Profitability of small and medium scale furniture workshops in Uganda

Abstract

There is growth in the furniture industry in Uganda today with it contributing to economic development to the country. It has provided employment to many Ugandans and has helped in fighting poverty. These furniture businesses are small scale and medium scale. The growth of furniture businesses is as a result of meeting the primary objective which is profit maximization. Profitability is one of the measures of determining the growth of a business. The existing competition between small and medium scale furniture workshops affects profitability. The purpose of this study was to compare the profitability of small and medium scale furniture workshops in Uganda. Specifically the study assessed the monthly expenditure on resources, monthly revenues, profitability and the challenges facing small and medium scale furniture workshops. The study was carried out in Kampala district where by four divisions of Kawempe, Nakawa, Makindye and Rubaga were selected. Only 6 medium scale furniture workshops were selected and10 small scale furniture workshops selected from each division. The results indicated that; timber had highest cost compared with the rest of the resources for small scale furniture workshops while for the medium scale furniture workshops it was the equipment with highest cost. The small scale furniture workshops generated highest revenue from beds with it being 28.9% of total revenue and medium scale furniture workshops from house hold furniture with 31% of total revenue. The profitability of medium scale furniture workshops was higher than that of the small scale workshops with 13.9% compared to 11.6%.Small scale furniture workshops were mostly faced with the challenges of heavy taxes, seasonality of customers, lack of facilities, and scarcity of timber species. Medium scale furniture workshops were faced with mostly the challenges of seasonality of customers, high timber costs and change in customer choices. The study concludes that medium scale furniture workshops have high profitability compared to small scale furniture workshops and that there is need of capacity building of business owners in terms of business management through training.