My name is Sammy. I am 24. I have a vision of opening my own barbershop early next year. The problem is, the only amount I have as my savings is Sh60,000. Currently, I am a university student. My part-time hustle is shaving at a certain barber shop in Umoja, Nairobi. I usually work four days a week and each day I get between Sh400 and Sh600. I need advice on how I can raise Sh500,000 between now and March next year.
Dominic Karanja, a financial and investments consultant
Starting a barbershop will require careful planning and commitment, but with the right strategy, it can be a successful and profitable business.
It is commendable that you are already thinking of how you are going to fund your barbershop venture. However there are other factors that you also need to consider so that you increase your chances of succeeding.
Start by calculating your startup costs even before you explore the financing options. Have a clear understanding of the initial investment required for building renovation, equipment, rent deposit, goodwill and ongoing expenses like monthly rent, utilities, salaries, supplies, and marketing.
Research the price set by other barbershops in the area and set competitive prices. You need to research the demand for barbershop services in the area you intend to start the business.
Choose a strategic location that is easily accessible and visible. High foot traffic areas like highly populated residential areas, shopping centres, or busy streets are the most ideal.
You also need to develop a comprehensive business plan outlining your objectives, services, pricing, and financial projections.
Register your business and obtain the necessary licences and permits and ensure compliance with health and safety regulations. Investing in quality barbering equipment and supplies will be very crucial for your business.
If you plan to hire barbers, you will need to ensure that they are skilled and highly committed. Provision of ongoing staff training is essential for your business success.
A well-trained team will enhance customer satisfaction and loyalty. Explore how you will create a strong brand identity and build an online presence through social media, local advertising, and word-of-mouth to attract customers.
Your focus should be on providing excellent customer service to retain customers and encourage referrals. You need to stay updated with the latest grooming trends and continuously improve your services to meet customer expectations.
To raise the remaining Sh440,000 for your barbershop by March next year, you will need a clear plan that will involve boosting your income, cutting unnecessary expenses, and exploring options for external funding.
Track your income and expenses carefully, reduce unnecessary spending and prioritise saving. Look for a savings account or a money market fund that offers competitive interest rates to help your money grow faster. Set a specific goal to save a certain amount each week.
For example, if you can save an additional Sh5,000 monthly, it will add up to Sh25,000 in five months. If possible, try to work more days a week or extend your work hours to increase your income.
Assuming you work an extra two days and earn an average of Sh500 per day, this would increase your weekly earnings by Sh1,000 and over five months this would generate an additional Sh20,000.
Consider starting a small business on the side, like selling barbering products online or offering mobile barber services on the days you are not working at the Umoja barbershop. You could market your services to friends, university mates, or clients in your area.
If you can secure five to 10 extra clients a week at an average of Sh400 per cut, you could potentially earn an additional Sh2,000 to Sh4,000 per week, which adds up to Sh40,000 to Sh80,000 over five months.
Explore other part-time jobs that can supplement your income. Leverage your other skills by taking up additional side hustles that do not interfere with your studies or primary job.
Talk to business owners who have successfully started their own businesses because they can provide valuable insights and guidance.
Look for opportunities where you can participate in workshops and seminars that can help you develop your business skills and learn about financing options.
You can look for a business partner who is willing to invest in the barbershop and share in the profits. Talk to friends, family, or acquaintances who might be interested in investing in your business idea. You can offer them a percentage of your future profits in return.
There are so many uncertainties surrounding a new business and I would urge you to start your business using your own resources and only consider borrowing funds for business expansion or working capital once you are sure about the daily cash flow.
Financial institutions usually do not fund startups because they are not sure of how to evaluate loan eligibility of those businesses.
Once you have operated the business for a certain period, perhaps six months, you can consider applying for a microloan from institutions that support small businesses. Always compare loan terms like interest rates, repayment terms, fees, and conditions to find the best deal.
To fund your business, you can explore government-backed programmes that offer loans to small businesses, small business loans from Saccos, microfinance institutions or even family members.
Saccos offer favourable loan terms and a loan amount that is equal to three times your savings. If you are not a member of a Sacco, you can consider joining one where you can get friends that can guarantee you when you need a loan.
Raising a significant amount of money takes time and effort. This implies that as a young aspiring entrepreneur, you may also want to reconsider the timelines you have set for yourself.
By postponing the opening date from March 2025, you could give yourself additional time to build up your start-up capital as well as an emergency kitty, without overloading and, or neglecting your university study obligations.
You need to be patient, persistent, and committed to your goal. With careful planning and execution, you can achieve your business dream.
If you have any money problems, send us an email at [email protected] and leave your number for contact. Money questions will be answered in this column.
