Business Tales: "Why you should not invest in the transport business unless..."
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Beginning today, The Nile Post shall run a series of short stories centring on the business adventures of a one Nelson Musoke (name changed). Over the years, Musoke has tried his hands at several businesses with mixed results. Along his business journey, he has made a big share of mistakes and registered some successes.
In this first tale, Musoke narrates how his investment in what appeared to be a very lucrative transport business, ended up in tears. Read on
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Over the weekend I and a number of my siblings took a road trip to bid farewell to an Uncle and on the way back we passed through a place called Kakiri in Wakiso District.
It was close to 9 pm when we got to Kakiri Town centre and when I saw a familiar large Mivule tree my mind went racing back to my escapades in the transport business between 2006 and 2009 (timeline may not be totally accurate but I am getting old)
Anyway just below that Mivule tree was a park where my Elfs (small 5 ton tipper Isuzu trucks) used to park and from which they would ply their trade.
I had earlier been convinced to enter the trade by a cousin of mine who explained the business to me, showed me where to buy good second hand trucks was gracious enough to even hand me one of his trustworthy former employees as a driver to start with and also gave me the cashflow projections
It was as simple as this. You buy a second hand elf between 15 million and 25 million depending on the condition hand it over to a trusted driver and wait for 175,000 Ushs every week from the driver. No questions asked.
The driver would then take what is akin to an operating lease where he looked for clients, did their work, fueled the truck and did minor repairs and gave you a progress report every week when he came to bring you your agreed 175,000.
As the owner my job was to handle major repairs and crises.
After the first 4 weeks of payments from my driver on time with no issues, greed set in. I also had an old pickup which had been gifted to me by my father and it had done its time so I also engaged it in this easy business.
I can say before I entered the transport business I had a word with my father who over the years with the exception of my wife has heard me come and talk about all my wild ideas.
On this one he asked whether I had come to get advice or get his blessing. His advice was "don't do it" but being the pragmatic person he is he gave his blessings well knowing where I was going.
Anyway, for the pickup I would earn a clean 70,000 to 100,000 a week and then I started "taking the piss" and got a dudu, another truck and a few cars which I gave different individuals and organisations to drive and just pay their tithe to me every weekend.
Whilst the cashflows were good and at anytime I had a few bob in my pocket the vagaries of being in the transport business began to set in.
The first issue was as the vehicles aged the amount of time and money spent in the garage starts taking its toll. At the end of each month when you do your calculations you begin to realise that as much as 80% of the money that has been tithed to you has been spent on repairs and replacement of car parts and their consumables like tyres.
You then begin to see dishonesty set in with the trusted drivers.
He can come and tell you he has not worked for the week because its the rainy season and can provide only 50% of the usual tithe and then the next night at 3am call and tell you he was delivering sand at a site and he parked the truck on an incline and the strut that lifts the bed broke. In your mind your thinking, but it's rainy season and you said you had no work.
You then learn about things like "sepuulingi" springs that break willy-nilly and batteries that need to replaced on a regular and get personal numbers of all OC Traffic in the areas your trucks operate in and get used to being prepared to get the most outrageous of calls anytime over all sorts of silly things and you have to sort them out.
The truck was reversing and run into someone's wall kind of crap.
You also start understanding the trends of the Ugandan economy. When there is a government release, your tithe comes in full. When it's a week to school fees being paid or Christmas, Idi or Easter business is always bad and tithes are light. Rainy season or any rainy days are always a bad time for business.
School fees period is also when you will make the most calls to OC Traffic and bail out your drivers from different police posts over the flimsiest of traffic offences. No driving permit.
The tithes though were adding up but in all honesty when you realise that the costs and the stress and time wasting are factored into the equation you begin to understand that the meagre profits are not worth all the hustle it requires.
You even begin to dread all phone calls from your drivers which come out of sync on days other than payment days.
I eventually sat down with one of my mentors and we had a chat about what I was doing and this is how he opened my eyes to the folly of my ways.
I will quote him verbatim.
"Musoke, your problem is you have grown up in town in an environment where most of the people you interact with have some level of education. So you have no idea how to deal with semi literate people".
He then outlined the measures he was taking to keep his employees in his big trucking business in line.
Rule one
You as the owner of the business is the one who should go out, look for the clients and handle all receipts of income and payments.
Rule two
For every spare part and accessory you replace you get the old part and record the serial number of the new part you have put in and whenever there is a change in parts look at your record to see if the serial number of the part being removed is the one you put in.
At that point I had never realised that even tyres have serial numbers and expiry dates.
For parts like bushes or rubbers that have no serial numbers, mark them with invisible ink. Then use blue light to confirm they are your parts when the need arises.
Rule three
When engaging in transport ensure you buy vehicle as close to new as possible as you can as old cars will just clear all the revenues you generate in repairs and maintenance.
Rule four
Be a tough boss when dealing with semi literates. Don't smile and laugh with them too much and use technology to make them think you are everywhere and always watching them.
Put trackers in the car and call them whenever something is amiss. When speeding. When they stop in funny places, When the car is being driven when it's supposed to be parked etc.
Rule five
Inspect the vehicle as regularly as possible. Make it a rule the the vehicle is washed somewhere every day where you or a subordinate can do physical inspections on things like tyre pressure, oil levels, whether wipers and brake lights are working and general look of the inside and outside of the entire car.
A few weeks from that talk my wife and I had the talk and we realised that the toll of running this business was too much for the revenue it was generating and so we decided to sell everything where is, how is, no questions asked.
Now that is where the real losses were made. The vehicles had degenerated so much that for example trucks which had been bought for in excess of 20 million could only salvage 7 million on account of seemingly good tyres and well looked after body but as most buyers claimed, a rubbish engine.
So to those who want to enter the transport business make sure you follow the five rules otherwise when all is evaluated you will realise that when the cashflows were good you were just eating capital and not making profit.
The author is a serial entrepreneur
