How to Start / Open A Plumbing Hardware Retail Business in Kenya

Plumbing Hardware Retail Business Plan (Kenya)



Introduction

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This quick guide looks at the business of selling plumbing items. Usually plumbing items are sold in general hardware shops or specialist plumbing hardware shops. This guide focuses on the specialist shops.

Plumbing like most other hardware business is a function of the real estate sector. And as much as the real estate has slowed down a little bit (March2018), generally there is still enough demand to profitably run a successful plumbing business. Nonetheless success will depend on among other factors the specific characteristics of your location and the ability to seize local opportunities.

Why Specialize?

In terms of set up a plumbing hardware shop competes with a general hardware shop. But why would a customer opt for the plumbing hardware rather than the general hardware? There are several reasons:

Knowledge - The specialist plumbing shop portrays knowledge. Skill. The specialist is supposed to know more about plumbing and plumbing equipment than the shop selling everything. It’s not always necessarily true but perception counts.

Variety -The plumbing hardware is expected to have a wider variety of equipment as opposed to the general hardware shop. While the general hardware proprietor might spread her budget to have a little of everything, the specialist concentrates all her budget on plumbing and thus often can has a wider variety.

Market Strategy - Specialization is a way of differentiating. In some locations the number of general hardware shops almost rivals those of grocery shops. A specialist plumbing shop just like one specializing say in tiles or electrical items is able to have stand out from the crowd. However we hasten to add that even the number of plumbing hardware shops is on the rise because of all the above reasons. Competition is expected to continue rising.

Plumbing Shops Set Ups

Plumbing hardware shops set ups take some very basic forms which include:

“Kiosk” Shops – These are shops located in kiosk size spaces. This does not necessarily mean that they are poorly stocked. The nature of plumbing items means that even as shop as small as 4 meters by 4 meters could be holding stock worth thousands of shillings.

An entrepreneur will pick this kind of premises because of limitations in availability of space. Economies of location also play a role. In some towns there are sections say streets well known for having plumbing shops.

Such streets could be crowded such that there is no space for bigger shops leaving the entrepreneur with no option but to grab the smaller shops around and enjoy the foot traffic in the area.

 

 

 

 

For others it’s a business strategy. Why go for a big shop while a small one can serve you equally good while costing less? The biggest hiccup with the kiosk shops is that they limit the kind and quantity of products that you can stock. For instance in such a space it’s not possible to stock items like bathtubs which take up a lot of space , consume space could be slow moving of course depending on who is your target market. And any space can only hold as much.

Large Shops –These are the antithesis of the kiosk shops. They have space and with products very well displayed such that the customer does not have to guess if really the shop has a particular items. By virtue of their size they can have a bigger and wider variety of stock. Hence they could accommodate bigger items like tanks and bathtubs, depending on who the target market is.

Entrepreneurs will go for such large spaces either because their capital allows, they want to stock the ‘bigger’ items as per their target market, or it’s the kind of space available. At times a big shop is a business strategy; shock and awe. Get into a market dominated by small retailers in a big way, attracting attention and with it customers and profits.

In markets dominated by small, big could give an impression of wider variety and better prices. At times this strategy works pretty well. But obviously requires more capital and ability to meet expectations.

Between the kiosks and large shops are the medium size shops.

Specializing Plumbing Shops – These are shops that specialize in one or a few types of plumbing items. For instance a shop could specialize in fittings only or just sell sanitary items, tanks or any other item. Specialization is often a business strategy either to differentiate or fulfill a need in the market.

To illustrate it often happens in some smaller markets there is no plumbing shop stocking sanitary items. Thus an entrepreneur sets up a shop specializing in sanitary items. This will work if there is really a gap in the market that needs specialization, like the sanitary case above. Otherwise for the common items consumers prefer to buy at least the basic items from one shop, unless if by specializing you are able to offer variety and price advantages that the competition does not.

Choice of Set Up

Consider the following when choosing your set up:

Local Market – Think about what is happening in your local market. In an area with established economies of location it would work fine even if you have a small shop. There is enough foot traffic and reputation to make the shop profitable.

In some areas with economies of location small shops cost more in terms of rent and goodwill than even the bigger areas with less location economies. An extreme but very well known example Nyamakima area in Nairobi.

 

 

 

 

Capital - Your capital will also determine the set up. A larger shop will require more capital to stock otherwise if it’s big and poorly stocked then it will give customers a bad impression. A large shop comes with higher customer expectations.

You may also require higher rent. If the location you target is populated by small plumbing shops and where there is demand, and space and capital is available then a large shop like we pointed could be a good market entry strategy. Yet you should think beyond the market entry into sustaining the excitement and foot traffic you attract by your large size.

Specialization in one or a few items should be dictated by the market. And here is where you have to be keener because if you get the product wrong then you will either have few sales or be leaving money on the table.

If in a moment of rush you decide to specialize in pipes but without the necessary fittings then as much as your customers can purchase the latter elsewhere they could have purchased from you . And then for how long will they be comfortable with purchasing pipes from you then going to look for fittings elsewhere? This could work if again if you offer such price, variety or other advantages that it doesn’t matter what you don’t sell. The extra effort of shopping for the fittings elsewhere becomes worth it.

Think: Market Structure – Need – Capital

Target Market

Main Customers

Generally plumbing items are targeted at two main groups of consumers:

a)Those constructing buildings and are laying plumbing works from zero.

b)Those who already have constructed houses and are seeking plumbing items in order to conduct repairs of sorts.

The needs of both these groups will slightly differ. Those laying plumbing will purchase a bigger quantity and wider variety of items than those conducting repairs. The latter could purchase just a single item and then only once in a while.

When setting up its preferable to have the construction in mind. Whereas there are a few shops which stock with repairs in mind, the fact is that if you are targeting construction you can satisfy the repair market without a sweat, the vice versa is not necessarily true.

The shops that tend to target the repair have a limited variety of items, and then those that are likely to damage like taps and fittings.

The Construction Purchase Process

In construction the purchase process takes two main forms:

 

 

 

 

a)Where the owner is responsible for the purchase of items.

b)Where the plumber is responsible for the purchase of the items

In the first case the owner in consultation with the plumber settle on plumbing items that are needed for the building. With the list of items the owner or equivalent such as project manager goes to the plumbing hardware and buys the products

Related to this is where now instead of the owner going on his own he is accompanied by the plumber. The role of the plumber is to identify the items are the correct ones and the price is right.

In the second case the plumber is solely responsible for purchase of items. The plumber could either have been given the contract to do all the plumbing or simply the owner trusts him. In either case the plumber buys the items. (This also happens during repairs)

Whereas both scenarios happen the most common is where the plumber buys the items. And even in situations where the owner himself buys the items more often than not he will have consulted a plumber. This means that plumbers will be your main customers. Make them happy.

What Plumbers Want

So what exactly do plumbers want?

Great prices - Plumbers want fair and actually low prices. In many cases where the plumber is buying items on behalf of the owner they will have inflated the prices with the aim of making some profit. Hence if your prices are high you will wipe out the extra shillings that they hope to make.

This is irrespective of whether they are buying for the owner or for their own use. Fair prices means that the plumber recognizes that some items are relatively expensive because of brand strength or quality, but they want the costly item to fall within the market rate, which often they are very aware of.

Flexibility - Flexibility here is in two ways. One is to have no minimum quantities, such that if a plumber needs a single pipe and nothing else you can sell it to them. There are plumbing shops that were in a habit of bundling items together such that if say a plumber wants to buy a single pipe they would insist on him buying an accompanying fitting say a tee.

We talk about in past tense because competition has more or less killed this habit. However they are still a few shops which in a subtle way try to create some unnecessary minimums or other such barriers. These are disliked by plumbers.

 

 

 

 

Two, flexibility also means the ability to ‘strike deals’ with the plumber. Say a plumber knows that on a certain day he will come to buy items accompanied by the owner. He approaches you and asks what your prices for various items are. Then he adds some extra amount on each item and says “I will be coming with my boss, give him these prices and the difference is mine (or we share).”

Plumbers appreciate shop owners who can strike such ‘deals’. The deals come in many forms .A plumber could for instance ask for a receipt that shows a higher price than the actual cost of the item so that he squeezes the extra from the owner.

Of course these are ethical questions and whether you can do the deals or not depends on your moral standing. Nonetheless the fact is that a huge number of plumbers will prefer a shop that can collaborate when need be.

Good Customer Service - Plumbers like most people want good customer service. This could be from simple habits like basic politeness to more advanced actions like packaging. Great customer service at times is able to mask any other weaknesses that the shop could have. More important its able to increase spend and repeat customers.

‘Non – Plumber’ Customers

Owners or what could be called amateur buyers too have their needs.

To start with is assurance, knowledge and some sort of advice. For as much as amateurs might display general product knowledge they lack the details only a pro can be aware of. They might not know the reputation of various brands, or what brand or price options are available for a particular product. They either want to be told that the choice they have made on their own is the best one. Or if it’s not the best they want to be advised as to which is better without being patronized. You know more like reasoning with them.

Amateurs also want good prices. The amateur is more likely to bargain harder because he thinks you have a hint he is no expert and want to take advantage of him. With the amateurs a big part of the purchase process is psychological; win them and they too will keep coming back and even refer their friends.

In summary your core customers will be plumbers. Build great relationships with them. Amateurs will also form a significant though not major part of your customer base. Do also understand their needs and seek to fulfill them in the best way possible.

 

 

 

 

Stocking

Overview

In broad classification plumbing items are not more than fifty or so categories. However each sub category has tens of items. Whereas it might be possible to stock all the items, well if you have sufficient capital, it might not necessarily make business sense. No need to stock what your market does not need, you would rather use the capital to have more of what is in demand.

Still as much as every item might eventually get a buyer you want to stock what will move fast not the item that takes six months to sell. When stocking think your target market and maximizing returns from the capital you have.

There are items which are regarded as basics. Items which will sell relatively fast, irrespective of your location or target.

Main Categories of Plumbing Items

First let us explain more about the various categories of plumbing items. Let’s take a simple residential house. The main plumbing works will consist:

Pipes to convey and distribute water from the source to the various parts of the house. The source here could be a county government connection, a tank or any other. Once the water is in the house it needs to be distributed to the various sections.

Kitchen plumbing works which could include taps and sinks.

Toilet plumbing works which could include bowl and cistern.

Bathroom plumbing works which could include shower, taps, bath tubs, soap dish towel holder.

Corridor plumbing works which could sink and taps.

Based on the above let us go into a little more details to help you understand the various main items and appreciate the width of plumbing items.

Pipes

There are four main types of pipes commonly used in Kenya:

PPR Pipes (Actually PP-R) – These are the ‘modern’ kind of pipes made from a material known as Polypropylene. Think of them as the ones which replaced in some areas, or gradually replacing in others, the previously commonly used iron and plastic pipes. Often the PPR have a distinctive green colour. Presently they are the most widely used type of pipes and hence there are many plumbing shops which only stock PPR pipes.

 

 

 

 

PPR pipes are preferred for a number of reasons. They are light compared to say iron pipes, they also corrode and leak less. They are also cheaper and easier to work with requiring minimal skills and relatively shorter time.

In addition they are also durable both in high and low temperatures .They can be used for both cold and hot water. In the latter case they cause very low heat loss compared to iron pipes however they get fragile in very high temperatures. You can start with only this kind of pipes.

G I Pipes (Galvanized Iron Pipes) – These are the once very common iron pipes. Galvanization is a chemical process that aims at reducing corrosion. For many years they were the default pipes. Presently they are more expensive and not necessarily better than the PPR pipes. Comparatively they are harder to work with by virtue of the material used to make and their weight.

Nonetheless the GI pipes have their own advantages. They are longer lasting; they are also tough and survive many conditions. The galvanization helps protect the pipes. They are still preferred for large commercial buildings and those in remote areas. There are many plumbing shops which don’t stock the GI pipes partially because of demand , and unlike PPR pipes they cannot be folded into a roll thus require bigger shopping space. You can stock the GI pipes after gauging the local demand.

CPVC & PVC Pipes – CPVC stands for Chlorinated Polyvinyl Chloride. They are an improvement from the PVC (Plastic) pipes. PVC files are gradually being pushed out of the market. Often CPVC they are yellowish white in colour.

 

 

 

The disadvantage with CPVC is that it cannot withstand very high temperatures. It also expands under high temperatures and sometimes this affects the flow of water. They are the least used of pipes.

Waste Pipes –These are used to transport waste for example from the toilet. Often they will be orange or grey in colour and then of a bigger diameter.

Fittings

Fittings are the bells and whistles that are used to make the pipes function. Think of them as ‘joiners.’

Fittings include items like:

Sockets

Elbows

Bends

Tees

 

 

 

Union

Reducers

Adapters

Fittings are specific to the kind of pipe such that PPR will have its own PPR specific sockets, adapters and all else. CPVC the same. Waste will have its own set of fittings and so will G.I.

More so each of the fittings will come in different sizes to match those of the pipe. Thus just like the pipes there could be fittings from 1 inch all the way to 10 inches depending on the kind and purpose of pipe. This way for each kind of fitting there could be up to 12 different sizes or even more.

Kitchen Plumbing

 

The main plumbing items in the kitchen are:

 

 

 

Sinks – And these also come tens of designs

 

and shapes. For instance they could be single,

 

single bowl – single drain, double bowl –

Double bowl – Double

single drain, double bowl double drain. They

drain

could be of various materials and brands.

 

 

 

Sink Waste – These are used to manage the

 

waste from the sink. These too can be

 

classified by the size, material say plastic or

 

metallic. The metallic can further be classified

 

by brand say Aramix, Brimix and so forth.

 

 

 

Bottle Traps – These too are for managing

 

waste. They too come in different sizes and

 

brands such as Viega, Alphine and so forth.

 

They could also be single or double.

 

 

 

Taps – These as we will see later come in

 

 

 

 

tens of designs and brands.

The above is just a sample, there are many more kitchen plumbing items.

Bathroom Plumbing

Among the plumbing items found in the bathroom are:

Shower head – These ‘spray’ water from the shower pipe. These too are a wide variety based on shape, material and brand. For instance by brand they could be Cobra, Brimix, Eurobath, Tapis and more.

Telephone shower – This is the shower head with a cord extension which allows you to spray water to various parts of your body. This too comes in various sizes and brands such as Alpha, Cobra, Eurobath, Brimix and more

Angle valve – These come in various sizes like ½ inch. 3/ 8 inch, and also various brands like Maat, Peglar, Cobra, Hitplus and more

Stop Cork – This is for controlling water in the sink or tab. These are also of different brands and sizes like Cobra, Peglar, Eurodeluxe and more.

Bathtub – This is used for bathing. It comes in different sizes and brands.

Mixers – These are used to mix the cold and hot water in the shower or sink. There are bath tub mixers and also shower mixers .They too come in various brands like Maat, Cobra, Eurobath, Eurodeluxe, Tapis and more.

 

 

 

Soap dish – This is used to place the soap. It could be plastic or metallic and of different designs.

Towel holder – To hang the towel in the bathroom. These too come in different sizes and brands. For instance Brimix, Maat and more.

Then if the bathroom has a sink inside then it will have its own set of fittings. The basic will be the basin which will come in different sizes and brands like Twyford, Orient and more.

Then will be the basin fittings like waste, bottle trap, basin mixers. Each which comes in various brands. There are many more items.

Toilet Plumbing

The toilet can either be step, pan or high level, low level in different sizes, designs and brands such as Twyford, Orient and more.

Cisterns – These can either be ceramic or plastic, different sizes and brands

Seat cover – These can either be plastic or wooden each of various brands and designs

Flash valves – These come in various sizes brands such as Cobra, Docol, Maat, Euro and many more.

Urinal Items

This is part of the toilet but with its own set of items.

 

 

 

Urinal Bowl – These come in different sizes, designs and brands.

Doom waste – These too come in different sizes and brands

Flash valves – Various brands and designs.

Sensors - Various brands and designs.

Flex tubes

There are also many more products specifically for the urinal

Other Items

Gate Valves - These too are of various brands and sizes

Ball corks

Taps

From the above you can see how wide the variety of plumbing items are. Not only in size but brand and design.

What should you stock?

When deciding the above classification although not exhaustive should guide you moving from section to section so that you don’t leave things out.

But as you have seen there are hundreds of items, and it might not be practical to stock all. So first should be to prioritize items in terms of those are fast moving and with low brand loyalty.

The fast moving items include:

Pipes – Starting with PPR pipes, waste pipes, GI and CPVC. You don’t have to stock all the kinds of pipes. PPR could be sufficient for a start.

Fittings – Fitting are among the fastest moving items. These include sockets, elbows, unions, valves, adapters and the like. However as you have seen fittings come in various sizes. If limited on capital you can concentrate on the kind of fittings that are commonly used which are the smaller sizes. Not that anybody will buy the rest of the sizes, someone will buy but on a daily basis you are more likely to sell the smaller sizes which are commonly used in houses. PPR and GI fittings are the fast moving.

 

 

 

Fittings and pipes are bought both by those plumbing from zero and also those conducting repairs.

Taps - Taps especially the common types of taps as compared to the luxurious ones sell well too.

After these you can look into other commonly used items like gate valves and other types of valves.

Basic toilet and bathroom fittings like valves, shower heads, flashing handles corks and related also are relatively fast moving.

Remember other than for fittings and pipes most of the other items come in various brands. Among the most popular brands are Aquaflex, Cobra, ASL for kitchen fittings and Twyford for sinks and Peglar among others. It’s worth noting that there are also many brandless products largely from China; see a gate valve which is simply a gate valve and not a brand name. Stock lots of these too; there is a large market for them.

Also there are counterfeits for the most popular brands. For instance Cobra which a well known brand has many counterfeits. Usually for such a brand there will be a 1 and 2. The former will be the original and more expensive while the latter will be the counterfeit and cheaper.

This is a well known fact in the business such that even when buying from wholesale the seller will ask you whether you want 1 or 2. Also consumers buying from you might insist on either 1 or 2. This will primarily depend on the budget and also what the owner of the construction wants.

There are also cases where the owner of the shop will sell a 2 and pass it as a 1, and so sell it at a higher price. Some plumbers will also buy a fake item and pass it as the original to the owner therefore charge more.

As a newbie in the business there is no fool proof way of identifying counterfeits. There are pointers like packaging, texture, prices, spelling and such but still this is one of those skills you become a master of through experience. Buying from ‘good’ wholesalers will also give you some sort of assurance. There are also wholesalers who don’t hide the fact that they are selling counterfeits only.

It makes business sense to stock both the original and counterfeit. After all there is high demand for the cheaper brand carrying counterfeit. The actual decision whether to stock the counterfeit will depend on your ethics. There is also a risk, albeit slight in stocking counterfeit items. You never know when the anti counterfeit agency will come knocking. But then from history this is rare; a once in a long time occurrence; just pray it’s not your shop that they visit when the time comes.

There are shops that stock just pipes and fittings. Nothing else. In the worst case scenario where you are low on capital, anxious and unsure you can start with these two; they are sure to

 

 

 

sell. But as you will quickly learn customers will demand more and more until you find yourself stocking a wide variety of items.

Remember you don’t have to stock everything customers ask for. For instance, if only one customer asks for a premium brand of tap then there is no need to stock it. But if ten enquire then you can consider it. Your aim should not be to satisfy all possible plumbing items customers rather as many as possible of the customers. A race to satisfy all the customers will leave you frustrated with lots of dead stock and the one customer who had asked for the item nowhere to be found.

In relation to the above what you stock should be driven by your market. For instance if you are opening the shop in Giconjo town in Kirinyaga County, where many are constructing modern residential but of standard quality, and you stock 5 bathtubs. You might sell one but the rest will occupy space in your shop for a year if not years. Not that the people of Giconjo don’t know what a bathtub is, not that they don’t have the money but their socialization does not make them see sense in buying one.

On the other hand if you are in an area with a significant population of consumers who understand what a bathtub is, have the purchasing power and more important appreciate it then you can stock. You have to be real about your target customers; don’t simply look at their purchasing power but who they really are and what kind of products fits them.

You also must have your ear on the ground for new products or trends. For instance it’s common for some items to lose favour in the market. A product could be counterfeited to an extent that it starts performing poorly, and despite the strength of the brand it’s never respected and purchased.

Location

Ideally a plumbing shop should be located where there are a lot of construction activities happening within a reasonable radius. Like we mentioned consumer constructing are the biggest consumers of plumbing materials.

On the other hand is an area with a dense population connected to water. To these you sell items used for repairs. And because repairs don’t happen each and every day you need a big population of consumers so as to make significant sales.

Once you identify the general area with construction activities or substantial residential houses the next step is to settle on the premises.

For the construction market good premises could be areas with economies of location; those areas known for plumbing or hardware shops. Because such areas are known for hardware products they attract high foot traffic looking plumbing materials. Sometimes a customer could be looking for something different related to construction but sees the plumbing shop and decides to make a purchase. Although such areas could have intense competition the foot traffic could be enough to mitigate the effect of the competition and for you to break even and make profit.

 

 

 

Good premises are also visible and easy to access. Visibility announces your presence, while easy access means that customers are not only able to view your shop but also reach it, buy and leave with their goods. Access could mean a road, path, distance from main road, security and other such factors.

Good premises are also about security both for the customers and also your shop. The risk of theft should be as minimal as possible.

Good premises are also near supporting services which could be other hardware items, or shops like Mpesa, bus stations and the like.

Good locations also attract high numbers of the right kind of foot traffic.

Starting

The starting process will involve the following key steps:

Identify location.

Based on the location identify the specific target market

Understand the characteristics and needs of the target market.

Use above understanding to decide what to stock and where to have your shop

Based on the capital at hand decide what actual items to stock.

Identify suppliers. Get price quotations.

Acquire licenses.

Acquire premises and renovate.

Stock and open shop.

Market .

Licenses

A plumbing items shop does not require any specialist licenses. Only the basic of county government licenses are needed. These are:

 

License

Details

 

 

Cost

 

 

Single User Business Permit

This is issued by the county

 

Budget at least Kshs. 14,000

 

 

 

government to all businesses

for this license.

 

 

 

operating within the county.

 

 

 

 

 

The cost will vary from county

 

 

 

 

to county, and also depend on

 

 

 

 

the size of the building.

 

 

 

 

 

 

 

 

 

 

Outdoor Advertising Licenses

This is issued if you have

 

Budget at least Kshs. 4000 for

 

 

 

some form of outdoor

 

this license

 

 

 

advertising such as

 

 

 

 

 

signboards. The price will

 

 

 

 

 

depend on the county, nature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and size of the advertising.

 

Fire Clearance

All businesses within a county

Budget at least Kshs. 3000 for

 

should be fire ready. This

this license.

 

means at least having a fire

 

 

extinguisher. County officials

 

 

will inspect your premises and

 

 

extinguisher then issue a

 

 

license. The cost will also

 

 

depend on the county.

 

Renovation

It could be necessary to conduct some renovations on your shop before starting the business. Renovations could entail putting up some shelves, a counter, painting and signanage. In your budget factor in renovation.

Market Entry

You could enter the market through several strategies. Although we have touched on them above , here we summarize them. Please note these are not the only market entry strategies, you can use any method that works in your market.

 

Market Entry Strategy

Details

 

 

Possible Effect

 

 

Scale

Getting into the market

 

Works well in markets with

 

 

 

through a large shop both in

high potential but populated

 

 

 

physical size and stock. A

 

by small plumbing shops and

 

 

 

kind of shock and awe

 

hardware. Challenge is

 

 

 

strategy. To draw attention by

meeting and sustaining the

 

 

 

virtue of size. To attract

 

expectations of the

 

 

 

customers who hope size will

consumers. Relatively higher

 

 

 

mean wider variety, better

 

capital will also be required.

 

 

 

prices and great service.

 

 

 

 

 

 

 

 

 

Economies of Location

Opening a shop in areas best

You will get a jump start

 

 

 

known for general hardware

through already existing

 

 

 

shops or plumbing shops. The

reputation and foot traffic. On

 

 

 

idea is to take advantage of

 

the other hand competition will

 

 

 

the existing foot traffic in such

be more intense in such

 

 

 

areas.

 

 

areas, and with it downward

 

 

 

 

 

 

price pressure. Low risk way

 

 

 

 

 

 

to start.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Location (Market Gap)

Opening a shop in an area

Great strategy. Keeping

 

with high demand for

everything constant then you

 

plumbing items but insufficient

have a high chance of winning

 

supply. Such an area could

a share of the existing market

 

have fewer than needed

and new customers too. The

 

general hardware shops or no

margins will also be relatively

 

specialist plumbing hardware.

high at the start. In such

 

The idea is to fulfill the unmet

markets competition grows

 

demand in the market.

fast. In the medium term you

 

 

will have to work harder and

 

 

smarter to win and sustain

 

 

customers

Specialization

This involves specializing in a

When you specialize

 

few of the plumbing items. For

customers will be expecting

 

instance pipes, fittings, valves,

some advantages such a

 

sanitary ware or such other

wider variety, better prices

 

item. The plan here is to stand

and flexibility. Specialization is

 

out by being a master of one

risky but works well if you pick

 

or few. Specialization works if

the right item based on your

 

the item you focus on has

market. And be careful not to

 

enough demand

leave money on the table by

 

 

specializing too narrowly more

 

 

so for products that go hand in

 

 

hand. For instance

 

 

specializing in pipes only

 

 

without selling the

 

 

accompanying fittings.

Variety

This is the opposite of

Variety works well if there is

 

specialization. It involves

demand for the ‘extra’

 

having a wide variety of items.

products. For instance there is

 

The strategy is to provide

no need to have a large

 

wide options for as many

variety of sinks when your

 

items as possible. The options

market doesn’t appreciate.

 

could be in terms of brands,

But then you could have a

 

product categories, prices or

wide variety of fittings, valves

 

even sizes.

and other items that your

 

 

market demands. Variety for

 

 

varieties sake will leave you

 

 

with a lot of dead stock.

Revenue and Margins

 

 

 

Sample Wholesale & Retail Prices

To get an idea of the margins to expect below is a sample of products and their wholesale and at places retail prices. Where there is more than one price listed for a single item it’s to capture the price differences between various wholesalers and retailers.

W= Wholesale

R= Retail

PPR Fittings

Size(mm)

Sockets

 

Elbows

 

Union

 

Tee

 

Adapters

 

 

(Kshs.)

 

(Kshs.)

 

(Kshs.)

 

(Kshs.)

 

(Kshs.)

 

 

W

R

W

R

W

R

W

R

W

R

20

10,7,6,8

20

10,8,7

20

25,15,18,20

35

8,10,11

25

20,25

80

25

7,12,8,10

25,35

15,13,10

25

28,25,22

40

14,15,13

30

35,30,25

70

32

12,15,20

40,35

15,18

50

22,35,30,27

80

25,18,20

50

50,35,60,30

80

40

16,22,30,20

60

30,40

60

65,60

100

33,40

120

75,120

180

50

48,50

70

55,70,50

 

90,80,100

140

60,70

 

90,150

 

63

60,80

 

110,130,100

 

,150,130

 

120,150

 

150,180

 

75

90,120

 

165,200

 

80

 

 

 

220,260

 

90

100

 

300

 

115

 

380

 

280

 

110

 

 

 

 

180

 

600

 

350

 

 

 

 

 

 

 

 

 

 

 

 

Waste Pipe Fittings

Size

Bends

 

Tee

 

Inspection Bends

(Inches)

 

 

 

 

 

 

 

W

R

W

R

W

R

1

7,10

15

10,20

25

 

 

1 1/4

12,25,20

40

20,35,30

50

 

 

1 1/2

,38,25,35

70

50,35,45

70

 

 

2

52,35,50

80

35,60

100

60

 

3

105,100

120

165,130,150

140

90

240

4

110,115,100,120

180

130,180,160

240

130

 

6

450

 

650

 

300,220

 

8

1500

 

2000

 

2500

 

10

 

 

300

 

1100

 

G I Fittings

 

Size

Bends

 

Sockets

 

Union

 

 

Tee

 

Elbow

 

 

 

 

Inche

W

R

W

R

W

R

 

W

R

W

 

R

 

 

s

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1/2

48,40,50,45

2

10,20,17

3

50,60,45

3

 

20,25

 

20,18

 

 

 

 

 

 

5

 

0

 

5

 

 

 

 

 

 

 

 

3/4

65,60,70,55

3

25,30

4

60,70,80,55

5

 

28,30,35

 

25,32

 

 

 

 

 

 

5

 

0

 

5

 

 

 

 

 

 

 

 

1

380,85,80

5

25,30,40,3

5

50,70,80,100,

6

 

40,50

 

40,35,30

 

 

 

 

 

 

0

5

0

65

0

 

 

 

 

 

 

 

 

11/4

120,150,170,130

 

40,80,60,7

 

170,150

 

 

75,90,85

 

70,80,100

 

 

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11/2

150,220,200,250

 

80,95,100

 

180,195,200,2

 

90,130,120

 

105,100

 

 

 

 

 

 

20

 

 

 

 

 

2

280,350,300,250

 

120,100,1

 

300,250,280

 

140,250,200,1

 

120,150,170,1

 

 

 

 

05

 

 

 

50

 

80

 

21/2

400,700,680

 

220,250,2

 

750,780

 

480,450

 

,300,380,350

 

 

 

 

70

 

 

 

 

 

 

 

3

650,1050,1000,12

 

350,380

 

900,950

 

780,650

 

400,450,480,5

 

 

00

 

 

 

 

 

 

 

00

 

4

1200,1570,1700,1

 

500,480

 

1400,1600,15

 

1400,1300

 

600,,500

 

 

600

 

 

 

00

 

 

 

 

 

5

2500,1900

 

700

 

3500

 

1400,1800

 

1300,1200,88

 

 

 

 

 

 

 

 

 

 

0,

 

CPVC Fittings

Size

Socket

 

Elbows

 

Adapters

Tee

 

Union

 

 

(Kshs.)

 

(Kshs.)

 

(Kshs.)

 

(Kshs.)

 

(Kshs.)

 

Inches

W

R

W

 

R

W

R

W

R

W

R

1/2

20

 

20

 

 

50

 

20

 

40

 

3/4

30

 

30

 

 

120

 

30

 

70

 

1

40

 

50

 

 

250

 

60

 

180

 

1 1/4

60

 

70

 

 

400

 

100

 

270

 

1 1/2

80

 

120

 

 

550

 

170

 

350

 

2

120

 

150

 

 

600

 

200

 

450

 

2 1/2

150

 

170

 

 

700

 

250

 

580

 

3

220

 

250

 

 

900

 

350

 

750

 

4

280

 

450

 

 

2500

 

450

 

1100

 

Pipes

Size

PPR (Kshs.)

 

Waste (Kshs.)

 

G I (Kshs.)

CPVC(Kshs.)

Inches

W

R

W

R

W

R

W

R

1/2

130,150

180

200

 

500

700

450

 

3/4

170,230,250

300

280,270

 

900

1200

600

 

1

230,405,350,400

540

140,295,300

-

1100

1500

750

 

1 1/4

330,700,600,680

600

200,350,370

350

2500

 

900

 

1 1/2

480,850,1000

850

230,400,450

450

2800

 

1200

 

2

650,1000,1500

 

350,550

650

4000

 

2500

 

2 1/2

900,1350,2500

 

450

700

5500

 

3000

 

3

1200,3500

 

750,800

1200

8500

 

3500

 

4

1800,4500

 

1300,1000,1200

2500

13000

 

4000

 

6

 

 

 

 

 

 

 

 

Kitchen

Kitchen Fittings

 

Sinks

ASL (Kshs.)

 

Other (Kshs.)

 

 

 

 

W

R

W

R

 

 

Single Bowl:

4000,3900

5500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single Drain

 

 

 

 

 

 

 

 

 

 

 

 

Double Bowl:

9400,9500

 

11000

 

 

 

 

 

 

 

Single Drain

 

 

 

 

 

 

 

 

 

 

 

 

Double Bowl:

2000,1900

 

2700

 

 

 

 

 

 

 

Double Drain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sink Wastes

 

 

 

 

 

 

Size

Plastic (Kshs.)

Metallic (Kshs.)

 

Aramix (Kshs.)

Brimix (Kshs.)

 

W

 

R

W

 

R

 

W

R

W

R

1 1/2

59

 

90

150

 

200

 

200

240

200

260

Bottle Trap

Size

 

Vega (Kshs.)

Malphine (Kshs.)

Alphine (Kshs.)

 

W

 

R

W

R

W

R

1 1/2

120

 

180

100

250

100

 

Bathroom

Shower Head

 

Rose

 

Cobra

 

Brimix

 

Eurobath

Tapis

 

 

(Kshs.)

 

(Kshs.)

 

(Kshs.)

 

(Kshs.)

 

(Kshs)

 

 

W

R

W

 

R

W

R

W

R

W

R

 

850

1000

 

 

 

1000

1150

800

1150

1200

1370

 

 

 

 

 

 

 

 

 

 

 

 

Telephone Shower

Eurobath (Kshs.)

Brimix (Kshs.)

Alpha (Kshs.)

Cobra (Kshs.)

W

R

W

R

W

R

W

R

900

1300

800

1500

 

 

1000

 

Angle Valve

 

 

Size

Maat

 

 

Peglar

 

 

 

Cobra 1

-2

 

Hitplus

 

 

 

 

Other

 

 

 

 

Inches

W

R

 

W

 

R

 

 

W

 

 

R

 

W

 

 

R

 

W

 

R

 

 

 

 

 

180,220,200

350

 

220

 

 

 

 

 

 

130,150

 

 

1500,100

 

 

 

 

 

 

 

 

 

 

 

3/8

130

 

 

250

 

 

 

 

 

 

250

 

 

 

 

 

400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stop Cork

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Size

Peglar 1

 

 

Peglar 2

 

 

Cobra 1/2

 

 

Eurobath

 

 

 

Eurodeluxe

 

 

 

 

 

(Kshs.)

 

 

(Kshs.)

 

 

 

(Kshs.)

 

 

 

(Kshs.)

 

 

 

(Kshs.)

 

 

 

 

 

 

 

Inches

W

R

 

W

 

 

R

 

 

W

 

R

 

 

W

R

 

W

 

 

R

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1/2

 

500,600,550

650

 

450

 

550

 

3500

 

1500

 

1500,1800

 

 

 

 

1300,1500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bathtub Mixer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maat

 

 

 

 

Cobra

 

 

 

 

Eurobath

 

Eurodeluxe

Brimix

Tapis

 

Hitplus

W

R

W

R

W

R

W

R

W

R

W

R

W

 

R

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shower Mixers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cobra

 

 

 

 

Eurobath

 

 

Eurodeluxe

 

 

Cartoon

 

 

 

Hitplus

 

 

 

 

 

Tapis

 

 

 

 

 

 

Brimix

W

R

 

 

W

 

R

 

W

 

 

 

R

 

 

W

 

 

 

R

 

W

 

R

 

 

W

 

 

R

W

 

 

 

R

12000

 

 

 

7500

 

 

 

 

6000

 

 

 

 

 

2500

 

 

 

 

 

3500

 

 

 

 

6000,5500

 

 

4300,5000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Soap Dish

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plastic ( Kshs.)

 

 

 

 

 

 

 

 

 

Metallic ( Kshs.)

 

 

 

 

 

 

 

 

Ceramic ( Kshs.)

 

 

 

 

W

 

 

 

 

 

R

 

 

 

 

 

 

 

 

 

W

 

 

 

 

 

 

 

 

R

 

 

 

 

 

 

 

 

W

 

 

 

 

 

 

R

 

 

 

 

80

 

 

 

 

 

150

 

 

 

 

 

250

 

 

 

 

 

 

 

 

300

 

 

 

 

 

 

 

 

 

 

 

 

350

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Towel Holder

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brimix ( Kshs.)

 

 

 

Hitplus ( Kshs.)

 

 

 

 

Maat ( Kshs.)

 

 

Other ( Kshs.)

W

 

 

 

R

 

 

 

W

 

 

 

 

 

 

R

 

 

 

 

W

 

 

 

 

 

R

 

 

W

 

R

500

 

 

 

 

 

 

 

 

 

550

 

 

 

 

 

 

 

 

 

 

 

 

 

450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Size

 

 

 

 

Twyford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Orient

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

W

 

 

 

 

 

 

R

 

 

 

 

W

 

 

 

 

R

 

 

 

 

 

 

W

 

 

 

 

 

 

R

I

 

 

 

 

900

 

 

 

 

 

 

1100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medium

 

1800,2000

 

 

2500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pedestral

 

2900,2500

 

 

3500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Waste

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Size

 

 

 

 

 

 

Plastic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metallic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W

 

 

 

 

 

 

 

 

 

 

 

 

R

 

 

 

 

 

 

 

 

 

W

 

 

 

 

 

R

 

 

 

 

1 1/4

 

 

 

 

 

 

50

 

 

 

 

 

 

 

 

 

 

 

150

 

 

 

 

 

 

 

 

150,100

 

 

 

250

 

 

 

 

 

Basin Mixers

 

Cobra

Maat

Eurodeluxe

Hitplus

Eurobath

Cartoon

Brimix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W R W R W R W R W R W R W R

Bottle Trap

Size

Viega

 

Alphine

 

Malphine

Others

 

 

 

 

W

R

W

R

W

R

W

R

 

 

1 1/4

200,350

 

100,120

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Toilet

Low Level Toilet

Step (Asian)

 

Pan (Asian)

 

W

R

W

R

900,850

1200

750

1000

 

 

 

 

High Level Toilet Cistern

Ceramic

 

Plastic

 

 

W

R

W

R

 

1900,2100

2500

1100

1500

 

Seat Cover

Size

Plastic

 

Wooden

 

 

W

R

W

R

 

750

550

 

 

 

 

2500

 

 

 

 

1800

 

 

 

 

4000

 

 

Flushing Handle

 

Low Level

 

 

High Level

 

 

 

 

W

R

 

W

 

R

 

 

 

250

 

 

 

250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Urina

Bowl

Size

Twyford

 

 

Orient

 

Other

 

W

R

 

W

R

 

Small

 

 

 

 

 

 

Medium

1000

1500

 

 

 

 

 

 

 

Flush Valve

 

 

Cobra

 

Maat

 

 

Docol

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Flex Tubes (Plastic)

Size

Brazil

 

Yellow

 

White

 

 

 

 

W

R

W

R

W

R

 

 

½ x 1

40

100

60

180

80

180

 

 

½ x 1

40

150

60

180

80

200

 

 

1/2

 

 

 

 

 

 

 

 

½ x 2

 

 

 

 

 

 

 

 

Notes on Revenue & Margins

The above prices are from a sample of various wholesalers and retailers. They are not definite and should act as a guide only since prices are subject to change.

We acquired the prices in various ways: One is by acting as if we are novices and want to start a plumbing shop, two is by acting as if we already have a plumbing shop outside Nairobi, Three is by going shopping with existing retailers, four is by going shopping accompanied by a plumber, five is by asking retailers their buying and selling prices, lastly is by just walking to a wholesaler and just requesting prices without so much of an explanation.

If you are a novice is best to go buy items accompanied by a plumber who has been in the business to know the various prices and tricks in the business. If wholesalers get a hint that you are new and without a proper grasp of plumbing or the plumbing business they are likely to give you higher prices. And as much as you are just starting to portray confidence. Still even in situations where a plumber or when accompanied by a retailer was there were significant price differences between wholesalers for a variety of items, meaning that you should shop around.

A difference of even Kshs. 5 could mean a lot when purchasing in bulk and when negotiating discounts with your customers.

 

 

 

There are no guidelines on prices. You buy and add appropriate mark up. The mark up will be based on retail prices in your locality, which you partially get to, know through your customers. There are some rules of the thumbs though.

For instance for fittings the trick is to add between Kshs.5 and Kshs. 20 per item. You should seek to add at least Kshs.10. You can play around with prices based on the quantities that the customer is buying, the possibility of the customer becoming a long term client, the customers negotiating power, and the competition. Of course always aim for the maximum margins without hurting seeming excessively expensive.

Margins in the business range between 30% and 100%, with an average of 40%.

The more the item costs the higher the gross profit should be. And the more slow moving the item is the higher the gross profit should be .The figures above could act as a general guideline on pricing. However use the realities of your local market and business instincts. At the end remember you want to make as much profit as you can to break even, pay yourself and be left with profits.

From the above you see if you are specializing in say fittings and pipes then you need higher volumes to break even. This is due to the relatively low gross profits for these items. Some traders will thus lower their prices to ensure they sell as many items as possible rather than enjoy higher margins and sell few quantities.

The unwritten rule among some traders is they would rather make Kshs.10 per fitting than make Kshs.20 and not sell. Considering that plumbers will often purchase several fittings at a go there is some logic in this. Note a customer will expect to be always buying the item at the price you sell at today. So price wisely.

From a survey of retailers we noted turnovers of between Kshs. 2000 all the way to Kshs. 90,000 per day. Shops with higher turnovers had scale, lower prices or a great relationship with customers. Most of the shops fell between Kshs. 5,000 and Kshs.15, 000 per day. Sales were not consistent throughout the month.

Indeed in some cases the sales and there were peaks which could be way above the daily average. Indeed one shop in Githurai, Nairobi reported a single sale of Kshs.300, 000 .This is an exception rather than the rule but shows the possibilities. For planning purposes use lower average sales figures. The shops recording lower sales did so by virtue of location, competition and stock.

What Affects Sales

Location – Keeping everything constant a location with high traffic of the right kind of customers resulted in higher revenue.

Sourcing – If you are able to source at lower prices so will your margins be higher. Buying expensive at a wholesale level will reduce your margins. In areas with intense competition this could even lead to losses.

 

 

 

Pricing – How you price will determine your margins. Pricing below your competition in areas where it’s not intense will not necessarily lead to higher margins. Same way if you price below market rates in areas with low competition.

Networks – This is to do with who you know, who you try to know and how you make use of your networks to bring business to your shop. As much as your shop could be in a strategic location you need to make use of what you have at your disposal to increase sales. If you know a foreman or can get connected to a plumber then why not follow up to make them buy at your shop.

Sales skills – This is how you are able to convince your customers to spend more and keep coming.

Flexibility – This means how flexible you are with your customers in trying to fit their needs.

Variety of stock – The wider of the basic and fast moving items the more customers are likely to buy from you rather than elsewhere.

Breakeven

The average breakeven point was 4 months, with some shops breaking even in the first month. For planning purposes use at least three months. This will help budget for the working capital to pay rent, salaries and any other fixed costs before you break even.

Here is a crude example of how you could view the break even. Assuming you are running a small shop whose major fixed costs are as follows:

Rent – Kshs.15, 000

Manpower – Kshs. 12,000

Miscellaneous – Kshs.15, 000

Total; Kshs. 42,000

And working with a minimum margin of 30%, then to break even you need to sell items worth Kshs.140,000 a month…That’s an average of Kshs. 4,700 per day. Very possible of course depending on the location, stock and all the other factors above which affect revenue. In this above case if you are selling more than Kshs.140, 000 you are breaking even. Note the above is a simplified hypothetical case to give you a crude idea of what to expect.

Capital Breakdown

 

Item

 

Breakdown

 

Total

 

 

 

 

 

 

(Kshs.)

 

 

 

Licenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single User Business Permit

1

15,000

Signboard License

1

5,000

Fire License

1

4,500

Sub Total

 

24,500

 

 

 

Equipment

 

 

 

 

 

Fire Extinguisher

1

8,000

Signboard

All

15,000

Furniture

1

5,000

Receipt and Record Books

All

2,000

Fittings

All

5,000

Sub Total

 

35,000

 

 

 

 

 

 

Premises

 

 

 

 

 

Rent

2 months deposit + 1

45,000

 

month rent. Will

 

 

depend on location.

 

 

(@ Kshs.15,000 per

 

 

month)

 

Branding and Renovation

All

20,000

Sub Total

 

65,000

 

 

 

Stock

 

 

 

 

 

Stock

All

300,000

 

 

 

Working Capital

 

 

 

 

 

Salary

3 months @

45,000

 

Kshs.15000 per

 

 

month( 1employee)

 

Marketing

All

10,000

Miscellaneous

 

30,000

Sub Total

 

85,000

 

 

 

 

 

 

Grand Total ( Adding all the above sub totals)

 

509,500

Notes on Capital

The above figures should act as a guideline. Costs could vary with the county, size of the building and location. You can spend more on stock based on your capital and the size of your shop or target market or even less. Khs.200, 000 could start a small shop selling a variety of fast moving items. Like in similar businesses you can start with the basics and include varieties as you grow.

 

 

 

The working capital is to help you survive until breakeven point; to pay rent, workers and other fixed costs. You should also have working capital if also you receive a large order that you cannot fulfill from your stock.

Operations

The day to day operations in a plumbing shop are simple; you open the shop and wait for customers to come in or perhaps go looking for them. Hence the key operation points will be:

Opening and Closing Hours – This will depend on your business strategy, location and even the competition. We noted shops which opened as early as 7pm. Many operated between 8pm and 6pm. The shops which opened early hoped to win plumbers going for an assignment in the morning and which they had not bought the required items. It was also a way of differentiating in highly competitive markets. Where there are security challenges then it makes it risky both for you and the plumbers to open and close relatively early. And where your competition is opening early or closing late and making sales then you could do the same hoping to get a piece of the pie.

Stock Management – Many of the smaller owner operated shops don’t have a proper stock management system. They just monitor what they have sold, what is in demand and stock accordingly. For a small beginner shop it’s not absolutely necessary to have say a computerized stock management systems. However it’s important to have a method, however crude of monitoring your stock.

For instance you could use stock cards as some plumbing shops do. But these require a certain level of discipline to consistently fill them after every sale or at the end of the day. Even without the stock cards at least record in a book other than the receipt book how many of what you have sold in a day and how many are remaining.

If you have a large shop, wide variety of items and high sales then it could be best to invest in a computerized stock management system.

Monitoring stock helps you not be caught flat footed; a customer asks for an item and you have no idea it has run out. Stock monitoring will also help you observe the trends; know what is selling more and what is selling less. This way you stock intelligently. Monitoring also helps discourage employee theft. If an employee is knows that you are monitoring she might be slightly reluctant to steal than when she knows you don’t.

And once in a while you have to do the actual stock taking.

Book Keeping - You need to know whether you are making profit or losses, the size of each, whether you are growing, what are your costs and what’s the revenue and growth trends, what’s your cash flow, how much is owed to you, how much do you owe, how is this affecting your business, what can you do to even earn more. Basic book keeping starts with recording each and every sale and business expense.

 

 

 

At least issue a receipt for every sale. And even where the customer does not care about receipts, record in the receipt book even if you will not issue it. Then record each and every expense and keep each receipt for expense incurred.

Presently there exists simple do it yourself online accounting services where you just feed data and get profit and loss accounts, balance sheets and a dashboard showing what is happening with various figures. You could also use computer applications such as quick books.

However in the end you might have to hire an accountant who although could use the some of the same tools will give insights and have conversations explaining what is happening and what can be improved. To keep your fixed costs low you don’t have to hire an accountant on permanent basis rather on contract depending on what needs to be done.

There are other aspects of operation such as allocating duties, sales activities and the like. There is no template for these and you have to run them based on your specific circumstances.

Manpower

You can run a small plumbing shop on your own but only to some point. As your sales increase you will definitely need an assistant. The assistant could help in selling, packaging and simply standing in when you are not available for a reason or another say when you have gone to restock.

If you are on your own it could mean closing the shop every time you are away. Again when on your own it might negatively affect the customer experience. For example when there are several customers who want to be served. Some could simply walk away to your competitor, never to return.

An assistant is also necessary if you are not present to run your shop on a day to day basis. The traits of the assistant could include:

Good selling skills: The ability to sell should be a minimum key consideration. The assistant can do so much more but if she is not able to sell then the rest won’t matter.

Selling is not simply the ability to get items from the shelves and give to the customer. But also understanding the customer needs, playing with his psychology, talking him into buying more, making him come back and without saying it out rightly encouraging him to spread the word.

Sales skills are also about the ability to spot sales opportunities and seize them. If a plumber who is working on a building that is getting started then the assistant making sure to offer the best terms possible to encourage the customer to buy all plumbing materials required for the project from your shop. Selling is also about the ability to take the customer’s budget and find products that fit it.

Product Knowledge or Fast Learner – Ideally the assistant should have good knowledge of plumbing products. Knowledge acquired from experience or training. However there are many assistants who learn on the job. The learning curve is not so steep. The basics are

 

 

 

understanding the uses of different kind of items and what exactly the plumber wants to achieve, the qualities of each, the brands, the alternatives available and the trends. Good product knowledge shows and customers at times appreciate. It looks bad when the person selling does not seem to have a clue of what she is being asked for.

For a keen fast learner with more than passing interest in the business and industry a week or two would be enough to learn so much about the business. Even for you with no background in plumbing the same period would be enough as long as you are interacting with products and customers.

Honesty – Of course you want someone who is honest and trustworthy. Although there is always the risk of theft you don’t want to spend all day wondering if they are stealing from you. The assistant might not be a 100% honest but at least 80%, well if it can be measured that way. Always reprimand acts of dishonesty because if you entertain them they become a norm and the assistant starts taking you for granted especially if you are running the plumbing shop as a side business.

In matters of honest you can’t be absolutely sure. Use carrot and stick methods, be firm but not to the extent that employees are demoralized. It’s almost impossible to get someone who is perfect so go for near perfection.

Industrious – You want someone who simply does not follow your orders or guidelines for that matter. Someone who can think on her feet, with initiative, can look at the market and even come up with new ideas.

Other desired traits include responsibility, punctuality, good communication and personal presentation.

For shop assistants you pay a monthly salary. Present rates range between Kshs.10, 000 and Kshs.25, 000. With many following between Kshs.10, 000 and Kshs15, 000. You pay more if the business is busy and making high sales.

Don’t aim to pay the least because it could demoralize the workers and possibly encourage theft. Negotiate with the employee to settle on an agreeable figure. There are shops that in addition to the salary will pay a bonus sort of commission based on sales.

For sales people it helps to pay a commission in addition to the salary. The commission motivates the salesperson . In some cases salespeople are allowed to add a mark up to the prices and keep the extra. Look at the model that works best to increase sales and keep the employees motivated.

Opportunity

Beyond the obvious opportunities in the business at a local you could explore niches. One niche which could possibly work in large cities is premium luxurious plumbing items. This could especially work for items like taps, shower heads and sanitary ware like sinks. There are luxurious or out of the ordinary designs which would be attractive to mid income and high

 

 

 

income clients. Indeed there is a general limited knowledge on what options are available in terms of items like taps, toilet bowls,sinks and other bathroom and toilet accessories. Therefore many consumers settle for the standard which are relatively cheap and widely available. And there lays an opportunity but which also requires lots of marketing. A shop of this nature could work by having a good online presence through our website.

Case Studies

Below are some summarized case studies from the sample of many surveys we did in the course of writing this report. The sample below is from plumbing hardware shops in Githurai, Nairobi.

 

Trait

Shop 1

Shop 2

Shop 3

Shop 4

 

 

Age in

8 years. Medium

3 years. Small

2.5 years. Small

2 years. Medium

 

 

Business

size shop.

shop.

shop, only two

size shop.

 

 

 

 

 

customers can

 

 

 

 

 

 

be served at a

 

 

 

 

 

 

go.

 

 

 

Reasons for

Differentiation

Opportunity

Owner was once

Branch of a

 

 

Specialization

 

 

a plumber

bigger general

 

 

 

 

 

 

hardware in

 

 

 

 

 

 

Ruiru.

 

 

 

 

 

 

Specialization

 

 

 

 

 

 

was a way of

 

 

 

 

 

 

differentiating

 

 

 

 

 

 

from the many

 

 

 

 

 

 

general

 

 

 

 

 

 

hardwares in

 

 

 

 

 

 

Githurai.

 

 

Stock Bias

Pipe, Fittings,

Pipe, fittings,

Fittings, Pipes,

Fitting, Valves,

 

 

 

Valves, Hose

Valves

Valves,

Pipes

 

 

 

pipes

 

Bathroom

 

 

 

 

 

 

&Toilet

 

 

 

 

 

 

Accessories

 

 

 

Wholesalers

Fairman Limited,

Weskam

Ramco, Pramuh

Weskam

 

 

 

Jocha Limited

Hardware,

Towers, Nairobi.

Hardware,

 

 

 

 

Duruma Road

 

Duruma Road

 

 

 

 

 

 

Afriwell , Baricho

 

 

 

 

 

 

Road

 

 

Why the

Good

Offer free

No preference

Great customer

 

 

Wholesaler

relationships

transport for

for particular

relationship.

 

 

 

over a long time

large orders, say

wholesalers.

They also have

 

 

 

 

above Kshs.25,

Depends on

an account with

 

 

 

 

000.

existing prices

their suppliers

 

 

 

 

 

and terms.

which allow them

 

 

 

 

 

 

to get discounts.

 

 

Main

Plumbers,

Plumbers

Plumbers ,

Plumbers and

 

 

Customers

Landlords

 

Contractors

Contractors.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amateur

Yes, mainly

Yes, but not as

Yes but

Yes but many

 

 

Customers

landlords

many. Usually

plumbers are

come to buy

 

 

 

 

they are

more.

items a plumber

 

 

 

 

accompanied by

 

has

 

 

 

 

plumbers.

 

recommended.

 

 

Attracting

Offers, Good

Customer

Have a

No active effort,

 

 

Customers

discount on

service, Fair

salesperson that

but their prices

 

 

 

purchase of set

prices

goes to sell

are competitive.

 

 

 

amounts.

 

within Githurai

 

 

 

 

Only waits for

 

and outside too.

 

 

 

 

walk in

 

 

 

 

 

 

customers.

 

 

 

 

 

Transport

Free transport on

Yes but paid for

No rather they

At times

 

 

 

purchases of

by the customer.

will recommend

depending on

 

 

 

Kshs.10, 000

Cost depends on

a transporter to

the size of

 

 

 

and above.

distant.

clients who need

purchase and if

 

 

 

 

 

it.

the customer

 

 

 

 

 

 

requests.

 

 

Average Spend

Kshs. 10,000

Kshs.5,000

Kshs.10,000

Kshs.2,000

 

 

Per Customer

 

 

 

 

 

 

Single Biggest

-

300,000

25,000

200,000

 

 

Sale

 

 

 

 

 

 

Monthly Sales

Kshs.1.5m to

At least

-

At least

 

 

 

Kshs.2m

Kshs.500,000

 

Kshs.100,000

 

 

Fast Moving

Valves. Often

Pipe fittings

Pipe fittings

Hose pipes,

 

 

 

bought by

because they are

 

fittings

 

 

 

plumbers

applicable many

 

 

 

 

 

conducting

times.

 

 

 

 

 

repairs.

 

 

 

 

 

Preferred

None in

Aquaflex,Cobra

Aquaflex,

Aquaflex

 

 

Brands

particular

 

Corazon, Apollo

 

 

 

Counterfeits

Knows of

Yes, but rarely

Yes but only a

Yes they are but

 

 

 

existence but

stocks.

small

it’s so hard to

 

 

 

rarely stocks as

 

percentage.

tell...but

 

 

 

a matter of

 

Sometimes can’t

sometimes the

 

 

 

choice.

 

tell.

weight can

 

 

 

 

 

 

tell…if its lighter

 

 

 

 

 

 

than usual then

 

 

 

 

 

 

there must be

 

 

 

 

 

 

questions on it

 

 

Plumbing

Acquired through

Acquired through

Acquired partially

Acquired through

 

 

Knowledge

experience. No

experience.

through

training

 

 

 

formal training

 

experience and

 

 

 

 

 

 

partially through

 

 

 

 

 

 

apprenticeship

 

 

 

Licenses

 

Single User

Single User

Single User

 

 

 

Single Business

Business Permit

Business Permit

Business Permit

 

 

 

Permit

Outdoor

 

Outdoor

 

 

 

 

 

 

 

 

 

advertising

 

advertising

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KRA PIN

Fire Clearance

 

Fire Clearance

 

 

 

 

Plumbing

 

 

 

 

License

 

 

 

 

Liability

 

 

 

 

Insurance

 

 

 

 

Fire Clearance

 

 

 

 

 

 

 

 

Pipes Stocked

PPR only

PPR only

PPR Only.

PPR Only.

 

 

 

However they

 

 

 

 

sell the other

 

 

 

 

types of pipes

 

 

 

 

through

 

 

 

 

manufacturers

 

 

 

 

and distributors.

 

 

 

 

If say a customer

 

 

 

 

wants a GI pipe

 

 

 

 

they refer him to

 

 

 

 

the manufacturer

 

 

 

 

or distributor and

 

 

 

 

if he (the

 

 

 

 

customer) makes

 

 

 

 

a purchase, they

 

 

 

 

get a

 

 

 

 

commission.

 

 

 

 

 

 

Suppliers

There are major plumbing equipment wholesalers in every major town. Still Nairobi has the highest population of wholesalers and often their prices relatively lower.

Nyamakima, Nairobi, along and around Duruma Road has a number of plumbing hardware wholesalers. Sheikh Karume Road also has a number of big and small wholesalers. And so is Munyu Road , off Accra Road. The lower part of River Road near the junction with Ronald Ngala, also has a number of wholesalers. And so is Baricho Road, near Nyayo Stadium. Road A in Industial Area, also has a number of wholesalers.

Still here are some specific contacts to jump start you:

Weskam Hardware – Sheikh Karume Road.

 

 

 

Afriwell – Baricho Road

Pramuh Towers – Sheikh Karume Road

Ramco – Sheikh Karume Road

Wiskam Hardware – Vision 201, House , Duruma Road

Yincon Hardware, Luthuli Road.

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