Tag Archives: africa

How much money do I need to start business?

Posted on March 5, 2015 | 14 comments

A week hardly goes by without being asked how much money it takes to start a business. On each occasion, I labour to explain why you just can’t sit and come up with a figure out of the blue.

Prior to August 2008, Mr. David Kabiswa was leading a near peasant life in Masaka district. As a wood curver, he made some income by selling crafts while complementing his meagre income with subsistence farming and occasional moonlighting as a teacher in a Primary school. Life was slow and money that others spend on an average shopping visit in a supermarket was a pipe dream to him.

One day, he was invited by a Women’s Group to an event in Kitaka, Nyendo. That is where he met a team from the Uganda Health Marketing Group and Base Technologies (now Barefoot Power Uganda Ltd). His interaction during that event earned him an opportunity to attend a Solar Micro Entrepreneur training that had been scheduled by Base Technologies. This training was a very big eye opener for him as he was able to realise the potential that lay in extending clean energy solutions to his rural environs.

Armed with UGX 110,000/= that August, Mr. Kabiswa invested in his first purchase of Solar Lamps to kickstart his new venture. What started as a ‘let me try and see‘ kind of activity turned into serious business which is now fully registered as Kabiswa Genuine Solar Solutions operating in over three districts with five branches located in Bukuya, Maddu, Bukomansimbi, Kiwangala and Bijjaba. Six years down the road, his operation earns him at least UGX 11,000,000/= (Eleven Million) monthly and offers direct and indirect employment to hundreds.

Now I know the debate begins here on whether actually he started off with what he claims or not. We could choose to get as detailed as we can if we want to, however, the moral of his story/experience is that from an insignificant financial investment he has been able to get so much. Just like a seed, what he invested has given birth to much much more.

We therefore don’t need to always focus on the financial outlay of our intended businesses otherwise we are likely to become non starters. Business is dependent on Opportunity and Resources. How well one harnesses the resources around them determines how far they get. It’s important for one to appreciate that money isn’t the only resource required to start a business. Resources come in-kind like skills attained, property, network of people, location among others.

Have you identified a challenge in your community? Are you passionate about addressing it? Let‘s take the case of the ever growing rural-urban migration. It has a direct impact on food demand and production. One might want to tap into the supply of beans since it is a commonly consumed sauce in Uganda. If you looked at the opportunity in its entirety, you’d stop dead in the tracks. Questions like;

  • How much do I need to purchase the beans from the farmers?
  • How will I store them and at what cost?
  • How will I transport the beans to Kampala?
  • What do I need to bypass all the traffic officers along the way that need bribes?
  • Where will I store the beans once they reach Kampala?
  • What sales outlet will I use to wholesale/retail the beans?

Depending on your mindset, you would be led to imagine that this opportunity requires at least UGX 15 Million simply because you are considering purchasing a tonne of beans for starters, hire/rent a store in the village, hire a truck to bring your beans to Kampala, hire a warehouse in Kampala to store the beans and finally rent a sales outlet. This might freak you out and cause you to either postpone implementation of the venture or abandon it entirely. Whenever you’re preoccupied with the money as you plan for that new business then know you aren’t ready yet. Don’t focus on the money, focus on the opportunity before you. Identify ways of pulling it off with the least use of financial resources as possible.

  • Do you for example have a rural home with some empty rooms that you could use as a store for the purchased produce?
  • Are there suppliers you can deal with on the basis of trust and pay them after selling off the products?
  • Can you bargain for a discount when it comes to upfront cash payments?
  • Can you partner with other produce dealers and share transport costs by hiring a single truck?
  • Have you explored the option of reducing the initial quantities purchased?
  • You could market your produce in advance such that its delivered to the customer(s) upon arrival in Kampala (This could save you urban storage costs)

From another perspective, you might be planning to set up a business in the City that offers services. Looking at your Business plan, the financial outlay could freak you out as it involves renting an office (6 months upfront rent), buying furniture, acquiring relevant licenses, hiring employees, day to day costs of the business, salaries, the list is endless. Don’t get held up by these figures. Think of ways you can avoid certain cost centres for starters. Case in point;

  • If your customers don’t need to visit your office, can you operate without fixed office premises for starters?
  • Do your parents, friends or acquaintances have an abandoned garage in their home that you can use as an operational base?
  • Can you hold on hiring staff and carry out multiple tasks until the cash-flow situation improves?
  • Can you opt for some cheap furniture especially through the second hand market?
  • Can you use the online world especially social media to build your business and interact with potential clients?
  • Can you get a friend with accounting skills to help you with finances on a pro bono basis in the meantime as you also counter offer them some services?
  • You may consider parking that car and using public means to move around as you work.
  • Consider scaling down on your personal expenses so they don’t hurt the potentially available money to incubate the business.
Business is usually rugged but there-in lies a crevice leading you to success

Business is usually rugged but there-in lies a crevice leading you to success

Will it be as easy as I just stated? Of course not. In such situations, one should be ready for a bootstrap approach. Spend minimally, delay the outflow of cash if possible, try as much as possible to sell on cash basis, you might be required to compromise on your comfort e.g. travelling on the back of the truck in the night as your cargo is making its way to Kampala, among other measures. They may seem mean but hey, who said entrepreneurship is a roller coaster? Its the reason we have more Worker bees than Queen bees.

St Francis of Assisi said, “Start by doing what is necessary, then do what is possible and suddenly you are doing the impossible.”

Mrs Enid Tuzaire a member of CELAC Bushenyi is an enterprising farmer who decided to save the UGX 2000/= that she had been paid as transport allowance to attend a workshop and use it for purchasing Tomato Seeds. She initially planted on a small piece of land but today boasts of 5 acres of Tomatoes.

“If you believe in yourself, anything is possible,” once said Miley Cyrus.

Don’t be bothered by the money. There are always ways around it.

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Failure, the Entrepreneur’s friend

Posted on February 17, 2015 | 6 comments

The folks at Dictionary.com define failure as; “non performance of something due, required or expected.”

From the time we are born, directly or indirectly the world throws at us the notion that to fail is a bad thing. When a baby fails to walk within the prescribed time, parents aren’t happy and are often heard saying “My child has still failed to walk.” When you start nursery school studies and can’t quickly get a hang of writing numbers, reading stories or drawing and colouring, right from the teachers to the parents it’s deemed as failure and often calls for “extra lessons.” When a child fails to get the passmark that enables them join a particular school for Primary or Secondary Level Studies, parents get disappointed and deem it failure. Recently, I read in an Agony column about a parent who was beating up his child and continuously ridiculing him for failing to pass the Primary Leaving Exams with good grades thereby embarrassing the family and exposing it to ridicule. The story goes on and on.

Such negative talk and experiences with failure builds an impression in our lives that ‘you either make it or make it.‘ The demonisation of failure has had the effect of stopping many dead in their tracks hence not fulfilling their potential. When Select Garments, a company that was known for selling Gents suits over the years experienced a setback and had to close shop, people lurched out at the proprietor and overnight we had all these wannabe business analysts dissecting his weaknesses and convincing us why he could never have been a successful businessman. Never mind that his tormentors have hardly run vegetable kiosks.

It is the hard nosed condemnation upon failure of those that try that scares away those that want to try. Quotes like this one from Warren buffet only make matters worse, “My two rules of investing: Rule one – never lose money. Rule two – never forget rule one.”

In 1985 Steve Jobs was ousted from Apple, a company he founded by its Board of Directors and the CEO, John Sculley that he had personally hired. This wasn’t the best of time for him as he was just 30 years old and already a public celebrity. In a commencement speech at Stanford University he said “What had been the focus of my entire adult life was gone, and it was devastating… I was a very public failure.” This led him into an early mid-life crisis. Years later, in 1997, he was called back to a nearly bankrupt Apple which he later realised was 90 days away from bankruptcy by the time he took over. In the same year, when Michael Dell was asked what he would do if he were in Steve Jobs’ shoes, he responded, “What would I do? I’d shut it down and give the money back to the shareholders.” By the end of 2006, Apple’s worth had surpassed that of Dell and we all know that the rest is history.

Back home, in an interview with one of the local daily newspapers, Steven Kiprotich the current World and Olympics Marathon Champion was ridiculed as a failure when he quit studies to concentrate on athletics. A quick Google search is enough show you that his decision isn’t regrettable.

A friend of mine I studied with has toyed around with various entrepreneurial ventures over the past decade. His story is quite humbling. Full of what I will opt to call challenges and not failure. He set up a forex bureau with a team of friends and quickly realised the need to have controls in order to avoid financial leakages. When he came up with an implementation plan and shared it, he was hounded out.

He then tried his hands on a transport business which quickly became successful and at its peak, monthly revenues of Ushs 40 Million were a common sight. Due to lack of proper controls, this dwindled down to as low as Ushs 4 Million and he was forced to sell off the business for peanuts. Being the hardliner that he is, he simultaneously tried his hands at setting up a hostel residence for students. To cut the long story short, this too failed miserably after he had invested handsome proceeds into it.

Despite the knockouts he had experienced, he never gave up and went ahead to found a Human Resource Consulting firm which he has wrestled from a time when partners had offered to buy him out to the current stage where its a leading player in the recruitment industry and has branches all over East Africa.

These stories and probably many more that you already know all point to the fact that failure or challenges are not a death sentence. No successful entrepreneur can claim not to have a scar of failure up their sleeves. I speak to many of you out there whose fear of ridicule has prevented you from realising your full potential. Bill Cosby once said, “In order to succeed, your desire for success should be greater than your fear of failure.” “The person who risks nothing, does nothing, has nothing, is nothing and becomes nothing,” a quote from Leo Buscaglia.

If you have read this article this far, you definitely want and admire entrepreneurship and its associated benefits but the fear to court failure is likely to keep you at the admiration and dreaming phase. No business school can effectively prepare you for an entrepreneurial career. There are things you must learn on the job, the hard way but they are worth the pain in the end. Failure is the fuel that powers the entrepreneur’s engine. It propels you forward as opposed to rendering you static. Samuel Beckett put is bluntly, “Ever tried. Ever Failed. No matter. Try again. Fail again. Fail better.” This is echoed by John F Kennedy, “Those who dare to fail miserably can achieve greatly.”

The relationship between Success and Failure

The relationship between Success and Failure

While success may steer you forward, failure catapults you even further. Failure is to success what rocket fuel is to a rocket. Managing failure, learning from it and building upon it is very key in our lives.

All said and done, what the average Joe views as failure, real entrepreneurs view as a challenge or setback. “Success is stumbling from failure to failure with no loss of enthusiasm” once said Winston Churchill.

You have feared for too long, years have gone by, you may have seen one idea after another that you had in mind become a runaway success for others that chose to implement amidst all the risks. This is the time to change the scales, let the desire for success prove to be more potent than your inherent afinity to fear. Get off your laurels. The time is now !!!

Success lies in failure.

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