5 key management aspects that kill most SMEs in Africa

Fon Noel Nfebe 2017-07-24 Business

Many African business are failing or barely surviving, people get engaged into businesses and run them without any caution or care. There are situations where a business is neither making  profits or loss for years and the owners just keep "surviving" like that. Worst,  in some cases these businesses make huge loses and eventually stop existing. Dohmatob Cyril Gevala CEO of Extended Limits Inc a company providing expert solutions in accountating, business planning and business intelligence has from his pool of experience in helping these businesses, identified some of the key aspects killing African SMEs, and made this write-up, here we go!

1) Poor Financial Management

Financial management is the engine of every business. Most SMEs in Africa are owned by 1 person. This allows them to manage their business’s finance from their pocket. Most don’t separate their Business finance from personal finance and so it becomes difficult to manage the Business finance. Given that they don’t put themselves on salary for running the Business, it permits them to periodically just withdraw money from the Business at regular intervals. When they have problems, they easily jump into getting money from the Business without measuring the effect of such action. This consequently leads to overdrawing of the capital in most cases. The second problem include; not having a periodic budget that guides financial decisions. Because they don’t develop a budget before spending, it becomes sometimes difficult to properly prioritize spending and this consequently could easily strain the cash flow of the Business. Also, they do not evaluate the financial performance and use it to take decisions. You can only know what to draw as profit if you know how much profit the Business has made, and if you don’t have a proper measurement system, it becomes difficult or impossible to know which amount is right to withdraw. Businesses are supposed to build cash reserves. Without profit measurement, this reserve is not build and so the business easily face difficulties in periods of losses.

2) Poor Marketing

Most of these Businesses do not properly brand their companies or product. Branding is the perception you build in the mind of your clients about your product. Without a proper brand, you find difficulties in gaining credibility in the eyes of clients or prospects. Without a proper brand, it becomes very easy for people to copy your product and kick you out. The next downside is Poor customer service or CRM. This is very predominant with service businesses. Without a good customer service, you can’t retain customers and grow the customer base of your Business. Another problem include; not putting in place clear marketing strategies or even evaluating the marketing performance and making decisions from that. To properly market, you need to research and identify client’s needs, clearly define marketing objectives which determines the strategies you need to develop. At the end of the day, you have to evaluate the effectiveness of this strategy and modify where necessary.

3) Poor Vision and Planning

A vision is what guides the actions of the business. Most SMEs here do not clearly map out their vision, they don’t use it to guide their actions. Planning is very essential in every Business. Most of them don’t even know what a Business plan is not to talk of using it as an ongoing tool to guide the management actions of the Business and by so doing, things happen by chance in the life of the Business. It becomes worst when most of the staffs are disconnected from this vision or plan, so their only motivation is the money they get at the end of the day, and not contributing to a bright future for the company.

4) Poor HRM

Most of the Business don’t recruit based on needs nor recruiting the required competent staffs. They practice a lot of tribalism and nepotism, so recruitment is usually on the basis of friends or relatives and not regarding their competence whether it matches the skills required to execute the job. Most don’t invest in the growth of the employee. Growth here include periodic trainings to develop the skills of the staff. In addition, they don’t border about employee motivation. This generally leads to poor performance of the staffs and so negatively affects the growth of the business.

5) No System for Business Operations

Most businesses are usually just about the owners, so when the owners are not around, the business falls. Without a proper system, it becomes almost impossible to scale the business. Overall willingness to learn, improve and change. If we even think of succeeding in Business, we have to seriously consider these points

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