It took 20 years of saving up to build our business

Dr Betty Gikonyo and her husband Dr Dan Gikonyo founded Karen Hospital, a 102-bed multi-speciality hospital, in 2006. The dream to run a hospital was 20 plus years in the making. “We started with a clinic in Tusker House in the Nairobi Central Business District before moving to Kimathi House, then Reinsurance Plaza before going for further training in the United States. During that process of running a clinic, we started having big ideas, asking What If?” says Dr Gikonyo when we meet for this interview. In the US, they saw what was possible: high-quality healthcare in private healthcare facilities that were funding themselves. They set out to do the same. Today, Karen Hospital has 500 permanent staff, eight branches and a medical training college. But as Dr Gikonyo reiterates, they have had their ups and downs throughout the years and the experience has made her an astute businesswoman. Dr Betty Gikonyo answers common business questions and offers tips for common struggles that entrepreneurs encounter.

What would Dr Gikonyo do?

I’m struggling to get a loan to start a business. What do I do?

Karen Hospital is among the first hospitals of this size to be started as a business and being pioneers as such, it was hard to get a loan. Before, healthcare was seen as a purview of the government, missionaries and donors. We could have registered it as a non-profit organisation, but we were very clear we wanted a scalable business. But we knew we could not set it up without money, and there was no time when we could earn enough money to set up a hospital. We got professionals from different fields to help us translate this dream on paper – a financial consultant to help us draw a business plan, an architect to draw the building, and so on. We knew we had a good thing going until it came time to get a loan. We peddled our documents for 10 years. We got rejections and sometimes ridicule. Once you’re committed to a cause, keep ongoing. Nevertheless, do everything you can to increase your chances of securing a loan. Saving is a big part of this. Make sure you have enough for a down payment. We saved for 20 years while running the heart clinic at Nairobi Hospital, and it took so long because we were raising children and had other financial obligations. In the 10 years, we spent looking for a loan, we were still practising medicine. Continue doing what you are doing as you pursue the bigger dream; it’s the smaller dream that leads to the bigger one. 

I’ve started a business and although I have the skills needed to produce a product or offer a service, I’m not good at running a business. What to do?

Look for answers to things you don’t know. I always say no one is the custodian of all knowledge, and you can’t be good at everything. When we started, there was one thing we knew well – medicine. But talk to me about balance sheets, supply chain management, IT – I didn’t know much. We wanted to provide quality healthcare and that was our strength. Everything else we fed to other professionals who translated it to a business plan. I also went back to school for an MBA because I knew there was no way I could run a large hospital without understanding business administration. I had to go for evening classes but it’s now easier to learn thanks to the internet. Seek collaborations with professionals in fields you’re struggling with. If it’s the human resource, get an expert who is within your budget. If it’s numbered, get someone to help calculate what you’ll need to do to break even and give projections of when. With collaborations, you even get ideas that would have never occurred to you were you running things alone. 

My business is not making profit. How do I continue?

Most people work with the assumption that first, you start a business then profit comes. Before you make a profit you must meet your obligations, the most important being employee salaries, taxes and paying suppliers. If you meet your obligations consistently, profits will come. You have to be patient and understand the journey won’t follow a straight line. There will be wins and losses. But you have to know when to step back and admit when it’s not working. If you find yourself in a hole (say a venture is only haemorrhaging money from you) stop digging. Get an accountant or another professional to help you get out of the hole. Accept it was not meant to be and understand that it necessarily wasn’t your fault. Sometimes circumstances outside your control happen. There were many businesses thriving before the Covid-19 pandemic that had to shut down.

I’m struggling to get customers.

Medicine is different from other businesses because unlike, say, a hotel, we couldn’t advertise. It felt odd to do so. Also, medicine is very personal. Most people don’t just go to the nearest health centre when unwell, they’ll go to their doctor. The good thing for us is we had already built a clientele the 20 years we ran the heart clinic at Nairobi Hospital. Our customers grew organically and a lot of it was word of mouth. To attract customers it’s about the experience people have with your brand, not what you say. You also have to be patient because it takes a few years for a business to break even. We projected that we’ll break even in ten years but luckily we did within our first five years of operation.

When do I expand and how do I balance growth and quality?

There is no one formula to stick to. It depends on the type of business and the business model you started with. Some need to be stable and well-established first. For others, expansion is what will steer their progress. Our first expansion was in 2008 in Nyeri, and it was more of relocation really. We had already been running that clinic and already had a clientele. So as not to compromise on quality, don’t expand too fast. We’ve been in operation for 15 years and have eight branches. We’ve always been guided by statistics. For instance, on February 17 this year we relocated to a bigger premise in Meru, and the relocation was four years in the making. Our branch in Meru was doing well owing to the fact that it is a cosmopolitan area and an agricultural business community, plus other businesses are thriving and their pattern of access to healthcare is different from other locations; so that’s where we focused our expansion plans. And as I mentioned before if you find yourself in a hole, stop digging. We’ve had instances when foolproof strategies did not work out. We’ve had to close two branches before, both in Nairobi. We did feasibility studies and everything looked good on paper but once you start operating you find it’s just not working.

My business is dependent on a few paying customers. How do I diversify my customer base?

Use market intelligence to find out about gaps in the market and how you can fill them up. It is important to develop more products and services to attract a wider customer base. Strategic partnerships are also important.

How do I create a business succession plan?

Every owner, business and situation is unique — there is no such thing as a one-size-fits-all succession plan. Building value that endures the test of time is the dream of every entrepreneur. It is important to first set a foundation by ensuring that working structures are in place. I set up a vibrant executive management team with proper working structures; this ensures teams are able to handle the day to day running of the hospital and only consult where necessary. I also worked very closely with this team, mentoring them along the way. With structures in place, engage with all stakeholders involved, clearly stating your vision for the future of the organisation. Together with the oncoming team develop a good strategic plan that will steer the organisation forward.