Life In Transit Part 5: THE WHEELS COME OFF
In the past four weeks, we have been following the saga of SME/ MME Family Business owner Mr. Mbanje and his transport business. We have looked at his journey from the idea stage to this pivotal moment in time that makes or breaks family businesses. This week I would like to conclude the journey of Mr. Mbanje's transport business. We will be using this business amongst others we will meet reference points. The reason I chose this business is because it is a story we are all familiar with, with tweaks here and there. Most importantly, when it comes to opportunity the facts on the ground from research done by institutions like the African Development Bank, show that Africa's logistics sector holds so much potential and presents a significant opportunity for anyone willing to build their business in the industry. Millions of commuters travel every day across the continent and require transportation. We have all seen family wealth being built successfully, on the back of the transport industry. We need to explore as to why these illustrious businesses fail, yet in their ashes rise, yet another family who join the cycle. Hopefully, after this installment, we will be able to see how the players in this industry can beat the so-called curse and build a company that will last for generations to come and possibly complete the Cape Town to Cairo route dream through their company.
One day while drinking in the bar with his friends, Mr. Mbanje hears that one of his fellow business owner friends has diversified into long haul trucks. He believes that this is the best route to take to escape all this "bad luck" that has been plaguing his family. So, he sells off his buses and goes into the long haulage trucks business.
With no experience in managing trucks and sourcing new business, Mr. Mbanje realises that his decision was a bad one, and he slowly sees his business interests dwindling and his costs escalating. He tries to get his son involved in his business to assist, but his son Hatineti is reluctant because of previous experience with his father. Mr. Mbanje undermines his son's decisions and refuses to get professional assistance and advice in his business.
This Ego vs. wealth building mentality leaves Mr. Mbanje more powerless than if he looks into his business with the perspective of running it with the vision of creating wealth into the future.
Steps Mr. Mbanje could have taken to preserve his fortune.
Structured his company and company shareholding in a way that was inclusive of all members of his family.
Created investment vehicles outside his main business, which were not family-run or owned, but which were led by a financial advisor's advisement.
Created savings that could be diversified in the case that his business starts failing him
Hired qualified and proven staff to run his business, including getting in place an HR strategy that engages skills that are necessary for his business to run effectively.
Appointed a board of directors or an advisory board that consisted of individuals who are not members of the family, but rather proven business minds.
Handling his business as a corporation or established business from inception and putting into place measures that optimise operations.
Separated family finances from business finances.
Created a chain of command that gives him the overall vision of the company's success and the ability to make decisions based on facts.
Created vehicles that allow all members of his family to be financially covered by the success of the business,
Groomed his children from a young age to become a part of the business by getting them to work in the business even at menial jobs that allow them to understand the inner workings of the business.
Groomed an heir apparent. This should be handled as a business strategy as opposed to the principal thinking of it as planning for his death or demise. A well-managed business allows the founder to retire and oversee the growth of the business from afar.
2nd and 3rd Generational Wealth will become a possibility if these generations are included in the communications and planning of the family business direction.
Setting up a family charter and or family council that handles the legacy issues do the business and it's strategy.
Handled the business as a separate entity from the family but also putting in place legal measures that help the business grow even if family politics fall apart.
Diversity and inclusivity for all family members help the business create a longevity strategy. All members should be working towards a common goal. No one feels excluded.