Entrepreneurs advised to avoid business expansion


Entrepreneurs have been cautioned against aggressive expansion drives as they can be a cause of business failure if not cautiously executed.

Citing Kenya retail stores Uchumi supermarket which closed its Uganda and Tanzania subsidiaries last year and Nakumatti which is struggling, Enterprise Uganda executive director Mr Charles Ocici said unnecessary expansion drives before consolidation constrains cash flows, resulting into business collapse.

“Don’t rush to open new branches before consolidating the existing one. If you do that, you will into get cash flow constraints, begin to delay paying your suppliers and eventually collapse,” Mr Ocici warned entrepreneurs at a Global Entrepreneurship Week held at Uganda Manufacturers Association ground, Kampala recently.

He further said while business expansion is good for profitability and business growth, it should be done carefully, after putting in place a right strategy that can deliver stability, security and long-term profits.

“First assess the current strengths, weaknesses, opportunities and threats to your business and
To ensure business growth, sustainability and capital expansion, Mr Ocici urged entrepreneurs to always plough back 50 per cent of their profits into their business ventures for growth and continuity.

He scoffed at people who fear to venture into the entrepreneurial space, citing lack of capital.

“Entrepreneurship is not only about accessing resources like money, land or market to sell your goods. You can have all that but if you don’t have the credentials of a great entrepreneur, you cannot do much. Entrepreneurship starts from and ends in your brain,” Mr Ocici said.

He added: “The moment your brain is not constructed to enter this arena, it’s a waste of time with promised cheap capital or opportunity to go to America.”

He also noted that there is need to change the attitude and mindset of the youth towards a more entrepreneurial culture.

“We need attitudinal orientation, encouraging young people to own up their lives. Entrepreneurship is tough and it takes attitudinal transformation and passion for one to venture into it. We need the right mindset to foster entrepreneurship spirit,” he said.

Entrepreneurs were also urged to uphold integrity so as to grow businesses and build strong brands, which are crucial in giving businesses a competitive edge.

“If you want to succeed in business, you need to be a person of integrity. Character is fundamental in the long-term success of business; cheating customers will not take you anywhere,” Mr Ocici said.

Integrity is a fundamental part of the human character, involving acting morally and firmly adhering to a code of values.

The Finance state minister, Mr Haruna Kasolo, said government needs to consider offering tax holidays to entrepreneurs with promising enterprises in respect of their capacity to grow and employ more Ugandans.

Responding to entrepreneurs’ woes on the high cost of borrowing from commercial financial institutions with interest rates of between 23 per cent and 30 per cent per year, the minister advised them to pursue the soft loans in the government-funded Micro-Finance Support Centre for cheaper loans of not more than 13 per cent.


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