Monthly Archives: April 2015

Is Collective Agro-Processing an Opportunity?

For a long time, selling of unprocessed food products has been the norm in Uganda. However, due to Government’s efforts to encourage value addition in the Agriculture value chain, private players have come up to heed this call. It is common to find locally processed food products on supermarket shelves lately. However, the investment required to set up proper processing facilities remains steep and this is where the idea of communal processing facilities emanates as shared in this article.

Locally processed produce in a Supermarket

Locally processed produce in a Supermarket

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Undermine Social media to your Peril

The use of Social media beyond gossip is taking root in Uganda and this has been exhibited by it’s growing use for social causes. This serves to remind the fence sitters that it’s time to realise that you either jump onboard or get left by the bus. More in this article.

The #HelpRosemary Campaign conducted using Social Media

The #HelpRosemary Campaign conducted using Social Media

Bite what you can Chew

The time I have been around the business arena has taught me many lessons and one of those is not to take on endeavours that are more than your business can realistically manage.

Incomplete Temple Structure - India

Incomplete Temple Structure – India

As small businesses the temptation to look out for that big break is always there. You want to get into the big time and because most of us have grown up in the ‘fast food’ era, we expect everything to work out instantly. Many are the stories of someone setting up a business targeting a ‘big deal’ with the expectation that it will see them take off comfortably.

More often than not, these businesses with alot of potential have chocked as a result of this approach and ended up in limbo. Not so long ago, an Internet Service provider that pioneered the use of internet services in remote areas using HF radio in East Africa had grown into a reputable market player and even had lucrative contracts with some of the Telecoms companies in the region. The desire to continue growing pre-occupied them so much so that when an opportunity to take on a major Internet Access infrastructure project presented itself in nearby Rwanda, they went for the jugular.  As lady luck would have it, they were the successful bidder. Delivery kicked off in high gear, bank loans were accessed to fund the deployment, progress was made on the ground. Midway the project, stuff went haywire. A blend of factors among which were; low capitalisation, loan burden, project management, thin spread of human resource and poor service delivery connived to run them into the ground. Within a month, the business had closed.

Another was an IT infrastructure installation and support company that a friend of mine set up. It too kicked off well with numerous contracts that were efficiently executed. Along the way, their ambitious expansion plans led them into a joint venture with an international company. This Joint Venture meant that they had to commit to certain deliverables. Just like the previous example, they too reached a point where they couldn’t fulfil the expectations and the business went under. Its now just being revived from the woodworks.

In 2006 my company won a tender to network the new offices of a Government of Uganda entity. Using supplier financing (having feared to opt for bank financing), we were able to deliver the work as required in the stipulated time. However, that was just the beginning of our woes. Payment wasn’t forthcoming as per the agreement and the pressure from the suppliers meant that we had to use revenue from other services and products to clear them. This was so hard considering that we had borrowed alot of money from these suppliers. The Government agency took its sweet time and amidst court threats, we almost closed the business. However, somehow we held onto a thin thread with some of the suppliers opting to get the piecemeal payments which took us almost a year to clear. The Government agency eventually paid up 15 months after we had completed and that was as good as a loss. We had received heavy knocks along the way as a result of diverting money intended for activities like marketing to pay suppliers.

Are you ambitious? If Yes, its Ok. Do You want to grow? If Yes, its Ok too. Do you want to be one of the biggest businesses in your field? Its also Ok. However, take note of the fact that like a baby first crawls, then walks before running, you too need to know when to take on what opportunities to avoid being drowned in the sea of failed businesses. Bite what you can chew.

AGRICULTURAL EXTENSION SERVICE AND THE UGANDA PEOPLE’S DEFENCE FORCES

The humanist view

While we celebrate the arrival of the rains for our first cropping season 2015, we are also apprehensive of a major change in our agricultural system – the allocation to the Uganda Peoples Defence Forces (UPDF) the role of logistical distribution of planting material; a role which has been removed from trained agricultural extension workers. Apparently, the logic is that the UPDF will only distribute the planting material and then the agricultural extension service providers will either precede or follow up with agricultural advisory services.

Sadly, the negative impact of using the army – UPDF – to logistically distribute seeds is coming fast and furious. “Ngora Town council is stranded with 900 kilograms of maize and 90 kilograms of beans meant for seed inputs to farmers” according to the Ngora Town Clerk as quoted on social media. Apparently, the ‘beneficiary’ farmers were scared to pick up the seeds for fear…

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Staff Specialisation not good for Start-ups

Business books world over tend to glorify the need for specialisation and ensuring that the different dockets of the business get due attention from their respective professionals.

As a business startup, especially if you are the bootstrap type, this is advice laced with poison. While it may work, the pain it’s likely to put the entrepreneur through is usually uncalled for. A colleague with a new business under a year old approached me and on sharing his experiences, I realised that he had followed the business books’ principles with religious zeal and failed to harmonise their advice with his local situation. He had a challenge of very high overheads and yet was going through a lean period. Essentially the business was bleeding even when it wasn’t earning as expected.

The move he took of hiring people for the different functional areas of the business had led him to a situation where he could hardly meet salary and allowance obligations. Staff morale was at its lowest and there was no end in sight to the financial dip they were facing. He justified this hiring by the fact that the business was making money and could afford to pay for the hires.

My advice to him was simple, STOP THE BLEEDING. I shared with him how he for example didn’t need to have an in-house IT professional since the work being done could be effectively handled through outsourcing. The same applied to the accountant. For a business that currently sends out not more than two invoices a week, all he needs is to have some system set up using simple spreadsheets to capture pre-determined financial information. The files generated can then be shared with an accountant via email who will then spend not more than 2 hours to come up with the relevant reports. Any other staff to be retained had to have the capability to play multiple roles e.g An Office Administrator who can handle book keeping, telephone sales, website updating and customer support. It is possible and in case they can’t do all that, some training is in order and once blended with the right technology, the rest flows like a charm.

As a Startup founder, do not feel guilty when you realise that you are the CEO, Salesman, Engineer and Client Relationship Manager. It tends to happen since during this phase your vision alone isn’t enough to attract people to you who are willing to work through thick and thin for meagre pay.

Roadside Fish Entrepreneur in Mukono, Uganda. Notice the two hand helps in the background.

Roadside Fish Entrepreneur in Mukono, Uganda. Notice the two hand helps in the background.

Indian business owners are a good example here. You’ll find one running a small shop entirely on his own or with the help of one or two unpaid family members. Only when the business has grown and he is making really good money will he hire a paid hand. That paid hand is then expected to play multiple roles in the business based on how the owner deems fit. Every extra hire is justified by a significant growth in stable revenue and over the years, what started off as a small corner shop becomes a large supermarket.

We all usually want to feel good when sharing our business setups with others. We know that people want to hear that you have a Sales Department, Support Department, Accounts team, Management among others. While all these things are nice, they do not make business sense if all they are doing is haemorrhage your company.

Some of the challenges you are likely to face with a quick recruitment drive are;

  • Lack of Management skills. As an entrepreneur, you might need time to up your game in management of people. It is very likely that if you cant manage one or two people effectively, you wont be able to manage a large team. Use the time when you have a lean team to up your game in preparation for a bigger team. The category of staff you’re likely to get in your startup may not be that much experienced in work and hence require a significant level of baby sitting. That is where the headache starts from and alot of patience is needed.
  • Meeting Obligations. For every hire you make, obligations arise and they go beyond merely paying a salary. There are local and national taxes to pay, insurance (depending on the type of industry), clothing (especially protective gear for the construction industry), mandatory leave that also ropes in Maternity leave which can be as much as three months of paid leave. These can be difficult to track and before you know it, the authorities will be raining down on you and demanding their pound of flesh.
  • Staff Utilisation. Business opportunities in Startups tend to peak and dip quite alot. I covered that in this article. This has the implication of seeing your staff be utilised at over 100% in one month and then drop to as low as 20% in the next. For a business that hasn’t yet built enough reserves and has to rely on Accounts Receivables to meet salary obligations among others, the end result is what happened to my colleague at the start of this post.

You are therefore better off avoiding the temptation of hiring too quickly and if possible try operating below the radar as a way of gaining your bearings.