This question is not just for business founders and owners but also for private equity managers and lenders. In the African manufacturing sector, this is a particularly pressing issue due to the multitude of skills required to be successful. The dependence on a single key person often hinders the growth of small and medium-sized enterprises (SMEs) into larger, more sustainable businesses.

This article aims to explore why reducing key person dependence is the single most significant challenge preventing the emergence of larger agri-processing businesses in Africa. We will delve into essential steps for transitioning to a team-based management, covering successful delegation, role clarification, key process codification, and establishing effective communication systems. Additionally, we will examine the critical role investors and banks play in this transition and how they can contribute to resolving this bottleneck.

Why Reducing Key Person Dependence is Crucial for African Agri-Processing

The Unique Challenges of African Agribusiness

Trusting relationships are the cornerstone of doing business in Africa, particularly in environments where the rule of law may be weak or inconsistently applied. Clients, suppliers, staff members, local banks, and representatives of authorities often build strong relations with key individuals within the business. Additionally, the founder/owner has developed a vast amount of implicit knowledge in running the business and has often had little need to codify this knowledge in processes and procedures. Quite often the key person fulfils several roles or jobs of the company at the same time. This concentration of relations, knowledge and responsibility can be both a strength and a significant risk.

The Inevitable Exit

Whether planned or by stretcher, there will always be an exit of the founder. The question is not if, but when and how it will occur. A sudden and unplanned exit can be disastrous if the business is overly dependent on key individuals. Therefore, it is vital to have a plan in place to ensure the business can thrive independently of these key figures. This plan should focus on building a robust team that can carry the business forward and ensuring that critical knowledge and responsibilities are distributed across the organization.

The Critical Need for Larger Agri-Processing Businesses

Key-person risk is by far the most pressing issue for most African agribusinesses. Unfortunately, most will not take action based on this insight alone: it does not immediately improve your situation or cash flow and so becomes one of those non-urgent things that end up on the bottom of most to-do lists. However, addressing this issue is crucial for the emergence of larger, more sustainable agri-processing businesses in Africa. So, if risk control doesn’t drive your actions, here are a few more compelling reasons to focus on building your team, delegating effectively, and driving engagement:

Accelerating Growth
Efficient operations and scalability are direct benefits of a well-developed team. When roles are clearly defined, processes are streamlined, and responsibilities are effectively delegated, the business can respond more quickly to market opportunities and challenges. This agility facilitates faster growth and positions the company to take advantage of new opportunities.

Enhancing Enjoyment and Ease of Running the Business
For business leaders, a motivated and well-structured team leads to lower stress levels and a more enjoyable work environment. Effective delegation and strong team engagement allow leaders to focus on strategic initiatives rather than operational details. This improves work-life balance and drives a positive organizational culture.

Increasing Business Value
A business that is not overly reliant on its founder or key individuals is inherently more valuable. Potential buyers and investors are attracted to companies that demonstrate stability, resilience, and the ability to thrive independently of any single person. By developing a robust team, businesses can enhance their market value and appeal to a wider range of investors.

Enable Innovation and Adaptability
A diverse and engaged team brings various perspectives and ideas, enabling innovation and adaptability. This diversity is particularly advantageous in the unpredictable environment of African Agribusiness where unforeseen events happen regularly. A team encouraged to think creatively and take initiative can drive significant advancements within the company.

Strengthening Customer and Supplier Relationships
An engaged team is more likely to deliver excellent customer service and maintain strong supplier relationships. In agribusiness, where trust and reliability are crucial, engaged employees are motivated to go the extra mile, ensuring customers and suppliers receive the best service and support.

The typical case: from entrepreneur to leader

A founder grows a company successfully to a turnover of several million and perhaps attracts some external equity finance to fuel the next stage of growth. The planned growth is going to be at a new geographical site. At the same time the staff count of the business goes beyond seventy, maybe well into the hundreds. The complexity of managing the business increases exponentially with each staff member and the additional geographic site adds a whole new dimension. The entrepreneur now stands before a critical point in their development: transitioning from entrepreneur to leader.

With a relatively small team in a single site, it is manageable as a founder to stay on top of things, and ensure that your staff acts in accordance with your values. As the business grows, not so much. Initially, company culture builds itself. Later, it requires conscious effort on the part of the leader to make sure that all people in the organization are aware of its purpose and values and act accordingly. Most founders go into this stage unprepared and unaware of what they need to do.

I know we did when we were hired to run a business and we were gearing up for growth. We were trying to manage too many people at the same time and didn’t delegate enough. The result: working crazy hours, stress, and continuously working to put our fires instead of focussing on the long-term growth of the business. Also read this classic article on managing your time: Who’s got the Monkey?

Growing beyond the SME level, requires a business to become more corporate with another layer of hierarchy, authorized formal systems, detailed documented procedures and protocols. The leader of the organization may no longer know the same level of detail about the personalities and lives of the employees. It becomes an entirely different business and the skills required to make this transition are entirely different from the entrepreneurial ones needed in the early stages. The founder may not have these skills, nor wish to develop them. It’s not uncommon for them to start another business and grow it again towards this level of around seventy employees. I’d go so far to say that the leadership, management and business administration skills to grow beyond seventy employees is the single biggest factor inhibiting the emergence of more large African agribusinesses.

Preconditions for Successful Delegation

Codifying Purpose and Values

Successful delegation is essential to reduce key person risk, and it begins with codifying the business’s purpose. Delegation is not just about handing off tasks; it is about empowering others to take ownership and make decisions. Codifying the purpose and values of the business helps in successful delegation.

Everyone within the organization needs to understand why the business exists and the problems it solves for its clients. This purpose should reflect the business’s character and identity, avoiding generic statements that could apply to any company. It must be specific, clear, and resonate with all team members. I know, we’ve all heard about the importance of this before, and as an entrepreneur you want to get stuff done. You might consider this as being too fuzzy and without immediate results, but bear with me. It’s the single most important thing you can do to delegate effectively.

Work on creating a behavioral guide for employees by codifying your values. This can be a process of discovery, as most business cultures grow spontaneously in the early years. Involve your senior management team in this process to ensure buy-in and comprehensive representation of the company. Bringing these values to life involves integrating them into the rewards system, referencing them during discussions about improvements, and embedding them in disciplinary procedures. Values should also be a central part of all recruitment efforts, ensuring that new hires align with the company’s culture from their first day on the job.

Clarification of Roles: Avoiding Bottlenecks

The bottleneck is always at the top of the bottle, and clarifying leadership accountabilities is key to reducing dependency on key individuals. Often, the strengths of a leader can become the organization’s weaknesses. Leaders may hold on too tightly to roles, suffocating initiatives, or employ someone too junior for a role while keeping tight control over them.

To clarify roles effectively, start by listing all the roles within your business, from operations to marketing to finance. Identify who is responsible for each role, ensuring that only one person is accountable for each. This clarity prevents confusion and ensures accountability. Each role should have one or two key performance indicators (KPIs) that link back to the overall strategy and critical success factors of the business. If a founder’s name appears for more than two roles, it indicates an issue that needs addressing. Typically, founders may serve as CEO, head of marketing, head of sales, purchasing and more. Clarifying these roles provides a starting point for distributing responsibilities more evenly. When I completed this exercise for myself, my name only showed up twice instead of six times, enabling me to focus on more strategically important work instead of the nuts and bolts of operations.

Codification of Key Processes: Creating Autonomy

In small businesses, decisions on key processes are often made by one person. As the business grows, it becomes crucial to ensure that cross-functional processes are running smoothly. Start by listing your key cross-functional processes, such as customer order to cash collection, recruitment, and conversion of raw materials to finished products. Limit this list to a maximum of seven processes to maintain focus and manageability.

Map how each function within the business is involved in these processes. Designate one person per process who is responsible for tracking performance and establishing KPIs for each process, focusing on speed and efficiency. By clarifying how each function or role contributes to key processes and their related KPIs, you ease the transition to a more collaborative and autonomous working environment.

This transformation can be challenging, especially for those used to working in silos and making autonomous decisions. Encourage collaboration by assigning projects that require cross-functional teamwork. This not only develops a collaborative culture but also helps identify individuals who can work autonomously while contributing to the overall goals.

Mapping key processes also lays the foundation for becoming a lean organization. Once you have a clear overview of a process, eliminating inefficiencies and waste becomes much easier. This step is crucial for improving operational performance and achieving long-term success.

Established Communication Systems: Ensuring Effective Information Flow

Effective communication structures are essential to ensure information flows smoothly throughout the organization, from top to bottom and vice versa. This is the final step to reducing key person risk and ensuring you can exit your business at the time of your choosing. Previous steps include delegation, role clarification, and process codification.

To set up an effective communication system, establish fixed agendas with built-in flexibility to address specific challenges. Use a hierarchy of meetings—daily, weekly, monthly, and quarterly—each with a fixed agenda but room to tackle one or two pressing priorities. In daily and weekly meetings, focus on “stucks” or issues that need immediate attention. Monthly and quarterly meetings should zoom out to check for emerging trends and adjust strategy and priorities as necessary.

Daily meetings are essential. Each team member should briefly discuss how yesterday went, their plans for today, and their current “stuck.” These meetings should be concise, lasting no more than ten minutes. If someone doesn’t report a “stuck” for two days, it indicates they may not be fully engaged or encountering challenges, which should prompt you to start asking questions. Frequent “stucks” are a sign of active problem-solving and engagement of your team.

For the communication system to be effective, ensure your team is informed about ongoing operations before the meetings. Visual management systems and KPI scoreboards can help keep everyone in the loop, making meetings more productive and focused. If meetings are not saving you time, then you’re doing something wrong.

The role of investors and entrepreneurs in the emergence of larger African agribusinesses

There is an apparent contradiction in African agribusiness where businesses complain about the lack of available finance to fuel their growth, while investors complain about the lack of investable projects. I firmly believe that building teams using the steps set out in this article would unlock the emergence of more investable projects and facilitate more money flowing toward agri-processing. Here’s what is required from both businesses and investors.

Entrepreneurs

The key characteristics of businesses that end up at the key transition from entrepreneur to leader are the following: they are at about 70-100 employees, they have a turnover of somewhere between 2 and 20m USD and they have often been in existence for a while, more than ten years is not uncommon. Their founders and managers have delivered an outstanding performance: despite the odds they made it to this point. That requires resourcefulness, plenty of entrepreneurial skills and persistence.

There is, however, also a darker side. Over-confidence and narcissism can develop from years of ruling a business without honest feedback, leading to a distorted vision of reality. Going for many years as ruler in your own little kingdom has the potential to distort your judgement. If you don’t have critical directors, a spouse, or advisors to keep you grounded you will develop a distorted vision of your business and what is needed to take it to the next level. The science is clear on what unchallenged power does to people. The mechanism is not your fault, but letting it happen is. Having people close to you who speak truth to power can prevent this distortion. If you don’t, you will become your business’ greatest vulnerability.

Taking your business to the next stage requires a change in leadership style. The role of leader of the business becomes more that of an administrator and less that of an entrepreneur. Not realizing this, and proceeding with growth and expansion anyway, is what trips most businesses up. More businesses die of indigestion than of starvation. From where I sit, I see three options available to entrepreneurs that want to take the next step:

1. Reinvent Yourself: Recognize that leading your business through the next stage requires personal transformation. Educate yourself on the topic, strengthen your (advisory) board, and bring in experienced people to help with the transition.
2. Hire an Experienced CEO: If the role of CEO for the next stage does not fit your skills or interests, consider hiring an experienced CEO while you focus on areas like marketing, client interaction, or product development. Alternatively, you could lead new projects that play to your entrepreneurial strengths.
3. Maintain the Status Quo: Some entrepreneurs choose to maintain their business at its current level and start new ventures instead of scaling up. This approach allows them to leverage their entrepreneurial skills repeatedly without transitioning to a corporate leadership style.

If you do none of the above and still complain about the lack of finance available to grow your business, it’s time for a hard look in the mirror. The lack of finance is because you are not investable. It’s as simple as that.

Investors

(Impact) investors potentially have a large role to play in facilitating the emergence of larger agribusinesses. By doing so, they could unlock more investable projects and grow their own businesses. However, I do not see the facilitation of the business leadership transition very high on the agenda.

Typically, equity investors take a minority stake in an agribusiness, secure some negative control clauses in a shareholder’s agreement, and contribute to governance through a board position. Some offer technical assistance funds to help organizations develop competencies like passing certifications, improving accounting systems, or investing in sustainability. While these efforts are laudable and needed, they do not address the core bottleneck.

There seems to be a misconception that because a business is already relatively successful and has existed for over a decade, it doesn’t need further leadership and management development. This assumption overlooks the fact that what got the business to this point won’t take it further. Leadership and management capabilities need conscious development to enable the transition to a larger scale. The transformational change that is required also doesn’t sit well with the time horizons of most technical assistance funds or development efforts. A successful transition may take longer than what they’re used to: three to five years. The resource intensity of facilitation such a transition is not the same over the entire duration but some level of involvement is required.

The business case for investing more in leadership and management capability development to me is a no brainer. Higher valuations on exit, fewer investees needing restructuring, and increased impact are all positive outcomes. However, this requires changes to existing business models for investors. The costs come upfront, with results only realized on exit. Investors in impact funds may not be willing to accept higher cost structures to facilitate increased investment in leadership development. This approach would also be more active on the part of the investors, perhaps requiring some realignment of competences to be more involved with their investments.

So far, we have discussed the role of private equity investors and much of what was discussed could be extended to lenders. Obviously, they have less leverage and power than an equity investor would and so some control could be exercised through conditions precedent or additional covenants. A structured approach along the lines set out above will lead to superior results. If that approach is embedded in the business models of impact investors, new markets will open up. Because risk is reduced and backed up with more intense investment in leadership and management capabilities, more businesses would be investable. What do you think?

Conclusion: joint action is needed to unlock growth of African agri-processing

Addressing the dependence on key individuals is crucial for the growth and sustainability of agribusinesses in Africa. By focusing on reducing key person risk and building high-performing teams, businesses can overcome the significant obstacles that limit their growth beyond seventy employees. The steps outlined in this article—codifying purpose and values, clarifying roles, codifying key processes, and establishing effective communication systems—are practical strategies that can drive business growth and resilience.

Implementing these strategies leads to more efficient operations, faster growth, and a more enjoyable work environment. It also makes the business more attractive to investors and buyers by demonstrating stability and resilience. Moreover, enabling innovation and adaptability within the team ensures the business can keep up with the challenges of the African agribusiness environment.

Moving from reliance on a single individual to a team-based operation is challenging but necessary. It requires a change in leadership style, a commitment to delegation, and a focus on building a cohesive and engaged team. Entrepreneurs need to recognize the importance of transitioning from a hands-on, entrepreneurial role to a more administrative and leadership-focused position. This may involve reinventing themselves or hiring an experienced CEO.

Investors also play a critical role in this transition. Impact investors, in particular, have the potential to unlock more investable projects by supporting leadership and management capability development within agribusinesses. However, this requires a shift in their approach, moving beyond technical assistance, board work and negative control clauses, to actively facilitating leadership transitions and investing in the long-term capabilities of their investees.

The business case for investing more in leadership and management capability development is clear. Higher valuations on exit, fewer investees needing restructuring, and increased impact are all positive outcomes. Investors must be willing to accept higher upfront costs and realign their competencies to be more involved with their investments.

Access to finance does not need to be a bottleneck for agri-processing entrepreneurs. Similarly, a lack of investable projects does not need to be a bottleneck for investors. Overcoming these challenges requires action from both sides, recognizing what is needed for these businesses to transition to their next stage. By taking these proactive steps, both businesses and investors can help secure the emergence of larger, more resilient and more sustainable agri-processing companies.