In all honesty, do you run a one-man business?
If yes, how do you intend to mitigate key man risk?
You can have a hundred employees and still be a one-man business.
Can critical decisions be taken without you?
Can business move on without you?
Over the weekend we had a virtual meeting with two investors abroad on behalf of a business venture here in Nigeria.
They sought to know what happens to their investment should anything happen to the business owner.
When the business is a sole proprietorship and the investment sum is small, it is easier to take the risk, but not when the investment sum isn’t a small amount.
Typically, we say “God forbid. I cannot die. Nothing will happen to me”. It is okay to have faith, but the preservation of people’s investments shouldn’t be on the basis of your faith.
You need to have a clear plan on how to mitigate key man risk (a concern for most investors), especially if your business is incorporated.
What should you do?
1. Find an IDEAL co-founder or partner, IF YOU CAN and give some powers to the person.
The next one is more important in the context of this discourse.
2. SET UP A BOARD.
Set up a functional board of directors. I don’t mean an advisory board, but a board of directors that is listed with the corporate affairs commission.
A board of directors can take crucial decisions. The board can even hire a new CEO to continue with the business.
You don’t have to consider death to think about these things. Government can create a regulation tomorrow that says the CEO of a company shouldn’t serve for more than a period of time.
You may decide to establish another company that requires your attention while someone takes over as CEO to run the other company.
So when an investor throws that question at you someday, tell them you have a functional board of directors that will take decisions in the best interest of the company and stakeholders should anything happen to you.
This issue is one major reason why we are not building trans-generational companies in Nigeria. Our sense of control and power limits the potential of the company and our vision doesn’t develop deep roots for sustained growth.
If you have registered a limited liability company, what is keeping you from setting up a proper board of directors?
You know that the listed directors you have on your CAC documents were just to meet the criteria for registration.
When do you intend to do the right thing? Are you even considering it?
If you really want to go big and build a sustainable company, think about these things and ACT.
On structuring your business, there are a number of things to consider, but we will present just an overview.
Structure is one of the fundamental differences between being self-employed and owning a business.
In self-employment, the business is totally dependent on you. The business needs your constant presence to function. Decisions cannot be taken without you. Procurement can’t happen without you. Business is just a hustle.
In being a business owner, you create a system around the business so that it can keep running even in your absence. You can even resign or move on to other things and the business will keep running so long as there is good management in place.
So how is a structure set up?
First, you have to outline all that needs to be happening in the business for it to run effectively and profitably.
That then leads to the need for people who will get the outlined things done in an effective manner. The higher the quality of people you employ the better.
These people won’t be moving in various directions or doing what they want, they have to be aligned to what you want for the business.
Therefore, there should be clear instructions for each person (job description), performance appraisal (key performance indicators), and penalties (policies et al).
There also has to be clear reporting lines for each officer with you at the helm of affairs CEO.
However, even you need to report to someone and be put in check. Hence the need for a board of directors (for limited liability company) or an advisory board (for business name or yet to be registered business).
You will have to someday leave the position of CEO for someone else to take over, but you can move on to be the Board Chairman if you like or just a founding director.
Note that for each position you create, you also have to vest the needed power into that position without micro-managing. The business account will need other signatories. There should be other decision-makers at different levels and so on. There should be a succession plan for each officer that exits the business.
There are many more things in between but we hope that this gives us a good perspective on what structuring a business is really about.
Do you look forward to seeing your business exit the small business stage?
What needs to happen for your business to stop being a small business?
Can you handle your business becoming a company?
Look at your business, do you really have other executive officers?
Drawing from the lessons of 2020, we decided to start a support community for entrepreneurs and those aspiring to be one sometime soon. It will be a full-blown business community (in the form of an Academy) for those who are seeking to go beyond mere hustle and survival to building sustainable companies and reputable brands.
Many business ideas will be shared.
Statistics and data from various sectors of the Nigerian economy will be shared.
Even foreign networks and opportunities shall be shared.
Hacks and contacts for funding and other access will be shared.
But being a part of this community will not be free. So we can have only committed people on board.
We will learn together without anyone lording it over.
The many questions of members can be answered by different persons, not just one person.
We will have breakout groups according to areas of interest and unique challenges.
There will be an exchange of experiences, resources, and support.
It will be a community for those who want to be inspired and pushed beyond their limits without feeling less of themselves.
There will be hand holding for the weak or inexperienced.
There shall be no talking down or shaming of anyone.
Both the sprinters and crawlers are all welcome on board.
Do you think it is a good idea?
All members will have access to the following:
– An overflow of business tips and insights
– Answers to business questions and challenges
– Access to our resources (ebooks and online courses) at no extra cost
– Discount on our MBA courses in the works
– Access to professionals in various areas (Legal, Accounting/Finance, and many others)
Members of the community will set goals for 2021 and be paired for discipline, focus, and accountability:
– Saving goals
– Investment goals
– Business objectives for the year (You want to attend a global conference or change office or just get the business started? Etc)
– Travel goals
– Self-development goals
– Compliance goals (Your personal tax, company taxes, contract eligibility papers, annual returns, etc)
As we mentioned, it is a full-blown business support community.
Does this interest you?
Do you have someone to sponsor?
Click on REGISTER to enroll.
We can achieve more, one day at a time, with the right community.
We can #DoBusinessBetter
We came across a Facebook post suggesting that certain businesses perform better when they are unstructured compared to when they are structured. The person asserted that a renowned Nigerian blogger, Linda Ikeji, is struggling ever since she became structured, but that is quite a baseless assertion without specific indices or metrics to measure the performance of her business. The argument had so many holes in it, we didn’t even know which one to address or ignore, but our take away was that many people do not understand what structure means.
Here are some insights on structuring your business:
1. Structuring does not mean leaving your product-market fit. If you were doing very well by selling food to Tricycle Drivers and then you go build a gigantic edifice with air conditioners in the name of structuring, you are just burying your business alive. The drivers won’t follow you but will switch to another option.
2. Structuring does not mean leaving what is working and going to experiment with the unknown. If Linda Ikeji leaves what has been working for her to new terrain, she may struggle before getting it right again, if she does.
3. Structuring does not mean you stop innovating. If you become relaxed simply because you got structured, you will lose out. The more structured you become, the more you have to be on your toes innovating.
4. Structuring does not mean fancy offices and glam. It is not about “I have arrived”, you will be pushed over to the sideline.
5. Structuring is about becoming BETTER ORGANIZED as the business grows gradually. When a bukka woman teaches her daughter to cook the meals as well, it is structuring. When she teaches her Son how to go buy foodstuff from the market, it is structuring. When she keeps proper inventory of the foodstuff to check them against daily sales to ensure there is no theft or unrecorded debts to customers, it is structuring. When she can take a break and business is still ongoing, it is structuring. The list goes on.
6. Structuring is about creating systems and processes, no matter how basic. You cannot seek a serious business loan with your personal account, you need to open a business bank account and that requires BVN, a registered business, Tax identification, etc.
Our investor at Mapemond asked us, “what if I die, what will happen to my investment in your company?” our answer was all around systems, processes and ultimately, structuring.
You cannot desire to be another Dangote, Otedola, Elumelu, Jason Njoku, Ibukun Awosika, and all these people and not be thinking in terms of structure over time.
Davido and WizKid will direct you to their managers if you want to do business with them, even personal brands have their own approach to structuring. That is why they create DMW, Mavin Records, and the likes.
We have to break the fetters and manacles holding us spellbound to the hustle and survival mentality while thinking that we can build a big business by staying unstructured and evading FIRS and the rest perpetually.
Global Ventures that…
All the fancy desires will not happen by mere wishes, you have to build structures diligently and consistently for several years.
If your clients’ work will be on hold because you have malaria, your business is an endangered specie.
We don’t like to think about it, but what if you die? What happens to the monies you collected from people? Pending salaries? Etc?
Please share this, let’s empower more entrepreneurs with the right knowledge.
If you think otherwise, then this post is not for you.
We wish you well in your endeavors.
Blessed are those whose business is approaching a time when sales will be made without personal posts on social media, for they shall know sustainable growth.