Are you thinking about how to start a payday loan business? Payday loan businesses bring in lots of money. Starting a business for the first time can be confusing for a newbie.
You may be unsure of what your first steps should be. This article will provide step-by-step instructions on how to start your own payday loan business.
About payday loan businesses in Kenya
The process of starting a payday loan and check cashing business can be demanding and risky at the same time, but if you have done your research before starting the business, you are unlikely to run at a loss.
Ideally, you should have experience in the financial industry. You will surely benefit from studying accounting or banking and finance if you are planning to enter this line of work.
What to note on how to start a payday loan business in Kenya
Starting a payday loan business alone or with someone follows the same steps. In both cases, there is also a beginning stage, whether or not there is a third-party lender. Be out for the challenges and focus on what you want to achieve.
How start a payday loan business in Kenya
In starting a payday loan business, you need to follow a structure accordingly to avoid huge mistakes. Ways of starting it includes:
Having a business structure before commencing the payday loan business
To know what structure works best for your business, you need to understand your goal as you commence. An important thing about payday loan business is knowing how much you will require as repayment.
Some payday companies go on to overdraw the amount they are allowed to charge people to pay back. Some don’t even recognize the process and standard amount of interest thus, charge less interest.
Draw-up your business plan
Your business plan is designed to help you stay on track and decide on the best way to move forward with the company.
A detailed business plan that covers much ground is necessary. The more in-depth your business plan is, the more likely you can secure more capital.
Establish your payday loan business in a secure commercial space
The level of security available at your business location is important. Remember that the payday loan business is all about handling and dispensing cash.
Avoid having many entries and exits in your office. Hiring security would be ideal so as not to worry about someone coming in to rob your business.
Understand what the business is legally
Different counties in Kenya have different laws and policies in place. Understanding the laws of the county you are in will help govern what you are allowed to do with your payday loan business.
These laws may dictate what you are allowed to charge as interest, what type of loan you are allowed to give out and lots more.
Consult an attorney in your county
Your business practices may come into question and in order to stay on the good side of the law, it is advisable you consult and speak to a professional. Even if you think you understand how to operate within the laws.
How much does a payday loan business make
There is a great deal of money to be made in the payday loan industry. At the end of the day, they make a lot of money by charging high interest rates. Typically, they charge between 10% and 15% a month.
Payday loan business plan
Steps in writing payday loan business plan include:
- Write out the industry overview
- Include executive summary
- Lost the products and services
- Spell out the mission and vision statement
- Outline the business structure
- The job title, roles, description and responsibilities
- The SWOT analysis
- Sales and market analysis
- State also the sales and marketing strategies
- Media, advertising and communications
- Pricing strategy
- Start-up budget
- Expansion strategy
Conclusion
In Kenya, many entrepreneurs make money by offering payday loans. Workers who get paychecks that might not cover their expenses for the month are mostly eligible for it.
They will likely be subjected to tedious processes by their bank or other financial institutions if they need a quick loan to fix a pressing issue or project. You have learned everything you need to know about starting a payday loan business from this article.