IT’S OKAY TO START SMALL BUT YOU DON’T HAVE TO STAY SMALL

Eddie Mugulusi, Founder at Fab Creations Ltd.

In this picture (A container of the candy refered to in the article)

A couple of days ago a young small business owner reached out to me. In his message he indicated that he was in the candy making business and wished to learn a few things from me. Now I often talk to and offer guidance to small business owners but I’d never encountered one in the candy business. I was curious to learn why and how he got into that space. Following a lengthy phone call, it emerged that everything he knew about candy was self-taught and that he had begun this journey after failing to find a job. He decided to put to use the tools he had available to him. For one, he had some space at home and access to the internet. Over a period of close to a year, he invested time and his small resources into learning how to make good candy. With numerous failed attempts, he gradually improved his craft. Today his small business makes and sales tasty candy and as I would come to learn can barely meet the demand.

It is obviously impressive just how much this young man has achieved on his own but even more impressive is just how much he wants to grow and scale his business. Even without the resources necessary to scale, he is already experimenting on new candy recipes. Infact, his primary reason for reaching out to me was gain insights into how he can grow his small enterprise. This way of thinking is remarkable moreover he is doing so at a point where many small business owners in Uganda get comfortable.

According to a research paper titled ‘Why small firms stay small: risk and growth in Nairobi’s small – scale manufacturing’, the author McCormick, Dorothy notes that one very significant reason why small firms stay small is risk. The writer goes on to say that in Nairobi and probably elsewhere, the economic and social consequences of business failure are extremely high. Entrepreneurs try to protect themselves from failure and in the process ensure that their firms will remain small.

Findings from this research identified four risk-management strategies that discourage firm growth. First, many entrepreneurs manage risk through flexibility. By working in rent free quarters, using family labor and little capital they minimize fixed costs and maximize opportunities for additional income. Second, many small manufacturers avoid risk by making standard products for a known market. Third, successful entrepreneurs frequently diversify their income and assets rather than expand a single enterprise. Finally, most prefer to preserve their land and assets unencumbered by debt. As a result, these rational responses to risky business environment ensure that most firms will stay very small. In Uganda we are quick to place all blame for failure to grow business on not being able to raise capital. While in some instances that might be true, it’s often not the case.

Just like the young man making candy, I too started out in my small kitchen way back in 2017. There was no doubt in my mind though that the kitchen arrangement was only a temporary situation. I could have chosen to stay small in my kitchen at the first sight of revenue, after all staying there would have really minimize my fixed costs. However I had not gone through the trouble of starting the business just so I could run it at home and sale the ketchup in the neighborhood. I wanted more from the get go and that’s the kind of mindset you need too. I have always had a good tolerance for taking calculated risk in business. As a small business owner it is important that you asses and mitigate risk then make a case for how best to move forward in growing your Enterprise. Over the years I have realized that the direction a business takes, be it one of growth or not, truly is in the hands of the business owner. Choose growth.

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