Raising finance is frequently the most difficult task for new companies; most entrepreneurs grumble about being unable to get funds to fund their business ideas.
A notable example is Paul Kinuthia, a Kenyan billionaire who founded a multibillion-dollar cosmetics company with an initial investment of Ksh 3,000.
He founded Interconsumer Products Limited, a Kenyan-owned company that has been manufacturing for the past 20 years.
The company is well-known for providing Nice & Lovely items and sanitary pads under the All Tyme brand. His entrepreneurial path began in 1995, when he established a modest firm to supplement his income.
In a previous interview, Kinuthia stated that his initial investment in the company was Ksh 3,000, with the main product being homemade shampoos.
His company was originally based in a shop on Kirinyaga Road, but he eventually moved to Gikomba, Nairobi’s largest open market.
At this point in the firm, he had no staff and handled all elements of it himself.
One of the most difficult responsibilities was marketing his products, which required him to visit multiple salons and pitch them.
According to Kinuthia, the company required nearly six years to establish itself in the cosmetics sector.
“We broke even in 2001, and that is when I formalized its operations and hired professionals to help run the show,” he said.
Kinuthia explained how he was able to get his products on shelves and into people’s homes by studying the cosmetic business and identifying a gap for high-quality, cheap products.
This encouraged him to price his products comparatively low, providing him a competitive advantage over other players.
“Kenya is a price-sensitive market, and the fact that we were able to provide our clients with high-quality products at significantly cheaper rates benefited us. Before long, we were drawn into an all-out market share war with the multinationals who had dominated the personal care business for decades,” he said.
By 2013, the company had evolved into a multibillion-dollar business, with sales forecasts exceeding Ksh 1.7 billion and net earnings of up to Ksh 200 million.
In 2014, Kinuthia reached an agreement with the renowned worldwide cosmetics firm L’Oreal, which is headquartered in France.
He is said to have sold a firm unit for an amount estimated to be worth more than Ksh 1.5 billion.
In an interview, Kinuthia stated that his initial aim was to list on the Nairobi Securities Exchange (NSE), but he changed his mind due to the various regulations and fees associated with the listing procedure.
“I had planned to list the company by 2015 but the stringent compliance rules before and after listing were daunting,” he said.
The purchase opened up new markets and assisted Interconsumer Products in entering previously unexplored territory.
Interconsumer goods Limited is currently one of the country’s major cosmetics companies, with its goods estimated to have a market share of 30% or higher.
