At SOWIT, we decide to focus on African farmers as they are facing a crucial sustainable intensification challenge, far behind all other territories. You might be wondering how could a small french-moroccan start-up with limited means thrive in such a complex environment and provide win-win services to its various customers?
Let us share with you 7 of the most beneficial tips we apply when getting into business in Africa.
1. Dive deep into diversity and build an interactive personal roadmap
Many people say that in Business school, you mainly learn how to dance and drink. Not only is it true, but Business School also gives you the opportunity to dive deep into multiple and diversified subjects. For example, the YIP matrix was tremendously helpful in identifying and addressing decisive drivers in the French and Western African economy. Since our marketing is easily transferable and trade policies are favorable, we used this knowledge to take advantage of the interdependence of France, Morocco and Western African countries.
We did build our business roadmap with statements such as “Nigeria is the next China” or “South-Africa is the only food self-sufficient country in the continent.” We first bought a large map of Africa and annotated it with all the information coming from our customers, researches, readings and interviews. We learned that drones were banned in Nigeria and competition was tough in South Africa. This thus led to realize that there were some areas far more accessible for us (Ivory Coast, Ghana, Tanzania, Morocco, Tunisia).
Before you act, think. Relying on your intuition is important but it can also be misleading (except if you are Steve Jobs). Frameworks, concepts and insights are necessary to challenge your beliefs and remind you of the essential. In Thinking, Fast and Slow, Daniel Kahneman illustrates this idea. He argues that old-fashioned and boring analytical frameworks are key to make conscious decisions. So, don’t let your gut feelings take over. Make an effort to dive deep into the subject you are interested in and always, leverage external expertise before making any big decision.
2. Open your eyes, leapfrogging on the go!
I hate the word “reverse innovation”. It sounds as if “innovation” was a Western property and it is then “reverse” where it comes from somewhere else. I visited 7 African countries in 2016 and they seemed more innovative than some of the Western countries I lived in. Africans innovate daily because the more limited your means are, the more creative you must be. When visiting one of my partners, I noticed he modified his drone to mount other custom batteries. This resulted in an increase in minutes flying -From 35 to 100- and flight coverage. Because of the challenge in finding a remote area to set the drone station, he had to maximize the coverage each time he found one.
One of the most important turning points in African history is that the continent does not need to rely so heavily on Western market economies. It is increasingly expanding its local markets to build a balanced economy which is thus less vulnerable to commodity price cycles.The SOCFIN group manages thousands of palm oil hectares in 8 African countries. It thus does need to ship its production overseas anymore as local market are today absorbing its production. Moreover, the price of palm oil has started to increase since national demands exceeded supply. If you propose a B2B service for instance, you may need to be innovative and adaptable enough to target both the Western multinational companies operating in Africa and the local rising companies. In Precision Agriculture services, working for Western-based companies producing in Africa (e.g. KKO international in Belgium or SOMDIAA in France) and for rising local companies (e.g. Dal Group in Sudan or Harvest Flowers in Kenya) allows to diversify risk and leverage international innovation. That is why we decided at SOWIT to work with global agribusinesses while making sure the solutions will be adapted and accessible enough to reach any farmer.
3. Manage your P&L and find your magic payment balance
Build your revenue pipe
Revenue first! Focusing on the revenue you are able to generate is paramount because you need to confirm that the services you propose are relevant, enabling you to take strong market positions.It is good to wonder if Marketing is transferable or if your operational margin is fine enough but it is essential to determine how bankable your solution is. I remember spending a lot time analyzing total cost of drone ownership (TCO) in Democratic Republic of Congo (DRC) while I should have first analyzed the revenue potential. It was actually not relevant for us to start a business there since the proportion of farmers cultivating the crops we had services for (cereals, oilseed rape or potatoes) was negligible.
Find a payment balance
Payment and Cash Management are essential and finding the right payment equilibrium is really appeasing. Payment in advance is the safest option but it sends a damaging “lack of confidence” signal to your partner. One of the solutions could be to negotiate favorable payment terms with your suppliers (up to 6 months) to cover as much as possible the payments delays you will face.
Model your business
It is very important to model your operational plan. Fluctuations are even stronger in Africa where some economies still rely on commodities (oil mainly) and face reversal cycles, not to talk about political unsteadiness. Being agile is essential and having a flexible piloting tool is helpful!
Set your business hypotheses, understand your revenue drivers, breakdown your costs, dive deep in all your business rationales and build your own piloting tool.
Do not forget margins
Margins are important even for a start-up. A start-up is a temporary organization designed to search for a repeatable and scalable business model. You will thus make mistakes and take difficult decisions but it is essential to think big and engage in a viable win-win business. Keep tracking the contribution margin of your service and set quantifiable targets. This way, your customer will be your best investor!
4. Coach, develop and LISTEN above all
Africa still has the image of the “hopeless continent” despite that it tripled its GDP in the last 20 years. This image is so prevalent that some people would rather invest their time with well-established companies than in young Africans that have a lot of potential but lack resources to develop their projects. It is not only rewarding to coach high-potential young Africans but they also end up nurturing your own project. They are the best advocates as they already achieved a long journey to identify your company, understand your technology and size their market. Furthermore, they have an excellent understanding of the existing technologies and have been talking to multiple solution providers.
Africa is so diverse and market information is scarce. We tend to present our services first and then find a way to adapt them. Never prejudge any potential partner. Listening to them is key to get crucial insights. You need to understand your interlocutor journey, show empathy and feel his or her way. No one cares about your service if it does not hold clear direct value while being easy to use.
5. Patience is bitter, but its fruit is sweet!
Trust is necessary to achieve business in risky environments and patience is key. You need to believe that the outcome will be positive. Some projects are hard to set and giving time and support to your partners is crucial. Think long-term and build relationship that are based on values, passion and ownership and not simple business deals.
6. Be obsessed by the continent, 100% focus
Africa is not just an opportunity to get additional revenue, it is a passion. There are so many challenges in setting a win-win business that it requires a 100% focus. Africa is an obsession not an alternative and you need to believe in the fact that it holds outstanding opportunities for the world. There are companies that are ready to die for it so do not go if it is a default choice.
7. Be resourceful, bias for action and multi-tasking
Do not walk away after your first failure, insist. Look for the right people to contact, do not hesitate to make them aware about the impact your business could have, never miss an opportunity to convert any decision-maker to your plans. You need to be involved with passion. Do not just attend great conferences, make your case every time there is an opportunity and share as much as possible with potential customers, scientists or influencers. There are times (Kairos) where life open its arms, never miss one of them.
Africa is now!