Does Your Business Depend on Another to Survive? Read This

While businesses must depend on each other from time to time to ensure that operations carry on smoothly, it is important to evaluate the dependence of your business on another and plan ahead.

The year was 2012. Online freelance writing in Kenya was not yet a thing. You would tell someone that you write articles for clients abroad and get paid but they would dismiss you as just another joker involved in a scam. This was actually my initial reaction when my friend, Simon, tried selling the idea to me. I was a Judas—I wouldn’t try it till he received his first pay. And I was proved wrong; the money did come in a week later. A paltry twenty bucks but it was enough proof.

Three months later we were both earning at least a hundred bucks every two weeks, working part time after classes. Any student could use a little extra income to supplement their HELB loan and donations (if any) from their parents. We were not complaining. Life was good!

A few more months down the line, the rivers ran dry. Our writing accounts were terminated. We had, apparently, violated the website’s terms of service. To add insult to injury, any balances at the time of account termination were not going to be paid. Their site, their rules. And just like that, we were staring at going broke.


Another friend, Peter, sells African-themed fabrics and curios on a popular international eCommerce platform and receives payments via PayPal. The platform only pays using PayPal. Peter is highly skilled in marketing. His business turned out very successful within a short period of time. He was able to sell at least 1,000 items in the first 6 weeks of business, receiving revenue in excess of $6,000 USD.

As soon the second payment of $3,753 USD hit his PayPal account, account access was limited. He could neither make payments nor withdraw funds. PayPal asked him to provide more information about his business, the source, nature and direction of payments he receives and explain his plans of using PayPal in future. Peter complied and provided all documents and information requested for pronto.

Exactly 14 days later, he received a not-so-pleasant email from the PayPal Compliance Department:

“Appeal denied: We regret to inform you that we are initiating the closure of your PayPal account….we noticed a pattern in your activity that is inconsistent with our user agreements….any balance in your account will be held for 180 days….” Wait, what?! He could not access thousands of dollars he had legitimately received as revenue for legitimate sales. For 180 days. 6 months!

My friend tried pleading with them to at least let him withdraw the funds but they would hear none of it. He tried requesting the eCommerce platform to intervene but they stated that they were not in a position to help. Also, he would no longer be able to sell his products on the platform because it only accepts and uses PayPal to make payments. He was caught between a rock and a hard place. A very hard place! Because: their site, their rules!


The year was 2013. My Simon and I moved on and found other platforms to offer our writing skills for money. Come March, the only company that was facilitating PayPal ‘withdrawals’ faced financial problems and suspended operations. The only other means of withdrawing money from PayPal in Kenya was through a U.S bank account. Even Equity bank had not joined the bandwagon.

There was a crisis: guys were earning money but had no means of accessing it. We saw an opportunity and took it. Each one of us applied for a virtual U.S bank account, set up the connection and we were good to go. Soon enough we were helping our colleagues withdraw their PayPal funds. And then they referred their friends. And then those friends referred their friends. A few months later, Online Pesa Kenya and Freelancepesa were born. We were processing PayPal to Mpesa payments on a large scale.

We also set the path for other enterprising freelancers to follow suit and launch their own PayPal to Mpesa businesses. There was enough room for all; the online freelancing industry was growing rapidly. At least three times over the course of 5 years, we tried selling the idea to PayPal to partner with us to provide the service officially but they were highly reluctant. “The business model you are proposing is too risky. We will make an update as soon as we evaluate it further.” Did the update come? Your guess is as good as mine.

Fast forward to April 2018. Safaricom makes the big update. “We have partnered with PayPal to provide PayPal withdrawals straight to your Mpesa. Maisha ni MPESA-TU.” They had brokered a deal through a third-party, little-known, foreign company that offers money-transfer services. What’s more, their charges for the same service were less than half the regular PayPal to Mpesa agent’s business costs.

Death is scary, but suffering a slow but sure death is stuff of nightmares. One day you are operating at 100% capacity, the next day at 60% and 40% the following week, eventually stabilizing at 25 – 30% months later. You can’t help wondering, “Why did PayPal overlook the initial proposals by various local companies to offer the same service using the exact same model, only to end up going to bed with another company that hardly understands the market?”

Because: their company, their choice, their rules.

Bora uhai.


There are infinite examples of scenarios such as these. I call it the middleman’s curse. While businesses must depend on each other from time to time to ensure that operations carry on smoothly, it is important to evaluate the dependence of your business on another and plan ahead.

If your business’s core operations are not directly related to another business’s operations but they heavily depend on the services offered by that business, it would be prudent to have a backup service provider on standby in case there is a critical setback in the other business that would affect your operations for an extended duration. A good example is over-reliance on one internet service provider or phone company.

However, if your business’s operations are entirely dependent on the existence of another business, you should plan ahead to diversify. If the business dies, so does yours. If the other business’s owner(s) cut you off, you close shop. You can only diversify, not scale up or down. There is no two ways around it.

Robert Kamaru

Robert is a freelance writer, blogger and e-preneur. He is interested in all issues mental health, lifestyle and online business.

You may also like...

2 Responses

  1. Shadrack says:

    Very insightful