Are you planning to start a business or invest in Africa?
Today, I want to share with you some indispensable Africa business tips with those of you who are getting started. As an Africa Business Coach and Consultant I engage regularly with people from various background who want to get started in Africa, and interestingly many feel challenged by the same aspects and consequently, they tend to make the same mistakes.
So I made a list of some bite-sized Africa business tips for start-ups. Being aware of them, will help you to maneuver a little better through Africa’s complex business environment.
1. Don’t just get started – fix a local problem or gap
I will be honest with you: Your biggest success factor lies in aligning your business concept with a real local demand on the ground. Fix a problem – meet a need or a clearly growing market demand, and you will be in business. In general term, there is usually a much higher rate of demand than supply across sectors and industries, and this is precisely where you need to come in.
My Advice: When there is so much opportunity, I advice not to come up with a business concept where you try to make a market fit with what you have set out to do (it can work, but responsiveness within your target market may be delayed or never happen to an extent that is very profitable). Instead, take a demand-driven approach. Get your antennas out in an effort to spot opportunity and how you could provide solutions in form of products and services.
2. Start with a single market on the continent
“So you want to get started in serving companies in Africa with your product xyz. Great, have you been thinking of a particular market?” – “Yes, I was thinking of South Africa, Kenya, Tanzania, Ghana, and possibly Angola.” Oh no, no – I can see where the challenge lies when you have 54 markets to choose from, but targeting several countries at once with your start-up or your Africa entry strategy is not only almost practically impossible, it just adds up to the lack of clarity and focus among both you and your target market and will hold you back. Remember you are just getting started – you are not Burger King looking for a Million-Dollar expansion plan!
My Advice: Start with a single market. Possibly two if they are in the same region – make sure your market, your business concept, and your personal circumstances align well with each other. That’s key for success. Get started, get the necessary focus, experience, and revenue. Then you can always expand to a new African market later on in a quest to grow your business. That’s another stage.
3. Choose a market with high potential but low risk
Yep, they are available, you just need to find them. In my opinion too many first-time entries into Africa are heading straight for the most difficult markets on the continent, often without realizing it. And a year later they still deal with the headaches. These markets may have a high opportunity ratio, but they also have a high level of risk. I would leave those markets to the more advanced entrepreneurs and businesses with previous experiences in Africa. Why make your life and operations difficult from the get go? Exception: An exception are online businesses, as they are generally less affected by corruption, red tape, and unfavourable business environment.
My Advice: Check out my post ‘Starting a business in Ethiopia, Nigeria, Angola, or the DRC? Then Know This…..” or visit the World Bank’s ‘Ease of Doing Business’ Index to compare African markets against each other.
4. Get strategic partners on board early on
Partnerships are necessary for the advancement and growth of any business and that is even more so the case in Africa. Of great value – but often overlooked – are so-called ‘strategic partners’. These are government agencies, industry associations, or other businesses who are interested in helping you succeed, as long as you can provide immediate value to their own agendas, members, or operations. In my experience writing them, following this up with a telephone call – or ideally – passing by their office asking for an appointment always works. You may be surprised by the level of interest and value you receive in return for both short-term and long-term projects. I have successfully knocked doors. More than once.
My Advice: Check out the websites of such potential ‘strategic partners’ and be very clear about how what you offer aligns directly with their goals. Then ask for a meeting and prepare a friendly proposition. Make clear what value you can provide and how you would like them to assist your own endeavours. Make sure you offer more than you ask for – or at least keep the balance always in their favour.
5. Don’t underestimate start-up costs on the ground in Africa coming in from abroad
Contrary to some perception – starting a business in Africa is not cheap and the more you depend on certain licences and permits, imports of certain good or materials to get you started, and third-part contractors the more time and money you will have to spend. This is in particularly the case in ‘high risk’ markets where responsiveness is low, corruption is high, and systems are ineffective. Waiting and/or bribing someone to get your shipment out of the port 1 month later both cost significantly. You will need a lot of capital for daily subsistence and travel. Also note that there are huge local difference regarding the cost of cargo shipments, taxes, and labour so it is worth doing some comparisons and your calculations before choosing your entry market.
6. Don’t get frustrated by obstacles – see your next opportunity in them
One very crucial but largely overlooked aspect to a successful business are not just market information and strategies, but the investment of time and even money into your own personal growth and mindset development as an entrepreneur. This truly is priceless and will turn you in my opinion into both a better businessman/woman and a much happier person. So when you come across obstacles on your way to success in Africa do not just see them as nuisance, but as another problem that needs to be fixed and which you can ultimately even turn into yet another lucrative business opportunity for you. Once you see opportunity where others see solely a problem, you have indeed developed an entrepreneur mindset. The most successful African entrepreneurs – and I have followed many of them – have done precisely that !