In the business of selling businesses

Tuesday January 22 2019

Mr Cuthbert Isingoma, chief executive officer

Mr Cuthbert Isingoma, chief executive officer Tufic Business Marketplace. Mr Isingoma has been demonstrating to the market reasons as to why businesses can be sold instead of dissolving them. PHOTO BY ERONIE KAMUKAMA.  

By Eronie Kamukama

As early as 2010, reports indicating that Uganda was among the top countries with the highest rate of failing businesses had emerged. This revelation drew one man’s attention, Mr Cuthbert Isingoma, because when businesses collapse, the economy hurts.

“Many people had financial problems but even then how were others not leaving their business to collapse? I realised that we have a stock market where people are selling shares for big businesses. But what about the small businesses? ” he wonders. The answer was, selling these small and medium enterprises to entrepreneurs.

Taking business ahead
People start businesses to earn money, employ others and leave a legacy behind. Another objective is to create a business so that it is sold off. He says the latter objective is alien to businesspeople in Uganda.
“Businesses are collapsing because an owner does not know what step to take to the next level, has no exit strategy at the time of retirement. The business should be sold to another person so that it continues to earn because they are for sale like other items.”

He says the same about entrepreneurs. “Entrepreneurs here tend to think they should be running businesses. Their job is to move capital from one business to another.”

But Mr Isingoma is no stranger to business failure. By 1991, he had nurtured a career in the field of civil engineering. He landed jobs in government agencies as well as the private sector, supervising construction works such as telecom towers to bridges and buildings around the country. He knew engineering was a good profession for him. But he would soon learn that it might not fetch him the kind of money he would want to earn in life.

“I said to myself engineering is good but I want to be rich,” Mr Isingoma says. “If you want to get rich, you can steal and get the money, but if you really want to do genuine things, there are a number of things you can do and I thought business was one of them.”

Dropping job for business
In 2008, Mr Isingoma ditched private sector jobs for his own business. His first foray into the business world started in his construction company. But what started as a partnership failed to grow because he got the wrong partners.
“If partners are looking for survival, it does not last but if it is for growth in the next ten years, then that is okay,” Mr Isingoma says.

In 2015, he decided the idea of creating new investment opportunities through brokering deals between sellers and buyers of businesses was the finest. He set up Tufic Business marketplace, the service did not require bundles of cash to start.
“Many people know to only invest in real estate. You cannot build an apartment of Shs200m to earn Shs1m a month. It does not make business sense,” the civil engineer in him says.

In the three years Tufic has been running, Mr Isingoma has been demonstrating to the market reasons as to why businesses can be sold instead of dissolving them. Much of the knowledge he applies is from the experience he picked from managing organisations in his earlier life, reading and learning from his business coaches.

“It is good to sell it to other people who can take it to another level. The seller has to tell us why he wants to sell. Should the reasons not be strong enough, we advise you to improve the business and maybe sell it later,” he says.
Should your reasons be valid, annual sales for the last three years, number of all clients and human resource must be looked into. The business is then properly valued.

But why buy a supermarket instead of starting one?
“You are buying something which already has customers, workers, suppliers, and a name. You will be able to start earning on the first day,” Mr Isingoma explains.

However, Tufic has its fights because selling one’s business is difficult at times. It can take a year to sell a business.
“Why? You cannot market a business carelessly because you may talk to a competitor who wants to take the company out of business,” he says.

The target was to move to two countries by the third year, having sold about 2,000 businesses in Uganda. This is yet to be realised.

For now, the business is still in its growth stage and has enough to meet its expenses. Mr Isingoma says the company is embarking on a marketing drive, one where it must sensitise people on buying businesses, including those in the diaspora.
Expansion plans are also on his mind. “We intend to spread in the next five years to Rwanda, Tanzania, Kenya, Nigeria or Ghana because this is an African problem,” he says.

Mr Isingoma does not want to remain without competition in this business. “We do not want to be the only ones. We want other players to come on board,” he says. Why? “It makes this business more acceptable.”

The 52-year-old engineer preaches about owning several businesses. On whether he lives up to the same talk, he says their ultimate target is to buy businesses, improve and sell them.
“I want to have 25 businesses. So far, I have two, another in safety.”

They should know their objectives in setting up their business and one of them is to sell. If you want to own a successful business, get a coach to train you on how to coordinate your affairs.
Find partners who should be able to sacrifice for the company’s vision to come to life.

Overcoming negative perceptions
Tufic has struggled to get heard and its seven directors have to find and convince clients.
“We work for a commission depending on who engages us, between 8 to 10 per cent of the sale value. But business is slow,” he says.
The perception is that businesses especially small ones are not sold but dissolved, he says. People do not know that they can buy businesses. Also, entrepreneurs think having one business is enough.

Clientele is built from Uganda Manufacturers Association (UMA), Kampala Capital City Traders Association (KACITA) and Private Sector Foundation Uganda (PSFU).
Tufic is targeting new millionaires. Some are corporates, he says.