The African continent is littered with the corpses of failed business expansion projects. Multinationals view Africa as the last economic frontier and many have ventured into the territory and scored big – like mobile communication companies. But just as many have failed, with only scars and damaged egos to show – like the unsuccessful attempts to set up data networks and ICT services in East Africa.
Failing to achieve success is a complex issue, but a lack of sound business development practice and little understanding of how this ties in with African business practices is often at the core of the problem.
What is business development?
Business development defines the initiatives, actions and projects firms create to grow sales, enter new markets or attract new customers. The core idea is simple: make more money by developing sustainable relationships with new clients and markets. It should be a structured, focused and well-resourced function that is as important as human resources, research and development, production, sales and finance.
Yet, as simple as it sounds, many companies have made big mistakes. Menno Gazendam and Hennie du Plessis highlight five issues business developers looking to expand into the African continent should take care to avoid.
1. Misunderstanding the strategy
Make sure you understand your company’s strategy and what it means for business development. If strategy is conservative (defend and hold our accounts in Addis Ababa while we get our new product ready for launch), the focus will be on protecting key accounts and maintaining relationships to keep the competition out. If strategy is aggressive (grow our sales in Lusaka by 50%), bold steps and resources are needed to build relationships, form partnerships and break into accounts.
Communicate your strategy to your staff so that they understand your aims and make decisions that align with the strategy.
2. Making assumptions
The most basic error sales executives make is assuming that they understand the market in Uganda just because they have done business in Tanzania. Africa is not a country. It is a collection of countries in which cultures and business strategies differ.
Gather data, structure information and create your account plans by understanding your customers’ profiles and buying habits, how your product could further their business aims, your competition’s weak and strong points, potential profit margins, how your product compares with others and what analyses reveal about your strategies.
3. Disrespecting the customer
All too often, business people approach the continent with arrogance. Remember, you may not necessarily know better; you only know different things. Your approach may not be more sophisticated and the customer may not be as naive as you think. A customer may have been late for a meeting not because it isn’t important to be on time, but because there isn’t an underground railway service in Kampala, Uganda.
Respect the cultures and the values of others. Ask, be courteous, be honest.
4. Bribing your way in
The tales you hear about bribery and corruption may be true, but that does not mean they define the rules of business, just the same as in Europe. People conduct business with customers and clients they trust because values such as integrity, reliability and competence are still important. Your business contact in Lusaka may not be an Ivy League MBA, but he sure has a degree from the school of hard knocks.
Additionally, the rule of supply and demand applies. If there is not a compelling benefit to buy from you, a potential customer won’t, even if you add a sweetener.
5. No follow through
The best-laid plans amount to nothing if you don’t implement them. Make sure your analyses are robust and diligent, and back them with solid account plans and sales management processes. Work and rework the plan: check progress, question the assumptions, evaluate the results.
Having good representation on the ground is critical. Choose someone you trust, someone who has useful contacts and credibility in the right circles, a person who can sense how politics drives decision making, will give you honest feedback and is capable of executing and following through on plan.
Menno Gazendam blogs his thoughts about business. You can also follow him on Twitter (@mennogazendam). Hennie du Plessis is a business consultant who spent 14 years of his career in top management (hdadvisory.com).