We have patronized this Asian business for at least five
years. It had been in operation at least two years before we happened upon it.
They have never displayed any signs of distress -- service
falling off, creeping lapses in cleanliness or stocks running out. And then it
struck me the other day, that I have never seen an advert by the business.
A friend I was with suggested that one thing the Asian
businessman can do is withstand the initial losses for longer, up to four years
he hazarded. Our business may not be capitalized enough to survive the first
six months.
"While inadequate capital is cited in most studies of business failure, I think it shouldn’t be given that much prominence...
While it’s possible the business is well capitalized, a
casual analysis of the Asian business also shows their customer service is
consistently good – you will be surprised what a “Hello Paul” when you walk in
and “See you next week” as you walk out makes a difference; their food is
consistently good – nothing like ordering for the same meal and you get served
a different taste every time; They treat their workers well or at least better
than elsewhere – the waiters are the same for all the time I have been there with an addition here and
there.
The mistake we make is to think that business is the getting
paid for the good or service we are peddling, but actually it is more than
that, it is everything you do or have to do to get paid.
And because we are so fixated on getting paid we think the
main problems of our business is lack of money or inadequate access to credit.
This same analysis I suspect informs government’s attempts
to help business startups or the youth.
In his budget speech finance minister Matia Kasaija said he
had committed to sh40b to be lent to Small and Medium Enterprises through the
Microfinance Support Center. In addition he earmarked a total sh162b for a
skills program for women and the youth.
Everything costs money, so the minister cannot be faulted
for allocating money for such projects.
But what our entrepreneurs really need is education,
training on how to run a business.
"I remember many years ago an engineer telling me that the one thing they did not learn at the technology faculty was how to run their firms. They knew the technical part inside out but could rarely run a firm profitably and sustainably for any given length of time. Again all the things one needed to get paid and once paid to keep the money coming in and the business open was the trouble.
By investing in training – not the kind where you are
ticking the box, of the recipients of this money government would be helping to
shorten the learning curve and make sure it is not so steep. Without this it
will be like throwing good money after bad and even worse breed a generation
that is dependent and useless to itself and society.
Government’s program Enterprise Uganda is one such program
that could be rolled out much wider than it currently is.
For the last decade or so enterprise Uganda has been demystifying
what it means to be an entrepreneur – especially cash as the starting point of
the business. By now a few thousand youth have gone through their programs,
mostly in and around Kampala.
It would be interesting to see a study of their methods and
outcomes. I am willing to bet that he attrition rate of those who chose to be
businessmen is much less than if people went out and started a business without
prior information.
Money is always good. But I think government should be focusing on effectiveness and efficiency. A well oriented businessman would be a better bet than someone trying to wing it, to make it up as they go along. They may even be successful eventually but just think how much time, money and other resources they would save if they were properly oriented from the beginning.
This is important even critical because as the minister
reported that 600,000 new workers enter the job market every year and that 4 in
ten youth are unemployed.
The creating of business that are sustainable and growing is
key. In more developed economies it is the SMEs creating jobs, fostering
innovation and driving economic growth. There is no reason why this can’t be
our reality.
But for that to happen government needs to stop thinking
dishing out money is the way to go.
But then again maybe I am howling into the wind!
