Why Ugandan businesses will fail in 2022

2020 and 2021 were rough years for most Ugandan businesses due economic downturns brought by the COVID-19 pandemic. Manufacturing companies made a little to nothing. Several multinational companies closed shop. Ecommerce companies remained unprofitable. Profit margins of retails stores dwindled.

Several factors contributed to the backdrop in profitability; from the unexpected outbreak of Coronavirus to the troubling devaluation of the Uganda currency against the dollar.

But even with all these events around us, Ugandan business owners have remained optimistic for 2022 when the economy would be fully opened after two years of restrictions aimed at the preventing the spread of the deadly COVID-19.

Some businesses that are optimistic for 2022 have started folding up, but as a religious nation Uganda is, many businessmen are looking towards “hope” and “grace” for a miraculous turn around.

Also read; How to sell online in Uganda

Why Ugandan businesses will fail in 2022 and what you can do to save yours

A wise man once said, “hope is not strategy”, and for that matter, here are 10 tips and will help your business survive in this collapsed economy in 2022.

1). Look for ways to aggressively cut cost

If you are not careful enough, expenses will ruin your business in 2022. It is time you do away with every unnecessary profit eating agent in your business. Is it unneeded service? Unnecessary staff or strange miscellaneous expenses? Also consider moving from your fancy office to a much more functionally modest office. Most businesses with fancy offices don’t generate as much revenue as those operating in modest work environments. If you don’t adjust your overhead costs, your business might collapse as soon as 2022 takes off.

2). Focus on cash flow

Do everything possible to see that cash is coming in faster. For example you can offer reasonable discounts to make customers pay quicker and also sale faster. Deliver a better customer service. Do all you can to entice your customers and ensure that cash keeps coming in because it’s going to get tougher since customers would want to spend less in these times.

3). Focus on staying afloat, not growth

This is not the time to focus on growth. Acquiring a lot of new customers means spending a lot of money on creating more awareness. This will painfully backfire because your cost of acquiring new customers is already high considering the abnormal Uganda Shilling to Dollar exchange rate. This would put you in a horrible loss index. Instead focus on identifying your strength now. Understand what keeps your customers coming back? What generates for you the most income? What is your business known for? Staying afloat now is all you need, and it will determine which business will remain standing in 2022.

4). Be on good terms with your creditors

Falling behind on periodic repayments is creates a terrible image in the face of your creditors. When you start delaying on your payments, you start looking unreliable, and if you are not careful, long after the economy has recover, no one might trust you enough to loan you money or give you products or services on credit. It is better you let your creditors know your status and tell them how it affects your business, so they can see how they can help you realign your payment schedule. This way, they would trust you better in the long run.

5). Outsource a lot of work

To many, this may seem an expensive approach, but outsourcing one project at a time can save you costs you would spend on paying permanent staff in a year. Instead of hiring a individual and paying them a lot of money monthly, streamlining job roles and outsourcing the service for a slightly higher sum but lesser project counts is far better. This would save you both the emotional stress and cost of managing and maintaining staff in your company.

6). Renegotiate with your suppliers

Explain what is happening in your business and economy to your suppliers, especially if they are based abroad so that they (those who value customer relationships) can help you a little better by slightly reducing the cost you spend in acquiring their items. Appealing to emotions of suppliers might work, but don’t try this under normal circumstances. People mostly want only financial pay-offs.

7). Offer a new service

If your business has grown to a considerable size, create a new branch. Preferably something that is not capital intensive. Always think outside the box when trying to come up with a new business idea. For example if the service you offered was a premium one, you can introduce a regular service for people that have already reduced their expenses and they are not willing to spend extravagantly until the economy bounces back to normal.

8). Cut costs for your customers

Offer your customers creative ways that can help them cut their costs when they patronize your business. This way, they would feel better appreciated and would keep patronizing you, knowing that you care about them and their pockets.

9). Retrain all your staff

Train your staff to carry on more responsibilities. Enlighten them on the economic situation in the country, and how cross-working in the company can ensure that their jobs are saved for the future. This approach will not only keep your staff motivated, but will also cut costs of new staff and ensure the majority of their jobs would be secure till long after the economy has recovered.

10). Embrace social media

This is where you could get some free leads and sales. Build your social media presence and connections. Show your social media followers what you are capable of and drive some potential sales your way while you are at it.

Also read; 21 ways to save money on grocery shopping in Uganda

 

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