Chicken farmer's son builds a Sh27m revenue processorThursday March 23 2023
If there are two things that have propelled Stanley Gitau’s chicken business is walking in his father’s entrepreneurial steps and seeking a level playing field in a partnership deal.
The 32-year-old certified public accountant and financial investment analyst says he could have pursued his career path but took notice of what his father achieved in life from just chicken farming.
“As a child, I was fascinated by chicken farming and how it moved people from poverty. After university and a stint at KCB Bank Foundation, I decided to start the business,” he says.
In 2016, he started a small chicken farm. “All I knew was buying day-old chicks from an agro vet and come harvesting day, I’d start making frantic calls looking for market,” he says.
Then he sought a market solution in Big Kuku, his chicken processing company in Nairobi, which collects live birds, slaughters, and distributes to selling points.
Although he is proud of having grown his chicken business, more than his father could, he says it has not been easy.
Funding, just like many entrepreneurs, was his main challenge. He sought help from entrepreneur incubation programmes.
“When at Chandaria Business Innovation and Incubation Centre, I was trained on business/funding writing proposals, got attached to mentors, trained on pitching, and later joined the Young Africa Leadership Initiative which moved us from classroom learning to learning how to source for funds and access networks,” he says.
In his quest to raise funds, Mr Gitau reached out to the US-Africa Development Foundation. He received his first funding of Sh1.3 million ($10,000), a grant.
He used the cash to pilot fish farming in Lake Victoria and chicken farming in Gatanga. After six months, he compared the successes of the two, and the chicken venture had more promise.
“What enabled me to raise funds is having a good business plan and proposal writing skills and networks in organisations that I’d worked in,” he says.
Also read: High-growth lessons from agritech start-up founder
But despite having the initial funds, growing the business was another hurdle.
“Whereas I had built good physical infrastructure with good management practices, the business was not fetching enough revenue/margins to sustain operations and the growth I had projected on paper; that was the first reality check,” he says.
To get more funds, he brought in a silent investor who was not involved in the daily operations of the company.
“I picked my first investor who happened to be a friend and used that money as working capital. It was a marriage of convenience – he had the money while I had the shelter and technical knowledge,” he says.
Whereas that sounded like a good decision, in 2019, Mr Gitau had to go back to the drawing board after realising that in the contract, the investor picked his pay first irrespective of the business performance.
“That wasn’t sustainable because mostly, he wasn’t actively involved in the business and there were times we could lose birds but based on the contract, I had to pay him a certain amount, so I often took a hit to keep an investor happy,” he says.
He severed ties at first but later proposed a new partnership deal. The investor had to understand the inner workings of the business. “This was now an equal investment,” Mr Gitau says.
Unfortunately, by the time Mr Gitau and the investor were starting afresh, the market they had been supplying had crumbled.
They started selling at City Market, Nairobi until Covid-19 containment measures forced the closure of the market.
“Nobody had prepared for that, orders were cancelled, and we never knew about cold storage as ours [business model] was to slaughter and sell. With no market, we were offered ridiculously low prices. We looked for companies doing cold storage and found one at Jomo Kenyatta International Airport but we were green on cold storage procedures for chicken,” he says.
They stored their produce at the cold storage warehouse, and four months later they showed up to 4,000 rotten chicken.
“We figured out that cold storage warehousing was not our route to market,” he says.
This forced him to think about another business model. Invest in bigger deep freezers.
The Big Kuku business has now grown from processing 500 chicken weekly and sourcing from other farmers to supplying two tonnes of slaughtered chicken daily, generating revenue of Sh27.4 million in six months.
Also read: Why Jumia co-founder is betting on Kenyan kiosk goods platform
However, when Big Kuku began receiving big orders, the company started experiencing capacity constraints.
“Whenever you bring chicken, you factor in 10 percent unsold, which you must find a market for. The problem we faced is that these piled up and we ran out of space and started having pilferage at a very high rate,” he says.
Capacity constraints also meant that they were unable to comply with regulations leading to a shutdown by public health officers.
Mr Gitau says that every business has capacity issues and that whichever stage you are in, there is a ceiling you cannot go beyond.
There is also the challenge of being away from your business.
“When Mandela Washington Fellowship gave me an opportunity to learn value addition and processing in the US, I had to be away for two months. When customers, workers, and farmers know you are away, your business gets affected especially when you are in a different time zone,” he says.
The biggest lesson he has learned is that trust is a big component for partners, customers, and suppliers.
“Trust in your ability and integrity, I’m a product of self-giving, try and solve problems of the world and money will follow. Mine has been a painful lesson on knowing who to trust and identifying potential investors,” he says.
The second lesson is not to underestimate the challenges that come with establishing a business from scratch.
“I wish there were more legacy businesses where young people take and improve on what their parents did rather than starting from zero,” he says.
The third lesson is that a business is like a small boat in the middle of an ocean, constantly dealing with balancing the waves.
When starting a new business, many entrepreneurs tend to have rosy ideas and projections on paper but in the actual sense, the ideas are just good on paper.
“Also, you need to find a support system that works for you, they’ll be burnout, fatigue, and mental health issues. I’ve gone through depression and had I known, I would have sought help. Entrepreneurship requires a lot of patience and hope,” says Mr Gitau who studied Economics at Kenyatta University.
He is now eyeing a franchise model, and partnerships with butcheries and mini-marts, that will see him grow above the 10,000 birds that he currently sells daily.
“Our competitors are mainly focused on supplying the supermarkets, leaving a huge underserved market – butcheries, minimarts, groceries, hotels ...,” he says.