Here is Henry Njoroge’s story, as told to Wok:
Earlier this year, I partnered with one of my acquittances to venture into the fishing business at Lake Victoria.
In our deal, we agreed to purchase a fishing boat and fishing paraphernalia, which cost approximately sh 270 000. We also decided to hire experienced fishermen to fish dagaa (Omena), which we would then sell to local traders wholesale.
I was assured that the fishermen would trap at least 5 basins of Omena per day, which we would sell at sh 2000 per basin. Subtracting the expenses, we would have at least sh 3000 per day. Assuming that the daily catch could exceed 5 basins sometimes, we were sure of making tidy profits.
The idea sounded promising until we ventured into the business 3 months ago. Our fishermen would go out into the lake and, most of the time, return with little tuna or none at all. The business, which I thought would grow, is now killing me slowly.
I am now thinking of selling the equipment, forget about the business, and try something else. However, the most I can get from the equipment is sh 150 000. I will have made a loss of over sh 120 000. What should I do?
Wok Advice
Like many entrepreneurs, you made the mistake of falling into a common trap, where the narrative and potential profits are so alluring that you forego doing due diligence.
You should have done your research by visiting the lake, interacting with the fishermen, and so on. However now that this is water under the bridge, you have a few options to consider:
Sell The Business and Cut Your Losses
You are already in a mess, and according to your narrative, it does not seem like things will get better. Consequently, your most straightforward option is to sell the business and move on to something else.
Collect the little you can from your sinking venture and use it to start over again, even if it means accepting a loss of sh 120 000. In business, it is always advisable to dust yourself and reconstruct yourself whenever you make a mistake.
Hire Out Your Equipment
Rather than selling your boat and equipment, you can hire them out to other fishermen. Assuming someone hires at ksh 1000 per day, you’ll make at least ksh 20 000 per month, which is around sh 240 000 per year.
You can also charge to transport goods along the beaches using your boat. You could focus on routes between the mainland and islands, where ferries and water buses are fewer.
Change your Strategy
Before you throw in the towel, you can try to change your business strategy. For instance, focus on other fish aside from Omena. There is a huge demand for fish in the country, a chance for money to be made.
Rather than selling your catch at the lakeside, you can partner with sellers at fish markets such as Gikomba, where you will likely fetch better profits. Find fridge storage for the fish, bulk up, and sell when you reach your target amounts.
Another strategy is to move to new fishing grounds, such as the coast. Although this might require plenty of work and effort, it might be an excellent way to turn your fortunes.
The three months you’ve been in business is too little time for a new venture to turnover, especially the fishing business, which has low and high seasons. A successful business demands patience and consistency.
Ultimately, the decision of what to do is up to you. However, Wok recommends doing thorough research and communicating with your partners before making a decision.
