MASERU — Basotho have been urged to get the basics of running businesses right and draw a critical distinction between “bedroom and boardroom strategies” if they are to run successful employment generating enterprises in the Kingdom.
Addressing a well attended business seminar in Maseru last week, prominent chartered accountant and business woman, Moratuoa Hlongwa, attributed the high number of business failures in Lesotho to what she called “bedroom strategies” used by many local entrepreneurs.
She said companies run on the basis of “bedroom strategies” did not have any controls and tended to be operated as “one-man shows”.
“The bedroom strategy has no controls nor strategies. The owner will arrive at home and while on the bed says ‘sweetie, our client has paid today, let’s buy a new Range Rover’ without regard to proper management of the cash flows of a business,” said Hlongwa.
“You (Basotho) must jettison this bedroom governance and stop thinking about investing in a plush holiday or your girlfriend first once you have won a tender instead of re-investing in the business.”
“A boardroom thinker will sit down, draw a budget and devise a proper cash flow plan. A boardroom thinker is a long-term thinker. A bedroom thinker is a short-term, short-sighted thinker, always desperate and always chasing after payment to spend on some goodies at the expense of the business,” said Hlongwa amid much ululation from the audience.
She said some businesses failed because the owner of the business was everything in the business. “In some businesses, the owner is the general manager, the assistant manager, the accountant, the director, the marketing director, the sales representative, the messenger, the cleaner . . .”.
“Such a business in which one person is everything can hardly succeed. You will mostly likely find invoices lying in the back seat of the owner’s car.”
Basotho badly needed successful entrepreneurs to help alleviate the country’s unemployment, now at about 35 percent. But for any entrepreneur to succeed, they needed to get the basics of running a business right, said Hlongwa.
She urged businesses to put proper management structures in place and have a strategy to avoid failing.
“You can win a lucrative tender, but you can still fail because of mismanagement,” she said. “Some businesses are always writing cash cheques. The cheques are not supported by any source documentation. That cannot be the way to run a business.”
She also urged Basotho to shift their mindsets from thinking small to aiming higher.
“There are those who will earn a profit of M100 and are happy with that. They are happy they have got money for beer . . . .We need to change that mindset and aim higher.” Ultimately, the businesses that succeed are the ones that have proper plans, budgets and performance monitoring strategies.
“Many fail because their owners don’t think long-term. They get a tender, they buy a posh car. They win the next tender, they go to Hawaai on holiday. Sustainable businesses are long-term”.
“When it comes to running finances, one needs to separate personal affairs from those of the business”, she said.
Hlongwa, who is also a financial advisor and partner at New Dawn Chartered Accountants, discouraged what she termed the “Lesotho way” of running businesses, which tolerates incompetence and mediocrity in service delivery.
She spoke of the need for a paradigm shift from pessimism to positivity in the local business person’s “daily business dealings and perceptions”.
“Business success requires one to invest not just finances, but also time to plan and implement strategies,” she added.