McDAN warns SMEs against founder-dependent growth, urges stronger systems

McDan Group's founder and Executive Chairman, Dr Daniel McKorley, has warned small business owners against over-dependence on their own leadership as companies scale up. During a speech at the Telecel Business Runway, Dr McKorley outlined three phases of business growth: infant, organic, and corporate. In the infant stage, entrepreneurs handle all aspects of the business, from cleaning to sales.

The organic stage sees businesses generate revenue and attract talent, but this period can be precarious due to lack of robust systems and poor management choices. Dr McKorley emphasized that a thriving company is built on effective systems, structures, and corporate governance, not personality alone. He cautioned that while expanding revenue might seem like a sign of success, it doesn't guarantee a resilient business.

One challenge during the organic stage is managing employees who may have joined due to personal connections. Dr McKorley advised that business owners must be prepared to make tough personnel decisions to ensure growth. Drawing from his experience in logistics, where he owned 220 trucks across West Africa, he shared how he identified that only 61 or 62 trucks were profitable, while the rest were causing financial strain.

This led him to stress the importance of regularly assessing operations to identify value-creating elements. McKorley also advocated for investment in human capital, despite the risk of losing trained employees to competitors. He recounted a cargo conference where he and two staff members attended together, while a fellow CEO traveled alone.

The latter later revealed that he had stopped training employees, believing they would leave to start their own businesses. Dr McKorley took a different stance, training ten people, with the expectation that nine would depart and one would remain. He believed it was his responsibility to give back to the workforce, and this approach helped him cultivate a dedicated team.