Away from the need for governmental support to Micro, Small and Medium Enterprises – MSMEs topic covered in my last article, I must say that promoters of small business are the ones who must take responsibility for the success of their initial project! When setting up an MSME, it is important for certain things to be done in a specific way if the business is to be built for legacy and/or long-term growth and profitability.
I believe that Zambian Small Local Direct Investments-LDIs can grow into other countries Foreign Direct Investments-FDIs! But why? Because there are many big entities with humble beginnings.
That maxim, ‘there is no free lunch’ makes me believe there must in fact be a ‘Law of MSMEs Success Foundations’-LMSF? What is that? It is something I “imagine” is true for any MSME that built for legacy from the beginning. LMSF has ten (10) imperatives for building MSMEs for legacy/success. In this article reference to the idea of building for legacy and/or success is about long-term growth and profitability-LTGP.
The ten themes in LPMF which will be explored in coming weeks deo volenti-DV i.e. God willing are briefly presented in this article.
- Clear Business Plan:
The most important matters here are clear definitions of the mission, goals, target market, and financial projections.
- Strong Financial Management and other systems: From the beginning there has to be strong management of cash flows, expenses and budgets. Other non-financial systems must be set out and written down so that the ability for the business to run even in the absence of the entrepreneur are increased.
- Unique Value Proposition (UVP): Have you ever wondered how so many micro traders simply copy what the neighbor ‘tantikers’ and do the same even without confirmation that the one they are copying is actually progressing or not? I am reminded of someone who said “abena Zambia baliba bwino problem bali temwa ukuconcluda nangu tabakwete ama facts”! Well, that approach partly explains why we have very few ‘graduates from the FISP school of GRZ input support to commercial farming’. They all want to grow maize even without surveying or researching possible alternatives that could give them a UVP.
Building for legacy actually requires being able to differentiate one’s business from competitors with a compelling UVP. When common products or services are plentiful at the same level of quality, the chance of a downward price war that is in fact a race to the bottom are so high that the businesses involved end up bursting! That makes the case for investing in a UVP worthwhile.
- Effective Marketing Strategy: Identify your target audience and develop a marketing plan to reach them.
- Solid Legal Structure: In early 2022, I phoned my brother Logan for some financial help. His initial response was to respond jokingly by advising me to “just form a cooperative”! We laughed it off. At that time the new dawn government was all out advising the ‘army’ of Zambian unemployed people to form cooperatives as a vehicle through which empowerment in business would be supported! Even though the jury is still out as to the appropriateness of forming cooperatives as a way of carrying on business, it is true that not everyone that became a cooperative member actually interrogated the appropriateness of a cooperative as a business vehicle in comparison to say sole proprietorship, partnership and/or indeed limited/unlimited company. All that is being pointed out here is that building for legacy requires an examination of the choice of the right business structure. It cannot be one size fits all approach!
- Quality Products/Services:
This is about delivering high quality products/services to build customer/brand trust and/or loyalty.
- Adaptability:
Building for legacy requires one to be flexible and adapt quickly to changes in the industry and the economy as a whole. We now live in a “VUCA world”! VUCA stands for volatility, uncertain, complex and ambiguous.
- Strong Team:
It is commonly stated that the biggest asset any organisation could have is its people. It is trite law that building a skilled and motivated team of people will more than always deliver on business objectives. Time is required to initially invest in hiring and/or partnering right ab-initio! That should save the business time that could very easily be lost with a wrong team or poor attitude people in a business!
- Continuous Learning: There is no option but to stay up to date with industry trends, best practices, and new technologies. The environment must always be scanned so that what needs to be learnt is actually learned fast.
- Risk Management: Zambia’s Insurance industry gurus will tell you that most MSME owners in the country do not fully appreciate the need to risk manage both their business and/or their assets and liabilities. A simple risk register properly used for example could go a long way in disaster-proofing an MSME of any size.
Napita mukwai!
The Author is Partner at NS-CGMA in charge of Management Accounting.
Victor PM Nyasulu, CA-Zambia, FCMA, CGMA, LLB mulenjicas@gmail.
