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Generational Wealth – Take note of it

Generational Wealth is defined as Wealth/Assets passed on from one generation to another i.e parents to their children or grandchildren.

Wealth is also defined as An abundance of valuable possessions or money.

Those of you reading this article today are either parents with children who you expect to continue with your legacy when long gone or children with parents who are still fending for you while a third category is the in between like me who are both parents but still with parent(s) around too.

Wealth is usually perceived from the aspect of financial resources but it can also be educational, spiritual, intellectual, skill among others.

My focus is on those young men and women out there whose parents have some resources available for them to kickstart life. I see many of them taking this wealth for granted and largely being proud of what their parents have achieved as opposed to seeing how to grow that wealth to the next level.

There is someone whose father is very rich and owns one of the biggest poultry chicks companies in Uganda that competes head to head with Ugachick and Kenchick. Upon leaving University, the father placed him in the business and had his sights set on him to grow into the business and later take over. Within 2 years after university, the guy decides to follow the bandwagon of pursuing kyeyo abroad. I’ll honestly tell you that he has not had much impact in his life and that of those around him like he would have, had he chosen to continue with the initial line of his father.

Some of you reading this have deliberately chosen to settle for measly jobs just because they give you a better profile in society. You proudly speak with a lisp saying, “I work with XXX Bank” or “I am a Customer Service Agent with YYY Telecom and you ignore the 20 something rice acres your father has in Butaleja that need simple management to rake in not less than UGX 60 Million every four months. With your education, you can get into value addition and eventually earn 50% more than the above estimate. Within a span of 10 years, you will have grown your father’s business from 20 acres to probably 40 acres and that automatically implies greater income for you the individual as well as guaranteeing the education of all your siblings with ease.

Haji Naleba a big Rice farmer from Butaleja district had a hard time handling revenues from the rice farm and one day chose to place one of his sons Ahmed Naleba to be in charge. Ahmed had just returned from some studies and with his intervention, within a year, Haji was able to buy a brand New Tata Lorry loan free using farm revenue. This is something he had never believed he could do, never mind the son eventually left the operations (that is a story for another day.)

I therefore implore you to always look at building upon what came from your parents and ensuring that it multiplies. Many children upon the death of parents prefer to scamper and subdivide all that was left in order to sell it off and call it a day but that is small mindedness. If such assets remain as a collective to benefit all family members, they provide a cushion for future generations.

One of the reasons my industriousness was limited from the time I started working was the need to first guarantee my survival (It’s also the reason many are still stuck in employment despite the brilliant ideas they have). I had to first ensure I had food to eat and a roof under which to sleep (never mind that I lived in a leaking house at one time and would sleep standing whenever it rained.) This made me vow to ensure that my children will never have to worry about the basics of survival and instead invest their energies in pursuing greater goals. This is where our peers in developed countries have an advantage.

Steve Jobs had a garage he could work from when starting Apple and was assured of a meal and at worst a bed at home.

Bill Gates’ grand father was William Henry Gates who was a Furniture Store owner, his father who passed away last year was William Henry Gates II (Bill Gates Senior) and was one of the most highly accomplished attorneys in the USA. It is not by mistake that he is among the richest men in the world today. He built upon the networks of his parents to access huge companies like IBM while starting up.

In Uganda, a similar scenario is playing out with the Madhvani family, Uhuru Family, and I am having a big problem identifying an indigenous Ugandan family that fits the billing (forget the thieves we know).

For Uhuru, I witnessed while in my primary school at Buganda Road, Salim Uhuru the current proprietor of Uhuru Restaurant would run to his father’s restaurant after class to serve food, wash plates, collect money etc as we looked forward to eating mangoes and beating dogs while walking back to Naguru Estate. The father eventually passed on the business to him and it has grown over the years.

In conclusion, real wealth (forget the cosmetic wealth of the so called smart guys who are actually thieves donning makeup and lipstick) actually grows from generation to generation. Hence the need to seriously work towards building generational wealth.

What is your view?

Wire James

Business and Technology Consultant

Twitter – @wirejames


HOW TO – Start a Retail Shop

One of the biggest challenges facing both the employed and unemployed folks is that of having a guaranteed daily income to take care of basics especially at home. In most cases, people with big salaries find themselves in negative balances by the time they are paid simply because during the month, as a result of lacking cash to purchase daily necessities, they resorted to borrowing.

There is a teacher who was struggling from pay cheque to pay cheque in a bid to fend for his family until a friend advised him to open up a stall selling simple home groceries. Within three months, his stall had grown and was taking care of all the home needs. Today, he’s actively saving his salary in a Savings and Credit Society with the hope of buying land to build a house.

Mid this year, I was approached by one of the blog readers with a request to help a young lady set up a shop for business. While her initial thought was to set up a wholesale shop, she eventually settled for a retail shop. It is the experience we went through doing all this that is shaping this article. Have you tried setting up a shop before or do you want to do it for the first time? Either way, I believe there is something to learn from this experience.

Retail shops are spread out in our communities and they are not something really new. They largely deal in groceries and other home products like toiletries, beauty products, Mobile Money transfer, Airtime sales, basic electronics among others. While they were traditionally overlooked by many in the past, it seems like their importance in stabilising family finances has been appreciated lately. It is the reason we are seeing more of them crop up.

So, you want to set up one? Good. Let us look at the key issues to consider.

Investment amount: You need to have an idea of how much money you are prospecting to sink into the investment. This will help you as you put your plan into action. Typical retail shop setup costs are dependent on numerous factors but they can range from as low as UGX 2 Million to as much as UGX 50 Million.

Target Market: Identify the target market for your retail shop. Is it an upscale or low end clientele? Is it a roadside location targeting passersby of all kinds? Could it be entertainment revellers in a nearby complex?

Correctly identifying your target market helps you to determine how much money to sink in the project, the pricing approach to be used, types of products stocked and packaging. A good example is the prevalence of small sized 30ml cooking oil sachets in less affluent communities as opposed to the standard 500ml sized cooking oil cans.

Set Standards. Before you set out to look for that shop to rent, have some minimum expectations in place otherwise you might just end up taking on anything that comes your way and not achieve your goals. Do you need parking space? Is a large storage space necessary? Do you want it in a residential area? Should it have electricity and piped water? Should it be able to double up as your accommodation? Is burglar proofing a must? The list could go on and on. You should have at least five core expectations. This helps ease the decision making process in case you have multiple offers.

Location: Be very critical of the location you choose. It highly determines the success of your shop. Basing your shop near a taxi or bus stage can be attractive to the users of public transport and shopping is likely to be brisk during the rush hours. Having a shop by the roadside on a route largely used by drivers of private cars endears you to them especially if you have parking. There is a row of shops on the Namugongo road near Naalya Secondary School, they not only benefit from the fleet of cars that pass by that route daily but have gone a step further to open for business as early as 5am. This allows parents that forgot to shop snacks for their school going children to buy them early in the morning on the way to school.

Agreement with Landlord: Upon identifying the space you want to rent, it is time to interact with the landlord. Most Ugandans are okay with informal agreements for as long as they know they shall pay for the place. However, I urge you to insist on a formal agreement complete with a contract that spells your expectations and obligations as a tenant clearly. If you can, use the services of a lawyer at this stage. There is nothing as sad as starting up a shop, then as it is booming, the landlord decides that it is time to double the rent or boot you out on flimsy grounds with the sole intention of replicating what you have done in that space. Always plan for the worst.

Secure Premises. Once occupancy issues have been sorted out with the landlord, you need to start establishing the investment requirements for furnishing, branding, security among others.

Product List: By this time, you should have studied the target market and identified what kind of products they are likely to buy from you. The items to be purchased should be fast moving because turnover is the secret in most of these retail shops. The margins on products are usually low and this calls for large sales volumes if one is to make some good money. If you can sell 100Kgs of rice weekly making a margin of UGX 20,000, you’re much better off than one who sells the same amount in three weeks making a margin of UGX 30,000.

Suppliers: With full knowledge of the target products, the next stage is to identify suitable wholesalers (suppliers) you can deal with. Most manufacturers do not sell directly to retail shops or consumers but prefer to use a network of distributors who tend to have territorial limitations. Take the example of Jesa Milk, their distributor in the Naalya and Namugongo areas is different from the one in Nansana. You therefore need to find out who to purchase from the selected products. An easier way out usually is going to Kikuubo and purchasing from the various wholesalers already there.

Registration: It is crucial that you register a business name. Lately, it is a very simple process to do this and will hardly take more than 4 hours of your time at the Uganda Registration Services Bureau if you have all the paperwork like Identity Cards in place.

Ensure that the local council registration requirements are met too. Visit that Municipal or Town council office and pay up for the requisite trading license.

Purchases: Your shop is furnished with all the shelves and tables required, burglar proofing is in place, registration paperwork complete, now it’s time to purchase the first products for stocking. Review your product list and purchase limited quantities of each identified product because you are still in an experimental phase and aren’t so sure what will or will not sell. Some shopkeeper once showed me stock he had bought while starting his shop and had not been sold two years down the road. He had misread the market.

Sell: At this point, you should open up the shop to the general public. Start selling as well as actively seeking their feedback on what products they would like to see stocked. Based on the product sales, you too can be able to make judgement on stocking decisions. Take note that different localities have different tastes. There are areas where the sale of fish is likely to boom while for others it’s beans.

Due diligence

The success of a shop isn’t a random occurrence. You need to work towards it and some of the things one needs to adhere to for this success to manifest are;

  • Setting up a record keeping system. This helps you know what you have purchased for stock, how much has been spent purchasing it, what has been sold, remaining product quantities, payments for recurrent costs among others.

  • The records should then facilitate you to carry out daily, weekly and monthly reconciliations. Without such a keen eye on the details, a shop can easily drag you into unnecessary losses especially when you rely on hired labour. I have heard of cases where a hired shop keeper stocks his products e.g crates of soda side by side with those of the business owner, sells off his stock first then starts selling those of the owner. Closer attention could help avert such scenarios.

  • Open up an account for the shop with a financial institution. It’s good practise to desist from keeping business money under the pillow. This is the reason why robbers often times target shop keepers. By keeping money in the bank, you not only secure it but it also helps you account and plan for the business better.

  • Upon transacting, ensure that you bank all your earnings prior to spending. It is a good trail that should make your efforts at accountability much easier especially when ambushed by the tax man. Withdrawals from the account should be clearly recorded indicating the purpose.

  • Pay yourself. You are a human being with needs too. If you are working in the shop, pay yourself a salary, however small. You can always increase it based upon the growth of the business.

  • Take on the services of a walk-in accountant for your book keeping. This should help you keep a proper record trail as well as analysis of business performance at an affordable rate.

  • Your focus should be on growing the business through profit re-investment. Avoid the temptation of rushing to spend lavishly simply because the shop is making a lot of money. The time shall come when you will be able to do that, for now, focus on getting your business to grow.

  • Honesty. As I finalise, it is important to touch on this subject. Exercise utmost honesty in your business. Avoid cheating of customers through dishonest scales or sale of counterfeits. Remember that customers over time get to know when you are dishonest. I once went with my kitchen scale to some meat vendors in my neighbourhood and as they ran towards me expecting business, I challenged them to give me an opportunity to weigh what they offer as a Kilogram of meat. They all withdrew apart from one elderly man who took me on and his Kilogram was of the right amount. I have never stopped purchasing from him ever since.

Hopefully, you have picked up some pointers from this article to pursue your goal of setting up a shop. Start small and scale up with time. What was meant to merely meet the basic needs of you home might turn out to be a huge enterprise worth millions of dollars. This is how the story of Quality Supermarket started in Old Kampala.

James Wire is a Business and Technology Consultant based in Kampala, Uganda
him @wirejames on Twitter.
lunghabo [at] gmail [dot] com