INVESTING WISELY: A PRIORITY FOR BUSINESSES

What comes to mind when you think of starting or growing a business? In most cases, entrepreneurs think of the capital investment required to set up infrastructure, recruitment of the best staff and raising the required working capital to successfully run the business. But a key question is: While most entrepreneurs focus on the available opportunities for their businesses, do they proactively identify and evaluate the things that could go wrong and that could negatively affect?achievement of the objectives ?

Businesses today are encountering a myriad of challenges, including the effects of COVID 19, requiring entrepreneurs to re-think about their ways of operations and be more proactive in managing the various risks businesses faces. It is imperative that entrepreneurs consider their approach to the following non-monetary investments in order to enhance their chances of survival and growth.

1. Understanding the business and players within the industry- A business does not operate in isolation. Its success is dependent upon a complex network of third-party relationships such as Information Technology (IT) companies, supplier engagements, joint ventures and partnerships, alliances and informal arrangements - these are all defined as one unit, the “extended enterprise”. It is imperative to understand the contribution of all the players to the success of the business. In addition, entrepreneurs should constantly evaluate the other forces outside the business that have the potential to influence its performance such as: political, environmental, social, demographic, technological, economic, competitive and legal and take appropriate action to shield the business from any form of negative shocks.

1. Leadership- Leaders influence the organization’s culture, that is, values and beliefs formed about an organization.?Culture is a critical element for the success of an organization’s strategy and its sustainability. As the saying goes, “Culture eats strategy for breakfast” – a poor culture will negatively influence achievement of strategic objectives.?It is important to ask the question, “Is the leadership aligned to the organization’s vision and mission?”
2. Employee engagement- Having employees with the right skills, attitude and motivation is a perfect recipe for the success of any business.?Regular communication with employees is a critical factor in embedding a positive work culture. Employees are the face of the business and should feel charged up with the activities of the organization, take ownership and responsibility of any actions undertaken. ?This promotes a culture of having the customer at the heart of the business.
3. Performance measurement- “What gets measured, gets done.” An organization should have performance targets; income and expenses, cash flows, assets and liabilities, employee and other stakeholders satisfaction, ?against which actual performance can be measured at certain predetermined intervals e.g. ?monthly or quarterly or annually.
4. Operational excellence- Businesses should have clearly defined and documented processes to ensure harmonization in execution of tasks thus facilitating a smooth service flow. It is also important to consider digitizing most operations to enhance efficiency.
5. Stakeholder management- The key to solving the core strategic problem is to understand the firm’s core set of stakeholder relationships. It is the relationships rather than the transactions that are the ultimate source of wealth.
6. Social capital- “Do you know people?” is a commonly used Kenyan phrase. Social capital refers to intangible resources and assets that emerge from social interactions and relationships gained through joining business forums, professional forums or clubs. The resultant goodwill is important for continued business engagements.
7. The execution of the above may appear overwhelming for a business depending on the scale of its operations. It is important for every entrepreneur to perform a self-assessment on each of the above elements and prioritize on execution in a phased approach.

? “In investing, what is comfortable is rarely profitable”

Robert Arnott

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