Connect with us

Business Home

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

Published

on

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

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Press Release

Helios Investment Partners Backed Africa Specialty Risk Group Launches

Published

on

By

Africa Specialty Risk Group CEO, Mikir Shah

Helios Investment Partners (“Helios” or the “Firm”) is pleased to announce the launch of Africa Specialty Risk Group (“ASR”) in partnership with Mikir Shah, former CEO of AXA Africa Specialty Risks, and Bryan Howett, former CEO of Old Mutual’s pan-African reinsurance operations. ASR is a reinsurance business focused on becoming the partner of choice to corporations through the provision of comprehensive and bespoke risk mitigating insurance solutions.

Helios, through its extensive financial services expertise in Africa, identified an unmet need in the reinsurance space to expand the continent’s long-term domestic capacity beyond its current capabilities. Having previously founded market-leading businesses such as Helios Towers, the Firm
took a similar pioneering approach in partnering with Mikir Shah and Bryan Howett to develop and increase domestic reinsurance capacity.

Also Read: Lindelwe Lesley Ndlovu, African Risk Capacity (ARC) CEO Shares Goals, Disaster Risk Solutions, COVID-19 and Future

ASR will create tailored solutions for local and global customers, using Africa-specific pricing models coupled with a deep understanding of African risk and cultural environments. This provides corporates and investors with the confidence to grow their businesses, thereby unlocking investment activity, and the associated developmental benefits.

Mikir Shah, commenting on the partnership noted: “We chose to work with Helios given their extensive reach across Africa, their knowledge and experience in our key markets, as well as their established track record in helping entrepreneurial businesses to scale.”

Souleymane Ba, a Partner at Helios, said: “We have identified a sustained lack of adequate insurance capacity across Africa, which has been exacerbated further by Covid-19 as global reinsurance providers focus on their home markets. ASR has been established to address this gap by providing specialist risk mitigation products which companies and capital providers operating in Africa have found difficult to access to date. As demonstrated in the US and Europe, private equity has a long and successful track record of stepping up to fill unmet insurance capacity to de-risk and support investment activity.”

ASR intends to work proactively with local regulators and clients to develop skills and provide training to local underwriters. Environmental, social and governance considerations are central to ASR’s values, particularly in relation to local capacity building.

The investment in ASR is being made from Helios’ latest fund, Helios Investors IV, L.P., whose investors include CDC Group (the UK’s development finance institution) and the International Finance Corporation (a member of the World Bank Group).

Issued by Helios Investment Partners

Continue Reading

Press Release

METTĀ And Nairobi Garage Join Forces To Create Kenya’s Biggest Innovation Community

Published

on

By

Nairobi, September 15, 2020 – Kenya’s leading co-working space Nairobi Garage and entrepreneurial club METTĀ have announced they are combining their services to create the country’s largest innovation community, offering flexible access to all their workspaces and networks, as well as a new digital event series.

African businesses are facing a disrupted marketplace due to the COVID-19 pandemic, with day-to-day operations and the economic outlook for businesses of all sizes feeling the impact. As a result, there is a renewed demand for flexible work space arrangements, allowing companies to remain responsive to the market and keep their teams productive without tying up much-needed working capital.

As Kenya’s leading co-working space, Nairobi Garage is home to over 150 companies across its four premises, giving members total flexibility when it comes to the office space they need, as well as offering a range of add-on business development, collaboration, and networking opportunities.

METTĀ is a club for the entrepreneurial community to connect, share knowledge and bring ideas to life. With 370 members in Nairobi, and over 15,000 members in its digital community, METTĀ offers a range of events, workshops and corporate innovation programmes.

By joining forces, METTĀ and Nairobi Garage members will have access to both organisations’ workspaces throughout Nairobi – with drop-in and private office options available in Westlands, Riverside Drive, Karen and Kilimani -, as well as to all the complimentary business support services provided across the two communities. All members will benefit from exclusive corporate collaborations and partnerships – such as discounts, programmes, and first dibs on funding and training opportunities.

The organisations have also combined their entrepreneurship events and will launch an online event series offering thought leadership, innovation and practical business advice. The series involves six monthly events, including panel discussions, networking e-meetups, and podcasts.

Also Read: Chynna Morgan – helping brands create memorable experiences using sound + music with GIF Out Loud

“We are confident in the resilience and capacity of Kenyan entrepreneurs to come back from this pandemic stronger than ever. We want to support them in doing just that, and this merging of forces is a demonstration of our belief in the strength of both our communities. It’s of utmost importance that innovation in business continues to be a priority, and we’re here to facilitate that process for the country’s top entrepreneurs,” says Hannah Clifford, director of Nairobi Garage.

Esther Mwikali, general manager of METTĀ, says: “We have always believed that “Innovation doesn’t happen in isolation”. Outstanding innovation breakthroughs occur when the right people collaborate, to spark commercialisation and scale. This partnership is a true testament to our
vision, as we are taking our own advice and leading by example – the value we offer our customers and the community at large through this is greatly increasing.”

With the business landscape plagued by so many uncertainties in the COVID-era, Nairobi Garage and METTĀ want to provide a sturdy, strong foundation for businesses in Kenya to thrive. By combining their two trusted names, members can have the most complete support available to weather the current storm.

To become a member, people should write to join@nairobigarage.com or nairobi@metta.co

New members joining in the month of September get 10% off their first month’s membership.

Jointly Issued by: Nairobi Garage and METTA

Continue Reading

Business Home

Sahara Energy, Petroci Sign $43 Million Deal To Boost LPG Supply In Cote D’Ivoire

Published

on

By

Dr. Ibrahima Diaby, Director General, Nationale d’Opérations Pétrolières de la Cote d’Ivoire (Petroci Holding), and
Olayemi Odutola , Country Manager, Sahara Energy (Cote d’Ivoire) at the execution of the Joint Venture Agreement between both companies for the construction of a 12,000 Metric Tonnes Liquefied Petroleum Gas (LPG) storage facility to guarantee LPG supply security in Cote d’Ivoire. (Source: Sahara Energy).

Sahara Energy Logistics Holding Limited (a Sahara Group company) and Société Nationale d’Opérations Pétrolières de la Cote d’Ivoire (The National Oil Company of Cote d’Ivoire, Petroci Holding), have entered into a Joint Venture Agreement (JVA) to facilitate the construction of a 12,000 Metric Tonnes Liquefied Petroleum Gas (LPG) storage facility to guarantee LPG supply security in the nation.

The cost of the project is estimated at $43million and will be executed in two phases, with commissioning scheduled for November 2021 and October 2022 respectively.

Incorporated as SAPET Energy S.A., the joint venture company will handle the construction, operation, and maintenance of the ultra-modern LPG storage terminal. Upon completion, the facility will become the largest of its kind is Sub-Saharan Africa, and more importantly, support the government’s efforts to meet Cote d’Ivoire’s growing LPG demand.

Speaking at the execution of the agreement, Dr. Ibrahima Diaby, Director General Petroci, said, “this joint venture project is the first of its kind in Cote d’Ivoire and will serve as a model for other projects in the energy sector. It is a historic event that will pave the way for a robust and seamless storage, distribution, and supply of LPG. This translates to more clean energy, growth, and productivity in Cote d’Ivoire. We are delighted and look forward to more collaboration with Sahara Energy.”

Olayemi Odutola, Country Manager, Sahara Energy said the project was in tandem with Sahara Group’s commitment to promoting clean energy in Africa through investments, new technology, and collaboration with regional and global institutions. He stated that the partnership with Petroci further reiterates Sahara Group’s support and commitment to enhancing economic growth in Cote d’Ivoire and contributes to the UN SDG7 goal which aims at ensuring access to affordable and clean energy.

“We are excited about the project and the huge opportunity it will confer on Cote d’ Ivoire as the leading LPG hub in the sub-region. Sahara Energy continues to support the energy value chain in the nation as a foremost partner. Sahara Group remains unwavering in its commitment to enhance capacity, productivity, reliability, safety, profitability, competitiveness, and sustainability in Africa’s energy sector. We will continue to explore other investment and partnership opportunities to replicate similar projects across the continent,” he said.

Industry experts say the development is cheery news for the nation with a population of 25 million people which has recently emerged as one of West Africa’s fastest growing LPG markets. National LPG consumption has grown from 175KT in 2013 to 380KT in 2019, a significant increase that far exceeds the country’s demand for liquid products (excluding gasoline).

The proposed facility will increase the country’s LPG storage capacity by 60% and significantly enhance importation, storage, supply and distribution of LPG and other related activities in Cote d’Ivoire and its neighboring countries such as Mali, Burkina Faso, and Guinea.

Also Read: Siemens: Setting the Pace for Good Corporate Citizenship in Nigeria

The investment will also bridge the current product supply and storage gap in the market and ensure more product availability and security by increasing stockholding from 15 days to 27 days.

Sahara Group is already a leading LPG supplier on the continent via its joint ownership of MT Africa Gas and MT Sahara Gas, both LPG vessels with a combined capacity of 76,000 cubic metres (cbm). The vessels have delivered about 600,000 metric tonnes of LPG, making households, communities and nations cleaner and safer as well as boosting economic growth and development across markets.

Source: Sahara Energy


Continue Reading

Ads

Most Viewed