The Importance of Data Backed Decisions

The Importance of Data-Backed decisions.

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A few years ago when the entrepreneurship bug had bitten me, I started to see the world rather differently. Whenever I was walking down the streets of downtown Kampala, I no longer simply faded into the commotion of casual laborers carrying "ndiboota" the size of a mini-van and street vendors that tugged at my shirt calling me "Uncle" in hopes that I'd buy from them a pair of second hand knickers.

Instead, I started to pay close attention to the myriad of businesses that made up the bustling commercial life. And what caught my attention, especially, was the number of boutiques. They seemed to make up over 65% of businesses in down town. It seemed to me like most people that start a business hop onto a plane to china and return with some handbags, shoes or jeans to sell. But what did they base on to start that business? After asking several business owners, I came to the realisation that it was all a matter of "feeling". They simply felt that that was the best idea to start with and went ahead and did it, guided by mostly intuition and a very limited knowledge of the opportunities that abounded.

Its no surprise then that most of these business people are simply getting by. Nobody is getting immensely wealthy because the market is so darn saturated and competitive.

Think about it. If I were to give you $10,000 right now, what business would you start? I expect typical answers to be "a boutique, a restaurant, a pharmacy, a supermarket" and maybe the usual agriculture of growing maize/ rearing pigs and the like... maybe taxis and bodabodas.

But these are just a small portion of the thousands of businesses that support an economy. There are businesses as crazy as selling cattle gall stones(which are a pretty big deal in Chinese medicine), and even less crazy(but importanter) businesses such as cooling houses for fresh agricultural produce. Yet these aren't typical ideas that most people would start, yet they might be even more profitable than retailing. Which makes such fields quite ideal due to their lack of stifling competition.

What I picked from all this is, how can I go about setting up the right kind of business? The answer seemed obvious: "Begin with where the demand is" At the end of the day, isn't business a result of meeting a need? But that's not where most business people start. And even if they claim to have "spotted the need", what actually happened was that they witnessed something unusual, such as an entire village not wearing shoes, but not knowing why.

This problem can only be solved by data.

I think in this decade, we have grown to appreciate the power of data. It's the currency of the digital age. Companies like Amazon have used it to streamline their offerings and produce unprecedented levels of efficiency and scale.

I suggest we do the same.

Before starting a business, let’s try to get some data to support our hypothesis. What is the demand like in terms of how much of this product is imported?

I tried this out last year when I went to the URA customs office and requested for data on our imports by value.

I was surprised to know that one of our largest imports by value was Wheat. To imagine that 80% of all the wheat flour we consumed was imported from neighboring Tanzania(Azam) yet we have vast fields of virgin land was embarrassing to say the least. At least Hajji Omar Mandela is putting an end to that madness. And I'm very optimistic that his new flour business will cement his name in the big leagues because such is the power of making data-based decisions.