Ex-accountant who found fortune in moving middle class to new homes

For nine years, he diligently served his employer, ensuring books of accounts were balanced. This only prepared Sam Kihara on how to make his own money.

When he quit his job in August 2004, he decided to tap into the growing middle class in an area that had previously not been conquered - moving them from one house to another in a professional way.

“With a change in regime in 2002, I saw the middle class start expanding. I saw an opportunity. My employer was keen on the crème of the market while the rest of demand was being served by jua kali movers,” he told Financial Standard. 

Logistics services

Having joined Express Kenya, a clearing and forwarding services firm for air and sea as well as warehousing and logistics services, he rose from the ranks of a senior accountant to a chief accountant.

Alongside four other colleagues - one accountant, two logistics movers and one lawyer, they decided to quit their comfort zone of monthly salary to take a leap of faith into the uncertain world of creating their own company.

For about eight months, Mr Kihara, a certified public accountant mooted the idea before he was joined by his colleagues to register a logistics company, Cube Movers Ltd, trading under the slogan “Move Without Tears.”

But it was off to a bumpy start. “We came into the market thinking it was going to be  easy since we had some information about the work, but the reception was difficult,” he admits.

In 2005, they had approached Marshalls East Africa, an automobile firm, and acquired a track - one Mr Kihara describes as “tattered and return good from a customer.” Such a vehicle would mean one with defect and returned to dealer for replacement.

That was Sh1 million already put into an idea that no local entrepreneur had not dared try before. It reduced their savings, leaving them with more determination not to see it get drowned. And the old track cost Sh800,000.

For Kihara, previously an employee of Eastern Produce Ltd, failing and waking up only served to sweeten his success.

Between December 2004 and March the following year, the business hardly attracted customers. In fact, the first 18 months, the business was not profitable.

His team was moving up and down to market the idea. All that time, their competitors were random vehicles and handcarts that were branded ‘Ask for Transport’ which were also doing rounds in the estates in search of clients.

The thought of quitting, he says, never crossed his mind even though his team was getting discouraged that people were not buying the idea.

“Failing happens every day, everywhere. If you fear to fail, then you will never get anywhere. Sometimes you have to fail in order to succeed,” observes  Kihara.

With time, the middle class started relating with the idea especially as the team sold the concept that they had a reliable team with ability to move them regardless of whether or not they were around. “All we needed was a better concept than our rivals.” We do packaging of the household goods, move, unpack and set up the new house,” he explained.

The track proved handy serving them up to four years. In 2007, with the market begun to warm up to the business, and he needed a second truck to cope with demands.

That would require Sh1.6 million but the business could only afford half of the price. His banker at that time, a tier one bank, denied him the loan to purchase the truck on grounds that the business idea was not clear and the concept was too risky.

Commercial loan

In addition, the bank said that it was only giving a minimum of Sh5 million as commercial loan.

He turned to ABC Bank which loaned him the money. The business of domestic moving within Nairobi was growing and within six months, he turned to Tata Africa for another truck.

The now under-receivership lender Chase Bank, keen on startups, came in handy as ABC Bank was not willing to lend the company again before clearing the Sh0.8 million loan.

“When they (Chase) listened to our story, they related with it. They were willing to give us a loan for a bigger truck and take up the ABC loan too,” Mr Kihara told Financial Standard.

That would begin a long relationship with Chase Bank that helped Cube Movers to expand the business as demand increased. Kihara, now in his 50s, started seeing the business beyond Nairobi as clients came asking to be moved as far as upcountry.

The company has now attracted companies serving in different sectors- financial, telecommunications, oil and gas, consultants and auditors, government- as it diversified from just moving households.

In 2013, the firm got the privilege to move retired President Mwai Kibaki’s luggage from State House to his home in Othaya, Nyeri.

“It was special when we received the call for the assignment. It raised our profile and helped us win more customers,” said Mr Kihara, adding that it was the same year the firm entered Kampala.

Even when President Barrack Obama visited Kenya, his firm was among those who moved various equipment for the US Marine Corps.

In banking, he has served lenders such as Barclays Bank, Standard Chartered Bank, Stanbic, Equity Bank and Co-operative Bank of Kenya when they were moving. Safaricom, Standard Group and Airtel have also used the firm’s services. When Teacher’s Service Commission wanted to move nine floors, the firm came in handy.

Even diplomats-British High Commission, Royal Danish Embassy, Embassy of Spain, Embassy of Sweden, Tanzania High Commission- entrusted the company to move their goods and so has World Bank and audit firms - PwC, KPMG and Deloitte.

His business, he says, depends on referrals from the people and institutions that they help to shift. To ensure client’s property is safe, the company has been forced to be very careful in selecting its staff.

Currently, it has 111 employees serving in Nairobi, Mombasa and Kampala offices. It has since acquired four tonne, seven tonne and 10-tonne trucks totaling 25 in number from the humble beginning of one second-hand truck.

 

Logistics services

All staff are recruited through referrals and the firm keeps records such as place of birth and letters from village heads. It has now turned to Sheer Logic, to help manage casual labourers.

Currently, the company charges from Sh18,000 to move a client, but this amount varies depending on volume and nature of goods to be moved and the location, among other factors.

Usually, once a customer puts request to move, the company sends in an employee to survey on what is to be moved and also set the price.

Kihara, also a part time farmer, estimates that the business’ asset base is now between Sh100 million and Sh150 million. He however cagy about the firm’s turnover.

From a no serious locally-owned moving company, the moving industry has attracted other entrants and now has about 60 companies. This has meant increased competition.

To stabilise the pricing, Kihara is leading other moving companies to start an organisation which will do among other things, set pricing for the market.

“The pricing has become erratic. There are unregulated companies and not even paying taxes therefore end up charging very low prices,” he says.

Despite the competition, the company wants to expand to Kisumu, Eldoret, Nakuru and Nanyuki as it seeks to live to its vision of serving the entire continent.

It also wants to diversify into warehousing as sectors such as real estate grows.