According to reports, 8 of 10 of new businesses started in Uganda do not leave to see their first birthdays. This is because they would have collapsed.
This is mainly because of the unrealistic plans that most business starters make from the time they kick of their investment venture.
Half of the people who start businesses borrow money from private lenders and financial institutions like banks and micro finance which is risky.
In the end when a business fails, one is forced to use personally income to pay back the bank loan yet he did not benefit from.
Sometimes it ends with a trip to Luzira for defaulting.
It is unrealistic to borrow money to start a business with hope that the business will pay back the loan and cover expenses with no proper prior planning.
On average, a business may need two years to stabilize and start bringing in visible profits.
In Uganda, it’s hard to find a money lender who will give you a grace period of 6 month before you can start paying back the loan.
The most realistic thing is to save enough money before you start up a business.
Don’t rush into starting a business that will fail after years and leave you in debts.
It is only wise to use your own saving as capital at the beginning.
This will save you the pressure of worrying about the loan. Worrying about the loan will lead to making haste decisions and mistakes.
Another worrying behavior that most business people have is spending more than they are earning. It’s important to keep daily records.
If your records show that your expenditure is more than your earnings for a month, then you are assured that that business is heading to nowhere.
Expenditures can be rent, food, paying workers and paying taxes.
In a growing business, all these expenses are supposed to be covered by the profits from a business in the wrong run and not the initial capital.
However this is hard and almost impossible to achieve especially when a business is just beginning.
That is why it is important to have a side income that will supplement the business in case it cannot cater for all the expenses.
Doing business needs determination and sacrifices. It should be like a long term investment and not an immediate rescue plan to your financial problems.
Because in the end, the problem will get worth when you realize that you’re operating in losses yet you have to pay most of the expenses using your own money.
Lastly on spending, I do not understand why people who earn less than a million in a month want to have an expensive phone, ride a nice car, stay in a nice apartment and generally live a life beyond their means.
These other things should come as luxury and the last time I checked, luxury means your living on the surplus. Work hard now and enjoy late otherwise that small businesses you just started will be no more tomorrow.