Thursday, January 04, 2007

Work ethic & sucession

Work ethic is something I’ll have to work on in 2007. In vying to start the aforementioned kiosk, I still have the idea that I can sit in an office all day and only visit the shop in the evening to collect the day’s income, pay bills, and reconcile accounts & inventory. That may be a recipe for mediocrity.

Just before Christmas, I went to buy some wine from a famous small town shop. The proprietor, let's call him Mr. Shah, has been at his storefront for the last 20 years. He is supported by his grown children and their spouses to run the shop and despite millions of shillings in annual turnover, they still have modest and humble lifestyles. He’s there from 9 a.m. to 7 p.m. - 6 days a week and drives a 20 year old Mercedes.

This management style of Asian businessmen where they commit themselves, family, and their time to running the shop is admirable – and you see it in hardware, auto part shops, pharmacies, supermarkets etc. – i.e. owners being on the ground [not far away in someone else’s office, trying to run the shop via remote control - over the phone to avoid relatives looking for jobs, creditors, and others seeking favors]

Some business run by remote control may succeed, but rarely. As an owner I’ll have to get down & dirty with customers and suppliers ever day and know the business in & out and ring the cash register myself – and that will come by being in the shop full time. I have already promised a distant an uncle that his currently unemployed son could run the shop once it’s ready – but I may have to rescind that offer. Am I ready for that? I don't know.

There are limits at succession time – as a parent has to convince his kids that their future is in the shop and not being a CPA working at a multi-national firm. This is a dilemma Indian shopowners and African land owners/farmers face – with many of them running large businesses but which their kids have no interest in taking over. What happns to the business after many years? Sell out - move abroad/travel the world for the rest of their lives? I hope that will be a dilemna I'll be facing in 20 years time (i.e. How do I give away my money/estate?).

28 comments:

Unyc said...
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Unyc said...

U r really set on starting the kiosk, well all the best. I agree that family ran businesses r sucessful and especially if the owner does it him/herself. I am talking from example of my parents who run soleproprietorship businesses and none of them is employed anywhere else.
My mum is there 8-6pm and my dad is always supervisin from outside and researching on future improvements of the businesses plus promoting it on his own.
I must say no complains of the lifestyle we have had.

I hope u succeed and about bringing relas, bad idea. Thats smethin else i hv witnessed. Even ur own brothers cn ruin u.

Anonymous said...

Management Style:

I admire the way Asian Businessmen run their businesses.
However, as a business owner, I'd probably want to establish a system that works - dealing with customers, suppliers, sales, admin etc etc. Once that's done I'd work on 'replacing' myself in the business with someone capable.

Sometimes doing things with relatives etc is limiting - and tends to be a self employment venture vs business ownership (where ownership doesn't imply day to day running)

I'm working on that so lets see how that goes... after all .. we can't expect the Govt to create the jobs on its own.

jke said...

A simple kiosk/duka?

Hmm. How about moving to Shaggz and opening a computer parts shop? (=> Embu :-)

Jakarumba said...

jke, you are not funny at all! Banks, relas is a sure way of bring in down the biz especially if you bring him in during start-up.

Mashatall said...

Banks.
Sole proprietorship will not work for you, i believe you have too many interests to be tied down in a duka for 8-12 hours daily.The best model for you would be to create a system where anybody employed can run it and all you will have to do is come in at the end of the day and balance your books.otherwise you will be left with no time for thinking on ways and means of improving the biz, or even creating other ventures.Also depending on one source of revenue can be dangerous, since you are at the mercy of other service providers.Diversification in revenue streams is important, just hope you do not overlook that part !!

bankelele said...

Unyc: good to know

Alpha Quadrant: I understand sytemes are important, but personal touch is also needed

Jke: Computer parts in Embu? Never thought of that. I have a plan for shags, but for much later

Jakarumba: Sometimes you just someone smart, honest, and numeric to do clerical stuff(within a system) - and that can be a relative (who I will have extra leverage over)

Mashatall: I have thought about that. But I think I can do it - as long as I have my laptop with net access throughout the day - and by being on teh ground I woudl make oberavtions that would improve the business faster. This time, remote control management won't work

Sijui said...

Bankelele, forgive me for offering unsolicited advice BUT have you been rigorous in your vetting of potential store managers i.e. your cousin? Is he the most qualified? Greatest guarantor of ROI? If so, then by all means forge ahead!

As one who has been burned by family ties in business, I have this to offer. Our culture is prone to sentimentality, and fortunately or unfortunately we extend this to business relationships where informality and family committment are a liability not an asset. I have come to admire, more and more the rugged individualism and isolation of the Western entrepreneur where self interest is valued above all else. Ditto for the Easterners where strict discipline and conformity is demanded from relations engaged in a venture. My own personal lesson has been to combine elements of the two, preferably the latter.

In regards to growing the business vis a vis our mentality, we have yet to grasp the concept of scalability i.e. you enter business to expand and transform. Rather we are content with statism, that's why truly indigenous multinationals or corporations are few and far between, if any. We think small and stay small.

sijui said...

one last thing, as a struggling entrepreneur, I too have come to learn the power of WORK ETHIC. I continually strive to study the methods of others who have been enormously successful. Take home-hire help who exhibit similar drive. They have to believe in your business as much as you....and I don't mean loyalty to you, I mean the same sense of naked ambition, self confidence and self reliance. I've come to believe that the best employees are the ones who make it clear that they're using your firm as an incubator to hone their skills and expertise, before at some point they'll move on because they'll get better than you :) Think about it, you want your venture to be an assembly line for innovators and creative thinkers.....that's why who you hire is so important, and especially when you're starting out and don't have the resources to pay huge salaries, you'll have to leverage attractive benefits from other intangibles.

Anonymous said...

Personal touch is important, not only so that you are physically present to keep tabs on the staff but also to develop goodwill with your customers.

Relatives - I'd hesitate. Our African culture is one of "you owe me; you cant fire me; it's your business so by extension it's mine".

Succession issues get sorted if you "wean" the brats in time. Mama has a poultry business - it's hers but the entire family takes part in it at one time or another - to the point where I was once tearful come slaughter-time! I digress. Errmm...if something happened to mum, there would be someone to step in - and with pride too. Otherwise, have a staff member who'd be willing to take over i.e. acquire the business so that your life's work lives on even if not within the family.

Ntwiga said...

I think a large part of making any employee work well for you as an owner is finding a way to motivate them to WANT to work to make the business succeed.

In larger companies, employers have been doing this though stock options. This approach seems to work reasonably well for employees whose option values are large enought that they can actually derive significant benefit from them.

I cannot even claim to know how you would begin doing that but I have to agree that relatives are definitely a step backward rather than forward in that regard.

Nimechoka said...

Relatives can be a good source of cheap labor esp. for a start-up. This depends on a number of factors: 1) the relationship/trust level btwn you and the relatives 2)How you compensate your relatives.

I have had good experiences with relatives (from shags). Be it your cousin or uncle - make sure they are ambitious. Literally what I've done is enroll these relas in some practical courses/classes - Excel, Word or Graphic design - at the same time compensated them for their work.

If you have ambitious relatives who feel they will gain something out of your business venture and feel appreciated (you investing in them) they are more likely to produce more.

As such don't make them feel like this is 'our' business/'too comfortable'. Make sure they understand that you are helping them help themselves. Unless you can create such a relationship - relatives will waste your time/resources.

Also - set time target for how long they will work for you. Say 2 years or 3 years/and house them if possible.

From firsthand experience! Well managed relative-employees produce better results than some qualified/overpriced candidates (especially in start-ups.)

KE said...

sijui:

you sound like a very smart person. who are you?

anyway, it's hard to see yourself as an innovator if your boss is paying you a low salary to do very basic work!

The problem in kenya is that there is NO upward mobility. Employee's at the low end are paid nothing and get no respect...no wonder they end up stealing from their employers. they don't see any other way of making it, except through theft. How many watchmen in kenya end up owning security firms? how many maids go on to bigger things? the system is stacked against them.

the reason indians are in their stores 24/7 is because they know don't trust any kenyans. I honestly would hate to work for an indian in kenya.

banks:
why are you hiring your cousin? is it one of those deals where you let them stay in your guest house for free in exchange for them showing up for work?

kenyanentrepreneur.com

gerald said...

If you could read Cashflow Quadrant - rich dad poor dad series by Kiyosaki Robert it will give you clear picture of the pros of 'remote controlled' business as opposed to that of sole proprietor which is in actual sense self employment.
At initial stages of the biz its fine but not 20yrs down the line stil stuck in a duka.
Read that book it will help you make a smart choice.

Gish said...

Kiosks can be a source of income depending on the location and all other pertinent issues. The catch is not to get carried away with the cash in hand and to always remember that to make money you have to keep putting that money back in the shop.Unfortunately the profit margins are not as much thought that depends on the products and services that you choose. I do know for a fact that you can make a tidy sum from a kiosk from experience.
Thought-provoking, seeing that this swivel-serving all day is not working....

Chaka said...

Bankelele - you seem like a realist, I am sure you've gone to school and are smart too but you go for simple ideas.

Most of your readers on the other hand are text book entrepreneurs (not all of them) so there is no way they will support your idea. It seems too simple for them.

They've read books or even worked for bigger companies and think starting a small kiosk is a demotion. Banks give me the directions to your kiosk and I will come buy from you.

Wachana with these negative sayers. You know what you are doing and you will get there. Simple ideas is the way to go!

Most of your readers will end up being managers and not entrepreneurs (watch this space)

Anonymous said...

U r now thinking strategically.Most people rarely think beyond the scope of their lifetimes'.They only think of today,tomorrow and maybe next year.

That's why african Dictators dont care about posterity or the future

coldtusker said...

I agree with Chaka... and don't be afraid to fail.

Many of the most successful entrepreneurs failed before they became successful.

Hard Work - The Indians, like Jews, work hard. Period. Whether in Kenya, UK, Canada or the USA, they have become solid middle-class (or higher).

2 choices: Sweat Equity or Cash Equity...

Kiyosaki is OK but this is a path for someone who has the money OR has a steady source. In his examples about owning real estate for rental income. You need a down payment then a loan. He emphasises BORROWING but interest rates & lack of suitable lenders makes it tough in Kenya.

All the best!

coldtusker said...

Banks - Do you have a unique skill (I am sure you do)that you can sell or trade?

Many entrepreneurs have a niche they can tap into. Joining the multitudes selling the same thing in the same manner is tough.

Overall, you have to have FUN...

I like JKE's idea of serving an underserved town with products they need but have to far & wide to find!

I might end up in a small (safer?)town where going to work is fun & takes 10 minutes not 1 hour!

Anonymous said...

coldtusker:
just to add to ur comment kiyosaki is in the business off selling books. alot of what he passes of as he's experience is lies

Anonymous said...

ke:

Most of those who attend Kiyosaki's lectures/seminars are looking for "easy" wealth...

The entrepreneurs are hustling for jobs, contracts, etc...

I wonder how much of Kiyosaki's wealth is from books, seminars 7 endorsements!

Anonymous said...

All the best with your venture. A pal started a stall ten years ago, now he is doing 1m+ per weeks in shagz.

bankelele said...

KE & Sijui; venture has not started and no one has been offered the job. But I had mentiond the position to an Uncle who had mentioned my cousin - who has a nice, smart, honest, hard working kid. As a startup I may not have teh luxury of finding the best possible person, just the best available fit

Ichiena: agree about being there for biz to grow, or until systems are in place

Ntwiga; No stock options here - all I can offer for motivation is a salary at a fulfling job that offers an oppotunity to learn & shine.

Nimechoka: Agreed - for a start up, relatives are good workers. But we see problems later when the firm takes off and as a condition for a bank loan, entreprenur is asked to hire a qualified FC (to replace his nephew)

Gish: Well, this would be a variation - not a kiosk per se. But I accept that i'll have to separate business money from my money and not confuse the two on a Friday evening

Pesa tu & Chaka: Thanks, will keep it moving and hopefuly in a few months i'll be able to see whats' on the ground

coldtusker & gerald: I read the first two Kiyosaki books then realised that books were now his main selling products. Like a TV show that runs for many seasons, not because the story is there, but beacuse money & ratings keep coming in

Anonymous said...

Banks - You can read all the books but initially you need to put in sweat equity yaani DIY.

BTW, I saw an amazon ad on your blog for... kiyosaki's rich dad, poor dad!

As you grow then you can put in these "management" structures!

As in everything (except crime), I wish you the best!

bill said...

siple is nice but am of the opinion that it is better to use a relative in a service industry business other than a place you have to buy and sell goods such as a kiosk. the profit margin is small and if the guy is not entirely faithful then he will eat into your capital. i have used acquitances in service industry with success.Otherwise go ahead, you will suceed if you work hard at it.

Anonymous said...

Bankelele,

All the best with your venture.
Good views all round but let's keep it simple. Is the level 1 argument between remote control and hands on? Then as a level two if remote then hire rela?

If so, I ask before I vote. Where is your passion? Do you feel this kiosk or is it just another way to make money?

If it is then you may be better off keeping your job and using this as a practical MBA cum hobby business. If you have a passion for the kiosk and/or a reason to quit work and never look back then you will make it through the hard times.

I am with Chaka on the support. Tutafanya shopping (assuming its that kind of kiosk :-))

Anonymous said...

Oh, there you are, i was beginning to think the kiosk must be keeping you very busy.. get well and God bless.

Anonymous said...
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