The African startup ecosystem is immersed with innovative players driven by a strong sense of purpose, but building startups in Africa is often shrouded in so much mystery and misinformation.
We explored this on our recent Twitter conversation Building Startups in Africa – How to Start, where our guests spoke on their lived experiences launching successful startups in Africa.
Our guests were Moses B. Arthur (President & CEO at Lush Group LLC) and Anthony Owusu-Ansah (CEO of Shaq express)
You can listen to the recorded conversation here.
1. What are some key things that everyone who wants to have a startup should consider?
According to Moses, many individuals enter the business world because they are passionate about their market niche. However, passion is not enough. Everyone who intends to launch a startup should first consider their vision.
- Entrepreneurs must also have a strategy for achieving the identified vision.
- He added that to create a roadmap to realize that vision, founders need:
– People to collaborate with
– People to create with (products, services, ideas)
– People for checks and balances
– Competitors to keep them on your toes and encourage them to perform better.
- Moses emphasized that once funders have these people, that vision becomes a shared vision.
- For instance, Steve Jobs founded Apple, and even though he’s gone, the team he assembled and shared his vision with is thriving and currently dominates their market niche.
Anthony concurs that every business begins with an idea. All founders must ask themselves 5W-related questions (Why, What, Who, Where, When).
- Why– why am I doing this? Do I plan to accomplish something? Is this due to my boredom? Etc.
- What– what are your intentions? What do you intend to bring to the market?
- Who – with whom am I doing this? (Do you want to do this by yourself? ), for whom are you doing this? (target market)
- When– when do you wish to commence? When is the best/most secure time to begin? Some individuals want to perfect their moves before beginning. They want to read every book on entrepreneurship and attend every seminar and conference.
- Where – How do you meet your clients? In-person or virtually? How can they contact you when necessary?
These 5Ws are essential to launch a successful business.
2. Is it important for all startups to get funding?
Moses believes that all startups need funding. Entrepreneurs require capital to drive, launch, and operate their businesses. However, some founders fail to do what is necessary to attract funding.
- It is crucial to conduct research and feasibility analysis on the business and target market. When you know the size of the market and how customers want to be served, you can quantify what needs to be done and devise a plan for raising the necessary funds.
- He added that building strategic and mutually beneficial relationships is one of the simplest methods for entrepreneurs to raise funds. Even if the relationships do not generate cash, they may attract ideas that will help the team make the most of its limited resources.
- As a founder seeking funding, it is essential to ensure that your investors are individuals who are passionate about you and your business. This is very important because, when your business is struggling, they may be able to sympathize with you and offer suggestions. A solely profit-motivated investor would not care that the company is experiencing a difficult period. The only thing they would care about is their money.
Anthony believes that obtaining funding from family and friends is the simplest, but most sensitive option. This is because it can destroy relationships and impact mental health.
- He advised that the right timing is essential before seeking funding so you are not pouring money into the business too early. This is essential so that you do not spend the money you will need in the future prematurely.
- Founders need to ensure that the necessary structures are in place before considering funding. Similarly, when considering funding, you should also consider making a profit. Profitability entices and persuades investors. Nevertheless, funding is essential for the operation and expansion of a startup.
3. As a founder, what do you look for in a hire?
Moses asserts that he values character in his hires.
- He stated that skills and competencies are valuable, but a lack of character renders them useless. Character is essential for constructing a winning team.
- A business leader must be keenly observant and discerning. It would help if you studied the behavior of your team members when the business is thriving and when it is struggling.
Anthony concurs with Moses regarding character.
- According to him, different types of businesses require different types of personnel, but startups, in particular, need individuals who are eager to learn and unafraid to make mistakes and those with an entrepreneurial spirit who understand what it means to build from the ground up.
4. When should a founder who has a full-time job focus on their startup 100%?
- Anthony believes there is no particular time to do this. Concentrating on a startup and a full-time job may become difficult. Therefore, rather than dividing your concentration and allowing both roles to suffer, you should resign and focus on the startup.
- However, before making such a decision, you should ask questions, speak with those who have been in a similar situation, and borrow their ideas.
Moses advised that a sufficient amount of cash reserves needs to be available.
- The significance of this, according to him, is that after your resignation, you will no longer earn your usual salary, and your startup may not yet be profitable.
- Also, ensure that you have conducted sufficient research so that you do not invest your money in an industry about which you know little.
5. What challenges should everyone who desires to have a startup expect to face in Africa, and how do they navigate through them?
Anthony stated that funding is one of the most significant obstacles for African startups.
- According to him, the lack of funding restricts the performance of many entrepreneurs on the continent.
- He added that competition is an additional challenge, albeit a positive one. However, startups face competition from prominent, already-established industry players who may be the market’s favorite and have all the resources that startups desire.
- The work ethic of the people, according to him, is another obstacle for startups on the continent. He stated that poor work ethic kills a business faster than any other obstacle startups face on the African continent.
- Anthony suggested that Africans support local startups and reduce their preference for foreign brands and products.
Moses stated that the environment and policies are crucial success factors for African startups.
- He said that the African environment and government policies must do more to encourage the expansion of businesses and the continent’s young population to thrive through diligence.
- As a result of policies that strangle the vitality of their businesses, he added, a large number of entrepreneurs building startups in Africa are working hard but being frustrated by ineffective systems.
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