Monday, July 24, 2017

ANOTHER DEATH, ANOTHER BUSINESS IN JEOPARDY?

Last week veteran politician and businessman John Sebana Kizito died and immediately attention went to concerns about what would happen to his business holdings, a hodge-podge of real estate, insurance and everything else in between.

The same worries followed in the wake of the deaths of school proprietors Ivan Semwanga and Lawrence Mukiibi and any number of our lesser, neighborhood tycoons when they move on.

Is it possible to bullet proof our businesses against mortality? And if so why do our businessmen fail to do this?

Given the frequency of this occurrence, clearly the more natural thing is to live everything tethering on the brink of chaos, given how our businesses are more likely than not to self-destruct on the passing of the founder.

When we fail to do something that is good for us, in effect dooming us to a less than desirable future fate, it’s more often than not because it is too much work to do the right thing.

For business it’s easier to set up your stall, make sales and dip into the till whenever the need arises.

 It’s too hard to keep books! It’s too hard to think ahead! It’s too hard to delay gratification in order to build an enduring company! It’s just too hard to do the right thing.

"There are four reasons to start a business –  to maintain a lifestyle, to pass on to future generations, to sell in the future or for philosophical reasons...

These are not written in stone but the record shows that your business has a higher chance of longevity if its driven by the motives that tend towards the more philosophical than subsistence.

It’s not difficult to see why.

 If you build a business to only create subsistence for you and your family it cannot grow very big, because once you have sated your needs, which are not very much – how many meals can you eat or beds can you sleep in or cars can you own or children can you father before you reach the outer limit of your appetites. The logical conclusion to this is why should I bother being systematic in business, after all I will eat it all before I die.

If you build a business for legacy purposes, you want to leave it to your children, then you have to be a bit more systematic. You have to think more about keeping books, for instance,  because getting finance or attracting quality partnerships or beating off the competition will depend on an objective measure of your business that outsiders can understand and also one to which you can refer you to grow the business.

Think about it if you are going to leave the business to the children may have to be around for a few decades before you can pass it on. And in business if you are not growing you are dying and the way to grow consistently is to be able to measure the process in your business so you can replicate the good and do away with the bad.

The next level of being systematic will come with if your end game is to sell the business somewhere down the line. 

"The level of complexity of the business has to rise so that one, it can operate without the founder, keeping alive, growing and beating off the competition, also that that outsiders looking in can make a fair assessment of its value....

Last week it was reported that Kenyan based coffee shop chain, Java House was being sold to Dubai based private equity firm Abraaj Group for about $100m. Kevin Ashley who founded the  company in 1999, had earlier on sold a controlling interest – 90 percent of the firm to private equity player Emerging Capital Partners in 2012.
Not only has selling the company – twice, made Ashley a very rich man but it also ensures the companies longevity and possible expansion into the rest of Africa and beyond. Talk about a legacy.

A philosophical reason to build a business may be one like Bill Gates goal to put a computer on every desk in the US. While this would have made Gates a very rich man, which it did, it oriented his company to reach for a higher goal that made being systematic and thinking beyond the founder’s ego necessary of not critical.

But think about it, even if you wanted your business to just guarantee you and your family and generations after you a good life wouldn’t it make sense to build a company with the intention of sell it eventually or to chase after an outlandish goal that would not only drive its growth but yours as well – as a person and business person?

Interestingly when you set your vision and commit to it, that high it is not a pain to keep books, to think strategically or delay your purchase of your dream car, home or wife in service of a greater goal.

What it takes to reconfigure your business is a change of mindset - easier said than done, but once the mental shift is done it is not hard to execute the necessary steps to build an enduring company.

"At last checking Uganda was second only to Chile as the most entrepreneurial country in the world. We have no fear of starting companies, that is one hurdle out of the way. Now we just need to grow durable companies – less than five in a hundred companies started in Uganda make it past their fifth birthday....

Part of the reason our economy is in such a shambles is because we do not have the size, quantity or quality of businessmen to create the jobs that we so desperately need.

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