25+Top Worst Business to Start in Kenya in Today : Don’t Start These!

One of the very most critical decisions you will ever make in starting your own business is selecting the best-fit business idea for you to go within your entrepreneurial journey. In case you are an upcoming entrepreneur, it is quite easy to have an assumption that any business ideas you land on are going to be lucrative. Once you get started with this business idea in Kenya, unfortunately, this is not always the case because of the many constant factors that keep varying every day such as market, competitive prices, new products, shifts in the economy, and lower demand for the product or services which can be unpredictable when starting.

According to statistics nearly 20% of businesses fail within the first year of launching.

Some of the common obstacles why business ventures in Kenya fail include; lack of resources such as capital, poor management systems, adopting a wrong business model, and lack of marketing of the product or services to the public.

This article will cover some of the worst businesses to start in Kenya. These business ventures are not necessarily unprofitable since some have proven to be lucrative over time but in the current market they have shown a lack of demand for the services and goods they are offering and a decreased demand indicates a declining market which leads to a drop in sales in the overall business sector. Others are overcrowded and increased competition for the services offered in these businesses leads to low prices among the sellers, reducing profit margins.

Table of Contents

list of worst Businesses to start in Kenya

1.Matatu Business Venture

The matatu business venture in Kenya is a ruthlessly competitive industry in Kenya with several high regulations. The costly initial capital to acquire the matatus including the daily running and maintaining cost of the matatus is high for most starting entrepreneurs. Factors hindering the matatu business are such as frequent police harassment and the risk of careless accidents making it the worst business to start in Kenya and a very hard industry for new entrants to thrive and be successful.

Costs of Acquiring Vehicle

Several cost factors involve the acquiring of the vehicle, registering, maintaining, and running costs or expenses.

Legal requirements- are costly to have and maintain including business permits, licenses, and insurance.
Vehicle Branding cost- since most passengers prefer matatus pimped with trends in the music industry Hip Pop, Drill, Gospel, Hollywood actors, Artists, Movie celebrities, Sportmens, etc., Interior design includes sound and lights and stylish seats, neat floor, and roof structures fitted with led screens all this increases the cost of starting a success matatu venture.
Sacco registration fees-New entrants also need a SACCO to get started in the operation of a matatu in Kenya. Getting your matatu into one of the SACCOs is a complicated and costly process that needs large amounts of capital to battle through the corruption you may encounter while carrying on the process.
Maintenance is another big difference to poor road conditions leading to frequent breakdowns. Downtime and frequent repair costs can be stressful and worse end up taking money from your reserves while disrupting daily operations resulting in the worst business to start in Kenya.
Acquiring vehicle-on credit or loan from financial institutions. With a staggering industry, the income required to be generated to repay the loan becomes a hurdle to most business entrants.
Other additional costs include but are not limited to vehicle trackers.

It is essential to say that once you get through all these hurdles and get your matatu in a decent SACCO, the matatu business has proven to be lucrative because the market is large and the high margins are on point.

see a video of the matatu business

2. Movie Shop

Kenya’s movie rental shops are struggling to emerge in the low-demand industry that has been ensuing since the digital era came into the picture with unrelenting volatility. Streaming services have become digitized and easily accessible to the common man on the streets steering the need to purchase edutainment films from these once-crowded film shops which lately have turned out to be absolute. With a little pc you can be hooked on the internet and soon before you know it you are staring at a live show, game, or sports movie with high production quality. Digital streaming services like Netflix, Showmax, and YouTube offer easy access to content to users around the world with a click of a button rendering the traditional movie shops obsolete and hard to prefer in accessing entertainment.

Most Kenyans are now referring to digital media over physical hard copies. This recurring shift is especially evident among urban dwellers and younger tech-savvy Kenyans. They opt for streaming on their phones or computers while accessing more diverse and trending features in the entertainment.

Increased availability of pirated content is a challenge to authentic legal businesses. This easily accessible and very available pirated content, both online and in markets, hurts legitimate businesses competing in the same environment. Such competition with free, illegal options makes it hard to stay profitable and places this as the worst business to start in Kenya.

The high cost of licensing requirements and the ever-decreasing customer demand make running a movie shop a severely risky and often unprofitable venture.

But there are a number of remaining Kenyans who can’t afford to stream online due to the payment of these services plans. Leaving an opportunity to work depends on the location of your movie shop building where you can still get such potential interested customers.

3. Shylock Business

Shylock business in Kenya can seem like an easy easy but there is a caveat since it is prone to risks. It experiences an increased high default rate among borrowers leading to unpaid debt so making the debtors non-repeat customers and plummiting income revenue for the lenders. Additional challenges a led due to debtors still struggling to clear their debt in the tough economic times. Considering this worst pattern in the venture it is among the worst business to start in Kenya.

Most of the lenders have their backs against the wall where retreating is impossible and are faced with the reality that recovering their money is absolute, resulting in a significant unpremeditated loss.

There seems to be a light at the end of the tunnel with the involvement of the government in following some of the predatory lending practices, enforcing regulations on interest rates, and looking into lending terms. This has seen the profit margins plummet for money lending businesses in Kenya making it the worst business to start in Kenya.

Reputation in relation to the clientele base is often negative and looked at as an opportunistic venture to lure the impotent naive debtors into the public making it hard to make a positive image in the customer’s minds and retain the existing debtors.

4. Bodaboda Venture Using Costly Loans

Bodaboda is likened to an offline taxi business mentioned in Kenya. With increased predatory lenders targeting the motorcycle or bodaboda business in Kenya and taking advantage of the borrowers to bodaboda instead of helping them while preying on some illiteracy levels among the riders. They present baited loans with high interest rates which the bodaboda riders have to make a daily repayment to settle the loan with high interest over time. Considering the nature of the bodaboda business the average repayment daily is about Kshs.300/($3). Factoring the daily income after all the daily services are catered the remaining amount is less after the cutthroat deductions that keep recurring until the loan is settled after that the business owner and rider work together to gather funds to secure the motorcycle from repossession and penalties. Several factors make such a business one of the worst businesses to start in Kenya.

To get started in the bodaboda business: Avoid the predatory expensive motorcycle loans in Kenya they might drain your money reserves.

5. Charcoal Business

Charcoal venture is a traditional business that started a long time ago and has been a source of livelihood for many folks mostly in villages. Several years ago the government began putting a firm first on these charcoal sellers and this has resulted in the charcoal sellers in Kenya making significant losses in demand and demand from the urban dwellers. The efforts to reduce charcoal selling are geared towards a sustainable and renewable source of energy in the future and the need to reduce greenhouse emissions in many nations across the globe. It is estimated traditional wood energy, including charcoal, emits 1–2.4 gigatons of carbon dioxide equivalent (CO2e) per year. This is 2–7% of total human-caused greenhouse gas emissions. This regulation has led to less charcoal accessibility and high cost for the available charcoal in the market. Bringing charcoal venture as one of the worst businesses to start in Kenya.

Furthermore, the charcoal business is associated with illegal activities, such as deforestation increasing enforcement by the government. The risk factors such as fines and the loss of business make charcoal selling a challenging venture with low returns to the sellers.

6. Photo studio business

Although photography is still a crucial aspect of our lives the introduction of smartphone cameras with high-definition quality photos has led to a reduced demand for traditional photography studio services in the market. A majority of Kenyans have easy access to smartphones with cameras that capture moments in any setting. Several factors such as the price of DSLR cameras, lights, studios, and photo editing applications act as a barrier to the shrinking traditional photo studio model due to their high cost of purchase and maintenance.

Everything adversity comes with opportunity and in the case of traditional photo studios try and opt into the freelance photography services with a wide array of options such as weddings, food photography and street photography, etc., find what works for you and your style and transform your photography passion into paying hustle.

7. Cybercafe business

We have observed an increased number of smartphones and very affordable internet plans available in most places across Kenya making it easier than ever before to be connected to the internet from the palm of your hand while on the move, in the comfort of your home, or while doing day-to-day errands. This makes the cybercafe browsing and internet connectivity services a second option for the majority with easy asses to computer and internet connection leading to a low demand and reduced income. Faced with such challenging difficulties this brings cybercase business as the worst business to start in Kenya.

8. Retail Shop

Starting a retail shop in Kenya sounds like a walk in the park but it is a business that comes with many hurdles along the way such as stiff competition coming from the far more established retail shops. Min malls, online shopping sites, and wholesale stores offer a more diverse range of products at a deducted price with offers and a strong diverse customer base. Several costly factors such as rent, other utility bills, stocking of goods further leading low margins of profitablity while running retain shops in Kenya. Access to the internet has led to a reduced need to visit retail shops in person since a customer can browse a product (s) and place an order and it is delivered within a few days at a convenient time, placing the physical retail shops as the worst business to start in Kenya.

9. M-Pesa Agent

M-Pesa has made sending and receiving money directly accessible and faster in Kenya, setting up a Mpesa agent outlet is not in demand as when it was starting in 2007. Several Mpesa agents are set in every point, we have over 160,000 agents countrywide ready to serve customers. Making the market crowded and also competitive which in turn drops the commission that an agent earns. Several factors such as initial starting capital are a hindrance to the market which is saturated, with agents found on almost every corner in major towns and rural areas. This saturation has led to fierce competition, driving down the commissions that agents can earn.

Additionally, the cost of setting up an M-Pesa shop, including the need for capital to handle daily transactions, can be quite high. There is also the risk of fraud and theft, which can result in significant financial losses.

As Safaricom continues to innovate and introduce new digital services, the need for physical M-Pesa agents may decline further, making this business a risky investment and the worst business to start in Kenya.

10. Money Lending Business

The money lending business in Kenya has many tolls involving it. The strict regulations put in place by the Central Bank of Kenya(CBK). CBK has strict regulations on any players involved in the ventures of money.

The plummeting economy of Kenya is a hindrance to this business. Many Kenyans have little to no access to liquidity and the recent past has seen an increase in lower purchasing power. The circumstances following this contribute to low repayment numbers on the money lent to them showing a slow payment process over time or some not being able to pay quite the full amount of our money. The money lending business is among the worst businesses to start in Kenya. A high default rate is experienced by many borrowers. A borrower without a clear confirmation of their credit check history.

Lenders must compete with more established financial institutions. The competition between emerging mobile platforms such as M-Tiwari, and Tala and other competitors like Banks and microfinance institutions. This more established institution has better technology integration into their systems and reserved capital to take care of lenders and any unexpected turnouts and serve a broad clientele base in the market who can pay the prices.

Other easily accessible sms options on mobile phones such as Fuliza.That requires little availability and the conditions relied on for lending money are usually less strenuous than banks and others. Individuals can get a little extra deposit from this simple option. Requiring a Safaricom customer to dial *234# to join fuliza.

11. Luxury Car Rental Business

Launching a luxury car rental business in Kenya is a pursuit of hardship. Several factors such as a small clientele base affect the luxury car rental business in Kenya since luxury is not a necessity for most people. We want to make life more relaxed but only a few of the wealthy individuals with enough saved cash reserves can access such services, while others have a handful of enough to live anxious enough. This business is abandoned because the initial starting capital is far more than most people envision and a series of trial challenges can quickly drain your saved money with any miscalculation. A possibility of breakdown can leave you with nothing if not accounted for at the start. In some rare cases, theft and low tourism can lead to monumental loss. Parts of servicing the vehicles confirm another key challenge far more expensive than obvious utilities such as fuel. It is a hard business to navigate and sustain making it one of the worst businesses to start in Kenya.

12. Tendering to the Government

Government tenders are often seen as a profitable opportunity in Kenya, but the reality is far from this expectation.

The tendering process competition is marked with several corruption hurdles and bureaucratic red tape. To secure a contract is highly competitive and often marred by corruption, favoritism, and bureaucratic red tape. Securing a government contract needs a well-connected person and several hidden costs of binders in the process to win such tenders bringing tendering to the government as the worst business to start in Kenya.

Although the tender is successfully awarded, most payments are delayed and a low cash flow is common. Making tendering unreliable, often risky, and can lead to financial instability.

13. High-End Jewelry Boutique

The running cost of high-end jewelry boutiques takes a big toll on inventory. Specialized knowledge of how to of the industry’s needs makes the niche hard to penetrate and sustain the business. New entrants should explore the vast majority of the affordable accessories and cover a broad base of customers with lower purchase power. A high-end jewelry boutique makes it hard to generate decent sales due to the limited demand. Several factors make high-end jewelry boutiques one of the worst businesses to start in Kenya. Small markets for specialized accessories such as special occasions such as weddings can be easily navigable and demand may be taken with a pinch of salt since the vast majority of Kenyans are not focused on high-end accessories.

14. Fidget spinners shop

Fidget spinners became popular as a craze object. It was obvious there was not enough demand for the short seasonal success of spinners. The demand for a fidget spinner store is low making it among the worst business to start in Kenya. Entrants in such associated businesses can focus on long-term existing business products that serve a broad base of customers which can boost sales such items are toys and games that educate the customers and this can act as a reviving moment.

15. Generic Clothing Shops

Many new entrants in Kenya saturate the market with the clothing market by offering similar products. Reselling generic clothing often leads to low profit margins and struggles to stand out. Instead of entering the generic clothing market, entrepreneurs can explore niche fashion segments. They can also offer unique designs tailored to local preferences. A startup tried to enter the generic clothing market. But, it struggled to attract customers. The market has fierce competition which makes this the worst business to start in Kenya. They pivoted to designing and selling eco-friendly fashion. They found success in a small market.

16. Taxi Business

The taxi business in Kenya with very high-interest loans serves as a risky venture into the modern and organized transport sector. Repayment of the loans can be a hindering factor and considering an over 15% p.a with monthly payments. As the running of business is costly considering all the deductions the business tends to be less lucrative.

Available services such as Bolt, Faras, Uber, Little Cab, and Indrive have transformed the taxi industry. New entrants in the market have stiff competition facing this well-accessible, preferred means of movement as taxis have become obsolete and have less demand. Install an app on your mobile phone and you have a close driver near you and you move from point A to B easily without going through a rocky patch. Additional costs such as fuel, maintenance, and licenses cut the running cost making this a challenging venture and among the worst businesses to start in Kenya.

17. Starting a consultancy service in a niche

Starting a niche consulting business in Kenya can be tough, despite its potential for high earnings. The main challenge is finding clients for specialized services. Many businesses might not see the need for or afford such services. Building trust and a client base takes time. This period can be financially tricky. Moreover, local consultants face tough competition from well-known international firms.

18. Organic farming without proper research

Venturing into organic farming in Kenya comes with many risks mostly when it is not well researched. The Organic farming market is in the growth phase and many of the customers are not very well acquitted takes place in that area. Anyone practicing this faces challenges such as unreliable market trends, low demand, and low-profit margins. There is stiff competition from well-established farmers.

19. Beauty and Cosmetic Shops in Saturated Areas

When it comes to running a beauty shop in very busy places it is quite hard since there are already other operating beauty shops in business which leads to one dropping prices to be able to stand out in the crowd and end up lowering the growth of the shop. Shops with wide reach are often preferred by many customers.

20. Liquor Store

There are so many government restrictions around licensing and operating a liquor store. These licensing and control requirements bring a lot of challenges to the operation of the business including working hours which in turn affects the

21. Starting a Music Shop

Music shops used to sell like hot cakes but in recent times, the demand has significantly gone low. Most people have songs on their phones and computers. The emergence of music-sharing platforms such as Spotify has left many moving to digital spaces to listen, stream, and consume their favourite artists’ mucis on the move.

22. Starting an Insurance Company

Insurance companies run on less unpredictable happening in life. Provision of monetary protection services backed by policies can be uncertain. Mostly a client pays and based on the agreement they receive monetary service for a certain period.

23. Manufacturing and Production Business

The right product is king in this space and massive amounts of capital are required in the initial establishment. High taxes and several conditions must be adhered to.

24. Starting a Political Blog Business

Crafting political narratives comes with good and bad which can result in hate and negativity among political leaders resulting in unwanted and unforeseen scenarios if not well approached.

25. Starting a Betting Firm

Starting a betting firm comes with several hurdles such as licenses and stiff competition from well-established competitors in the market. Sometimes it can lead to the closing of the business based on government directives.

26. Starting a Traditional Print Media

Online space is more available and easily accessed improving the consumer’s convenience to interface with what is currently going the reverse of what traditional media has been doing for years.

27. Mushroom Farming

Requires a lot of initial capital to start and the cost of operation is high mushroom farming requires a well-planned and tested feasibility plan to establish.

28. Poultry Farming

Poultry farming was a gold mine some years back but with competition from the importation of eggs from China and the high increased price of the feeds the local market is wailing for help.

29. Interior Design

When it comes to interior design handling clients and technicians and various varying budgets can be costly.

30. Travel Agency

With online booking so readily accessible traditional travel agency experiences are a decline in a number of clients. Several factors such as global pandemics such as COVID-19 affect the operations of the agencies and starting a well-trusted agency take huge capital.

32. Printing and Publishing

The printing and publishing business used to do well before the advent of many emerging technological innovative solutions such as ebooks, websites, apps, and social media platforms.

33). Software Company

Software companies are expensive to start and the need to acquire software licenses, quality hardware, and well-skilled experts is costly for most people. Making errors and mistakes in this area can be a detrimental factor of failure. The pressure to be the best among your competitors and to adapt to new innovative trends is very high. Most running businesses are not yet ready to adopt new technological ways to manage their businesses.

Alternative businesses if you want to start a business in Kenya today

See article on Business ideas in Kenya to start

1.E-commerce

There is increased growth of the internet mobile tech, and e-commerce in Kenya. Platforms such as Kilimall have made it easy and accessible to shop online from anywhere. With the growth of the internet and mobile technology, e-commerce is a rapidly growing industry in Kenya. There is a need for e-commerce sites that focus on products such as beauty products.

2.Agribusiness

Kenya has a broad agricultural sector, and there is an increasing demand for locally grown produce. Venturing into agribusiness can be a lucrative venture considering the plenty of opportunities available such as poultry farming.

3.Real Estate industry

Real estate is a profitable industry in Kenya with a growing demand for both residential and commercial property. There are many opportunities for new entrants to involve themselves in such as buying, selling property, developing affordable housing, and managing rental apartments.

4.Health and Wellness Services

This is a growing space in our Kenyan market and if you focus on niches such as fitness and holistic health chances of doing well are very high.

5.Technology Services

We have increased demand for tech-related services such as software development, mobile and web app development, information technology-based consultancy services, and online advertisement.

6.Education and Skill Development

The focus is on education and skill development. Start a business that offers tutoring, vocational training, online courses, or career programs. It can serve the needs of people who want to boost their skills and knowledge.

7.Tourism and Hospitality

Despite setbacks due to the pandemic, the tourism sector in Kenya is resilient. Eco-tourism, unique experiences, and local travel are areas of growth.

8.Renewable Energy

As the government and businesses seek to reduce reliance on fossil fuels, there’s growing interest in solar energy solutions, both for residential and commercial use.

9.Transport and Logistics

The need for efficient transportation and delivery services is on the rise, fueled by the growth of e-commerce.

10.Fintech

Kenya is known for its mobile money innovation, and fintech continues to grow. Services like mobile banking, digital lending, and payments are in high demand.

Key factors to consider when doing business in Kenya

As you plan to turn your idea into a business here are things you need to look into:

1. Research the market and create a business plan:

Look into the Kenyan marketplace analyze the demand for your product or services and come up with a business plan to indicate the business aims, your target audience, competitors, and your strategic growth maneuver.

2. Regulations and licenses:

Understand the regulations regarding setting up and running a business. For example, start by registering your business, getting the right licenses, and observing all regulations.

3. Decide on business structure:

The best business structures are the ones supporting your goals. Choose options such as sole proprietorship. Every decision has different conditions that need to be looked at carefully.

4. Workforce and Labor Regulations

Have concise human resource policies that meet Kenyan labor laws such as minimum wage and safe workplace.

5.Taxation

Look into Kenya’s tax such as corporate income tax. Work well with the local tax team to understand the complex tax system.

6. Infrastructure and Logistics

Check the infrastructure for effective business movements, or transfer of information.

7. Cultural diversity

Don’t embody anti-cultural ideals.

8. Networking

You are worth your network.

9. Protect Intellectual Property

Guard your IP from unauthorized users.

10. Banking and finance

Get a bank account for easy financial transactions. Good financial management is key to growth.

11. Be informed

Remain aware of the trending economic changes.

12. Sustainability

Environmental sustainability practices for the planet are key considerations.

13. Embracing IT:

Use technology innovations to solve problems and reach a wide audience.

14. Language:

Local languages such as Swahili can forge connections with locals.

How to Get Capital for your business idea in Kenya

Common different strategies such as:

1. Your savings

Utilize your personal savings to help your business and have full control by avoiding debts and being careful in your finances; planning and escaping the trap of running out of resources.

2. Borrowed loans

Get loans from financial institutions and be prepared to take well-arranged plans to repay interest and manage a steady cash flow.

3. Your investments

Demonstrate commitments and invest in your ideas to grow your business.

4. Grants

Grants from government programs, non-profits, or private organizations provide non-repayable funds for Nonpayable funds from legal programs, nonprofits, or private organizations for specific projects.

5. Risk capital (venture capital or angel investment)

Give equity to investors for funding and grow your startup with the trade-off of sharing ownership and control.

Looking at foreigner-friendly opportunities

Any foreigner can start a business in Kenya by meeting this regulation.

Get Licences and permits: Have all the required licenses and permits from the appropriate government authorities.
Business registration: Choose your business structure for example, sole proprietor.
Investment requirements: Certain industries may require you to have a certain investment.
Industry-specific regulations: Some industries require ownership restrictions with Kenyan entities.
Work Permits: For the actively managed business, foreigners may need work permits in Kenya.
Ownership Limits: For certain industries, there are foreign limits when it comes to ownership percentages.
Taxation and Compliance: Comply with tax laws and avoid tax compliance
Land Ownership: For foreigners leaving is easier than freehold ownership.

How do you revive a struggling business?

1.Change your mindset

Learn and unlearn. Acquire a growth mindset to conquer challenges.

2.Set clear goals

Have SMART goals to move your operations forward.

3.Understand your target audience

Seek to understand your audience’s needs and gather necessary feedback.

4.Learn why customers are leaving

Look at why the customers are not staying and seek feedback.

5.Perform a SWOT analysis

SWOT analysis to improve the quality of your performance.

6.Examine your finances:

See where there are loopholes and restore and optimize where necessary.

7.Get funding if necessary

When you need resources take calculated risks and fund your idea.

8.Pivot if needed:

Go around the obstacle with a newly enacted crafted strategy and be flexible.

Common reasons why small businesses fail

1.Lack of proper planning

Without a clear roadmap and well-defined objectives, businesses can struggle to execute effectively, leading to disorganization and missed opportunities.

2.Insufficient funding and ineffective marketing

Inadequate financial resources can hinder growth and operational efficiency, while poor marketing efforts can prevent businesses from reaching and engaging their target audience

3.Poor management

Ineffective leadership and decision-making can result in low employee morale, inefficiency, and a lack of strategic direction, which negatively impacts the overall performance of the business.

4.Failure to adapt to market changes

Businesses that fail to stay flexible and adjust to shifts in customer behavior, industry trends, or technological advances risk becoming obsolete.

5. Legal issues

Ignoring legal requirements, such as regulations, contracts, or intellectual property protections, can lead to costly lawsuits and damage to a business’s reputation.

Why do most businesses fail in Kenya

1. Lack of market research

Understand the market sufficiently, the customer needs, and competitors to find your opportunities for growth.

2. Poor planning and management

Bad leadership and disorganized business structure can result in poor performance of the systems.

3. Limited access to funding

To invest in growth you need capital resources to help you develop your ideas into business through hiring, product research and development, and marketing your products.

4.Regulatory challenges

Working around the complex permits, regulations, licenses, and compliance requirements can be time-consuming and costly.

5.High competition

The competition in the market can be very stiff and make it difficult for you to emerge on top attract customers and maintain profits.

6.Infrastructure and logistical challenges

Bad infrastructure, supply chain difficulties, and distribution challenges can lead to higher costs and slower operations of the products and services.

What makes a business one of worst businesses to start in Kenya

1.Lack of proper planning from the entry point

Bad planning from the start can lead to poor judgment, poor strategies, and bad strategies. making it hard to gain traction.

2.Less funding and ineffective marketing

Less financial resources and poor advertising efforts can limit the business’s ability to expand, reach its target audience, and make sales.

3.Bad operating and management system

An inefficient operations system coupled with a less strong management structure can disrupt the workflow, low employee performance, and bad customer services which slow growth.

4.Emerging demands and changing technology

Inability to keep up with the trends and the ever-changing business landscape.Lack of incorporation with innovative technological changes to advance your business.