Small businesses in Nigeria are popularly known with the cliché one-man business, which is quite apt, for the trend among most of the small and medium enterprises over here is for an individual to be the chief executive, the financial director, head of human resources, as well as the facilities manager and much more.

Being a one-man business has its own advantages, like prompt decision-making, personalisation of dealings and fast responses to queries and complaints. All these, though, cannot be compared to the lapses of running and controlling an organisation by just one individual; like they say, a tree cannot make a forest.

What this does is that the quality of decisions in the company would be shallow, due to the lack of a peer review mechanism. Another disadvantage would be the inability to run the day-to-day activities of the outlets or branches independent of the owner, especially in his absence. Nothing serious would go on in the absence of the business owner, even with the aid of technology.

He has to be around for agreements and contracts to be negotiated and signed, for issuing and signing of cheques, for decisions on salary payments, for people to be hired, and for spare parts/huge consignments of raw materials to be procured.

Nothing serious happens without the owner being around to see to it or at least to supervise. The implication is that the business cannot grow or expand beyond the geographic scope the owner can cover at a time. And since humans are not omnipresent, the growth and expansion of the business will be limited and therefore the opportunities and wealth that it can generate.

Sustainability and quality of management are all threatened with this arrangement; under such a centralised decision-making process and most times without any strategic sessions, the decisions and quality of management coming from here surely will be poor. And should anything happen to the business owner, in terms of disabilities, death or loss of freedom, the business goes with it, in that there hasn’t been a preparation for independent operation of the business.

It is therefore important that businesses formalise their operations for both efficiency and sustainability. Structuring and setting up processes in a business organisation would require that you pay attention to the following:

Respecting the separate entity status of your business – by separating your business from your person, in terms of the finances, facilities (real estate, vehicles, operational equipment, like the ICT equipment and tools, etc), human resources, goodwill, and so on. Some people think that because they founded and funded the business, they and the business are now one and the same. Which is not true; the lawyers would say that a business is an independent entity, which can sue and be sued. The public relations practitioners say they assume personalities of their own, which is called brands. Accountants would say it’s an on-going concern. How then would anyone combine the resources of a business with his, simply because he is the owner? These people would dip their hands in the business coffers for personal use and claim, like they would say in Nigeria, “me and my business are one, that if you have seen me, you have seen my business.” No wonder that you can hardly see any successful indigenous business organisation of over 50 years in Nigeria or a trans-generational one of any age.

Also, concentrating all the critical decisions on one person does not allow for the crystallisation of the best of ideas, strategies and implementations. It does not also allow for effective monitoring and control protocol to be adopted. Which affects the quality control in its management, products and organisation’s value and ethics.

Building structures to diversity the operational base, the strategic and management line of the business is a must, if sustainability and efficiency is the entrepreneur’s goal. Many businesses die with the owner because the business has been running only on his promptings and when he isn’t there any longer, the business ceases to exist. The business is the sum of activities that generate the money, but organisation is what sustains it. It is therefore important for the entrepreneur to understand the development process of an organisation and to know that it’s the organisation that is transferable to the next generation and not just the money. One of the major reasons inheritance in form of money does not last is that it’s not earned and therefore it’s so difficult to endure, due to the beneficiaries’ lack of sustainability capacity.

Establishing processes and procedures – which is the operating standard or set standard of operation in the organisation. This is a defined way and method of doing things and carrying out operations and activities in a specified place. This makes replication easier for operations, thereby making it easier for branching out, as well as franchising. It also makes delegation easier and monitorable, so with benchmarking of performance, operational audits and compliance monitoring.

Developing growth plans must be factored into the entrepreneur’s business model, in order to know which strategy and combinations to adopt in the business growth plans, whether it will be linear or organic, or even a combination of the two. He will have to choose its target market and determine the approach of reaching them and optimising the opportunity. Would he go for the niche or the mass market? Is he going to serve luxury or convenience items? How about targeting margin by turnover (volume driven margins) or unit sale (profit on unit sale)?

These will all determine the marketing and sales strategy, as well as the business model/architecture, the business location, pricing and the ambiance of the shops/offices. Establishing market strategy is very important, in that it defines the concept of reaching out to the target market, the market penetration model, pricing and cost outlay and ultimately achieving your market share.

Establishing sound leadership selection procedures for the recruitment of the line managers is a very important process of establishing effectiveness in business operations. The entrepreneur must have to develop a sound method of picking leaders for his organisation, he will either develop them organically in house, or he head hunts, whichever way, for effectiveness and efficiency in management; sound, trained and tested drivers must be hired to stir the ship of the business to the desired goal. In all synergy, command and control structures, must be well in place and oiled for effective business operations, though it’s said that vision cannot be delegated, it has to be sold to loyal associates for synergy and fulfillment of dreams.

God bless and see you next week when we’ll start a three-part series on “An Entrepreneur’s Look at the 2016 Appropriation Bill”.

•Lawrence Nwaodu is a small business expert and enterprise consultant, trained in the United Kingdom and the Netherlands, with an MBA in Entrepreneurship from The Management School, University of Liverpool, United Kingdom, and MSc in Finance and Financial Management Services from Rotterdam School of Management, Erasmus University Netherlands. Mr. Nwaodu is the Lead Consultant at IDEAS Exchange Consulting, Lagos. He can be reached via nwaodu.lawrence@hotmail.co.uk (07066375847).

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