By Cynthia N. Mpanga
So many Ugandans have over the years ventured into Small and Medium enterprises with gusto though unfortunately the mortality rate of these small businesses over 5 years is very high especially with increased competition due to globalisation and other factors.
It is suggested that a staggering 70 percent of businesses in Sub Saharan Africa fail within that time frame.
Given the high failure rate of SMEs, it is essential that the reasons for the failure be discussed and maybe this will reduce the failure rate of start-ups. It is generally accepted that the lack of management skills is the primary cause for failure.
According to Sutton (1984) it is vital to have a well balanced owner–manager or a well balanced team to run a small business in terms of their respective managerial skills. Unfortunately, most small businesses, during the introductory and early growth phases will not be in a position to hire skilled management staff due to financial constraints.
Sutton (1984) believes that if the owner-manager is good at managing a small business, then they can do exceptionally good things in terms of ensuring the continued survival and operation of the business. This brings me to the importance of succession planning among SMEs.
I recall a colleague who was a successful businessman by all measure but despite having had an office, business partners, employees as well as a family, he mostly conducted his business as an individual. He wouldn’t divulge details of his undertakings to his immediate family...this despite having mature children whom he could have groomed to take over the business. So upon his passing, the business partners who were his confidants and friends were the first to seize his assets and documents like; land titles, business deals and other things which the family never knew about.
What eventually happened is a story so many of us have heard time and again....if you however have not heard of any such story, I will tell you that the end was not a story anyone who has toiled to set up a business would like to happen to them....yet inevitably, it does. The family was left empty handed with the children dropping out of school and the family falling apart.
There is no reason why a knowledgeable, exposed, shrewd businessman who has toiled so hard to let the same fate that has been encountered over and over again by their colleagues befall them. If one has the will, has worked out how to secure capital and actually gone ahead to start up these businesses, isn’t it about time we also looked at what we need to do to ensure our businesses in order to survive long after we are not able to run them? So many corporations we see today including multinationals have outlived their founders based on deliberate strategic planning and the focus of the owners to ensure their success.
I am certain that something can be done to avert this trend of events especially in our country.
One of the keys to a sustainable business is really succession planning which generally means identifying talented employees and providing them with training to develop them for future higher level and broader responsibilities.
The journey to implementing a succession plan has to be pre-meditated and one has to have the conviction to embark on the undertaking. The journey starts with recruiting the right people in the right jobs and this has also got to be a deliberate, planned and a focused exercise.
To get the right people in the right job, the business owner should ensure they apply the strengths-based philosophy which means playing people to their strengths. This involves empowering employees in the fields they perform best instead of promoting employees to available vacant positions regardless of their abilities or hiring relatives to protect the business from theft or act as watch dogs. Risks like theft have to be mitigated through reliable systems and processes which can be sought from various sources.
The key to ensuring you are grooming the right employees for the right responsibilities is to identify their strengths and harness them for example, if you have an employee whose strength is being an Achiever: a business owner can set them more challenging goals for career development and set for them goals that can be easily measured. On the other hand if you know that you have an employee who is good at Wooing, they are best placed in positions where they meet new customers since they enjoy meeting new people and can easily win them over and are good ambassadors of the company.
It is critical for the business owner to deliberately empower their employees who are in the positions of responsibilities because of their capabilities. Even when you notice they may have the potential to get to where you want them to be, you still need to groom them through the ranks e.g. moving an employee systematically with the deliberate aim of making them an all rounded and knowledgeable individual capable of managing more complex responsibilities.
One way of empowering these employees is emphasizing on -the-job career development by practicing job rotation, that is to say, moving employees through different functional responsibilities – e.g. from finance to sales to human resources and so on.
Whereas it is common practice for SMEs to hire people and fire them if they do not deliver on set jobs or targets, it is important to understand that people perform to their strengths. Even when they cannot deliver on some jobs, they can be fantastic employees if they are put in the roles where they can play to their strengths. Business owners should therefore strive to retain employees and keep them motivated so they don’t leave the business hence having successors in place whenever there is change. Due to having a succession plan, even when an employee leaves the business, if they had successors they were training and grooming, this will guarantee continuity and a successful business which can stand in the absence of any employee.
The writer is a Corporate Affairs Manager