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BUILDING LASTING BUSINESS CLUBS The Pitfalls, Principles and Investment Options

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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  1. BUILDING LASTING BUSINESS CLUBSThe Pitfalls, Principles and Investment Options

  2. Content • Introduction to Business Partnerships; • Causes for High Failure of Clubs; • How to Nurture a lasting Club; • Intermediary Steps to Equity Partnerships.

  3. INTRODUCTION Importance of Partnerships: 2 Quotes • One relating to a Journey; • One on the acronym: TEAM.

  4. 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..

  5. 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….

  6. 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….

  7. 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…

  8. 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.

  9. HOW TO NURTURE LASTING CLUBS • Put Salient Aspects in Writing • Date; • Contribution, immediate and on-going; • Shareholding; • Witnesses; • Exit Closes; • Handling of modifications.

  10. 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?

  11. NURTURING LASTING CLUBS CONT… • Groom Members on 3 Attributes of Team Players: • I…..; • I…..; and • M…. All others are a welcome bonus.

  12. NURTURING LASTING CLUBS CONT… • Tap into the Strengths of Members • Technical skills; • Time; • People skills; • Contacts; and • Capital.

  13. NURTURING LASTING CLUBS CONT… • Unshakable Commitment • Whatever agreed upon, embrace; • Deliver beyond expectations; • Works when all members have been honest and never over-committed.

  14. 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.

  15. 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.

  16. 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.

  17. 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.

  18. 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.

  19. INVESTMENT OPPORTUNITIES • Qualities of a Good Business Idea; • 7 Sources of Investment Opportunities; • Business Selection Determinants; • Investment Options; and • The Realities.

  20. 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.

  21. 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.

  22. 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.

  23. 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.

  24. 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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