A podcast from the SME Leadership show on CliffCentral.com where Richard Angus and Adriaan Groenewald chat to Prof. Shirley Zinn about Talent Management.
Michael Sedge, president of Michael Bruno LLC, a construction business based in Delaware, USA, was approached by a NAFVAC programme manager a few years ago. “We could really use a good design and construction firm,” he said. “Would you consider going to Djibouti?”
“I looked at him and asked, ‘D-Ji-what?’” says Sedge.
Eight years later, he is being asked to establish and head the American Chamber of Commerce in Djibouti, his firm having run almost 80 successful projects in countries such as Ethiopia, Ghana, Kenya, Rwanda and Tanzania. Sedge offers some fascinating insights around the potential difficulties of expanding your business in Africa. We have taken those insights and offered ideas around how to overcome them. Our approach advocates using an ‘Africa finance manager’ to help you get this right.
The process of attracting tenders differs vastly from one country to the next
Sedge’s line of work has involved completing projects for the US military in places like Afghanistan. He observes how many companies have successfully won tenders there and then failed miserably when trying to apply the same principles in Africa. “Many have experience and past performance, but unfortunately they have misconceptions and misunderstandings about how to practically and legally position themselves to receive and execute government awards in Africa,” he says.
Your Africa finance manager should provide a solution. As part of their preparation for the role, your Africa finance manager should spend time understanding the tender process in your host country. This will require them to have a sufficient understanding of the legal, political and financial processes around securing a bid. Knowing the complexity of the process in South Africa, you will appreciate that this role, if executed well by your Africa finance manager, will act as an invaluable platform for business strength in your new host country.
Logistics are complex and highly changeable
Whereas you may be used to relying on a stable infrastructure or postal service (perhaps not the latter if you’re based in South Africa!) to get your goods from one point to another, logistics in your new host country will be a completely different matter. Every country in Africa offers a new set of challenges in terms of infrastructure, transport costs and warehousing facilities. Your Africa finance manager needs to provide you with a realistic picture of what it will really take to get your goods from A to B. This will be impossible to do without having on-the-ground experience. Once they have a proper handle on that, they will provide you with a realistic cost analysis. Having your Africa finance manager carry out this function will mean more accurate planning before you enter the new market, less frustration when you inevitably face logistical hiccups you aren’t used to, and a better sense of the margins you can expect.
Cultural and environmental issues have a cost impact
“Cultural and environmental issues are often overlooked when one is putting together their budget and schedule in Africa,” says Sedge. “Yet they play a major role in both.”
His example: “In 2007 and 2008 we managed a $10 million design-build project in East Africa. It did not take long to realise that trying to make progress in the construction during Ramadan [a month of fasting observed by Muslim worshippers] was a futile act. By the time labour entered the base each morning, went through their traditional prayer, they had to rest due to fatigue from not eating or drinking—the delays and risk of accident out-weighed the little progress.
“We were ultimately forced to stop work during this religious holiday—a factor that had not been considered in our schedule.”
The solution: Make sure you appoint an Africa finance manager who has worked in the new country before, and include them in your planning early. When mapping out your calendar year and costs, your Africa finance manager should have a sense of the cultural implications for the cost and timing of your project. Will the Easter period mean several long holidays and an interrupted work period? Is there a hurricane season that could affect production or require more insurance? You Africa finance manager should anticipate the things you can’t, and communicate how they’ll affect the bottom line.
Just like Sedge, when entering your chosen market in Africa, it will be impossible to know what you’ll face. There will be cultural complexities and bureaucratic hurdles. There will be logistical challenges and surprises. Appointing a seasoned Africa finance manager will help you face this new step with a sense of excitement rather than trepidation. Speak to The Finance Team to find out how our qualified, experienced associates can assist you on a part time or interim basis.
The panel chats with Belinda Young, HR Director of The Unlimited – winners of Deloitte’s ‘Best Company to Work For’ in the Small Business Category for three years running.
American musician and songwriter Frank Zappa once said: “Without deviation from the norm, progress is not possible.” For many companies, that progress comes by looking for ways to expand. It’s tapping into growth opportunities as they present themselves, and learning whether they’re right for your business. For many South African companies, it means weighing up the current growth opportunity on the rest of the continent. Often, it means taking a decision to grow into Africa.
If your company has decided to take that leap, the next steps often seem overwhelming. How do you determine where to expand, how receptive the market is, and how to set up operations? Business owners often doubt whether they have sufficient insight into the new market to understand whether setting up shop is indeed a good idea. For this reason, you’ll probably consider bringing on a project manager to assist you in this quest. This person will have the skills and time for the successful planning and execution of an expansion project. He or she will be integral to the process. At the same time, we recommend that you bring on a project accountant as part of your management team. This role is not often emphasized in the same way that a project manager may be, but we’re of the firm belief that it is just as integral. Your project accountant will partner with the project manager in providing a firm foundation for expansion into the continent. They will help ensure that your company expands into the right part of Africa at a time that will ensure maximum returns and minimum risk for your business. If you’re wondering how they’ll do that, here is a list of ways.
A project accountant helps you get a realistic idea of your future returns
The first step to any expansion venture involves taking a long, hard look at what returns your investment might yield. Your project manager might have a good idea of your product and the market you’re entering. Your project accountant has a handle on both of these, and understands the numbers as well. The two of them should work together on the inputs. Your project accountant will then determine timelines around expected margins, profit levels and give you an idea of how many years it will take before your investments start to yield returns.
A project accountant helps you understand the risk you’re undertaking
A project accountant brings together an understanding of the competitive environment you will be facing, the buying power of your target market and the economic environment you will be entering. Considering those factors together, he or she will give you a feel for the risks you’ll be taking on in the new market, before you enter it.
A project accountant helps you understand the cost implications of your project upfront
It goes without saying that expansion is a costly endeavour. It helps to get a realistic picture of how much the project will actually cost, rather than having a nasty surprise at the end of the quarter or when your project manager reports back. Get a feel for how much things will really cost so that you can plan for dips in cash flow and ensure you have adequate savings before you execute your expansion plans.
A project accountant will help provide insight into how efficiently money is spent
A good project accountant will track how each cost centre on the project is performing. She’ll be able to pinpoint where money is being used well and where it seems to be presenting low returns. Not only will this enable better management of the project, it provides useful hindsight for the next venture.
Your expansion project into Africa will be both exciting and stretching. It has the potential to be the start of something extraordinary, or something that can act as a drain on the company coffers and ultimately fail. To ensure your venture is a success, have the right financial leadership on your side. Contact The Finance Team to find out more about our team of interim and part time project accountants to help you do that.
In the movie Mona Lisa Smile, 30-year old liberal arts graduate Katherine Watson (played by Julia Roberts) takes up a position teaching the “history of art” at a snooty conservative arts school in Massachusetts. On the first day, Watson discovers that her uppity students have already memorized the entire syllabus from the text book. Since her students already know all the theory, Watson takes a different approach. She embarks on an effort to allow them to understand art in a new way, introducing them to modern art, allowing them to touch the pieces, debate their meaning and paint their own compositions. Watson’s approach brings her into conflict with the school’s head, but the results speak for themselves: at the end of the year her students graduate with flying colours and describe her influence as one that has compelled them “to see the world with new eyes”.
It’s a fairy tale story, but it contains a moral that is applicable to decision-making in the business world. If your company is already doing everything “by the book” but you’re not seeing the success you want, it’s time to bring in some new energy and a different perspective. For this, consider a strategy consultant. Here are four ways a strategy consultant can revitalize your business.
A strategy consultant provides knowledge that doesn’t exist in the business
If you need to better understand your environment, your competitor or the way technology will change the future of your business, bring in someone who specialises in knowing these things. Giving your company a knowledge injection will bring the thrill of learning something new – and the benefit of being able to apply that knowledge, of course.
A strategy consultant can validate ideas that have already been created in the organisation
This suggestion is given by business consultant Lee Iwan. In Mona Lisa Smile, one of Watson’s students dreams of becoming a lawyer. Watson encourages her to pursue her passion: she enrolls to Yale Law School and is accepted. Sometimes all you need is someone to push you in the right direction. For example, your senior management team might have been brewing something for a while. The idea seems like a good one, but you need another vote of confidence before you can take that leap of faith. Your strategy consultant can provide this for you. He or she can be a sounding board, give the go-ahead where applicable, or help you to rework your ideas into something that will help the business fly.
A strategy consultant can provide external change force (or ‘political cover’)
According to managementconsulted.com, “it can be hard to do what’s right – particularly when it comes to job layoffs, salary and benefit changes or reductions, and major operational and strategic shifts. Hiring strategy consultants can be a way to reach the desired conclusions with sufficient political cover in case certain parties are unhappy”. In other words, your strategy consultant can help you do the dirty work, and as an external party, more easily shoulder the blame for unpopular – but necessary — decisions in the business.
A strategy consultant can catalyse and facilitate the ideas process within the organisation
In Watson’s class, the students discovered artistic abilities they never knew they had. These skills were lying dormant and merely required someone to help unleash them. Similarly, the collective experiences and ideas within the company can be ignited to produce something powerful – if someone skilled is able to light the flame.
A strategy consultant acts as a soundboard
Is your company considering creative or innovative offerings to grow its revenue, market share or distribution channels? If so, use the advice of an expert to determine whether your ideas have legs. The result will be growth in the areas you want it, and cost savings in the areas where you could do without it.
All companies get to a point where they need to do something different in order to bolster growth, overcome hurdles or conquer competitive activity. At times like this, a strategy consultant can be a powerful force for change. Contact The Finance Team to find out more about receiving ad hoc, interim or ongoing strategic assistance that can help your business see the “world through new eyes”.
Adriaan and Louis Groenewald, together with Richard Angus, speak with Andrew Butters of ‘Pretty Much People’ and focus on how to find the best people.
Whether you’re a Human Resources manager or a small business owner, the task of hiring is one of the most daunting, and risk-laden aspects of your job. Author and business owner Gene Marks puts it this way: “No matter how much work you put into it, no matter how many interviews you conduct, no matter how many books you read about the process, in the end it’s still just a leap of faith.
“You can minimize the risks and try to weed out as many inferior candidates as possible. But, whether you’re the human resources director at a Fortune 500 company or a small business owner, you never really know for sure if this person is going to be the right hire or not.”
As the chief executive of a consulting company that focuses on pairing up part time financial managers and finance executives with companies that need them, I’ve gleaned some insight about how to increase your odds of getting a good hire in the finance department. Here are a few tips below.
Have at least two or three people interview your candidate
A part time financial manager will be an integral part of your management team and need to collaborate well with several other department heads. Don’t let the hiring decision rest on only one person’s opinion. Marks suggests bringing on an outside advisor as part of the process too. “Getting insight from others, particularly those that have no personal agenda, will help you round out your opinion of the candidate.”
Get someone qualified to ensure they have the technical skill base you need
When hiring a part time financial manager, you should start off being comfortable that their technical skills are already there. At this level of management, an understanding of the numbers and the institutional frameworks surrounding their profession is a must. However, it’s impossible to know whether these skills are there if you don’t have them yourself – and if you did, you would be doing the job, not them! So enlist the advice of an experienced Chartered Accountant or a similar professional to get a sense of their level of insight.
Find someone with a passion for the details
Financial oversight requires an unusual combination of skills. Your part time financial manager will need to be able to think strategically and grasp the bigger picture. But, because they’re dealing with numbers, they’ll also need to have an eagle’s eye for detail. You’re looking for the equivalent of someone who would be willing to spend an hour looking for the missing word on the crossword puzzle.
Look for someone with the ability to translate financial jargon
Your part time financial manager has arguably one of the most important communication roles in the company. Not only must they understand the numbers, but they must be able to tell non-financial colleagues what they mean for the business. Use the interview to get them to explain a few financial scenarios – and see how clearly they are able to do it.
Stick to a shortlist of criteria
In some ways, hunting for the perfect part time financial manager is like hunting for a life partner: you’re never going to find the perfect spouse, and if you did, they probably wouldn’t be interested in you! So decide on a few non-negotiables and stick to them. Whether it’s a certain qualification, experience in a certain area or a particular management style, use these as your weeding tools as you search.
Don’t underestimate the importance of personality
Your part time financial manager will need to embrace your corporate culture and work within it. He or she will also be working with you! Be honest with yourself in this area. The part time financial manager candidate may have the most convincing CV in the world, but if you’re going to find them intolerable to work with, you should go with someone else.
Above all, remember you don’t need to undertake the task of finding the perfect candidate by yourself. The Finance Team can guarantee the experience and qualifications of our associates, and provide you with suitable candidates to interview to make the search an easier one. Contact us to find out more.
Got mates? Research has shown that the biggest source of financing for small business owners is friends and family. But sometimes that well is running dry, or the nature of your financial need has outgrown what your acquaintances can offer you. Whether you’re starting up your business or expanding, there are certain times in the life cycle of every company when you look to attract finance from the formal sector. Here are some things to bear in mind as you go about it.
Consider bringing on a part time CFO to help you attract the finance you want
In order to convince banks that your company is worth lending to, you need to speak their lingo. Hire a part time CFO or equivalent to help you get the documents together that tell a compelling financial story about the business. Not only can this person help ‘write the story’, they can also ‘sell’ the company to future investors.
Identify your collateral
This is one of the first laws of finance: your financial institution needs assurance that, if things don’t go the way you expect, there will be some way of getting their money back. Your part time CFO should spend some time evaluating your collateral and determining what can be offered to the bank to the value of what you are hoping to borrow. This could come in the form of property, equipment owned by the business, or existing savings. The Small Enterprise Development Agency (Seda) makes this observation: “The smaller your business, the more collateral the bank will demand, because you are perceived as a high risk. Ironically, of course, the smaller you are, the less collateral you are likely to have.” Now could be the perfect moment to call in favours from friends or family members – they might not have money to lend you, but could own property that they would allow to stand as guarantee.
Prepare a detailed business plan and presentation
By this stage, you’ve likely already put together a business plan. But your part time CFO should spend some time drilling into the details. Banks and other lenders will want to know how much you need to borrow, when and why.
Have your part time CFO play the part of the banker or loan officer, and interrogate your business plan. He or she should criticize where necessary and ask you to motivate for your decisions. Once you can confidently hold your own in this setting, you’re more likely to feel comfortable and prepared when you meet with the real lenders.
Get your eggs into as many baskets as possible
Apply to several institutions at once. The review process is lengthy and tedious, so you can’t afford to apply to your lenders one at a time. You’ll notice similarities in many of the loan application processes, but enlist the assistance of your part time CFO to make sure you spot the differences too. Take the time to write out a strong motivation upfront – this could favourably predispose the decision-maker to your request.
Think wider than banks
In today’s tough economic environment, small business divisions in banks are becoming more and more picky about who they award loans to. So, the big banks are the obvious place to start, consider other options, listed below:
- Enterprise Development programmes. Many big corporates have begun to fund small businesses as part of their Black Economic Empowerment (BEE) requirements. Have your part time CFO take a look at your black ownership and turnover in order to see if you qualify for assistance from such an organization. Generally, if your company has 51% black ownership and a turnover of less than R50-million you could qualify as a beneficiary.
- Government-mandated small business loan organisations such as SEDA and the National Empowerment Fund also provide funding to qualifying businesses. Your part time CFO should determine whether this is an option for you.
- Venture capital funds. Investment companies that see potential in good businesses will trade equity for a share in the business. If you’re considering this route, your part time CFO should delve into the suggested terms of engagement. Ensure this is a partnership that you can live with in the long-term.
If your business is looking to attract funds and you need the help of a professional to do this, get in touch with The Finance Team. Our finance executives can provide you with interim or part time assistance according to your needs, and help you secure the money to grow.
The African growth story is an exciting one, dotted with giant forward leaps and unexpected dips. It holds the thrill of an under-exploited market, and represents huge diversity that is still shrouded with mystery for many. Many international brands choose South Africa as a springboard for growth into the rest of sub-Saharan Africa. Over the past year, Hilton Hotels, Airbnb, Cotton On, H&M and Forever 21 have been just a few of the mainstream international brands making an entrance into the continent via our shores. Theoretically, this means companies like yours — that were founded and established in South Africa – are one step ahead. Already successful in the South African market and more familiar with their neighbours than non-African entrants, many SA-founded companies are perfectly poised for expansion into the rest of Africa.
However, it only takes one attempt at doing so to realise that this is no light undertaking. The first lesson to learn is that categorizing the “rest of Africa” as a homogenous ‘other’ is a foolhardy mistake. Every African market is vastly distinct from its peers, and it takes expert insight to understand the market you’re entering. At times like this, an interim financial executive can act as a subject matter expert and partner during the expansion process. Here are some of the insights an interim financial executive can offer as you weigh up the possibility of expansion in Africa.
Understanding the GDP
Anyone can google the GDP of an economy, but your interim financial executive will know what the numbers mean for your business. For example, Nigeria, with its Gross Domestic Product of $522-billion has recently officially overtaken South Africa’s GDP $351-billion to bag the title of having the largest GDP in Africa. Does that mean your company’s market would be more buoyant in Nigeria than SA? Not necessarily.
South Africa’s wealth per capita is double that of Nigeria, at $6 600 per capita here versus just over $3 000 in Nigeria, according to World Bank 2013 figures. Your interim financial executive can further help you understand the cost of overcoming infrastructure and transportation limitations in your host country. Understanding the GDP means knowing how likely people will actually purchase your product in the new country, not just how much money is collectively amassed in the country.
Understanding who the big players are in the new country.
Your interim financial executive can help you know who is already established in your space, how long they’ve been there for and what they did to get there. Knowing your competition – and how they prosper – is key to your own strategy and survival plan.
Knowing the labour market.
Your interim financial executive can research and help you understand things such as wage and salary trends, and what they mean for your business. Assuming that you will be able to find and attract the right talent in your new host country, how much will it cost you to keep the human resources you need? Can your company afford to pay employees what they will expect to receive, in light of operational and capital costs? Your interim financial executive will be able to analyse these possibilities and answer these questions.
Becoming au fait with tax requirements.
If you thought doing tax in South Africa was a headache, try navigating a completely different set of tax requirements in a foreign country where the system is likely much less sophisticated. Your interim financial executive will make it his job to get to know the ins and outs of the system, what the reporting requirements are, how your company needs to comply, and when.
The nuances around paying employees and suppliers.
In South Africa, you may be used to a “30-day from invoice” expectation with your suppliers. In the new host country, suppliers may demand cash on delivery. You might be used to paying employees via bank transfer, whereas your host country may require cash payments for many of your workers. Your interim financial executive will get to know the local way of doing things, and help gear up your company with the right systems, processes and checks to make this work.
Expanding into the vastly under-explored continent of Africa is both daunting and bright with opportunity. With the right partners assisting you, it can be part of a fulfilling and successful endeavour. Contact The Finance Team to find an interim finance professional who is willing to travel with your company and become your sounding board and partner as you take the leap.