Monday, September 21, 2015


A fortnight ago an organisation called the Inclusive Business Accelerator (IBA), which in a nutshell helps small businesses formalise their operations and make them more understandable and attractive to investors and potential partners.

IBA inaddition to make small businesses investor friendly link the up with potential investors.

The organisation, backed some traditional charitable organisations, highlighted a growing trend by aid agencies who in trying to have their monies have a broader impact on society are looking directly at the bottom of the pyramid.

Its a natural progression from offering a hungry man a fish to showing him how to fish, which is more sustainable and can be profitable for all involved.

"Uganda's status as the most entrepreneurial country in the world was recently reaffirmed by UK study. Unfortunately while we are good at starting up companies we are poor at growing them and ensure they endure over years.
The reason that this happens range from the strategic -- we have no long term plan for our businesses beyond providing subsistence for ourselves, to the tactical -- that our businesses are not organised enough to take advantage of opportunities available. The second is derived from the first...

Arguably since we have businesses sprouting up at every corner we have solved a critical part of the equation of how to build sustainable businesses. Our businesses then need handholders to help them transition from their small, informal beginnings to more viable entities.

And this does not apply only to the rolex guy around the corner or the small market stall owner. 

During a recent press event with Uganda Revenue Authority boss Doris Akol she said that the informal sector include law, accounting and consultancy services. This was a revelation because one would think these knowledgeable specialists would better appreciate the benefits of getting organised.

Of course one of the reasons of this reluctance is the high price of transitioning to formality -- the hustle of registration, new dues and regulations that come into play.

The difference between a company with organised accounts and one that doesn't is like night and day. The same can be said for one that is tax compliant compared to one that is not.

One of the challenges of making the transition is the unrealistic expectations people place on their business. Talk to any new business owner and they expect to have broken even within months and buying a VX within the year. Registering, paying taxes and meeting other regulations do not play into these expectations.

This an important discussion if only because it will give our small business not only a chance of survival but to grow into big companies. All big companies started as small companies.

It is also important because even in more developed economies it is small businesses that create the most jobs.
While organisations like IBA and similar outfits, may have it as one of their aims to make small businesses investor ready the long term benefit to businesses to getting organised is immeasurable. The ability to qualify for credit, the quality of tenders one can bid for  and the calibre of partners that will give one a second look are but a few of the benefits and make all the "pain" of formalising.

"But even for those who want to become immensely rich, they soon find out that informal practices only take you so far before they begin to sabotage the business. If you are racking in millions even billions on an informal structure know you can be making multiples more with a formal structure. And the longer you remain informal the costlier it will be when you are finally compelled to...

As Uganda has formalised over the last few years we have seen any number of businesses from supermarkets to manufacturers and even banks because their continued informal practices caught up with them.

The new movement of business incubators and  accelerators, which should eventually evolve into our own venture capital industry is one to watch and encourage.

Thankfully the early adopters are already coming through. Last week the start up online logistics company, Intership Uganda beat off eleven other local companies for a chance to pitch to foreign investors in Switzerland next year.

They won, i think, on the strength of their business model, providing logistics services via the web, but also because their model was better organised and they had realistic projections given their current operations.
So do you have a side hustle you are running-- you bake cookies or you have a chicken  project or even doing mushrooms in your garage, at the bare minimum have organised books of accounts. At the bare minimum you will be able to objectively determine what you are doing right and you do more of it or what you are doing wrong and not do it again.


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