How to diversify a business in Kenya: Entrepreneur Maureen Orango’s lessons

Starting a business is one challenge. Keeping it profitable while finding room to grow is another.

For many young entrepreneurs, diversification sounds like opening another shop, launching a new product or venturing into an entirely different industry.

But expanding too quickly, without understanding the new market or managing the money properly, can create more problems than opportunities.

That was the focus of the Co-op Bank Youth Forum on Friday, November 6, where host Violetta Ngina was joined by entrepreneur Maureen Orango for a discussion titled Beyond One Hustle: The Art of Business Diversification.

Orango brings practical experience to the subject, having built a portfolio of seven businesses spanning event management, construction and renovation, and transport and logistics, among other ventures.

Her entrepreneurial journey began in high school, when she sold small perfume samples for Sh20.

She later moved into event management, which opened opportunities in construction and renovation through relationships developed along the way.

Her experience illustrates how one venture can create opportunities for another.

Start with what you already have

One of Orango’s central messages was that entrepreneurs do not always need substantial capital to identify their next business opportunity.

Skills, experience and personal networks can provide a starting point.

For example, someone already running a catering business may identify opportunities in event supplies, deliveries, or corporate catering through existing customers.

Orango encouraged young people to look at what they can already do, the people they know and the gaps they encounter while running their current businesses.

Her own experience reflects this approach.

Rather than treating each new venture as an unrelated startup, she described how opportunities and relationships from one business helped open doors to others.

Find a gap and add value

Diversification does not always require launching another business.

Sometimes, it starts with improving what an existing business offers.

Orango used the example of a food vendor who could provide serviettes or wipes alongside meals.

It is a small addition, but one that improves the customer’s experience and gives the business an opportunity to stand out.

For an entrepreneur, this means paying attention to what customers ask for, what competitors overlook and what additional service can be offered without significantly increasing operating costs.

The idea is to identify demand before committing money to expansion.

Partnerships can open new markets

Orango also encouraged entrepreneurs to consider partnerships instead of attempting to manage every aspect of a business independently.

Working with another business can provide access to customers, skills, equipment or expertise that an entrepreneur may not have. It can also reduce the cost of entering a new market.

However, partnerships require clear responsibilities, financial arrangements and accountability.

Sharing opportunities should not mean losing sight of who is responsible for what.

More businesses require better financial discipline

Having multiple income streams does not automatically translate into higher profits.

Orango cautioned against entering industries that the entrepreneur does not understand.

Poor pricing, inadequate knowledge of operating costs and failure to identify the right customers can quickly turn a promising venture into a financial burden.

She also advised entrepreneurs to master their operations and establish a reliable customer base before hiring employees.

Expansion should follow demonstrated demand rather than the assumption that a larger team automatically means a bigger business.

Financial discipline was another major lesson.

Orango recalled making Sh1 million in profit but subsequently losing control of the money through personal spending and loan repayments.

She urged business owners to separate personal and business finances, maintain accountability and treat money transferred from one business to another as a repayable loan.

Equally important is knowing when to stop.

A business that consistently makes losses should be reviewed before more capital is committed.

Continuing to fund an unsustainable venture can drain resources from businesses that are performing well.

Diversification must make business sense

The challenges facing Kenyan enterprises underline the importance of sustainable growth.

The 2016 Kenya National Bureau of Statistics MSME survey recorded 2.2 million business closures over the preceding five years, while identifying shortages of operating funds as the leading reason for closure among surveyed businesses, at 29.6%.

The 2023 FinAccess MSE Tracker Survey also found that only 73% of the businesses in its original 2021 operational sample remained active in June 2023.

Among businesses that had closed, lack of working capital and reduced customer demand were the leading reported challenges.

The lesson from the Co-op Bank Youth Forum was not that every entrepreneur should run seven businesses.

It was that growth opportunities can emerge from existing skills, customers and business relationships, provided the numbers and market conditions make sense.

Through its weekly Youth Forum webinars, Co-op Bank continues to bring entrepreneurs and industry professionals into practical conversations about building businesses, managing money and developing sustainable income opportunities.

For young business owners, the next opportunity may not require abandoning the hustle they already have.