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With the signing of the African Continental Free Trade agreement in May 2018, we are excited about the policies and subsidies that will be put in place to facilitate intra-African trade, and hopefully makes it easier for SMEs to expand into other countries. Since our founding 5 years ago, we have expanded into 8 countries, and this is what we’ve learned along the way:
Make sure you have product market fit
Very rarely does re-wrapping a product work in new markets, especially in varied countries like those in Africa. Before we enter a market, we do extensive research in everything from user behaviour to general macro-economic trends, to make sure there is a need for what we’re offering. We use a mix of customer surveys, focus groups, user experience tests, and just getting on the ground to talk to potential customers and ecosystem thought leaders.
Only enter one new market at once, or else you will be overwhelmed. It may seem like a much splashier entrance if you do many markets at once, but it’s better to start small, do well in the market, and use the earnings to expand into the next market. Remember that you and your team are limited resources, and even if you have the financial resources, you may not have the bandwidth to do more than one.
The right man (or woman) on the ground
There are two ways you can go about doing this — either hire one person on the ground, who you really trust or find the right partner. Finding a reseller or a referral partner might be a good way to test a market of interest without fully committing to it. If it works out, then you can do a full launch with a partner with whom you have a tried and true relationship. Local partners can help navigate cultural nuances, protect against risks, and discover opportunities.If you’re planning to hire a country manager or a local rep, take your time. You will probably have to remotely manage them, so make sure they are self-starters that fit into your company culture. Empower them to be your eyes and ears on the ground, and make sure that you listen to their insights.
Find the right cross-border payment partner
Liquidity and inability to repatriate funds back to the parent company is one of the most underrated risks in frontier markets. You are going to need to move money into your new market, for initial capital costs, to pay salaries, or pay partner commissions. In the beginning, when you’re moving small amounts from your new market to your headquarters, you may be able to use your local bank or the market. But many cross-border payments mean that you need to go to the bank, stand in line, and fill out long forms. If the country you have expanded into has strict currency controls, like Nigeria or Ghana, it may take weeks to repatriate funds. However, with BFX, we always have liquidity and can reduce the time it takes to make cross border payments from weeks to minutes. Find a better way to make cross-border payments at www.mybfx.co
Fail fast, but document and come up with a process
Be very explicit about the metrics you’re using to measure whether or not you’re successful: the amount of volume you want to sell, the number of new customers you have, and how much revenue you want to make. If you do not measure your success, it is very likely that this market is going to be a resource and time drain. However, if you are successful, be careful to document how you got there. The best business development and market expansion teams have figured out how to make the market identification and evaluation process scalable and repeatable.