What quail farmers have taught start-ups about business cycles

A quail farmer in Nyeri feeds her birds. Finding a new market with no competition is quite difficult. FILE 

By Canute Waswa

In Summary

• There are times when businesses hit rock bottom, but this period never lasts forever.

I am told quail eggs are now at an all-time low. The price of an egg has fallen from Sh100 to as low as Sh10. Welcome to the harsh realities of business.

My hunch is this; the Kenyans who abandoned their jobs to get into the ‘million-dollar’ business did not know that all businesses will encounter slowdowns, growths and peaks in their lifetimes. This happens to all businesses, even the most aggressive sales organisations on the planet.

Business cycles

Cycles are everywhere and if you are aware of them you can make good profits. If you are not aware of this you need to open your eyes. The big thing to note, however, is that the cycle is just that, a cycle.

No time of prosperity or poverty ever lasts forever. What does this mean for you and I? It means there are continual opportunities to position yourself and your business to make a profit.

Excessive demand for products leads to an increase in the prices of products. This is especially true in a boom in which the demand often surpasses the supply of the products.

For instance, during a boom, the demand for a product usually goes up. The excessive demand for available products inevitably leads to an increase in the prices of such products.

The farmers who ventured in quails last year would sell as many as 200 eggs a day for Sh100 each, making Sh20,000 a day.

But the business cycle tells us that the boom always comes to an end. The prices of goods will usually drop sharply to reflect the sudden reduction in their demand. That is what happened to the “in-thing” and “the hot investment trend” of quails in Kenya.

Stay ahead of the curve

We tend to take on unnecessary expenses when times are good, but this can sink your business if a recession strikes.

As Warren Buffett puts it; “you should be fearful when others are greedy and be greedy when others are fearful.” This phrase speaks to the idea of setting yourself apart from the rest and cushioning yourself from the effects of group think.

You want to stay out of phase with what the majority of people are doing. Staying ahead of the curve often means not adopting what everyone else has adopted.

Find a unique angle and go with it. Don’t model your approach after the market. You will be lost in the masses.

The reason people make a purchase decision between two products is because one of them is cheaper, of better quality, or is readily available.