The collapse of business after the demise of the founder is a global occurrence not limited to Nigeria.
I had conducted an in-depth research, while during my postgraduate studies and in the course of my banking career, on the main causes of this phenomenon.
My findings may be well known to the readers. I shall also be recommending measures to stem this preventable occurrence.
My privileged position as a finance person has afforded me numerous opportunities to meet a lot of Nigerian business persons of who were from home town of Nnewi and some my relatives.
It is heart rending to see a renowned business empire collapse soon after the death of the founder.
There were many businesses that were the pride of a town, state and a people that have now become history because the men that started the businesses either died unexpectedly or even at a ripe age.
There are many successful businessmen especially of Igbo extraction who are still living but have continued to make the mistakes made by the bourgeoisie before them and whose big empires would most likely end up the same way.
This has to stop!
CAUSES OF THE COLLAPSE
The following could be said to be some of the reasons why the businesses of rich Nigerian men don’t outlive their founders:
1. Personalization of the business by the founder: Most successful business men started small and worked so hard to grow their businesses.
Some of them even answer their company’s names instead of their personal names. They are usually the sole signatories to all the companies’ accounts.
They confirm all payments.
There is no problem with this if it ends here.
However, in most cases, the founder begins to assume that he is the same as his business. He would refuse to put structures in place to drive the business. He does not separate his personal expenses from that of the business.
2. Lack of Organisational Structure: Flowing from the personalisation of the business operations, the founder would refuse to put a proper management structure in place.
Proper structure in business means creating functions and hiring competent staff with clear job description to man those functions.
Examples of structure include: Accounts, Internal Control, Audit, Marketing, Admin, HR, etc. It also entails creating levels of management e.g Board of Directors, Executive Management and Heads of Departments.
It also demands having clear policies on how the business of the company is conducted.
The founder of a typical big Nigerian business would surround himself with incompetent personnel, mostly relations who specialise in gossiping with great propensity to feed fat from the company.
This group of people quickly milk the company dry whenever the founder is terminally sick or dead.
This incompetent group ensures that the founder does not define roles or hire experienced administrators who could help organise the company. They would instigate the sack of any manager in the company that dares moot the idea before the founder to put a proper structure in place.
3. No Clear Succession Plan & Founder’s Feeling of Immortality: Many of our successful business men deceive themselves and have refused to learn from history. They think that they would never die.
Some of them spurn the idea of writing a Will or training a successor. They don’t see any competent person in their children or staff and carries on in self-delusion until death calls.
And the cookie would crumble.
4. Resistance to Diversified Ownership: Many of our rich business men are egocentric. They have no temperament or sense of beneficial charity to share profit with anybody as longer they, the founders are key to the success of the business.
The list of directors filed at Corporate Affairs Commission is merely for registration purpose. The directors on form C07 are usually members of his family.
There is no real board member as the founder is same as the board and management of the company.
The absence of a good board with equity in a big company is a serious threat to the sustainability of that company.
Two good heads, they say, are better than one.
5. Refusal to Modernise or Embrace Technology: Some big companies that refuse to read the trend and modernise their operations shall surely die.
Due to lack of competent management team and advisory board, a one-man managed big business cannot read the trend of his business well all the time and can be run out of business or become obsolete or out of tune with the market. It can happen so soon.