UNIVERSITY OF NAIROBI

SCHOOL OF BUSINESS

DEPARTMENT OF BUSINESS ADMINISTRATION

MSC IN ENTREPRENEURSHIP AND INNOVATIONS MANAGEMENT

502: NEW VENTURE CREATION AND DEVELOPMENT

GROUP ASSIGNMENT 2

“Discuss the Legal Requirements, Monitoring and Evaluation of the Performance of a

New Business Venture”

Submitted By

NAME REGISTRATION NUMBER

ALI SHARIFF ABUBAKAR D66/43324/2022
BERNARD MPARA D66/42946/2022
VICTOR JUMA D66/42984/2022
HARRY JONAH NJOROGE D66/43028/2022
MICHAEL SAGINI MBAKA D66/43471/2022

31st JULY 2023

Legal Business Environment

Businesses operate in environments, and one of these environments is the legal environment which
basically controls and regulates how businesses are run. The legal requirements are important both
for new ventures and running ones to ensure fairness among players, safety to the customers,
protection of the natural environment as well as taking care of government interests such as tax
and labor matters.

It is therefore of great importance to ensure that new and running business ventures comply with
these requirements whether mandatory legally or as per professional body or other enforcement
agencies or bodies.

To start a new business venture requires registration either as a sole proprietorship, partnership, or
a company. These will vary depending on the type of business. For individuals, it is known as a
business name registration certificate while for a company it is the company registration certificate.
There is also a category of Trusts that operate with a trust deed with appointed trustees but also
have a business name since they are not companies.

1. Certificate of registration
1.1. Business registration

Business name registration is easier and cheaper to get. Below is the process of Business name
registration in Kenya.

1.1.1. Log in to the E-citizen portal and then business registration to reserve the business
name after ensuring it is available for use.
1.1.2. After reservation, you should proceed to register the business name. The reservation
process involves providing 5 names for the search process.
1.1.3. Specify the nature of business.
1.1.4. Provide the physical address of the business. This should include details such as
plot number, Road, and Town.
1.1.5. Provide the contact address for the business. This includes postal code, address, and
town of the business.
1.1.6. Indicate the proprietor(s) details: the name(s) should be in full as per the ID Number
and all details must be filled in.

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 1.1.7. Download the system-generated form for signing. The signature should be in the
order of the names on the form if the registration has more than one owner.
1.1.8. Pay the registration fee and await the registration certificate.

For a partnership, you need to launch a partnership deed that details the rights and
responsibilities of each partner and if the partnership is limited or not, its recommended that
the deed is prepared by a legal firm or professional to avoid gaps that can lead to rejection of
the application.

1.2. Company registration

Registration of a company is a bit complex in relation to a sole proprietorship or a partnership,

due to the requirements of the memorandum of association and articles of association which
are quite technical in nature.

Process for registration of a company in Kenya.

1.2.1. Name Search. The proposed company name must be searched and reserved by the
registrar of companies.
1.2.2. Execution of forms CR1, CR2, CR8 and statement of Nominal capital. Once the
name is approved and reserved,the company registration forms are executed and
signed by the subscribers and directors of the company.
1.2.3. Application for registration. - The application forms are then launched with the
Registrar for registration including the payment for the certificate.
1.2.4. Registration and issuance of certificate of Incorporation.
1.2.5. PIN application
2. Business Permit

A business permit indicates that you are licensed to operate by the local county government within
its jurisdiction. These will vary with counties based on their charges but are mostly annual or
monthly permits. These also have compliance requirements before the permit can be processed.

The charges will depend on mainly on the nature of business, size of the business by space or even
the number of employees. The permit can be obtained by a physical visit to the county offices or
through the online processes where available.

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Upon getting the permit, you should ensure to display it on your premises as a sign of compliance.
Operating without a permit is illegal and could lead to business closure or prosecution in a court
of law.

3. Specific regulatory licenses

These are licences that are needed to operate specific business that require compliance with
regulatory and enforcement bodies. For example, to operate a bank you need a Licence from CBK,
in addition to business registration and permit these specific licences are mandatory.

The regulatory authorities have specific requirements hence the need to conduct comprehensive
research to ensure compliance before commencement of the business venture, professional
services can be sought to avoid delays.

Compliance is continuance and failure, or a lapse can lead to business closure and prosecution.

4. Food and Health License

A new business venture dealing in food services or products will require a food and health service.
Food is a sensitive product making it necessary to have a compliance license. Before getting it,
inspectors must evaluate your business premises to ensure you have met all the requirements.

Hygiene is also a critical element to check when applying for this license. This ensures food is
being prepared, sold, and packed in a clean environment minimizing the chances of contamination.
In case of lapse. This could lead to food-related disease outbreaks.

5. Fire Prevention and Safety certificate

This certification ensures the business has the necessary tools and preparation to maintain fire
safety. Some of the requirements to get the certificate are.

5.1. Presence of fire extinguishers

5.2. Fire evacuation plans and policy.
5.3. Fire escape/exit space
5.4. Fire assembly points

The get the clearance, a fire certification officer visits the business premise to inspect if it is
compliant.

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6. KRA PIN

The KRA Pin is now a mandatory requirement for the registration of a new business venture, it’s
a requirement in all the above-mentioned licences for the initiation stage of searching for a business
name.

This is key for tax registration, collection, and compliance requirements by KRA and filing of
returns which is an annual activity. Compliance is mandatory as failure attracts closure and hefty
penalties that can be catastrophic to business operations.

To get the pin, you can either do it online by visiting the KRA website or one of their many offices
across the country and Huduma centers.

7. NHIF Registration

The National Health Insurance Fund (NHIF) is a government body whose mandate is to offer
medical insurance services to Kenyans. A new business venture must register to make mandatory
monthly contributions for its employees. The amount of contribution depends on the amount they
earn.

Failure to remit the payments can result in prosecution and penalties as well as lead to a lack of
medical services for its employees.

How to register for NHIF as an employer

7.1. Visit the NHIF employer portal and click registration.

7.2. Fill in the registration form. This includes information such as registration name, business
name, KRA pin, address, and business type.
7.3. Attach both the registration certificate and KRA pin.
7.4. Submit your application. This is the last step after ensuring the application form is filled
out.

NHIF will review it and if successful, you will receive confirmation with a registration number.

8. NSSF registration

NSSF is an acronym for the National Social Security Fund. National Social Security Fund (NSSF)
is the statutory retirement benefits scheme and operates as a public trust. Its mandate is to offer

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social security protection to workers in the formal and informal sectors by providing retirement
benefits to members. Application for employer registration is done via the funds website and or at
the NSSF offices.

How to register for NSSF as an employer

8.1. Visit the NSSF self-service portal then click employer.

8.2. Fill in the application form on the portal. This includes providing details such as
registration number, number of employees, KRA pin, and business name. Other important
details include contacts such as business location, address, and branch details if there are
any.
8.3. Submit your application. After filling out the application form, you should submit your
details for review. If successful, you will get the NSSF employer number.

9. Registration with the National Industrial Training Authority (NITA)

A new inclusion in the registration of a new business venture is the requirement for all
employers to register with NITA. Registration as an employer is a legal requirement as per Sec
5B of the Act and the Levy order.
NITA is a state corporation whose mandate is to promote highest standards in the quality and
efficiency of Industrial Training in Kenya and ensure adequate supply of properly trained
manpower at all levels in industry.

Monitoring and Evaluation of the Performance of a Small Business

Monitoring and Evaluation (M&E) for a small business refers to the systematic processes
that involve collecting, analyzing, and using data to track performance and make informed
decisions. The main aim is to improve efficiency and effectiveness, ensuring the business is
on the right path towards achieving its goals.
For small businesses, monitoring can involve tracking sales data, customer feedback, web
analytics, social media engagement, or any other metrics relevant to the business's objectives.
Monitoring and evaluation have one thing in common, which is learning from what the
business is doing and how it is being done, by focusing on two things, which are;
i) Efficiency

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 ii) Effectiveness

Efficiency - tells the entrepreneur that the input into the work is appropriate in terms of the
output. The input can be in terms of money, time, staffing, equipment and so on. For an
entrepreneur concerned about reliability and scale of their enterprises, getting the efficiency
component right is crucial for the success of the business.

Effectiveness - is a measure of the extent to which the small business achieves (or doesn’t
achieve) the specific objectives it set out.

Why Do Monitoring and Evaluation?

There are several reasons why a small business can opt to conduct M&E, for instance, for
reporting purposes to venture capitalists or other investors, who are certainly entitled to know
whether their money is being properly spent, and whether it is being well spent.

However, the primary (most important) use of monitoring and evaluation is for the entrepreneur
to see how the business is doing against the set objectives; whether it is having an impact,
whether it is working efficiently, and to learn how to do it better. Monitoring and evaluation are
both tools which help the business know when plans are not working, and when circumstances
have changed.

Below is a brief discussion on how to monitor and evaluate the performance of a new business
venture;

1) Planning and setting Key Performance Indicators (KPIs): Every new business venture
should start with a business plan that outlines its goals and objectives, and the strategies it
will use to achieve them. The KPI’s are quantifiable measurements, agreed beforehand, that
reflect the critical success factors of a business. For instance, a new e-commerce store might
set KPIs around customer acquisition cost, conversion rate, average order value, and
customer lifetime value. Defining these KPIs at the start of a business venture will provide a
clear direction and a framework for M&E.
2) Data Collection: With the advancement in technology, businesses today have access to a vast
amount of data. However, for effective M&E, it's crucial to identify and focus on the data
that directly aligns with the pre-defined KPI’s, e.g. a new agri-processing business venture

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 might use tools like KAMIS (Kenya Agricultural Market Information System) for marketing
and trade information data. This phase also involves setting up the right systems to collect
this data reliably and consistently.
3) Analysis: Data analysis is a complex task that involves cleaning, inspecting, transforming,
and modeling data with the goal of discovering useful information, drawing conclusions, and
supporting decision-making. Simple but powerful data analytics software such as Microsoft
Excel and Microsoft Power BI can help businesses analyze data effectively. For example,
using Power BI, the agri-processing business can pull data from different sources, including
Excel files and on-premise SQL Server databases, and then process and transform that data
into insights through easy-to-understand dashboards and reports.
4) Evaluation: The evaluation phase includes interpreting the analyzed data to assess the
venture's performance against the set KPI’s. This involves not only comparing the actual
performance to the targets but also understanding why the business achieved what it did.
5) Adjustment: The insights gained from the M&E process should guide the decision-making
process. This could mean reallocating resources towards more profitable products, improving
customer service to boost satisfaction rates, or overhauling marketing strategies to improve
customer acquisition. Adjustments can be made based on concrete evidence and not on
intuition or assumptions.
6) Reporting: Communicating the findings of the M&E is essential. Transparent reporting of
both successes and failures fosters a culture of accountability and continuous improvement.
Stakeholders including investors, board members, and employees should be kept informed
about the business performance through clear and regular reports.
7) Regular Monitoring: Markets, customer preferences, and competition are dynamic, and
hence M&E should be an ongoing process. Regular monitoring enables businesses to keep
track of their performance in real time, take proactive measures instead of reactive ones, and
ensure they're always moving towards their strategic goals.

To make M&E effective for small businesses, it's crucial to have a clear understanding of the
business's goals and to set relevant KPI’s.

The process also requires implementing appropriate tools and systems to collect and analyze
data, and using the insights gained to guide decision-making and strategy adjustment.

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Benefits of Monitoring & Evaluation for a Small Business
Monitoring and evaluation can;
a) Help you identify problems and their causes
b) Suggest possible solutions to problems
c) Raise questions about assumptions and strategy
d) Push you to reflect on where you are going and how you are getting there
e) Provide you with information and insight
f) Encourage you to act on the information and insight
g) Increase the likelihood that you will make a positive development difference, i.e.
impact.

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REFERENCES
1. Kenya Invest (2022). Legal Requirements that You need to Start a Business in Kenya [online]
retrieved on 30th July 2023 from https://kenyainvest.co.ke/2022/08/16/legal-requirements-
that-you-need-to-start-a-business-in-kenya
2. Harvesting data: Who benefits from platformization of agricultural finance in Kenya? (Gianluca
Lazzolino, 2019)
3. Monitoring and Evaluation of Small Business (https://www.brainkart.com/article/Monitoring-
and-Evaluation-of-Small-Business_7091/)

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