Money Management
November 11, 2024
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Have you fallen for the common assumption that selling foodstuff is one of the surest bet businesses in Kenya? Of course, food vending is among the most vibrant businesses because the average Kenyan will eat at least one meal or two as they do their business.
Food of all types might sell on any given day. However, many vendors underestimate the glitches and snags that could compromise their business. They swallow hard for the bait - you can't go wrong with food because everyone needs to eat.
No need to jump to conclusions if a neighborhood food court closes so soon after opening. They may have gone through the fire baptism that most Kenyan food and beverage entrepreneurs go through.
And while some may not be ready to spill the beans, here are some of the common challenges most food vendors face:
A busy and expansive food vending business requires staff; you can't do it alone. A reliable management team helps keep an eye on daily operations and for things to run smoothly. But things begin to unravel and fall apart if you have an inefficient staff or poor inventory management.
A famous Nairobi eatery was recently on the news for all the wrong reasons. The staff wasn't readily available for customers. Even with the delicious food and beverages that make this place many diner’s choices, customer service was poor. The staff were either rude or would not take the correct orders.
The supervisors wouldn't act quickly on complaints, and the business was on the verge of closure until the hiring of new management.
Many food vendors face a wide range of management issues, ranging from untrained staff to poor or inadequate daily—weekly sales monitoring. You might find it hard to pinpoint the sticky areas that might lead to revenue loss. Until you do, the business could begin a downward free fall.
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The cost of raw materials can change for various reasons, such as seasonal changes or economic uncertainty. The food vendor can be at crossroads and have to update prices because of the volatility in raw material prices.
It is tricky because how would you explain to your regular customer that their favourite meal on the menu, which cost Ksh200 last week, is now going for Ksh350?
Most customers wouldn't understand because they might also want to eat on a budget. A vendor might compromise the menu with cheaper ingredients, making the standard meal or beverage questionable, and this still sends away that loyal customer.
The food vending business is naturally a highly competitive one. Your next-door competitor will most probably want to steal your customers, staff, and sales tactics. You could soon be out of business if you are not constantly raising your bar.
The best tips that could help in a situation of harsh competition include:
Might your employees do more harm than good to your food vending business? If you are not keen enough, a few dishonest cases can run down the entire establishment in a split second.
Have you ever heard of employees who ask customers to bypass payment via the till? The excuse might be that the till is either complete or not working. In most situations, these staff would be pocketing the money as it's not easily accountable without the till payment.
Food vending businesses will often attract younger employees, primarily fresh from college.
Despite the fact that you may spend time and money training them, they frequently do not stay long enough. While you may be relieved that they have found greener pastures, turnover may destroy your business operations swiftly.
Each time they go, you have to start hiring people again, which is undesirable for business stability and growth.
What are the standard overhead costs for food vendors? These are the rent, utilities, and staff salaries. If you transport raw materials and advertise, that also counts as overhead expenses.
Poor inventory management with needless spending can lead to food wastage, eventually inflating overheads.
These recurring expenses are almost unavoidable. However, they can escalate if you do not understand each item and how it works. Knowing the expenditures attached to individual overheads can help create strategies to save on costs.
When customers do not pay their bills, it has a substantial negative impact on food vending. It affects profitability and causes financial hardships for the business because it cannot properly function without money.
Several scenarios could explain why debt problems arise unexpectedly. Customers might fail to pay their bills after finishing that delicious meal because they forgot their wallets. Or maybe their mobile payment is being delayed and they do not have cash.
Many customers are trustworthy and will make every effort to settle their bills as soon as possible. However, a few dishonest people exist, and they may never repay that debt and it will have an effect on your business, besides eroding trust.
When the economy is in shreds, personal finances suffer. Consumer behavior also changes. It's not strange for customers to want to stick to previous prices even when raw materials have become costly.
Some of your clients may insist on quality and quantity at the exact cost they have been paying, which leaves you in a big dilemma because you do not want to lose your customer, and you do not want to compromise on menu prices.
Many food vendors are optimistic from the outset, anticipating a quick break-even. But they are in for a harsh awakening even before they begin. The harsh reality is that the licenses eat away at their finances. A single business licence, food handler's certificate, food hygiene license, environment certificate, and fire certificate costs more than Ksh50,000.
Nobody can deny that food vending is one of Kenya's most popular businesses. It's one of the options that many individuals consider when they want to start a business.
However, expecting it to pick up fast because people need to eat soon leads to disappointment and frustration. Without knowledge, competent management, adequate cash, and quality, you may be setting yourself up for failure before you even begin.
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