Cash is king

Somali business folk must understand that when in Rome they must do as the Romans do. This is a vital lesson. In Somalia it was easy to lend to your neighbour or long term customers and trust them to pay on time when agreed. Even without much written law, customs are strong and bind an entire community together. The respect of an individual depends on their ability to honour their obligations and debt. Unlike going bankrupt in England and America, once the business community has lost faith and trust in a person or group in Somalia, they are ostracised by everyone else.

Advertisements

The investment climate is not yet right for foreign investors to gamble on Somalia

Investing in a conflict zone like Somalia can be suicidal for global businesses even if the rate of return for their faith is higher. There is the need to worry about Corporate Social Responsibility, staff security, eruption of spontaneous violence, poor infrastructure and no legal recourse if things go wrong. Moreover, in the absence of widely available opportunities and political voice, together with corrupted leaders that embezzled seven out of every ten dollars they received according to a UN report published in July and strong presence of Al-Shabaab, people have come to rely on their tribes for security, protection and welfare. As a result, it would be very hard for both local and foreign investors to just set up a business in a certain region, bring their chosen staff and get on with their business without employing local tribes men in key posts even if they lack the qualifications and experience. Where they do decide to employ locals, investors may have to make enormous investment in the education and training which can deter even those with the deepest pockets.

Poor staff retention is driving away customers

The staff turnover is exceptionally high because of the over reliance on family members and friendships networks to find employees. The perceived benefits for employers is that the informal relationship will help their business grow and avoid red tape as most of the employees would be employed on part-time self-employed basis. This perceived advantage is the real problem that hampers ethnic business development and growth.

Many businesses are making workers redundant in response to the global financial crisis. The argument has been that because of poor sales brought about by weak consumer spending and confidence, the high cost of employing and retaining staff is no longer financially justifiable. While this argument is credible given the difficult trading conditions internationally, most ethnic lead businesses in the UK have always been poor at retaining qualified staff. Many business leaders that have been approached for this article have argued that many of their former employees were unreliable, lazy and difficult to get along with. They went on to argue that many of them lacked customer service skills and had at times been dishonest and as a result were not employable.

Dishonesty in an employee should never be tolerated but conversations with these business leaders revealed that while they were all happy to discuss employee related problems they were ignorant to their own shortcomings as managers and business owners.

For any entrepreneur profit is the key goal as it allows for expansion and creates individual wealth. However, to be able to achieve success ethnic business leaders must invest in their most fundamental asset: their workers. Yes, having premises from which to trade from and the equipment with which to trade with is important but what use are they when you do not have the skilled man power to oversee the operation? Ethnic businesses have one of the poorest staff retention record in the UK. The staff turnover is exceptionally high because of the over reliance on family members and friendships networks to find employees. The perceived benefits for employers is that  the informal relationship will help their business grow and avoid red tape as most of the employees would be employed on part time self employed basis. This perceived advantage is the real problem that hampers ethnic business development and growth.

The most successful businesses employ workers who are great communicators, approachable and excellent relationship builders. They also work with management to promote the business and are generally the public face of the enterprise.  Staff retention creates a good working environment, higher staff morale and confidence which results in greater productivity. Customers also enjoy familiarity and strong staff retention will not only strengthen their relationship with workers but it will generate more customers as satisfied shoppers report back to their friends the excellent service they receive from the business. Customers shop in places which make them feel welcome, valued and appreciated. If there is high staff turnover how can customers build a relationship with the employees to feel all this? 

“I enjoy going to see my butcher because he is also a good friend,” said one customer of a Halal butcher store in Bristol. “The workers there know my order, the way I like my meat cut and they also sometimes give me a little extra because of my loyalty to the store.”

Another added, “I will pay a little more rather than seek cheaper deals if I have a good relationship with the workers of a shop.” From these customers what is clear is that a good relationship with employees keeps customers loyal and makes them feel a part of the business. Customers feel that by investing in businesses with consistent and well trained employees that they are investing in their friends and communities. Problems that may arise can also be easily resolved as customers can look back at the service history to know that the unfortunate events that caused the problems may be uncharacteristic of the business and employees involved. Furthermore, employees who have worked for an organisation for some length of time, if treated well, will feel proud of their business and this will be evident to all customers and can easily rub off on them too.

When recruiting staff it is always best to recruit those who are best suited for the job and to give them a permanent contract of work with clear responsibilities which they can fulfil. It is also crucial to provide them with fair wages that reflect their responsibilities and to reward exceptional performance.  Employees have ambitions, families and most want a career and not just a temporary job. This requires employers to train and support the personal ambitions of their employees if it is in their professional business area by providing them with training and opportunities that allow for self development and growth. Most ethnic bosses interviewed for this article admit that they offer no ongoing training support to their employees and those that do only offer the most basic in house. This is a recipe for disaster as workers, feeling that they will not achieve their ambitions, will leave regularly and either work for a competitor that offers them greater opportunities and takes customers with them or set up on their own competing directly with their former employers.

With fierce competition in all sectors, unreliable cash flow and greater regulation, there is a great deal for ethnic business leaders to worry about today. However, with greater consumer choice and a need for more personalised service to survive, these leaders must wake up to the importance of staff retention. They need to start treating their staff like colleagues and not subordinates as well as providing them with the training, opportunities and support they require to fulfil their ambitions within the business. These things can be difficult for all small business but if they do not act on it, they will either remain small forever or vanish completely.

Liban Obsiye

libanbakaa@hotmail.com

 

 

Somali businesses must respond to the recession effectively or close

All businesses are suffering as a result of the recession, but Somali businesses seem to be failing like sandcastles in heavy rain and winds. For some they fail having tried everything to survive, but for the vast majority they let themselves down by ignoring or forgetting business basics such as negotiation and honesty. The fact is all businesses at some point face great hardship, but what differentiates those that survive from those that collapse is simply the ability to negotiate and communicate with key stakeholders who also have an interest in the businesses survival.