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The Challenges Businesses Face in Africa

Expanding into Africa, and laying the foundations for partnerships in other emerging markets across the globe, have their challenges. Here are six lessons we’ve learned on our four-year journey.

Entrepreneur

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Emerging markets are full of opportunity for the clever entrepreneur. Across Africa, Asia and South America are countries with millions of underserved consumers. These people may be living on very little, but their basic needs are similar to those of wealthier people in more developed countries.

Related: ‘The Mother Ship’, ‘Local Heroes’, ‘Gazelles’ and even ‘Silicon Valley’ – the Types of Entrepreneurs SA Needs

In their paper, The Fortune at the Bottom of the Pyramid, C.K Prahalad and Stuart L. Hart explain that “low-income markets present a prodigious opportunity for the world’s wealthiest companies to seek their fortunes and bring prosperity to the poor.” This opportunity exists for any company, whether it’s wealthy or not.

Designing for emerging markets, specifically those in Africa, requires an enquiring mind, the determination to question every assumption, and both the confidence and humility to engage with the right partners.

1. You can’t assume anything

“Assumptions are dangerous things to make, and like all dangerous things to make – bombs, for instance, or strawberry shortcake – if you make even the tiniest mistake you can find yourself in terrible trouble.” – wise words from Lemony Snicket. 

There are hundreds of examples of failed endeavours to repurpose products and services for emerging markets. They fail because although the transition may seem fool-proof, the foundation – the context for which the product was originally designed – often does not exist in this new environment, at least not in exactly the same way.

We often hear local developers pitching ideas that essentially entail creating a business that came out of the US (usually Silicon Valley), without changing it any meaningful way. Developing a new app called ‘Uber for Africa’ is just about the same as: ‘Uber now launching in Africa’. And the same applies across countries on the continent – MPesa may have done well in Kenya, but that success has not been replicated to any great degree (except in Zimbabwe and Bangladesh).

2. You can’t do it from HQ

Starting from scratch means starting from the point of view of your ideal customer. What does their day look like? Who do they interact with? What are their pain points? What opportunities can you help them grab hold of? This is true in all markets, but if the country you want to enter is not your own, or isn’t an emerging market itself, there is no substitute for spending time on the ground trying to understand the context.

Product design should always be undertaken with the input of  the customer, and it always requires real, on-the-ground research and testing.

Related: How can I find the right suppliers for my business?

3. Things change all the time

This is an inherent trait of emerging markets. If product development is too slow, you risk losing out to a faster competitor, or you may find that the need you were trying to meet has evolved and your product becomes obsolete before it hits the market. An agile approach is vital. Start with the one or two most important features, build the product around these and then get it to market to test. See how users are interacting with your product and then use that insight to re-evaluate your design.

4. Local partnerships are essential

If the market you’re designing for isn’t your own (and sometimes even if it is), partnering with a local organisation and letting them take care of operations on the ground is wise. They should have strong client and supplier relationships in place already, and they are more likely to know how to package and market the product for best results in their market.

Your partners can be windows to your end-users. They often supply useful contextual information that can help you improve your product for all markets.

Allowing partners to make the decisions around configuration, branding, marketing and distribution works well and increases the chances of success for both sides.

5. Get the software right – make it scalable and updatable

If your product requires software, think about how you will install updates, collect insights and update information – especially if the device is likely to travel long distances (a reality in Africa).

Cloud solutions allow you to scale instantly, on a pay-per-use basis, and to run software updates and make changes remotely. Cloud also makes working with partners in other countries much easier because there are no major infrastructure requirements, and nothing to install or replace.

It’s amazing how much you can achieve through software.

6. It’s worth the effort

Emerging markets are challenging and the margin for error is small. But with predictions that these economies will grow almost three times faster than developed ones, and account for an average of 65% of global economic growth by 2020*, those businesses that can offer well-designed products that meet a basic need, could find themselves sitting on a veritable goldmine.

*Euromonitor International report

Related: When should I insure a business against risk?

This article was written by Vahid Mondjem (founder and CEO of Nomanini, a South African-based mobile Point of Sale service for facilitating cash transactions in emerging markets) and Dale Humby (Chief Technical Officer of Nomanini).

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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Business Landscape

What Can Businesses Expect From The Future Of Work?

While the future of work will always be a constant process of innovation and change, here are a few things that business today can expect in the near future.

Josh Althuser

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The phrase “future of work” is something professionals have been talking about since the birth of the traditional workplace in the late 19th century.

Once defined by cubicles that were arranged neatly side by side with meeting rooms and, of course, the head office with an amazing view of the skyline, today’s offices are strikingly different.

Over the last decade, there has been a surge in the development of open-plan offices, and more and more companies are moving their employees to co-working spaces and experimenting with remote work. For businesses that are still straddling the traditional office, but looking to embrace the future of work, it could be overwhelming at first. While the future of work will always be a constant process of innovation and change, here are a few things that business today can expect in the near future.

Expect flat hierarchies

In 2017, most companies have recognised that employees, especially younger ones are turned off by the conventional hierarchies that once dominated the world place.

Related: 5 Inexpensive Workspace Improvements That Boost Productivity

Start-ups and small businesses often pride themselves on their “flat” workplace culture, which aims to give both leaders and employees the chance to give input on an equal level. In theory, these structures aim to make room for more innovation and also to help workers feel more appreciated in their roles.

Yet, it doesn’t come without its issues. There have been various studies showing that egalitarian workplace structures can be disorienting and can potentially result in higher turnover rates, as employees feel lost in their roles. Thus, it will take time for the workplace to strike a balance between structure and equality, but so far it seems we are well on our way. 

The architecture of the office space is changing rapidly

Chances are you’ve heard of open-plan offices. With corporate giants like Facebook and Google companioning the flexible workspace, company around the world are breaking down literal walls to create airy and open offices that encourage collaboration.

Again, much like the flat workspace, open-plan offices need to be considerate of individual needs. While many workers appreciate the chance to work in a more informal setting, the open office has also faced criticism for introducing new distractions by not including enough private areas, which can lead to a downturn in productivity. As a result, more companies are turning to co-working spaces, which offer both workspace and community space.

Co-working spaces differ from open-offices in the way that they provide community management, structure, and flexibility, ensuring that workers have their needs met, whether that means a private office for the whole company or a hot desk for workers who just want to come in a couple of times during the week. 

Related: Workplace Evolution 2.0: Are You Ready For The New Era?

Remote work will be commonplace

Allowing employees to work remotely has proven to be successful. Companies have been introducing remote days over the last five years, and some even allow their staff to telecommute on a full-time basis. In the early days of the freelance ecosystem, remote work was considered to be unprofessional, but we have learned over the years the allowing employees to telecommute, even on a part-time basis can make them more productive and satisfied in their roles.

There’s no doubt that advancements in communication tools, such as Slack, have allowed workers more freedom, but there are also enormous benefits for businesses as well.

Companies can save on overhead costs by moving teams into a co-working space, or take out a flexible lease in combination with allowing workers to work outside of the office, even if it’s just a few days a week. By saving on rent and utilities, leaders can make room in their budget to invest in employees, by offering educational workspaces or purchasing new equipment.

Overall, these changes have a long way to go before they become permanent fixtures in the workplace. In fact, many businesses are now experimenting with various workplaces trends to find what works best for them and their employees.

Yet, even if you are not ready to grant your staff remote days or turn your office into a single shared space, it’s vital that your business is aware of these trends so you can keep up with the rapidly changing future workplace.

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Business Landscape

How Investors Can Take Advantage Of The Rand’s Currency Trading Rates

Negative sentiment is likely to be pervasive with the SA economy, and it will take more than a new figurehead in government to right the wrongs of a mismanaged economy.

Harald Merckel

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The USD/ZAR currency pair is trading in the 13.65 range heading into mid-December 2017. Over the past year, the 52-week low was 12.3126, and the 52-week high was 14.5742. As one of the more volatile currencies in the trading spectrum, the ZAR is closely associated with the political shenanigans taking place in South Africa.

The year to date return for the currency pair is -0.50%, after having started 2017 at 13.7351. Much of the activity taking place with the ZAR is speculative. Futures contracts are largely responsible for the whipsaw movements in prices.

Wilkins Finance strategists stress the importance of credit ratings agencies on currencies:

‘Whenever credit ratings agencies such as Moody’s and Fitch downgrade their assessments of the South African economy, this has a negative impact on the ZAR. The impact is not always predictable however – towards the end of November 2017, the USD/ZAR had appreciated after the recent ratings downgrade of the economy.’

Moody’s Investors Service downgraded South Africa’s economy to a rating of Baa3. This is the lowest rating level for Moody’s. Further ratings will be announced in February next year. Fitch has already downgraded the foreign currency and local currency to BB +, but has offered a stable Outlook for the ZAR.

Related: The Business Of Anxiety In Business: Giving Heroes Permission To Feel Vulnerable

That S&P also downgraded the South African economy to sub-investment grade is an important decision, and one that will have negative ramifications for the South African bonds market. Now, the Barclays Global Bond Index will no longer feature South African bonds. That South Africa’s bond market will be excluded from the World Government Bond Index will also be a bugbear to any hopes of the ZAR appreciating.

Interest Rates in the South African Economy

The South African interest rate is highly attractive to foreign investors, given that the UK, US, Canada, Japan, and European bank rates are at historic lows. There is little to be gained by investing cash in fixed-interest-bearing securities in these economies. The current interest rate in South Africa is 6.75% (as at November 23, 2017). The interest rate has dropped to expand economic activity in the country.

Overall, South Africa’s inflation rate for the year is expected to remain at 5.3% dropping to 5.2% in 2018 and rising to 5.5% by 2019. Global investors remain concerned about the risk/reward environment in South Africa. The country has experienced significant capital outflows in recent years, driven in large part by uncertainty regarding future prospects. The USD/ZAR was trading at 14.60 in late November, and current ZAR strength is being attributed to USD weakness.

Related: Offshore Business Opportunities Abound For South African ‘Oldpreneurs’

Factors on Both Sides of the Atlantic

One of the major economic events affecting exchange rates will be the reconciliation of the House and Senate bills on US tax legislation. Any major overhaul of the US tax code will invariably result in a dramatically boosted USD, and a weakened ZAR. For traders, it appears to be short-term call options on the local currency and long-term call options on the USD.

It is evident that currency traders are hedging against the ZAR over the long-term. The fundamentals of the economy are structurally unstable. The power grid infrastructure, water supply problems, and political instability at the highest echelons are but a few of the many problems plaguing South African growth prospects.

However, the ZAR will draw strength from the election of a credible leader, and this will be particularly noteworthy with Cyril Ramaphosa’s appointment. Overall, negative sentiment is likely to be pervasive with the SA economy, and it will take more than a new figurehead in government to right the wrongs of a mismanaged economy.

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Business Landscape

Get Cracking

For many people, the holiday season represents a time of change.

Rhyse Crompton

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For many people, the holiday season represents a time of change. Some folks have made the decision throughout the year to start a new business in 2018, and the festive season’s message is one of hope for a bright new entrepreneurial future. Unfortunately, for most, this dream can become a nightmare without considerable amounts of planning on part of the entrepreneur and start-up founder.

So, without sounding too depressing, Christmas and New Year’s should be a time for stringent planning rather than celebration for the season and the year ahead. Call me Ebenezer Scrooge, but hitting the laptop and doing research is the best thing an entrepreneur can do while family and friends are unwrapping gifts or holiday-making.

As a business owner who has used the month of January as a starting block for my foray into a new industry, I can say that one of the problems I encountered was not accurately defining my customer personas, both in real-time and online. It got me thinking; if I can make the mistake when it comes to accurately segmenting customers in real-time, how many people make the mistake of inaccurately creating customer personas for their online brands?

It’s All About the Customer

Creating a customer persona is easy. Most business founders have an idea of who their customer is before marketing their product. And once you know who the customer is, its just as easy to find out their likes and dislikes, as well as their habits.

Related: Want To Leave Customers Grinning And Vowing To Return? Do The Following

The best way to create customer personas is to base your personas on research and data. Many established businesses find this a simple task, as they have a wealth of clients from which to draw this data. Unfortunately, this is not the case for business founders, so they must carefully test the waters using surveys, third-party research, and an ear-to-the-ground within the industry.

Once a business understands its various buyer personas, it’s time to start considering the typical online buyer persona…

Characteristics Mapping

Just because you can accurately determine your optimal customer due to your created customer personas, you may have to create alternative personas for online consumers. This is because a slightly different person will be looking for your product online.

As an example, Bob owns a pool business, building as well as maintaining pools for residential clients across Johannesburg. Bob’s nominal customer persona is that of Adam, the 40-something business owner who owns a home in a middle-class neighbourhood. Adam is likely to come across Bob’s out-of-home marketing material, or comes to Bob for business through referrals. However, Adam differs from Lerato. Lerato is a different age, race and gender. Even more importantly, Lerato looks for products and services exclusively online. To appeal to Lerato over Adam, Bob’s customer persona must be changed for the online customer, and the online customer must be exposed to tailored content to be appealed to.

Lerato also lives in a middle-class neighbourhood, but Lerato has young children, while Adam’s children have now moved out of home. This means that Bob can take advantage of Lerato’s need for pool safety nets and a custom-built pool fences, and Bob will make sure that Lerato is exposed to content about these services while making her online journey.

Content Mapping

When creating online material, ensure that it is developed to take advantage of the online customer. One mistake that business owners make is that, in their attempts to be recognised as industry leaders, they try very hard to use industry specific language. They make attempts toward showing their prowess in the trade and showcase their own certification and business journey.

The online customer persona representing the business’s primary online buyer does not care about the business’s goals and objectives, and they have no clue as to what is being said when the website uses online lingo. They want content created for them; they want to know why they need the product or service, they want to know that they are using the best business for the job, and they want social proof regarding the service offered.

Make sure that you do proper content mapping research, and identify the online journey taken by the consumer through online channels before they make a purchasing decision.

Related: Direct Marketing: Go Where Your Customers Are

Take this a step further and make sure that you define several online customer personas. Determine the value of each persona and structure content and the consumer journey for the most profitable of the personas. Additionally, determine the lifecycle of the journey, how much attention a segment of online content generates, and capitalise accordingly. For example, if most of the purchasing decision is made on the product or service landing page, make sure that the landing page is optimised as often as possible to increase your business’s revenue.

Starting Blocks

Hit January 2018 running, and make sure you understand your online client before receiving your first online lead. And if you make a few mistakes initially, don’t worry. 2017 was – and 2018 will be – known for being the year of big data, where business owners make operations and marketing decisions based on the behaviour of customers online. Always analyse the data available to your business when made available, and make changes accordingly. The best of luck for the year ahead!

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