Monthly Archives: August 2015

Start A Business Solo or with Partners? – Part 1

I started some company with friends some time back which did not do well. So …, I started again with just one of them but he was mishandling funds and so down again. NOW! I decided to pause for a while and think through the whole process, plus option of starting out alone.”

His Concerns,

… what if I am not able to sustain the business on my own since some of my friends are better in marketing and so on?

What if my capital is not enough or I don’t get clients for a long time?

What will my friends think if I start alone because they are pushing for union yet I don’t trust a few based on [past] experiences?”

Mutembuli (Name Not Real), wrote to me with multiple concerns regarding his entrepreneurial journey. His concerns are many but we’ll address them in separate posts considering the breadth of issues they cover.

It is evident from the above communication that Mutembuli has a keen interest in being an entrepreneur. He has tried on two occasions to do business and failed. At this point, like any calculative person, he has decided to take a step back and re-assess his stand. One thing that comes out clearly is that he is not about to quit his entrepreneurial pursuits.

The first issue that comes out of his experience are the two fatal attempts he has made to start business with friends. In both cases no success was registered leaving him feeling quite desolate. This begets the question;

Is it wise to start a business with partners?

Conventional judgement is largely positive about starting business with partners citing reasons such as;

  • Benefits accruing from the diversification of expertise that partnerships tend to have.
  • The ability to build the business faster through raising capital or piggybacking on multiple resource centres.
  • Partners offer an opportunity for checks and balances especially as regards new ideas and opportunities that require proper synthesis before being taken on.
  • Partners help you spread your risk.

The reality however is that for each successful partnership you see in place, there are probably one hundred failed partnerships implying that it isn’t always rosy when it comes to dealing with partners in business. I have not met any entrepreneur who doesn’t have a partner induced setback story. Most of these experiences evolve around greed and misaligned visions for the business.

While participating in a recent exhibition, I got this visitor at my stall who on admiring my products on display eventually got into a business discussion with me. Within no time she narrated to me how she and three other friends had set up a meat distribution business in Nairobi, Kenya that used supermarkets and other retail shops as it’s outlets. Their business grew quite fast and just when they were looking forward to reaping some initial dividends, one of their partner swindled all the company’s money and abandoned the venture. This experience left a bitter taste in her mouth and she has had very many unanswered questions since then. Fortunately, after sharing with her my and other people’s experiences, she sighed in relief and promised to gather herself together and embark on a new venture she has been pushing aside all this time.

Our friend Mutembuli took a backseat to rethink his entrepreneurial pursuits and is seriously considering attempting business without partners. Based on his experience, I don’t blame him and probably it is worth the attempt. Starting a business alone can have some advantages over starting it with partners and these are;

  • Ease of pursuing your vision. Start-ups rely a lot on a founder’s vision and their progress into a regular business is greatly determined by how solid that vision is. As an individual, you have a great opportunity to clearly follow that which you believe you want to achieve without being sidetracked. This is the challenge Steve Jobs (RIP) faced when as Apple Inc founder he had to contend with the politics of dealing with other partners eventually leading to his disgraceful exit from the company only to be re-admitted back many years later. With the leeway in decision making given to him upon his return as CEO, Jobs was able to turn around a company that was ’90 Days away from bankruptcy’ into the most valuable Technology company in the world within twelve years.
  • Flexibility. Working solo can give you the ability to tune your working hours according to what suits you. There is no need to struggle fitting into the most appropriate working hours of multiple partners. As an individual, this also helps you create a better work and personal life balance. Imagine a young mother who feels she needs more time with her one year old infant, she would probably want to work with her child in tow or even work from home. Some of these decisions would be harder to make if there is need to get buy-in from other business partners.
  • Decision making. Being solo gives you more comfort and ease for making decisions. Without having to balance lots of political interests that tend to arise among partners, you can be able to make decisions that don’t compromise your values and goals. Imagine a situation where you have partners and in pursuit of business, you come across this big client whose procurement personnel require a kickback in order to give you business (this by the way is the norm in many countries and big business engagements, no one should lie to you). Your partners may be advocating for the bribe while you’re against it. When it comes to voting, you’re out numbered and a decision that goes against your very ethos is passed.
  • Long term business made easier. Neil Blumenthal defined a start-up as “a company working to solve a problem where the solution is not obvious and success is not guaranteed.” This is remarkably different from a business whose key objective is to generate revenue or even profits from day one. Usually the flow of events is first a start-up then a business. The start-up phase requires a solid and unobstructed vision and approach which is usually hard to achieve with multiple founders. The mass and velocity with which a company morphs from the start-up phase to a business greatly determines its potential for success. There is this case of a team of Ugandan software developers who teamed up with some subject matter specialists to design a Mobile Application that caught the attention of many. The day they got a handsome pay after winning an international App competition is when differences emerged and eventually some founders had to drop off. Full commercialisation of this Mobile Application has still failed to be realised years after it surfaced.

The idea of starting a business alone is therefore not a strange one and considering the circumstances and experiences of our friend, I would urge him to give it a try, after-all that is what entrepreneurship is all about. Notable global brands that had solo founders are Amazon, Craiglist and Wal-Mart. This list of ten successful solo start-up founders could prove useful too. This however doesn’t mean that you can’t co-opt partners in future after the business has grown. I have been in situations where I have flatly refused to bring partners into a business during the early years for fear of derailment. Some partners come with different goals and this can end into a bitter divorce. In this article, I share about partnerships and as a follow up on which partners to avoid, Scott Gerber’s article on Ten Worst Partners for your Start-up hits the nail on the head.

What would you advise Mutembuli?

Proceed to Part 2 of this article

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Do you need that business loan?

I begun with 70 broilers, and next time I kept 220 and it went on till now I have 350 chicks and I’ve booked 600 chicks …. I want a loan.” This was an actual inquiry for help by Robby, a member of a farmers’ group am subscribed to.

Robby’s inquiry didn’t come as a surprise to me as I have seen similar tendencies exhibited by many small business owners. From that brief message, one can see that Robby started off small (like we all usually do) and managed his resources with passion. This saw his flock grow in size five times. Considering the success he has registered, he now wants to rear nearly three times the current flock size by acquiring more birds. Unfortunately, he seems resource constrained.

Robby’s growth and decision making process reveals to us the following about Small businesses;

  • Passion yields Progress: The phenomenal growth experienced by small businesses especially in the early stages is usually more about the passion than abundance of resources. Robby must have balanced the few resources he had in place and excitedly worked tirelessly to see that he looked after these birds in the best way possible. He most likely achieved this by investing alot of personal time. This naturally gave way to positive returns hence the remarkable five fold growth in flock.
  • Excitement comes before a downfall: Robby is clearly excited and very pleased with his achievements. While that in itself isn’t a bad thing, he needs to avoid succumbing to the ‘fast growth‘ syndrome that the media subjects us to. Alot of praise is usually heaped onto businesses that achieve so much in so short a time without mentioning the underlying catalysts to that progress. While he may have this grand plan of having a 10,000 broiler farm, the steps towards that vision should be measured. Deciding to borrow money to engineer your growth without looking at the holistic implications could turn out to be your nemesis. There is still alot he needs to understand about the business in order to grow it sustainably.
  • Organic is better than Artificial: In Uganda where the cost of capital is very high with interest rates ranging from 25% to 30% per annum, one can hardly achieve a profitable growth in a legitimate business by opting to borrow money. An organic approach that would see Robby re-invest his income regularly and consistently is much better off than rushing for a loan. While it may take longer to achieve the much desired growth, the organic approach would help him achieve two things; One, he gets a chance to experience the growth pains of the business a stage at a time without leap frogging (usually called the Entrepreneur’s school fees) thereby giving him a more solid foundation and Two, he has a better chance of growing with his clientele (most people like rushing to acquire big already established clients but their demands tend to lead small businesses into a wall. Often times it is better in the early stages to get clients that are within your supply ability and grow based upon their demand).
  • Understanding market stability: Robby needs more time to understand the market dynamics fully. While he may have sold his 200 birds with ease, the timing and size of flock might have been in his favour. What happens when he has 700 birds that he needs to sell off at once and the market demand is low? Every extra day that broilers stay on your farm after they are due for sale means increased overhead costs. Losses are likely to ensue and matters would be worsened by the demand of the bank loan.
  • Management is a puzzle: Like I pointed out earlier, due to passion, Robby might have played a very big role in managing the flock thus far. With increasing numbers, he’s likely going to look for staff to help him out. Is he sure that the staff are going to do the job with the same zeal as his? Any drop in the level of care for these birds has a direct implication on the eventual income attained. In any small business, it’s always a challenge getting staff to work with the same zeal as the visionary considering that most come primarily to make money.
wire_mushroom

The author assessing the supply potential of a mushroom farmer. Busolwe Town Council, Butaleja District, Uganda.

To my dear friend Robby, while borrowing money may look like the most obvious option, I advise you to step back and assess the options available to you. Having to pay interest rates of 30% per annum on capital for a business generating you not more than 25% gross profits is a recipe for disaster. You by now know too well the kind of competition in the poultry business.

When Piracy addresses Youth Unemployment

Have you ever taken time to check out that ‘video library’ in your neighbourhood? Are you aware of the rampant piracy they are engaging in by availing you DVD movies for measly amounts of cash? Do you know how sophisticated their industry is? Find out more in this article.

A client selecting DVDs to purchase in a video library.

A client selecting DVDs to purchase in a video library.

Ten Reasons why Uganda is the Most Entrepreneurial Country in the World

Richard Branson shared an article on Uganda being the leading Entrepreneurial country in the world. I had earlier on written an article on the same subject having read the report made by the UK networking group Approved Index.

The Freedictionary.com defines an entrepreneur as; “A person who organises, operates and assumes the risk for a business venture.” Branson’s post generated quite some debate on twitter and it’s on that basis that I now share the Ten reasons why I believe Uganda is the most entrepreneurial country in the world.

  1. Everyone knows someone intending to, starting up or running a business. I say this with confidence and pride. Nearly all Ugandans employed or not, young or old will be able to point out themselves or someone else they personally know who is involved in some form of entrepreneurial activity. These could range from semi commercial farming, petty trade, service provision, speculative dealings all the way to complex operations involving high end logistics. Quick example, look at how many homes in Kampala have their backyards converted into chicken coops.
  2. There are very few jobs. With very many graduates in various fields being churned out annually through the education system, we have too many Ugandans vying for very few jobs. Many Human Resource practitioners tend to complain about the hoard of applications they get whenever they advertise for jobs. In a certain instance, a particular position in a telecoms company received over 3000 applicants when only one person was to be selected. This scarcity of jobs leads to many of the ‘unemployed‘ to moonlight in business as they look out for opportunities in the employment world. It could partially explain the high closure rate of these enterprises within the first few months or years of operation since when a job presents itself, most are inclined to quit business.
  3. Salary is never enough. In a country that has no minimum wage, the employees are usually at the mercy of the employer to determine their pay. The biggest hit category are the non professional staff like casual laborers, part time workers among others. Government employees too tend to be hard hit due to their low salaries with an ever increasing cost of living. This leads many to always ensure that they start up a small side business aimed at guaranteeing the daily cash flow demands to meet living expenses.
  4. No safety in employment. As a country with very weak labour laws and heavily compromised trade unions, it’s common knowledge that employers especially in the private sector can sack employees with little or no consequences to be faced. This feeling of nakedness among the employees has created a need for ‘insurance’ which is exhibited through the side businesses that the average employee has to have. In the public sector, the gross obsession for patronage makes the tenures of most staff members highly dependent on who the head of the organisation is at that moment in time. Any change means a likely clean up of the organisation’s staff. This uncertainty among public officials leads to their increased zeal to engage in private business.
  5. Stock What? Stock Exchange. The average Ugandan hardly knows about the stock exchange and how it operates. Even the few that have tried to participate in it get bogged down by the load of things required to be a participant. Buying shares in publicly listed companies is largely a preserve of a small fraction of the elite with most people feeling comfortable investing their money in ventures that they have a lot more control over. Those that have invested in stocks usually do it with the long term in mind.
  6. Glorification of Business. Over the years, being a business man/woman has become something of good repute and in many cases gives one more clout than the traditional professions that we used to look up to like being a Doctor or Engineer. The media is always awash with stories of successful entrepreneurs, the recent drive of a private sector led economy has only increased the admiration many have towards doing business.
  7. Abundance of opportunities. The country still has an abundance of stuff to trade in or services to offer with little or no innovation requirement. Most sectors of the economy are virgin and could do with much more participation. Take Agriculture as an example, the ever increasing rural-urban migration is putting a strain on the ever decreasing number of farmers available to supply food to the urban centres and this coupled with demand from neighboring countries like South Sudan, DRC, Rwanda and Kenya has seen food prices soar over the last 5 years.
  8. Absence of Oligopolies. Wikipedia defines an Oligopoly as a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Apart from the Telecoms sector and precisely for Voice and Data business, most other sectors in the economy don’t have oligopolies. There is potential for numerous small players to still operate and make meaningful business. Across the border in Kenya, in the diary sector for example, Brookside Diary by the nature of its operations can’t easily enable a new entrant to survive. However, in Uganda, despite there being two large players in the market, there are numerous smaller players that have opened up in the past few years and they are performing better than expected. We also have the category of milk businesses that sells door to door and it too is thriving.
  9. There is room to risk. Most people are pushed away from entrepreneurial pursuits due to the fear for risk. Risk translates into many possibilities among which are; lack of money, failure to afford shelter, food, clothing, family/home needs among others. One thing that is common in our social fabric is the fact that most Ugandans have a place to call a village (country home or place). In these villages we usually have access to land or even free accommodation that doesn’t require one to pay rent regularly. In the village, food is hardly bought with most coming from the gardens. So, what is the worst that can happen to me if I failed to make it in the big city? Retreat to a rural life and sort myself out there. If one is a rural based entrepreneur, they are able to take the risk due to this assurance of an abode. Compare this with a Kenyan friend I knew while at university who was born in Nairobi City, her parents were born there too and they never had a place to call village. She had to make it or die trying. She confessed that it is such fears of ‘no where to go’ that made her settle for a job that guarantees a monthly stipend. It may not be much money but it’s predictable hence providing the comfort zone that she needs.
  10. Low entry requirements. For most sectors of the economy, the bar of entry is quite low and thus gives many a chance to try out their luck at business opportunities. Due to failure in one way or another to enforce the regulations in place, people are able to commence entrepreneurial ventures at minimal costs. Take the case of a restaurant, while in developed countries one might need to get all sorts of clearance permits and ensure availability of set basic facilities, a Ugandan could very easily start by cooking food in their home backyard and delivering already served plates to offices during the lunch hour.
Roadside fruit vending entrepreneur, Tirinyi Road, Eastern Uganda.

Roadside fruit vending entrepreneur, Tirinyi Road, Eastern Uganda.

When you travel around the country, you see the buzz of entrepreneurial activity in urban and rural areas. Take an example of your journey from home to work, notice the roadside entrepreneurs selling seedlings, flower pots (designed in different styles), lockup shops dealing in airtime and simple electronics, mobile grocery salesmen, transporters (boda bodas, bicycles, 3-Wheelers) of various household commodities destined for the customers, cars cum sales shops with open trunks displaying products like herbal soaps and traditional medicines for sale, plastic container dealers, motor garages, the list can go on and on.

Now you know why year in year out, Uganda is always featuring among the top most entrepreneurial countries in the world.

MODERNISING AGRICULTURE CHANGES UGANDA’S LAND USE – ARE WE PREPARED FOR THE CHANGES?

My sentiments on the proposed agricultural land use changes are well represented in this article.

MODERNISING AGRICULTURE CHANGES UGANDA’S LAND USE – ARE WE PREPARED FOR THE CHANGES?.

The Market always exists

She’s got a great business idea out of her culinary skills. While most of us keep defaulting to already existent menu templates to prepare special dishes especially for special occasions, she has the gift of coming up with unique recipes that are based on the actual tastes of an individual.

Lisa (not real name) has been at this game on a voluntary basis for some years now. Friends and family all tell her how marvelous she is at coming up with unique surprise recipes. At the same time, she has always been bothered by the fact that she has no ‘side hussle‘ (personal business) she can call her own or even fall back to in the event of being relieved of her job. Eventually she figured out that instead of trying out what she didn’t know like; setting up a baby clothing shop, operating a Mobile Money outlet and Events Decoration, she was better off doing something that came easy with her and that she loved from first principles.

She then begun prospecting the market and trying to find out what clientele base lay out there. She talked to some people and while they found the idea interesting, there was no ‘effective demand’ generated. She needed to get people to start paying for her services if this business idea was to make sense. That’s when she came for advice.

After a detailed discussion, her key challenges lay in two areas;

  • Reaching out to a wider base of potential customers

  • Getting people to actually pay for her services

Reaching out to a wider base of potential customers seemed such an uphill task considering that she had been trapped in the traditional mindset of customer acquisition. She complained of lack of money to market herself at events e.g. through printing fliers and the word of mouth approach wasn’t yielding the expected results. This is when I probed her presence on Social Media and how much impact it has on her and her community of friends. To my surprise, she turned out to be an avid Social Media user with Twitter, Facebook and Instagram taking the lion’s share of her time. With over 7000 followers/friends across the three networks, she had such a rich resource to tap into. When we reviewed her communication, it was always responded to by the friends/followers. Unfortunately, she had never imagined Social Media to be a business tool for her nascent business idea. My advice to her was to utilise this network of friends online and start tickling their interest through a number of different approaches aimed at suiting the different networks. Instagram for example would be good for her to profile photos of her prepared foods while Facebook can be used to generate discussions on her recipes and even highlight some of her satisfied customers.

Then came the challenge of getting people to pay for her services. Changing from a pro bono arrangement of service offering to a paid one is always a challenge since it has a lot to do with mindsets of the people. On this one, following a lot of debate, we agreed that among others she’s going to have to do the following:

  • Brand herself in line with the service she wants to offer. This she can do through physical networking with people, talking about what she does, carefully crafting posts for her online community aimed at promoting her new found brand among others.

  • Opening up a blog that she can use to share some recipes with the rest of the world as well as stories of how she has approached various requests for her services and how things turned out.

  • Client Recommendations. She can seek these recommendations from those she has already offered services and profile them on her blog, and through her other social media outlets like Facebook.

  • Formalising of her communication to potential clients. Verbal or carelessly written communication has a way it doesn’t elicit the right responses from potential clients. There is a need to make it formal and straight forward in order to show that you’ve got what it takes. The middle class who seem to be the major target of her business dwells a lot on formality.

Are you out there procrastinating over a business idea and thinking you might not have customers? The customers are always there. You just need to look around you. From family, to friends and eventually to the unknown people out there, you can grow your idea into a business that thrives.

Package attractiveness plays a key role in the Supermarket product sales.

Super Mukene on a Supermarket shelf

I did the same for my Silver Fish (Mukene) business which started off by providing the products to my brothers, sisters, aunties, cousins and friends only to later get into the supermarkets after perfecting. We’ve now been at it for Six years.

Wake up / Zukuka !!!