I had a firm in Africa

PROFITS GLITTER NORTH OF THE LIMPOPO Africa has always lured entrepreneurs seeking great riches, but its roadsides and valleys are also littered with their graves.

For ambitious entrepreneurs, the sky is the limit and venturing into unchartered and unfamiliar territory to explore the wealth a region offers is a call hard to ignore. And it just so happens that we in South Africa live on a continent that boasts vast amounts of untapped natural resources and a growing, massive consumer market. Therefore, how do you as an entrepreneur venture into Africa to get a piece of the 1.2 billion population market? The answer lies in research, research and more research.

Information is the key to setting up an international office because you cannot run a business in an area if you do not understand its economy. And, by “economy”, I mean the way the money moves: who are the big players; is there a middle-man system; and what is the buying power or spending habits of consumers? These questions help you put together a strategy specific to that region, because no two areas are the same.

Many have failed in their international endeavours because of a cut-and-paste strategy. Don’t be fooled into thinking the strategy you used in South Africa will bring you success in the rest of the continent. Consumers are not driven by price alone; emotions, habits and, most importantly, culture put a very different spin on things.

Therefore, diligently study your intended market and, in that regard, be wise to enlist the services of the locals. Who better knows the market more than the people living there? But, as well as being advised by local experience, you must go to the region and get a feel for it yourself.

It is shocking to consider that many entrepreneurs simply set up shop in a foreign region, yet have never set foot there. How can you expect to drive a business to success if you haven’t physically interacted with your potential customers?

Most large corporations use consultants to inspect the feasibility of a region. But, as much as consultants can draft a sophisticated feasibility model, they cannot help you with the inner conviction which you the entrepreneur will eventually have to fall back on; some call it a gut feeling.

And besides, if it is your money, wouldn’t you want to see exactly where it’s going? A note to remember: do not confuse knowledge for information. Many entrepreneurs are masterful in their profession – like IT entrepreneurs – but understanding your craft is a very different matter compared to understanding how to operate an IT business in a foreign region.

Next week we will look at some laws in Africa that govern foreign businesses operating on local soil.