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Family Owned-Businesses, SMEs Fail Because Of No Succession Planning

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Small Businesses are the future of Africa. This sounds like a bold statement because when we think of small businesses or our family businesses, we think of our “tuck shops” and “Misika” and the “bottle stores” that we find across the sparse savannah. And the concept itself sounds like a laughable concept built on dreams.

However, closer inspection of this fact proves that it is these small and humble beginnings that have made the huge corporations that we know today. It is family businesses that have their foundations built on value systems, and the financial dreams of families (to be independent and build wealth for future generations) that have built nations.

In Africa, the dream of enterprise and entrepreneurship has been dashed, by what has been dubbed by many as “generational curses,” where family businesses seem to run to ground as soon as the founder passes on and the financial freedom of the family gets buried with the founder of the business. A staggering statistic shows that the majority of the world’s wealth is created by family-owned businesses. 85% of start-ups worldwide are established with family money (FFI Global Data Points). Estimates suggest that businesses that are majority-owned by a single family’s members contribute to 70-90 percent of the world’s GDP (Tharawat Magazine, Volume 22, p. 36)

New business is fueled by family involvement.And family business is within the category of micro, small, and medium enterprises (MSMEs) globally, whether in Africa, South America, Europe, Asia, and the USA. However, some family businesses are large multinational corporations that operate in many countries such as Ford Motors and McDonald’s, which originates from the USA.

The survival rate of most African family businesses beyond the first generation is extremely low. It has been found that globally 33% of family businesses have survived past the first generation (the founder) onto subsequent generations. However, in Africa, only 2% of family businesses last past the first generation.

You may be wondering how this applies to you and your business. If you are a business owner, then you should be very concerned when you hear of such statistics. It means you may fall under the 98% of failed family businesses that are currently on the continent. Your company may be making money at this moment, but if you have not started planning for your SUCCESSion plan, then it is 98% guaranteed that your business will no longer exist once you exit that business, either by incapacitation, illness, retirement or death.

How so? Simply put; as a business owner, your responsibility is to start planning for the life of your business after your departure from that business. This further simplified means that you must see a future in your business where you are not managing it or involved in the day to day runnings of the business. Yes … After you. At some point in the life cycle of your business, you have to be outside the everyday running of the business, allowing it to grow independent. You have to make yourself useful as either a chairperson who oversees the vision or completely walk away and allow others to take the lead.

To most SME founders, this seems like impossibility, and indeed it is if you do not plan this properly and use the right tools to get to this momentous event.

A business is not its owner, and the two must be separated. The owner is similar to a doting parent who is nurturing their child to become independent. However, we have found that in the African business space, SME business owners have made their businesses extensions of themselves and their egos. Which, in turn, leaves the business unable to grow. 

Also Read: Building Sustainable and Profitable Enterprises: An Interview with David Owumi, Founder of VisionCTRL Africa

Some Red Flags that you should know about that are crippling your business may include:

  • The lack of official operations manual for any of your business functions
  • No set formula or method to your activities
  • Your business Values, Vision, Mission are just words on your brochures but do not form part of the culture of your organization
  • You have no Values, Vision, Mission
  • You are the sole signatory to all accounts
  • Only you know your major suppliers
  • Only you know and handle your major customers
  • If you are ill or traveling your business is closed, or certain functions cannot be done.
  • You don’t trust any of your staff
  • Your staff do not trust you
  • Your family members who are part of your business are not qualified or trained (You are just helping them out)
  • Your children or spouse are not involved in your business, and you are the only person who is interested in the business
  • Your Company Directors are just family members who you put on the paperwork, but they know nothing about your business.
  • You are not quite sure what your company structure means, and the various registration documents came standard with registration.
  • You have a Will, and you believe this will protect your family and your business.
  • You do not have any written plans for your business
  • Your business and personal finances are the same
  • Your business has no governance structure

At first glance, you may feel that you have already failed and that your business may never reach the heights reached by the huge corporates that you now see across the world. However, Africa has significant success stories similar to Econet, Pick and Pay, and Dangote. These businesses were started by families, and that started as small operations providing goods and services to their communities. But as they started envisioning the future of businesses, they also secured the futures of generations in their families. And with the right planning and direction, your family Business could be the next corporate giant. You are the person who will make this happen.

Over the next few weeks, we will unpack the SUCCESSion of small businesses and the steps that must be taken to secure this future. The first most crucial step you have made is to be in business.

Author 

Tsitsi Mutendi is a Family Business Expert specialising on Family Governance. She is the Founder, African Family Business Association, AFF – African Family Firms.

Email: tsitsi@tsitsimutendi.com

Visit: Tsitsi Mutendi

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Press Release

Journey Wellness, an AI-Enabled, Personalised Healthcare Platform Launches in South Africa

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Journey Wellness Co-Founders, Dr. Jacques Ludik and Lara Wayburne (Image: Nomsa Mdhluli)

Journey Wellness, an AI-Enabled, Personalised Healthcare Platform set to Revolutionize Wellness & Healthcare in South Africa. The Platform will transform business employee benefits and medical schemes’ approach to offering wellness for employees and medical aid members.

A revolutionary new approach to offering Ultra-Personalised, Artificial Intelligence-Enabled Healthcare from tech-trendsetting company Cortex Logic is set to transform the way medical aid schemes, consumers and corporates offering employee benefits as part of their EAP (Employee Assistance Programmes) view their current healthcare offering.

The Journey Wellness platform is perfectly timed to coincide with the current global shift in Healthcare, as the focus moves from a disease-management model to one that encourages optimum health and disease-avoidance, targeting younger as well as existing members with a holistic, pro-active offering.

Corporates and medical schemes are realising that they need to offer their employees and members wellness and EAP benefits that move beyond expensive, reactive, chemical care to cost-effective, proactive preventative primary care.

“Globally, an ever-increasing portion of healthcare spend and focus is shifting to promote wellness and wellbeing, rather than responding to illness,” says Lara Wayburne, a respected Healthcare Actuary consulting to Cortex Logic and part of the development team of the Journey Wellness Platform.

“Healthcare analysts predict that over the coming decade the focus on wellness and wellbeing can reduce overall healthcare costs by as much as 30%.”

“Journey Wellness enables that future by empowering and engaging consumers to better understand the drivers that impact their health and therefore be more actively involved in managing their own health. By doing so, the Journey Wellness ecosystem encourages positive health seeking behaviour, promoting better physical and mental health,” says Wayburne.

The driving force behind Journey Wellness, Dr Jacques Ludik, Founder and CEO of Cortex Logic, who has also recently written a book called ‘Democratizing Artificial Intelligence to Benefit Everyone’, says that the Journey Wellness platform will provide more healthcare, to more people, faster.

“Essentially, Journey is a cost-effective, pro-active, personalised and engaged AI health companion that will improve health outcomes for everyone involved – the medical scheme provider, employers, employees, healthcare providers and ultimately the end-user consumer who will benefit from personalised, proactive healthcare with the added benefits of cost savings all-round,” says Dr Ludik.

Journey Wellness offers a number of benefits for Medical Schemes, Corporates and End-Users:

Employer Groups and Medical Scheme providers will benefit from the cost savings inherent in moving from expensive, reactive, chemical care to cost-effective, proactive preventative primary care for their members and employees. This will result in increased productivity, increased employee engagement, reduced absenteeism and cost-savings to all involved.

Healthcare Providers will benefit from having a 360-degree view of their patients that will improve wellness proactively without costly chemical intervention, usually at the reactive stage and will also empower patients with continuous self-care.

And, Consumers will benefit from a Holistic Wellness Solution and the reduced need for expensive healthcare options, improved wellbeing, rewards for engagement and ultimately having a personalised wellness coach on hand at all times to help them understand their health status and associated risks and better manage their health and improve quality of life.

“Overall, it’s a win-win scenario in which technology, data and analytics foster a collaborative and progressive healthcare environment, creating an ecosystem for improved wellbeing one step at a time that benefits everyone,” says Wayburne.

Journey Wellness has also made an exciting announcement around making the Platform’s Mental Health Module available for free to users from 1 September 2021.

“We realise that the current state of affairs globally, and in South Africa in particular, with pandemic lockdowns and economic uncertainty foremost on our minds, places an enormous amount of pressure on people. So, we’re offering free access to our Mental Health Module to users, where they can access an AI-enabled mental health companion 24/7,” says Dr Ludik.

The Journey Wellness Demo Platform for Corporate Employers and Medical Schemes is available at www.journeywellness.co.za, and for Consumers, the User App is available as a free download for Android and iOS devices at Google Play and App Store. Medical schemes and Employers looking to offer Journey Wellness to their members can interact directly with Journey Wellness by requesting a demo via the website.

 

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Investment

Chaka secures $1.5M pre-seed round to power digital investments and wealth management opportunities across Africa

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Chaka CEO, Tosin Osibodu at a press briefing (Image & Press Release: Chaka)

Chaka is thrilled to announce its $1.5M pre-seed funding round led by Breyer Capital, a global venture firm focused on catalyzing growth in high-impact companies like Spotify, Facebook, and now, Chaka. Other participants in the round are 4DX Ventures, Golden Palm Investments, Future Africa, Seedstars, and Musha Ventures.

Chaka is a technology solutions company on a mission to enable every business and person in Africa to access borderless digital investment and wealth management opportunities. The team combines investment expertise and best-in-class technology to provide reliable digital Investing, trading and wealth management solutions that are easy-to-use and easy-to-integrate.

Their mission is to enable digital border-less investing for African businesses and individuals. They’re powering the digital investment landscape in Africa through partnerships with asset managers, financial technology firms, and regulators with whom we have a shared mission. We achieve this by providing trading solutions that are easy to use and easy to integrate.

With this capital, they will focus on the goals to build a roster of formidable partners and accelerate expansion to other markets within West Africa. This investment also enables them to hire top talent and integrate more advanced functionalities into our investment and wealth management solutions.

Jim Breyer, CEO of Breyer Capital, shared his view on this investment and it illustrates their shared vision: “We are proud to align ourselves with a company that is leveling the investment playing field for Nigerians (and Africans at large). We’re confident in the value Chaka provides through its digital tools, and we look forward to playing our part in supporting Tosin, Bo, Olaolu, and the Chaka team.”

This is a significant milestone for Chaka and could not have come this far without their users, partners, early investors, and a talented, achieving team of Champions.

They see digital investments as a means to boost economic transformation in Africa, and we’re very keen to bring this vision to life.

 

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Manufacturing

Emmanuel Penneh set to lead the Ghanaian team that will re-assemble the first Nissan Navara made in Ghana

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Emmanuel Penneh (Image: Lusawovana Pius- edelman) 

Emmanuel Penneh arrived back in Accra this week, ready to start the next phase of a journey that’s taken three years so far and still has an intensive eight months to run. On Thursday 3 June 2021, the married 44-year-old father of three graduated with his team of 11 Ghanaians from an intense eight-week course at Nissan South Africa’s Rosslyn manufacturing plant outside Pretoria. That was just the first step for them. Now the hard work begins, getting Ghana’s brand-new Nissan assembly plant in Tema, outside Accra, ready to begin re-assembling the first ever Nissan Navaras to be built in Africa early in the New Year.

The graduation is a critical milestone in a process that began back in 2018 with the signing of the landmark Memorandum of Understanding between Nissan and the Government of Ghana, followed by the drafting and promulgation of Ghana’s automotive development policy the following year and then the appointment of Japan Motors Trading Company (JMTC), as Nissan’s preferred partner last year to ensure that the new facility will be 100% Ghana owned and run.

Penneh is up for the challenge. Speaking at the special graduation ceremony held at the Rosslyn, SKD plant, he said he and his team were proud and honoured, excited and delighted. “This is a historic evolution for Nissan Ghana, Nissan South Africa and Nissan worldwide. This is the plant where the Nissan Navara is being made for the first time in Africa, by Africans for Africa, now we are going home to re-assemble the first Navara made in Ghana for Ghana by Ghanaians!”

Penneh will be the plant manager. It’s a feather in the cap for the 10-year JMTC veteran. Before being approached to lead the team, Penneh was service co-ordinator for the group’s aftersales operations, overseeing five workshops across Ghana. He’s been in the automotive industry for 14 years, with four years at Man Truck Ghana before he joined JMTC.

“It’s exciting,” he says, “it gives a new dimension to my career. After concentrating on the after sales aspect, I’m now coming into the industry that actually builds the vehicles.”

The eight-week training that the team underwent in South Africa had been gruelling, he said, they had no idea what to expect. “It was challenging coming fresh into this industry and discovering so many processes and rules and mastering them, but it’s been exciting.”

He’s exceptionally proud of the team he led to South Africa and the way they’ve conducted themselves. “This (the creation of a Nissan assembly plant in Ghana) is going to be a game changer for ourselves, but also for our country, creating jobs, upskilling people and creating opportunities for local brand ownership.”

 

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