SHOLINKE

SMART
BOOODA
BODA BODA BUSINESS PLAN
[SSB]
Contents
I. Executive Summary .................................................................................................................................. 2
II. Company Description.............................................................................................................................. 3
Company Description Worksheet ........................................................................................................................................ 3
III. Services .................................................................................................................................................... 4
IV. Marketing Plan ........................................................................................................................................ 5
1. Market research .................................................................................................................... 5
2. Barriers to entry .................................................................................................................... 5
3. Threats and opportunities ..................................................................................................... 5
4. Key competitors..................................................................................................................... 5
Market Competition Plan/Strategy ....................................................................................................................................... 6
5. Pricing .................................................................................................................................... 6
Pricing Strategy Worksheet .................................................................................................................................................... 7
6. The proposed location ........................................................................................................... 7
V. Start-up Expenses & Capitalization ...................................................................................................... 8
VI. Financial Plan .......................................................................................................................................... 9
VII. Source of Capital ................................................................................................................................. 10

1
I. Executive Summary

Motorcycle business known as “Boda-boda” has become a very accessible “last mile” transport
service provider in almost all parts of Kenya. Sholinke Smart Boooda (SSB) aims to provide passenger
and small/light cargo transport between Sholinke Township and greater Ongata Rongai area.

Motorcycle transport services are popularly known “Boda-boda" originated the early 1990s from
Uganda through Busia town in western Kenya and spread to adjacent towns, subsequently other
cities in Kenya.

SSB will target individuals and households who want accessible, fast and reliable transport service
provider for all their transport needs within Sholinke Township. While the passenger transport
sector is dominated mainly by matatus, these cannot reach to everyone’s doorstep since they
operate from established and regulated matatu terminus.

SSB will focus on giving unparalleled customer experience so that we can always be the “top-of-
mind” name for anyone who wants individualized transport services within Sholinke Township and
greater Ongata Rongai area.

2
 II. Company Description

Company Description Worksheet

Business Name
Sholinke Smart Boooda (SSB)

Company Mission To offer unparalleled customer experience, in individualized transport services within
Statement Sholinke Township and greater Ongata Rongai area.

Individuals and households within Sholinke Township and greater Ongata Rongai area
seeking individualized transport services including:
Target Market
1. Persons looking for transport services to and from Matatu terminus
2. Individuals looking for light/small cargo delivery within greater Ongata Rongai
areas

Industry/
Our main competitor will be other individualized transport and small cargo transport
Competitors operators such as other boda boda operators, Tuk-tuk operators and taxi service
providers.

We shall register the SSB business name (sole proprietorship) to enable SSB to open a
Legal Structure/ bank account independent of the owner. We shall abide by all statutory requirements
for operating a boda boda services such as motorcycle driving licence and insurance
Ownership
covers.

3
III. Services

BSS will offer individualized transport services within Sholinke Township and greater Ongata Rongai
area.

1. The problem the product or service solves:

In many parts of the country, transport is at best unreliable, crowded, accident-prone and very
inconveniencing in terms of accessibility, timeliness and comfort. While motorcycle transport does
not solve all the transport problems – and in certain ways can increase some such as accident risks,
they offer access and convenience that their closest competitor – matatus, cannot match.

In rural areas especially (such as Sholinke), matatu terminus are often miles away from homes and
individuals have to walk long distances to get to them. For these people, boda boda, therefore,
offers an alternative or even complementary transport service linking them from the primary public
transport model – matatus to their doorsteps.

Additionally, boda boda operators offer personalized light/small cargo delivery service for many
households such as cooking gas delivery, collecting/delivering market products to markets and
households etc. Because customers can establish a personal relationship with a boda boda
operator, such bonds of trust can morph into individualized courier service relationships – where
trust becomes well established between the two.

2. Any proprietary features that give you a competitive advantage:

Safety & Trust, as well as excellent customer service skills, are the three critical ingredients that can
give any boda boda operator competitive advantage over others. I will work to ensure that “a
customer’s word will be my command” ensuring to deliver my services in a timely and respectful
way for all the reasonable service expectations from my clients.

3. How you will price your service:

Boda boda “floor” level prices are set by each of the respective boda boda bases. Charging fees
lower than generally agreed prices attracts stiff penalty from fellow base operators. SSB will,
however, strive to meet and exceed client service expectation such that our price – standard though
it may be, will rank as superior and highly competitive.

4
IV. Marketing Plan

1. Market research

Public transport situation in our township is characterized by chaos and unreliable matatu service
providers. There are about 35 boda boda operators in the three boda boda bases in town. Because
of high unemployment among the youth and low barriers to entry boda boda business is set to grow
and competition increase. It is likely that given the growth prospects competition will increase
eating into profitability of the sector.

2. Barriers to entry
Boda boda operations generally have low start-up costs, operational costs and often no marketing
costs required. Boda boda operators are however organized into bases (of operation and
cooperation), which have stiff one-off entry fees.

3. Threats and opportunities

The government of Kenya has severally, but unsuccessfully tried to introduce regulation that would
increase market entry and operational costs for boda boda. While past attempts at additional
control have been unsuccessful, it is likely the government will continue to introduce these
regulations.

Fortunately, online transport applications such as safe-bodaboda are easing market linkage between
customers and boda boda operators – which may well see the end of “bases”. This is likely to ease
entry as all an operator will require is being duly registered as a provider with such an app.

Unfortunately, this may reduce cooperation and mutual support that takes place between members
of each of the "bases" especially when one gets an accident. The "bases" are social capital
production centres, supporting members to save, mutual support during situations of adversity such
as a death in a family, as well as security, particularly in reducing motorcycle theft.

4. Key competitors

Every business has competitors, and so does boda boda business. Our main competitors are
individuals who prefer to walk, use a bicycle, matatus and taxi service providers. Our competition
strategy is outlined in the matrix below.

5
Market Competition Plan/Strategy

Matatu Taxi Walking Bicycle

Competitor
comparison to
boda boda

Cheaper than More expensive No cost Cheaper than

boda boda than boda boda boda boda

Price
Carries more More luxury and Healthy but more Healthy but more
people and cargo convenience (esp time consuming time consuming,
than boda boda during the rainy and tiresome – in tiresome and in
Benefits/Features season) than some cases it is some cases, not
boda boda not even an an option
option
Larger than boda Large than boda N/A N/A
boda with a boda and likely
nationwide more profitable
Size/profitability network and than boda boda
more profitable

Market response We shall use a We shall compete N/A N/A

to address complementally on price, assured
competition approach – by availability and
offering last-mile personalization
connectivity, of service.
where matatus
cannot reach.

5. Pricing

Prices are set by respective boda boda bases and strictly policed by the stations – charging lower
fees than agreed is taken as undercutting fellow operators and an unfair pricing strategy. We intend
to adopt the pricing guideline provided by the central base – Sholinke.

6
 Pricing Strategy Worksheet

Business Name
BSS

Which of the following pricing strategies will you employ? Circle one.

Cost Plus Value-Based Other:

The costs of making/obtaining Based on your competitive

your product or providing your advantage and brand
service, plus enough to make a (perceived value)
profit

Because pricing guideline is provided by the "base", we shall instead use our "brand" to advance our
competitive advantage. We shall ensure that we provide a highly customer-centric value proposition,
emphasizing timeliness, trust, and high sensitivity to safety to attract customers as opposed to offering
competitive prices.

6. The proposed location

We shall join the Sholinke Central Base because it is convenient to customers, its proximity to public
transport – matatus (whom we aim to offer last-mile connectivity) and its proximity to major
businesses in the township (who require transport services for their purchased cargo.

7
V. Start-up Expenses & Capitalization

Prices for motorcycles appropriate for boda boda business range between Kshs. 95,000 – 150,000.
There are also several financing options available in the country. Most of the options require that
one to make an initial deposit and pay the balance through daily/weekly/monthly instalments.

There are many financing options available, ranging from established banks such as KCB bank, Mogo,
Bimas Kenya etc. Below we highlight two options that one can use. In deciding on the choices one
will use, there is a need to consider not just the initial down-payment but also the interest charges
over the period of financing. Below we present two available options – Mogo & Bimas (these are
provided as a guide only since actual costs are arrived at after the providers evaluate client's risk
profile).

Option A1

Sources of Capital – Mogo Financing

Owners' Investment (name and per cent ownership)

Down payment of Mogo financing Kshs 15,000.00

Total Investment Kshs 15,000.00

Bank Loans

Mogo loan + interest Kshs 191, 625

Total Capital Kshs 206, 625

Option B2

Sources of Capital – BIMAS

Owners' Investment (name and per cent ownership)

Down payment of Mogo financing Kshs 22,500.00

Total Investment Kshs 22,500.00

Bank Loans

Mogo loan + interest Kshs 129, 500

Total Capital Kshs 150, 000

1
https://www.mogo.co.ke/boda-boda
22
https://ke.kcbgroup.com/for-your-biashara/get-a-loan/for-a-small-business/boda-boda-tuk-tuk-loan

8
VI. Financial Plan
1. Cash flow projection - Weekly

Our research shows the likely revenue scenario for different bases. It is no secret that some stations
are more competitive than others – which explains why they also have many more boda boda
operators as well as high-level initial base entry fee. Below is actual weekly data on five bases:

Base Monday Tuesday Wed Thurs Friday Saturday Sunday Total

1 2000 1500 1500 1000 3000 1000 800 10,800
2 1000 1500 1500 800 2000 1800 800 9,400
3 1500 2000 2000 2500 500 2500 2800 13,800
4 1800 1000 3000 1000 1000 1000 800 9,600
5 1500 700 1000 800 600 400 2000 7,000

For our planning purposes we shall use daily averages from the 5 bases within greater Ongata Rongai
area, well aware that boda boda revenues are a function of idiosyncratic factors that are unique to a
particular base and individual operators:

Total
Day Monday Tuesday Wed Thurs Friday Saturday Sunday Weekly
Projected
Revenue 1,560.00 1,340.00 1,800.00 1,220.00 1,420.00 1,340.00 1,440.00 10,120.00

In terms of costs, our research indicates that there are two main cost drivers for boda boda
businesses. These are fuel and service & repairs. These two cost centres are in turn a function of
distance travelled and quality of driving by the rider. More sensitive boda boda riders are likely to
incur less service and repair costs than the more aggressive riders.

Our research indicates fuelling costs are the highest recurrent costs followed by services and minor
repairs in that order. Weekly fuelling costs average at Kshs 2,200 or Kshs 8,800 monthly. At the same
time, services are undertaken every ten days at the fee of Kshs 600 or Kshs 1,800 monthly, and other
repairs average at Kshs 250 weekly equivalent to kshs 1000 monthly.

We, therefore, project that monthly income from operating activities to be Kshs 40,480 less fulling
costs of Kshs 8,800 and service and repairs of Kshs 2,800 leaving us with net margins of Kshs 28,880.
It is from these net margins that we shall plan to pay for financing at an accelerated rate of Kshs
14,853 monthly such that by the end of 12 months we shall have cleared all our debt.

In essence, then for the first year of operation, our net profits are projected to stand at Kshs 14,000
monthly.

9
VII. Source of Capital
There are many providers of financing for the purchase of boda boda motorcycle in Kenya, such as
the two we have highlighted above. While Mogo requires a daily minimum payment of Kshs 350
after having to pay a down payment of Kshs 15,000, KCB bank, on the other hand, offers a loan at
14% interest rate plus 3% service charge.

We propose that in addition to the Kshs 10,000 personal savings, we shall invite friends and relatives
for "chai" fundraiser targeting to raise Kshs 5000. This should be adequate for us to buy a boxer
motorcycle valued at Kshs 109,000 plus Kshs 9,000 comprehensive insurance and personal accident
cover. We shall then seek Kshs 106,090 financing from KCB bank boda boda product (i.e. Kshs
103,000 + 3% facilitation fee) which would require us to make minimum monthly repayments of
Kshs. 14,853 only and clear the loan balance within 12 months.

10