Mugambi Muraguri is the Managing Director of Fort Hall and Fort Hall Kenya Limited, a midsized construction company involved in roads, buildings, sinking boreholes and water engineering construction.
I started the company in 2015 primarily to deal in buildings construction but have expanded to offer roads and dams construction as well as sinking of boreholes. I started with a capital of Sh. 1 million which was partly my savings and a commercial loan. We have 11 permanent employees and several casual employees depending with the number of projects being undertaken.
Our main customers are the government of Kenya agencies, multi-lateral institutions, private companies and individuals.
It took more than 4 years to break even. During company’s infancy, jobs were scarce since clients had reservations about a new service provider in the market.
Convincing a client that your product or service is different from the existing service providers is not easy. You don’t even have a history of work previously done for reference and many clients feel they don’t want to be a guinea pig for you to experiment your expertise with.
The greatest challenge so far has been access to capital for bigger projects and late payments by clients. Construction is capital intensive business; the number or scope of projects the company can undertake concurrently is greatly diminished when payments don’t come in time.
I opened my Nakuru business with Sh. 1 million capital, broke even after 6 months
I was once a civil servant. Also, I used to work in another FMCG business I established with some other colleagues. This business is still in existence and deals in bottled drinking water, sanitary pads, baby and adult diapers.
I once took some very enticing but expensive loans from shylocks to do a project. I took a loan to do a project in 2019 and then there was a delay in payment which was unexpected. I had it very rough with the lender as interest on loan spiraled out of control. I ended up paying almost five times the cost of the original loan. I ended up making a loss because interest on loan ate away all the profit from the project.
This taught me to trust and rely on my bank, which I had banked with since I started the company for project financing instead shylocks. The bank maybe a little bit slow in processing the financing of the project compared to shylocks who offer you same day service but it’s worth the wait.
Your work should speak for you. I once got a client who had seen part of my work elsewhere. This client invited me to a company board for project proposal, interview and presentation. I showcased work I had done for a foreign embassy and this gave me the deal.
My presentation convinced them that I knew what I was talking about and had the requisite experience. I executed the contract and the client so satisfied that they have remained my biggest regular customer up until now. This has also come with unlimited referrals.
It’s important to separate company finances from your personal expenses and finances. I used company finances on my personal expenses and this affected my business operating capital. Operating capital is like blood in the veins of all businesses. Without it, your business will face certain death.
Hire professionals to do the work for you. You must hire the right people if you want your company to survive beyond its first birthday. You have to be very patient too. It’s always good not to overcharge as well as not to undercharge to get customers.
It’s better to supply the client an expensive but quality product or service instead of a cheap and junk product or service.
Always be informed about the latest technology available in your kind of work. In construction, you need to know the latest trends and technology in roads, bridges, building construction. Information is key.
I prefer to deal with the right professionals who have experience and understand the task given. In the past, I would sub contract firms which didn’t have much experience but simply because they were willing to do it at a lesser fee.
I did one project and I was forced to fire that sub-contractor and hire another one who was expensive but knew what he was doing. In the end I spent more money than I could have if I had gone straight to that sub-contractor.
