A woman sells merchandise during an exhibition. As a young entrepreneur, focus on building a strong track record in one line of business before exploring new opportunities. PHOTO/FILE
People start businesses to build successful enterprises and become accomplished entrepreneurs.
While focusing on a single venture is often recommended as one of the key factors for achieving this goal, many, especially young aspiring entrepreneurs, find themselves juggling multiple businesses to make ends meet driven by the rising cost of living.
However, this approach is often cited as one of the primary reasons why many businesses in Uganda struggle to survive beyond their fifth year.
Therefore, young entrepreneurs often find themselves at a crossroads in their business decisions: Should they concentrate on a single venture or diversify their efforts across multiple businesses?
This crucial choice can significantly influence their long-term success as entrepreneurs, according to experts.
Case for single venture
Several business experts who weighed in on this topic advocate focusing on a single venture as the key to entrepreneurial success.
The reasoning behind this perspective is rooted in the idea that dedicating all resources, time, and energy to one business increases the likelihood of mastering that field.
Literature demonstrates the value of focusing on a single venture. Take, for example, Jeff Bezos, who founded Amazon. His unwavering dedication to building the e-commerce platform has driven its immense growth. Similarly, the late Steve Jobs of Apple Inc. and Howard Schultz of Starbucks exemplify this focus on a single brand.
Bringing it closer to home in Uganda, as provided by Mr Ronald Mayanja Omugalanda, there are local examples such as Mr Dennis Ngabirano, the owner of Psalms Food Industries Limited; Dr Ddungu Livingstone, who owns Naalya Schools in Namugongo, Bweyogerere, and Lugazi, and Mr Ssenyonjo Moses Kiyimba the proprietor of St. Mary's College Lugazi and St. Ann Grace in Nakifuma.
"These individuals have focused on one business and excelled in it," said Mr Mayanja, a business coach and proprietor of Ability Explored and Youth Innovation Club, a business training hub.
Various business experts have provided valuable insights on this topic. Before presenting his perspective, Mr Charles Ocici, the executive director of Enterprise Uganda, underscores that focusing on a single venture and adopting a diversified approach have their merits.
"Concentrating on a single brand or area of expertise often yields better returns than spreading oneself across multiple fields where recognition may be lacking,”Mr Ocici notes.
He further advises budding young entrepreneurs saying, "Financial success cannot be achieved through over-diversification."
This means it is better to establish a solid foundation before considering diversification.
“If you have not established credibility in one sector, first build a strong profile in a specific area. It provides a solid foundation for venturing into new territories. Without proving your credentials in one sector, diversifying too early can lead to scattered efforts and financial strain,” he explains.
Foundation
Several scholars teach that building a solid foundation for a single venture before diversification requires several key elements. First, entrepreneurs need to develop a clear business plan that outlines their goals, target market, and strategies for success compounded with patience.
In addition, Mr Ocici says: “Once you have established yourself and your business is generating consistent returns, you can then consider diversifying.”
“As a young entrepreneur, it is advisable to focus on building a strong track record in one line of business before exploring new opportunities,” he notes.
In the same stride, he says before jumping into another sector, evaluate how thoroughly you have leveraged your existing sector by ensuring that you have fully exploited the opportunities in your current field and built robust systems that will allow you to manage multiple ventures.
“Establish solid structures and systems within your initial business, allowing it to operate independently while you explore new ventures. By doing so, you ensure that each business entity functions independently, contributing to your overall success,” he explains.
A single venture can also create opportunities for growth and success, as per Mr Mayanja comments.
“Many people prefer to offer opportunities to specialised businesses. When you try to do everything, you risk becoming a jack of all trades but a master of none. A specialised person is easier to trust because of their expertise. We call it experience—having more experience allows you to deliver quality work, helping you become a specialist and expert in your field."
He says successful entrepreneurs who have excelled in a single venture only diversify after establishing a strong foundation with their first business.
Risks in single ventures
While single ventures may appear more advantageous than juggling multiple businesses, they carry specific risks, including reliance on a single income stream and vulnerability to market fluctuations.
However, experts say these risks can be mitigated.
Single business ventures are particularly common in sectors such as manufacturing, health businesses, and to some extent, agriculture.
Case of diversification
By diversification, we mean managing multiple businesses across various sectors simultaneously, to maintain continuous revenue even when one business experiences a slowdown.
Mr Mayanja illustrates this with examples of successful businesspeople who have thrived through diversification.
For instance, he says: “There is a businessman named Batte Gerald in Nansana, the owner of Njovu Properties Limited. He started from scratch and now manages land, numerous rental properties, and even a school.”
Mr Sengozi Wilson, the owner of Wilsen Supermarket, simultaneously runs a real estate business in addition to the supermarket. He has mastered the art of diversification.
According to him, the above examples suggest that diversification can provide a better chance of success, especially in unpredictable economic environments because it allows for risk distribution and exploring different revenue streams, particularly when one business encounters challenges or slow periods.
His caution, however, is that running multiple businesses does not always guarantee continuous earnings as sometimes all can incur losses.
Risks in multiple businesses
The risks involved in managing multiple businesses are numerous.
"You risk losing money because you cannot divide your attention equally. It is like having 20 beds in a hotel, but you can only sleep in one," Mr Mayanja illustrated. He further noted that employees quickly notice when you are inconsistent—present one day and absent the next—especially if there are no proper systems in place.
Precisely, effective business management requires close monitoring and evaluation, which is more difficult when diversifying into several ventures.
“This is similar to opening more branches that become unmanageable,” he illustrated further: "I have seen this happen with banks where they expanded by opening multiple branches but later scaled down. Expansion demands more resources," he noted.
Experience
Businessman Mwanje Nassir, also a partner at Bakirana and Co. Advocates, who ran an informal business three years ago, operated a chapati stall along Entebbe Road.
"Someone used to manage a chapati stall for me. I wanted an additional source of income alongside my other ventures," he shared.
Mr Nassir further recounted how a friend had advised him that with an initial investment of Shs100,000, a chapati stall could earn Shs10,000 daily, which could translate into Shs1 million per month. He decided to set it up.
Unfortunately, as highlighted earlier, his venture didn’t last.
"I could not manage it properly because I had other businesses to run, and my full-time job did not give me time to oversee it. The person I trusted to run the stall would buy his stock, mix it with mine, and make extra money for himself."
Whereas he recounted a bad experience with multitasking, he notes that some people are multi-talented and can handle multiple tasks at once.
“If you can manage to multitask, go ahead—because the economy does not favour specialisation.”
It is best to diversify within the same line of business or sector, similar to how a farmer grows coffee while also raising livestock.
