Nation Media Article Posted November 3, 2015 by Jane Munene


By KINUTHIA MBURU  See article on Daily Nation.

Four years ago, James Muchangi was just another casual labourer working at construction sites and tilling farms in Karatina for Sh250 a day. Although he had always wished to become an entrepreneur, he was convinced it would take him years to save enough money to start a business.

“I could not picture myself as a businessman. I’d failed to secure a place at the university after sitting my KCSE examinations and I feared that I would amount to nothing with my casual jobs,” says the 27-year-old.

Out of the Sh250 he made, Muchangi began to save Sh100 in a wooden piggy bank that he kept under his bed. “I saved Sh6,000 in three months,” he says.

He used the money to buy a calf and his journey to a successful agribusiness started. Within a year, his calf had matured and given birth to a calf.

“I quit the casual jobs and began to supply the 10 litres of milk I got from the cow every day to small hotels in Karatina at between Sh30 and Sh35 per litre.” He made between Sh300 and Sh350 a day.

Value-added farming

“I began to feel optimistic. I saw opportunities in agri-business and knew that if I explored them, I could generate more income by venturing into value-added farming,” he says.

Unfortunately, Muchangi did not know how to turn his dairy farming into a successful, profitable, and reliable business. It was not until he registered for a programme with the Professional Business Mentors Association (PBMA) that Muchangi reached a turning point.

He says: “I got a business mentor who carried out a feasibility study on the kind of business I wished for in order to find out if it was viable. It was found to be financially viable and my mentor and I began to formulate a plan to turn it into a booming enterprise.”

His mentor, Jane Munene, advised him to adopt high breed dairy cows to boost his milk supply, start selling milk to a cooling plant to help him gain collateral for a business loan, and venture into fruit farming.

Last year, Muchangi bought half an acre of land and began to grow tree tomatoes. This year, he planted purple and yellow passion fruit. Since he began his mentorship programme, Muchangi has seen his annual turnover rise from Sh72,000 to Sh2 million.

“I have been able to invest Sh500,000 of my profit in a new house and bought a motorbike at Sh100,000 to help me supply milk efficiently.

I am now saving to buy a pickup car so that I can ferry the produce to wider markets in Nairobi, Nakuru, and Thika,” he says.

Ripest fruits reaped

According to Muchangi, exposure to an outside market, lessons in saving, and access to affordable credit have been the ripest fruits he has reaped.

Nonetheless, his agribusiness has not been without challenges. Currently, Munene is helping him devise a value-addition mechanism and gain access to high quality drugs and treatment for his livestock and fruits.

Muchangi is not the only entrepreneur benefiting from business interactions with a mentor.

Take Emily Achieng’ Adago and Derrick Samambo. Adago owns an agro-veterinary business with branches in Chemelil and Kibigori. Since joining a mentorship programme with PBMA, her turnover has risen to Sh1.4 million.

Samambo, who owns a metal fabricator business, has been able to expand his business to two branches, one in Kisumu and the other in Nyamasaria, which employ 18 people.

According to Samambo, outsourcing, human resource, and aggressive marketing, have been the fuel driving his business.

“My mentor has helped me develop structured procurement and business operating systems,” he says.

According to a report by GroFin, a private equity fund manager, about 74 per cent of small and medium businesses collapse within their first three years due to failure by the owners to budget and plan for financial, managerial, and operational requirements.

Further, according to a report on promotion and development of SMEs in Kenya by Business Partners, SMEs that fail due to poor management of financial activities account for 34 per cent, while SMEs that crumble due to lack of management competence account for 16 per cent.

Lack of sales and marketing know-how takes 11 per cent.

Alarmingly, the number of organisations that offer professional business mentorship locally is microscopic. According to Tonnie Mello, this was the gap and need that birthed the Professional Business Mentors Association.

“Lack of objectivity in running small and medium enterprises was the most highlighted problem plaguing young businesses,” says Mello, the association’s chairman.

“We always assume that the business is our own and thus seek to help the small and up-and-coming owner realise its full potential,” Mello, who is mentoring Rachel Waweru, the owner of a telecommunications business, says.

Cornerstone of growth

The business, which has three branches in Nairobi and Eldoret, has grown and become profitable, with a monthly turnover of Sh3.6 million. “It  employs seven people,” says Ms Waweru in a report. “Profitability and growing customer numbers and customer feedback have been the cornerstone of the enterprise’s growth.”

While some business owners have been in the programme for some time, others are only a few weeks old there. Felister Wakina is one of the new entrants, having joined the programme just a month ago to be guided on how to refine her sales process and customer retention.

“I was not getting the bigger picture and, while my business was making sales, I felt that I needed a proper strategy on how to retain good customers rather than have the one-off kind,” she says.

According to her, the main benefit is having an accountability partner. “I now know that if my mentor, Edna Chepng’eno, and I agree that I must meet a certain sales threshold within a certain timeframe, then I must work towards achieving that target,” she says.

“In between, my mentor will walk with me in refining the areas I am struggling with.”

Wakina adds that she is working towards increasing her turnover by 80 per cent by the end of the year through a change in market focus and improved customer relations and retention. Currently, her software development business has a turnover of about Sh5 million and 11 employees.

Although many of the business owners in the programme have a turnover of over a million shillings, others are startups with small profit margins.

Kelvin Waithira is one of these. He owns a salon in Kitengela town which has a monthly turnover of Sh15,000. According to Mello, a small turnover should not discourage an entrepreneur from seeking the services of a professional accountability mentor. He further notes that small and medium entrepreneurs should try to have a budget for business mentorship programmes.

“Business mentorship is a critical point in the growth and development of a small business. There is always a huge difference between businesses that are benefiting from mentorship and those that aren’t,” he says.

Group helps put minds together

^ The Professional Business Mentors Association has 25 mentors, who are nurturing 50 SMEs.

^ Each mentor handles two businesses. “We felt that we should start a programme to help up-and-coming entrepreneurs nurture their SMEs into profitability since we were already running successful businesses or working with successful business firms,” says chairman Tonnie Mello.

^ Mentors receive Sh4,000 for each session. “The firm retains 20 per cent of the fee. A complete session contains 10 mentoring units, which provide the firm with at least Sh800,000,” he adds.

^ The mentoring project usually focuses on an analysis and understanding of the business idea, value proposition and delivery, business system, gap analysis, and feasibility assessment.

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