Trading at USE. Founders can list their businesses on the Uganda Securities Exchange or bring in private equity partners to invest.
By Denis Jjuuko
Last week, we discussed the transition nobody is talking about where business owners of the 1970s, 80s and basically those who have made it over the last 40 years of NRM’s rule are aging, aged or already dead and the impact it will have on the economy.
Overall, cases of successful transitions have been very few with the Mulwanas showing no signs of being another business that collapses after the death of the founder, businessman James Mulwana who died in January 2013.
There are of course several other businesses that have survived the founder’s death in Uganda like Greenhill Academy. Though many also don’t.
What can businesses in Uganda do to survive collapse after the death or incapacitation of the founder? Founders must learn to let go of certain things by building structures that can enable a business operate in their absence.
If a founder can’t be away from their business for a week or two, then that business can’t survive their death or any form of incapacitation. If a founder is on a business trip and everything has to wait for them to make every little decision, then there are no management structures and systems that can make the business last for generations.
Founders must empower their teams to run the businesses. Mentorship is critical while enabling professional and personal development for the teams.
Being the child of the founder shouldn’t automatically make one the deputy managing director, general manager or whatever fancy title that is available for grabs. The founder must observe the children and assess their interest, business acumen, tenacity and work ethic while mentoring them. Sometimes they may have to let the children work elsewhere or do their thing that is aligned to their interests and/or competence.
The practice of sending the children to universities in America or Europe and return to be heads of businesses without experience is one of the challenges founders in Uganda face.
A child goes for the MBA at an elite university, returns to Uganda at the age of 25 and is straight away made the chief operations officer without gaining experience to be in that position. Yet they could have started in a lower position and rise meritocratically or simply remain in those lower positions. If an incompetent son rises into key positions just because of genetics, the business can’t survive the founder’s death.
Letting go also doesn’t mean only the management but the shareholding as well. It is easier to own a rabbit than a cow. Always, the owner of the cow will make more money than one who owns a rabbit ceteris paribus. The founder must decide whether they want to keep a rabbit or a cow. Obviously, the cow needs much more investment and sometimes that capital may come from elsewhere.
This would mean several people owning a cow. If four or five people owned a cow, they would still be worth much more than one who owns a rabbit 100%. But also, because there are many people with interests in the cow, it will be looked after better. A better keeper would be sourced and hired. A better kraal would be built. The cow would be able to give birth to more calves, yield more milk and provide better returns to the owners than a single rabbit owner would ever make.
The cow won’t die or be eaten at the vigil if one of the founders died.
Founders can list their businesses on the Uganda Securities Exchange or bring in private equity partners to invest. There are many Ugandans and people from elsewhere willing to invest as long as they know that the business is well managed. That way we move from owning a rabbit to a small piece of the cow but that is still more valuable than the whole rabbit.
The children of the founder wouldn’t have the burden of running the business that they are probably not interested in or have no competence for. They could simply sit on the beach in Maldives or Bali and wait for their dividends from the inherited shares while seasoned professionals run the business.
Many big companies in the world are not run by their founders or their children and that perhaps explain why many have existed for many decades or even centuries while many of ours collapse within months of the founder’s death.
The writer is a communication and visibility consultant. djjuuko@gmail.com
