SME Business Series: UBA Cameroon drills entrepreneurs on succession plan.

The exercise came within the framework of United Bank for Africa, UBA Cameroon's flagship programme, SME Business Series. 

According to officials, the SME Business Series was created to provide free useful information, training and advice to SMEs, to enable them to be more structured and in turn, be able to have a better relationship with banks.

The SME team of UBA Cameroon organises the event every quarter and invites SMEs to a seminar on specific themes. For the just ended edition, the theme experts elaborated on was:  "Succession plan for SMEs, an eligibility factor for loan".

In his discourse, the keynote speaker, Olivier Sohaing who is CEO of the SOHAING GROUP, noted that good business succession plan is essential to achieving set goals down the road. 

“Whether you want to keep the business in the family or sell to outside buyers, the journey can be long and rewarding,” he said.

Given that, Cameroonian SMEs are mostly family businesses, Sohaing said it important for the founder to prepare a plan of transition. But the said reality remains that, 30% of companies survive at the second generation but only 1% survive the third generation. 

The explanation to the general implosion, as explained by experts, is due to the fact that most CEOs send their children abroad to study but they sometimes fail to prepare them to accept taking leadership of the institution in case of death or incapacity.

However, for banks to grant loans there should be a well-crafted plan which defines, with precision, the choice of the next CEO for a period of up to 5-15 years. Sohaing said the choice of a successor must not necessarily be based on blood relations, but on meritocracy.

"A plan should start taking shape years before the founder’s departure or change in role and involves building a transition team. With your eye on maintaining company strength, a good plan will help guide ongoing operations: hiring, employee retention, and more," he said.

"Entrepreneurs have to work hard for a payoff that will allow them to finance their next venture, whether it's a new business, charitable foundation, or other goals such as ensuring generational continuity,” Sohaing added.

“This is because the bank needs to know: what the governing strategy is, who are those managing the company. This is important to acquire loans; without loan growth is not possible. SMEs need to grow, as such, they will always need to obtain loans," he continued.  

Some family members critical for succession

Experts suggest that, to ensure financial continuity, some family members may be critical to succession; others will not be involved. Achieving fairness for everyone can be complex, they said, noting that transition can be controversial, but there are ways to help improve communication and minimise disagreements and power struggles.

Even for companies with substantial assets and loyal customers, lack of liquidity can impair the transition process. A good succession plan accounts for this, allowing wealth extraction while helping to keep the company vital in a competitive market. 

Experts said some may decide to keep the business within the family or sell to an outside buyer. The bottom line remains that, it is imperative to think of the future, they insisted. 

Rose Bonny Wondja, Country Head for Retail Banking at UBA Cameroon, concluded by saying, they have kept hopes that the exchange between the experts and SMEs will go a long way to solve some of the issues business promoters face and ameliorate their work relationship with the leading digital bank.