With so many African startups recording high cash inflows in investment, especially this year, Africa is beginning to fulfill its dream of becoming a launchpad for innovative high-tech companies. From 2015 through 2020, the number of African tech startups receiving funding grew at 46% annually, six times faster than the global average.
This journey has however not been as rosy as it seems, as only just four African unicorns (Interswitch, Flutterwave, Fawry, ChipperCash, with OPay and Paga looking to attaining that status officially in few months)—privately held tech companies valued at more than $1 billion—the most recent being Nigerian fintech Flutterwave. By contrast, there are more than 50 unicorns in the EU, 100 in China, and 200 in the United States. As a report by BCG shows, African startups rarely survive beyond the Series B funding stage.
Owning a startup, in and of itself, is challenging. While, having the financial capacity and knowledge to get a business off the ground is one thing, surviving the fierce market competition, a volatile economy, as well as the, oftentimes, changing and unpredictable African marketplace is yet another. The Wheeler Institute for Business and Management highlights this difficulty, even in the expanding fintech space in Africa:
Out of the 716 fintech companies that operate in Africa, only 37, or 5%, have scaled based on our definition. More than half of the scaled companies come from the African tech powers Nigeria, South Africa, and Kenya. Click To Tweet
Hence, for Startups to remain viable and sustainable in the foreseeable future, these are some actionable principles that they may require to adhere to:
Lean startup management
The lean startup methodology as originated by Toyota’s manufacturing revolution operates on the principle of utilizing the minimum necessary, and not the maximum allowed. It operates based on a framework that builds products iteratively and incrementally. Because your business is just beginning to generate a consistent inflow of capital, it is practical that you rethink expensive choices in acquiring and retaining your customers. You mustn’t ruin your odds of securing your return on investment (ROI) because you have spent more than you ought to for that advertisement or sponsorship. Maximizing the benefits of unpaid social media and digital marketing will expose your brand to a broad section of your marketplace without having to go beyond your budget. Utilizing creative ways in influencer marketing through building collaboratory partnerships in content creation and distribution can help grow your brand presence, without much ad spend.
Your business offering must remain relevant
If your service or product is deemed less of a necessity or has disappeared from the list of today’s trends, it will be difficult to get your business back on the radar. Your product or service must remain on top of what others want and need. Provide something fresh on top of any existing services, or develop a new service altogether. Either way, pay close attention to how relevant you ought to be. In this respect, it is important that you are continuously innovating and repositioning your product in the mind of your target customers.
Human capital is very important
With serious expansion will come serious job opportunities. One important business growth strategy is not to hire those you need desperately for only today, yet neglect to employ those you need for tomorrow. Take all of the resources and time needed to discover the ideal match for each role. It is also important to grow a well-defined company culture within your organization. This will strengthen your brand and likewise impact your service delivery to your customers.
Do not compromise on your customer service delivery
Since it takes quite a long time for your customers to trust your business offerings, try to avoid costly errors as they may make your business lose them all. Irrespective of your reinvention, expansion, or growth, high-quality customer service needs to be permanent. Your people ought to have the ability to do their job. Be certain they’re highly trained to offer your customers the help needed as they conduct business for you.
Startups today are actively pursuing innovations and technologies which assist in easing many of the operational activities. From automated finance management tools to phone systems, learn how and when to take advantage of these innovations. Technology as an enabler would offer you flexible platforms for engaging your customer base and satisfying their needs.
On the whole, it is important that as a startup, you are agile enough to meet the changing faces of business in Africa. Africa’s market is unique with a peculiar consumer base; there is also a range of challenges in supply infrastructure, government bottlenecks, harsh economic climates, dwindling purchasing power of the middle class, and a host of other factors. These challenges keep you on your toes, in needing to repeatedly position your business for success and sustainability.