Prof Samuel Sejjaaka on Business Failure

#360Mentor is a continuation of the #40DayMentor series. In this episode, Robert Kabushenga (RK) speaks to Prof Samuel Sejjaaka (SS) on Business Failure.

 RK: Welcome to #360Mentor Sam

SS: Thank you Robert, it is a pleasure to be here.

RK: Tell us about MATABACUS

SS: MATABACUS Business School was as a result of a merger between the Management and Accountancy Training College and ABACUS Business School . This was the premium or still is the premier training institute of professional accountants in Uganda. My situation which is familiar to yours; in 2014, I decided to leave the university and start ABACUS Business School. I also had doubts of what I would do after retirement. I decided to start ABACUS.

In 2019, ABACUS merged with MAT. The owner was retiring. I became the Principal and Principal owner.

RK: Where is the physical location?

SS: It is on plot 1, second street, industrial area. MAT ABACUS is the platinum partner of the ACCA Program. I am challenged to keep the founder’s dream going to be the premier professional training institution.

RK: Were you born with a calculator in your hand?

SS: Robert, that is not correct. I think it is very interesting because I ended up teaching mathematics in the university and I still believe that there are many of my students here in the quantitative methods course. I also authored a book on quantitative methods. One of the biggest issues I have had being in the science profession is my relationship with mathematics. I had good teachers and I had bad teachers. When I had good teachers, my performance was very good. When I had bad teachers, my performance was not good. But luckily when I was leaving, I had a very good teacher who made me love mathematics. Mathematics is not a difficult subject, it is the way we teach it which is poor. It is a practical subject, it should be a subject people understand instinctively.

RK: So tell me, what is your actual professional training?

SS: I am a certified public accountant. I am a partner at a firm called Sejjaaka Kaawaase & Co. Certified Accountants. When I got involved in teaching, I think I got so much gratification in it. Then I resolved that my calling is to be a teacher. I am really grateful that you invited me here.

RK: Can you describe for us the Ugandan business on the market that people find difficult to muster that eventually leads to the attrition. The study says Uganda is the most entrepreneurial country but also the highest rate of attrition. What is causing us problems?

SS: That is a beautiful question. First of all, I want to look at that question from the angle of opportunity. Which country does not have its own peculiarities? When you go to Tanzania, you will find that the people have their own peculiarities that  will amaze you. If you go to Kenya, they have their own.  Uganda is no exception.

When you get into Uganda and look at our peculiarities, the question then becomes, is the glass half full or half empty? The investors who come here and are very successful see opportunity. There is a word we use in pessimism. We say a pessimist is a person who sees a solution in every problem. I want to look at it in terms of certain peculiarities. Do we as Ugandans see those opportunities? Let me give you a good example. I usually take walks to downtown Kampala. I walk in the slums of Kivulu, Katanga, and Kisenyi. These places are in the middle of Kampala and I see mud and wattle houses. But for me I see plots. I see so much opportunity that we are not taking on.

RK: That, I understand. But the question here is why does Café Javas succeed easily where KFC struggles? What are these peculiarities you are talking about that people face and manage differently?

SS: Being in the business world, I have seen a lot of these things. The people of CJ know how to run a restaurant business in this country. But KFC has not seen the other things that come with that opportunity. If you go to any of these two businesses the first experience is how they welcome the customer. If you went to Barclays there was a certain experience you got. When you go to Stanbic there is a certain experience you get. When you go to Centenary Bank where there are queues, there is an experience you get. You may wonder why are these people queuing up to bank their money? When you are talking about CJ and KFC, it all comes down to how the proprietor sees the customer experience as a driver of the business. I certainly think that everybody who goes to CJ leaves with the feeling  that they have to go back. I don’t know whether that is the same feeling people get when they visit KFC. These are the peculiarities we are talking about.

The example of Barclays and Stanbic for example. I sat on the board of Stanbic for 10 years. We looked at the bank as an African bank. Barlcays was not sure if they were African or if they wanted to stay for long or if they were an investment bank. Barclays operated on the same market with stanbic with a different philosophy. Take that philosophy and apply it to KFC and CJ and your own business. It is the attitude you have.

RK: Thank you. That’s the clarification I needed. So there is nothing wrong with the circumstances. Every country has its peculiarities and we have ours. The only difference is in the way the entrepreneurs on how they want to take on the market, is that what you’re saying?

SS: Spot on!

RK: They see a solution to a problem not a problem  to a solution?

SS: That is also correct.

RK: You shared some points earlier on, can share them with us here

SS: To make this relevant, many of us are in the M/SME space. I have done so many businesses and I have failed in many as well. Let me talk about bias. When you start a business, you never plan that you are going to fail, you plan that you are going to succeed. Nobody starts a business as a parachute.

RK: What is bias?

SS: Bias means you don’t want any other voice that gives you a different view of your business/ idea. And that is very good.

RK: True. I am like that in farming.

SS: Let’s list them down:

·         The first thing is that you must have belief in yourself.

·         Secondly, when doing your business you get emotional involvement. In economics, we call it sunken costs. You get money from your family, the time you spend on the business and such details. It may not necessarily be profitable but you are attached to it. When you have that cost, the cold calculated cost is the sunk cost. But when you are an MSME nobody can say that to you. You’re in this business, the connotation takes away your rationality.

·         Many people have good business ideas but lack economies of scale.

RK: What does that mean?

SS: That means that you are not able to grow your business where your revenues cover your costs. You use money from elsewhere to run the business. You are always cutting corners. Sometime ago you shared details about a lady called Liz and I followed her to buy her bags. But I was wondering how many clients know about her business. A month without selling a bag can wipe out a business.

·         The other point is poor management. We use family members who are a black tax who come with poor management and poor branding.

·         The issue of indiscipline. Some people have written widely about culture. The moment you arrive you want to have gratification. You want a second wife, a second car, and everyone else should know.

RK: And yet the Indian is still sleeping behind the shop.

SS: You talked about Café Javas. I once had a conversation with Mr. Omar, the founder. He told me, he was living in a house in Kololo and had some pending bank loans. His father told him to sell off the Kololo house and pay off the bank loans. So he had to go and rent a house.

Being successful is a very long game. You have not been running Rugyeyo Farm for a year. Success takes years, it takes tears and sweat. We fail to stay the course because of indiscipline.

·         The other thing is taxes and government regulations. They can break your M/SME. They have been a big problem. I had a factory which was making plastic pipes. One of the things which gave me problems was electricity. At night when the tariffs are low, is when they would loadshed me.

At the corporate level, the things which make you fail are not yours. When things don’t work out, you go and look elsewhere to work.

It is the shareholders who carry the blame. If you want to look at failure, the first thing is a bad business model. There was a company called Metro, it was a supermarket. For you to shop from Metro, you had to be registered.

RK: They imported the apartheid mindset.

SS: Before they started, they sent away the customers. The same applies to telecoms. The market is not well leveled. Having a  third sim card is like having a third wife. Eventually, if you have this kind of experience, you soon become like Africell and metro. You don’t do something because people are doing it.

RK: That is a typical Ugandan thing, you find people in the arcade selling the same thing. 

SS: Exactly, what you don’t know is how the other person is operating. I will give an example. My brother Ngabirano of Capital Shoppers has brought all the Bakiga and employed them and they are not earning expatriate salaries, they are not living in Kololo. There are no expatriates in Capital Shoppers like was the case with Shoprite. The high cost base is not equal to operating in Uganda.

RK: Some of them are paid a hardship allowance. They also pay for the children’s school fees in international schools.

SS: Yes, and you know what? All those costs are carried to the goods on shelves. At the end of the day, you don’t have a big middle class to support you.

RK: What is the next point?

SS: Bureaucracy. Multinationals have something called a matrix organisation structure. This means that you have somebody you report to in Uganda who reports to someone in Singapore or Dubai. I once wanted to borrow money in Barclays. After doing all the paperwork, the relationship manager told me they had to send me a loan application to the office in Singapore. That makes  the people in the local office redundant. They lose the morale.

Remember British Airways, they had the worst aircraft. They had very old planes which they would send to Africa. But look at Emirates, they are trying to give you a world class experience. When British Airways left, I doubt there were people who missed it.

RK: The employees maybe.

SS: Of course there is always the collateral damage.

RK: True, what is the other point?

SS: Technology. I think technology can take you out of business. There was something called the pager. There is Kodak. The graveyard of failed businesses is full of companies that  were kicked out by technology.

In between there are so many moving parts, but they say the devil is always in the details.

RK: One of the frustrations at my workplace is that you would have people come with marketing strategies conceived in Dubai to implement in Kampala. They had zero connection with the market in Kampala.

Sam, now that you have identified these pitfalls, if you’re talking to me, what would you tell me?

SS: Let me take it from my experience from the businesses I have failed at.

·         First thing is to learn to fail. But fail fast. Fail and move on. One day someone went to BMK with the idea of investing in road construction. BMK told me after two years he realised that was not his cup of tea. So he left.

·         Secondly, don’t look at failure in a negative sense. Success is a lousy teacher, you need to pay school fees to be able to move to the next level.

·         There is also the issue of knowledge. We are in the knowledge age. There is something called the science expertise. Seek out expert knowledge. Look at  Eve Zalwango of V-Interiors, you realise she is applying science to her work

·         You need grit. There is a book called Grit by Angela Durkworth.

RK: Let me say this to the people here, if you have not read Angela Durkworth’s book, you are 8 years behind your goals. If you do nothing this year, read that book.

SS: To add to that book called PEAK by a guy called Ericsson Anders.

The last point which is so important to me as a teacher. I want people here to know that not everyone is supposed to be a businessperson.  

RK: Some people are supposed to be employees.

SS: I was an employee for 30 years and there is nothing wrong with that. One must define what success is for them. When I was a student at Budo, a gentleman called Elidad Mulira talked to us about a man called Bookert Washington. His work was to sweep the church but he did it so excellently that everyone wondered how he did it.

Define what success means to you. Not everybody is going to be a successful business person. Actually, if everybody was to be a business person then who would be the employee?

RK: And who would be the customer?

SS: I thought it would be fair to make this clear because you don’t want to push people to commit suicide. Failing is part of life. If we don’t fail, there will not be new ideas.

Comrade Otoa: The first time I met Sam, he taught me a lesson never to refer to my business as a side business. What are those steps that people can take on to become better?

SS: Thank you Comrade. I don’t know whether it is with the way the Ugandan education system works. Many people begin business as an alternative to not having employment. Then they refer to it as my ka small business. When actually it is the one sustaining them. If your attitude is to look at your business as something temporary, it can only go far.

I will go a bit personal. The person who started the business kikuubo online was a classmate to my son. I forget the young man’s name. He left university because he didn’t like what he was being taught. He’s about 25 years old. On the other hand, I saw my son, I made sure he got a degree. I don’t know whether I did a good thing.

Five years later, when I see where my son is and where the young man is, I see I have a lot of work to do.

The attitude with which we approach business is the problem. Don’t call it a side hustle when it is the one that feeds you. There are more people in self employment than there are in the employment sector. When you start your business, embrace it.

What are the steps to take to learn the business? I have failed in many businesses.

·         Whenever I start a business, I have never tried to understand the intricacies of this business. I take risks without analysing them. Don’t be like me. If you have to start a business, do some background study.

·         Don’t go into the business with both feet. Go in slowly. Find people who are in that area to guide. If I had asked a few questions, I would not have made all the mistakes we have made.

Mugoya Moses: I have been trying to find a side business. I got one; I have tried out it as a side business but the returns are very slow.

SS: A lot of the problems we face as public servants is trying to do a side business. You end up as a telephone contractor or telephone farmer and you are likely to lose money. As a public servant, I should have concentrated on shares, bonds and treasury bills. Places where you know your money is safe. You can as well be successful at doing the side business but it will take you time. The only time success comes before work is in the dictionary. If you are doing the business with your wife, that is fine. If not, you are looking for an easier way to lose your money.

Solomon Tumwesigye: I am an advocate for starting slow. But there’s this school of thought of go big or go home, what do you have to say about that?

SS: One time Patrick Bitature told me of the tyre experience. A tyre works better when pumped to the fullest. It depends on how you approach it.

Nicholas Aruho: How do you make a successful transition from employment to self employment since you have done it?

SS: One of the things people who come to spaces must take up is to read. There is a lot of information out there. One advice I took from The richest man in Babylon; he said never take financial advice from a bricklayer. Anybody employed today must think of their transition. How long can you survive without your salary? You need to have a plan.

Moses: Looking back, what would you do differently for your son? How different would you advise him?

SS: I was very right. I think I could do better. Whatever he chooses, he has to be the best. No in between.

But that leads me to the context of culture. We have learnt the white man’s culture and the Indian culture. The Indian has neither learnt the white man’s or black man’s. They have stuck to a cultural behaviour which is very important. Some of these things work against us.

RK: It was a pleasure having you Sam.

SS: Thank you very much Robert for the evening.

RK: Thank you for giving us for free what others pay a high amount of money for.

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