How Davis & Shirtliff turned a family business into a regional player
The Davis & Shirtliff Group is an indigenous Kenyan family business that supplies water-related equipment in the East African region and has lived through several regimes – from the colonial period until today, 67 years after being founded.
Alec Davis, chief executive at Davis & Shirtliff Group, tells How we made it in Africa’s Dinfin Mulupi the secrets behind running a successful, long-term, family business and some of the opportunities that exist in Africa today.
Tell us about Davis & Shirtliff.
The company was started by my father in 1946. At the time it mainly focused on water supply and in the mid 1960s it started importing equipment. The firm then partnered with Grundfos of Denmark who manufactures pumps. The company changed focus to retailing and distributing equipment, a trend that has evolved since then.
I came into the company in 1976 and assumed control of it in 1990. Since then, we have expanded the product range and markets. We are now in seven countries namely Uganda, Tanzania, Kenya, Zambia, Rwanda, Ethiopia and South Sudan. We also do business in Burundi and DRC and we are looking to develop Somalia. We are now in a number of product segments: pumps and swimming pools (which are our traditional areas); water treatment (which is an area that we have developed); and new business areas (which is renewable energy like solar and power generation). Our business model is importing in bulk into Nairobi and distributing to regional subsidiaries with our fleet of trucks. We have 400 employees.
After 67 years, what do you attribute to the success of the business?
The business has been successful because of stock and our supply chain. We have nearly US$10 million worth of stock just sitting here and very efficient procurement and warehousing logistics. We get the product in and out efficiently, which is important. We are a big brand now because of the many years of experience. We are also very professional with a team of competent and capable staff. We have also innovated in product literature.
What is it like running a family business and what would you advise other family business owners?
Every business has its own sort of environment and the family structure suits us. Normally the problem is funding, but we are reasonably well funded and we have a good team. There are obviously issues with family businesses, but it mostly depends on the individuals. At Davis & Shirtliff, we have got the right people. So how do you ensure succession, progression and sustainability of a family business? One of the key things is to professionalise. In order to succeed in the long-run, you have to run a family business as if it were a big corporate and then people in the family have to earn their positions.
What are your expectations for 2013?
It is going to be a more difficult year this year. The market in Kenya is a bit flat because of the elections. Our subsidiaries are doing well, so our business is going to grow quiet healthily, but in Kenya and mostly in Nairobi, we are seeing a bit of a slowdown. The first half of the year is going to be a bit difficult. Assuming everything goes right after the elections, I think that the country will then take off and business should improve substantially in the second half.
Your future plans for the business?
The continuation of the basic strategy we have been following for the last 20 years, which is widening our product range and market reach.
We are investing in a new facility to increase our local manufacturing capacity. Our local manufacturing will cater for specific products in opportunity areas like solar, water heaters and assembly of electronic and water treatment equipment. There are a lot of items that have benefits of being assembled locally in terms of cost and serviceability. We are also becoming more technologically competent by building our electronics capacity. We want to have a much higher skill and expertise level in our products.
What advice would you give other business people in Africa?
Persistence, vision, direction and the ability to communicate are important. You also have to be disciplined and get on with your staff. It is important to have knowledge and a clear understanding of your organisation and industry. The key requirement, especially in management, is hard work.
Share your thoughts on the business opportunities in Africa today.
Africa is the next frontier, there is no question about that. But it is starting from a small base. Investors are coming in, but obviously there are established players in the market. Africa is not an easy place to work and there are hurdles to business. People sometimes underestimate the [difficulty] with which they are going to become established in a market. Whereas there is a huge opportunity for new investors coming into Africa, I think there are even more opportunities for existing and established players, like us, who understand the market.