That Business Needs Partnership to Grow

That Business Needs Partnership to Grow

Partnership: We do not do it very well in Nigeria – everyone wants to go it alone. Many years ago, many banks went down despite a fair timeframe from the Central Bank of Nigeria for them to beef up their capital requirements. For most of the owners, “this bank belongs to me. I will always be the owner”. Yes, they ended up owning 100% of 0 as the central bank withdrew their bank licenses the next day.

You may ask: why didn’t the man accept 10% in a bigger bank for his dying bank? In Nigeria, he would look small, owning 10% when 100% is on the table!

Typically, Nigeria is not good with mergers & acquisitions. We like to be 100% in charge. That is bad. From Aba to Kano, Osogbo to Uyo, you would see guys killing visions purely because they do not want to TEAM up and build something greater.

Sure – I get it. We do not trust one another that much. So, if that is the case, there is no clear basis for partnership. Unfortunately, that is a lame excuse. Nigerian legal system is emerging and if you follow it properly, the risks are as what you have in most parts of the world. The problem is that the partnership was done in a beer parlor with no clear responsibilities, rules and defined modalities. Simply, it was created on chaos because it was not done professionally.

Do not be like them – partner with others. But do it brilliantly. To save cost especially in markets where the path to profitability takes long, one of the best ways of managing risk is to share risk, smartly.

The gestation period to profitability in a typical Nigerian startup is long. That long gestation is also the reason why many startups or small businesses collapse few years of founding. Typically, one way to deal with this is to raise capital, ramp up market entry to grow fast enough to attain profitability. But in our extreme volatile economy, if the timing is off by months, the company can collapse. You just run out of cash.

Think about it –if those shoemakers in Aba could tear down those small stores [their design centers and sales offices] and have a big one where they could use division of labour to deepen capabilities and drive process efficiencies, they would make more shoes, improve quality through specializations and possibly make more money per partner. Also, they would buy in bulk and that would improve their unit economics.

Aba shoes sector would grow with partnerships [source: techeconomy]
Sure – men cannot talk at beer joints that they hold the titles of CEOs and Managing Directors post-partnerships in some cases. We like titles – a lot. But we need to understand that they are ephemeral. It is far better for three shoemakers to make progress when one is indeed a CEO, another is focusing on production while the other is driving sales/marketing. While the egos may be muted, the bank accounts will grow. And as the banks see the growing scale, those loans will begin to come in because they are seeing better digits hitting the bank accounts.

People, look for a smart partner, and combine capabilities and resources in what you do in Nigeria. It does not have to be in your city: having someone represent you in Yola, Uyo, Aba while you are in Lagos could save you massive logistical issues.

Make it happen.


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