Starting business: Financing should be the least of your worries

Monday September 14 2020

A woman speaks to a customer. Before you start any business, ensure that there is a demand for your product or service. PHOTO | FILE


Ms Sandra Letio, fondly known as Uganda’s Queen of Shea Butter is an ambitious young entrepreneur.
With the brand name Pelere, meaning beautiful or great in Madi language, the determined entrepreneur has been working hard to ensure routine supply of her cosmetics made from Shea butter penetrates regional markets and beyond. 
Just like for many successful entrepreneurs, it isn’t always a smooth ride from the beginning. And indeed it hasn’t been an easy ride for the young entrepreneur over the last seven years in the business. And she is not about to throw in the towel either. 
Given her commitment and hard work over the years, Pelere Group currently has at least 10 beauty and health Shea Butter products, including lip balm, Hand wash, Hair Shampoo, Hair Conditioner, bathing soap, skin beauty products and liquid detergents. This is in addition to products such as bee wax.
Mr Brian Ssenoga, another young entrepreneur gave up on journalism to try his hands in honey production. It’s not been easy for him. This is because while venturing into the honey production business he didn’t have sufficient financing. 
Armed with zeal, focus and strong belief to succeed, he went about networking with sector and industry players as he firms his hand on anything that there is to learn about his “new craft”.  
The reason why the two young entrepreneurs Ms Letio and Mr Ssenonga are still in business is not because they started out with huge financing. , Both are still working hard and they believe slowly, but steadily, they will build their enterprises into a business empire. 
According to top chief executive officers (CEO) in the country, young entrepreneurs looking to build their enterprises into a lifelong business empire shouldn’t solely get obsessed with financing element, especially in the initial stages of the business.  
Speaking at this year’s CEO Summit held last week through zoom, under the theme; ‘Leading change through strategic collaboration’, the forum sought to ignite conversation on how the world is changing and progressing faster than ever.
The summit also  explored ways corporates can stay ahead of the game through innovation and creativity, finding new ways to operate their businesses in order to stay in line with market developments. 
This year, the summit explored ways corporates can support and promote youth led innovations through shared value partnerships and how they can navigate through the effect of COVID-19.  The CEOs noted that the element of financing should be the least of young entrepreneurs worries when building an enterprise. 
According to the CEOs, there are more important things to worry about in the initial stages of building a business and financing should not be in the most top list of priorities because it is not the only determining factor for a successful investment.   
“Financing is not an issue. It is available for young entrepreneurs,” the Executive Director of Equity Bank, Mr Anthony Kituka said.  
He continued: “The question is where and how have you positioned yourself and in which sectors are you involved in? Those in the winning sectors or those who have the ability to switch to the winning sectors will have no problem attracting financing.”
He cautioned young entrepreneurs of the risks that commercial banks poses to nascent enterprises, warning that the structure of the traditional banking model wasn’t designed to particularly provide cheaper or tailor made financing solution for enterprises such as the one being built by young entrepreneurs. 
He advised that a prudent option for initial capital should come from personal savings or through relatives and friends or a combination of both rather than straight borrowing straight away from a financial institution.
However, for those who must borrow and want a good deal, Mr Kituka said they must know that bank rates are premised on individual terms, for example, type of facility, length of borrowing, cash flows, and character of borrower.  
Winning sectors
With Covid-19 pandemic taking a heavy toll on most economic sectors, financiers will be choosy when prioritizing where to invest their funds.
According to Mr Kituka young entrepreneurs engaged in agribusiness and processing, ICT, health and medical sector stands a greater chance of accessing financing. This is in addition to energy and services sectors.   
Mr Mumba Kalifungwa, the CEO of Absa Bank Uganda reminded the young entrepreneurs of their role, which is problem solving, including finding answers to the “ticking time bomb” question of unemployment, rampant among youths. 
To deal with entrepreneurial challenges, entrepreneurs, especially the youthful ones, he said, must arm themselves with the necessary skills, including  book keeping, proper management and proper understanding of the market. 
Mr Dmitry Pozhidaev, the regional technical advisor at UNCDF-Uganda, said the emphasis shouldn’t solely be based on technological innovation. He said young entrepreneurs should be innovative with business models. “We are so interested in social and business model innovations and not just technological innovations,”  he  said in his presentation.
 “Innovation is also about proper applications of existing solutions and models. So we believe from our experience that finance is not and should not be at the centre of things that young entrepreneurs are dealing with in the initial stages of their business,”  he added.

Top executives
The 11th edition of the annual CEO Summit brought together the country’s  top CEOs and executives from the most successful corporations and tech  companies, along  with  innovation  experts,  fast-growing  startups  and investors.