One of the very most critical decisions you will ever make in starting your own business is choosing the right business idea. If you are an upcoming entrepreneur, it is easy to assume that any business can be profitable. According to statistics nearly 20% of businesses fail within the first year.
Some of the reasons why businesses fail include; lack of capital, poor management, a bad business idea or business model, and poor or lack of marketing.
In this article, we will cover some of the worst businesses to start in Kenya. These businesses are not necessarily unprofitable. Some of the businesses were very lucrative at some point but currently, they are either overcrowded or the demand for their services has decreased.
The following is a list of the worst businesses to start in Kenya and are likely to fail:
1. Cybercafe business
The rise of smartphones and affordable internet plans has made it easier for people to access the internet from the comfort of their homes. This has greatly reduced the demand for cybercafes in Kenya. Kenyans are no longer going to cyber cafes to access the internet like before. Additionally, cybercafes are everywhere in Kenya, with many established players and new entrants in the market. This high level of competition can make it difficult for new cybercafes to attract and retain customers.
2. Movie shop
The advent of online streaming services such as Netflix, Amazon Prime, and Hulu has significantly reduced the demand for movie shop businesses in Kenya. With these online streaming services, customers can easily access a wide variety of movies and TV shows from the comfort of their homes. This has made it difficult for movie shop businesses to attract and retain customers, resulting in a decline in revenue and profits. But there is a percentage of people who can’t afford to pay for online streaming services plans. Depending on the location of your movie shop you can still get customers.
3. Photo studio business
While photography remains an important aspect of our lives, the advent of high-quality smartphone cameras has greatly reduced the demand for professional photography services in Kenya. Many people now prefer to take their photos or have their friends take photos for them. Additionally, the high cost of camera equipment and studio space can make it difficult for new photo studio businesses to compete in the market.
Instead of a Photo studio, you can start a photography business but niche down to specific areas like event photography(weddings, burials, corporate events), fashion photography, or product photography. Focus on one area, establish yourself, and grow.
4. Car wash business
Starting a car wash business in Kenya may seem like a lucrative idea, but it comes with its fair share of challenges. Car wash businesses require a significant investment in terms of equipment, water supply, and rental space. Additionally, the competition in the car wash industry in Kenya is quite high, with many established players and new entrants. This can make it difficult for new businesses to attract and retain customers.
5. Tendering to the government
While tendering for government contracts can seem like a lucrative opportunity, it comes with its own set of challenges. Government procurement processes can be complex and opaque, with high levels of bureaucracy and corruption. Additionally, the competition for government tenders in Kenya is quite high, with many established players and new entrants. This can make it difficult for new businesses to win contracts and generate profits.
6. Matatu business
The matatu business is a highly regulated and competitive industry in Kenya. The high cost of acquiring and maintaining matatus, coupled with frequent police harassment and the risk of accidents, can make it difficult for new entrants to succeed in the industry. Additionally, the matatu business requires a significant investment in terms of licenses, permits, and insurance.
You also need a SACCO to start operating a matatu in Kenya. Getting your vehicle into one can be complicated, and costly with large amounts of money going to corruption.
It is important to say that once you get through all these challenges and get your vehicle in a good SACCO, the matatu business can be lucrative because the market is big and the margins are good.
7. Travel agency
While the travel industry in Kenya has great growth potential, starting a travel agency can be challenging. Travel agencies require significant investment in terms of office space, staff, and marketing. Additionally, the competition in the travel industry in Kenya is quite high, with many established players and new entrants. This can make it difficult for new businesses to attract and retain customers.
8. Betting firm
While the betting industry in Kenya has grown significantly in recent years, it has also become highly regulated and competitive. The high cost of obtaining licenses, and permits, high taxation, and complying with regulatory requirements can make it difficult for new entrants to succeed in the industry. Additionally, the competition in the betting industry in Kenya is quite high, with many established players and new entrants. This can make it difficult for new businesses to attract and retain customers.
9. Offline taxi business
With the rise of ride-hailing services such as Uber and Bolt, starting an offline taxi business in Kenya can be challenging. The competition in the taxi industry in Kenya is quite high, with many established players and new entrants. Additionally, offline taxi businesses require a significant investment in terms of acquiring and maintaining vehicles, hiring drivers, and marketing. This can make it difficult for new businesses to compete in the market.
Consider these alternative businesses if you want to start a business in Kenya
While the above businesses may not be the best choice for aspiring entrepreneurs in Kenya, there are plenty of other options available. Here are some of the best businesses to start in Kenya:
E-commerce
With the growth of the internet and mobile technology, e-commerce is a rapidly growing industry in Kenya. Online marketplaces like Jumia and Kilimall have made it easy for Kenyans to shop online, and there is a growing demand for local e-commerce businesses.
But you don’t need to start a big online marketplace like Jumia and Kilimall. Instead, focus on one area and one line of products like cosmetics, office equipment, Beauty products for men, or pet products.
Agribusiness
Kenya has a diverse agricultural sector, and there is a growing demand for organic and locally-grown produce. Starting an agribusiness can be a profitable venture, and there are plenty of opportunities in areas such as dairy farming, horticulture, and poultry farming.
Real Estate
Real estate is a lucrative industry in Kenya, with a growing demand for residential and commercial property. There are plenty of opportunities for entrepreneurs to invest in real estate, whether it’s buying and selling property, developing affordable housing, or managing rental properties.
Conclusion
Starting a business in Kenya can be challenging, but by choosing the right type of business, you can increase your chances of success. It’s important to do your research, assess the market demand, and choose a business that aligns with your skills, interests, and resources.