There is risk in initiating a new project or business. Expats, like you, setting up something new in Africa will face even greater risks than starting something in your home country. Corruption is everywhere and lack of trained staff can cause some problems. Yet, most expats beginning new works in Africa have seen the lack of appropriate infrastructure the greatest challenge. That challenge is real and formidable, yet it can be overcome.
Africa Contextualized Solutions
Each enterprise is different and so are its challenges that must be met with contextualized solutions. Many expatriate entrepreneurs and project managers have invested large sums of money and personnel in a single enterprise that they came to the continent to start. When faced with the challenges the failed. Often it is not the challenges specific to Africa that brought them down. They came with goods or services they assumed Africans would use and benefit from.
Entrepreneurs have known for a long time that most ideas are not worth implementing and many start-ups fail. The key to your entrepreneurial success is in small-scale, prototype testing.
Simulations Lower Risk in Africa
Because of the heightened risk to beginning a project in Africa, you could be making a mistake putting all of your financial and personnel eggs in one basket. You could be setting yourself up for setback that could leave long-term damage. The advantage of small-scale prototyping is that it manages risk. Multiple, simultaneous prototyping not only manages risk, but it maximizes learning and resource discovery.
To show what I am talking about lets take the an actual, current opportunity. Nigeria’s university system is the largest in sub-Saharan Africa with 114 accredited universities, colleges and post secondary, trade schools. Half of these schools have more than 20,000 students each. Recent reports from Alitheia Capital of Nigeria state that these institutions have “experienced a significant rise in student enrollments over the past decades. However, the surge in students has not been matched by a corresponding growth in student accommodation. Figures from the National Universities Commission show that the provision of student housing is less than 30% of demand. The vast majority of students live in privately rented accommodation.”
Alitheia Capital has identified one need of the expanding enrollment. What other opportunities does the growing enrollment bring. What about textbooks, school supplies, student eating facilities, tutoring and part-time employment are just a few ancillary opportunities for new businesses and projects. Each category could contain multiple needs for which small-scale, prototype testing could be entered into by entrepreneurs and like-minded project managers.
Lets say the Nigerian post secondary education institutions provide an environment ripe for tutoring services. Should the service be done one-on-one in student housing, in an off-campus classroom, or online? Small-scale prototypes can be set up in each environment for for just two or three subjects.
These small-scale, prototypes are rough drafts that have been brought to life after being developed by mini incubator teams consisting of people who have expertise in tutoring, promotion, technology and preparing business models.
If your budget prevents you for many simultaneous prototypes, a random survey can be conducted to determine which service students would be more likely to use. Surveying a couple hundred students on campus should provide you with enough information to take the preferred tutoring service to an incubator team to develop. Again, you are forming a prototype. If it meets with success, however you define it in your business plan, then ramp it up. If the result is not good or mediocre, then put set a prototype for another environment.
Financial accounting and outcome testing are essential. A time limit of several months should be set for initial review and suggested changes or abandonment.
If a predetermined, measure of success is achieved the prototype should be expanded as rapidly as possible. There is every possibility in Africa that someone will attempt to reproduce what you have set in motion, so you must constantly work toward staying out in front by improvement and expansion.
If the prototype proves less than successful move into a prototype of an alternate service type to tutoring service, say school supplies.
You might think that that prototyping is too expensive. Commitment of large sums of money to a failed project is much more expensive. The fact of the matter is that labor and overhead costs for most materials, office space, and labor are reduced in Africa.
Determining Best Product in Africa
Primarily the small-scale prototyping allows you to determine the best product or method of service to deliver. There are some secondary advantages as well.
- being on the ground in the real world offering goods or service, even on a small-scale, exposes you to new opportunities.
- you learn many things about Africa that will apply to the projects that you launch on the large scale.
- you form relationships with suppliers and personnel that you can plug into the projects that you fully launch.
Africa Mentor keeps abreast of the opportunities and how they are being met and missed in Africa. Take a look at all the possible ways of doing business or investing in Africa, FOR A PROFIT, by downloading our report Africa’s Business and Investment Outlook 2012-13.