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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: [email protected]

Visit: Tsitsi Mutendi

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Apply: The African Impact Initiative Challenge

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Speakers at the last African Impact conference at University of Toronto (January 2020). Right to left: Wisdom Tettey (Vice President, University of Toronto), Efosa Obano (Founder, AII), OlutoyinOyelade (Founder, CASA foundation), Sandra Chuma (Founder, Ndini Media), EhiAdemabo (Mindset Surgeon), ObidimmaEzezika (Assistant prof, University of Toronto).

The African Impact Initiative is a non-profit organization with a mission of developing the African community through its youth. Formed and supported at the University of Toronto since 2016, their projects have helped to provide African youth in Canada with better career opportunities and core skills. They also provide a platform for them to learn from experienced professionals, through their workshops and conferences.

As the organization grew, they began to tackle challenges back home as well through community development projects. Their first project in Southern Nigeria was focused on improving healthcare outcomes for the IkotEko Ebon rural community. In partnership with Cottage Hospital and the Akwa Ibom government, they were able to increase the number of people in that village who received quality care by revamping their community hospital with equipment to address their pressing health issues. They also held a campaign, to educate the community members on what was now available in their local dialect.

Members of the African Impact Initiative Healthcare team at the Cottage Hospital in Akwa Ibom (December 2018)

While successful, this project revealed some of the challenges organizations face when trying to bring in solutions from outside. Sustainability was proving hard, due to travel costs and communication gaps. It was clear that they couldn’t replicate this model in different African communities as easily as they had thought. This was what motivated their team to come up with the African Impact Challenge.

The goal of the African Impact Challenge is to enable sustainable development locally across the continent, by investing in youth and empowering them to solve identified problems through technology driven impact entrepreneurship. They are essentially trying to empower African youth to tackle their own challenges locally with technology. Guided by The Prosperity Paradox, it will be run in different African countries over the next 5 years. The target is to successfully kick-start 10 innovations aligned with the selection criteria by 2025. African Impact Initiative will be doing this by providing capital, resources and mentorship necessary to begin from scratch with a $100,000 CAD fund.

Also Read: Women in Tech: Interview With Ellen Fischat, Founder Story Room and Inspiring Fifty SA Ambassador

The first version is taking place in Ghana, and they have partnered with Ashesi University, Ghana Technology University & University of Development Studies to rollout the applications. It is open to students in other universities as well. They have also partnered with BaseCamp Initiative to provide the co-creation space. Selected teams will participate in a paid summer incubator, which will bring their ideas to life and make them market ready;  with funding of up to 20000 GHS available per team.

All Ghanaian youth are welcome to apply! This year’s challenge application is open until April 10th at 11:59PM GMT. Please check out the criteria and apply here: https://www.africanimpact.ca/the-african-impact-challenge

Pictures from the visit to Ghana in December 2019

The founder of African Impact Initiative (Efosa Obano) with the founder of BaseCamp Initiative (SunitaKragbe)
The founder of African Impact Initiative (Efosa Obano) with the GTUC office of research services and innovation faculty (Prince Loko and Mabel Amachie) 

Visit African Impact Challenge

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10 Inspiring Women Share Their Thoughts on IWD 2020 Each for Equal

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International Women’s Day (IWD) is an annual event which holds every March 8 to celebrate women’s achievements, spread the message of women empowerment and gender equality across the world. The theme for International Women’s Women Day 2020 is, I am Generation Equality: Realizing Women’s Rights. Below, 10 inspiring African women in business and social ecosystems shared their thoughts with Alaba Ayinuola on the progress made towards achieving gender equality.

Elisabeth Moreno, Vice President and Managing Director at HP: All Humans beings are born free and equal in dignity and rights …But some Humans are more equal than others. That’s a fact. And an issue for most of the reasonable people in this planet. Whether you’re born in the North or the South, in an Urban or Rural area, Black or White, Girl or Boy, you will not have access to the same equality. Read More

Oyinda Bishi - Marketing Professional and D&I advocate.
Oyinda Bishi – Marketing Professional and D&I advocate.

Oyinda Bishi – Marketing Professional and D&I advocate: As a strong advocate for women in any sphere of life, I grew up in Nigeria in a family of many brothers – I was very lucky to have a father who was an unashamed feminist that believed people generally should be free to chart their course in life and women especially should be able to decide and undecide what their life should look like and that has fueled my passion and self-belief to no end. Now as a mother of 3 daughters – that grit is amplified a million-fold especially in the world today. Read More

Cynthia Musafili Wright, A speaker, Author, Entrepreneur, Aged Care Clinical Consultant and Philanthropist: – Leading with inordinate authenticity as a substitute for the adoption of personalities basing on other’s expectations might crack more governance potentiality in women and, at the same time, hasten their influences within their respective organizations, according to the United Nations. If women are not authentic in society and at the same time are not recognized, appreciated, and respected,most would want to do what is required of them to perform and succeed in most departments. Read More

Oyetola Oduyemi, Executive Director at tengvoX Consulting: Each for equal to me means – Acceptance. Fairness. Partnership. Support. Giving opportunities along lines of competence, skills, interest, desire, ability. Not gender or race or tribe, or any divides irrelevant, or that should be irrelevant, to the pivotal task of nation-building that we have at hand. Read More

Bukola Bankole Partner, TNP: International Women’s Day is a day of reflection and celebration of everything we’ve achieved especially over the past century. This year’s theme #EachForEqual is about equality. There has been an uprising in recent times about the need for constructive inclusiveness of women in all aspects of human life. Read More

Stha Mavundla is a Speaker, Scientist, Life Coach and Educator at First Leap China

“The #EachForEqual movement is a powerful one in the fight against gender inequality. I admire the work of companies and organisations that have taken a stand against inequality, especially in the workplace. Furthermore, I believe that there is a lot more work that needs to be done in reshaping the minds of women. A woman can be the CEO of a large company and still feel as though her opinion is as undervalued as entry-level staff. She simply cannot be a powerful force to be reckoned with if she feels unworthy. I am passionate about being an agent of change in this department. I believe that there should be an investment in the personal development of these women together with high-quality leadership development training. Visit: Stha Mavundla

Christine Ntim – Chief Marketing Officer at Global Startup Ecosystem 

The #EachForEqual campaign is raising a new narrative on gender equality. No more movements filled with the voices of only female voices demanding equality. This is not a women only problem- this is a societal problem. More men are now seeing that limited opportunities for women don’t just hurt their wives, daughters and mothers but also directly limit the possibilities of our sons, fathers and husbands.Thus equality and inclusivity is not an option but a necessity. 

Amira Kamel – Child Abuse Prevention Ambassador, Business Mentor and Educator

Strong women do not have attitudes. They have standards and boundaries. Professional women are not trying to impress anyone. They are doing their jobs in a professional way. Self-confident women are not conceited. They have self-esteem as they believe in and acknowledge their own abilities. Women are unique because they were created that way. This post would never be complete without adding “and men” after “women“ as they are our partners in life. An equal world is an enabled world.

Serah Odende – Founder Tragital and African Harvesters

The International Women’s Day celebration this year theme says it all, equal opportunities especially for both male and female in the agribusiness value chain. Reduced marginalisation of women in agriculture ecosystem, and equal access to funding for female founders of agribusiness among others.

Emmaline DateyLeadership and Personal Growth Coach | HR Manager EIB Network | Founder ICS Africa

This year’s International Women’s Day Theme, Each for Equal, emphasizes yet on how important it is to protect the rights of women as stakeholders of societal, economic, and national growth.

As the theme rightly indicates, an equal world is an enabled world.Both parties, male and female, have the potency to make positive global and local change according to each one’s capability and purpose. We all have equalcollective power to change the narrative by challengingstereotypes, fighting bias, broadening perceptions, improving situations and celebrating women’s achievements.

I believe that even though we are celebrating women who have achieved in the areas of politics, business, health, sports, science and technology, entrepreneurship, and education, there is still more room for improvement. I am particularly excited about the inclusion of our young women in STEM projects. I yearn to see projects that will accelerate the each for equal movement for more women in politics, financial inclusion, and access to business opportunities.

Let’s all be #EachforEqual.

Also Read: Interview: Oprah Winfrey Leadership Academy For Girls Executive Director, Gugulethu Ndebele On Girls And Leadership

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Women of Excellence At Alfajiri Hub In Spite Of Corona Virus Scare

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Alfajiri Hub is located in the downtown Johannesburg district of Maboneng which is seen as a symbol of the city’s revival and a centre for creatives and entrepreneurs. The vision for the space which was opened earlier this year is to foster innovation and contribute to urban regeneration efforts already taking place around the Maboneng precinct through events, workshops, seminars, hackathons and meetups aimed at helping to close the digital skills gap.

The esteemed speaker panel at the Women of Excellence event included Alesimo Mwanga of the Youth Entrepreneurship Exchange Program (YEEP) Africa which allows aspiring entrepreneurs and future leaders between ages 16 – 30 to discover opportunities, solve social problems, exchange learning experiences, harness talent and learn about finance principles. Rehema Isa, a women entrepreneurship development expert and the co-founder of OYA was also on the speaker panel along with Thobela Gceya, the program associate at United Nations Women South Africa.

The event was scheduled a week after International Women’s Day as a celebration of women in business leadership. “With support from technology companies focusing on emerging market development and innovation enablement, we are already bringing education around 4IR technologies such as blockchain to people who may not have previously been aware of the transformative technologies that are changing lives of people especially in developing economies,” explained Heath Muchena, Alfajiri’s program director, founder of Proudly Associated and author of Blockchain Applied  

Innovative business models are already unlocking opportunities to access work that does not require advanced tech skills. Although tech-enabled work creation is mostly associated with mid- and high-skill work, there is a real opportunity to scale low-skill domestic work opportunities through digital platforms that connect market participants. “Alfajiri hopes to create sustainable work opportunities and promote digital business models that unlock new opportunities for people to create and access meaningful work,” said Beth Malatji, co-founder of Alfajiri Ventures.

The interactive event touched on some topical issues including how women can learn assertiveness skills to apply in meetings and predominantly male environments in the workplace. The digital skills challenge in Sub-Saharan Africa is significant, but it is addressable and the future workforce must cultivate 21st century survival skills including critical thinking, decision-making, and collaboration.

These are skills that machines cannot replicate and ones that will ensure humans can adapt and transform in a digitally-enabled future. The discussions were wide-ranging from practical advice sharing around issues of self-confidence, developing action plans; recognise strengths and weaknesses, practicing assertive behaviours in challenging situations, negotiation skills, and general business, lifestyle to even relationship issues.

Also Read: Women in Tech: Interview With Anna Collard, Founder Popcorn Training – A KnowBe4 Company

Initiatives such as the educational events offered at hubs like Alfajiri play a crucial role in equipping learners with the knowledge and tools necessary for their advancement in the modern economy. “The concept of twenty-first century skills has gained traction over the past decades and denotes a range of skills, abilities, behaviors, and attitudes that are required for success in this new era,” said Grey Jabesi, a founding member at Alfajiri.

Alfajiri is one of several hubs on the African continent seeking to highlight the demand for specific types of digital skills and provide a solution aimed at creating a balance to the supply and demand in those skills, understanding the anticipated change in demand over time, analysing the market implications of any imbalance in demand and supply of skills to help inform institutions and business on the opportunities Africa can unlock if the issue of digital skills is given the proper attention and measures are put in place to close the digital skills gap.

Visit Alfajiri Hub.

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