The cereal business in Kenya is a profitable venture, given the ready market, as demand for food products continues to soar.
The venture does not require high starting capital, as one can get started with only Sh50,000. To succeed in this business, it’s advisable to invest in cereals with high demand and a good profit margin, such as rice, beans, lentils, and green grams, among others.
While the cereals business is considered profitable, earnings are determined by various factors such as market availability, pricing, and location, among others.
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A Facebook user, Esther Pishori Rice, shared how anyone with Sh300,000 can set up a cereal business and make Sh40,000 in profit per month.
Below is the breakdown:
- Initial Setup Costs
Rent & Deposit: Sh30,000
Wooden Pallets, Shelves, and Chairs: Sh10,000
Weighing Scale (Ratili): Sh5,000
Digital Weighing Scale: Sh10,000
Cereals Stock: Sh200,000
Packaging Bags, Measuring Containers, Padlocks, etc.: Sh5,000
Business Permit: Sh5,000
Shop Name Registration: Sh5,000
Miscellaneous Costs: Sh30,000
Total Setup Cost:
This adds up to Sh300,000, which covers the complete setup and initial stock.
- Monthly Revenue Potential
Assuming the shop will sell different types of cereals like beans, maize, lentils, rice, etc., let’s break down potential earnings based on an estimated monthly sales volume.
Revenue Estimates:
Daily Sales: If the shop generates an average of Sh5,000 in sales per day.
Monthly Sales: 5,000 x 30 days = Sh150,000 per month.
- Cost of Goods Sold (COGS):
Assuming the cost of stock is about 60 percent of the selling price, the monthly cost of replenishing stock would be:
60 percent of Sh150,000 = Sh90,000
Monthly Expenses:
Rent: Sh15,000 (assuming half of the initial deposit is for monthly rent)
Miscellaneous Expenses: Sh5,000 (for packaging, electricity, transport, etc.)
Total Monthly Expenses: Sh15,000 + Sh5,000 = Sh20,000
- Monthly Profit Calculation
Gross Profit: Monthly Revenue – Cost of Goods Sold = Sh150,000 – Sh90,000 = Sh60,000
Net Profit: Gross Profit – Monthly Expenses = Sh60,000 – Sh20,000 = Sh40,000
Monthly Profit
With these assumptions, you could potentially make Sh40,000 per month after covering monthly expenses.
Key Assumptions:
- Daily sales average at Sh5,000.
- Stock replenishment costs around 60 percent of revenue.
- Monthly expenses remain constant at Sh20,000.
“This plan offers a good return on investment, with Sh40,000 monthly profit,” she stated.
