Covid-19 could be a blessing in disguise for many businesses
Jaluum Herberts
The other day I was talking to a few traders about what the business landscape is going to be looking like after covid.
Reality is a lot is not going remain the same, alot is going to change for good.
A lot of talk has been around the health effect of covid with little or no talk about the economic impact of covid.
Personally I believe the economic impact of covid is way bigger than its health impact. Many businesses have been killed for good, many livelihoods shuttered for good. A lot is not going to remain or even feel the same ever again.
Very many have been forced to readjust and those that will fail to adapt and adopt to the new way of doing things will die.
Any business that closes shop now may never resurrect again. Anyone 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 Shs 10-20 million as capital. That's the money they shuffle around to be able to survive as a business. Use Shs 10 million to make say Shs 15 million monthly.
The extra Shs 5 million 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 Shs 1 million-2 million for your personal use and development.
That's how most having been running.
Five to six months of not working has seen them consume their capital base of Shs 10 million. 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 myself 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 a lot 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 kitchenware 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 Shs 2.5 million 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 Shs 5 million, 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 400,000 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 100,000 on transport and saving 300,000 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 and Contributor with the Nile Post. He is also a Business Consultant at YOUNG TREP East Africa's No.1 Business Management and Consultancy firm that helps people start and grow profitable businesses.
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