How to Start / Open A Tents & Chair Leasing Business in Kenya

Tents & Chair Leasing Business Plan (Kenya)



Overview

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The survey focuses on the primary business of hiring out tents and chairs. The entrepreneur in this case purchases the tents and chairs and rents them out to those having events of sorts. Although such a business may entail offering related services such as photography, video ,sound and event management the main focus of the survey is hiring out tents and chair at a small and medium level. The target market for the business is anyone having an event. The social class does not matter, although different business models may be applied to cater for various economic classes.

The Bigger Picture

At the national level the tents and chair hire business is influenced by a couple of factors:

Economy & Inflation

Kenya’s economy is projected to grow by about 5% in 2014, though this is lower as compared to previous highs it presents an expansion considering that in 2012 & 2013 the economy has been growing at below 5%. In 2014 lending rates are projected to go down leading to more investments and consumer loans , this is in addition to an increase in government will lead to more positive cash flows in the economy.

Inflation + Disposable Income

Inflation affects the disposable income and thus the amount of money an individual spends on products not considered to be necessities.

Kenya’s inflation rate peaked in September 2013 from August’s’ 6.47 to 8.97 before reducing

slightly to 8.25 in October. In December 2013 the average inflation rate stood at 7.5 %. Inflation is projected to reduce to an average of 6 %, with the governments own target being 5%. A reducing inflation rate will positively affect consumption of tents and chair services through more cash being available to spend on personal, social and corporate events.

Though the national outlook for the business is good the success of an actual venture will be tied to particular conditions which will become clear in the rest of the survey.

Capital, Process & Equipment

Equipment

Tents

Tents are usually sold first based on their capacity, and secondly by design. Capacity has to do with the number of people that can comfortably fit in the tent. Design on the other hand has to do with the look of the tent. Among the common designs include flat roof, high peak, marquee, dome and pyramid. There are also innovative tents like the clear tents which allow guests to see the outside, heart shaped tents and others. And there are now more colures other than white. Most independent manufacturers give the buyer a chance to select the canvas from a variety of colors.

With the increasing number of independent ( as opposed to big factory) tent makers the variety of designs is expanding as the tent makers try to outdo each other, and also as more tent buyers order tents made to their specifications. Some tent buyers search the internet for designs which they take to tent makers to replicate.

Prices vary with capacity and design but also the ‘features’ of the tent. For instance the type of canvas used the strength of the supporting frames. Some tent makers talk of ultra violet rays protection and water resistant in case it rains. When purchasing the balance is between what the vendor wants for her business and what her customers want. High quality canvas means that the tents won’t tear and depreciate easily. On the other hand her customers may not ask about the quality of the canvas rather they may be interested in the design and other fancy additions.

Also as more entrepreneurs get it and drop out of tents hire business, and trends change a secondary market of second hand tents has emerged. Considerations of quality (are they torn, faded?), design and price are important.

Independent manufacturers tend to be cheaper than factory manufacturers. However some of the independents lack a sort of quality control thus one may find an unnecessary fold, lose threads, rough edges in the frames and other such ‘small’ oversights. This is not always the case but is a higher possibility with independent tent makers. There are some who are extremely good and make tents of a better quality than those made in the factories.

No matter the source of the tent, prices tend to fall within a certain range. The difference is based on design, competition in the area, negotiation skills and at times even the time of the year.

Price of Tents

Capacity

50 People

100 People

 

Ksh.

Ksh.

Average price

50,000

100,000

Lowest Price Recorded

40,000

80,000

Highest Price Recorded

75,000

170,000

Other Common Price Points

55,000, 60,000, 65,000

90,000,95,000,110,000

Chairs

Plastic chairs are the commonly used. Generally there are two types of plastic chair used;

a)Chairs With Arms

b)Chairs Without Arms ( Armless)

When the tents and chair hire business started picking in Kenya plastic chairs with arms were the only used. However the market found them bulky, eating up lots of space and not easy to dress. Manufacturers reacted by making armless chairs. As compared to the chairs with arms more of these fit in a space, and their structure makes it easy to dress.

Most of those who have in the business for 3 or so years have both the chairs with arms and without. Among consumers the demand for armless chairs is more than for chairs with arms. The hiring out price is also more for armless chairs than for the chairs with arms.

Prices vary with the manufacturer and the seller. Though there are 3 main manufactures (Kenpoly, Adix and Complast) the price differences can be as high as Ksh.200 between 2 sellers. Some manufactures tend to be favored than others due to quality.

 

Price Of Chairs

 

 

Ksh.

Average Price

 

600

Lowest Price Recorded

 

480

Highest Price Recorded

 

800

Other Price Points

 

500,550,580,650,760

Chiavari Chairs

Since late 2011 Chiavari chairs have started gaining popularity. These are seen as more stylish, comfortable and giving a superior and exclusive experience. They come in many styles some made of wood, metal and even fiber with fancy cushions.

They cost between Ksh.2, 500 and Ksh.4, 500 and between Ksh.150 to Ksh.300. See Revenue for more) when renting out.

Tables

Plastic are sold based on size and design. The most common sizes are of a capacity of 6 and 8 people and design round and rectangular. Prices vary from Ksh.1400 to Ksh.4700 with the average price being Ksh.2400. The difference in prices depends on the seller, design and manufacture.

Since chairs and tents are the most in demand entrepreneurs starting with low capital purchase tables as the business grows.

Other Basic Items

Draping/Dressing Cloths – These cost between Ksh.50 and 150 per meter depending on the quality, and source.

Flowers – There is no standard price for these and they can be as low as Ksh.100 and high as

Ksh.1000.

Center pieces

Balloons

Suppliers

In Nairobi independent tent manufactures are found in Kariobangi, Jogoo road, Doonholm, Kikuyu, Thika Road, Baba Dogo, and several other places. They advertise on the papers and internet classifieds in addition to displaying their works in the open.

(If you have difficulties finding a tent manufacturer we are able to assist with the contacts of various makers)

Factory Tent Manufactures include

http://www.kenyacanvas.com/

http://www.kenyatents.com/#

One supplier sells equipment as packages depending on buyer’s budget. (Contacts available on request.) Here are the packages and prices.

Option 1 – Budget of Kshs. 20000

2 gazebos (tents made of cloth – green in color with white stripes) that can fit 25 people each @ kshs 10000

Option 2 - Budget of Kshs 30000

2 gazebos (as above) that can fit 25 people each - Kshs 20000

20 chairs white plastic seats @

- Kshs 10000

Option 3 - Budget of Kshs 50000

 

2 gazebos (as above) that can fit 25 people each - kshs 20000

55 white plastic seats @

- kshs 30000

Option 4 - Budget of Kshs 70000

2 white high peak party tents made of PVC that can fit 25 people each - Kshs 70000 Or go for option for the 3 gazebos and 70 white plastic seats total Kshs 70000

Option 5 - Budget of Kshs 100000

 

 

2 white high peak party tents made of PVC that can fit 25 people each - Kshs 70000

 

55 white plastic seats

- Kshs 30000

 

Option 6 - Budget of kshs 150000

 

 

2 white high peak party tents made of PVC that can fit 25 people each - kshs 70000

 

55 white plastic seats

- kshs 30000

 

 

 

 

 

 

 

A set of Complete PA System – Amp/Mixer/Mic and 2 speakers

- kshs 50000

Option 7 - Budget of kshs 200000 - 212000

2 white high peak party tents made of PVC that can fit 25 people each - kshs 70000

1 bridal white high peak tent

- kshs 70000

40 white plastic seats

- kshs 22000

A set of Complete PA System – Amp/Mixer/Mic and 2 speakers

- kshs 50000

Option 8- Budget of kshs 100000

 

2 gazebos (specifications as per above)

- kshs 20000

55 white plastic seats

- kshs 30000

A set of Complete PA System – Amp/Mixer/Mic and 2 speakers

- kshs 50000

Option 9 – budget of kshs 250000 and above

Here you can get to purchase 3 white peak tents to cater for an average of 300 people, a complete set of PA and music systems as well as catering equipment ranging from chafing dishes etc

Licenses

Other than a trading license issued by the local authority, No special licenses are required to run the business. However when playing sound in a public space a NEMA & MCSK license is required. Usually it’s the role of the event organizer to acquire such licenses.

Price of the trade license varies from county to county. Prices range from Ksh. 3000 to Ksh.10,

000.There are also many home based tents and chairs businesses that operate without any license. Though they may escape scrutiny it’s a risky move considering the enthusiasm with which the national and county governments are collecting revenue. Once in a while the authorities may raid an event asking for licenses.

Competition & Survival

No. of Existing Vendors

No. That Have Opened In The Last 1 Year

No. That Have Closed In The Last 1 Year

Status of Competition

Generally competition in the tents and chair hiring out business is intense and will continue to increase. For a start the barriers to entry in the business have been gradually reducing for the last 6 years. Equipment prices have gone down as a result of one rivalry among big manufacturers of plastic chairs and tents, two the rise of small independent tent makers and thirdly importers of the same items. The relatively low prices have allowed more entrepreneurs to join the business.

Demand for higher quality events has increased driven by lower equipment prices, a recovering economy and lifestyle exposure through education, shows on television, access to the internet and travel. The surge in demand has attracted and continues to attract more investors to the business.

Capital, as seen above, is not a barrier too; there are entrepreneurs who have started the business with as little as Ksh.20, 000. Again there are no special skills or licenses required to run the business. Any one with basic marketing knowledge and an investing spirit can run with some level of success this kind of business.

Distribution of Competition

Nevertheless competition is not evenly distributed with some urban centers under served, almost saturated or headed towards maturity. Maturity in this case means that the market is big enough to sustain the existing players profitably, while saturation means that new entrants take longer to break even and older businesses record lower profits.

In Nairobi all segments of the market, by social class, events or customer (weddings, funerals, corporate, individual etc) are served while geographically not all locations are well served. Although purchase decisions are not tied to location there are advantages in setting up in less competitive areas.

The market is segmented such that there are no players fully dominating. This implies that a new entrant with the right mix of factors (as will be seen below) has more than fair chances of succeeding. Of course there are a few big players ( like Wonderjoy & Chairmania) ,by scale, that have made considerable progress in branding as one stop event companies yet their share of the market is not big enough to discourage the entry of new players or lead to obvious low returns for the existing providers.

Opportunities, Survival & Critical Success Factor

Looking at the percentage of businesses that have existed for over a year, those that have opened in the last 1 year there are opportunities in the business. However as competition increases the critical success factor in terms of survival in the business is becoming marketing.

Even if a provider has the best services and items but the marketing poor then her chances of success are minimal. On the other hand if a provider has good marketing but not very good service or modern items she still can survive for a long time.

Marketing alone if not accompanied by service will make the business survive but not grow. Survival means the provider gets the occasional assignment, is able to meet related bills and perhaps even get a return on investment. Growth on the other hand means the business turns a profit, is left with excess cash, and is able to absorb any market shocks, adapt to trends and expand its share of the market. In the long run, when the market matures the businesses that remain standing are the ones that have been growing.

Per se the items of the trade are not differentiated much. The products are more or less homogeneous; a Kenpoly or Adix chair is the same wherever it is in the country. Before competition started growing at a geometric rate in the last 5 years or so, and supply outstripped demand in some areas, success was based on location and simple marketing efforts.

Presently though competition is based on Marketing, Capital & Capacity, Service, Levels of differentiation, Price, and Location.

Price

Intense rivalry in some locations has made some vendors result to price based competition.

In Nairobi, For instance, there are price differences of between 10 to 50 % for the same service: hiring of tents and chairs, this for the exactly the same size, make or design chair or tent. (See Revenue for details on pricing of different services).

Price is especially used by new entrants into the business so as to gain market share. It’s also used by those who have been in the business for over a year without gaining much traction, the reasoning being its better off to get some returns than none at all.

Price based aggression is also often used by those who offer tents and chair services informally as a ‘side hustle’ to get the occasional extra income. This is as compared to those who offer the service more formally through a formalized business with someone fully dedicated to it. The someone could be the owner or an employee.

Low prices do not necessarily lead to increased sales. Though price is a key consideration in purchase, it’s not factored in isolation. For mission critical events like weddings and corporate functions factors such as reliability and uniqueness tend to carry more weight. A customer purchasing tents and chair services for that kind of event will not be swayed by price alone.

However in a situation where all key factors are equal, and there is no particular advantage in going for the higher priced provider then the low price carries the day.

In this market there are what are considered standard prices partially determined by demand and supply and partially benchmarked against the oldest or well established player. These are the prices that consumers use to negotiate and new players to set own prices.

Capital & Capacity

A vendor with more capital is able to offer a wide variety of products. For instance she can have different designs of tents, linen, tables, flowers and more. Also she can acquire enough equipment to serve a big event or multiple events at the same time. The wide variety and extra capacity gives a vendor a competitive edge. She is able to appeal to more customers and pitch for bigger events.

Levels of Product Differentiation

Before 2010 there was not much variety in tents and chairs. Most tents were white and flat roof. Now they are manufactures experimenting with different designs and fancy shapes. Small independent tent makers are also making customized tents according to the instructions of the customer.

There are a few moderately radical designs. The biggest departure in 4 years being the clear tents, high peak, Marquee, pyramid shapes such as oxagonal and the use of ceilings. Otherwise tents tend to be of the same general look. If a tent, custom made or ends up being popular in the market it’s easily replicated, and the lead in design easily lost. Still there are advantages in having a lead. A lead in differentiation even within a small area helps win customers. This is more so for wedding and party tents.

Even if a vendor does not have a different product it pays to keep up with competition. For instance if high peak tents are the in thing then it’s a plus to have same kind of tents

The market being thus individual service providers often come with creative extras to try look different. Dressing chairs and tables was one of the earliest efforts at differentiation. At present this is commonly used, with some providers offering them free of charge and others as a premium addition. Nowadays there is more use of Chiavari chairs in weddings and corporate events. The chairs are preferred for their comfort and elegance as compared to plastic chairs.

In addition to the various tent designs that have come up, in 2012 a number of providers started hanging paintings, clocks and other décor items on the walls of the tents to try making the feel superior. There is also more use of potted plants and clear roof tents. One provider has introduced small cushions to rest on plastic chairs.

Beyond the designs the ‘grooming’ of the tents and chairs have become another point of differentiation. Statements like: New clean tents, Painted metal frame (as opposed to plain and rusted), frames strong enough to stand the wind, don’t go for torn tents etc point to this kind of differentiation.

Most product differentiation is easy to replicate as long as the rival has capital. A lead, however short lived, has advantages in getting references and establishing a head start in the market. There are also a number of providers who try to differentiate by offering a number of products as a package. Thus one may offer tents, chairs, and table and throw in a bouncing castle or face painting as a free extra.

Any creativity that makes an event look unique relative to others that have happened in the neighborhood is well received in the market. Customers seeking products for their weddings are the most open to differentiation. This is more so if the different creates uniqueness, saves money and helps solve a problem say of space or comfort.

Service

Service is another major point of competition. Even with minimal capital resources service providers are able to offer a level of service enough to satisfy customers and get references or repeat customers. Service includes the basics of customer care such as politeness and a warm character, punctuality and reliability.

At another level it includes the creative ability of the tents provider to fit the customers budget, suggest arrangements and related accompaniments. Some providers just deliver and set up the tents without investing time to make suggestions if need be.

Service is also the ability to provide an image of reliability. Customers want to feel the provider is committed to them, and if anything goes wrong on her end she will have a plan B.

Customers appreciate it too when a provider has at least one employee on the ground or on call. This is incase there is help needed in case a tent tilts, tears and so forth. Related to this is letting the event wrap totally before packing the tents and chairs. There are instances where tents providers start packing once they decide the event is over even without reference to the

customer. This is especially so for the small providers who have back to back events but no capacity, or those seeking to cut costs by hiring staff for a day instead of two.

Depending on the customer Service could be about friendly terms of payment. Good service contributes the most in getting references and repeat customers.

Location

Location is not a make or break in the tents and chairs business but it has a great influence on success. Location is in terms of one physical presence and two the market a vendor is targeting.

Purchase decisions in urban centers like Nairobi are not wholly informed by location. Thus a customer may not necessarily purchase from the tent services provider in her neighborhood, rather she may buy from whomever offers a good deal if located within a reasonable radius.

Still it’s advantageous to establish a presence in a location where there is a pool of the right potential customers. This increases the chances of walk in customers or have locals enquiring for friends and family located in other areas. This more so if one is operating from a shop or office.

Also from the local grapevine a vendor gets to know about the events happening and gets to pitch her services. Social places like churches and entertainment spots offer chances of landing a customer, more so for the providers operating informally from their homes.

Customers prefer to purchase from the immediate provider if their service and reputation is good. In addition to saving on transportation costs, if an event is happening in the neighborhood, there is comfort in the ability to make physical follow up if need be.

Competition is not the same across locations. There are areas which are underserved while others are saturated. Some seem underserved if considered by numbers and population. For instance a sizeable rural town may only have 2 providers, while an urban center of equal size might have up to 10 providers. Though the former location may seem underserved the reality could be the social and economic circumstances of the area cannot sustain more than two firms. The residents’ income may be low and thus not able to afford hiring tents and chairs for their events.

Alternatively the income may be high but attitudes not conducive for the business. Some may consider tents and chairs unnecessary expenses when the weather is okay for an outdoor event and chairs can be borrowed from neighbors or the church. Also social events of which tents and chairs are required may be occasional, far apart and not to able to viably sustain the business.

Yet even in such locations attitudes are changing and demand increasing. Devolution also has resulted in growth of more institutions based in relatively small and rural towns. Such institutions are potential customers.

There is an advantage of establishing an early lead in small towns and rural areas. As lifestyle changes through social exposure, demand for tents, chair and décor services will increase. Customers in small towns tend to trust the pioneer, although they will also respond favorably to

anyone who comes with a far superior product say a new design of tents. They are also more sensitive to price.

In urban areas where competition is stiffer visibility and accessibility plays a part in gaining customers. An open display of tents attracts walk in customers.

Marketing

As competition intensifies the more providers are starting to conduct aggressive marketing.

Presently most marketing efforts in the business are aimed at creating awareness rather than trumpeting the value a provider has. Such efforts are based on “I can provide you with tents” which is transformed in all marketing efforts like advertising or social marketing through the internet, family and friends.

Due to the minimal differentiation some of the most successful small providers have used this form of marketing to remain in business and at times even grow. This is because purchase decisions are to a large extent based on friends and family recommendations.

Nonetheless in areas where the market is crowded and every body seems to know someone who hires out tents and chairs the effectiveness of the I have tents marketing is reducing in favor of more value adding messages “I have a clear roof tent”. Customers of weddings are interested in trends, uniqueness and standing out so they are increasingly particular about what they want in terms of tents, chairs and the like.

Service providers who are aggressive in their marketing even in their social circles record higher sales.

Such aggression involves constantly lobbying those with any sort of influence in their circles. For instance church officials. It also involves networking with others offering related services. Hence a provider may form a working relationship with a wedding baker, and they market on each others behalf. This has been very effective.

A couple of providers in Nairobi go to buildings and hotels known for holding wedding and funereal committee meetings (like Kinagop, Express) and try to pitch their services.

More advanced forms of marketing include efforts to build a brand. Currently firms try to build brands around an image of a one stop for all that is needed for events, in addition to tents and chairs it includes , organizational capabilities, sound, catering, children entrainment and in some cases the grounds.

A little more capital is required for such. Branding activities may involve consistent advertising in all media, having branded materials like vehicles and a really professional image through an office and trained staff.

Social media is commonly used to advertise. This is through posts on Facebook groups, pages and online classifieds. The effectiveness of this depends on the confidence and image the provider is able to portray. The fact that customers using the internet are able to easily access a high number of providers and information means that comparing vendors is equally easy and when there is a tinge of doubt potential customer’s move on to the next best vendor quickly.

Persistent marketing accompanied by consistency in providing good service eventually produces a number of satisfied customers who are able to give references and generate leads so that the business now grows without the need for intense promotion.

Market Entry

Several market entry strategies are presently used by tents and chairs vendors:

Buy Tents and Chairs, Keep Them In The House Or Backyard, Then Spread The Word Among Friends & Family

This strategy is now commonly used by small vendors getting into the market. They chose this method either for lack of capital to do formal advertising or hire space from which to operate. Sometimes the vendors may have capital but are uncertain and anxious about the returns of the business and opt to start from a theoretically rent free space until they are confident the business can sustain itself. For others the use of the strategy is not motivated by anything in particular rather simply copying what they see or have heard other small vendors doing.

The success of this depends on among things the quality of friends. Quality in the sense of how the friends take the vendor. Are they committed to marketing on her behalf? Also it depends on their social circles. Although anyone could be a potential customer there are classes of people more likely to purchase than others.

Motivating friends and family through monetary incentives helps them to be more proactive rather than passive in marketing. Cash incentives work better than relying on goodwill. Professionalizing a little by business cards or leaflets also helps.

This is a good beginner’s strategy but not the best for the growth of the business. Relying on this strategy alone makes the business grow slowly, slower than it could have if combined with other strategies.

Buy Tents and Chairs, Keep Them In The House Or Backyard, Then Employ Sales People To Market

This strategy takes a more proactive role in seeking customers. Some vendors use dedicated sales people, while others use freelancers. Some put the salesperson on a small retainer plus a commission based on sales while for others reward is purely on commission.

Either may work depending on the skills and dedication of the salesperson. It also helps if the tents and chairs are sellable: in terms of quality and trends. And since most commission sales people will only operate within a certain radius where they can manage their costs it’s a plus to be in a location with a pool of enough potential customers.

This strategy works but is tied to the salesperson and the motivation he or she gets.

Buy Tents and Chairs; Keep Them in the House or Backyard, Then Form Partnerships with Those in Related Business

This strategy is aimed at reaching out to those who are most likely to be in need of tents and chairs by virtue of the events they are having. Related service providers include Bakers, Caterers, Coffin makers, Sound system providers, Wedding cards printers /designers, DJs and MCs among others.

The partnerships are formed on the basis of cross selling. For instance if a soon to be married couple approaches a wedding card designer, the designer suggests to the couple the tent and chairs vendor. Trust is the keyword. If the couple has trusted the designer and are confident of his abilities, then they are likely to take his advice regarding other related services.

Agreements can be on mutual sales or commissions. In the former case the vendors mutually refer customers to each other, while in the latter the tents vendor gives a commission on every successful sale coming through the wedding card designer for example.

This strategy works. The level of success depends on the marketing skills and reach of the related businesses.

Buy Tents and Chairs, Keep Them In The House Or Backyard, Then Purely Use The Internet To Market

Currently this is increasingly being used. The ease with which consumers are able to use the internet to access providers, compare terms and services and get recommendations is driving many of them to use online forums to search for vendors. Hence an entrepreneur buys the equipment then sets up systems to market on the internet. The most common being a Facebook Page where a vendor displays the items on offer and tries to pitch. A few have set up full fledged websites and also free basic Kenya Business Online websites. Many also advertise on Facebook groups and free classified websites like OLX, Pigia Me and Kenya buzz. Some have their ears on the ground in Facebook groups and pages so as to tap on those posting seeking services.

Success depends on skills in online marketing. Trust and references are crucial in the online space. A good display of what is on offer; testimonials and a quick turnaround help make sales. Putting a proper ad in the form of correct grammar and formatting, details and professional photos helps gain confidence of a skeptical audience on online classifieds and Facebook. Strategy like knowing which groups to join, when to time posts and marketing emails, how to craft replies and ads matter. A well designed website, kept fresh with relevant content also greatly helps.

This strategy works if done well. Patience, Persistence and Consistency are needed. The biggest advantage is how good references easily spread and turn to actual sales. The converse is also true, poor service will lead to a bad reputation and negative reviews which can spread even faster. At the end of the day a superior product and service is what consumers are looking for.

Buy Tents and Chairs, Keep Them In The House Or Backyard, Then Focus On A Few Influencers

Rather than targeting the whole market a vendor focuses on influencers such as pastors and other clergymen, school head sand members of the board, committee members of institutions, PR officers of companies and others in a position to influence purchase in organizations.

Sometimes a monetary or in kind (gifts) may be necessary so as to tilt sales in the vendor’s favor.

This strategy works if there are opportunities in the organizations and influencers are willing to lobby on your behalf. Not good for the business if done in isolation.

Buy Tents and Chairs, Partner with a Shop to Display the Tents

In this case the vendor partners with a shop or a mall which has some free space outside so as to display her products say by pitching a small tents and showcasing some chairs. If the products are good the immediacy of the display helps attract walk in customers, some who might purchase immediately or pick contacts and purchase later. This works especially if the tents or chairs are unique as compared to the competition.

Shock and Awe

Here the vendor enters the market with a unique, superior and functional product as compared to the competition. She uses any method to market but her core message is how different her products look. This strategy works especially if the target markets are weddings and parties.

Buy Tents and Chairs, Open an Office or Shop

This takes a more formal and professional approach to the business. The vendor herself or through an employee runs the business fulltime. They spend full days selling the business and trying to reach more markets.

A lot more capital is needed for this since there is rent and perhaps salaries to pay. On average such businesses take an average of 7 months to break even. The duration may be shorter or longer depending on other business factors.

The formal set up helps acquire skeptical customers, walk in customers and more corporate customers. The full time dedication, the knowledge that there will be business bills to be paid at the end of the month leads to more aggressive marketing.

A Combo Strategy

This is a mix of all the above marketing strategies whether operating from home or an office. Its involves a clear marketing strategy, persistence and aggression. This is a combination of formality and a casualness of social marketing. Though this may mean more investment in time and money but is the most effective.

Few entrants start with a combo strategy rather they evolve to it as the business grows.

Revenue

Tents

 

 

 

Size

50 People

100 People

Average Price of

3000

4250

Hiring Out (Ksh.)

 

 

Lowest Price

2500

3000

Recorded (Ksh.)

 

 

Highest Price

4500

6000

Recorded (Ksh.)

 

 

Other Price Points

3500,4000

3,500,4000,5000,5500

For bigger capacity say 500 people the price is usually a multiple of the 100 capacity tent. For instance if the price of hiring out a 100 people tent is Ksh.3000, most vendors will price the 500 people tent at Ksh.15, 000 (Ksh.3000 x 5)

Chairs

Type of Chair

Armless ( Plastic)

With Arms (Plastic)

Chiavari

Average Price of

15

15

200

Hiring Out (Ksh.)

 

 

 

Lowest Price

10

10

150

Recorded (Ksh.)

 

 

 

Highest Price

20

15

300

Recorded (Ksh.)

 

 

 

Other Price Points

17

 

250, 280

 

 

 

Tables

 

 

 

 

Capacity of Table

 

6 People

8 People

 

 

 

Average Price of Hiring

200

 

250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Out (Ksh.)

 

 

Lowest Price Recorded

180

200

(Ksh.)

 

 

Highest Price Recorded

300

350

(Ksh.)

 

 

No of Events Served In a Month

 

No

Average no of Events (Ksh.)

1

Lowest No. of Events Recorded (Ksh.)

0

Highest No. Of Events Recorded (Ksh.)

21

Monthly Revenue ( Tents & Chairs)

 

 

 

Average Revenue in a Month (Ksh.)

10,500

Lowest Revenue in a Month

(Ksh.)

0

Highest Revenue Recorded

(Ksh.)

210,000

As mentioned in Competition & Survival there is no standard pricing formula in the Tents and Chairs business. However there are what both customers and providers consider market prices. These as shaped by the amount investors in the business consider a fair charge so as to get a return on their investment within a reasonable time.

Return on Investment

A crude way to measure the period it would take to get a return on investment in a chair is to divide the cost of buying a chair by the price of hiring it out. For instance a chair costing Ksh.600 would take 30 event days (600/20 if the chair is being hired out at Ksh.20 per day) for a provider to get back the money she invested in it. Of course this is a crude method simply to give a guideline since other factors may come in place such as price discrimination, labor and transportation costs, inflation and higher returns on other services being offered by the provider.

As more people get into the business, and trends change (driven for instance by custom made tents, chair imports, exposure to international styles etc) it’s a plus to get a return on investment within the shortest time possible.

For instance in terms of trends there has been a major shift from plastic chairs with arms to armless seats which are easy to dress and consume less space. Entrepreneurs in urban areas who had invested in the plastic chairs with arms are finding it difficult to hire them out. If such a vendor does not have capital to upgrade to the armless plastic or chiavari chairs then her

businesses slows down or collapses. There is also a gradual shift towards marquee and pyramid tents which are considered aesthetically pleasing.

Depreciation

There is also depreciation to consider. Whether used or not tents and chairs depreciate naturally as a result of exposure to elements. The more they stay the more they lose their shine, and eventually their marketability. Many vendors put the lifespan of a chair and tent at between 2 and 4 years depending on how well they are maintained, the materials used to make the items, and trends.

Terms of Payment

Terms of payment vary from one vendor to another but often take the form of a deposit paid by the customer when booking and the balance on delivery. Some vendors prefer a 50% deposit on booking and 50 % on delivery while others work with a ratio of 80% and 20 % and so forth.

Unless when delivering to organizations it’s prudent to insist on a deposit first, this commits the customer and protects against last minute cancellations. For vendors with small capacity cancellations are costly because they may have involved turning down another customer so serve this particular one. Among the reasons that may make a customer to cancel include they have gotten a better deal elsewhere, or they want to give the contract to a friend or in rare cases an event has been rescheduled. The terms of payment work best for the business if they are friendly and based on mutual trust.

Most corporate organizations often pay on delivery. Credit period of a large number of medium and large sized firms is between 30 and 90 days. Although most organizations will aim to dictate the terms of such a contract a vendor has room to negotiate better deal for herself.

Transport Charges

Transport charges vary from vendor to vendor. Relatively big providers, with own transport vehicles, sometimes deliver free of charge for orders of certain sizes within a defined radius from their premises. Otherwise they charge a transport fee.

Smaller players more often than not charge a transport fee unless the event is in the immediate neighborhood. The fee is as negotiated with the customer, and tied to distant and the number of items. A common formula of charging for transport is per chair with charges ranging between Ksh. 7 to Ksh.20.

There are customers who arrange to transport the chairs and tents from the vendor’s premises to the event’s venue. This is if they find such an option cheaper as compared to paying the vendor transport charges

A quick note about customer’s own transport : In 2012 and 2013 there were several reported cases of vendors who entrusted their items to ‘customers’ who came with their own transport, only for the said customers to turn out to be conmen who disappeared with Canter full of items . Thus in case of doubt, some basic precautions should be taken without sounding eccentric lest the customers be genuine.

Pricing

As noted charging a price way below the market average does not necessarily lead to increased sales. Revenue is largely a function of marketing. If lower prices are not accompanied with good service then they don’t offer any advantage. Also customers are unlikely to compromise the quality of their event for the lower charges. For example if the lower price service provider does not have quality tents then the customer is unlikely to purchase simply because the price is low.

On the other hand above average prices are likely to put off customers even if the service is good. This because there will be a rival vendor offering the same service at a lower price. For customers and vendors it’s a balance between charges and service

Some Revenue Pointers

Revenue is a function not just the number of events served but also the nature of the events. Events taking more days generate higher revenue and are preferred. Such are often dominated by organizations (e.g. companies, churches, schools) and in some cases individuals’ .e.g. through a period of mourning.

More churches are acquiring their own tents and chairs, some even getting in to the business by leasing out to members at a subsidized rate. Bigger companies often higher out all rounded events company to run their occasions while medium sized and smaller organization the events are managed in house. The latter are likely to hire small and medium sized vendors to provide tents and chairs. In either case it’s easier to get contracts when the vendor is formally registered rather as an individual.

Sometimes a provider has to collude with an insider so as to get a contract. This may involve giving the coordinating person an incentive of sorts. Whether to give or not depends on the vendor’s personal principles, and if one decides to give then the value of the incentive is measured against the possible returns in the short term and also in the medium and long term in form of repeat contracts.

Revenue is higher among vendors with capacity to service several events at the same time. So that if they get 2 or 3 contracts on the same day they are able to service comfortably without having to turn down one customer.

Revenue is also higher among providers who are consistent and aggressive in their marketing: Having a plan to promote the business on a regular basis and the ability to get into all spaces. Such marketing involves using any appropriate opportunity to market the business. It also involves getting into rival spaces, and undercutting them in terms of product and services.

As noted purchase decisions are to a large extent by recommendations of friends and family. Such recommendations happen when a customer or guest has experienced a service and enjoyed it. Alternatively if they have heard of someone who deals in Tents and Chairs from their friends. The latter is more effective for start up vendors who have to find a way to gain the initial batch of customers from who to grow.

References carry more weight. Leveraging references leads to more revenue in the long run. Vendors who reported relatively higher income quoted references as their biggest source of business. Eventually when there are a number of satisfied customers the vendor can be assured of customers every week even without extra marketing efforts

Vendors with an internet presence are getting relative more leads. A good internet presence involves a Facebook page, or a website. Photos of items on offer, a portfolio and testimonies help validate a vendor and tilt customers in her favor.

Revenue is higher among firms which cross sells related products. Sound and documentation (video and photography) are the extra services most in demand. Sometimes the customer doesn’t have very good information of where to get the other items needed for an event such and she tries to network from the tents provider. There are many vendors who partner with people offering the extra services. For instance a vendor may quote a higher price than the sound provider charges and keeps the extra money. Alternatively she may a commission when she successfully refers the sound provider.

Though Revenue in Nairobi and other major urban centers has been comparatively higher, vendors operating in small towns are now recording higher revenues. Competition is less in such areas and the demand increasing due to changing lifestyles. Vendors who establish early in such towns are able to easily capture and dominate in the market in such a way that it becomes difficult for new entrants to survive in the business. Still in such small markets it’s easy to penetrate and conquered by having differentiated products.

Consumer Behavior

Presently potential customers make purchase decisions first based on friend’s suggestions. These could be close friends and family members or little distant friends in social media. Secondly is through companies with a presence of sorts. E.g. through board advertising, Facebook pages and websites or better still a physical visible and accessible display. Thirdly purchase decisions may be through proactive marketers, who will approach a potential customer on getting information they are having an event coming up.

For weddings and corporate events a woman is the primary influencer in the buying process. For funerals and birthday parties men are the primary influencers, while for other events it could be either. The primary source of information to help make purchase decisions comes from friends and family, and also the internet for those in urban centers.

Customers purchasing for weddings are concerned about aesthetics and a price fitting their budget. For corporate and parties it’s a balance of aesthetics and functionality, with the latter carrying more weight. For funerals budget and functionality are the key considerations.

Generally customers look for aesthetics, reliability, functionality, good service and a fair price.

Aesthetics and Functionality

For events like weddings and parties customers are looking for a unique or eye pleasing set up. Many consumers in urban centers who are planning a wedding want it to stand out from others that have happened. They want the set up to capture the feel good mood of the event. This is by the design of the tents, tents, chairs and dressing.

Consumers prefer tents and chairs which look well kept, fresh, and where possible of a unique design. The design is not necessarily unique in terms of how the tent is made but how the vendor is able to use the available space creatively for a fresh look.

At the end of it consumers want functional tents, meaning the tents serve their core purpose which is to offer shade and comfort. Thus no tents which leak or weak chairs.

In some cases the customer may not know the quality of the tent s and chairs until they have been delivered and it might be too late for the consumer to get an alternative. Although a vendor may still get his pay a big opportunity is lost for positive references from the customer or visitors at the event. Positive reviews are key for growth in the business.

Reliability

Customers want an assurance that the vendor will deliver, and also according to specifications. The market is awash with stories of vendors who didn’t deliver at all. Others brought tents of smaller sizes or of a quality other than the one they had promised or showcased. There are also cases of the provider sending few or less skilled staff to set up who then become overwhelmed and work slowly or shoddily.

Good Service

Like mentioned good service is about a level of professionalism and also basic customer service. Service entails the relationship the vendor builds and actualizes throughout from the point of enquiry to the end. It’s also about the provider making genuine effort to understand the customer’s needs and even suggest possibilities.

Fair Price

Consumers want to be charged fairly. Fair does not necessarily mean lowest but a price that equates the service and is within market rates and their budgets.

Manpower

For small and medium sized vendors there are two main kinds of employees:

1. Salespeople

These help in marketing the tents and chair services. Largely many providers don’t look for any special skills other than the ability to sell. However salespeople with experience or evidence of their ability to sell end up performing better. Recruitment is usually through friends, newspapers and internet classifieds.

A number of vendors recruit as many commission salespeople as they can and let them lose in the market. This according to survey of vendors is not as effective as a structured sales strategy. This is as compared to salespeople being deployed in specific areas or asked to cover particular kind of clients, and to continually give feedback of what the potential clients are saying. This kind of information can help the vendor make improvements. Also the salespeople are more

committed and determined than if they were free with no sort of obligations wherever other when they make sales.

Reward

The main forms of reward are commissions which average 20 %. The lowest commission recorded is 10% and the highest 40%.

There are salespeople on a salary and commissions. This is aimed at making them more accountable and committed. The average salary is Ksh.7, 000 with a commission of 20%.

Other reward methods include setting a price for services and encouraging the salesperson to sell at a higher price. The salesperson keeps the difference.

2. Casual Staff

These are used to set up the tents and chairs in addition to cleaning them after an event. This is a low skill job and any able person over 18 years can do it. Due to the lifting and climbing that may be required many vendors prefer to have male workers. Recruitment is usually through word of mouth in the area of operation. At times when the owner is not available to supervise the set up she may recruit a supervisor or elevate one of the casuals to be a supervisor.

Many vendors prefer to have a high no of workers s on relatively low pay, than few with high pay. This is because the work is quite manual and an optimal number of people will work faster and efficiently than few who are overworked.

In order to manage costs some vendors recruit the least no of casual workers possible, which are two. This may lead to sloppy service especially in set ups of 200 people and above, and where the visitors are not available or willing to assist in putting up the tents and arranging the chairs.

Reward

Reward is on a daily wage. The average is Ksh.400; the lowest recorded is Ksh.200 and the highest Ksh.800. The figure varies with the negotiation skills of the casual laborer, the location and the hours of operation.

Other Staff

Depending on the mode and size of operation one may have a full fledged marketing manager supervising salespeople, a receptionist to receive calls and sell when the provider is not available and even a driver. There is no standard pay for this and reward depends on the scale of operation and estimated possible returns.

Index

Some of the tents present in the market

Chiavari Chairs

Armless Chairs

Chair with Arms

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