Any business that closes shop now may never resurrect again. Any one that loses a job now may find hard time getting the same job back and may have to consider a career switch. Companies that see themselves through this time will have to change their business models to get back to being profitable and grow. Business owners that think having their operations online is still a luxury will struggle and eventually die.
An average Kampala business works with averagely 10-20 million as capital. That’s the money they shuffle around to be able to survive as a business. Use 10M to make say 15M monthly. The extra 5M is used to pay for rent,pay any wages and operational costs like utilities and transport and may be remain with a net profit of 1M-2M for your personal use and development. That’s how most having been running.
5-6 months of not working has seen them consume their capital base of 10M. We all know how hard it is to get financing in this country. Many banks are extra cautious extending credit during this time as many are struggling with the credit they already have which they got prior to this period. Many employers have been forced to cut down their work force something they wouldn’t have considered doing had it not been for covid.
The positive and negative thing depending on which side of the coin you stand is that companies now know they don’t need all those workers they initially had. They’ve managed to work without them so they’ll be asking themselves if they really need them anyway.
If I have 50 staff and I lay of 30 and work still goes on some how, I will be asking my self the hard question, do I need them back really!? Why not spread their tasks among the remaining 20 and increase their salaries abit!? I’d still be saving alot on wages. Reduction in staff means reduction in work space hence saving on rent. That’s why I said those who have lost their jobs now may never get them back indefinitely. Your position may get deemed surplus to requirement across all board. Many are wondering if they even need shops in the city center having found a way to work around the closed shops and sell their products.
One such a person is a trader who was selling kitchen ware around Arua park. During covid he bought a small pick-up truck (called nyongeza) and started selling his kitchen ware from the truck. He’d drive to town and pack around Arua pack and sell. He has been making lots of money. Due to smaller costs he managed to reduce prices abit hence attracting lots of clients. He is now wondering why she should go back to his shop and pay 2.5M every month in rent. There many who have shops that have accumulated rent in excess of their working capital. If the land lord is demanding 15M in rent and my stock is 5M, do I pay or leave the landlord with the items!?
Many businesses are going to allow their staff to work from home. The biggest worry for employers had been the ability of their employees to work and deliver from home without supervision. The notion has always been our workers here don’t have the capacity due to the work culture to work and deliver without supervision which is largely true but now they’ll have to challenge themselves in doing so otherwise they’ll have no jobs. A new work culture has to be built.
Only those who can work and deliver beyond expectation with totally no supervision will retain jobs. If I pay my workers 1M and they use 400k in transport every month. I can let them work from home and only appear at office once a week to physically bond hence spending only 100k on transport and saving 300k something that’s nice for them and may increase employee satisfaction without necessarily increasing their pay but reducing their expenses.
So many changes have come to stay and only those who will adopt and adapt will survive.
Jaluum Herberts Luwizza is a Speaker,Writer, Columnist with the C.E.O Magazine and Contributor with the Nile Post.He is also a Business Consultant with YOUNG TREP East Africa’s No.1 Business Management and Consultancy firm that helps people start and grow profitable businesses.twitter:jaluwizza
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