Challenges Facing Startups In Africa And Their Solutions
What is the likelihood that your startup will see its fifth birthday? This a hypothetical question but statistics show that 50% of the startups fail within their first five years of operation. The big question is why and where do the founders go. Do they bury their dreams, call themselves failures and seek formal employment? I cannot figure out this but some follow the above routes. If you have tasted failure, then you know what I’m talking about. The truth of the matter is that there are common challenges that face startups and if not well managed they lead to failure. The following are some of the common startup challenges facing entrepreneurs in Africa
Cash flow issues
The time it takes to break even varies from one business to the other. They are some that will break-even within the first month while others will take years before they start generating profits. You need money to keep your venture running up to a point where it can fund itself and generate profits.
Solution
You have to set up a budget to succeed in the startup stage. You require a thorough market research to determine the amount of money you need to keep going. You can approach investors if your vision is clear enough to attract them. You can even apply for grants that will keep you afloat during this hard period. Have a flexible budget that can cater for emergency expenses that may come your way.
Competition
Most of the business ideas we have at the moment are just innovations and nothing new. Not many people can create something new from the scratch. Your startup can be in this line but you should be creative and innovative. Let us say you are in the fintech area, the only thing you can do is innovate because we already have the framework. But this is the challenge. For instance, you want to introduce a digital payment platform. How will you compete with other established platforms such as PayPal, VISA and Mastercard?
Solution
You have to be unique and capitalize on the weakness of others. The reason why cryptocurrencies are picking ground is that they are universal, unlike legal tenders that are restricted to certain territories. Do not try to overstretch yourself in your startup stage as you might become overwhelmed. Focus on a single product or two and gain ground before you expand. Establish authority in that sector and create a community of loyal followers and buyers. Add value to your services and products to make them different from those of competitors.
Changing consumer patterns
Ten years ago, internet cafes were a thing in town and those who owned some made a kill out of the business. Fast-forward, cyber cafes are outdated because the internet is cheap and most people own smartphones. There might be a few people who frequent internet cafes but the flow is not that big. Some big brands like Nokia were once the leaders in mobile phones manufacturing. However, they failed in adopting new technology like Android OS and were overtaken by other brands such as Samsung and Techno
Solution
You have to be alert and know what is trending and what is likely to be faced off. Before you invest, you should evaluate the expected lifespan and relevancy of your investment. Take consumer surveys and learn what people are consuming and twist your products to fit the same.
Surviving the startup stage is a challenge to many. But with the right network, you can overcome the obstacles and take your venture to the level. This is what YEN AFRICA is all about. Join us for a chance to Network, Innovate and Transform.
