Ugandans are born risk takers and are very quick to start businesses.Unfortunately, majority of these businesses do not survive the first year.
Several reasons have been fronted to explain these failuresone of them being the high rent. most people who are getting into business for the first time are usually excited and enthusiastic and have no problem paying whatever the landlords request. very few bother to carry out a market research or even a simple interview with the existing tenants.
However, as they begin to operate reality hits them when theydon’t breakeven and are unable to cover basic costs like rent.In the landlord’s defense, this may be their only source of income.
Most of these buildings are mortgaged or used as collateral in the banks in - order to access loans.most landlords are choking on debt and as a result hike their rent. they also put unrealistic demands on their tenants, some demand a minimum of three months rent, security fee which is usually equivalent to one month’s rent while others want rent to be paid in dollars! Apart from rent, there are several bills the tenant must pay which include water and electricity, City council fees are also a must, one needs an operating license, income tax, which is mostly an estimate, garbage collection fees.
For those who import and export the preferred currency is dollars and with our inflation, prices are always fluctuating. They also deal with the fees charged by Uganda Revenue Authority.
Another factor can be the lack of specialising, most Ugandans start businesses just because they see someone thriving, you see one selling jeans and you too decide to sell jeans. They copy cat mentality is rampant, most people are not compelled by passion before they start a business, they bank on someone else’s success.
They are not patient enough to carry out a market survey, or to even undergo mentorship before starting a business. Rarely do they invest in training and hiring of consultants, they just dive into a business, it is no wonder that businesses are closing.
Some of these business failures can be avoided bycarrying out a market survey, if possible engage a consultant to do this before one ventures into business. Its also very important to allow yourself to be mentored, get in touch with someone who has been in the business you want to start, ask questions, if possible work for them and learn the trade before you decide to open shop. let your decision be based on fact rather than emotion and excitement.
It is a fact that most businesses are not legally registered, some do not even have a tin number, as such they engage brokers when it comes to paying licenses and revenue fees. the brokers work for a commission and tend to hike their fees. Most peopleare afraid to seek for information and as such are vulnerable to cheats and con men. This can easily be resolved by going through the registration process before one starts a business.
Having a registered company can open several doors, one is able to bid and get bigger clients hence more money.
Uganda is a growing economy, the infrastructure, electricity and other amenities are slowly taking shape.it must also be noted that since Uganda is a landlocked country, it relies on its neighbors like Kenya and the ports in Mombasa to import and export its goods. The clearing process can be long, tedious and expensive, goods are then transported by road to Kampala since there is no railway. Traders suffer losses from theft, damaged goods and delays which result in high taxes paid to both the Kenyan and Uganda tax authorities.
However, despite all these hurdles, some businesses survive and grow. Ugandan run businesses that survive the 5year mark should be supported by the government in difficult times. Landlords should also be given credit ataffordable rates. they should also have dialogue with the traders and agree onrent rates. Issues of infrastructure, security, electricity and taxes must be tackled by the government and be improved.
