Forgive the informal style of my blog this month, but I think it’s the best way I can articulate my message without sounding like I’m on the pulpit!
My team in African Sun is very much aware of a message that’s been on my lips in the past few months. I first debuted this message, or strategy rather, at our General Manager’s conference in August – I call it the Joseph Strategy. I will explain why later.
In the past two years we’ve heard of businesses that a lot of people said were too big to fail collapsing. We’ve also heard a lot about companies that peaked very early - within a few years of their existence - but didn’t adapt their modus operandi to the requirements of running a large organisation, resulting in a general failure to deliver on their promises. Although we cannot predict exogenous political and economic factors, and despite our rapid expansion across the continent, my desire is that we build a sustainable business that will definitely outlast my own existence. To achieve this, it’s important that we plan into the future.
For those of you familiar with Biblical stories or those who paid attention in Sunday school, you will remember the story of Joseph. In essence, Joseph saw fifteen years into the future after the dream he had in which Egypt would be besieged with seven years of plenty, seven years of famine and the year after to regroup. So what did Joseph do that we can learn from as a business?
1. Saw into the future and planned accordingly
2. Managed for cash (collected cash and kept it in reserve)
Joseph realized that ‘cash is king’, and as such collected cash and kept it in reserve. From a business perspective it simply means that we must align our costs to the cash available and not expected income, in order to create a balance between earnings and expenditure.
3. Created a strong working capital
Joseph created ‘tradable stock’ through the receipt of livestock in exchange for food and grain.
4. Created a strong balance sheet
This was achieved through the land he acquired during the famine. The land was a productive asset which earned him cash. From a business aspect we must learn to disinvest non-productive assets and invest in ones that give cash returns.
5. Forged long term partnerships
Joseph cultivated long term, strategic partnerships with the Egyptians during the time of famine through land tenure agreements in return for food. By so doing, he effectively bought land from the people and entered into a 'buy and lease back’ arrangement with the owners. This meant that he ensured long term productivity of the land as it allowed the former owners to still live on the land, work the land and pay 20% of the land’s produce to pharaoh, thereby creating annuity in perpetuity. In simple business terms, he was making the assets sweat for Pharaoh on a long term basis through strong partnerships.
So now you see where I get the Joseph Strategy from and hopefully understand why going forward, this is going to guide our planning and growth as a company.