Sundaymail Editor
Big Business Ideas
Stephene Chikozho
THIS year started on a very promising note for African businesses. However, like any other year, 2023 offers businesspeople lucrative opportunities and dreaded threats.
Some businesses shall close the year stronger, while others weaker. Even more, some entrepreneurs shall be lucky!
As the year progresses, it is important for businesspeople to reflect on:
What your business does well
What your competitors do well
What the client or consumer wants
How your business can evolve and continuously improve
The operating environment is changing every day, so are the variables that determine your survival, growth, success and failure.
Few businesses enjoy the privileges of monopoly in their chosen fields of operation. Most markets are increasingly global and increasingly crowded. As such, they are increasingly competitive.
To achieve commercial success, companies in Africa need to do something different so as to stand out from competitors. Yet sometimes, it may just be a matter of luck.
Luck is usually regarded as something that businesses have no control of. But researchers say the more you sweat, the luckier you get. This demonstrates that luck can be created. As such, the reality is that both assertions above are true.
As global markets become more volatile and less predictable, luck plays an inevitable part in business success. Picture it, if you launch a start-up at the same time as a rival, it may be luck that determines who succeeds, and who fails.
Luck is what happens when preparation meets opportunity.
People of action are favoured by good luck. The first rule of luck in business is that you should persevere in doing the right thing. Opportunities will come your way if you do.
A well-considered business plan is designed to dispense with reliance on luck. A good idea, underpinned by detailed market research and solid financial planning, may help a start-up to ride the whims of the market.
A good plan charts a course of action in turbulent markets, protects against the unknown and prepares the company for contingencies.
Furthermore, a well-conceived plan can ensure that a company is in a position to benefit from favourable market conditions. In other words, what might seem like luck is often the result of planning.
With so many variables, luck is likely to play a part in the survival of a start-up. But a good plan reduces how much luck a company needs.
In Southern Africa, for example, most businesses never grow beyond the scope of the owner; they start small and stay small.
Aspiration, or lack of it, is a key factor for small and medium African companies. Many small business owners are content with the lifestyle the business allows them, and have no desire for growth. But the biggest reason for a lack of growth is finance.
Growth requires access to capital, which is difficult and expensive for most African small and medium enterprises.
Moreover, unlimited liability means an owner’s personal assets, such as the family home, are at risk if the business fails. This is a risk that many are unwilling to take.
African business owners who aspire to grow must be willing to take the risky, but important second step of growth.
For most small and medium business owners, this means employing the first non-family member and beginning to acquire the necessary leadership and management skills to scale up the business and manage the people, systems and processes.
From establishment to growth
Faced with competition, the growth strategy for most companies is to differentiate.
This involves offering customers something the competitor cannot or does not offer, a unique selling proposition that becomes a key point of dramatic difference that makes a product saleable at a price higher than rival products.
For most African businesses, tangible unique selling propositions are hard to acquire and hard to copy, which is what makes them unique.
Companies must distinguish their product or service from that of competitors at every stage of production, from raw material extraction to after-sales service.
The primary benefit of uniqueness, if it is achieved, is greater customer loyalty and increased flexibility in pricing.
Differentiation guards products and services from low-priced competition. It justifies higher prices and protects profitability, and it can give businesses the competitive advantage needed to grow and stand out in the market.
The challenge of difference
By definition, not all products can be unique. Differentiation is costly, time consuming and difficult to achieve. In addition, functional differences are quickly copied.
For example, touchscreen technology was introduced to the mobile phone market as a point of differentiation by one enterprising mobile phone manufacturer, but it is now a feature of most smartphones.
As such, differentiation often does not remain a point of difference for long.
With functional uniqueness being so elusive, researchers suggest that companies should, instead, focus on an emotional selling proposition.
In other words, the task of the business leader is to generate an emotional connection to the brand that is so strong that customers perceive difference from the competition.
For example, while the design and functionality of the top brands of training or sports sneakers are distinct, the differences are so small that they amount to only a marginal difference in performance.
The products’ differences are, however, magnified in the perception of the consumer through marketing and the power of branding; uniqueness is achieved through brand imagery, promotion, and sponsorship.
Maintaining uniqueness
As many companies discover, popularity can be the enemy of difference. Let us reflect on the Kente, a Ghanaian textile, made of hand-woven cloth, strips of silk and cotton.
Historically the fabric was worn in a toga-like fashion by royalty among ethnic groups such as the Ashanti and Ewe. It was also worn by queens, princesses and women of Dagbon.
Today, the Kente has become increasingly abundant around the world, its uniqueness and difference have declined. The challenge for the Kente, like all products, is to protect its uniqueness while also expanding its reach, to stand out from the crowd, while welcoming new customers.
Different, but the same
Ironically, familiarity can also be a source of differentiation. One fast food organisation headquartered in South Africa revolves around providing almost identical fast-food products, with the same service, in identical restaurants across the Southern African region.
This familiarity differentiates the fast food outlet from unknown local offerings in Zimbabwe, Botswana, Namibia, and Mozambique from other global competitors who cannot maintain the same degree of consistency across their operating territories.
Sustaining growth and differentiation
Once established, uniqueness, whether functional or emotional, requires nurturing and protecting. Growing and standing out from the crowd is a constant battle that is fought in the hearts and minds of the business’s staff, as well as clients or customers.
Stephene Chikozho is managing partner and principal consultant for Urbane Create Agency, a strategy, marketing and advertising agency. He is also the business development and strategy consultant for Beyond Borders Logistics and Tsoka International. He writes in his personal capacity. You can follow him on social media (Instagram, Facebook, Twitter, LinkedIn) WhatsApp +263772409651 or email [email protected]
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