Ten tips to start a business in Africa

This article has been published in full length for the first time in German language in the BUSINESSART magazine in September 2017.

READY TO MOUNT A VULCANO?

Some of us have already ascended a volcano. If they succeeded and made it to the edge of the crater, they know it’s worth the effort. With all senses you can feel natural forces like fire, smoke and sulfur.

Climbing a volcano can be compared with a business venture. At home in Europe, as well as in an African country. The only difference probably is, that African volcanoes are usually somewhat hotter.

Maybe that is the reason that applying well-known mountaineering tips can also be a help for business people.

1. A good vulcano tour starts with checking out and preparing!
Focus on the customer: Design instead of rigid planning

As you have to prepare carefully for a difficult ascent on a vulcano, you do so when expanding a business to another country.

Normally, successful companies know quite well what they are able to do and which strengths they build on. And they know what problem they solve for their customers and which benefits they create.  (What here sounds obvious, is actually sometimes not so easy to detect.)

This leads to the very first questions in a newly selected African country: Who are our potential customers and do they have the same problems as the customers in our home market? Don’t take it for granted.  If not, what is their central challenge? Can we nevertheless add value to theme ?

2. Bad weather doesn’t exist, just inappropriate equipment!
Prepare for missing parts of the value chain

Any economic activity needs other activities as an input and is itself an input for others. This means, your activity is embedded in a value chain.  In an emerging market you should put more thoughts on this fact. Before you start , make sure you understand which input factors you need. And find out which ones are available in your African country and in what quality. Take also into account the technical and institutional infrastructure and complementary services as marketing, sales, finance, health or education.

And then consider your back-up plans. Which of the missing elements could you take over yourself? How else could specific services be ensured? With which partners?

3. Never without a local guide!
Learn from intermediaries

Look for “intermediaries” who speak both languages ​​- the local one and yours. It is not just about “translating” the wording, it is about understanding, the transfer of meaning and values ​​from the local context to yours vice versa.

Let these mediators be your guide at the beginning. And do not dive too quickly into an expat community. Be open and try to learn as much as possible from your chosen intermediary. How the local economy functions, how politics work. And especially, how you understand and hoe you get understood. That creates the basis to make your future interactions positive and trustworthy.

4. Never go alone on a volcano!
Work with partners, in ongoing agreement

Start with the assumption, that the informal sector keeps the economy alive in your African country. Which also means, formal law enforcement will not be an option for you for the time being.

Therefore, you need local partners. Only an embedment in local networks makes your long-term survival possible.

But how to work with local partners? Do it on the basis of explicit agreements. Those agreement don’t need to be formally enforceable. Contrary, keep them simple. But make them understood and considered binding on both sides.

And take it as your ongoing and permanent job to maintain  “consent” on these agreements.

If you succeed, you automatically nourish your relationship and you create trust. The basis for your future success.

5. Have enough to drink!
Calculate your affordable loss

Sufficient cash and cash equivalents are decisive for success. But what is “sufficient”? Doesn’t it seem that cash is never enough?

That is why you orientate your project on the available resources. What is the “affordable loss” for you? How far can you go in the submission without jeopardizing the African venture or your business at all? Go from your existing resources and see what you can make of it. Always do as much as your financial resources allow, and let the financial resources determine the speed of your action.

6. It’s easier with companions!
Clarify common values

And make your partner selection also on the basis of the greatest possible consistency of the world views and the underlying values. When you work together, you will see that you are developing and maintaining a common vision.

In management, the existence of common values ​​is called a “high-level parameter”. This is becoming more and more important because, in times of increasing complexity, a common value orientation and direction are given. Organizations are thus easier to cope with unmanageable situations.

7. With a base camp on the largest craters!
Establish local presence

If it allows your financial resources, ensure a permanent local presence as early as possible. Too often, the lack of a representative has caused gaps in the field, which could not be caught up again. Lack of information, lack of learning, deficient processes and, above all, lack of business deals are the result. Without an early suburban representation there is a risk that you will not reach the necessary critical level of action and will give you an (financial) breath at an early stage.

8. If it gets slippery, in small steps!
Iterative with feedback loops

Do not wait until you have planned a completed overall concept. Test a prototype of your performance as early as possible with real customers. And get direct feedback. Make the effort to standardize this process and repeat it over and over again. “Test-and-learn” instead of “plan-and-implement” – and you will be able to reach your goal more easily and quickly.

9. Expect a change in the weather pattern!
Make use of incidents and accidents

Be open, especially when it comes to uncertainties. Try to include these and other coincidences in the design of your activities. Get the persons you meet at random and fit to suit you easily on board. And change the direction of your activities flexibly with their additional contributions.

10. Small rope teams for difficult routes!
Create powerful autonomous units

Your strategic business units outside the market determine the success of your company. Give these units as much autonomy as possible. But within clearly defined guard rails: a common foundation with clearly defined values, clear rules on budgets, reporting and interfaces. And also: Never lose direct contact with what really happens in the field out there.

From push to pull

 

If you started your activities in a foreign African country on the basis of sound principles, you were flexible enough, and you could understand all the inconveniences, or even use them for yourself, and if you have had enough endurance, you will be rewarded automatically.

Suddenly, you are no longer the one who wants something that tries to persuade his / her ideas and concepts to others (push). Rather, it is the others who want something, your customers see the benefits they bring you, you are willing to pay for their services, and they even run the doors.

Then you have managed to “pull” (pull) the demand for your services. You can turn your “push strategy” into a “pull strategy”. Congratulations!

 

Download the complete article here (in German):

ZEHN TIPPS FÜR UNTERNEHMEN, DIE IN AFRIKA AKTIV WERDEN WOLLEN.

 

 

 

 

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