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How To Successfully Start An Online Business In Kenya
Money Management

How To Successfully Start An Online Business In Kenya

In this digital world, online business is gaining popularity every day. According to a study published by Mastercard, 79% of Kenyan consumers are shopping more online. If you have been starting your own online business, there’s never been a more perfect time.

Starting an online business gives you a perfect way to make money online. You can sell anything online. And the beauty of it all is that you don’t need to open an offline store/shop or quit your job, as you can do it from home and part-time. 

Starting an online business has become more accessible than ever, thanks to the internet's transformative power. However, adopting a strategic approach is essential to increase your chances of success. 

In this article, we’ll explore all you need to know about online businesses and how to start one in Kenya successfully. 

Read Also: How to Start a Business; Step By Step

What is an Online Business?

An online business is a type of business that operates through the Internet. It can involve selling products or services online and communicating with customers virtually. Instead of having a physical store or office, online businesses leverage digital platforms to reach and interact with customers.

Online businesses typically have a website that serves as virtual storefronts and offices. They act as a hub where customers can browse products or services, learn more about the business, and make purchases. They often include features like online catalogues, shopping carts, secure payment gateways, and customer support options. 

In addition to a website, online businesses may also utilise various online platforms to extend their reach. These platforms can include online marketplaces like Jumia, Kilimall, or Jiji, where businesses can list their products alongside other sellers. Social media platforms such as Facebook, Instagram, or Twitter are also utilised by online businesses to engage with their target audience, promote products, and build brand awareness.

Benefits of Online Businesses

The biggest advantage of starting an online business is the flexibility it can afford you. This is specifically important when you are looking to test the waters or plan to run your business as a side hustle or part-time job. You can run your business from anywhere and alongside your 9 - 5 job. 

Secondly, startup costs for online businesses are typically minimal because you don't need a physical location, signage, inventory, or store staff. The essential requirement is a computer and an internet connection. You may need to invest in a website and other digital tools for sales tracking, customer communication, updates, and digital store management.

Other benefits of online business are: 

  1. 24/7 Operation: Your business is never closed, allowing customers to purchase products and order services anytime.
  2. Scalability: It's easy to expand your online business as it grows with minimal disruptions.
  3. Higher Reach: Online businesses have the potential to reach a larger audience. With the Internet, you can sell your products or services to customers countrywide and even worldwide, breaking the geographical barriers that traditional brick-and-mortar businesses often face.

It's worth noting that while online businesses offer various advantages, they also come with their challenges. Competition can be fierce, and building trust with customers without face-to-face interaction requires extra effort. However, with careful planning, effective execution, and a solid strategy, you can start your online business and make it thrive in today's digital landscape.

Read Also: How to Make Your Small Business Competitive in 2023

Step-By-Step Guide to Starting an Online Business in Kenya in 2023

Decide What Type of Business You Want to Start

The first step of starting any business is generating a business idea. Begin by brainstorming and exploring various online business concepts. Look for opportunities in areas that interest you or align with your skills and experience. Consider your passions, market trends, and gaps in the market to come up with a list of potential business ideas.

Once you have a collection of business ideas, break them into smaller components. Analyse the key elements, such as the target market, competition, revenue potential, resources required, and scalability. This step helps you evaluate each idea individually and determine its feasibility.

Develop a set of criteria or pointers to evaluate the business ideas. These pointers can be specific to your goals, such as profitability, market demand, personal interest, or social impact. Assign scores or weights to each criterion to prioritise and rank the ideas accordingly. This will help you narrow down and pick a business that suits you best.

Struggling to come up with business ideas? Money254 has extensively written about numerous types of online businesses you can consider. Read them here: 

  1. 6 Money-Making Online Businesses
  2. Top 5 Profitable Online Businesses to Start With 20K
  3. 10 Profitable One-Person Business Ideas to Try 

Conduct Market Research 

After coming up with the business idea, the next step is to conduct market research to assess its suitability. Market research entails gathering information and data about your target customer, market conditions, and competing businesses. It provides crucial insights into what buyers seek, allowing you to understand their problems, pain points, and desires clearly. 

With this information, you can effectively tailor your product or service to address the buyer's problems.

To carry out market research, you should:

  1. Research your customers: Successful business owners comprehend their customers' desires and determine the most effective means of making their product or service available. If you don’t know who your customer is, you won’t be able to target them with your product or service.
  2. Research your competitors: This will help you gain deep insights and information about the specific industry and competing businesses. The objective is not to copy them but to identify their strengths and weaknesses and leverage them to your advantage.

Read Also: 9 Ways Small Kenyan Businesses Can Save Money

Choose Your Online Business Model

A business model is a plan your business has to generate revenue and reach profitability. When establishing an online business, it's crucial to have a solid plan for monetising it. 

For instance, if you're starting an online shop or selling products or services, you'll generate revenue through sales. 

However, if your website serves a different purpose, like providing entertainment or informational resources, there are three main ways to monetise it based on your business model:

  • Advertising: Earn money by allowing businesses to advertise on your site through ads or sponsored content and products. The more traffic you attract, the more ad revenue you’ll generate. If you use this business model, you will typically provide entertainment or information for free.
  • Subscription: Create ad-free websites where customers pay a one-time charge or a regular subscription fee to access the online service or website's content.
  • Freemium: Offer customers free access to a basic version of your online service, but charge for additional premium features and privileges.

The most suitable model for your online business will depend on its nature and your goals. You can also combine elements from these models to create a unique approach for your site.

Read Also: 5 Ways to Identify a Good Business Opportunity 

Get Your Finances in Order 

Once you’ve validated your business plan and there’s a customer base for your product/service, it’s time to think about your finances. Your business will be viable if you have the funding to get it off the ground and you can identify a price that’ll turn a profit.

As we have already discussed, the startup costs for online businesses will likely be low. But depending on the type of business you plan to start, you must ensure you have enough funds.

If you plan to sell products, ensure you have enough capital to manufacture or source them, depending on your model. Next, you need to think about storage. Will you keep your inventory at home, or will you need to rent a warehouse, store, or shelf space? If so, how much will it cost you?

You might need to hire a developer to build a website if you plan to have one. You might also need to buy some software tools to help you run your business effectively. But this will mostly depend on the product or service you are selling. 

It is important to list the capital to be invested besides other costs in setting up the online business. Some costs to consider include marketing, Logistics, utilities, overhead if you hire people, and license fees, depending on the business. 

Finally, contemplate how you will raise the startup capital. Do you have personal savings? Are you planning to crowdfund? Will you seek investors or opt for a business loan?

>>>>> Discover the Best Business Loans in Kenya

Create Business Plan

Creating a business plan involves thoroughly examining the various aspects of your business idea, including costs and potential profits. Its purpose is to determine the viability of your business concept. A well-crafted business plan serves as a roadmap, outlining the necessary steps to achieve your goals efficiently.

Your business plan should have the following elements:

  • Executive Summary: Provide an overview of your business, its goals, and the problems it solves. This concise document should highlight your motivations and objectives.
  • Business Description: Describe your business, growth plans, and profit sources. Explain your target customers and how your products or services benefit them.
  • Market Analysis: Analyze your target market, its size, potential growth, and industry changes. Prove demand for your offerings and differentiate from competitors.
  • Marketing Plan: Outline strategies for reaching and selling to customers. Include marketing channels, costs, pricing plans, and strategic partnerships. 
  • Management and organisation: This section should discuss your company's management team, structure, and operations.
  • Financial projections: This section should provide detailed financial forecasts for your business, including revenue, expenses, and cash flow.

Register Your Business 

Just because you are opening an online business doesn’t mean you will skip this process. The main reason to register your business is to build trust with your potential customer. 

Additionally, registering your online business, even without a physical store, is crucial for revenue purposes, compliance with payment gateways, and government bodies. 

Many payment gateways require legal documentation, including business registration, to use their services. For instance, if you need an MPESA till number, you might need to provide your business registration certificate. 

Certain government bodies may also mandate registration for industry-specific regulations. You will register to obtain licenses and for tax purposes. 

To register your online business, you will first need to give it a name. Next, log into your eCitizen portal, conduct a name search through the Registrar of Companies, and wait for the approval of the proposed identity. Once the preferred name is approved and reserved, you will need to register it. Business name registration will cost you Ksh950, and you will do it through eCitizen.

Read Also: 7 Things to Know Before Starting a Business With Your Family

Brand Your Business

Branding is crucial to establishing a distinct identity and creating a lasting impression on customers. It encompasses all aspects of your business and will shape the overall perception and experience of your target customers.

A well-defined brand helps customers easily identify and recognise your online business in a sea of competitors. 

To brand your online business, you need the following: 

  • Logos: This is a visual representation of your brand and serves as a visual anchor for customer recognition. It should be unique, memorable, and reflective of your brand's values, personality, and industry. 
  • Colours: Consistent use of colours in your branding helps create a visual identity that customers can associate with your online business. Choose a distinct colour palette that aligns with your brand's personality and target audience. It can help create a lasting impression and differentiate you from competitors.
  • Design: A cohesive design language across all brand touchpoints contributes to brand recognition. This includes typography, graphic elements, layout, and overall aesthetic. Consistency in design creates a unified and professional look and feel, making it easier for customers to identify and remember your brand.
  • Tone and Voice: While not visual elements, the tone and voice of your brand's communication also contribute to brand recognition and reinforce your brand's personality and values.

Build Online Presence 

An online presence allows your business to interact with your customers, enabling you to set the narrative of what your brand represents and differentiate yourself from your competitors. It encompasses all the points of contact your audience may have with your brand online, including various areas such as conversations on social networks and online reviews.

A strong online presence is paramount since you will be running your business online. It will play a vital role in attracting and communicating with your customers.

First, you must create social media accounts on every platform your target customers are. These profiles should include your business name and branding. 

Next, unless you are strictly planning to sell your products and services solely on social media, you need to create a website. It will allow you to list your products and services more professionally and have more control over your customer's journey. A website can also include a blog section where you can publish content that can help you attract organic customers from search engines like Google.

Finally, depending on your type of business, you might also need to list it on online marketplaces like Jiji.

Lunch Your Business 

Now that everything is set, it is time to go live and launch your new online business. If you want your business to start on a high note, you need to take steps to plan and execute a well-timed, memorable launch that will bring your business to the attention of more people. 

The first step is to develop a compelling story. Craft a narrative around your business, product, or service that resonates with your target audience. Your story should highlight the problem your product solves, the unique value it offers, and the benefits customers can expect. Emphasise how your offering stands out from competitors and why it is worth their attention.

Next, you should build anticipation: Create a buzz around your launch by teasing your product or service in the weeks leading up to the launch date. Use social media platforms and your website to share sneak peeks, behind-the-scenes content, and countdowns to build anticipation and excitement.

Finally, consider offering incentives and running a promotion. This will encourage early adoption and generate initial sales momentum. It can include limited-time discounts, exclusive access to new features, or bonuses for the first customers. Clearly communicate these offers and their time-limited nature to create a sense of urgency.

Read Also: 6 Money-Making Online Businesses

Start Marketing Your Business 

Congratulations! You've taken the leap and brought your business to life. But now, the real challenge begins: how do you ensure your business is seen and attracts new customers? 

Launching your business and making your first sales is just the start. Continuous growth is essential to turn a profit and keep your business afloat. And that may demand your time and effort.

To achieve sustainable growth, the first step is to devise a comprehensive marketing strategy. The marketing world offers many strategies to explore, each with its advantages. Some marketing strategies you can consider depending on your business are: 

  • Content marketing
  • Email marketing
  • Influencer marketing
  • Search engine marketing (SEM)
  • Search engine optimization (SEO)
  • Pay-per-click advertising (PPC)
  • Social media marketing
  • Affiliate marketing


In Kenya, 50% of new businesses fail by the fifth year. Online businesses aren't an exception, so you need to tread carefully and avoid mistakes by taking three vital steps. 

The first step is to always have a risk mitigation plan that will help you avoid or minimize losses. Secondly, don't try to do everything yourself. If you hit a roadblock, consider consulting an expert. If you are running your online business as a side hustle and notice it consuming much of your time, consider hiring a second pair of hands. Finally, don't ignore the legal aspects. If your business requires a specific license to operate, ensure you obtain it before launching.

Now that you know all the steps you'll need to take to start an online business, it's time to do it.

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Farah Nurow is an experienced Content Writer who enjoys writing creative and educative articles meant to provoke readers' thoughts. He loves sunny weather and thick books. You can connect with him on LinkedIn.

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