Lessons from Africa
Our initial thought here is, let’s reject our paternalistic predispositions to “save Africa” and instead focus on learning from the bright minds who are overcoming the odds and improving both themselves and their countries through entrepreneurship. Here are three common challenges we’ve seen African entrepreneurs overcome in brilliant ways:
1. Having multiple people depend on their success.
In the back of every entrepreneur’s mind is the fact that these individuals’ livelihoods depend on their company’s success. Adding to that pressure is the fact that, according to an Intuit study, just 60 percent of new businesses — anywhere — survive for more than three years. In the Congo, this reality is often magnified, as many households do not have any margin for error. Entrepreneurial success can literally mean the difference between full bellies and starvation.
Western business gurus often talk about the necessity of a do-or-die commitment, and a Congolese entrepreneur we work with — named Kimbale Mughunda Raphael — is living this high-stakes scenario in a very real sense. He has an extended family of 16 relatives and neighbors who depend on his tomato farm’s revenue for survival.
Mughunda’s business exists in a very crowded market with extremely thin margins, so he has to get creative in order to ensure his family’s well-being. Like a Silicon Valley startup offering a promo code to attract loyal customers, he began offering a promotional giveaway of free zucchinis to anyone who purchased more than 50 kilograms of tomatoes.
It worked. Giving away free zucchinis incentivized larger purchases and grew a base of wholesale buyers, rather than end users. This widened his profit margins, gave him an edge over the competition and bolstered his ability to support his family.
Mughunda demonstrates the type of marketing innovation and nimble business strategy that helps young companies here scale outward and rise to the top. As entrepreneurs, these people are responsible for creating value in society and preserving the livelihoods of their loved ones (and, ultimately everyone’s loved ones). In order to do that, we must realize and understand how our ventures affect others. Embrace that, and let it be part of your drive for success every day.
Related: 11 African Entrepreneurs Who Are Changing the Business Landscape
2. Finding a market need.
A recent CB Insights study crowned “a lack of market need” as the top reason startups fail. In order to beat the odds and establish a firm footing in a new market, entrepreneurs must quickly design solutions that are responsive to market realities. This is a tall task, especially when it comes to identifying, researching and analyzing those realities.
Denis Sangara, another entrepreneur we work with, noticed that his country was producing some of the best green coffee beans in the world. However, he also noticed that this commodity wasn’t being sold or consumed locally — it was all being shipped overseas.
In his eyes, this was an opportunity to launch a successful small business. The only problem, though, was that he knew very little about coffee. So, he took it upon himself to aggressively learn about the local and global coffee industries. He traveled across East Africa to meet coffee producers in-person, and he read books such as A Good African Story: How a Small Company Built a Global Coffee Brand and The Starbucks Experience.
Just 18 months later, Sangara is now co-owner of Café Kivu, which is currently in the process of opening its third brick-and-mortar location in the Congo. Additionally, the company just exported its first batch of packaged coffee to Greece, as part of its effort to market branded Congolese coffee to the global marketplace.
Sangara illustrates the drive and curiosity entrepreneurs need when they research market needs. He identified a glaring gap within a demographic, tirelessly conducted market research, learned the tricks of the trade and then built a business that has consistently satisfied the need. Take note of this studious and methodical approach, and mimic it in your own go-to-market strategy.
3. Building a viable product.
Especially in the digital era, developing a new product or service requires rapid prototyping, testing and iteration. The faster a feedback loop can be executed, the more effective the development process will be. Given this reality, it’s no surprise that, as revealed in a 2016 Innovation Leader study, 82 percent of businesses surveyed said they followed “lean startup” methodology when creating products.
Mughunda isn’t selling a tech product, nor does he have access to fancy tech tools that facilitate a fast feedback loop. Still, he finds a way to intuitively follow the same lean business model that is commonly championed in Silicon Valley. He conducts customer development in nearby village markets to find out what is in demand. Then, he prototypes his offerings, offers samples of them in the market and collects feedback. This approach helped him grow local demand for tomatoes, and it’s how he validated his zucchini-promotion hypothesis.
Testing and iteration is the best way for modern entrepreneurs to find out whether they have created a model that works, especially when the context calls for high adaptability due to complex environments or rapidly changing markets. It doesn’t matter if you think you have a terrific offering; the market gets to decide that, not you.
It’s essential to gather and utilize consumer insights to fine-tune your business model. Luckily, modern consumers are eager to voice their opinions. In fact, according to Market Force, 83 percent of shoppers say they filled out multiple customer feedback surveys in 2015.
Continual small iterations based on small experiments will eventually land you at a solid product-market fit that is based upon the realities of the market — not ideas you generated in a silo.
One thing is certain: African entrepreneurs are already succeeding in the face of tremendous obstacles. In many ways, they don’t need “more entrepreneurship” — rather, they need ecosystems and institutions that support their inherent entrepreneurial tendencies and talent.
We believe American entrepreneurs can take their ventures to new heights by learning from the commitment, grit, resilience, speed and agility possessed by the brilliant people we work with every day.