Building lasting business clubs the pitfalls principles and investment options
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BUILDING LASTING BUSINESS CLUBS The Pitfalls, Principles and Investment Options. Content. Introduction to Business Partnerships; Causes for High Failure of Clubs; How to Nurture a lasting Club; Intermediary Steps to Equity Partnerships. . INTRODUCTION. Importance of Partnerships: 2 Quotes

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BUILDING LASTING BUSINESS CLUBS The Pitfalls, Principles and Investment Options

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Building lasting business clubs the pitfalls principles and investment options

BUILDING LASTING BUSINESS CLUBSThe Pitfalls, Principles and Investment Options


Content

Content

  • Introduction to Business Partnerships;

  • Causes for High Failure of Clubs;

  • How to Nurture a lasting Club;

  • Intermediary Steps to Equity Partnerships.


Introduction

INTRODUCTION

Importance of Partnerships: 2 Quotes

  • One relating to a Journey;

  • One on the acronym: TEAM.


Causes for high clubs failure rate

CAUSES FOR HIGH CLUBS FAILURE RATE

  • Rushed Decisions

    • Originator of idea is more informed than the other and is in a hurry;

    • Assuming timing is suitable to all parties;

    • No regard for the Person’s on-going investment programmes;

    • Originator of idea hardly has other options;

    • Remember Ugandans are ‘NICE’ people..


Why high failures cont

WHY HIGH FAILURES CONT…

  • Forgetting that Clubs are Timeless

    • Equity positions are generally long-term;

    • No explicit agreement on handling exit;

    • No provisions for rewarding of additional efforts/contributions of club members;

    • No agreement how to involve relatives;

    • Remember character sealed when….


Why high failures cont1

WHY HIGH FAILURES CONT…

  • Mulwana’s Point of View ……

    • Africans have communal instinct for poverty;

    • If all are poor, tend to work well;

    • Once success comes, greed sets in – seek to eliminate your partner;

    • Success amongst partners must remain equal even outside business;

    • Remember: In a club a partner is in the kitchen….


Why high failures cont2

WHY HIGH FAILURES CONT…

  • Socially-based Choice of Partners

    • Share(d) school, religion, social joints;

    • Belong to the same tribe, clan, family, social status;

    • Grew up together, an acquaintance;

    • A quote on business and friendships;

    • Remember: Wealth does not know its…


Why high failures cont3

WHY HIGH FAILURES CONT…

  • Biggest Driver is Capital Contribution

    • Blinds one to other realities;

    • Determination of leadership done informally;

    • Bitterness soon after the reality dawns;

    • Remember: Investment clubs promise economic gains to their members. These call for more than just capital.


How to nurture lasting clubs

HOW TO NURTURE LASTING CLUBS

  • Put Salient Aspects in Writing

    • Date;

    • Contribution, immediate and on-going;

    • Shareholding;

    • Witnesses;

    • Exit Closes;

    • Handling of modifications.


Nurturing lasting clubs cont

NURTURING LASTING CLUBS CONT…

  • Members Should Mirror Each Other on Key Aspects

    • Financial Expectations e.g. cash flow needs and financial discipline;

    • The vision for the club;

    • The common values; and

    • If divergent/conflicting can you cope?


Nurturing lasting clubs cont1

NURTURING LASTING CLUBS CONT…

  • Groom Members on 3 Attributes of Team Players:

    • I…..;

    • I…..; and

    • M….

      All others are a welcome bonus.


Nurturing lasting clubs cont2

NURTURING LASTING CLUBS CONT…

  • Tap into the Strengths of Members

    • Technical skills;

    • Time;

    • People skills;

    • Contacts; and

    • Capital.


Nurturing lasting clubs cont3

NURTURING LASTING CLUBS CONT…

  • Unshakable Commitment

    • Whatever agreed upon, embrace;

    • Deliver beyond expectations;

    • Works when all members have been honest and never over-committed.


Nurturing lasting clubs cont4

NURTURING LASTING CLUBS CONT…

  • Work it out: partners are not angels

    • Members are products of their past;

    • Look at each one’s positive side;

    • Honour and respect each other;

    • Manage conflicts, they are normal;

    • Be prepared to lose part of your identity;

    • Absorb positive criticism;

    • It is a mutual mentorship; and

    • Limit number of partnerships.


Nurturing lasting clubs cont5

NURTURING LASTING CLUBS CONT…

  • Maintain Open Communication

    • Talk about all concerns/aspirations;

    • Listen; value each others’ opinion;

    • Have time for club members alone;

    • Discuss all members’ views openly;

    • Pick non-verbal feedback; and

    • Involve third party, but infrequently.


Nurturing lasting clubs cont6

NURTURING LASTING CLUBS CONT…

  • Celebrate and Mourn with Each Other

    • Stick with a member at his/her dark times;

    • Pass the ultimate test of true partnership;

    • Talk well about each other to non-partners;

    • Know the limits of courtesy.


Nurturing lasting clubs cont7

NURTURING LASTING CLUBS CONT…

  • Watch effect of families, relatives and staff

    • Limit discussing negative aspects of a member with your families/relatives;

    • Beware relatives’ advice and judgement are difficult to ignore;

    • With staff, toe the official communication channels;

    • Be wary of informalities when bringing in relatives to the business.


Nurturing lasting clubs cont8

NURTURING LASTING CLUBS CONT…

  • Walk away from Irreconcilable relationship

    • Let go irredeemable partnership;

    • Reward each other fairly;

    • People are people, they can change;

    • Remember 3Rs when in difficult choices;

    • No name calling, please!!!; and

    • Keep the lessons.


Investment opportunities

INVESTMENT OPPORTUNITIES

  • Qualities of a Good Business Idea;

  • 7 Sources of Investment Opportunities;

  • Business Selection Determinants;

  • Investment Options; and

  • The Realities.


Qualities of a good business idea

QUALITIES OF A GOOD BUSINESS IDEA

  • A good business idea is based on:

    • A Product/Service customers want;

    • A product/service one can sell at a price the customers can afford and still give you a profit;

    • The knowledge and skills you have or can acquire; and

    • The resources and money you possess or can acquire.


Sources of business opportunities

SOURCES OF BUSINESS OPPORTUNITIES

  • 7 Sources of business opportunities:

  • One’s skills – education, work experience;

  • One’s hobbies – sport, music, cooking etc

  • Entrepreneurial insight;

  • People’s needs – basic;

  • People’s problems – floods, famine, disease

  • Under-utilized resources - land, equipment

  • Complaints against existing providers.


Selection determinants

SELECTION DETERMINANTS

  • Selection depends on a combination of the following factors:

    • Background of Club Members i.e. health, education, work experience, families, hobbies, and environment they grew up from;

    • Proposed location of the business;

    • Investment capital;

    • Raw materials availability;

    • Proximity to a market; and

    • Government policy.


Investment options

INVESTMENT OPTIONS

  • Deposit/term accounts with banks;

  • Traded Shares;

  • Non-listed shares/own business/JV;

  • Bonds;

  • Venture Capital Projects;

  • Real estate;

  • Precious metals and gems;

  • Mixture of the above.


Realities

REALITIES

  • It will be difficult before it gets easier;

  • As the Club income grows, expect new unexpected challenges;

  • Watch the founders’ syndrome;

  • All members must remain willing learners to outlast the ups and downs;

  • People are wired to detect unfairness;

  • Some members may outlive the Club and strike out on their own. So be it.


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