Get your footing right before start of any business journey
Posted Wednesday, July 4 2012 at 20:47
I am 25-years-old and currently working with a basic salary of Sh12,000.
I have a capital of Sh50,000 and willing to start a small wines and spirits venture in one of the Eastlands estates.
Is this capital sufficient to start this type of business? What are the legal procedures of starting such an undertaking?
How much would it cost to get the licences? Could this be a viable business and how can I procure my products directly from manufacturers to enhance profitability.
From the information provided, you are trying to build a foundation for the fulfilment of your dreams by seeking all the necessary information so as to start on the right footing, which is very commendable.
The capital required to start the business depends on a number of factors. First, you have to determine whether you only want to operate a wines and spirits shop, or a wines and spirits establishment where you serve drinks to customers.
If it is the latter, then you are likely to incur higher establishment costs such as employing waiters, buying glasses and furniture, and other items needed for it to function properly.
Rent might also be higher since you will require more space. The former might be a better idea for now since start up costs are likely to be lower and once the business picks up, you can expand depending on future prospects.
You can visit your location of choice to get a sense of rent charges. It is important to determine how much your first stock would cost so as to get a sense of how much working capital you need.
It is important to draw up a business plan before you get started. It should estimate the amount of capital required, viability of the business and projected cash flow.
It’s important to project cash flow especially if you choose to raise capital through debt since you will be required to make regular repayments.
This will inform you whether the business can comfortably service the loan while ensuring there is enough working capital for operations.
The business plan should address the issue of viability by looking at the strengths, weaknesses, opportunities and threats, and their impact on your business.
The strategies you employ to increase sales will greatly determine your profitability. The legal procedure involved is seeking a licence from through the office of the district commissioner.
A committee will assess your application and make a decision on whether you will be provided with a liquor licence depending on the extent to which you will have met the provisions of the law.
You can visit the district commissioner’s office to get all the information you need and the licence fees required.
You can contact manufacturers of the goods you wish to procure directly to get information on their terms and conditions.
It is also important to note that most manufacturers tend to have wholesalers who distribute their products within certain locations and you can determine the one nearest to you so as save on transportation costs.