Medium Enterprises

Medium Enterprises are ones which employ more than 50 people with an annual sales turnover of more than Ugandan shillings 360 million and total assets of more than Ugandans shillings 360 million

Characteristics of Medium Enterprises

  • They operate from well-established and permanent business premises
  • They use advanced technology and produce on the relatively big scale
  • They require a lot of capital to be started and such businesses are formally registered as limited liability companies
  • The business may be producing for the local as well as export market. Examples of medium enterprise include Big Bakeries, Milk processing and packing businesses, and coffee hurling factories


Formal Businesses are businesses which are registered with the registrar of companies

Advantages of Formal Businesses

  • Formal businesses are properly organized
  • They are legally recognized
  • Formal businesses have a sound base for further research for growth and development unlike
  • It is easy to access a loan from financial institutions under formal businesses
  • Formal businesses are reliable and permanent hence have easy access to quality resources like raw materials
  • Formal businesses comply with social regulations like registration

Disadvantages of Formal Business

  • They have always governed by laws and rules and regulations
  • They are not adoptable to changes
  • They are not easy to start because of the involved procedural formalities

Informal Businesses are businesses that are generally not registered though they may have licenses, people with such businesses don’t pay taxes nor do they adhere to government regulations, but it’s wise to be acquainted with laws and regulations

Advantages of Informal Businesses

  • They are adaptable to changes and they are more flexible.
  • They are easy to start so many people can run them on a full time or part time basis
  • They require little capital.
  • They lead to fast employment generation.
  • They are basis for initiating new industries.
  • They require simple skills.
  • They are charged with less tax.

Disadvantages of Informal Businesses

  • They lack a proper working system and not properly organized.
  • They are not legally recognized.
  • They do not have clear access to loans by financial institutions.
  • They do not comply with social security regulations.
  • They produce poor quality goods and services.
  • They dodge government taxes some times.
  • At times they lack continuity since survival depends on the owner.