I am in my late 30s. I have a full-time civil service job, paying about Sh69,000 net, and a four-year-old wholesale fast-moving consumer goods (FMCG) supply business operated by my wife.
We average Sh400,000 to Sh500,000 in monthly turnover, rising to Sh650,000 to Sh750,000 in months with holidays such as December or school openings. Our goal this year was to raise average monthly turnover to Sh1 million, so we injected a Sh1 million loan into the business.
The loan is charged at 14.49 percent over 36 months, but we shall repay about Sh1,518,000 due to bank charges and interest. We have been repaying for five months. Our main monthly expenses are business rent of Sh20,000, loan repayment of Sh42,200, home rent of Sh16,000, school fees of Sh12,000 for my two children, my wife’s personal care of Sh10,000, support for parents of Sh14,000 (Sh7,000 each side), and two employees at Sh15,000 each.
We have no savings because every coin goes to the business. We would like to buy a Toyota HiAce or an Isuzu NPR small lorry for deliveries through a top-up loan. How do we grow the business sustainably? I would also like to quit my job and join the business, but I don’t know how or when to start the transition. Charlie
Dominic Karanja, a financial planning and investments consultant.
Your finances show a tight balance between your business and household spending. At typical Kenyan gross margins of 8 to 15 percent, average off-peak turnover of Sh450,000 produces monthly gross profit of Sh54,000 to Sh67,500, yet monthly business costs total Sh92,200.
The business therefore runs a deficit in regular months and depends on peak periods, such as December and school openings, to offset slower ones. Your Sh69,000 net salary covers Sh52,000 in fixed household commitments, leaving just Sh17,000 for food, transport, utilities and other costs. Your employment income is therefore essential to the stability of both household and business.
Borrowing to buy a commercial vehicle is currently too risky. You are only five months into a three-year loan with repayments of Sh42,200. A top-up would add fees, interest and insurance while increasing your monthly debt burden.
Vehicle ownership would also bring recurring costs such as insurance, fuel, driver wages, maintenance and inspections. Without an emergency reserve for breakdowns or slow sales, these commitments could severely strain cash flow.
A safer option is to outsource deliveries to local transport providers and pay per trip, which lets you build the cost into wholesale prices. This replaces a large fixed expense with a manageable variable cost.
To reach Sh1 million in average monthly turnover sustainably, strengthen margins, grow your customer base and manage working capital efficiently. Turning stock over three times a month at an 8 percent margin, rather than once at 12 percent, generates substantially more cash flow. Identify your 20 to 30 fastest-moving products and negotiate better supplier prices, discounts and payment terms.
Attract and retain retailers, kiosks, mini-markets, schools and eateries, using WhatsApp Business to streamline orders. Set clear customer credit limits and collection deadlines to avoid tying up cash in overdue debts or slow-moving stock.
Keep accurate inventory records, count stock regularly and maintain a rolling 13-week cash flow forecast. Save surplus cash from peak periods to support quieter months. Track turnover, gross profit, stock turnover, debt collection and cash remaining after expenses. Before reinvesting every shilling in inventory, build a business reserve covering two to three months of fixed operating expenses.
Before resigning, ensure the business earns a net profit above your Sh69,000 salary for at least six consecutive months.
Keep business and personal accounts separate, set a defined salary for your wife as manager, and take a fixed draw rather than ad hoc withdrawals.
Build a separate personal emergency fund of roughly Sh300,000 to Sh400,000, about six months of living expenses, in a high-yield Money Market Fund. Meeting these benchmarks protects your family’s finances as you move into running the business full-time.
Put the strategy into practice in three phases. First, stabilise operations by reviewing product margins, prioritising fast-selling stock and outsourcing transport instead of taking on vehicle debt.
Second, use peak-season windfalls to build a six-month household emergency reserve while expanding inventory through negotiated supplier credit.
Third, once your loan is substantially repaid, monthly turnover consistently exceeds Sh750,000, and business profits reliably match your salary, reassess buying a vehicle and move into the business full-time.
