Easy steps! How to start a small business in Nairobi

Kenya, March 27 -- How to start a small business in Nairobi with little money is a challenge to many. Nairobi, known as the "Green City in the Sun," is the capital of Kenya. It is not just the centre of politics and business, but also a great place for small businesses.

With over 4.5 million people living there, Nairobi has a busy economy that is perfect for new entrepreneurs looking to start businesses in different areas.

However, starting a small business in this lively city can be challenging due to the rules and tough competition. As startups grow in Kenya, experts and experienced business owners are sharing tips on how to succeed in Nairobi.

Small and medium enterprises (SMEs) in Kenya make up more than 30% of the country's GDP and employ over 80% of the people, according to the Kenya National Bureau of Statistics (KNBS).

In Nairobi, you can find many types of businesses, from tech companies in Kilimani to small shops in Eastlands. For new business owners, success begins with good planning and understanding the city's market.

The first step for any entrepreneur in Nairobi is to find a good business idea. With such a diverse population-ranging from low-income earners to a growing middle class and foreigners-there are many opportunities in different sectors.

"Think about what people need every day," said Grace Wambui, who runs a popular second-hand clothing stall in Gikomba Market. "Clothes, food, transport-these are things Nairobians can't live without." Other good ideas include affordable tech products, solar energy items, and processed snacks made from local crops.

A report from the Nairobi County Government showed that online shopping is growing, with platforms like Jumia and Kilimall increasing the need for delivery services. New entrepreneurs can take advantage of this by starting a delivery service or selling products online, especially since 89% of Kenyans use mobile phones, according to the Communications Authority of Kenya.

Once you have an idea, you need a good business plan. This plan should include your startup costs, expected income, and marketing strategies.

For example, starting a small restaurant in Nairobi's CBD might cost about KSh 150,000 ($1,450) for rent, equipment, and licenses, with monthly costs around KSh 50,000 ($485).

"You must know your numbers," said Peter Mwangi, a business consultant at the Kenya Institute of Supplies Management. "Banks and investors won't take you seriously without a plan."

Free resources like the Kenya Youth Employment and Opportunities Project (KYEOP) offer templates and training for young people under 35. The Nairobi Business Hub also provides mentorship for a small fee.

Following the law is very important, and the registration process in Nairobi can be tricky.

To register a business, you should start with the Attorney General's eCitizen portal, where it costs KSh 800 ($7.75) for a sole proprietorship and takes about a week.

If you're starting a limited liability company, it costs KSh 10,000 ($97), and you need to complete some legal documents.

Next, you need a single business permit from the Nairobi County Government, which costs between KSh 5,000 ($48) and KSh 30,000 ($290) per year, based on the size of your business and where it is located.

Food vendors also need a health certificate for KSh 3,000 ($29), and those selling alcohol face additional costs.

"The online process is faster, but there can still be delays," said Jane Njoroge, a hair salon owner in Westlands. She recommends setting aside extra time and KSh 2,000 ($19) for unexpected "facilitation fees" that some officials may ask for.

Finding money can be a big challenge. Many entrepreneurs in Nairobi use their savings or borrow from their families. For Wambui, her clothing business started with KSh 20,000 ($194) she saved from a previous job.

Others use saccos (savings cooperatives) or microfinance institutions like Faulu Bank, which offer loans starting at KSh 50,000 ($485) with interest rates of 12-18% per year.

There are also government funds like the Youth Enterprise Development Fund, which can give up to KSh 200,000 ($1,940) at low interest rates, but you need to present a business plan and collateral.

Crowdfunding platforms like M-Changa are also becoming popular, with Nairobians funding various projects from fashion lines to poultry farms. "Don't wait for big money," Mwangi advised. "Start small and grow as you earn."

The location of your business in Nairobi is very important. Busy places like the CBD, Ngong Road, or Thika Road can give you visibility, but the rent is high-ranging from KSh 10,000 ($97) to KSh 50,000 ($485) per month for a small shop.

Residential areas like Kasarani or Rongai offer lower rents, starting at KSh 5,000 ($48), which is ideal for businesses targeting local communities.

Mobile businesses, such as food trucks or delivery services, can also be good options based on your market needs.

In a city with many competitors, it's important to be seen. Social media like WhatsApp, Instagram, and TikTok are very popular in Nairobi. According to a 2024 study, 70% of people in urban Kenya use the internet every day.

You can create a simple flyer or video ad for around KSh 1,000 ($9.70) and share it with many people on WhatsApp. Also, handing out physical flyers at matatu (public transport) stops or talking about your business in churches and savings groups can be very effective. "People in Nairobi love good deals," said Njoroge. "Offer discounts at the beginning to attract customers."

Running a business in Nairobi can be challenging. There are issues like rising prices (currently at 5.1%, according to KNBS), power cuts, and sometimes political problems.

Successful business owners are adaptable. When fuel prices went up in 2024 and transport costs increased, Wambui decided to sell lighter clothing with higher profits to maintain her earnings. "You have to keep learning," she said.

The benefits can be great. A small business, like a vegetable stall in Kawangware, can earn KSh 1,000 ($9.70) each day, or KSh 25,000 ($242) each month after costs. This can be better than many regular jobs. For those who work hard, Nairobi can be a place to achieve big dreams.

Published by HT Digital Content Services with permission from Bana Kenya.