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Business survival lessons from Chase Bank collapse

ENTERPRISE
By Peter Muiruri | March 31st 2021
SBM Bank Kenya Chief Executive Office Moezz Mir

Moezz Mir, the Chief Executive Officer at SBM Bank Kenya has had a fruitful career in the banking industry, having worked at KCB Group for 11 years, including a five-year stint as the Managing Director at KCB Bank in Tanzania. As part of the team that oversaw the acquisition of certain assets and liabilities of Chase Bank, Mir has interacted with local and international entrepreneurs, drawing valuable lessons on business survival. He shares some of these with Hustle.

Revamping a failing business?

1. Find the right team, and when you do, instill confidence in them. You need to have a smart and resilient team that understands the nuances of change. They must stay agile if they are to be in tune with their customers. They must also be deeply rooted and aligned to the organisation’s strategic objectives.

2. Know your customers. As a leader, you also need to have a better understanding of your customers’ needs. Use data to inform what products will best suit them but also invest in face time to understand their unique needs. There are some things data will not tell you, but which a simple coffee date with your key customers will unlock.

3. Know how far you can go. It is important to base your risk appetite on factual information because as your business faces headwinds, you will be faced with a lot of difficult decisions and you must lean on both logic and facts.

Escape the main traps that cause small and medium enterprises to fail...

4.  Do you need to adapt? A lack of proper planning for your business as well as lack of agility in adapting to a changing business environment will be sure reasons your business will fail. Then there are those that divert cash from the business into speculative investments for short term gains perhaps because they lack an understanding on how to focus growth in their niche market.

5. Lack of a clear succession plan and thus failure to delegate responsibilities. With the attitude of “only I can do it well,” business owners self-sabotage their business growth potential and stifle honing of skills within the business. By delegating right, the business owners can spend more time on strategic direction as opposed to operational management.

6. Poor bookkeeping and inadequate financing are other key reasons businesses fail. Keep your records well, so that you detect patterns and make any adjustments, like keeping costs low and using revenue properly.

Your business plan is key to securing business financing...

7. An entrepreneur needs to give careful thought to their business plan. This is what will clearly determine the need and impact of the financing required. Clearly articulated cash flow projections should be established in order to provide some level of comfort to the lender regarding the repayment ability of the entrepreneur. Capital investments need to be carefully planned and expected returns clearly established. Further, it is also important to understand what portion would be funded through equity and what would be funded by debt. On getting funding, It is the entrepreneur’s business to ensure that the money once received will be utilised for the purpose it was intended and not used towards speculative investments.

The secret to getting and maintaining customer confidence...

8. A key plank is to stick to your commitments to the customer. For example, as we acquired some of the assets of Chase Bank Limited, we also took on certain liabilities. This included a commitment to make available 75 per cent of the moratorium deposits which were locked up under Chase Bank. We have been committed to this promise and made available 37.5 per cent of the funds at the time of acquisition and the balance made available annually in equal instalments over the next three years inclusive of interest. If the customer has kept his part of the bargain by giving you business, it is only fair you keep your word too.

9. A second key in maintaining customer confidence is by investing in innovation and technology. Look for new ways to service your customers and meet their ever-evolving needs. We now have the Generation Z entering the workforce. Their banking needs, for example, are very different from the millennials and every business must adapt. Further, with the onset of Covid-19, there has been a notable change in consumer behaviour and how they engage with a business, with a high preference for digital platforms. However, your last line of defence is your people because sometimes technology fails you but a committed team player will go the extra mile to solve an issue for your customer.

Readjusting the business in the face of changes à la pandemic...

10. Cash flows are key towards sustainable growth of a business. This depends on right capital investment and a smart business plan. However, things don’t always go as planned as the pandemic has taught us. It is therefore important for businesses to be agile in adapting to the current business environment. An entrepreneur should re-evaluate the business at an early stage and determine the potential impact of a changing business environment. In the event that the relevance of the service or product is not what it was when you started the business, it is important to take a disruptive strategy that aligns you back to the consumer’s needs.

Competition?

11. A shrewd businessperson needs to be clear on his customer value proposition and their target market. I would advise entrepreneurs not just to try and drive market share where competition exists but try to create his own market space and reduce competition.

Adapt fast to changes

12. A clear strategic plan keeps you focused on your objectives through turbulent times. It is important to consistently review and evaluate the strategic plan in view of changes in the business environment. Then adapt to these changes in an agile manner. Remember that businesses never have infinite resources. It is important to ensure that every investment in the business has been carefully thought out and that the investment will provide the best return for your business.

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