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Entrepreneurs are highly gifted, successful and happy people. Right? Wrong! Well if you count Bill Gates, Aliko Dangote, Mark Zuckerberg, amongst this lot then, perhaps, there may be some truth in it. But for the majority of entrepreneurs, life is one big slog and a constant teetering on the brink of bankruptcy and starvation. It is not fun at all! As someone who has experienced life in both the corporate and entrepreneurial worlds, I do often wonder why people bother to become entrepreneurs leaving the more secure and protected environment of formal employment. I now know better, people become entrepreneurs because they want to change the world.
Let me start with a caveat. Not all people are entrepreneurs by choice. To many people in Africa, this is a forced choice as the job market is just too thin to absorb the many people who are desperate for work. With unemployment rates in double digits, self employment is one of the very few routes available to self sustenance and survival. So there are a lot of people out there who become entrepreneurs, not by choice, but by force. This article is not about such “journeyman” entrepreneurs. It is about those who are entrepreneurs out of choice because they have the means, access and capacity to secure formal job opportunities if they so choose to enter such formal employment.
Let me give some few examples. Dorcas (not her real name), a post graduate degree holder worked for different organizations in various senior capacities. At some point she decided that she would start working for herself and she set up a business advisory company. She was able to secure some few contracts here and there but the income was not anywhere near what she needed to sustain herself or what she had received from formal employment. A few years ago she was offered a position as the chief executive of a national business organization and she gladly accepted. When I met with her she was still hankering for life as a business woman and expressed the hope that her position would help her to establish a stronger network which would enable her to survive and thrive if and when she gives entrepreneurship another go in future.
Another example. Malik Fal (his real name) is the Managing Director of the South African operation of an international business development NGO. He is a graduate of an Ivy League university and has held several senior positions in leading multinational companies such as Microsoft and Pepsi Cola. In between his various full-time engagements, Malik established his own consultancy firm Chesswood’s Holdings. He was recently in Kampala delivering a keynote address at Uganda’s 5th National Competitiveness Forum. Malik is an employee of an international NGO but he is also an entrepreneur who could be working full time to develop and grow his consultancy business.
If Dorcas and Malik decided to dedicate themselves to their business on a fulltime basis they would be entrepreneurs by choice not by compulsion. In such event, they would join many other entrepreneurs who are in business, not because it is the only avenue for self-sustenance but because there are strong forces that drive them into the path of entrepreneurship. My experience is that people who end up as entrepreneurs (successful or otherwise – but this is subject of another installment) have different characteristics to their counterparts who remain firmly lodged in formal employment until the day they retire. These characteristics are:
- They take calculated risks;
- They are disatisfied with the status quo;
- They are not afraid of failure; and
- They live life to the limit.
Let me expand a little. Entrepreneurs take calculated risks. Contrary to what a lot of people may think, entrepreneurs do not make or take blind and reckless decisions. They are not afraid of taking risks but everything they do is well calculated. My cousin sister is a trader who travels to China, Dubai and other places to buy merchandise which she sells at home. Before embarking on each trip she knows pretty well what she needs to go and buy, how much it will cost her, who she will sell the merchandise to and for how much. She makes detailed plans of how she will travel, how many days she will spend away, where she will stay and how she will avoid (or is it evade?) customs duties. The way she operates is pretty much how every business enterprise operates – taking calculated risks.
Entrepreneurs are never satisfied with the status quo. They are always exploring opportunities to change the present situation for the better. They are driven by the realization and knowledge that they can achieve more and better things than they current have. A good entrepreneur will not sit back and retire because they have made their first million dollars, they want to make a billion dollars and, when they have achieved that, they want to make a trillion. Aliko Dangote is Africa’s richest man with a net worth in excess of US$10 billion but he started as a trader, like my cousin sister. When he made his first million he did not sit back and throw a party, he ploughed on until he made his first billion and, even after that, he continues with his relentless pursuit to make more billions. He will never be satisfied until the day his kith dig up the ground and roll him six feet under.
Entrepreneurs are not afraid of failure. If anything, they thrive in failure because every failed effort is an opportunity to try something different or to do something differently. You have heard of that very famous statistic that 50% of new businesses fail within two years. That is an extremely misleading statistic because more often than not, the same people whose businesses “fail” go on to try other business ventures many of which then succeed. In business the so-called failure is nothing but a lesson or experience which you profit from the next time around. Entrepreneurs are persistent people. When something does not work well or as well as it should they go back and analyse why that is the case and what it is they should do to make things work better. They dig deep for solutions to problems and challenges which they encounter. And if they realize that the problem cannot be resolved and the challenges cannot be surmounted, they are not afraid to drop an idea all together and try something else.
Entrepreneurs are adventurous people who live life to the limit (or, some might prefer, who life at the edge). Richard Branson, the founder of the Virgin Group, is as well known for his adventurous escapades as he is for his business acumen. He has crossed the Atlantic in a hot air balloon, attempted to cross the English Channel on a kitesurf board, broken the trans-Atlantic mono-hull sailing record. Branson may be an extreme example but what he does reflects the character of many entrepreneurs who see life as one long thrilling adventure. They enjoy engaging in what other people would never dare to, they are always stretching the boundaries of life and challenging conventions. They are not afraid to inflict harm or injury to themselves but, like I have said, everything is well calculated – it is never reckless risk taking.
Thank God for entrepreneurs, the world is so much of a better place. Mr. Jack and Ms Jill may work themselves to retirement as highly paid chief executives of businesses or organizations which they do not own. They will drive big cars, live in plush houses and send their children to the best private schools. But they will never change the world in half the way ordinary entrepreneurs do every day. That is the challenge and the joy of being an entrepreneur.
To say that times are tough for any business is probably an understatement. The global recession is hitting businesses very hard as disposable incomes shrink, funding and credit sources dry up and markets disappear. Faced with these hardships, the standard text book (or knee-jerk reaction) is to downsize – cut costs, retrench staff and reduce product ranges. To me this sort of reaction is short-termistic and suggests a defeatist attitude which may be detrimental to the long-term sustainability of the enterprise. I believe there are more innovative ways in which businesses can survive and thrive in hard times and I will discuss five possible strategies which enterprises should consider:
- Product redesign
- Staying close to customers
- Expanding delivery channels
- Staying legally compliant
- Sticking close to the bankers
It is a truism that many products are designed for “normal” times. They are supposed to deliver a certain performance within a certain timeframe or they are expected to remain usable or consumable within a stipulated period (i.e. the product shelf-life). If that is the case then surely the parameters have to change in difficult times. I would advise that enterprises should, instead, design products that will last longer and save customers some money. For example if the product was originally designed to last for X months, consideration should be given to re-designing it to last for X+ or Xx months. Re-designing a product does not necessarily mean reinventing it. It may mean repackaging the product or recasting the marketing message to emphasise the longevity and cost saving aspects of the product. Instead of selling the product in small packages that get finished in a week, why not increase the size of the package so that it lasts for one and half or two weeks? When such changes are supported by a marketing message that intones empathy with customers’ financial constraints and a desire to help them manage through financially stressful times, this will strengthen the bonds with existing customers and attract new customers.
Staying close to customers
An important aspect of product redesign is to get customers’ input into any existing or new products. In good times, staying close to customers is very important. In tough times, it is critical and may be the only difference between survival and demise. Enterprises need to understand clearly what motivates customers to buy their products and what are their specific experiences in using those products or services. Needs of customers are shaped by their environment and circumstances and, given the evolving nature of these variable, it is inevitable that customer needs will change in difficult times. Enterprises therefore need to understand what the new needs of their customers are and how they can better meet those changing needs. Enterprises that stay close to their customers are quite likely to be more able to withstand the storms of recession and to grow their customer bases.
Expanding delivery channels
How you deliver your products is also very important to consider. In normal times you would expect the customers to come knocking at your door and take whatever it is that you are offering with little or no quibbles. In tough times you have to go looking for the clients and, not only that, you also have to devise different ways of delivering the product or service to them. This means using all possible channels which are available. The internet is a good delivery channel for selling products. Therefore if you have been selling only from the shop floor, you can expand to online selling. This means that you have to plan to deliver products to clients rather than wait for them to come and collect.
Staying legally compliant
In tough times it is so easy to fall prey to the temptations of non-compliance with regulations. Fiddling books of accounts, tax evasion, late settlement of debts, etc. become attractive options when the going is tough. My strong warning is that beware! Great dangers lurk in the wilderness of non-compliance. Many an enterprise has been felled or brought to its knees by the taxman’s invoice or the collector of a debt which has long been ignored. My view is that organisations that are complaint are much stronger and better placed to withstand the shocks and uncertainties of recession than those which are not compliant. Therefore keep you books up to date and accurate, submit the VAT and other statutory returns and pay your taxes! If you do that, your enterprise is less likely to be washed away by the tides of recession.
Sticking with your bankers
One of the biggest contradictions in life is that when you don’t need money, the bankers love you to nuts and when you are broke and need money the bankers don’t want to hear from you or talk to you or listen to anything you say. My experience in business has taught me that the second most important stakeholder to the enterprise is the bank (in case you are wondering, the first is the customer). In all times and, especially, in tough times you should keep close to your bankers. This means keeping them fully informed of what you are doing, what challenges your business is facing and what plans you have to withstand the challenges and to grow the business. You can do this through sending them a periodical report, sharing your accounts with them and scheduling regular briefing sessions/informational meetings with your bank manager. The long and short of it is that do not wait until you need money to go and talk to your banker. If you leave it to that point, it is probably too late and quite futile!
Of course this is not an exhaustive list. It is merely a starting point. But I strongly believe that if you do some and/or all of these things, your enterprise is likely to stay healthy and to grow and prosper in these difficult times.
Thursday, 3rd November 2011, was a very good day for Ugandan businesses. On this day the country’s Ministry of Finance, Planning and Economic Development (MoFPED) held its 5th National Competitiveness Forum and, simultaneously, launched the Second Competitiveness Investment Climate Strategy for 2011-15 (CICS II) at the Sheraton Hotel in Kampala. Held under the theme “Mainstreaming Competitiveness as a Driver of Growth and Prosperity”, the forum attracted the elite of Ugandan government and business personalities and a glitterati of international and local presenters.
Led by no lesser person than the President himself, Mr. Yoweri Museveni, the government contingent included the Ministers of Finance, Maria Kiwanuka, the State Minister of Finance, Fred Omach, and the Minister of Trade, Industry and Cooperative, Amelia Kyambadde, and other senior government officials. The keynote speaker was Malik Fal, Managing Director of Endeavour South Africa who led the international contigent which also included Ivorian Eric Kacou, Amit Kapoor from India and Allon Raiz founder and CEO of a South African based business incubator. The large representation of Ugandan speakers and moderators included Jennifer Musisi, the Executive Director (ED) of the Kampala City Capital Authority, Robert Kabushega, CEO of the Newvision Group and Gideon Badagawa ED of the Private Sector Foundation Uganda. The diplomatic and the international development sector were represented by the EU Ambassador, Roberto Ridolfi and Warwick Thomson of the Danish Embassy in Kampala, among others.
The forum was important for Uganda in a number of respects. First, it provided a platform to reflect openly and candidly on the country’s challenges and impediments to economic development. It was refreshing to hear business leaders openly express their frustrations with the environment under which they operate and for government ministers and officials to acknowledge their own shortcomings in delivering support and services to the business community and the nation at large. These challenges include poor infrastructure such as power and roads; difficulties with the land tenure system; and endemic corruption and rent seeking activities. The general consensus was that these challenges have to be tackled and overcome if Uganda is going to become a competitive and middle-income nation.
But the day was less about the negatives and more about the positives and this brings me to the second issue. The forum demonstrated a serious intent and commitment to pull the country out of underdevelopment and poverty by harnessing the power of the private sector as an engine for economic growth. Many if not all the speakers acknowledged that the role of government was not to involve itself in private sector business but to provide the enabling environment for private sector to grow and prosper. This means enacting appropriate legislation, removing bureaucratic barriers to doing business and providing necessary political impetus to initiatives that grow and strengthen the market such as the East Africa Community (EAC) initiative. President Museveni, though, expressed scepticism about the efficacy and economic benefits of the EAC, arguing that Uganda would benefit more by trading with the wider global community rather than just focusing on a narrow geographic region and cited the example of Kenya which has largely remained underdeveloped despite the fact that, for a long time, it was the regional trading giant supplying most of the requirements of countries in the region.
Above all, the day and the forum provided the platform to launch CICS II, Uganda’s strategy for driving economic growth and creating prosperity for all. Developed in close collaboration between the government, the private sector, civil society and development partners, CICS II’s overall objective or mission is to “mainstream competitiveness as a driver of growth and prosperity” and this will be achieved by focusing on five main goals or strategies which are:
- Unleashing priority growth clusters to drive total export growth to 7% per annum. The identified growth clusters include horticulture, agriculture (coffee, grains and pulses, edible oils), fisheries, tourism and IT services and the cross-cutting clusters which include construction and works, business financing, energy and education and training.
- Fostering competitive mindsets to promote co-competitiveness attitudes in economic actors and the general public and ensuring ownership of the competitiveness agenda at the highest level of the country’s leadership. Specific strategies will include defeating or neutralising negative mindsets, redirecting and coalescing neutral mindsets towards national economic objectives and supporting and stimulating positive mindsets which have high economic impact;
- Increasing firm-level capabilities by placing the private sector in the driving seat and providing adequate business development services focusing on micro businesses and SMEs. Under this strategy, a bigger and more vibrant business development services (BDS) market will be created which will operate on a commercial basis and promote competition and innovation among service providers.
- Strengthening the enabling environment by identifying and addressing “hard” and “soft” pain points that hinder effective business operations and coordinating efforts to improve Uganda’s performance on international benchmarks such as the World Bank Doing Business Report and the World Economic Forum Global Competitiveness Index. Aggressive targets have been set for improving the country’s performance against these benchmarks by 2015.
- Driving focused execution through ownership by reinforcing the capabilities of the CICS Secretariat and other key stakeholders and strengthening the Secretariat’s mandate to include more pro-active interventions which go beyond monitoring activities.
Before officially launching the CICS II, President Museveni outlined his 13 “stimuli” for economic growth and these include peace and security; macro-economic stabilization; infrastructure provision (electricity, railway, roads, piped water and ICT “backbone”); private sector led growth; elimination of corruption; human resources development and strong government regulation.
Being the first major national event which I have attended during my rather brief sojourn in Uganda, my impression was that the Forum was a success and encomiums must go to the organizers, Peter Ngategize and his team at CICS. Now for the hard work of making it all happen and translating intent into action!
If you think that it is easy to recruit good employees during these recessionary and economically challenging times, then think again! Logic dictates that at a time of recession more people are out of work and so you can cherry pick well qualified and experienced people from among those who have been laid off or that you can pick the brightest talents from the universities and other institutions of higher learning. Logic would also argue that because there are so many people who are desperate for jobs, you can pay staff as little as you can get away with because people have limited options or choices on where else to go.
The reality is, however, far more different! My experience is that during recession it is much more difficult to attract good people into your organisation and that the recruitment process is a much more complex and challenging endeavour than is the case during the more ordinary economic times. There are five main reasons why this is the case:
- Lack of will or interest in moving jobs;
- Lack of qualified and experienced people on the market;
- Proactive response of employers to market competition;
- Higher costs of recruitment due to inflationary and other forces; and
- Overwhelming interest or responses to the few job openings.
Let me discuss these reasons in more detail starting with the lack of will or interest in job moving. The fact is that during tough economic times clever people (and those are, in my view, the people who you really need) are very reluctant to move from their current jobs because they become risk averse. Have you heard of the saying “better the devil you know than the angel you haven’t seen”? That is precisely how people think and react during times of uncertainty. They will stay where they are until they are very convinced that it is safe to make a change. Throwing money at them may not be enough to entice them to jump ship. You have to do much more than that! You have to assuage their fears and insecurities.
The second point which I make about there being a lack of well qualified and experienced people on the job market is partly an outcome of the reluctance of people to change jobs as I have just discussed. But it is also an outcome of another entirely separate organisational metamorphosis that occurs during recession. In good times, organisations are much more willing and able to invest in training and developing their staff and thus there are more qualified and experienced people on the job market. In bad times, organisations simply stop providing staff development and training other than what is most essential for their immediate operational needs. As a result, there are fewer experienced people on the job market to choose from.
On the third point, you have heard, I am sure, about how people are the most important or valuable asset in the organisation. This statement becomes truer during hard economic times! Organisations realise that it is fatal to lose their good people and they are prepared to fight tooth and nail to retain them. As competition for good staff heats up, organisations will work very hard to outbid any rivals who may have the intention of enticing their staff. Many an employer will be familiar with the circumstances when, after protracted negotiations, you make an offer which you feel is very generous to a prospective employee only for the person to come back a few days later and say “sorry, I have decided to stay with my current employer”. What will have happened, in most instances, is that when he or she hands in their letters of resignation, the employer asked how much more they are going to be paid and simply bettered the offer on the table. In a straight bidding war for talent, you will have to have something really special to outbid the current employer.
On higher costs of recruitment, every employer will know that even in the best of times, staff recruitment is a costly endeavour. A quarter page black and white display advertisement in the local daily will throw you back a few thousand dollars. In all probability you may have to run the advert for a few times in order to attract the sort of persons you really want. Add to that inflationary pressure, which is constantly pushing advertising costs upwards and the cost becomes quite exorbitant. Then there are costs for screening applicants, holding interviews and the really big expenditure which is incurred when you make the job offer. In most instances, when you are bringing in new staff you are forced to review the salaries of existing staff so that you do not upset internal equilibrium which may lead to you losing your existing staff and, thus, incur even higher recruitment costs! That may mean increasing existing pay levels for certain strategic staff.
On the last point, during hard times people are so desperate for jobs that they will apply for anything which remotely matches their background and experience. Just the other day, I was talking to a professional colleague who said that she had recently advertised for a Programme Manager position for one of her clients and had been inundated with a large number of responses, most of which were clearly unqualified and unsuitable for the position. Even those who were reasonably well qualified had badly prepared CVs which made it very difficult to identify candidates which to shortlist. It takes a lot of time and effort to screen these applications and, in some instances, it becomes something of a drawing of lots to select candidates for short listing.
Having said all that, you will be wondering whether it is useful at all to embark on recruitment during these tough times. My very honest answer would be that it is probably not worth it. I mean, if you can avoid recruitment just don’t do it! You can avoid external recruitment by utilising your existing staff more efficiently. This can be achieved through reallocating or distributing the responsibilities of the vacant position to other existing staff and redeploying (though promotions and transfers) your current staff to fill any vacancies. In my view, staff turnover presents any organisation with the best possible opportunity to review, revise and re-engineer their business processes and systems in order to make them more efficient and to better align them to their prevailing mission and operational circumstances.
Be that as it may, there may well be a need to still recruit externally. My advice is that if you have to do so, do it smarter and more efficiently than can be achieved through the old methods of recruitment – expensive newspaper advertisements, laborious screening and short listing of CVs, lengthy and time consuming interviews and painful (and often disappointing) contract negotiations with prospective employees. Intelligent approaches to recruitment now include use of internet CV databanks offered by jobs portals and recruitment websites (such as Jobsmarketuganda.com) where, by entering a few search words, you can find CVs of prospective employers and simply call them for an interview.
Alternatively you can use social networking sites like LinkedIn and Facebook where people post their profiles even though they may not be actively looking for job opportunities. By identifying good candidates and directly approaching them, you will save yourself tons of money, needless heartache and almost certain failure. Finally, you should always remember that in all times – good and bad – exceptional talent will never come knocking on your door, you have to go out and find it. This means you have to adopt headhunting tactics to secure that top notch employee.