Why Africa is an Entrepreneur’s Paradise

Entrepreneurship in Africa
Jambiani Beach, Zanzibar, Tanzania

The African continent has been getting a lot of attention lately by entrepreneurs. Many economic forecasters has pivoted the continent as the new frontier for growth in almost every sector imaginable. While the continent still has many challenges, it is growing and expanding in many ways. A number of African leaders are starting to implement polices that make their nations attractive places to do business.

Market Potential

Africa is probably home to the most fertile business prospects on the planet. The continent is trying to catch up with its more developed counterparts. Yet, many African nations still lag behind in infrastructure development. This makes the continent a goldmine for entrepreneurs who are willing and ready to contribute to the dynamic growth of the continent.

Almost every major market has untapped potential on the continent. Only a few business sectors are saturated in Africa. This also makes the continent prime real estate to sell quality goods and services. So for almost any business endeavor that you can think of you can probably find a dozen or more countries in Africa to do business in. Most African nations have fertile ground for sewing the seeds of entrepreneurship.

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Low Start-Up and Overhead Costs

The cost of living in most African countries is much less expensive than the average developed nation. This means that it will cost much less to establish and maintain most businesses on the continent. It is fairly easy and inexpensive to lease or own property in many African nations. Salary and wages are also much less than in most developed regions of the world. This means that financing your entrepreneurship dream on the continent can easily become a reality.

Burgeoning Middle Class

Africa’s middle class is growing at a fast rate. On the other hand the middle class in most developing countries is experiencing slow growth or disappearing altogether. Africa’s middle class represents the rise in professionals and entrepreneurs that are taking the continent by storm. A number of African college graduates who left their home in search of a better life are migrating back home. Many others send money to their loved ones in an effort to help restore the economy of their home lands.

As this trend continues, more businesses now enjoy the ability to cater to more discerning customers on the motherland. Middle class and affluent Africans desire luxury goods and high quality services. This dynamic has created a growing demand for new businesses, especially those that are designed to serve westernized tastes. So now is the time to establish or relocate your start-up or franchise to the continent. Doing so can help you can gain more exposure and realize greater capital potential.

Social Transformation

As I write this post, many African nations are undergoing drastic social transformation. The youths in these nations are not satisfied with business as usual. They are frustrated with the corruption and infrastructure issues that have plagued Africa for so long. And they are doing something about it.

The youths in a number of African nations are beginning to demonstrate against their governmental representatives. They are also beginning to hold these politicians accountable for their actions. They are demanding a better socio-political structure and the entire globe is starting to take note.

Social transformation in Africa

Thousands of people march to Parliament in Cape Town, South Africa, to demand that the President of South Africa, Jacob Zuma, step down immediately because of his corrupt rule on April 7, 2017.

As governmental leaders start to rise to the occasion many of these nations are subsequently experiencing significant socioeconomic development. So if you decide to transition to this entrepreneur’s playground you can easily realize your vision. You can also simultaneously help many Africans realize the social change that they need.

Need more help developing your business plan for African entrepreneurship? Contact us and we will gladly assist you.

The Skills You Need to be an Effective Entrepreneur

Effective entrepreneur skills

In my line of work I constantly meet people who want to become entrepreneurs. While I celebrate and encourage entrepreneurship, I must say that it is not for everyone. Even more I don’t take clients who I feel won’t be effective in their entrepreneurship journey. This is because I don’t want them to waste their time or money.

While you don’t have to be born with an innate inclination for entrepreneurship, you must be willing to make the effort to build the right skills if you want to be an effective entrepreneur. For the average person building or growing a business takes hard work and dedication. It is not something that you should do just because you want to “be the boss”. However, it is something that you should do if you wish to be of service to your community. And you can’t do this if you don’t have or aren’t willing to acquire the knowledge, skills, and abilities that it takes to be an effective entrepreneur.

So if you are thinking about becoming an entrepreneur you need to do a thorough self-assessment to determine if you meet the following qualifications:

Strategic Thinking

In order to be an effective entrepreneur you must have the ability to think strategically. This does not mean that you have to be world’s best strategist. But you do need to know how to effectively think and plan long-term. You must think beyond selling to the small number of clients that you may already have. You must investigate how you plan to support multiple clients in the future.

The average new business owner that I meet is simply focused on the here and now. These individuals can only think about how they can make money from their service or product. They don’t think about the logistics of manufacturing mass goods or providing consistent services to large numbers of clients. They don’t think about ways that they will market their business, transact payments, or even expand in the future.

In order to be an effective business owner you must be able to think through every aspect of your business operations before going public. This is why it is important to have a sound business plan. You can easily draft one on your own if you have strategic planning training and/or experience or if you are a natural strategic thinker. However, if you don’t have the skills, experience, or expertise to think and plan strategically, you should consult a professional to help you with this very important task.

Determination

As an entrepreneur you must be willing to tough it out through thick and thin if you endeavor to be successful. You can’t give up at the slightest challenge that you face. You must be in it for the long haul if you plan to see results.

One common theme among new entrepreneurs is that they want to experience success overnight. As soon as they open their storefront or publish their website, they expect to make instant sales. In most cases, this is not realistic. It will take time to build your brand and your clientele.

Though businesses with physical storefronts are likely to see some activity on the first day of opening, it is unlikely that they will achieve massive sales right away. Exceptions to this general guideline are business owners who invest in franchises or other recognizable brands. Even more, it will generally take new virtual businesses much longer to build a steady and consistent clientele base. Competition in the online marketplace is very stiff right now. Without proper planning and sound marketing strategies it may be more difficult to get a stronghold in your niche market.

So if you wish to have a successful business you must be patient and ready to deal with the challenges ahead. Understand that many of today’s successful, well-known entrepreneurs failed several times before they or their brands became household names.

Adaptability

Effective entrepreneurs must be able to quickly adapt to changing and uncertain times. You can’t get stuck in one way of doing things. You must be able to bend or grow in a different direction if you want a successful business. Modern day technology has proven this time and again. If you are not willing to adapt to societal changes you will most likely be left behind.

Even more, you must be able to adjust your thinking to the way that customers think. You can’t do everything the way you like it. Your goal is (or at least it should be) to please your customers. You shouldn’t expect to only sell the products or services that you like. Doing so may be counterproductive in the long run. Consumers have varying preferences and tastes, which means that you should try to cater to their needs and desires and not your own.

Self-Starter

If you desire to be an entrepreneur, you must be a self-starter. You must be able to initiate and execute your business plan without the promptings of others. Unless you are starting your endeavor with a partner(s) you won’t have someone standing over your shoulder to ensure that you get the job done. You will need to set your own deadlines and stick to them.

Though there are many resources available to help you get started, you will need to do all the groundwork. Entrepreneurship is not for those who aren’t willing to take charge and take responsibility for ensuring the success of their business.

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Discipline

Entrepreneurship also requires serious discipline. You must be capable of managing yourself as you execute the day-to-day operations of your business endeavors. You need to be able to start your duties on time and stay until the job gets done.

I meet a number of prospective entrepreneurs who want to start their own business so that they can be the boss and do whatever they please. Entrepreneurship often means the exact opposite of this – you may have to work earlier and/or later than your employees. This is often the case in the beginning phases of your business endeavor. In fact, you may be the only employee during the start-up phase.

If you are not willing to put in the hard work, your business can easily fail. Few people will care more about the success of your business than you. So you should not anticipate being able to lay back on the beach while your employees oversee and complete all the work. You will need to be an active part of your business until it is running well enough for you to focus your attention on other matters.

Integrity

In order to be successful in business you must operate with integrity. Your customers must be able to trust that they are receiving a quality product or service. Otherwise, you will most likely lose many of them. You must consistently deliver your products and/or services in a timely and in an equitable fashion. Not only are you at risk of losing customers if you fail to operate with integrity you can also subject yourself to litigation. This can easily result in fines or imprisonment.

Studious

In order to be a successful entrepreneur you must be willing to learn. Even more, you must take the necessary steps to acquire knowledge about laws, rules, and regulations related to business ownership. You will also need to grow in your knowledge of marketing techniques, networking, and other business matters. This is a never-ending task as the world is consistently changing. You will need to stay abreast of the latest trends and happenings in your industry.

Again, there are professional services available to assist with many aspects of your business in terms of marketing, payroll, etc. However, you must have some foundational knowledge in these areas in order to avoid being taken advantage of. So adopting an attitude of continuous learning will serve to aid and protect you in the long run.

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Should I Be Debt-Free Before Starting My Business?

Debt and Entrepreneurship

I often get this question from my coaching clients who are starting a new business. Usually they are referring to revolving versus non-revolving debt. Revolving debt is the kind of debt that is associated with lines of credit issued to credit card holders. Non-revolving debt is associated with mortgages, vehicle and student loans, and other debt that involves fixed payment schedules.

I believe in entrepreneurship because I believe that this is one of the best ways to achieve financial independence and freedom. However, one of the first steps you should take toward financial freedom is to eliminate or decrease interest-bearing revolving debt. And if at all possible eliminate or decrease non-revolving debt – though this may be unrealistic for the average entrepreneur.

Reducing Revolving Debt

Your goal should be to eliminate revolving debt that you carry from month-by-month. This type of debt generates interest and fees that add more debt to your debt. It’s okay to maintain revolving debt as long as you pay it off in full by the due date each month. It is also best to maintain a 30% or lower credit utilization rate. In which case you don’t incur any interest and you are able to build your credit more efficiently.

However, anything beyond this will be a financial burden on you as you try to build your business. This is why I absolutely recommend starting a business free of revolving debt. You should also maintain a manageable amount of non-revolving debt. Doing so will take a great deal of stress off of you as start your new business venture. This way you can concentrate on building your business without the pressure to perform just to pay off debt.

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Obtaining START-UP CAPITAL

I recommend establishing business credit from the start of your business venture. However, I also recommend limiting the amount of money borrowed for business start-up. If you need to borrow money for your business be sure that you can pay off your debt in a timely manner. Only borrow what you can comfortably pay back each month and be strategic when making business purchases.

This is my general advice before starting any new venture that involves finances. Whether you are buying a new house or vehicle, or tying the knot, it is best to start with as clean a slate as possible. This way when unexpected expenses related to your new purchase or venture arise you won’t be caught completely off guard. So if at all possible, you should clear all interest-bearing revolving debt and as much non-revolving debt before starting your business.

Need more business coaching advice? Contact us and we will gladly assist you.

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Should I Quit My Job to Start My Own Business?

I am a staunch advocate of following your dreams and achieving your life goals. I feel that everyone should wake up happy and excited to start their day. This is the main reason that I started my coaching business – it energizes and excites me when I help people discover and pursue their passions.

At the same time, I am a staunch believer in not making impulsive decisions that can have a long-term adverse impact on your finances and overall quality of life. This is why I think that the pursuit of our passions should be founded on the principle of wisdom. You need to understand the how, when, where, and why of executing your plan of action before you dive in.

As much as I love doing what I do, I would not be able to do it without the foundation that I built from working a full time job. I worked for many years building my business while remaining employed at a fairly demanding job. There were many times that I thought about quitting my job and starting my own business during my transition phase.

About a year before I left my last full time job I was completely burned out but I kept going because I wanted to set a firm foundation for my business before leaving. I was not in the financial position that I wanted to be in during the early phases of my business start-up. So I stuck with my full time gig until it was the right time for me to leave.

Of course, my situation doesn’t apply to everyone so I never answer this question with a one-size-fits-all answer. Ultimately, it depends on your situation and your career goals. So I always challenge my clients to consider these three questions when they contemplate quitting their job in favor of entrepreneurship:

Are You Financially Prepared?

Generally, I recommend that you have at least 6-12 months worth of living expenses in savings before you voluntarily leave your job. This may sound excessive, but it can be a life-saver especially if you do not have another source of income. No one knows what tomorrow will bring so it is better to be prepared than to be sorry later.

Think about some of the individuals who left their jobs to be a full time entrepreneur within a few weeks of COVID-19 being declared a pandemic. A few of them probably made impulsive decisions to leave their jobs and had little savings in the bank to carry them through a few months. They were fired up and ready to give their business their all and out of nowhere the entire globe was forced into an economic shutdown.

So, what does that look like for them now? Number one, because they voluntarily separated from their employer they can’t access unemployment benefits right now. Number two, they also don’t have access to employer-sponsored healthcare benefits. This means that they may have to delay or forgo treatment if they experience health concerns.

Number three, unless their business provides essential products or services they probably won’t make many sales right now. Because consumers tend to primarily buy only essentials in a down economy a number of businesses that provide non-essential goods and services are suffering right now.

Therefore, more than likely these individuals have unnecessarily fallen on difficult economic times due to poor preparation. And believe it or not, I actually know someone who is in the exact situation at present. This is why I strongly advocate for financial preparedness when starting a business endeavor.

Even in an up economy, the average business owner typically has more expenses than revenue in the first year of their business opening. For some, this may be the case for the first two to five years. This means that you may not be making a profit while your business gets off the ground. Therefore, you need a financial cushion to keep you afloat during these times.

Do You Have an Economically Viable Business Strategy?

Is your business tried and true? By this, I mean have you tested the market and seen if your business is profitable for you? Generally this requires that you start building your business while working a full or part time job. That way you will have a better understanding of how much you can anticipate making from your business once you transition into it full time.

Taking a tiered approach to full time business ownership also helps you make less costly mistakes. You can take your time to see what works well for your business operations and what doesn’t while you still have a viable income scream. You can easily write off losses and lessen your tax liability while not breaking the bank if you strategically plan your transition.

Do You Have a Backup Financial Plan?

If you plan to leave your job, do you have have another viable means of income to sustain you through the transition? This could include income from other income earners within your household, alimony or child support payments, pensions, annuities, royalties, investments, lottery winnings, etc. This source of income can be in addition to or a replacement for the earnings from your employment.

It is very important to have a steady scream of income flowing while you start your business, if at all possible. Having a backup financial plan will help ease tension and anxiety from business losses or slow growth. It can also be an extra source of business capital in times of need. So think about how you plan to live as you grow your business before you leave your job.

Summary

After you have taken time to diligently consider the impact of leaving your job in favor of starting a business, you should strategically plan your course of action. You should never make an impulsive decision by simply quitting your job in the heat of frustration or excitement. No matter how tired you are of your employer or how burn outed you may be, impulsivity is rarely the best plan of action when it comes to financial matters.

Even if you decide that quitting right away is the best option for you at least follow proper protocol. Tender your resignation according to your employer’s guidelines and be diplomatic throughout the resignation process. You never know if you will need your job again in the future or if you will meet up with your former supervisor, colleagues, or customers in a different capacity.

Also, try to wait for the most opportune time to leave even if you are ready to walk out the door right away. For instance, if you work in education generally the best time to leave is in between terms or during the summer break period. This gives your employer enough time to replace you and you aren’t leaving your customers in a difficult situation. After all, your customers from your current employment may be your business customers one day. So you should always try to resign in a graceful manner.

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The Benefits of Employing Your Child in Your Family-Owned Business

Children Working in Family-Owned Businesses

Chances are your child or children already help out a bit in your small business operation. They may do anything from helping to carry, count, or sort inventory to answering phones and relaying messages. These are all work-related duties that they should be getting paid for just like any other employee.

Under the provisions of the Fair Labor Standards Act parents who operate a sole proprietorship, single-owner limited liability company, or spousal partnership may legally employ their child in their business. This guideline applies as long as the child is at least 7 years of age and is able to reasonably perform business-related tasks and duties.

There are certain occupational restrictions that apply to the employment of minors, however, in most non-hazardous workplace environments children can be legally employed and compensated. Additionally, there are daily and weekly work hour restrictions depending on the child’s age and school status. So definitely check the law in your state on what kind of work your child can legally perform and how frequent your child can work.

Aside from the obvious monetary benefits that the child receives, this employment situation can be advantageous to you and your child in a number of ways.

Work Experience

When you employ your child in your business and give them real, transferable work skills you are helping them build their resume or entrepreneur profile. This way if there is ever a need or desire for them to work for a non-parental employer they will have bona fide work experience.

Parental employment situations can also help children learn to be socially and economically responsible. If children are allowed to manage their time and income (when appropriate) they can quickly develop life skills that will benefit them for years to come.

Labor Costs

While individuals under the age of 20 must be paid state minimum wage rates after the first 90 days of employment, it is often cheaper to pay and sustain a child’s salary in small business operations. By law, a child must be paid fair wages for the job he or she is performing and in most cases state minimum wage rates meet this requirement for entry level jobs.

In general, you want to pay your child according to industry standards for the job he or she is performing. However, an adult with household responsibilities would usually request more in the same role. Even if the adult agreed to the same wages, his employment may be short-lived with your small business if he is able to secure better wages elsewhere. So not only are you able to save on wages, you can also save on recruitment and retention costs that often plague small and large businesses alike. This is an excellent benefit in the start-up phase of your business.

Tax Breaks

Employing your child in your family-owned businesses has its share tax perks for you and your child. First, the child’s wages are exempt from Social Security, Medicare, and Federal Unemployment (FUTA) taxes as long as the child is under the age of 18. Social Security and Medicare taxes start to kick in at the age of 18, but you are still exempt from paying FUTA taxes until the child reaches the age of 21.

Additionally, if you pay your child less than $12,400 this year her entire salary is exempt from taxes per IRS rules. This guideline only applies if the child is single or married filing separately. In which case, the average child will qualify for the standard tax deduction which usually increases every year.

Second, your tax benefits will come in the form of payroll deductions. You can deduct any and all payroll expenses on your annual tax return. This includes the salary you pay your child regardless of how the child uses it. This guideline is even applicable if you qualify for a child tax credit under your small business and/or through employment.

Succession Planning

If you are like the average entrepreneur, you want your child to eventually follow in your footsteps. This could mean either taking over the family business or building his or her own empire. Either way the earlier you start preparing your child for business ownership, the better. Your child can develop valuable skills and abilities if they start working with your family-owned business from a young age. This way if you are unexpectedly unable to maintain your business, your child can do so lending to your family’s economic stability.

Need more beneficial business development ideas? Contact us and we will gladly assist you in your endeavors.

How Much Should I Charge for My Handmade Products?

Pricing artisan goods

One question that I often get from new entrepreneurs in the handmade and artisan product industry is “how much should I charge”? Individuals who enjoy working with their hands usually love creating things for the pleasure that they get out of it and they often freely share the fruits of their labors with others. Designing and creating handmade products to give away as gifts and freebies is generally the norm for these individuals. Oftentimes they don’t even consider selling their products or goods until someone else suggests that they do so.

If they decide to heed this advice, they are typically confused about what rates to charge or uneasy about charging what they deem to be “high rates”. This is especially the case when they once gave away their items for free. Such decisions are even more complicated for people who are benevolent and charitable by nature.

Entrepreneurs and small business owners in this category are not alone. It’s not always easy knowing what to charge when you have little to no experience in operating a business. This is why it is important to do some research and soul-searching before putting your products on the market. Doing some preliminary work will make the process much easier now and in the future.

I have compiled a list of some items that I often encourage my clients to consider when they are trying to price their goods. These suggestions may also help you in your handmade business journey.

Market Price

The first step to accurately and fairly pricing handmade products is to check the market value of the goods. This step is essential and should never be overlooked. It is generally not a good idea to arbitrarily choose a price for your products. You could be making a costly mistake by doing so. Keep in mind that the value of any product is based on what the buyer is willing to pay.

If you overprice your goods, you may make a few sells but you will probably lose out on greater revenue in the long run. If you under-price your goods, you will be selling yourself short and possibly take a major loss in your business over time. However, if you price wisely you will most likely realize a steady stream of income for years to come – assuming your product meets quality, value, and other standards.

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Market price evaluation is very simple. A quick Google search will often yield an abundance of products similar to your artisan or handmade products to price compare with. I always recommend checking the prices of both mass-produced and handmade products. It’s important to gain a wider perspective of the broader market for pricing and other purposes.

While your products will be unique and attract a different type of buyer, it is still important to assess all competitor rates. It is very common for similar products in the same category to range significantly in price. For instance, in helping one of my clients price her handmade body butter we saw prices ranging from $4 to $140. These prices were inclusive of mass-produced and handmade body butters.

Mass produced products will typically be cheaper than handmade goods. This is because they are less expensive and faster to produce. However, handmade products take time, care, and craftsmanship to produce. Therefore they will tend to sell at the higher end of the price spectrum. And that’s perfectly fine as long as the price takes into consideration other elements such as labor and overhead costs and craftsmanship fees.

Labor and Overhead Costs

Calculating labor and overhead costs can be a bit more complicated. There are many factors to consider in this category. You need to think about every expense involved in making the product from start to finish. This includes supplies, equipment, legal fees, electricity, packaging, labeling, shipping, retail space, website maintenance, marketing, etc.

Additionally, you need to include the cost of labor for producing the product. If you are the sole producer, you should consider how much you would pay yourself as an employee. Obviously if you have employees or otherwise pay someone to help you make the products you need to include their salary or hourly wage expenses as well.

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Once you have the total cost for each element involved in producing your goods, you will need to determine the per product expense for each individual item that you produce. This is the complicated part because it is difficult to get an exact figure, especially if you don’t measure or otherwise account for the amount of supplies or products that you use to make your handicrafts. However, it can be done if you take the time to carefully consider the elements that you use to construct or create your handmade goods.

Craftsmanship Fees

Finally, you must know your value and worth as a craftsman. Are you a skilled artisan who produces detailed work of the highest professional quality. Are you a stay-at-home parent who produces semi-professional handmade goods in your spare time? Are you a working professional who makes amateur handmade goods as a side-hustle? Or, do you fall somewhere in between?

Understanding where you fall in the handmade industry will do a lot for helping you to assign a price to your work. Just like in any other career field, the more specialized, high level experience you have the more you can expect to make. And, of course you can and should adjust your price as your skill level grows. However, your skill level along with market value, and overhead and labor costs should always be considered when pricing your products.

Need more assistance with pricing or similar services related to your handicraft business, contact us and we will be glad to help you grow your business.

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