Money is not the only source of success, business leaders explain

A boy sells tomatoes

What you need to know:

As entrepreneurs build their businesses, it emerged from the study, they sometimes make mistakes just like others. But what are the leaves to borrow from experts?

Kampala- What makes a business succeed is not necessarily money or any other single factor, but adherence to a set of time-tested principles by those running it. Now, this sounds like a common cliché. But a new study by a group of business-minded researchers has found that it is true in Uganda and Kenya.
In most poor countries, the research shows, “many businesses, particularly indigenous ones, hardly last beyond three years.” Because of this, the researchers felt that there is a lot to learn from the few owners of those Small and Medium Scale Enterprises (SMEs) in Uganda and Kenya which endure and succeed.
The study, titled Constructs of Successful and Sustainable SME Leadership in East Africa, was built on interviews with the proprietors of successful SMEs leaders in Uganda and Kenya.

Ugandan entrepreneurs
Among the 10 Ugandan entrepreneurs who were interviewed were the proprietors of BMK Enterprises, Delight Ltd, Maganjo Grain Millers, Christex Garments, Bella Wines and Seroma Enterprises.
The study brought together a team of academics from Uganda’s Makerere University Business School (Mubs), Kenya’s KCA University and Dr Sue Canney of Pipal Ltd, Kenya,
Those from Mubs were Prof Samuel Sejjaaka, Mr Issa Nsereko and Ms Rachel Mindra and those from Kenya’s KCA University included Dr Renson Muchiri Mwangi, Prof Rosemary Maina, Mr David Kairo, Mr Abraham Rotich and Mr Edward Owino.
The firms which were studied were at least five years old and had at least 10 employees, with an annual turnover of at least $125,000 (about Shs310m). The study was funded by the Investment Climate and Business Environment Research Fund.

Key lessons
When the successful business owners or managers were asked to “construct an account of how they have managed to carve a niche for themselves in the current business environment,” eight “key leadership constructs driving successful business leaders” emerged.

The researchers grouped these constructs under “visioning, building commitment, social capital, personal values, anticipation and resilience, resourcefulness, responsiveness, and entrepreneurial orientation.” The study found that all those interviewed had all or most of the “constructs.”

From those “constructs” the study drew a number of lessons. It was concluded, for instance, that a business owner or manager needs to do certain activities repeatedly even if the first attempts may not be very fruitful.

“Success is a function of repeated activities in which the entrepreneurs become efficient as they become more experienced,” the study noted.

As entrepreneurs build their businesses, it emerged from the study, they sometimes make mistakes. “But through humility,” the study noted, “they pick themselves up and plough on.”
This they do by working to “understand their environment and work within it to achieve success.”

The successful entrepreneurs in Uganda and Kenya, it was further found, “are frugal and are willing to delay self gratification.”
It is not all about money
Most of those who were interviewed also agreed that whereas money is important for business success, “having money before actualising or without having a clear idea of the ‘correct’ venture is a disadvantage and may contribute to business failure.”

The report adds: “More is needed than just having the money. Indeed from the experiences of these entrepreneurs, the struggle to raise startup capital appears to be a necessity as it provokes creativity and resilience.”

One of the entrepreneurs said: “I think one of the key things that one needs to do is not put money in something because of hearsay, and people need to spend more [time] in searching”.

Hiring the right people
It also emerged that successful business leaders choose their employees carefully and almost always overlook relatives.

They were found to also look beyond qualifications and skills and attitude. An ideal employee, the researchers learnt, “should be a person who can work independently and can take personal initiative to solve problems as well as having ability to multi-task and do some menial jobs when circumstances demand without complaining.”

Selected quotes from the business leaders

On grooming workers: “All you have to do is make sure you get the first child right, and if you do that, the first child will tell all the other children, daddy doesn’t like this, mommy doesn’t like this, you can’t do this. So that’s exactly what I do over here, I make sure all the first few guys know my culture and what I think and how I think, the rest of the guys tell everybody else.”

It’s alright to make mistakes: “[If] you make a mess, what I always tell the guy is, ‘that’s how much it has cost us to train you’, if you messed a batch worth Shs500,000, that’s training, because we don’t expect it to occur again. Because if you quarrel and it’s already spoilt, is it helping anyone? But if you see it from a positive light, it encourages him to check on where the mistake was.”

On taking responsibility: “All those vagaries in business and what have you, the buck stops [with] me. And when something goes wrong in my business, I don’t blame anybody. I blame myself.”

On honesty: “What I mean is that when I am cheated, I don’t have to transfer the cheating to the manufacturer and suppliers. I therefore have to look for money and pay the supplier so as to sustain my job.”
On raising capital: “You know even at the point that you are raising money from the family, relatives and friends, you must make it very clear. You don’t just go and say give me money I will return it to you.
It must be a very clear understanding, it might not be written down, but it must be a very clear understanding from the outset that you are giving me Shs10,000, I am going to return it as Shs15,000. Which means very clearly somebody is seeing the benefit out of it.”

Keeping within the business’s means: “I said, calm down. I am not going to do machine. Because the project cannot afford it. Not that I cannot afford it; the project cannot afford it.”

On choosing workers: “For housing, we don’t take graduates, we actually take people who have never done sales and we train them. We found [that] when we get what we call graduates, they come with sort of, fixed ideas of how to sell and how to do things.”

On persistence: “We lost money on it. But what we didn’t lose is the passion for what we had learnt and we decided it is a lesson. Now the question is how do you use the lesson? Do you stop or do you continue? But for me, I had learnt a lot of things along the way and one of the things I had learnt is using leverage; using what you have to do something. And I felt that I could do bigger projects than what we had done.”

On applying acquired knowledge: “So I used my profession, I was also privileged because I served at the level of manager in the organisation (where I was worked before). So I applied that [knowledge] and I knew I was going to succeed.”

On focus: “Because we thought, if we invest heavily in other businesses like transport, like security, like all those and (yet) our core business actually here is teaching (won’t we be spread thinly on ground?). (For) those other businesses, we get somebody who is doing transport business to transport the pupils for us, we get the security firms to give us those services.”

On versatility: “As an entrepreneur you have to be an all-rounder. One day you are the packaging expert, another day you are in management, another day you are the accountant and cost controller.”
Source: Constructs of Successful and Sustainable SME Leadership in East Africa