Zambian businesswoman Monica Musonda is the founder of Java Foods, producer of the eeZee instant noodles brand. In a recent webcast, organised by The Tony Elumelu Foundation, she shared some of the lessons she has learnt in business. Below are the main takeaways.
1. Give consumers what they want
It is important to have a clear understanding of what consumers want and how much they are willing to pay for a product. Introducing completely new concepts can be risky business. “Ultimately we could have great innovations, but if no one is willing to pay for it, it is not really a great idea,” said Musonda.
When she first launched her instant noodles brand in Zambia, she wrongly assumed it would be an immediate hit, especially given the affordable price. But because instant noodles were not well known in the market, it proved to be a much tougher sell. “We thought this would be a really great product [and] very easy to sell. But unfortunately it was much harder because people didn’t know about the product. So for us our biggest challenge was trying to get people to know what the product was [and] how to prepare it…”
Although consumption patterns in Zambia are changing, launching an unknown product can be a slow and expensive exercise. She suggested that when starting out it might be better to offer a product consumers already understand, and at a later stage introduce something more innovative.
2. Start small – business is a marathon, not a sprint
It is highly unlikely any business will make money from the get-go. Entrepreneurs therefore need to ensure they have enough cash reserves to keep going through the initial stages.
“You are going to need some capital reserve from somewhere, because it will be a tough first or second year as you stabilise the business, as you begin to understand payment issues, as you begin to understand expenses,” Musonda explained.
She advises entrepreneurs to start small and not spend too much money early on. “Ditch the fancy office and the fleet of the most expensive Toyotas… Start small, understand your revenue base and your expenses. Until things are able to stabilise, when you have a little bit of cash flow left, then can you look into: should I hire that extra person, should we lease a bigger warehouse, should we buy that piece of more expensive equipment from the US as opposed to China?
“I think it is really understanding the business as it grows, and honestly, the business will teach you. It will teach you some bitter lessons, you will make mistakes and it will also teach you to grow up.”
3. Learn by doing
Many African countries suffer from a lack of reliable market data. And in cases where data is available it is often expensive.
“I think you have got to learn by doing. You may not have all the answers, you may not know the size of the market, you may not know how much the competition is selling. But if you get into the business, do your initial groundwork as much as you can – but get in there and then start gathering your own data,” said Musonda.
“I would advise against spending a lot of money before you start, on digging up lots and lots of information. I do say do some homework – but don’t spend thousands and thousands of dollars on market research because… you might not get the result that you want and instead you would have wasted quite a lot of money and time on something which might not help in the long run.”