6 Tips on Safeguarding Your Diaspora Business from Predatory Schemes

The disheartening stories of African immigrant businesses falling prey to treacherous schemes and unscrupulous tactics say a lot about the cunning ways of business "stealers" and the need for increased vigilance among thriving business owners in the diaspora.

In the competitive field of diasporic business ownership, success stories are often celebrated, but the darker side remains shrouded in silence. To navigate these perilous waters, one must recognize the potential threats posed by seemingly trustworthy figures such as business partners, legal advisors, and consultants. The calculated plots devised by these opportunists designed to blindside victims and gradually wrest control of their enterprises.

Starting a business in the diaspora is a dream for many Africans, driven by the aspiration to make a positive impact back home. However, the intricate narratives behind these businesses often go unnoticed, overshadowed by phrases like "it was hard, but we made it." For the unfortunate few, their tales of business demise are buried under explanations like "the business didn't work out" or "things happen." Successful businesses attract both opportunities and opportunistic individuals, often disguised in professional and legal garb, demanding a heightened level of discernment to uncover their motives.

When things are starting to look better than good, that’s the scary bit – scaling. Many turn to loans and potential investors or business partners to meet the exponentially growing demand and production capacity to scale their businesses. However, just like any business that’s looking to scale there are a lot of details that more often than not get skipped on assumption that the new partner has got one’s best interests let alone the company’s best interests at heart. This illusion has seen many businesses come tumbling down. And there goes 5,8, 10 years of hard work.

Choose Your Partners Wisely:

Selecting the right business partner or investor is pivotal to the growth and sustainability of your business. Tales of scams and deceit circulate on platforms like TikTok and Instagram, underscoring the importance of due diligence in evaluating potential partners.

A shady business partner is no good for any one, but you already knew that – except they don’t come labeled “bad business partner please stay away”. So, here’s a few red flags to NOT ignore. Because while many African immigrant business owners in the diaspora look to scale and expand production to Africa to create employment, fund NGOs, create economic impact etc. There’s always a band of feisty bandits waiting to pounce at their businesses to steal these dreams from them.

Beware of Overly Enthusiastic Investors:

The excessively enthusiastic investor may mask a calculated schemer with divergent goals. These individuals often present seemingly fool proof plans, leaving little room for independent decision-making. The intrusive approach may lead to a scenario where the business owner becomes excessively dependent, making it easier for the partner to seize control.

Exercise Caution in Loan and Investor Agreements:

Scaling a business may often involves seeking loans or additional investors. However, business owners must scrutinize every detail of these agreements, ensuring that the new partners genuinely have the business's best interests at heart. An illusion of collaboration can quickly turn into a nightmare, leading to the downfall of years of hard work.

Guard Against Business Restructuring Ploys:

Business stealers may advocate for a company's restructuring, gaining access to crucial information like bank accounts, websites, and social media. This enables them to manipulate cash flow, withhold payments, and create a façade of ownership changes, all while pushing the original owner out of the picture.

When the business stealer/partner/investor gets a hold of the company data, the job is ¾ done as the plot to kick out the owner involves excluding them from official company documents such as the company headed letters and other documents that legally bind them to the company. In the meantime, they (the scammers) may delay any announcements about any changes in the ownership of the business wherein they state either partial or full ownership of the business. All this stalling is done to ensure that the process of kicking out the original owner is thorough.‍

 Vet New Players and Legal Documents:

Business stealers may introduce new figures, such as managers or operations personnel, as part of their plan to marginalize the original owner. Hasty signing of legal documents without thorough comprehension can further accelerate the process of business takeover. A careful evaluation of new players and legal agreements is essential to prevent unwitting relinquishment of control.

The scammer will particularly use this stunt to deny the victim ample time to thoroughly understand the contents of the documents before signing them, insufficient time to consult a legal practitioner for advice on the same leading to the signing of documents that may not only implicate the victim but also kick them out of business quickly albeit “legally”.

A change in the company’s IT guy.

They will suggest a very much needed upgrade of the company’s computer system security. However, this is usually done to grant them access to personal emails, passwords and certain authorizations to enable the hacker/ New IT guy to phish clients, log the original business owners out of the company systems and social media, and send out spam email to already existing clients.

In conclusion, thriving diasporic businesses can only sustain their success when meticulous attention is paid to both small and large details across management, operations, marketing, and production. Investing in quality legal and financial advice becomes paramount, serving as a crucial defense against the potential pitfalls awaiting African immigrant business owners in the diaspora.