How to Start / Open A Paint Mixing Business Plan - Kenya

Paint Mixing Business Plan (Kenya)



Overview

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This quick guide focuses on the business of producing paint manually and in small scale by mixing different basic colors to produce a variety of tints or shades. This as opposed to formal commercial manufacturers who produce ‘original pigments do it more professionally, in large scale, brand and market aggressively. The informal production is an alternative to the formal producers in terms of color varieties available and at times prices.

The business , which is not unique to Kenya, has existed for over 30 years and was born out of the difficulties of getting exactly the right color ( tint, or shade) of paint for vehicles which needed repainting due to scratches, accidents, aesthetics or whatever reason. This still remains the main reason the business still exists to date. Other reasons include the search for cheaper alternatives by vehicle owners bitten by inflation and high costs.

However over the last couple of years the business has expanded such vehicles are not the only focus, any industry which requires painting is now a potential customer. This includes real estate and even furniture. The shift is not just a result of competition in the vehicle paints business but also the expansion of the other sectors. With all the construction going on at all levels there were bound to be consumers looking for less costly alternatives or very particular kind of colors. Compared to the vehicle market the real estate is yet to welcome the mixed paints in a big way.

The relationship between the paint mixers and the big paint manufactures has been more complimentary than outright rivalry. The mixers purchase their main raw materials from the big paint companies, who sell to them knowing they are helping reach a market they would otherwise have not. See because of the hundreds of vehicle color tints and the technology that existed before it was not commercially viable for the manufacturers to produce each of them. And it’s that gap that the mixers filled and still fill: they are able to mix just enough paint for one car. Small scale paint mixers also recycle and use tins originally used by the big manufacturers.

With new technology the big companies are now getting into mixing and selling custom colors in smaller quantities with the big focus being on the real estate sector, and to a lesser extent the vehicle industry. This has not threatened the informal paint mixers, at least in the short run. The mixers have the advantage distribution, location (very near garages, which makes them easily accessible), relationships with vehicle sprayers and mechanics and better prices.

The biggest difference between the computerized painting mixing systems used by the big companies and the manual mixing used by the informal paint mixers is that the former uses technology to identify tints then decide which are the ‘raw’ colors to mix in order to get that exact tint. The informal paint mixers more often than not use the naked eye to match the colors from a color chart then decide what to mix, the naked eye often has limitations and there are cases where the match is not exact.

Another difference has to be with the quality of the paint. At the very least quality is affected by ratios, storage and work environment and thus cleanliness of the paint and purity. Because of using manual methods to mix the paint sometimes there is no consistency; paint could be of an

extremely good quality today and the next day of quite a poor quality. A computerized machine is able to maintain the same standards day in day out.

Despite these setbacks the manual paint mixing business still thrives for reasons stated above and on the strength of a large and expanding pool of customers and experience.

The paint mixing business has not changed much over the years. The process is still very manual, and there is little adaptation of technology. Partially it’s a case of old habits dying hard, capital limitations, and if it works why fix it? Attitude. This will become clear in subsequent sections.

A Note on Car Paints

Before we get into the specifications of paint mixing it helps to have a general idea of how paint and colours work in the vehicle industry and the exact gap that paint mixers fill.

…Car manufacturers create a "standard" for every color that they put on their vehicles. The individual paint companies then have to attempt to match their paint to that "standard". The manufacturers are loyal to no particular manufacturer; they go strictly by price when deciding whose paint to put on their vehicles.

They will buy a certain volume of paint and when it's gone they will get new bids for more of the same color. Because of this a manufacturer might spray a number of cars with paint from company A, another thousand with the same color of paint from company B and so forth. This coupled with the fact that conditions in the plant will vary from day to day...conditions like temperature, humidity, how long the paint has been flowing through the system...and this will create variations in the color even in cars of the same year and paint code. The above is also the reason there is no such thing as Original Equipment Manufacturer (OEM) paint because no one can say sure for sure what brand of paint is on a car from a factory.

When paint companies create a formula to match the "standard" they will also create "alternate" formulas to match known variations in the paint on cars coming from the car manufacturers. Some paint codes will have many, many "alternates", while others may just have one or two. Because of the multitude of colours often it’s not commercially possible to produce each and every of the standard colours and associated alternates.

Also when car makers create a standard colour they assign a paint code to it. The paint cod is then stamped on various parts of the car. This is the code that professional computerized paint mixing systems use to look the mixing formula for that particular colour. In absence of computerized systems small scale manual paint mixers painters use colour chats to match the colours, not using colour codes but with their eyes. “

Operations - Small Scale (Manual) Paint Mixer

The main activity of a small scale paint mixing business is the actual mixing of the paint manually. Usually a mixer mixes the paint on order or premixes, packs in tins and waits for orders. Alternatively mixers also repack the primary single colour paint which they have bought in bulk, in smaller quantities and sell at a profit.

The general process of painting a vehicle involves three to four layers applied in a sequence:

Filler paste (if necessary) – These only are used to fill relatively shallow dents, small holes, depressions, creases and other such minor damages before painting.

Undercoat - These are designed to assist in creating a bonding layer on top of a car’s body to ensure the paint will effectively bond with the body of the vehicle. Undercoats also serve as a moisture deterrent to prevent against oxidation and thus rust. Undercoats are often black, grey or some other such colour.

Base coat / Finishing Paint – This is the colour of the vehicle, the actual colour that you want for the car.

Clear coat – This is applied on top of the base coat and creates the shiny smooth surface. But among the most important of a good quality clear coat is to protect the basecoat from fading due to the sun’s rays.

However this is an ideal situation and more often than not the process is not followed strictly. In most garages in Nairobi vehicle painters mix the clear coat with the finishing paint so as to minimize the work and maximize income. In the end how the painting is done depends on the cost and time with cost being the main consideration. So it is common for mechanics/ spray painters to only apply fillers, and a mix of the finishing paint and clear coat, there is little of the undercoat. All this influences how they make purchase decisions to buy paint. The basecoat is the paint often mixed by the paint mixers so as to get the desired colour.

When mixing on order say a mechanic will come and ask a paint mixer “ Can you get this colour ? “, he will have a part of the vehicle or show the mixer the actual vehicle. Rarely do mechanics or vehicle sprayers try to identify the vehicle colour using the colour codes found on the various parts of the vehicle. After ‘recognizing ‘the colour the mixer goes to the colour chart, spots the identified colour and notes which primary colors to mix so as to get the desired colours.

He tests a small portion in a mixing cup, and if accurate then mixes the required quantity in the mixing tins. The skill of the mixer is required in all this process. Everything from matching colours, mixing in right ratios, making sure the paint is clean, stirring and keenness all which affect the quality of the paint.

Once done the paint is poured into tins and sold to the mechanic. Depending on the quantities required the process can take as few as 30 minutes.

For those in real estate the focus is first on price then quality. The variety of custom colours demanded by the real estate is also minimal compared to vehicle industry.

Prepackaging is done on the basis of the more popular colours. These change with times and it helps to consult an experienced mixer on what are the fast moving colours at a particular time. In this case the paint is mixed, and then poured into containers of different sizes. The pre- packing also often involves repackaging the primary colours into smaller quantities.

Nowadays the painters label their containers with their business names or brand. The label is commonly a simple sticker with some graphics and which wraps around the tin.

Whether the transaction is on cash, credit or partial payment depends on the relationship the mixer has with the painter, mechanic or contractor.

How Computerized Paint Mixing Works

So in cases where the paint is not mixed manually and a computerized system used, how does this week. Here is a simplified summary of how a computerized painting system works.

There are various types of computerized paint mixing system. There are those which use recognized colour codes while others scan a sample colour and discover what basic colours it is made before mixing the right colours to match that of the sample. Others use both methods.

When using a sample the system uses a spectrometer which breaks the colour into component basic colours. The spectrometer sends a signal that is read by the computer which calculates the right rations of the basic colours. The machine then pushes the tints (basic colours) needed out of their cylinders and pours them out of the opening into the paint can waiting below. After the tint is added, the lid is placed on the can, and the paint is placed in a mixer. Metal clamps hold the can in place, and the machine shakes the can extremely fast for several minutes. If the paint is mixed properly then it’s ready for use.

Alternatively using the colour codes from a vehicle, you enter the codes into the system; it identifies the colour and then retrieves the necessary basic colours to be mixed to get an exact match.

For decorative paint a customer could come pin point the colour that she needs; the computer selects the basic colours required to be mixed so as to get the desired colour. The ‘basic ‘paint is pushed to the containers and then mixed thoroughly to get the required colour and quantity.

Different computer mixing systems have different capabilities and features.

Substitutes

Substitutes in this case have to do with where consumers buy paint and the kind of paint.

When consumers are not buying from the informal paint mixers they buy from established hardware stores for house or decorative paints. For automotive paints they buy from motor vehicle parts shops, official (say CMC Motors) vehicle dealer garages and mid level garages.

A couple of mid level garages have computerized paint mixing machines. Some buy the machines independently then partner with the big paint companies for supplies. The garages mix and spray vehicles as need be. Unlike the informal paint mixers who pack and sell to anyone, the garages only use the paint for their customers’ car.

Players in the Paint Industry

The painting business in Kenya can be divided into three main sub categories:

a) Big Paint Manufactures

These lead in terms of capacity, variety of products they offer innovation, market share, scale and method of operations. Among the major companies are:

-Basco Paints – This is the manufacturer of Duracoat (promoted by Marangi) and has a capacity of 22 million liters. It’s the second in terms of market share. Other than for Marangi the company is noted for innovations. For instance it has created scented (fragrance) decorative house paints, antibacterial range of paints and the Duracoat eco-friendly emulsion.

On the side and also as a way of winning a place in the hearts of painters the company runs the Duracoat Expert Training Center where painters are trained for one week examined and certified.

-Crown Paints – This is the oldest paint company in Kenya having been operational since 1958. And it’s the only paint company listed on the Nairobi Stock Exchange. It is also the market leader controlling about 65% of the paint market and has interests in Uganda and Tanzania. In addition to decorative and automotive paints it makes adhesives, wood finishes, road marking paints and industrial paints.

-Sadolin is another of the older paint companies having started in 1959. It has Danish roots and is a fairly well known brand.

-Solai Paints operates from Kariobangi Light Industries, and is perhaps the smallest of the big four. In addition to various paints it makes sealers for sealing cracks in wood, vanishes and gloss.

b)Medium Size Paint Manufactures – These are smaller in capacity and market reach than the major paint companies. Quite a number are unknown outside the painting industry though they make significant sales. This is because they have not been able to

compete with the bigger companies to pushes in terms of advertising and branding activities. Others seem to focus on supplying original paints to the small scale mixers. These include: Shivam Paint Industries Ltd, Gokul Ltd, Seweko Paints Ltd, Fastchem Paints, Spectra Chemicals Ltd, Pinnacle Paints

c)Paint Mixers – These small scale businesses that are the focus of this quick guide often use manual methods to mix paints. They don’t produce original paints rather they purchase primary already made paints, mix and then resell. Though many are small scale there are emerging medium scale mixers who are using technology and are more professional in the way they work and distribute their products.

Capacity, Size and Potential

There are no good local statistics to give a figure of the worth of the paint industry in Kenya. Partially it is because in addition to the formal companies there are many small firms that exist, some operating below the radar. Thus it becomes hard to get very accurate data. But logical estimates can be and have been made.

Still we can use some indicators to get a big picture of the size and capacity of the paint business:

Real Estate

According to the Kenya National Bureau of Statistics (KNBS) the building and construction sector grew by a rate of 13.1 % when compared to a rate of 5.8% in 2013. Of course not all the growth can be attributed to real estate but a significant part of it. But even without the statistics a casual look shows the growth of the real estate.

Motor Vehicles

No of people employed in the Wholesale and retail trade; repair of motor vehicles and motorcycles has increased from 181500 in 2010 to 212140 in 2013

The value of motor vehicle parts and accessories imported in Kenya increased from Kshs.26 billion in 2010 to Kshs. 44 billion in 2013

Newly registered vehicles increased from 196,456 in 2010 to 222,178 in 2013

Crown Paints

-Has a capacity of 2.3 million liters per month.

-In the first half of 2015 revenue increased by 15% to Kshs. 3.3b from Kshs. 2.8 billion in the same period in 2014. Though profits dropped to Kshs.25 from Kshs.109 million the previous year it was attributed to cost of expansion and relatively poor business in Tanzania

Other Figures

In 2014 Frost & Sullivan, a global market research firm, placed revenues from paints and coatings in Kenya and Tanzania markets at US$ 123.3 million. The firm projected that the revenues would rise to US$ 188.5 million by the year 2018.

Licenses

Contrary to what could be expected, there are no special licenses required to run a small scale paint mixing business. The main licenses are:

Single Business Permit – This is issued by the County Government. The average cost is Kshs. 15,000 per annum but the exact cost will depend on the size of the business.

Business Registration – If you want to operate more formally, open bank accounts, chase paint related contracts, perhaps grow and brand your products better then registering your business is important. You require about Kshs. 30,000 for the whole registration process. The price could reduce to about Kshs.20, 000 if you are doing it yourself rather than using a broker or lawyer.

The reality of the market is that there are many paint mixing businesses which operate without any form of license. Still it is important to at least get the single business permit to avoid harassment by county officials .If you are looking to be in the business in the long run and grow then have a registered company eventually.

Equipment

The major equipment required for a manual small scale paint mixing business is:

Mixing Containers

The containers are used to pour in the paint during the mixing process. Often tin and plastic containers of different sizes are used, 0.25 liters, 0.5 liters, 1 Liter, 4 liters, 20 liters or bigger depending on the quantities required. You can get the containers from some hardware shops and at Jua Kali past Muthurwa next to the Country Bus Station, Gikomba, Kariobangi Light Industries and many other market places.

Mixing Sticks

These plastic or wooden sticks are used to stir the paint when mixing. They are available from major hardware shops, and carpenters located in areas with significant numbers of paint mixers. In the hardware shops the sticks cost an average Kshs.900 for a box of 100, 12 inch sticks.

Mixing Chart – The chart helps the mixer to know which colours to mix in order to get a particular result. The chart is provided free of charge by the bigger paint companies. You can also get the charts from large hardware shops.

Mixing Cups – They are used test the paint before mixing in large scale. These cost an average of Kshs. 20 each.

Funnels – These can be disposable or non disposable and are used to transfer paints from mixing tins to packaging tins.

Other items include overalls, gloves, a chair to sit on, a table and miscellaneous items for the work place.

Primary/ Basic Paints – These are the core raw materials in the business. Mixers purchase the paints from the big and medium sized paint companies. The terms will vary from one company to another. But ideally the minimum purchase is 50 liters; some companies will insist you meet certain purchase thresholds within a month, while others will insist you open a buyer’s account with them and make a deposit. The paint companies treat you like a wholesaler. Remember in addition to mixing you can pack the raw paint into smaller quantities and resell even without mixing. Some of the companies deliver paints to the mixers premises.

Basically you can purchase paints from any medium and large paint manufacture. (See paint manufactures list below)

Tins – Tins are commonly recycled from those used by developers, mechanics or any other source. Each tin costs between Kshs. 10 to Kshs. 20. The tin is crapped to remove the branding of the original manufacturer. Alternatively you can purchase new tins, especially if you are starting on a larger scale. One of the leading Tin Manufacturers is:

Tin Can Manufactures Ltd, Nanyuki Road, Industrial Area, Nairobi, 020 2444875, 0722 209648 , [email protected]

Competition and Differentiation

In Nairobi there are at least 317 small scale paint mixers, of various sizes. None can be said to be dominating, and even the most established of the small scale mixers use manual methods and run the business in what can be said to be a ‘jua kali’ manner. . This does not imply that

they are not making profit, many are. Yet from conversations you hear many are content with what they are getting, there are no proper plans to scale. Partially this is because revenues have been increasing in the last four years.

Besides for so long it was not clear what the next level of growth was, other than perhaps having an additional shop. But that is gradually changing; you will now hear of mixers talking of plans to distribute to hardware shops and other outlets, some talk of computerized processing and even branding. The stereotype of paint mixers are of people of low education, and a very casual attitude; more like touts than hardware owners. That is not wholly the case some are very well educated, professional and focused, but as expected there are many without the attitude and skill to grow.

On the face of it there is no difference between one paint mixer and the other, but in reality there are, and these are the attributes used to differentiate and compete. These include:

oQuality

o Price

o Location o Marketing o Cost

These will become clear below.

Strengths of Existing Players

Skill

On the face of it mixing paint could seem a straight forward exercise as long as you know which colours to mix go get a particular result, but there is an art and skill to go with it. Knowing the quantities of A to mix with B to get a particular colour, viscosity, how to stir, or even what is a no, how long to mix or wait after mixing, the effects of air, tricks and so forth. This kind of information is gained overt time from experience, lots of trial and error, customer feedback and colleagues.

Those who have been in the business longer will tend to have more of this knowledge compared to a newbie. This does not imply that a new comer can’t learn the art, they can, but the real knowledge comes with experience. This is the reason that most new paint mixers will have an experienced hand working for them. Alternatively it will be junior mixers establishing their own businesses.

Understanding the consumer

Knowing what consumers want in terms of quality, prices, purchasing habits , how they can be tricked , what consumers look for and all that about consumer habits. Although this information can be gotten from research again it takes countless interaction with consumers to know exactly what they want and to be able to predict them. This also helps identify the gaps in the market. Once more as a new comer the way to accelerate the process is to employ or partner with someone who has been in the business longer.

Customer Relationships

It takes time to build a network of customers big enough to sustain your business profitably. Whether the customers are mechanics, contractors or vehicle or house owners themselves it may take a little time for them to trust your product, become repeat customers and recommend others to you. As much as customer loyalties are not absolute there is a higher risk in buying paint from a mixer who has not been tested. There is a crude form of branding in the business, and in some places you will hear mechanics praise a particular mixer and dismiss another. Clever marketing helps overcome this hurdle for small business.

Location

Ideally a paint mixing business should be located near the biggest pool of potential customers say garages or in areas which enjoy location economies: where there are many paint mixing businesses, and the location has become known as the “paint mixing area”. Some of the existing businesses have had the advantage of operating from such places. Sometimes premises in such locations are competitive and a newcomer might not find space there.

Branding

Like noted there is a crude form of branding in the business. This is tied to the quality of the mixed paint and personal reputation. Branding is also by fixing labels to the mixed paints. A mixer who has been in the business longer could be easily recognized compared to a new comer who is not differentiated in any way.

Weakness of Existing Players

Manual Operations

Almost all small scale painters use manual methods to mix the paint. Partially this is because it works alright, the costs are low (no power costs) and when small quantities are required manual mixing is just okay.

While indeed it works fine a weakness of the manual system is that it could lead to lack of constituency where a mixer produces great quality paint today and low quality tomorrow. Sometimes using a manual method does not produce the exact colour a client wants

Manual mixing also reduces capacity of paint that a mixer can make. Part of the problem is lack of affordable intelligent mixing machines that can be used the small scale mixers.

Lack of Consistency

Adding to the above most small scale paint mixing businesses lack any form of quality control or strict rules to be followed when mixing paint. They operate in a very casual manner, and whereas they could get it right there is always the chance the paint mixed today won’t be of the same quality as that mixed yesterday.

Capacity

Due to the manual operations, low capital and at times focus only on the immediate market the mixers lack capacity to mix higher quantities and qualities of paint.

Marketing

Though there are some efforts to brand and market there are also many small mixers who are not doing anything to win customers or seriously establish brands. Marketing is largely by personal relationships and taking advantage of location economies. Distribution of products is often done within the immediate market and there is not the kind of marketing innovation that will help win other informal markets.

Opportunities

There is room for more small scale paint mixers. To survive you don’t necessarily need to reinvent the wheel but just follow what exists in the market. Still there are exceptional opportunities that exist:

a)Computerized Paint Mixing

One of the biggest complaints among customers who buy mixed paints is the colour does not exactly match what was they wanted. Sometimes you will see one section of the car painted but on closer look or even casual observation you note there is a difference in the tint: it’s not the exact match but the nearest match.

The mismatch is largely because the human eye can only do and see as much.

There now exist technology which is able to scan a sample colour, accurately identify the colour, and mix the right primary colours to get the exact colour. Other computerized systems are able to match colours using the colour codes found on vehicles.

There is some of this happening but not in a big independent way. Some of the big manufactures like Basco Paints and Crown paints have partnered with some hardware and garages with computerized paint mixing machines so as to offer a variety of colours matching the exact needs of the customers.

There is opportunity in running an independent computerized paint mixing business. Customers will largely be vehicle owners who will purchase the paint and take to their spray painters. Alternatively is to establish a specialist painting garage which uses a computerized paint mixing system. One of the reasons motorists take their vehicles to

downtown garages is because it’s less expensive than in more formal garages. The few formal garages with computerized paint systems tend to charge relatively high fees.

There is a big market for a standalone computerized paint mixing facility in Nairobi and other major towns especially focusing on the car industry. A professional computerized paint mixing system will also help solve other major problems among mixed paint customers; that are constituency and quality. Quality is big complaint with cases of peeling paint, cracked paint, paint which lacks the shine that it was intended to have and such others. This is partially due to lack of skill and tools to mix paint properly. This can be solved by a professionally manned computerized paint mixing system.

The demand for mixed paint is there and will exist for the long run. The opportunity is in making computerized paint mixing accessible, affordable and known by as many of the intended customers as possible. A proper marketing could involve a website where customers enter the colour codes of their cars, quantities they require, packaging (say aerosol ready to spray), make payment and then the center mixes, delivers or the customer picks. Of course it takes time, hard work and good strategy to earn brand recognition but there is a huge opportunity in this.

b)Marketing and Branding

Like stated there is a crude form of branding that involves sticking labels tins and naming the mixed paint. But more or less that’s where it stops. There are no concrete efforts to push the brands to key influencers such as mechanics or vehicle owners. Again this is for lack of strategy, the fact the businesses are breaking even and make what owners consider to be okay income.

Also this is because the market is in such a way there are many small players each with its “ own “ customers .Thus on the face of it there is no much room to establish and push an own brand. But in reality there is. One way is by advertising on vernacular radio stations, using promotion materials and presence.

c)Formalization

There is room to start small, formalize and get into the mainstream. Although this involves more formalities like authorizations from Kenya Bureau of Standards (KEBS), National Environment Management Authority (NEMA), Kenya Revenue Authority (KRA) and other organizations it also means that the products can be available in more shops, places. Consumers will also trust you more.

Challenges of Starting a Paint Mixing Business

(Barriers To Entry)

Insufficient technical and market knowledge

Mixing paint is not rocket science, still like any trade it requires particular knowledge which can be acquired from experience or learning. When starting, you need some of this knowledge, one to protect yourself from any crooked employees, and two to be able to innovate, and to maintain standards.

You can acquire the knowledge by apprentice, hiring very skilled and responsible staff, or even paying some little money to have an experienced hand teach you. Basic knowledge can be acquired within a day but the nitty gritties will take longer.

Understanding the market takes time and whereas market research helps the real lessons are acquired from experience.

Location

Getting a good location where you can set up your shop within an area where you can easily access customers could be an initial challenge. Ideally you need to be near garages or places with location economies. You need to have your ear on the ground and actively such for space. One mixer does it from his vehicle and survives. Another way round this is to set up a little further but have relationships with mechanics so that you can deliver on order.

If you are supplying to real estate contractors you can set up and actively market your products not just by waiting for customers to come to you but going to look for them. This is possible but requires a lot of work and patience.

Customer relationships

It takes time to win repeat customers that sustain and grow your business. You can speed up this process by offering advantages in quality, price, and customer service or cross selling.

Revenue

Below are some average cost of production / buying price and average selling prices of paints and related products.

Item

Quantity

Average Production

End Product (Mixed

 

 

Cost(Kshs)

Paints or

 

 

 

Repackaged single

 

 

 

colours) Selling

 

 

 

Price

Packaging Tins

Recycled between

1,000 ( Prices could

 

 

100 - 150 pieces, in a

go slightly higher

 

 

gunia

depending on the

 

 

Local purchase from

supplier)

 

 

local vendors

 

 

Paints for houses and

4 liters

800

1,200

furniture’s

 

 

 

For vehicles;

 

 

 

Undercoat paints

1 liter

300 to 320

450

Finishing paints

1 liter

450

600

Red oxide

1 kg

1200

1500

Body filler

1 kg

1250

1400

 

 

 

 

Masking tape

1 dozen of 10 pieces

300

50 per piece

Sand papers

1 dozen of 10 pieces

250

40 per piece

 

 

 

 

Margins

20% to 40%

Average Purchase Per Customer

For vehicles : 3-5 Liters

 

For real estate contractors: 12-16 Liters

 

Carpenters : 2 Liters

 

 

Average Monthly Revenue ( Manual )

Kshs.160,000

Highest Revenue Recorded (( Manual )

Kshs.360,000

In producing mixed paints the following are the main costs:

Tin - A tin costs between Kshs.10 to Kshs.20.

Labels – Cost between Kshs.20 and Kshs.25

Labour - A mixer is paid an average of Kshs.700 for the whole day he has been working irrespective of the liters he has to mix. This could be higher depending on the experience and demand of the mixer.

Cost of the Paint - The cost of the paint will depend on the types of original paints being used and the quantities that are needed. But it amounts to between 60% and 80% of the total cost.

The above costs are average; the precise cost will depend on the skill of the mixer, if the mixer is using any tricks like mixing water or kerosene with the paints, and the quantities that are required.

Likewise the selling prices are averages. Prices could slightly vary from one mixer to another. Prices are set randomly though there is what could be described as market prices.

Revenue in the business is influenced by:

Quality of the paint – This is two sided. If the quality of your paint is great then you will get recommendations, repeat customers and a reputation that helps you increase sales and thus revenue. On the other hand you could produce poor quality paint by using less of the required costly original paints and in its place tampering with solvents. This way you sell the paint at the same price, but your costs are lower meaning you get higher margins.

This is a short term strategy, you can survive but it will be difficult to grow. Reputations in the business spread fast. Nonetheless if your paint is of poor quality and are you are in a good location you can survive by capturing new customers, but no repeat customers. Still it’s a fact that there are some skilled mixers who are able to produce ‘quality’ paint despite mixing with other solvents. These end up making higher margins.

The best strategy is which looks beyond immediate profits and long term growth are based on great quality. This is the strategy that ensures more revenue in the long run.

Location of the business – If your business is located where there are many of potential customers then you are likely to record more sales. This as opposed to locating where customers have to look for you. Locations known as paint areas also help to attract a lot of potential customers and your role is just to win them. In Nairobi such locations include parts of Kariobangi, Kayole and Ziwani.

Source of supplies – Suppliers who are the big and medium sized paint companies offer different prices. There are those who will ride on their brand reputations to sell at higher prices while others, especially the medium sized companies, will try penetrating the market by offering relatively lower prices. It’s debatable whether the quality is the same. Still if you purchase at lower prices then you will enjoy higher margins keeping everything constant.

Your Price - There are no fixed prices within the business, and it common to find price differences of between Kshs. 10 and Kshs. 100. Keeping costs constant the higher the price the higher your margins and vice versa. Like we have mentioned there is a lot of room for negotiations, and your skills at this also determine how much you make at the end of the day.

Your Cost – How you manage your costs will determine your margins. If you are able to keep your costs low without compromising on quality then it means you will have higher margins, keeping everything constant.

Cash Cycle

Most of the transactions in the paint business are in cash: a customer pays the mixer and gets the paint. However there are cases where payment is delayed for a few days say five. This is more so the cash where a vehicle owner has contracted a mechanic to work on everything and

0

then he will pay when he is done. In such a case a mechanic could approach a mixer to buy paint on credit then pay when the owner clears the bill.

The cash cycle in the business is short: it takes only a few days for the bigger percentage of the stock to be converted to cash.

Breakeven Point

The break even for the business is averages 10 months. This of course will depend on a number of factors such as your location, quality of products and pricing, competition, marketing and distribution. It helps to have a long term view.

Cross Selling

It’s possible to be a paint only shop, still many small scale paint mixer tend to include the basic items used in spray painting cars. These include masking tapes and sand paper. The masking tape is used to attach newspapers on cars so as to cover windows while spraying. The sand paper is used to scratch off the old paint before repainting. Other items include body fillers.

Critical Success Factors

-Quality

-Location

-Relationships

-Pricing

-Good staff

-Marketing

-Customer Service

Management Style

Ideally this is a business you should manage personally. This is so as to monitor sales, quality, build the necessary relationships and protect against being swindled by dishonest workers. A worker could dilute the paint, use wrong rations, sell and not inform you or any other trick. Initially it’s good to be there full time, and then perhaps leave trusted staff

Capital

 

Item

 

Cost (Kshs.)

 

 

 

 

Stock - (approximate 200 liters of paint)

110,000

 

 

 

 

Equipment

 

20,000

 

 

 

 

Licenses

 

15,000

 

 

 

 

Rent

 

30,000

 

 

 

 

Working Capital

 

45,000

 

 

 

 

Total

 

215000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The above is an estimate of capital. Actual amount will depend on factors such as your scale, suppliers and location.

Consumer Behavior

Customer can be divided into various but entangled categories:

-Those looking for a cheaper but quality alternative to “ formal’ branded paints

-Those looking for particular shades of colour

-Those in the automotive industry

-Those in the real estate industry

-Those in the wood industry

Motor vehicle owners looking for particular colour shades are the biggest customers. They purchase directly from mixers but often than not the mechanics and vehicle sprayers have a big say in the purchasing process. Some customers leave the whole exercise to the mechanics.

Customers looking for a bargain are the next biggest group. Carpenters and others in the wood industry embraced the mixed paints before the real estate industry. In the real estate contractors and foreman have the biggest influence when compared to owners. Those building mid and low level rental houses form the biggest of the customers. Consumers building residential houses for themselves tend to go for recognized branded products because of the expected quality and finish.

When car owners themselves are purchasing the paint they are more concerned about the quality of the paint, and whether the paint is the exact color they want. Of course they expect mixed paint to be cheaper than branded paints.

Mechanics will be more sensitive to prices because they want to “eat”, to make something extra from what the owner has budgeted. At times the mechanic will suggest or lead the car owner to a particular painter; the unwritten agreement is that if the sales goes through then the mechanic gets a cut, alternatively the mechanic will have quoted a higher price than the usual price, and in that case he gets the extra amount.

Car owners will be looking for a sign to help them trust you; they will depend so much on references, your conviction when explaining and guarantees though verbal (I tell you if it has faded within 6 months come and I will repaint it free) .At the end if your product is of great quality then you will get references to an extent that you can sell at a premium.

Customers want to purchase the paint as near as possible from where their cars is getting painted to avoid the hustle of carrying paint all over unless they can’t get good quality within the neighborhood.

On the other hand want to remain within the base all day and will often seek to buy from within...

If you are not within the garage locations or in areas where you enjoy location economies it does not mean that you can’t get customers but you have to work harder to win customers.

Don’t wait on chance. Beyond things like signposts you also need to reach out to mechanics and contractors in your area; have some mechanics as champions within your location that will create buzz about your paints and be ready to deliver if it’s within reasonable distance.

More important make the extra mile that customer goes through to reach you when compared with the competition worth it.

One way to do this is to give an illusion of scale, professionalism and variety while still working with average market prices. A bigger workshop, quick turnaround, an exceptional understanding of how painting and paint works. Customers are likely to trust you if they know you are very well versed in your trade.

Among individual owners loyalties are not absolute; after all they don’t purchase paint each and every day. So for that one time in a year they will look for the best deal in quality, price and service. And from that one experience they will carry an impression that they will use to recommend you to others.

For the mechanics and contractors they are more loyal to particular mixers, though their loyalty is also not absolute. Their loyalty originates from personal relationships, their ability to cut deals with the paint mixer, a tested assurance of quality, credit and at times price. Use these to win them over.

Manpower

Paint mixers and other casual staff required for a paint mixing business are found around garages and in locations with many of this kind of business. The market has matured and it’s relatively easy to get skilled paint mixers.

Pay is on a daily rate with a mixer charging between Kshs. 600 and Kshs.1000 per day. The average is Kshs.700 per day. This is irrespective of the liters of paint they mix within a day. Casual workers charge between Kshs. 300 and Kshs. 500 a day.

Some Paint Manufacturers

 

Paint Manufacturer

 

Contacts

 

 

 

 

Crown Paints

 

0703 333 777 www.crownpaints.co.ke, 020

 

 

 

 

6533604

 

 

 

 

Sadolin Paints

 

, Jirore Road, Off Enterprise Road, Industrial

 

 

 

 

Area

 

 

 

 

Fastchem Paints, Kariobangi, Nairobi

Cardinal Otunga road, Kariobangi, Nairobi,

 

 

 

 

0723299397

 

 

 

 

Seweco Industrial Coatings Company

Off Komarock Road, 020-784247

 

 

 

Novel Paints

 

Garage, Road, Off Dar es Salaam Road,

 

 

 

 

Industrial Area, 0708 114 276, 0725 710, 446,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[email protected]

Alfa Coate Industries, Nairobi

Kariobangi Light Industries Off Outering Road

Apex Paints (K) Ltd, Nairobi

Nanyuki Road, Nairobi, 020-559951

Basco Paints

North Airport Road, Embakasi, 020-823555

Galaxy Paints and Coatings Ltd

Kitui Road, Off Kampala Road , 020-531269

Solai Paints Ltd, Nairobi

Kamunde Road, Off Outering Road, 020-

 

3536825

Pinnacle Paints Ltd, Nairobi

Spine Road, 020-780940

Decorative Paints Average Prices (Nairobi)

Paint Brand

Quantity in Liters

Retail Price (Kshs.)

 

 

 

Crown

1

680

 

 

 

Duracoat

1

650

 

 

 

Basco

1

300

 

 

 

Solai

1

350

 

 

 

Contractor

1

500

 

 

 

Ideal

1

350

 

 

 

United

1

350

 

 

 

Shamco

1

350

 

 

 

Apex

1

500

 

 

 

Unity

1

350

 

 

 

Beaver

1

400

 

 

 

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