The last decade has seen a tremendous rise in the number of young Africans venturing into business. Although that can be attributed to several factors, advancements in areas such as information and technology have certainly played a major role.
The internet has helped facilitate for an easier execution of tasks which were highly complicated not too long ago. For instance, anyone today can start an online business without any coding expertise or having to hire expensive developers; such a task can be easily accomplished using platforms like WordPress and Shopify.
Marketing campaigns of all magnitudes can be carried out by a non-marketer through social media. Accounting tasks can be performed by a non-accountant through Quickbooks. Information regarding anything can be quickly pulled up using a smartphone and some connectivity.
The challenges that many entrepreneurs are struggling to cope with are often money-related.
Starting a business may actually be the easy part, but how do you scale it? Let us look at a few strategies that you can adopt when starting a business in Africa with little or no capital.
Form strategic alliances
“Every mind needs friendly contact with other minds, for food of expansion and growth.” – Napoleon Hill, The Master Key to Riches.
A strategic alliance is a fundamental element that must be in place before any business can experience exponential growth. There’s only so far that one can go single-handedly. Strategic alliances may comprise of partners, mentors, advisors, skilled employees – essentially anyone whose association can potentially help the business achieve its objectives.
When starting a business in Africa with little or no money, you absolutely need the association of other people to help you grow. Strategic alliances create pools which are comprised of skills, knowledge and the experience of all the minds in the team. With such in place, you may have little reason to outsource work or seek external capital.
A mentor can serve the purpose of a paid consultant. A business partner can help with the internal operations. Another partner can help with marketing. And as the business scales, so do their perks and benefits.
Focus on bootstrapping
The idea of bootstrapping has always been a hot topic in the start-up world, but the concept is applicable to most businesses. What it means is essentially growing a company by only using its internal team and resources.
That means leveraging the skills of each team member instead of hiring, using personal savings as capital instead of seeking a loan, working from home instead of renting an office, etc.
Bootstrapping calls for entrepreneurs to make sacrifices until the company is stable and can afford to stand on its own feet. For instance, they may have to sell their personal belongings to raise money, do the door-to-door sales themselves, endure sleepless nights working, etc.
The idea is to do whatever it takes to get the venture up and running at a budget. Entrepreneurs that use this strategy to scale their operations may in the long run avoid having liabilities such as bank loans or investors that dictate every move.
If bootstrapping is no longer practical
The people closest to us in many cases would like to see us prosper. Some of them would not even mind chipping in if they know that it’s for a good cause. Asking friends and family for money is a daunting prospect for most people, but they are nonetheless a viable source of capital.
Many people fail at raising money from friends and family due to failure from their part in presenting well-defined proposals and business plans, including how they intend to repay their money. They usually present in a casual and informal manner – but that hardly does justice reflecting the seriousness of the matter.
You are more likely to win over the confidence and trust of your friends and family by presenting to them as you would to an actual investor.
Take advantage of free advertising and marketing
Many start-ups in Africa have failed to gain traction due to inadequate marketing budgets. Although marketing expenses are usually one of the highest, there are a number of ways to generate a buzz for without having to break bank.
Platforms like Google and Yahoo often give free ‘trial’ credit to new businesses. And what’s the catch? You just have to sign up to their marketing programmes. For instance, LinkedIn gives users US$50 advertising credit for signing up to ‘LinkedIn Marketing Solutions’.
Google Adwords gives $100 credit after signing up and spending $25, and so does Bing Ads and Yahoo Gemini. Perfect Audience gives $100 dollars just for signing up. That is almost $500 dollars in free advertising credit to help get you up and running.
Another avenue that can be used to advertise inexpensively is social media. From a marketing perspective, social media can represent a gathering of a company’s prospective customers in one convenient location. It really couldn’t get better than that.
Entrepreneurs can leverage social media to get their word out by building highly-targeted followings on platforms such as Facebook and Twitter, and then inducing their marketing messages directly to them.
Even paid social media campaigns often provide a better ROI than campaigns through other mediums. With a budget of $5 per day, Facebook can show an advertisement to an audience of up to 1,000 highly-targeted people.
We are fortunate to be living in an era that is so fertile for nurturing a small business in Africa. But here’s the thing: the easier it gets, the easier it will be for more people to board the bandwagon. That means competition can only get tighter every day. You are better of focusing on working things out using what you have and gaining an early advantage, rather than sitting back and making excuses for your shortcomings.