FEATURE: Does your chama add value?

Many groups now have to deal with irregular contributions, lack of quorum at meetings, lack of communication, no leadership, no execution, and so on.

What makes one investment group really successful where three others (with people of the same financial capacity) fail or simply do not make any progress?

One of the keys to that answer lies in the difference between reporting to work and going for a party. When you report to the office, you know what your job is about.

You realise that there are expectations and a certain way you must perform your job. You know there will be consequences for not performing your role to a particular standard.

You are compensated for performing at your job. When you go for a party, the expectations are different. You are there to have fun and socialise.

There are no dire consequences if you decide not to turn up at the party. There is no financial compensation for coming to the party.

Lack of objectivity

The fundamental reason many groups do not work is because they have not decided whether they are at the office or at a party. You cannot have both a social and business agenda. One of them must take priority and structures set up to support that agenda.

Many groups want to arrive at a business-related destination (eg creation of wealth) but have set up social structures. They want to get to the office through a party.

The party atmosphere

During the Christmas season, many organisations held staff parties. But now that we are in January, none of them will have internal meetings to start planning the next Christmas party.

This is because the Christmas party is a bonus event and not the main business of the company. The mistake many investment groups make is to spend significant time, money, and effort in social activities when the main agenda should be investment.

I met a group that was adamant about supporting its group members with school fees. The problem is they started using money (contributions) that would have otherwise gone into investments to pay school fees.

Mistake one

This was obviously compromising their returns. The school fees agenda is what the group focused on in meetings, leaving investments as a secondary topic. This was starting to cause a rift between those who joined this group to create wealth and those who wanted to continue paying fees through this vehicle.

They now have to decide which agenda is going to be prioritised and forge forward even if it means losing some of the members. If you find your group is keen to stay together simply for social reasons, that is also alright — as long as you are aware you are a social club and not an investment group.

A proper plan

An investment group must clarify where it is going.  There must be a single vision that unites everyone.  What do you want this group to do for you?

Do the others want the same thing? This will determine how the group will operate and even what investments will be made.

There must be that single objective that everyone buys into and a plan to make it happen. This is what is known as the strategic plan, and this is the process that everyone should be involved in.

Execution matters

Next, this plan has to be executed. Say you had some shares in one of the companies on the stock exchange.

When they want to do something different eg, open in other countries, do they consult you and every other shareholder? I would think not. Nothing would ever happen this way.

When you bought the share, you also bought into the vision and management. Not everybody in the investment group needs to be in agreement for the group to move forward on a decision.

You do not all have to agree on what share to buy. A business cannot move forward with 15 CEOs. Your group (investment company) should have a board that is mandated to execute day-to-day decisions in line with the overall vision of the company. 

This board can be elected every year by the shareholders of the company i.e. the group members. Just as you would not like to see the board of the company you have bought into having its meetings at social venues, neither should yours.

Assess if the group is ready for success

Many investment groups have their meetings in social venues or in homes; the business is discussed for 10 minutes and is then promptly forgotten in favour of the party.

Have your meetings in places that are conducive to concrete business discussions.

Last but not least, the name you give the company should speak to a business agenda as well.

Given the above factors, evaluate whether your group is set up for success in wealth creation or for social success.

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