Aga Sekalala on Family Business

#360Mentor is a continuation of the #40DayMentor series. In this episode, Robert Kabushenga (RK) speaks to Aga Sekalala  (AS) on Family Business

RK: Aga, people have been asking for you for a very long time, it is such a pleasure to have you here, finally.

AS: Thank you, I am very happy to be here.

RK: Let’s start with this, what is a family business as opposed to other types of businesses?

AS: It is where two or more family members of the same family are involved either in an aspect of ownership or management. We try not to call it a family business if there are workers involved. That doesn’t make it a family business. If the ownership especially at the early stages or in terms of the development of the family cycle, that’s normally considered a family business. You could also have many combinations of a family business. You could have a husband and wife…

RK: What are the typical ones?

AS: Very common in this part of the world is husband and wife. Usually, you find that the husband raises the capital and the wife does the day-to-day work or it could be the other way around. You could also have brothers, it’s also very common. I would imagine sisters or even cousins. It’s also common. They could be two people who have grown up together and they understand each other. Cousins are a replacement for the big families we used to have of 16 to 20 siblings. In this particular case, it is easy to find cousins coming together to start a business. Normally and traditionally, in the academic sense of the word, a cousin business at the founding stage is normally not considered. It is considered a normal partnership.

RK: What’s the story in family businesses about the vision bearer somehow a patriarch and is the one driving this business?

AS:  It’s normal. I think that it is typical. Usually, you would have one founder and the founder would start the business, it could be circumstance or adversity of starting the business and they could be the ones who know what problem they are trying to solve or what opportunity they are trying to grab. And they would find, eventually, as the business grows having to bring on board family members either as an opportunity to get trusted management or a trusted co-owner. It could be the case in Uganda where you need another director to set up a company. That is also a common model.

RK: Just to get you clear, most family businesses start informally. If you could look at the late BMK, he started as an individual trader. In the case of your dad, did he start as an individual?  It is always interesting to know what it is that they are doing.

AS: Different people have different starts due to the nature of opportunity and time and that is very important. It is not easy to generalise that everybody is informal or formal. In the case of my father as a management training consultant himself, everything in his makeup was to set up a small company and start a formal company in the way he had been teaching business owners how to do business.

In his case, he had done formal training around business. In a lot of cases, it was a business started by somebody. We had plenty of friends in the late 80s who would fly to London and bring back a couple of records, come back and sell them, then next time come back with some turntables and soon or later set up a small music set up and sooner or later grow it into a substantial business. An entertainment empire.

RK: But I also thought that somebody starts a business and then realises that the amount of work is overwhelming, he goes and brings his brother….

AS: That’s also common especially as the business grows. It is very common especially where you have a professional side. It is very typical to bring on a brother. If you have grown children, that could be something to think about.

But typically, it’s a brother or a wife. That’s usually the starting point.

RK: And the issue of trust comes in.

AS: Trust is very important. One of the most difficult parts of starting a business is finding a trusted partner.

RK: You reminded me of the Sebalamu family, we were talking about how their elder brother began trading and they all got interested and they even all married five sisters. Theirs was not a family business but they got into the business of trading.

Let me take you now to your own experience, at what point do you now realize that you are in a family business?

AS: There is no such a thing. You don’t wake up one morning and realise that you are in a family business. You grow up in an entrepreneurial environment. That’s what you normally wake up to. You wake up to people buying and selling things. You wake up to your parents somehow involved in some form of a transaction. Maybe they are into farming or trading, and when you become conscious of the activity called work, you realise that this is what they do for a living. They sell something. They build something, they build something. And that forms your first impression of what it is that people do when they go to work.

And then you go to school and the person seated next to you coincidentally their parents go to an office or to a classroom to teach. And to them, that is their version of work. all of a sudden in the olden days, traders were looked down upon. They tended to be uneducated. Trading was a looked-down profession. So when they ask you in class, what your parents do, you are not the first to put up your hand, you let the ones with doctors and lawyers go first. By the time, they get to you, you have figured out what to say.

RK: What was the opportunity for you to participate in the business, how did it come about?

AS: Because your parents are farmers or traders, they are buying and selling things, what it means is that when you get out of school, you will be picked up and in particular, you end up at a petrol station. You cannot stand around for so long. You pick the oil or the money and count it. So you stand behind the counter. Automatically you become the dukawala. You have finished school, you are waiting for your parents to close up, you have one shared vehicle that you all have to use and you go to this place where there is buying and selling of goods.

You have to learn early how to count money and what goods cost how much. The clients will ask for stuff and you are the one there. You must know things.

RK: This is so profound for me. There is only one family car, and you’re picked up from school by 5 pm but for your parents, their work life has not ended, so you go to their petrol station and in the meantime participate in the business.

AS: Yes. You sit at the desk and go about your homework as you wait for them to close the books for the day and lock up the shop.

RK: But then what happens is that you happen to have some downtime that you don’t know what to do with and in the process you offer a hand in the shop. And you begin to learn important things

AS: And at that point you learn that that customer has to first hand over the money then you give them the goods. That’s very fundamental.

RK: Wowww!

AS: At that point in time, that’s the very first instinct you have to acquire. You have to know the amount of power that purchases the given item. And this is like 7 or 8.

RK: At 8, you are figuring out oil costs this much, a filter this much and that money of this magnitude has to be in my hands for me to give away the product.

There is another scenario that many other people went through where the parents would pick you up from school but turn off to another path. Imagine you were at the counter but another child was waiting at the back of the car waiting for their parents to get done with their pub session. What do you think they are learning?

AS: I don’t know. We were very far away from a bar.

RK: How does that begin to impact your thinking later on as you start growing up?

AS: The first thing is to understand that you have to be of use. To be of use means you have to do something to earn your place in this setup. In this arrangement, it is not enough to sit back and do nothing. You’ve got to get up and at least appear to be doing something.

RK: You have to earn your place?

AS: Yes. Then you also realise that you have to earn something. You have to get some income. And how do you get the money? You have to give someone something good and they give you money in return. After getting that money, you have to put it in a safe place.

RK: Wait a minute, let’s get this clear;

1.       You have to collect the money

2.       Then you check the accuracy of the money

3.       Then handover the good

4.       Then take the money to cash till where it will be counted by the close of the day

AS: So there’s a series of actions happening and you are in the midst of it. It becomes part of your understanding of how the world works. This is your view of how the world works. That’s what you see and live by.

RK: How does this influence your values and how do you get to know the values of a family?

AS: Before you get to the values, the first thing you realise is that in class, you have to pay a lot of attention to the mathematics teacher. You need to know your numbers. There is a functional need to know those numbers.

RK: To many of us mathematics was abstract. For you guys who were already in this, you saw the correlation of how math works and how it impacts your life directly.

AS:  Exactly. You understand that the additions and subtractions mean something. It enables me to know how much money I might need to keep or to give back.

RK: My dad was a civil servant and my mum worked in a company. All I saw was them dressing up and going to work. The only time I had money in my hands, I was going to pay rent, fees, and utilities. My job was to deliver it to somebody. I wasn’t involved in the money-making activity. I didn’t know how she made her money.  The point I am trying to bring out here is how many people are missing out on this opportunity because of the employment nature of our situation.

AS: I don’t think it is missing out. This is something that I would call contextual. You asked about the values. The first one is that you need to be able to understand that it is a job. You need to look someone in the eye and say this is enough money or something without being shy about money.

The other important lesson is that once someone gives you money, you give them something in return. So that is a transaction. You start to understand one for one, what goes with the other.

That money that is collected in the evening is not your parents’ money, it is money that belongs to this place. You cannot dig into this money.

Your personal money came at the end of the week after you had worked. It came as what you had earned. The money on the counter is not your money, don’t touch it.

RK: Imagine those of us who had parents who were salaried and we went on to be salaried, you’re dealing with your money, you don’t care how you spend it.

AS: There is a standard about money. You have to work to earn. You also learn that if you say you will do something, you have to do it. Most of the time if you don’t know one will.

RK: At what point do you know that dad is being a dad and then dad is being the boss?

AS: Dad was always the boss. Dad worked a lot. Late into the night. Even as a teenager, I saw him work a lot. There were times you sat down to talk about issues of your school and all these other things. But most of the time when you are talking about a business-related issue, he is the boss. On holiday, you talk about what has been done, it’s work. but you would have those moments when he talked about the school report, how are you doing this etc.

You also get to distinguish between mum and dad. Each has its role.

RK: What drives decision-making in a family business? There are those little things. someone may feel they are not as favoured as the others. How does that play in the family dynamic?

AS: Decision-making in a family is not a constant. It is not static and it is always going to be the same all the time. a family can very easily gravitate to areas of competence whereby certain people make decisions because they are competent. They are more successful in making those decisions. A family can also be very monolithic in nature whereby one person makes all the decisions depending. It could also be a situation where two people have to reach a consensus.

RK: Then there are those in the family who differ.

AS: It has to be. Not everybody will make decisions. Sometimes there will be someone who will make the decision

RK: How do you help having family gatherings turn into family business events?

AS: Family gatherings are always family business events. They are all the time. Conversations will always happen. It doesn’t stop someone from going to a sidebar to have a thing resolved. There are no fine lines. In fact, it is an opportunity for people to be together,

RK: When is the best time to start preparing the next generation for taking on the business?

AS: You are thinking about it as an event. You think that there comes a day when you dress up and have it announced. It doesn’t work like that. From an early stage, it is about going to see the business and spending time at the business. And playing at the business. My sons when they would come to the radio station, they would run through the station and they knew everybody. That way they were getting familiar with the business. People knew them and they knew them. They knew who did what. It is an ongoing process. We made sure they knew the programs and the presenters. That was deliberate.

You are working in the business, my sons, on their holidays, do what they call sorting eggs.

RK: Aga, I think we did people a disservice. Let me just ask, what is your family business?

AS: We have several. There are family businesses that were founded by my father and some of his partners. There are family businesses that were founded by my father and my mother. Over the years, they have grown. One of our companies; Ugachick poultry breeders. It is a producer of poultry.

RK: By the way, when does the production of poultry begin?

AS: The business started in 1992. When the business started, my father had a partnership with the late James Mulwana and their other partner. The three of them started the business. They were partners. For a while, my father did not run the business day to day, Mr Mulwana did. So he was my boss. The late Mulwana would always call you into a meeting and read you the riot act on what things should be done and what things shouldn’t be done.

RK: He did that for everyone. He used to read me the riot act too.

AS: We also run agro-processing. We run a vanilla business which was also run in the late 80s. We have been exporting flavour raw materials to the US.

Then there are my own personal businesses, the radio station, the network companies, and real estate companies. Those are some I have founded by myself or with partners.

RK: Is your family also involved in your businesses?

AS: Not yet but there is an awareness. There is a process of interesting them.

RK: Back to the egg sorting, tell me more about it.

AS: Egg sorting is a repetitive but very necessary task if you produce eggs. You need to make sure eggs are the right size, they don’t have cracks. They are clean. You are looking at the attributes of the eggs. It is typically done by hand. People pick out the bad eggs. It’s a skill you learn to do pretty quickly because you are sorting hundreds of thousands of eggs throughout the day. It is a mind-numbing exercise.

RK: Why is it an important orientation for the children?

AS: It is the equivalent of being in the shop.

RK: So it is you at 8 learning about the operations of the shops

AS: Yes. You learn what is good and what is bad. You’re understanding how this whole thing works. But you also have all these people around you. There is a dynamic. You have to learn. They have to teach you. You have to be able to observe them working. And there are a lot of other small things happening all along. And they slowly learn and pick up the skill. It’s not a very complex job but it’s quite repetitive.

There is also vaccinating the chics. Each one gets an intramuscular injection. Each one is injected individually. It’s quite a fast activity. There are a lot of activities that young people engage in to learn the basic discipline of working, earning, counting, sorting and value people and value their effort.

RK: On that point, what would you say to many people in our generation who have mostly been employees. We shielded our children from work-related issues. We didn’t want them to suffer. What would you say to parents like me?

AS: The first thing is that they don’t have to work in your own business. You don’t need to first have a business. That’s like a fallacy. You can actually, through a friend or someone, be able to get them to acquire sme work experience at a fairly young age.

It’s also good for them to start to understand the different kinds of work that is out there. They then need to put in a stronger effort in case they don’t want to do that job in future.

RK: In the town where my children go to school are two guys; one sits in the corner and plays a guitar and asks for a few coins. The other used to walk up and down the street also asking for coins. Every time I would walk the street with them, I would tell them if you don’t get serious with your education, this is how you will end up.

For a lot of us as a generation of parents, the question is we don’t want our children to “suffer”, and talk to us, what are we getting wrong?

AS: I think “suffer” is in your mind. You’ve got to think through it. What is important is that you have to instil certain values. You need to get them to understand the value of hard work. You need to get them beyond an insular environment at home just watching TV or on their gadgets. It is not easy. As parents, you have to go out there and see what things can be done.

RK: In the last lockdown, I took my children to go coffee picking. I wanted them to know how it was done.

AS: Parents need to open their minds to the different opportunities which exist out there. I can think of other things they can do like repetitive jobs they can do to start off. Along the way, the tasks increase.

RK: At some point, you invested in your own ability to run a family business, what did you do?

AS: I had to understand and appreciate that the family legacy had to continue. The business was not going to end with the old man. And we would be caretakers to hand it over to another generation. So we had to agree to take on the assignment and handover to them later in life.

Then you can understand how it is run. Then you learn the dynamics of running a family business. What are the correct business structures that need to be put in place? How do you arbitrate? How do you prepare the next generation for success? What if they are not going to become managers on a day-to-day basis? Then they have to take on a governance role. They need to be good hires. Good spotters. They should know how to network.

RK: So you would also say to those with family businesses to invest in the skills that could be useful?

AS: That’s always ongoing. You have to invest in learning and growth. That is a standard. That is an important aspect. You must be able to say what are the new skills needed to take this business to the next generation. That kind of skill is needed.

RK: Conflict is inevitable, how do you deal with those situations in the family?

AS: Before conflict, you need to separate ownership and conflict issues. I think quite often it is confusing who owns what. There is always ownership but what is the purpose of that ownership? Ownership could be that you are the one who is going to take on the risk. You are the one who has to sign on legal documents. You are the one who is committing on behalf of the family. It is not your personal estate. It is not your personal estate. That has to be very clear.

It is important to set up values early. Communication. Transparency. These need to be dealt with quite early. If a business is indebted, the first thing the bank does is to make you sign. Dividends become secondary. The first priority is to pay off the loan. Why would someone at that point in time expect that there would be a dividend when you have a loan?

RK: It is also important to know what the loan did.

AS: True. And that is usually known. If you all know what the loan did, then there is no issue.

RK: Let’s go back to the issue of hierarchy, and family dynamics. Let me even put it crudely, there are elements of jealousy. Aga runs the business but he drives a BMW, then I don’t run the business, I am just a shareholder, but I drive a Toyota. Where do these things play in terms of family rules, and family protocol.

AS: A lot is in the setup. How the family is set up. Sometimes to be honest, Robert, it is luck. You happen to be eight years older than the youngest sibling. To claim that some things are made in a certain way is not accurate. I think when you have a lot of competition, it is important that the people with authority clearly define what everybody does. It becomes very corporate and people know what they do and who does what. That is why I was telling you about decision-making. Some decisions are made by consensus while certain decisions are made by one person.

RK: I want us to go into another sensitive area in terms of family business; culture. There is this notion that somehow the Asians and Arabs have figured out how to do this family business thing well. In Uganda, the Muslims have figured it out. How much does culture play?

AS: From what I have studied is that comparatively, the Asian-Indian culture has been doing this longer. If you are looking at Ugandan businesses, you are going to find that the businesses started maybe in the 80s. Predominantly most of the Ugandan businesses are of the 90s. In Kenya, you will find businesses from the 50s.

What you will find is that the community will understand the hindrances to doing business. Communities like Eritreans collect money and give it to the person who knows how to invest to do the business. Not everybody will be given the money. The same applies to the Somali community. These communities understand how to accumulate the capital and generate the wealth. 

Our challenge is a timeframe. With time, we will see better practices. If you are running a race, there are always a few people who will run away.

RK: We have the Late Somani to look at. Until the time of his death at 92, he was still running a solid business.

AS: And you can tell he had a solid foundation.

RK: Here we have Ugachick and Jesa.

AS: Ugachick will be turning 30 next year. My father started a business in the late 70s.

RK: What are the lessons for us to learn?

AS: First and foremost, you must make sure the business works. It must be a growing business that must be able to transcend a generation. That needs to be in place. establish a business whose activities need to make money which can be used to pay off people and keep them busy. These should be constant economic activities. They should be able to bring in money daily.

You should run a business not a hobby. A hobby is not passed on. A business is.

RK: What are the three main factors that determine the growth of family business in Uganda?

You just said the business has to be viable.

AS: It should be viable but in addition, where is it going? Remember your family is always going to grow faster than the business. Down the generations, the number of people will always grow at an exponential rate. And because of that it is important to quickly identify those that can work within that particular growth and to be clear on family members who might want to pursue a personal professional career. Family business is not for everyone. A clear definition in that direction is very important.

If the business is a lifestyle business like an art gallery, or a restaurant, in case there is no one interested in that business, the owner could decide to sell it off.

RK: I recently got a phone call from a friend who was telling me about his children. They have all gone on to pursue very successful careers abroad. He has a square mile of trees and now he is considering liquidating. When people come to see me at the farm, they find me alone, they ask me; is your family interested? Is there a formula to interest people in a business?

AS: It is your interest first. Then you have to sell it to them. Sometimes people are not interested in what you are doing. If children are not going to be interested, you can tell anyway.

RK: Looking back, what did your parents do to make you interested in the business?

AS: There is nothing specific. You grow up in it and appreciate it. And then you become close to it. when I finished my undergraduate degree in chemical engineering. I had to decide whether I wanted to spend time looking at material science and samples. But Then there was this great opportunity Uganda was turning around. We were really looking at a new future. Then, the allure of being close to home where there was going to be a burst of activity.

RK: That comes from being able to be involved from the entrepreneurial side of things. If, like me,  your dad was an employee, you would probably be looking at the best job offer there was. Maybe if I were you, I could have stayed in the US.

AS: True. It is a personal decision. You look at what works for you. I have a sister who is an energy engineer and she chose to stay in Houston.

RK: There is the question of succession and succession planning, when does the patriarch handover, and how do you plan and manage those dynamics?

AS: What’s most important is managing the expectations the individuals have. If you understand that as a caretaker, the spotlight is on you, there might not be as much urgency to want to dig your hand into the coffers.

 RK: How do you balance the situation where for example I am supposed to be the successor but I am not suited to take up responsibilities, how do you go about that?

AS: It is becoming more and more common to be able to accept those businesses because of the sophistication of the business world. It is becoming quite common to have someone else as a better business manager. I am seeing a tendency to understand that. It is not completely uncommon. In the Indian community, it is not uncommon for the son-in-law to take over a business.

RK: Remember the biography of Catherine Graham, the daughter of the Washington Post founder, it’s her husband who took over the business.

AS: That is no longer unusual.      

RK: Let me throw in a spanner in the works; suddenly it becomes important who your children marry.

AS: I think it becomes inevitable, not by choice directly. It helps if they are well-mannered and have values that mirror what the company thinks. And that they can participate and offer value.

There is a view that begins to open and say that there is someone here who has a stake. This in-law is a trustee for his children too.

RK: What do you tell people who are involved in family businesses?

AS: It’s a long game.

RK: What is a long game?

AS: It’s a marathon that you guys run. that one is very short. Sometimes you’re worn out. Sometimes you are tired. Sometimes you fail. sometimes you have to go backwards. You have more balls to juggle. You have owners, shareholders, employees and then the family. You need to be very ready for a very long slope.

RK: What’s your last word for us?

AS: When I started out my entrepreneurial journey in the mid-90s, it was really hard to hire people’s sons and daughters. There was a very strong stigma against working for people. The traders. Those businessmen. I have found in 15 years, there has been a shift.

One of the reasons why I would go out to tell people to read about family businesses is that they are good places. They are loyal to their employees as much as the individuals who founded these businesses. People are very resistant and hesitant to jump in because they do not understand what is the true nature of a family business. What I have found with time is that there is a general acceptance and I think that people out there might have options. If you do not have a job, you will work for anyone that gives you the job. But if you have talent and you are good, you are someone who can add value, sometimes family businesses are good places to work. Decision-making is quick, and the management of resources is very fast and efficient. As a family business, you are very careful with the money. There is a caretaking instinct which needs to be at play all the time. With that, I always encourage people to learn more about their work to do business with them. Take some bit of time and understand how they work. And get your children to learn how to work.

RK: Thank you very much, Aga.

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