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, those 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.

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

As you have to prepare carefully for a difficult ascent on a volcano, 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 them?

Bad weather doesn’t exist, just inappropriate equipment!
2. 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 thought into 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 complimentary services as marketing, sales, finance, health or education.

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

Never without a local guide!
3. Learn from intermediaries

Look for “intermediaries” who speak both languages. But it is not only about translating words. It is about transferring meaning and values ​​from the local context to your environment and vice versa. It is about real understanding.

Let these mediators be your guide at the beginning. And do not dive too quickly into an ex-pat community. Be open and try to learn as much as possible from your chosen intermediary. How do your potential customers think? How does the local economy function? How does local politics work? And especially, how do you get understood? That creates the basis to make your future interactions value-creating and trusting.

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

Start with the assumption that it is the informal sector that keeps the local economy alive. This also means that formal law enforcement will most probably not be an option.

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 agreements 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.

Have enough to drink!
5. 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 your available funds. Not the other way round. What is my “affordable loss”? How far can I go without endangering the African venture or even my whole company? Go from your existing resources and see what you can make of them. Let the financial resources determine the volume and speed of your action.

It’s easier with familiar mountain buddies!
6. Clarify common values

Make your choice of partner based on as much agreement as possible in worldviews and underlying values. Then, when you work together, see that you develop and maintain a common worldview.

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, common values give orientation and direction.

Via a base camp to the largest craters!
7. Establish local presence

If your financial resources allow, ensure a permanent local presence as early as possible. Too often, the lack of a local representative has created gaps that could not be made up. The result is a lack of information, a lack of learning, poorly set up processes and, above all, a lack of business. Without early on-site representation, you run the risk of not reaching the necessary critical action level and running out of (financial) breath early on.

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

Don’t wait until you have complete concept. Test a prototype of your service with real customers as early as possible. And get direct feedback. Make the effort to standardise this process and repeat it again and again. “Test-and-learn” instead of “plan-and-implement” – and you will reach your goal easier and faster.

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

Continue to be open, especially when it comes to imponderables. Try to include these and other coincidences in the design of your activities. Just bring on board the people you happen to meet who fit in with you. And flexibly change the direction of your activities with their additional contributions.

Small rope teams for difficult routes!
10. 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. However, 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 it is no longer you who wants something, who tries to persuade others of your ideas and concepts, who constantly wants to “push” further ahead. It’s the others who want something, your customers see the benefits you bring them, they are willing to pay decent prices for your services and maybe they even knock down your doors.

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

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