The Challenges of doing business in Uganda

We usually celebrate successful entrepreneurs. Little do we know the many hurdles they have had to surmount. I know that in 10 years I will be a very rich and wealthy entrepreneur. So it is important for me to document the journey and share it with aspiring business owners. This will hopefully inspire and prepare young business owners to brace themselves for the long, hard and exciting journey which awaits them.

These are some of the things we have had to grapple with over the last year or so:

  1. Too much rain. Believe it or not too much rain is a problem for us. When it rains the road to the factory is impassable. That means people can’t go to work on time and also product can’t leave the factory in time. The rains also create a lot of traffic jam which affects sales. The sales team can’t activate when it is raining. There is also reduced demand for cold drinks when it is raining!
  2. Bad roads. Many of our customers are off the road. Bumpy roads increase the maintenance costs of vehicles and make distribution expensive. We have used bikes in some of these places.
  3. Product wastage. We have had to recall some products which didn’t meet the quality standards. Some times the packages break because of poor sealing and handling. We have tried to standardize the production process and also hired a dedicated quality controller to check the quality of the products.
  4. Quitting employees. Startups rarely pay market price. So some staff inevitably leave for greener pastures.
  5. Unreliable power. Power is a big problem in our area. Fortunately we are in touch with the Umeme district engineer who always comes to our rescue. We can’t afford a generator yet.
  6. Water shortages. Frequent water shortages cause us problems. Our production heavily depends on a reliable supply of clean water. We have invested in larger storage tanks to mitigate this issue.
  7. Lack of cash for operations. Cash has been tight because we are building the market yet expenses keep going up. We have heavily relied on shareholder capital to bridge the gap.
  8. High expenses. The expenses keep going up. The overheads are high. Distribution costs are quite high. The only solution is to aggressively grow sales to cover overheads. We are also trying to cautiously manage overhead without constraining the business.
  9. Sick employees. Startups have a lean team. When a key employee is sick an entire production process could halt. We have tried to train people in different aspects of the processes to manage this issue.
  10. Un-skilled labor force. Most of the casual laborers have no skills to speak of. So a lot of time and money is spent training them. Costly mistakes are quite common as people are learning on the job.
  11. Inadequate staffing. Because of limited budget everyone plays multiple roles. The cashier is the accountant, admin, secretary, procurement officer, HR manager, etc. The advantage is that people learn to do different things and develop multiple skills.
  12. Burn out. There is too much work and pressure for the small number of people. There are no weekends and working overtime is the norm. So stress builds up and sometimes leads to burn out. We are sensitizing people to be mindful of their health and well being even as they build their dream.
  13. Competition. We have seen cheaper products eat away at our market share. We just have to maintain consistent quality and keep coming up with new products.
  14. Corona Virus. Some of our equipment from China has been delayed. If the country shuts down, our sales will be greatly impacted.
  15. Lower sales. Sometimes actual sales are way below projections. Sometimes you run out of cash to  buy raw materials on time. Sometimes the distribution van breaks down. Sometimes the marketing budget is constrained. We have to invest in cheaper product promotion and also deal with the stock outs.
  16. Inadequate transport. There is a time when we had no reliable vehicle to move product around. The vehicle would break down every other day. We have had to invest in 3 “new” vehicles to solve this bottleneck. 
  17. Rejection of product by market. Some of our products have received a “hostile” reception from the market. We have gone back to the drawing board to reinvent some of the recipes.
  18. Machine breakdown. The equipment often breaks down and sourcing spares is a herculean task. We have lost full production days waiting for spare parts. We have trained the machine operators to be able to quickly diagnose and repair problems with the equipment.
  19. Poor quality supplies. One time we lost a full track of raw materials from the village which was all rotten! Sometimes packaging is also damaged. We have increased our supplier database to make sure we source from different parties and not entirely rely on one person.
  20. Loss of key customers. There is one sales guy who was rudely chased away from a certain shop. We realized later that the shop owner had started making a cheaper version of the our product. The team has since opened up new markets to mitigate against such scenarios.
  21. Car breakdown. There is a time the delivery van got stuck on the road. We lost several hours trying to fix it. We have a mechanic on call who usually comes to our rescue.
  22. Raw material stock-outs. Some of our materials are sourced from Kenya. Sometimes the bus delays and we end up losing production days. We have found local suppliers to buffer us in such scenarios.
  23. Police fines. Our trucks have been “arrested” several times for different traffic offences. We have paid many fines. We have sensitized the drivers to be more cautious. We have also incurred expenses to process driving permits for some of our staff.
  24. Government bureaucracy. Processing some permits and licenses usually takes longer than expected. We just have to “talk nicely” to some of these government bureaucrats to fast track our papers.
  25. Lack of access to funding. Funding is an issue. The banks won’t give you money because you are still small. Other people who have cash are also scared of the risk of investing in a startup. So we have to fund the project typically using shareholder funds.
  26. Lack of proper systems. We have to build systems from scratch. We can’t afford a fully fledged accounting system. So we are using Google sheets. We are building HR systems, strategic planning, document management, inventory management, quality control systems, etc. All this takes a lot of training, money and patience with the team as we learn how to set up proper systems.
  27. Lack of proper equipment. Our production output is currently limited because most of the processes are quite manual. We are sourcing funds to invest in proper equipment and automate the production line.
  28. Politics. Our factory is in Gayaza. Gayaza road is home to two aspiring opposition presidential candidates. Whenever there is chaos the road is closed off and we can’t move product.

The important thing is that you NEVER NEVER NEVER GIVE UP and keep pushing. Despite all these problems we are making steady progress and I believe we shall come out stronger!

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