THE MAJOR REASONS WHY BIG NNEWI BUSINESSES COLLAPSE SOON AFTER THEIR OWNERS' DEATH

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THE MAJOR REASONS WHY BIG NNEWI BUSINESSES COLLAPSE SOON AFTER THEIR OWNERS' DEATH
THE MAJOR REASONS WHY BIG NNEWI BUSINESSES COLLAPSE SOON AFTER THEIR OWNERS' DEATH



Anayo M. Nwosu


Background

The collapse of business after the demise of the founder is a global occurrence not limited to Nnewi.


I had conducted an indepth 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 my 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 are 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. 


Some businesses have even died before the founders  because they refused to heed advise to innovate or change their methods or processes. 


The founder believes that an old woman does not feel aged in dancing a familiar dance.


6. Unsuitable Education of the Children: It is customary in Igbo land and most Nigerian cultures that the sons or particularly the first sons should take over the management of their father's business once the founder dies. 


This business can continue operation at good levels if the founder had prepared the child for the role.


But engrossed in the business, our people forget to engage the possible successor son to ensure that he understands the secrets of the business.


Some send the son(s) abroad to study without close interaction and before they know it, the guy has developed interest in other areas of life and would not be interested in returning to man his father's business.


My research also revealed that a child who does not agree with the dad may see the opportunity to study abroad as a ticket to freedom. 


He would marry a woman in his host country and stay put.


The worrisome aspect is the case whereby a son is given to enjoyment abroad and returns home with profligate tendency and runs down the inherited company within few years.


7. Mother's Negative Influence: Some mothers swimming in opulence decide to spoil the children as they mature into adulthood  with entitlement mentality and without desire for hard work.


The big man would suddenly find out that his male children are not capable of managing his business and may attempt to give the mantle of leadership to his brothers and this would spark off a war that might even quicken his earthly exit.


8. Non Writing of Will or Acrimonious Contest of the Will : Unless the founder was lucky to have integrated his first son or any of his competent child into his business very early and the child develops good rapport with his/her siblings, the founder's death without a Will is quiet problematic.


A legal contest of the Will by the family members of the dead founder could grind a business to a halt.


Some famous businesses that were the pride of Nigerians are currently mired in this kind of quagmire.


9. Crass Incompetence of Successor or A Curse: The business may fail due to the greed or crass incompetence of the successor who could be the founder's son or a hired hand.


The collapse of the big empire of a man could also be in fulfilment of Proverbs 13:22 that says that "a good man leaves an inheritance to his children’s children, but the wealth of the sinner is stored up for the righteous."

 

RECOMMENDED SOLUTIONS

Nigerian big businesses could outlive and even grow bigger after the death of the founder by adopting what many people had done in other climes.


The following have been tested and have worked:


a) Go Public: The founder of a big business should go public and sell part of his shares to interested members of public. 


Investment bankers and stock brokers can advise on what options to take.


Going public demands a minimum corporate governance structure in the business. The founder is required to put a verifiable management and control structures before his company is allowed to sell shares to the public.


Upon death of the founder, his children can only be contesting for their father's shares while the company is running.


We forget easily that John Holt, A.G Leventis, Julius Berger, were men who set up businesses decades ago. 


Because they did the right thing, their businesses are still alive many years after they have died.


b) Clear Succession Planning: Founder should put in place a smooth succession plan known to the board of directors. If he desires that his son or relation would succeed him, he should ensure that the person must  rises through the ranks or serves under the founder's immediate successor which could be a hired hand to cut his teeth. 


c) Succession Through Competence: The policy of the company should state the required education and other qualifications for all the jobs in the company. This should be known to members of the founder's family. This would make anyone interested to get prepared.  


CUTIX PLC EXAMPLE

The recent Igbo history shall remember one Nnewi man in the person of  Chief Gilbert Ajulu Uzodike (Ozi Uzo Nnewi) for teaching business men from his side of the country the way to do it. 


Perhaps his educational background and work experience shaped his thoughts but he surely existed before his time. 


Ajulu Uzodike invited his friends to become shareholders in a cable manufacturing company he set up at Nnewi. He managed the firm, stabilised it and successfully listed the company on the floor of the Nigerian Stock Exchange and the shares still are actively traded for more than two decades.


Chief Uzodike at a point, even still below the age of 60 stepped down for someone else to manage the company. The company now has had a third successive CEO while founder is still alive and not meddlesome. 


CONCLUSION


We should find a way of impressing on our leading industrialists to change their ways and  to take steps in bequeathing their companies seamlessly to the next generation who can even take them to the next level. 


They must do this because, like all created things, a founder of a business must die but can perpetuate himself by putting in structures in the business that would make his company immortal. 


That's what is called an Enduring Legacy


Who amongst my readers can boldly convince our illustrious Innoson to immediately go public and set up management structures that can make his motor manufacturing business and brand last many years after he is no more like Ford, Toyota, Mercedes etc? Nnewi had buried many international brands with their owners. 


Ọzọ emezịna!


Excerpts from a book titled ORGANISED TO SUCCEED : NNEWI SOCIETY, CULTURE AND TRADITION written by Anayo Nwosu (Ikenga Ezenwegbu)

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