The art of Reinvestment to build your Venture.

Reinvestment is when a company take the profits that they will have gather during the trading year and return the money back into the business rather than distributing to the owners of the venture. According to Collins dictionary reinvest is "to back (profits from previous investment) into the same enterprise. McKinsey Consultancy wrote article which talked about the need to reinvest, however they pointed out that the sharing of the profit by the company to shareholder might show that the management has to find enough value-creating investment. This shows that for company or organisation to gain value there is need for the entity to reinvest the profit they accumulate at least a certain proportion back into the business so as to enable growth. 

Most entrepreneurs who have made it big in life (in terms of growth of companies) have learnt that they is power in reinvesting of initial returns in the business so as to grow the venture. Taking a look at the likes of Warren Buffett, Strive Masiyiwa and Kyle Taylor etc. The list will be endless if we are to mention every single entrepreneur who have embraced this model to growth of their ventures from small startups to major fortune 500 companies. In Africa, most people who engage in business have the belief that when the startup is still small it should facilitate for them to have a lavish lifestyle. They neglect the important of growing the venture and the possibility that comes with embracing the culture of reinvestment of profits. Most of this entrepreneurs have failed to separate their conduct between business and personal life. 

The notion that when the venture is yours, you should never put yourself on salary and whatever profit the venture make is your salary is a poor and misguide principle. However this is the culture that most entrepreneurs in Africa embrace, the culture have destroyed very highly attractive ideas into nothing. Even some of the old companies that are now being run by Africans have fallen victims of this culture, CEO falling to release the need to reinvest income from their trading in a bid to impress the shareholders whilst killing the business in the long run. Hayden B (2014) while writing on reinvestment pointed out that, "If you’re a business owner, reinvesting is crucial to your company’s continued growth and success."

Strive Masiyiwa in his autobiography pointed out that he managed to build Econet through reinvesting the profit his organisation made through no declaring any dividend for the first five years. Recently talking Strive was mentioned as a Billionaire this can be seen as result of his business culture and practice. Reinvestment also assist the startup to have more capital to engage in marketing campaigns that will help to improve the market position of your organisation in the local and global market.

Having more disposal capital will also enable you to buff up your staff compliments through hiring or outsourcing none core business activities that allows you to grow the venture. One of the business gurus Peter Drucker argued that it is essential to do what you are good at best and then outsource the rest.

The only way to succeed in Business is through embracing change!

Change have become the most important factor to consider when engage any economic operations for either businesses or countries. Many scholars have under gone research on the effect rapid changes happening currently in the world have on organizations and the overall effect on the economy of respective countries. Zoran Jovanović (2015) pointed out that, "... all business environments are in a state of ongoing change or disequilibrium." The need for organization to embrace change and also develop new business practises that goes against the traditional way of doing business. Most scholars and research institutions like Boston Consultancy Group(BCG) are now advocating for the adoption of lean business structures that can swiftly and quickly adopt to new developments happening in the environment.

In the case of Zimbabwe most industries are in need of fresh capital to enable them to buy capital equipment that will help them to be more competitive in the global village. These can be attributed to the inability by various industrialist to reinvest in capital equipment that will assist in tackling the effects of change. For example David Whitehead was once the leading manufacturer of textile material distributing across the world. Currently the company had undergone series of challenge that led the company to fall. The issue was that the management did not see the problems that was being brought about by the changes in the world. Most companies in the countries have structures that restrict them to engage in any change pro grammes and we had taken change programs as once of event in a world with rapid developments and disruptive technologies.

There is need  for organization to have agility in their structures if there are to survive  and be successful in carrying out their business objectives. Gone are the days where companies had more power influencing what customers would want for them. In these modern day it have come imperative for organization to listen and research on what the customer want and to have followups upon completion of sale. These feedback have become the backbone used by other firms to improve the services and products. Some international companies have resorted in the grouping their employees in small teams so as to enable them to look into changes happening in there respective industries how to go about achieving changes that will make there organization to remain relevant.

Is it a change factor or ill practices in African Business

As the world shrink, the business practices have to go under radical transformation for companies to remain profitable. In today's world the fundamental practice of pleasing the shareholders have lost value if the business want to remain relevant. The customer has become the most important element to business success. Therefore many scholars now suggest that the customer should now be the pivot for any business operations. Research institutes like McKinsey have outlined that there is need for organization to satisfy the customer for them to achieve the overall objective.

This have been necessitated by the growth of the Internet and its adoption to operations of different organizations. The availability of multi sources of information pertaining to varies products online and review by other customers have resulted  in making the customer know more about products being offered. Hendrick & Struggles argued that the emerging of an interconnectivity defines the characteristics of this era. Some scholars have dubbed the era as the information age, which can be translated to people have more access to information which makes them kings and queens for any organization. This era also brought about some changes in a lot organizations.

Disruptive Technology and improvement in some technology has forced organization to have flexible organizational structures as a means to adopt to the rapid changes. Looking at Africa, some of the countries have realize the need to able to embrace changes (South Africa etc.). However, a majority are still lagging behind due to varies problems like corruption, poor governance, rigid corporate culture (mainly found in government controlled companies), and poor financial and resources planning. This aspect can be highly associated with Zimbabwe, where most CEOs that worked for parastatals were taking home huge bonuses and remunerations for themselves in none performing entities. Some even went to looting of company’s capital so as to enrich themselves will forgoing the development of the business as whole (Air Zimbabwe, NOCZIM, ZIMASCO etc.).

Herald of 11 April 2015, had a story of the Air Zimbabwe bigwigs that were sentenced to 20 years in jail after it was discovered that the they looted money from the organization  for about 10 million for  the period of 2009 to 2013 in an insurance scandal. Financial Gazette of 22 October 2010, had a story of NOCZIM having purchased vehicles in a move to bribe officials so that the audit that they had gone under not to be published because of the financial irregularities that was surrounding the organization. In both case the management were responsible for the poor performance of their respective organization because they let agreed and selfishness get in the way of running a successful business as they thought they could control the implications of their actions.

This practise have erode the very fundamental that lobs the whole economic sector of a nation. The society have embraced  this practise as normal, this could be outlined with what our uniformed force were doing (where you find policemen spending more than three quarters of their time harassing drivers rather than attending crime scenes and solving cases).