EnterpriseAfrik

A look at Four Promising SMEs in Rwanda

2016-05-11T21:12:00.003+00:00

By Sara Leedom

This week, as investors and policy leaders land in Rwanda for the annual World Economic Forum on Africa, the spotlight will be on the hundreds of Rwandan entrepreneurs who are contributing to the East African nation’s rapid and sustained economic growth.

Kigali

Across the globe, small and medium enterprises (SMEs) are the lead drivers of job creation and economic development. In Rwanda, the statistics are on par. According to the Rwandan Ministry of Trade and Industry, 98% of businesses are considered SMEs, contributing 41% of all private sector jobs in the nation.
Rwanda’s government has created a supportive environment for these SMEs to thrive. Often cited are Rwanda’s policies which speed entrepreneurs through an online formal business registration at a record four hours. Protections for investors, practically non-existent corruption, infrastructure for online payments, access to energy, and an increasingly educated workforce are all hallmarks of a nation that is both smart and serious about economic development.

Yet, we know that small business growth is downright hard. Businesses fail. Entrepreneurs fail. Ideas fail. But, by overwhelming majority, the spirit of innovation and tenacity is practically baked into the Rwandan attitude towards business growth as a key to national transformation.

My company, African Entrepreneur Collective (AEC), works with dozens of young entrepreneurs in Rwanda who are taking big risks to see their ideas come to life. In Rwanda the business development community is largely split between investing in agriculture, the primary base of Rwanda’s economy and the largest driver of new jobs, and the ICT sector, which holds the promise for modernisation and lifestyle improvements for millions.

At AEC, we work with both. Here are some of the Rwandan entrepreneurs who inspire us:

Shekina Enterprise
Nearly ten years ago, Rwandan women traders in the local market threw away the cassava leaves they were not able to sell each day, as the plant spoils quickly. Pierre Damien experimented with methods of drying cassava leaves for improved storage, and his curiosity led to an innovative dried cassava leaf product that retained the nutritional value of the fresh leaves and was at least four times faster to cook.
Today Shekina employs over 100 permanent staff and works with more than 1,000 farmer suppliers – both groups are approximately 70% women – to produce a dried cassava product for domestic and export markets. Isombe is a staple food of East Africa, and the dried and instant cassava product not only brings higher value for the farmers and jobs for processors, but it saves thousands of hours of time for Rwandan women cooking for their families.

Hollanda FairFoods
Pascal Murasira, co-founded Hollanda FairFoods and its signature brand Winnaz crisps in 2014 with initial capital investments from IFDC. Hollanda purchases and processes Rwandan-grown Irish potatoes to sell as potato chips. By using a contractual farming approach to engage with farmers and cooperatives, Hollanda now is a profitable Rwandan company, with a strong domestic and export market.
Hollanda’s presence in East African markets is growing, as sales for snack foods in Kenya in 2010 reached US$44.4m, growing at an average rate of 8% annually. In Rwanda, packaging is one of the more expensive elements for the company, as Rwandan law prohibits the use of plastic bags. So the special Winnaz package not only is full of awesome chips, but it’s environmentally sound as well.

Academic Bridge
In the ICT realm, we’re checking out the young and promising Academic Bridge, an ed-tech company connecting parents to teachers for the benefit of communication about student progress. From tracking school fees to exam marks, the team at Academic Bridge has assembled an inspiring package of features, recently recognised by Tigo’s Reach for Change programme.
Academic Bridge’s CTO, Christian Ikuzwe, has been previously awarded accolades by the World Bank and the Bill & Melinda Gates Foundation for his SanMob app. Other team members, including Miriam Muganga and Yves Iradukunda, are serial entrepreneurs bringing networks from Nigerian start-ups and Rwandan ecosystems to build an app that is sure to succeed.

SafeMotos
And no conversation about Rwandan tech is complete without a nod to SafeMotos, the ”Uber” for motorcycle taxis in Kigali. With 5,000 users on their Android and iPhone apps, co-founders Peter Kariuki and Barrett Nash have created a taxi-hailing app that not only delivers convenience and mobile payment options, but also allows customers to select drivers based on ratings of driver quality. The SafeMotos team has been securing accolades across the continent – from a feature in the Economist last week to awards from Pivot East, the team has created serious traction with less than $200,000 investment.
We believe it’s a special combination of a positive enabling environment, practical hands-on support from partners like AEC, and a thriving entrepreneurial spirit that make Rwanda’s SME scene a trendsetter for the continent.

Sara Leedom is the co-founder of the African Entrepreneur Collective, a network of business incubators and accelerators with the mission of creating jobs through private sector development.

Source: How We Made in Africa

How to become a Better Boss

2014-12-13T14:29:00.000+00:00

By Michael Mankins

It’s a time-honoured precept of good management: Teach your team members or direct reports to take on some of your responsibilities. Doing so builds their skills and expands their horizons; it also frees you up to focus on higher-order or longer-term issues.

One key to successful delegation is to coach team members on making and executing critical decisions. If people can learn the craft of decisions – making good choices, making them quickly and implementing them effectively – they will find their work far more satisfying. And your unit will be far more productive, because every decision won’t depend on you.

Many people, of course, don’t handle decisions well. They may act too quickly, failing to think through the options and implications. They may try to deflect responsibility or pawn off the decision on someone else, often their boss. (“Just tell me what to do, and I’ll do it.”) So to build your team’s decision capabilities, you’ll have to start from the very beginning. Here’s what’s involved:

Work with your team to identify the most important decisions.
Every unit or function in an organisation must make critical decisions. Some of these are big, strategic choices, such as determining the allocation of marketing dollars or choosing which IT system upgrades to buy. Others are everyday decisions that add up to a lot of value over time, such as how to handle customer service requests. A useful coaching tool is to create a decision architecture with your team that captures your unit’s critical decisions. Begin by listing all the decisions your unit must make; then winnow the list by determining which ones involve the most value and which require the most attention. Those that make the cut will be your critical decisions – the ones that absolutely must work right if your team is to be successful.

As a group, assess how those decisions are made and executed today.
Are they made in meetings, or by individuals? Do you yourself have to make most of them? Figure out not only who makes the decisions but who plays other key roles, such as creating a recommendation or offering input. Then analyse the decision-making process itself. What sort of information is required before anyone can make a decision? Do decision makers get that information at the right time and in a useful form? A good way to help team members answer these questions is to evaluate each part of the decision process. Ask them whether the decisions in question are usually right – that is, whether they typically result in the desired outcome. Ask whether they are made and executed in a timely fashion, and whether they involve too much or too little effort, given the decision’s value.

Define key roles for your critical decisions going forward. Your team members may not understand that every major decision usually involves several key roles. There’s the recommender, who gathers input from people with knowledge about the issue and proposes a course of action. There’s often someone who must agree to the recommendation before it can go forward. There’s the decision maker, and there are the people who will implement the decision. We like to assemble all these roles into an out-of-sequence but easy-to-remember acronym – RAPID®, for Recommend, Agree, Perform, Input and Decide. Once people get used to the language, you’ll find they use it easily, as in “I have the R for that decision – Sheila has the D.” The common language makes it easy for the group to agree on who should play each role.

Coach team members on good decision disciplines.
Every major decision needs to be framed correctly – not “what should we do?” but “what are the best options in light of this specific goal?” A significant decision is likely to require a robust set of facts before it can be made. Gathering this information can take time – time that will need to be accounted for to keep the decision process on track. Decisions should be made according to criteria that are agreed on in advance. A leader shouldn’t jump in and make a decision the first time people get stuck, but should instead reinforce his confidence in the team that they have the expertise and skills to work it out. Setting guidelines for a decision – “as long as you stay within the guidelines you have full responsibility” – will help keep escalation to a minimum. Put these disciplines together, and you can reset each major decision accordingly.

Helping people learn the craft of decisions is a significant investment of time. You will have to role model the right behaviors and decision disciplines to make sure that they stick. But coaching your team to make and execute critical decisions well not only makes you a better boss; it also leads to higher productivity and engagement. Because your people are more effective and engaged, you can focus more on the big picture than on the daily details of management.

Michael Mankins leads Bain’s Organization practice in the Americas and is a partner in the firm’s San Francisco office. He is coauthor of ‘Decide & Deliver: 5 Steps to Breakthrough Performance in Your Organization’ (Harvard Business Review Press, 2010). Cornelia de Ruiter is manager of the Organization practice for Europe, the Middle East and Africa. She is based in London.

Africa is a World Leader for Start-ups

2014-07-01T18:52:00.000+00:00

Entrepreneur Regina Agyare is the founder of Soronko Solutions,

a Ghanaian software development company.

From ambitious teens taking on the world and tech pioneers breaking boundaries to maverick slum dwellers dreaming big and trailblazing innovators tackling social problems, CNN's African Start-Up has been following the efforts of the continent's innovative and determined entrepreneurs to make their business dreams become reality.

Indeed, all across the continent, a growing wave of grassroots self-starters are taking risks and defying obstacles to bring their money-making ideas to life. Armed with a can-do attitude and hopes of striking it big, they're navigating a conundrum of challenges to pursue opportunities at a time when many African countries enjoy unprecedented levels of economic growth.

"The entrepreneurial landscape in sub-Saharan Africa is absolutely excellent," says Mike Herrington, executive director of Global Entrepreneurship Monitor (GEM) and professor at the University of Cape Town in South Africa. "It's on the increase because Africa, at last, has been emerging and the economies are booming -- several countries are starting to really increase entrepreneurial activity and move to opportunity entrepreneurship, rather than necessity entrepreneurship," he adds. "Opportunities abound and a positive spirit is emerging amongst the population of these countries."

So, Africa's entrepreneurial spirit is alive and thriving -- but how does it compare to the rest of the world?

Earlier this year, GEM published its annual report looking at the state of entrepreneurship globally. It found that sub-Saharan Africa is the region with by far the highest number of people involved in early-stage entrepreneurial activity (TEA), with Zambia and Nigeria leading the world rankings.

It's a woman's world
Africa also leads the world in the number of women starting businesses, with almost equal levels of male and female entrepreneurs. In fact, in countries like Ghana, Nigeria and Zambia the women outnumber the men.

Source: Global Entrepreneurship Monitor 2013 Global ReportINEZ TORRE/CNN

Overall, the continent has a much higher proportion of female entrepreneurs compared to other regions, with Nigeria and Zambia (both 40.7%) coming on top and countries like the United States (10.4%), the UK (5.5%), Norway (3.6%) and France (3.1%) lagging far behind.

According to Herrington, the main reason for this is because women in Africa "need to earn an extra income" to be able to afford "to send their children to school."

Getting off the ground

Source: Global Entrepreneurship Monitor 2013 Global ReportINEZ TORRE/CNN

Yet, does the high number of both male and female entrepreneurs tell the whole story? And do these impressive figures translate to sustainable startups that are able to grow and provide employment to the continent's young population?

Factor-driven economies are mainly based on low-skilled labor and national resources. By comparison, efficiency-driven economies develop more efficient manufacturing processes and increase product quality, while innovation-driven economies are engaged in the production of new products by combining sophisticated technologies with a high-skill workforce and research.

In its analysis, GEM groups countries into geographic regions, but also according to their development stage: factor-driven, efficiency-driven and innovation-driven, each suggesting an increasing level of sophistication in the operation of the economy (see fact box on the left).

Most African nations surveyed are placed into the factor-driven stage, where early-stage entrepreneurial activity rates tend to be higher than the rates of owner-managers in established businesses (running more than three and a half years).

In other words, "a high entrepreneurship rate does not necessarily mean the creation of a lot of jobs," explains Herrington. "Those countries with low GDP per capita tend to have a very high entrepreneurial rate, because the larger corporations are not taking up a lot people to provide them with the so-called formal employment," he adds.

Calling it a day

Source: Global Entrepreneurship Monitor 2013 Global ReportINEZ TORRE/CNN

Similarly, the continent might be buzzing with startups, but how long do these last?
According to GEM, the rate of business discontinuance tends to decrease as economic development increases. As a result, countries like Malawi and Angola that see many new businesses also experience high numbers of people abandoning their efforts after failing to make profits.

"The discontinuance of businesses in the factor-driven economies is very high," says Herrington, citing "the lack of education, market research and access to funding" as the main reasons.

Fearless entrepreneurs

Source: Global Entrepreneurship Monitor 2013 Global ReportINEZ TORRE/CNN

There are several factors hindering the survival and growth of small businesses in Africa -- little government support, bureaucracy and lack of financial backing to cite a few more. Yet, all these constraints do little to prevent the continent's budding entrepreneurs from trying their luck.

True, entrepreneurs might be optimistic by nature, but nowhere else in the world is this key drive toward success as present as in Africa.

The continent's entrepreneurs boast the lowest levels of "fear of failure," with just 24% responding that it would stop from starting a business and seizing business opportunities. In countries like Zambia, Uganda and Malawi the figure drops to as little as 15% -- compare that to countries like the UK (36.4%) and the United States. (31%).

All you need is confidence

Source: Global Entrepreneurship Monitor 2013 Global ReportINEZ TORRE/CNN

It's no surprise then that African entrepreneurs are also the most confident in the world in their ability and skills to start a business. In comparison, people in Malawi feel twice as self-assured about launching a startup as those in the UK.

Likewise, sub-Saharan Africa claims the top five spots for countries where people see good opportunities for starting a business and feel positive about entrepreneurship.

Herrington says that it's these qualities, coupled with a need for better education and a focus on moving entrepreneurs from necessity to opportunity, that will drive the continent's development.

"Africa is going to have to rely on small businesses (SMEs) to provide the bulk of the employment," he says. "In a lot of countries the SMEs contribute more than 50% of the GDP and more than 50% of employment, so if you're going to employ people in Africa and other developing countries it's SMEs are the ones that are going to provide that."

Source: CNN

Five big and Controversial Ideas that can Transform Africa

2014-06-29T20:59:00.000+00:00

A big idea can be rejected. It might be illegal. It might mean political suicide. In the words of Marcelo Giugale, the World Bank’s director of economic policy and poverty deduction programmes for Africa, challenging conventional wisdom isn’t always easy. But in the realm of big ideas, the risk is part of the reward.

Speaking at the recent Africa Big Ideas 2014 conference, where experts from the World Bank gathered to discuss some big ideas that may change the way we think about Africa, Giugale was referring to the mother of all big ideas: conditional cash transfers.

First implemented in Mexico almost 20 years ago, the idea of giving cash to the poor was considered heresy by most development experts, the World Bank included. Today, conditional cash transfers are implemented in more than 70 countries in the developing world, and evidence shows them to be effective at reducing poverty.

Among all the big and smaller ideas that were presented at the Africa Big Ideas 2014 conference, here are my five favourites:

1. The boldest: Gambling for safe sex
The big idea is to use lottery tickets to incentivise safe sex. How? People who remain STD-free for four months are entered in a drawing for cash awards. The tactic has proven effective: In Lesotho, the study Safe Sex for a Chance to Win found that the number of new HIV infections dropped by 22% among participants. The lottery is clearly a better gamble than risky sex.

2. The simplest: Stop worrying that the poor will misuse the cash
An innovative study, Do the Poor Waste Transfer Income?: Evidence from Tanzania and Beyond, found – using evidence from around the world – that money given to poor people doesn’t get wasted on “temptation goods”. Concerns that cash transfers will be used on booze and tobacco are unfounded.

3. The most controversial: Exploiting the power of the mine
Two out of every three people in Africa have no access to electricity. Government and private funds are inadequate to commission the large-scale power projects needed to achieve universal access. The controversial idea is that mining can help. The Power of the Mine: A Transactional Opportunity for Sub-Saharan Africa, a recent study from the World Bank, suggests that mining will ensure an ample, steady flow of revenue to utility companies in Africa, which will deploy the funds to increase access to electricity.

4. The fairest: Breaking the metal ceiling
The big idea is that women should work in sectors dominated by men. Why? The answer is simple. As a recent study shows, in Uganda, women working in male-dominated sectors make three times as much as those with jobs in sectors traditionally defined as “women’s work”.

5. The most urgent: Let’s worry more about drought and conflict
Africa is singing the Africa-is-rising song. But what can derail Africa’s rise? Is it slow growth in BRICS – Brazil, Russia, India, China and South Africa? Is it another worldwide financial crisis? The study Stress-testing Africa’s Recent Growth and Poverty Performance found that in Africa, the greatest risks to growth and poverty-reduction arise from internal shocks such as drought and civil conflict, rather than from external shocks. The big idea? To focus more on climate adaptation and conflict reduction.

Source: How We Made It in Africa

The Rise of E-commerce in Africa

2014-06-29T20:52:00.000+00:00

E-commerce has a bright future in Africa, according to Sascha Breuss, managing director at South African online fashion retailer Zando.

Speaking at Source Africa – a pan-African textile and clothing trade event recently held in Cape Town – Breuss said e-commerce will make up for the lack of modern bricks and mortar retailers in many African countries.

“Lagos today has a population probably between 20m to 25m people … and they have two malls,” he said, making a comparison with Cape Town that has around 10 larger shopping malls that serve a population of under four million people.

Furthermore, traffic congestion in cities like Lagos, Cairo and Nairobi can make shopping a hassle. Breuss said he is not exaggerating by saying that it takes around four hours to travel the short distance from the airport to the city centre in Lagos.

Two of the top online retailers in Nigeria are Jumia and Konga. Both companies sell a variety of products from mobile phones to fashion.

According to Breuss, Jumia is currently Nigeria’s biggest retailer, a status it achieved after being in the market for just two years. “So e-commerce is already dominating this country.”
Zando and Jumia are part of Africa Internet Holding. The group also owns a number of other online properties in Africa, including real estate portal Lamudi, hotel booking site Jovago and vehicle marketplace Carmudi. Jumia has also expanded to Egypt, Morocco, Côte d’Ivoire and most recently Kenya.

Both Jumia and Zando want to sell more locally-made products to reduce the challenges and costs associated with importing goods into countries like Nigeria.
In South Africa, Zando has introduced its own private fashion label, and only around 25% of its products are international brands.

Jumia and Zando’s free returns policy allows customers to try on garments in the comfort of their homes. According to Breuss, the number of returns the companies receive are relatively low.

“In terms of our return rate, I cannot share that number, but I can tell you that using the international benchmark – if you look at our sister companies in Europe and Asia and elsewhere – it is tiny… significantly lower than what we expected when we came here… specifically in South Africa but that applies to all African countries.”

The rise of e-commerce in Africa
According to a report by McKinsey & Company released in November last year, e-commerce will open up a new shopping experience for Africa’s growing middle class.

“By 2025, it could account for 10% of retail sales in the continent’s largest economies, which will translate into some US$75bn in annual revenue.”

While McKinsey estimates that just 16% of the continent’s one billion people are currently online, this number is expected to grow considerably over the next few years.

“Despite a slow start, Africa’s digital development is now accelerating,” states the report. “As the continent grows more connected, it is already producing innovative web-based applications and dynamic new business models. For now, the internet in Africa remains a wide-open space where companies can capture large opportunities if they move rapidly and decisively.”

McKinsey’s research also indicates that more than half of urban African consumers already have internet-capable devices. Africa’s smartphone penetration could reach 50% in leading countries and 30% overall in the next decade, spurred by the introduction of low cost devices.
Breuss said growing smartphone penetration will play an important role in e-commerce on the continent, and leapfrog fixed-line internet infrastructure that is vastly lacking.

Source: How We Made It in Africa

What it takes to be a Successful Industrialist in Africa

2014-06-29T12:14:00.000+00:00

How Cash-Strapped Startups can attract Good Employees

2014-06-18T16:37:00.000+00:00

How Smaller Businesses can help Africa thrive

2014-06-18T14:39:00.000+00:00

International investors, representatives of international and regional organisations, and African leaders from government and civil society, who attended the World Economic Forum on Africa in Abuja, Nigeria last month are seeking to translate the region’s economic promise and youthful demographics into employment opportunities and poverty reduction.

Sub-Saharan Africa is a rare bright spot in a still-sluggish world economy, with the International Monetary Fund projecting 6% output growth this year. A decade of expansion has been driven by peace, better economic governance, investment and high commodity prices. But make no mistake: it has not just been about resources. Some of the best performing countries are not rich in natural resources, such as Rwanda, Ethiopia and Burkina Faso. Services such as retail and communications, together with agribusiness and manufacturing and exports, have driven growth more than is generally recognised. Business incubators and accelerators are spawning technology startups from Accra to Dar es Salaam.

That said, Africa faces daunting challenges. The extractive sector propels growth in several countries but does not directly create many stable jobs. By 2050, the continent’s labour force will be bigger than that of China or India. Creating jobs for hundreds of millions of labour market entrants will mean the difference between a demographic dividend and a social time bomb. Africans don’t just need more jobs; they need better jobs. Prosperity hinges on getting people out of subsistence agriculture and marginal self-employment into more productive activities.

Growth without diversification, technological improvement, and increased productivity is easily reversed: all it takes is a dip in commodity prices. This is where trade and SMEs fit in. Trade demands competitiveness. Exporting firms are more productive, and pay higher wages than their domestically focused counterparts, especially in places like sub-Saharan Africa. If firms manage to thrive in world markets, they tend to increase their productivity even more.

A key subject at the Abuja summit was the bottlenecks that prevent existing and yet-to-be-founded firms in African countries from exporting value-added goods and services, and think about how best to encourage investment and hiring in modern, tradable sectors.
Just take a look at the success story that is M-Pesa .The impending launch in Europe of this mobile money transfer service that has transformed the way banking and business are done in East Africa, is more than a feel-good story about a Vodafone technology pioneered in one of the world’s poorest regions being imported to one of its richest. M-Pesa is a powerful example of the gains to be had when the development community works together creatively to empower people and businesses in developing countries. From a modest pilot project focused on microfinance repayments, M-Pesa – ‘pesa’ means ‘money’ in Kiswahili – has grown to the point that an estimated one-third of Kenya’s $44bn annual economic output now flows through it. M-Pesa has turned mobile phones into both offices and banks.
Responsive governments committed to improving the broader trade facilitation and business environment can help companies of all sizes by improving infrastructure: roads, transportation, ports, information and communication technology, and electricity. For enterprises to capitalise on opportunities to grow, they need access to finance. This can be difficult for SMEs that are too big for microfinance institutions but too small to interest commercial lenders. Meeting export markets’ health and quality standards, together with the dizzying array of private voluntary standards, is especially tough for smaller firms, although the rewards for compliance can be considerable. The recent World Trade Organisation agreement on trade facilitation should cut customs-related red tape which weighs heavily on SMEs, making it easier and cheaper to bring goods across borders.

The International Trade Centre works to internationalise SMEs in developing countries. Some of our work is with governments to improve policies and to strengthen their institutions in trade and export development. The rest of our work is with the private sector: creating free intelligence tools to help them learn about conditions in potential markets; assisting them to connect to value chains; helping with product branding; and tackling non-tariff measures.

In our experience, modest, targeted interventions can yield substantial rewards. Facilitating contact (and contracts) between Southeast Asia and Western and Central Africa yielded over $150m in deals for cashews, rice, and cotton in the space of a few years. Bringing experts from Bangladesh spinning mills to the United Republic of Tanzania to train cotton farmers and gin operators on how to reduce contamination, led to higher prices for the farmers and better raw material for the mills. Connecting women in rural Burkina Faso to a rising star in Italian fashion meant more sales than ever for their traditional prints which helped Stella Jean’s high-end customers do some good while being fashionable.

Governments, African business, foreign investors, and civil society groups have an opportunity to pool their ingenuity and their resources to find innovative new ways to strengthen the African private sector and help SMEs access capital and markets.
The broader development community can support the private sector to improve productivity and generate jobs which can free people from unemployment or the drudgery of subsistence labour. Prioritising the private sector will require some development policy experimentation. The policy makers and policy takers at the Abuja meeting could take a lesson from M-Pesa’s success where small risks can have huge payoffs. They can think about how they can work together to help the continent’s biggest job creator: its immense ecosystem of micro, small and medium-sized enterprises. Empowering the African private sector to tap into value chains would bolster prospects for growth and job creation.

Arancha González is Executive Director of the International Trade Centre, Geneva.

Sharing Space makes Work easier for Entrepreneurs in Africa

2014-05-05T16:11:00.001+00:00

Modupe Macaulay, founder of CapitalSquare

“Lagos is a difficult place to do business. There’s the high cost of rent and poor infrastructure – unreliable electricity and unreliable internet connectivity are some of the major issues affecting modern businesses in Lagos today. And, with that, there are still a lot of people going into entrepreneurship because of the high rate of unemployment. There is clearly the need for an easier and more affordable way to do business.”

This is why Modupe Macaulay believes there are opportunities for co-working spaces in Nigeria’s commercial hub, and towards the end of last year she officially opened one, CapitalSquare. She had been inspired by the concept a few years earlier when she discovered that one of her heroes, Maria Popova, a writer living in New York and founder of the blog Brain Pickings, had used a co-working space.

“It just seemed like an amazing idea to me; the ability to share a workspace with people doing interesting and not necessarily related things. There would be so many opportunities to learn, to work together, to come up with new ideas, to start great things… At that point, it was the community aspect that caught my attention, and I thought it would be great to have something like that in Lagos,” Macaulay told How we made it in Africa. “So I wrote it down as something I’d like to do someday and forgot about it.”

When Macaulay returned to Lagos after finishing her master’s in the UK in September 2012, she struggled to find a job, and by 2013 she was still unemployed. At that time she was looking to start a business with a friend and needed an affordable and professional place from which to work, which was also hard to come by. Macaulay saw the potential for a shared working space in Lagos, and so the idea for CapitalSquare was born.

It’s all about flexibility
Before coming up with the membership model for CapitalSquare, Macaulay did a lot of research on co-working spaces around the world and realised the membership options needed to be flexible in order to succeed.

Today, CapitalSquare has four membership levels that address the needs of those who have a day job and need another place to work part-time or on weekends, to those who need to use the space full-time. The fees range from US$87-$202 a month and include unlimited high speed internet, uninterrupted power supply and extras like printing, meeting rooms, mail handling, virtual phone numbers, office supplies and tea and coffee.

There is also a $7 full day pass, and a virtual membership option where members don’t physically use the space but can make use of a business address, virtual phone number and mail handling.

According to Macaulay, sharing office infrastructure is not only cheaper for entrepreneurs, but also means they spend less time paying electricity and other administrative bills, and more time on developing their businesses.

“Another huge plus, which really appeals to me, is the free networking opportunity that the entrepreneur gets from working alongside other entrepreneurs,” she continued. “Co-working spaces are a breeding ground for innovation, simply because they are full of people with ideas, who are crazy enough to try to make them happen.”

The pros and cons of being an entrepreneur
Macaulay was able to get most of the startup capital for CapitalSquare from her family after much time studying the market and running the numbers.

“You have to prove that your idea will work because nobody, not even family, wants to put their hard-earned money into something that isn’t worth it.”

She added that the best part of being an entrepreneur is having control over her life, despite the fact that all hours are office hours for the self-employed. However, Macaulay noted that the negative side is not having a regular, guilt-free paycheck.

“I say ‘guilt-free’ because it’s hard not to feel guilty when you’re paying yourself and the business is having a bad month. And yes, you do have to pay yourself (even if it’s something small), especially if you don’t have a day job.”

Source: How We Made It in Africa

Why Failure is sometimes a Good Thing

2014-05-05T15:11:00.002+00:00

“In failure there are many lessons to be learned,” says Sam Gichuru, co-founder and CEO of Nairobi-based startup accelerator Nailab.

Sam Gichuru

After working in the telecoms industry for three years, Gichuru started his first business at age 23. The venture however didn’t work out. For the next eight years he launched “a couple” of other businesses most of which also failed.

The Kenyan entrepreneur tells How we made it in Africa that he “made too many mistakes” in his earlier ventures partly because he had no one to train or mentor him.

“I made the mistakes most business people make [like] I invested too much or went into a field that nobody was interested in,” says Gichuru.

He notes that one of his companies went bust while he was on honeymoon because the business didn’t have the right structures in place for his employees to carry on while he was away.

At one point Gichuru went back to formal employment, then to university but he dropped out after two years to give entrepreneurship another shot.

It was then that he teamed up with crowdfunding platform 1%Club founders Anna Chojnacka and Bart Lacroix to start Nailab (Nairobi Incubation Lab). The startup accelerator established four years ago offers young technology entrepreneurs support by providing business advice, technical training and mentoring as well as linkages to investors.

Gichuru says Nailab seeks to enable hard working people to “not waste the eight years I wasted myself figuring business out”.

“By helping them cut down on the mistakes, [we] could make it [quicker] for them to launch a business and be successful.”

About 35 startups have gone through the incubation programme at Nailab, some of which have created jobs, scaled their operations, attracted investor funding and are generating revenues.

As an early stage investor, Nailab takes a 10% stake in each of its startups. However, it is yet to exit any of its investments.

Lessons from his failures
Gichuru explains that arrogance is one of the reasons why his earlier businesses failed.
“At the age of 23… you think you know everything [and] you think you have it figured out. Arrogance extends to the fact that you don’t seek advice as much as you should. You build products based on what you think is going to work but then the customer rejects it.”
He says not putting in place proper structures to ensure the business can run in the absence of the founder or CEO is also common among early stage entrepreneurs and often leads to failure. Having a culture where people can exercise creativity is critical to ensuring business continuity and innovation.

“You will discover today the culture at Nailab is everybody runs departments in their own different way. In my first business I ran everything. I was a little bit of a perfectionist,” he recounts. “I am the guy who knew everything so everybody had to do it my way. They didn’t know what to do when I was away.”

Nonetheless, Gichuru would like to see some failure among startups.
“There is very little you can teach from success. In failure there are many lessons to be learned. For you to be successful you have to take a risk and for you to take a risk you have to not be afraid of failing,” he says.

“What we want to beat is the perception that when you fail you are a joker. You shouldn’t stop trying. It’s just that you should be wiser. This is my strong conviction. You are not going to make something great the first time, or the second time, but you are going to be great making it because with every experience you become better and better.”

Source: How We Made It in Africa

Why Formal Trade in Africa lags, while Informal Prospers

2014-03-30T10:22:00.000+00:00

A local market in Accra. ©EnterpriseAfrik

While Africa’s trade with the rest of the world – such as with China and India – has been on the rise in recent years, trade between African countries still lags, especially when compared to other regions in the world.

In an article published last month by Dr Álvaro Sobrinho, a leading business figure in Angola and chairman of emerging bank Banco Valor, intra-Africa trade today is at roughly 12%, around half the share 15 years ago. This compares to Europe where trade between regional borders is estimated at 70%, and Asia at 50%.

It has been argued that one reason behind low intra-regional trade in Africa is poor transport and logistics infrastructure, and the resulting high cost to transport goods. However, according to Edward George, head of soft commodities research at Ecobank, while formal trade flows between African nations might lag, informal intra-regional trade is more advanced than one might expect.

“I was just recently in Nigeria talking to rice traders – 1.5m tons of rice goes into Benin and then makes its way across the border into Nigeria, through Benin or Niger, basically to avoid taxes. So that is, you know, half the country’s consumption of rice,” George told an audience at the Africa Trade Finance Week in Cape Town last week.

“So informal flows are extraordinarily developed and actually very good at getting to market.”

Why does formal trade lag?

The potential for regional trade not being adequately captured can be seen in Ghana’s exports to Côte d’Ivoire.

According to George, Ghana’s official exports to Côte d’Ivoire last year were less than 1% of its total exports. Considering that Côte d’Ivoire is Ghana’s largest neighbouring economy, this is a meager percentage.

He added that a large reason for this is that the two countries have different legal and monetary systems, currencies and languages.

Ngozi Okonkwo, chief legal officer at Oando, agrees. “I can say, from my experience, one major challenge that we have had is trading with countries that have very stringent requirements. It is understandable that there are local content type laws in most countries in Africa but sometimes it can be a challenge trying to work within the framework of those laws, especially where it would not be [giving] opportunities to make the quantum of investments that you would want to make and have the degree of control that somebody would want to have in that country.”

She added that the language barrier between English and French-speaking countries is a particular challenge.

“It’s a lot easier when you speak the same language … and we need to understand the local language in some of the countries because that is where the trust is built, if you are speaking the same language. If you don’t speak the same language then clearly there is a significant complication involved and you have to rely on interpreters; it’s just not the same,” continued Okonkwo.

“And then, sometimes between the two trading companies, one will have to sort of make more concessions than the other because you can’t have two different applicable laws in the same contract. It has to be one law. These are different issues that keep coming up.”

George added that the East African Community has been successful in terms of this integration of laws and regulations, alongside the Southern African Customs Union.

“So the models are out there. I think the real key is how do we get the CFA franc zone and the West African monetary zone to be doing more trade together,” highlighted George. “That’s the biggest headache.

Source: How We Made It in Africa

Business is not a Short Sprint, it’s a Marathon

2014-03-24T13:43:00.000+00:00

Carol Ngige, founder of Beauty Bee

Entrepreneurs should be patient and make “continuous investment” in their businesses before expecting rewards.

This is according to Kenyan entrepreneur Carol Ngige. For the last seven years Ngige has been running Beauty Bee, a company that locally manufactures mother and baby related products such as breastfeeding pillows, nursing covers, maternity briefs, changing mats and travel neck pillows for babies.

Ngige also runs Baby Banda Fair. The annual event brings together health professionals and firms specialising in baby and pregnancy products and services to train and advise parents in Kenya.

“Business is not a short sprint, it’s a marathon,” says Ngige. “It’s for the long haul. You need to be patient with yourself and take time to nurture whatever business you have and grow it. There are projects we have done that did not translate into money immediately but we have kept at it. In fact, we did not break even in the baby fair until the third year.”

Ngige started Beauty Bee in 2006 after seeing a breastfeeding pillow at a friend’s house. The product was not available in Kenya and most mothers imported it or used ordinary pillows for breastfeeding.

Ngige borrowed a sewing machine from her mother, hired a tailor and started manufacturing at her home. She says she continued operating the business from her home for three years because she did not see it as a serious business.

“It was always something I did part time because I had another business that was occupying my time. I was really hustling. I had my hand here and there. I had a networking marketing opportunity that I really believed in and pursued with all my heart. This was always a nice to do side job. I never really focused on it,” says Ngige.

When Kenya plunged into the 2008 post-election violence, the network marketing business floundered, as did the pillow making venture.

“This was a very definitive period for me. I needed to decide what I wanted to do with my life. The two businesses were both not working,” she says. “One night I had a dream and I saw an event, very clear and vivid. When I woke up I knew what I needed to do.”
As the violence subsided and business picked up, Ngige visited a local shopping mall and began organising the first Baby Banda Fair.

The fair provided her with a platform to market her pillows and build the Beauty Bee brand.
“It became an opportunity for me to actually relaunch the business in a very serious way. I began to focus on the brand and our products. After the event we moved out of my home, rented a small office and I hired my first full-time employee.”

The company has since expanded its product portfolio, hired more staff and moved to a bigger office space. Beauty Bee products are stocked by leading supermarkets in Kenya, as well as baby shops and hospitals. Ngige says she had to “knock doors tirelessly” to get her products stocked by supermarkets.

“[A local supermarket chain] took three years before they agreed to stock our products. We were patient, we kept knocking for three years [and] made a compelling case on why they needed to stock us,” says Ngige. “These days they call us when the stocks are depleted. When they open a new branch they ask for our products. Times have changed but it has come with hard work and investment in the brand.”

Another challenge Ngige has faced is accessing good talent and retaining staff.
“Getting skilled workforce for our production department has been a challenge. Quite unlike the other personnel, tailors and artisans don’t develop their CVs. You don’t have a pool to choose from. Therefore being able to ensure that whoever you are hiring is aligned to what it is you want to do can be quite hard.”

Growth markets
Beauty Bee’s flagship product, the breastfeeding pillow, retails for KSh. 1,650 (US$19).
A study by Transparency Market Research shows the global baby care product market was worth $44.7bn in 2011 and is expected to reach $66.8bn in 2017.

Developing countries are seen as growth markets due to their large baby populations, increasing numbers of women joining the workforce and an upsurge in the disposable incomes of parents.

“Today’s mother is more informed. We have access to various channels of getting information and people want to find things that make life easier and more comfortable. You can’t ignore the fact that we have a growing middle class, people have a bit more disposable income and that places products such as [ours] in the considerations set when one is doing purchases.”

The lessons
Ngige’s seven-year journey in entrepreneurship has come with many lessons. She says she honed her skills in the IT industry where she worked in the marketing department of a leading firm. This background has helped her utilise technology to improve her business operations.

“Technology is an enabler… It levels the playing ground for the big and small alike because it is relatively more affordable in terms of marketing communication. I may not be selling online solutions but we use technology a lot to uplift this business.”
She advises other women entrepreneurs to build relationships with their peers and improve their professional competency by advancing their education and reading widely. Nginge went back to school in 2010 to study an MBA in order to improve her business management skills.

“Sometimes I wonder to myself, did I really want to be a CEO? It’s a tough job. The buck always stops with you. When things are not working it is up to you to fix them. I think it is important to invest in yourself professionally and also as a person. Professional competency is important if you are looking to be a business leader.”

Source: How We Made It in Africa

Entrepreneurship should be a viable Career path, not a last resort for Jobless

2014-03-13T14:19:00.000+00:00

Patricia Jumi, co-founder and managing director of the GrowthHub

African youth should not view entrepreneurship as an “exit plan” because there are no jobs. This is according to Patricia Jumi, co-founder and managing director of the GrowthHub, an East African incubator and accelerator for early stage entrepreneurs and startups.

In recent years political and business leaders have been urging youth to start their own businesses because there are not enough jobs in Africa to absorb them.

Jumi says it is wrong to view entrepreneurship as “a last resort”. Instead, young people should be prepared from an early age to think of entrepreneurship as a viable career option.

“We all can’t be entrepreneurs. Unfortunately in Africa [people go into business] because they couldn’t find a job. To be in business you need to have a different kind of DNA,” says Jumi. “We need to… create that sense of entrepreneurship right from high school, for [young people] to see it as a viable career path and not [do it] because I failed in one area and this is the exit option.”

Founded in 2011, the GrowthHub works with East African startups that seek to create employment and contribute to social progress in various sectors, including mobile and IT, agro-processing, professional services and essential services like healthcare, education, water and sanitation.

“We felt GrowthHub should concentrate on working with early stage entrepreneurs who are solving the big problems in Africa. We wanted to take them in, accelerate them and provide them with training, mentorship, networking opportunities and access to investment. We wanted people who are solving real needs… [Entrepreneurs] who want to solve these problems in Kenya, for instance, then expand to Uganda, then… maybe even to India.”

The incubator held its first cohort of 18 startups in 2012. Last year it held two cohorts, bringing the total number of entrepreneurs with whom it has worked to 56. The startups have raised US$3m in total in funding.

The social enterprise focused incubator is currently running its 2014 agribusiness innovation programme of 13 startups drawn from across the region.

Jumi says the GrowthHub looks for entrepreneurs who have some level of experience in business even if they just kept rabbits when they were young. They should also have skills in the sector in which they are investing, passion and willingness “to take a back seat” if necessary.

“Most entrepreneurs want to be the CEO… To what extent are you willing to step back and concentrate on what you are really good at? If you really are telling us you are ambitious, you are committed, you are willing to scale and to grow, then you should be able to accept other people into the company. If you are a person… who believes it is only you who can do everything it means you are going to have trouble… with investors… and employees. That means we are limited; when you are ready to move is when we are ready to move.”

Jumi says plans are underway to open branches in Uganda, Ethiopia, Zambia and Rwanda as part of the incubator’s goal to be in 20 locations by 2020. Plans to expand to South Sudan have been put on hold due to recent conflict in the country, but Jumi says the GrowthHub will instead work with South Sudanese nationals who live in Kenya and showcase opportunities for them back home.

By the end of the year, the GrowthHub and the startups with which it has worked intend to have created 5,000 jobs and income generating opportunities.

Challenges
Jumi says getting entrepreneurs to understand the value they can obtain from the incubator, other than money, is a challenge.

“Trying to convince them that we need to take them through this journey to understand their business is almost like a hard sell. They ask: ‘Are you going to give me the money or not?’ The other challenge is the hype in the sector. [When] some early social enterprises…get a bit of press and attraction they concentrate on that at the expense of making their models work. So the [media] attention for some takes them away from concentrating on their businesses.”

Early stage entrepreneurs also tend to “hop from one programme to another” and attend many conferences, leaving them little time to grow their businesses.

Encouraging Africans to solve local problems
One thing Jumi would like to see is more local entrepreneurs active in social entrepreneurship. She explains that expatriates make up about three quarters of social entrepreneurs who apply for programmes and attend industry events. This, Jumi says, has even been the case with applications for the GrowthHub programmes.

“We see many passionate entrepreneurs from great universities abroad come and start great initiatives here and it would be great if we can transfer the same zeal and excitement to also young people in Kenya.”

Jumi says not having good local participation in solving African problems will lead to a repeat of history in which foreigners provide the solutions to certain issues.

“We keep having this… debate. It’s like we are just calling NGOs with a bit of financial component social enterprise. It’s like history is repeating itself.”

The biggest challenge social enterprises face is access to financing as most funds want to invest $500,000, which Jumi says is too much for most startups to absorb.

“We perpetually struggle with that. [Funds] tell us ‘your cohort is good but let them talk to us in a year’. We don’t have a lot of early stage investors [and] Kenya doesn’t have an angel network.”

Most investors, she says, want to be assured that the entrepreneurs and the team are the right people to steer the company, the model is scalable, the product actually solves a problem, the business has a corporate business model and a financial and social impact.

Source:How We made It in Africa

No Business is too small for a proper Budget

2014-03-05T15:21:00.001+00:00

Many business owners mistakenly think their operation is too small for a formal budgeting process. The budget (of sorts) that many business owners keep inside their heads is often more like a basic recipe, and is usually inadequate to deal with the constant change that every business is subject to.

This is according to Gerrie van Biljon, executive director of Business Partners Limited, who says that no business is too small for the discipline of hammering out a formal budget – which needs to be used daily in the management of a business.

He says proper and thorough budgeting is beneficial to a business as it clearly impacts on its long-term growth prospects. “Business owners who compile and use formal budgets know well in advance when cash will run out and can plan for it. They can also plan properly for business expansion and their financial decisions are often based on carefully thought through facts and figures. In short, budgeting gives them financial control over their businesses.”

Van Biljon says a business owner must ideally budget at least once a year for the 12 months ahead, but in order for the exercise to be in any way meaningful, the process must meet a few crucial requirements:

The business owner must be involved in setting up the budget. This exercise provokes thought (on the part of the business owner) and it assists in planning once he/ she sees the detail. One shouldn’t be leaving a budget up to a bookkeeper or accountant.
An annual budget that is drawn up only to be kept in the bottom drawer means nothing. The value of a budget comes to the fore only when a business owner constantly reviews it, consults it, adapts it and compares the forecast figures with the actual figures – at least once a month, in order to identify material variances.
A budget based on actual figures from previous cycles is a good platform to start with. A budget for any business should include at least a sales forecast, a cash flow forecast, and income and expenditure forecast, a capital expenditure forecast and a balance sheet forecast, says van Biljon.

He explains that of these, the most important working document for any entrepreneur is the cash flow forecast. “Without a cash flow forecast, a business is at a high risk of running out of cash at some point.

“Many of the common mistakes that business owners make in budgeting has to do with the cash flow forecast. It is very important that the cash budget takes into account the realities of the business’s debtor and creditor cycles. Business owners must take into account the cash lag from the date of having to pay suppliers to the date on which payments are received from customers.”

Van Biljon adds that often business owners neglect to work taxes such as PAYE, VAT and provisional tax payments into their cash flow forecasts.

Another crucial part of budgeting is the sales forecast, which needs to be as accurate as possible, says van Biljon. “One of the greatest strengths of entrepreneurs – their optimism and can-do attitude – can also be a limitation if sales predictions are set too high. Realistic yet challenging sales forecasts should be set.”

He warns that despite its obvious benefits, budgeting is still often neglected by business owners, due to factors such as sudden spikes in sales and increased cash flow, or absolute focus on day-to-day operations. “It is very easy to drop your guard and take your eye off finances and business owners need to guard against these bad habits.”

Van Biljon advises such entrepreneurs to rope in support from an advisor or reputable accountant who could help with drawing up a budget. “The mere step of making an appointment with an accountant helps to enforce the discipline of preparing for the meeting, and taking a step back from the operations to reflect on the finances.”

He says business owners who struggle with budgeting often find that, once they grasp the basic principles, and become comfortable with using spread sheets, compiling and reviewing budgets do not take much effort. “It is not a complex, nor daunting exercise. All business owners need to do is seek proper advice and support, and then dedicate time to draw up a budget,” concludes van Biljon.

Source: How We Made It in Africa

A Malawian Fashion Designer's Colourful Dreams

2014-02-26T13:02:00.001+00:00

Lilly Alfonso

Malawi's Lilly Alfonso dreams about her future in colours as vibrant as those of the clothes she makes.

New York, London, Milan and Cape Town are some of the cities that come to her mind when asked where she would like to see her designs 10 years from now.

As a matter of fact, some of her clothes were already shown in the UK capital last year, during the Africa Fashion Week, but she is convinced that this is just the beginning.
"Everywhere where fashion is, I want to be there, and I see myself making it. I'm not doubting on that one. I dream big and I'm dreaming in colour,"

According to the designer, her passion for fashion was already there as a child when she loved to play with fabrics in the southern city of Blantyre, where she grew up.

"I'd say fashion, I was born with it. I started when I was young, at the age of six. My mum would bath me and dress me, and I would totally change the design of the dress," she remembers.

"As I grew older, people liked what I was designing, what I was wearing, so that inspired me and I started working on other people."

She had two second-hand sewing machines that belonged to her mother and she started off with a tailoring business, when she was 24, but she says that fashion designing was still "a mere hobby".

That hobby, however, helped her to launch her career when she won the Malawi Fashion Edition (FAME) award as country's best fashion designer three years ago.

Financial challenges

"I never thought I was a designer until 2010 that I had a lot of clients and I'd design for Miss Malawi, I'd design for quite a lot of people," Mrs Alfonso told BBC Africa's Raphael Tenthani.

These days her studio - located in her house in an upmarket suburb of the capital, Lilongwe - is a bastion of activity as people organising weddings and other events troop to her for advice.

Although designer clothes are not cheap anywhere in the world, Mrs Alfonso says that her prices depend on the client that she is working for.

If the product is going to Europe, for example, she knows that she can ask for more money if she uses higher quality fabrics.

Back home, however, she can be more flexible with her pricing.
"Our economy right now is not really doing well so… I always use any reasonable resources to accommodate my country, for the people that can't afford the other fabrics, but I still design the same design," she explained.

Recently, Malawi's currency, the kwacha, lost almost half its value and this has put a strain on the running of businesses.

Also, the inflation rate is hovering at around 33% while bank-lending rates are at about 40% in the southern African country.

All these factors are presenting extra challenges for people who, like Mrs Alfonso, want to expand their businesses.

"I'm having problems with raising the money to have massive production… to be able to reach my goal, I still need extra 10 machines," she said.

"The prices of the fabric have been changing, the prices of everything have been changing; keeping the staff has been a problem because of how to balance up with the economy as it is," added young entrepreneur, who has seven employees and many other weavers and tie-dye fabric designers.

Nurturing talent

Despite these challenges, Mrs Alfonso encourages other people to pursue their dreams and start their own businesses.

"I'd advise everybody who has any talent - it's not only in fashion - I'd advise everybody to believe in themselves, and do whatever it takes to make it happen for them because God gives us this blessing but it's only us to start acting on it.

"So if you know that you can do it, don't stop it; no matter how criticism is, work on it because criticism is what makes us best. Believe in yourself and do it, and go for it".
Now that she is 33 and has two daughters, she also recommends parents to support their children's creativity.

"If you see that your child is gifted in a particular area - encourage them to pursue that alongside school.

"If you see a gift in a child - they need to research on that particular field and support the child in every way," the award-winning designer who liked playing with fabrics at the age of six said.

Source: BBC, African Dream

Five Points to Bear in Mind before Starting a Business

2014-02-18T12:43:00.000+00:00

BY: Linda Descano, Managing Director and Head of Content and Social for Citi, North America

For many, starting a business is the professional dream of a lifetime. While thousands of businesses are launched every day, history shows a pretty high failure rate. Yet, despite the odds, the vast majority of business owners would rather risk potential failure than never take the leap, based on what I heard on my virtual small business listening “tour” across the country.

As part of this tour, I spoke with veteran serial entrepreneurs as well as those in the early stages of launching a business, from a cross-section of industries and geographies and driven by different motivations. From those conversations, I distilled the following five considerations to help you position your new business on firmer financial footing.

1. Bolster your financial health
You may have the personal wherewithal to start a business, but can you afford to make the transition given your level of debt as well as savings? Set a threshold for the minimum amount of money in the bank that you are not willing to go below. This number will be different for each person, but the important thing to take away is that you think about what this number means to you and save it in advance. It’s important to build up and maintain this healthy reserve or cushion to allow you to manage the lean months or the periods of uncertain cash flow. If you find that you are approaching your bottom line number, this is where discipline must override passion. Step back, take a hard look at your situation, and see what’s working and what’s not.

2. Get over the fear factor
Change is frightening for most of us. It’s only natural and appropriate to worry about the possibility of failure, jeopardising your financial security, or reneging on your obligations to others. But sometimes we get so caught up in what we stand to lose that we forget to consider all that we stand to gain. And, we forget that we are driving the timetable and parameters for making this change.

3. Keep your personal and business wallets separate
The old adage that business and pleasure don’t mix also holds true when it comes to your business’s finances. Set up separate accounts for your business, and consult with a knowledgeable tax professional to understand what costs are deductible. If you start recording and keeping receipts of deductible expenses from the beginning, it can help avoid major problems in the future, such as liability for additional taxes or penalties. And, don’t stop talking to a financial professional throughout the process of building your new business as it can help you feel more confident that you are managing your personal finances wisely while you begin your business.

4. Work on your business, not just in your business
When you are surrounded by your own business day in and day out, it’s important to take a step back and make sure you are handling all aspects of the business. Sometimes entrepreneurs are so focused on their product or service, that they may overlook their business’s finances. But it’s important to handle your business finances with intent. That is, handling your finances in an organised – not haphazard – way.

5. Remember that not all money is created equal
You need to know when and how to raise capital (both equity and debt) and how to wisely put your money to work on things that add value. You should be spending as much time researching what investors and lenders want as you spend understanding what your customers want. Understand the approach that angel investors take versus mezzanine debt investors. The more you know, the better positioned you will be to tap the capital markets and make the appropriate asks. Money is a tool. Make sure you understand how to use it.

Luxury Handbags Made in Africa

2014-02-10T16:08:00.000+00:00

Zainab Ashadu, founder of Zashadu Bags

Nigerian entrepreneur Zainab Ashadu has had an eye for fashion since she was a child. Growing up, she “fell in love with a beautiful Art Deco-style clutch bag” that belonged to her mother.

Ashadu said that when she started working and making her own money she would visit vintage markets in London and spend her entire salary on well-crafted, timeless and quirky vintage bags.

“Soon enough I amassed a collection of over 200 bags, but I still felt something was missing from my collection.”

This love for handbags and the desire to find that missing link eventually inspired Ashadu to start her own business.

Ashadu is the founder and creative director of Zashadu Bags, a sustainable luxury leather handbag company which specialises in handcrafted leather pieces. Zashadu Bags makes clutches, bags, backpacks and pouches in Lagos, Nigeria, using locally sourced materials including leather, exotic skins and rough cut semi-precious stones.

Ashadu started the business three years ago when she returned to Nigeria after living in London for 12 years. She operates out of a Lagos-based workshop with a team of local artisans, who hand craft the products.

Ashadu previously worked as curator and director of African Artists’ Foundation and was head of public relations for the LagosPhoto Festival. She says that although these are causes she believed in, after a while Zashadu demanded her undivided attention.

The young entrepreneur says her bags have been well received in the market.
Zashadu sells its luxury handbags locally and internationally on its website. Items listed on the online shop this week have a starting price of £320 (US$524) for a box clutch bag while the priciest are bags from The Justice python collection selling at £1,100 ($1,800) a piece. The unique bags are described as a “collector’s dream”.

Zashadu Bags has been picked up by London-based retailer Wolf & Badger and products will be available in Paris, France later this year.

The British-Nigerian designer is confident that her brand will do well even in the face of competition from international and well known luxury handbag brands.

“You know, the market is huge and there really is space for everyone. There’s a place for mass produced ‘luxury’ bags, low cost cheap and cheerful bags, as well as artisanal handmade pieces.”

The business of fashion
However, she explains that for ‘Made in Africa’ fashion brands to flourish across the continent and beyond, there is need to improve infrastructure, increase investments and create a better understating of the “business of fashion”.

“For a country as culturally rich and diverse as Nigeria we have a very long way to go in supporting all factions of our creative sector in a way that is sustainable. We are all affected by the same issues: the sometimes poor infrastructure, the lack of institutional support and the struggle to understand a potentially huge but underdeveloped market base, to varying degrees.”

The biggest challenge Ashadu faces is blending the business and creative sides of her company in a way that one does not negatively affect the other.

“I think that as a designer it is very important to keep creativity and business separate. When one starts to affect the other the soul of the brand suffers. It is important to feed one’s creativity and remain focused on what excites you; it makes facing challenges that much more enjoyable.”

Organic growth
Moving forward Ashadu plans to work with more women in the production of Zashadu Bags.
“In terms of expansion, I strongly believe in organic growth as there is nothing more motivating or satisfying.”

Ashadu advices other African entrepreneurs “to look inwards for self-development and self-actualisation”, adding that they are not obliged to follow any “western blueprint”.

“The biggest lesson I’ve learned is to dream big, but start small. Also to trust your instincts and allow it to guide you like a compass, know who you are and believe in yourself.”
Ashadu explains that African economies will greatly benefit if citizens allow negative experiences and the challenges they face to unite them in finding solutions.

“I think that as Nigerians… for example, our electricity situation is shameful and dire, and we have been living with it for years, dolefully compliant. We are yet to find a united voice to challenge it, yet we all suffer for it. There is strength in unity.”

Source: How We Made It in Africa

Starting a Microfinance Business at age 19

2014-01-30T16:47:00.001+00:00

Best Ayiorwoth, winner of the 2013 Anzisha Prize

When Ugandan Best Ayiorwoth had to cut short her high school education because her family could not afford to pay her tuition, it broke her heart. However, this became the driving force that inspired her to start an award-winning microcredit business, at just 19 years old, that would go on to help hundreds of women and young girls in Uganda.

“Personally, I love being educated. I always wished to go to high standards in my education if it was possible. But unfortunately I did not have the chance to go to the level of education I wanted and I stopped at Secondary Four in Uganda,” Ayiorwoth said.
Having lost her father at the age of eight, Ayiorwoth’s mother strained to look after a family of seven in the Nebbi District in northern Uganda.

“My mother pushed me up to Primary Seven and she died while I was desperately waiting to join high school. I was 13 years old then. My two older sisters and brother struggled to push me to Secondary Four,” she explained.

“I never wanted to stop at that point in my education so it angered me… I would always remind myself that someday when I could, I would ensure that every girl child in my community received the best education they could.”

Start-up capital from her first salary
At the age of 17, Ayiorwoth moved to Kampala and joined vocational training schools that offered courses such as catering, graphics and web design. She later joined S7 Project, a skills empowerment centre, and got trained in catering and entrepreneurship. Through S7 she got a job working in a Mexican restaurant, where she received her first salary and the startup capital she would later use to follow her dream.

“I wanted to prevent what happened to me from happening to other girls because I knew it was a social injustice. So the first salary I got from the restaurant is what I used to open my organisation,” explained Ayiorwoth.

She realised that if she could empower mothers financially, they would support the education of their children, especially young girls. “I have seen that when families can’t maintain all their children at school and have to make a choice, they would often choose a boy over a girl,” she highlighted.

In early 2011 Ayiorwoth went back to the Nebbi District – where she had witnessed many girls, like herself, drop out of school – and started the Girls Power Micro-Lending Organisation (GIPOMO).

Using her savings of USh 100,000 (US$40), Ayiorwoth started slowly by giving monthly micro loans to enable women to grow their small businesses. With a 10% interest rate, she kept reinvesting her profit back into GIPOMO. It wasn’t long before her initiative caught the attention of her mentor at S7, who loaned her an additional USh 800,000 ($322) to boost her enterprise.

“My organisation has a unique twist in microfinance by providing tied loans to women who make a commitment to grow businesses while keeping their girl children in school,” added Ayiorwoth.

Today GIPOMO has helped 64 women start their own businesses, 111 women expand their existing businesses, and kept 168 girls in school by supporting their mothers.

At the beginning of 2013, Ayiorwoth won USh 1m ($400) at the FINA Africa Enterprise Business Challenge. In August she won first place and US$25,000 at the Anzisha Prize, a competition that recognises and celebrates African entrepreneurs under the age of 22 who are using entrepreneurship to solve problems in their communities.

Using a portion of the prize money, GIPOMO has already scaled up its operations four-fold, expanding to four different sub-counties in northern Uganda.

Innovative thinking to overcome challenges
Ayiorwoth started off providing credit to individual women but after two did not repay their loans, she changed her business strategy. She decided that in order for women to access finance, they needed to belong to a group of at least three. The strategic thinking behind this was that the women in a community knew each other and could group themselves with people they trusted to become guarantors for each other’s loans.

“We give them the freedom to choose who they want to be with in a group so that loans are secured. So if one woman has a problem of paying then the two others can always figure it out and stand in for that person,” explained Ayiorwoth. “This makes it easy for women without formal collateral to access financing in an easy way.”

Another challenge Ayiorwoth faced was that many of the women she worked with were illiterate, and the use of multiple languages made communication a challenge. To reduce this problem she collaborates with local government women representatives in communities to assist with communication.

Furthermore, Ayiorwoth explained that if she discovers that the mothers are not investing in their daughters’ schooling through income earned in their business, they will be disqualified from accessing finance from GIPOMO.

“That is the reason why we sometimes talk to those girls personally and we enquire exactly what is happening,” she added.

GIPOMO has also launched a Women in Agriculture fund, in collaboration with the Ugandan government, to provide microfinance to women interested in commercial agriculture and value addition.

Ambitious plans for the future
At the moment, GIPOMO only operates in one district in northern Uganda but Ayiorwoth, who has just turned 22, has big plans for her organisation.

“Right now I’m just trying to lay a good foundation so we can achieve real impact in one district. But in five years I see my organisation directly reaching 5,000 women in northern Uganda; and in 10 years, launching similar initiatives in different parts of the country. And we can even go further ahead and say that I see my model being replicated in various African countries because I know that the same problems are faced elsewhere,” she emphasised.

“For me, this is a new movement that redefines microfinance; to provide for specific needs in specific communities. Microfinance can never be relevant if it has one model. In one community, it should provide affordable finance for girl education and in another, it should provide affordable finance for land ownership – whatever the challenge a community faces.”
According to Ayiorwoth, GIPOMO is also launching an Education for Girls fund that will focus on providing no-interest loans to households interested in enrolling out-of-school girls into a skills development programme.

“I believe that once the girls possess practical skills, the chances that they will establish enterprises that apply these skills are high,” said Ayiorwoth. “In this way, my organisation would be developing a new generation of mothers that are skilled, entrepreneurial and financially empowered to contribute to family welfare and the education of their daughters.”

Advice to other young entrepreneurs
Ayiorwoth accredits a lot of her success to her mentor at S7, which she said continuously encouraged and challenged her to utilise her full potential.

She also wants to tell other young entrepreneurs that, no matter what their background, they have the potential to make a difference in their lives and the lives of others.

“They have to actually do something that they feel strongly passionate about, and in most cases they should seek inspiration from their own experience… If you had a terrible experience, you should despise the experience to the extent that you are continuously seeking a solution for it,” she concluded.

Source: How We Made It in Africa

Farming and Food in Africa and the battle over Land, Water and Resource Rights

2014-01-27T16:11:00.001+00:00

By: Dr Ruth Hall is an associate professor at the Institute for Poverty, Land and Agrarian Studies at the University of the Western Cape, South Africa.

Africa is being heralded as the new frontier for commercial farming but, as governments and investors sign deals, a counter movement of family farmers is promoting alternative pathways to development.

The International Year of Family Farming is now underway, and never before have family farmers in Africa been more under threat.

Large land deals between African governments and usually foreign (and sometimes domestic) investors have seen swathes of the countryside leased or conceded, often for as much as 50-99 years. From Senegal in West Africa to Ethiopia in the Horn, and down to Mozambique in the south, land considered idle and available has changed hands, with profound implications for local people and the environment.

With estimates ranging from 56m-227m hectares globally (with 60%-70% of this in Africa), what is clear is that what has taken place in the past five to 10 years is a rapid transformation of landholding and agricultural systems, not seen since the colonial period. Underpinning these deals is the longstanding failure of many African states to recognise, in law and practice, the customary land rights of existing farming households and communities, and the perpetuation of the colonial legal codes that centralise control over such lands in the hands of the central state, as trustee of all unregistered property.

It is not only African land and water that is now so desirable for international investors, but also growing African consumer market demand for food. In the face of growing urbanisation and consumer demand in Africa’s cities, the challenge is to scale up production and connect small farmers to markets, lest the benefits of rising consumer demand in Africa’s cities be netted by importers and foreign supermarkets.

The ‘land grab’ raises questions not only about land rights and transparency in investment, but also what constitutes inclusive agricultural development and how to bring it about. With growing urgency among development institutions globally to arrive at agreement on how to stop land grabs while still promoting investment, the stakes are high.

Replace the farmers?
At a recent meeting of the Economic and Monetary Community of Central Africa, parliamentarians and small-scale farmers from across this resource-rich region butted heads over what kind of investment was needed. The vice president of the Pan-African Parliament, Honourable Roger Nkodo Dang of Cameroon, presented an argument in favour of the industrialisation and commercialisation of agriculture:
“We really need to attract investments in the agricultural sector… It is very important for us to work to find the solution for food shortage that we have. Most African countries have an old-fashioned agriculture. The industrialisation of agriculture is very important. We need to have great areas of land to use agriculture. We see that when Africans do agriculture, it is not the type of agriculture that is bringing development. We have great, great areas of forests, and we need to work so that we can use those lands. How can we reconcile this development with the people who are in rural areas?”

Discourses such as these ignore the inevitable tensions that arise: clear-cutting tropical forests to make way for palm oil plantations destroys carbon sinks; removing local farmers to make way for commercial plantations might enable efficient food production for global markets, while undermining the food security of local people. Often the presumed outcome is that African farmers will become wage workers on their own land, yet most assessments – including The World Bank’s 2011 report on “rising investor interest” in agriculture – have found that they are inevitably worse off as workers than as self-employed farmers. Yet there are emerging answers, coming from Africa’s farmers themselves.

Invest in Africa’s farmers, don’t take their land
Invest in African farmers rather than give away their land, argued Alangeh Romanus Che, of the Regional Platform of Farmers’ Organisations of Central Africa, a network of membership-based farmers’ associations across 10 countries in Central Africa. “All farmers depend on land as their principal capital, any denial of this access will impact negatively on farmers,” said Che.

The international movement of peasants and family farmers, La Via Campesina (literally, ‘the peasant path’), has rejected efforts to clean up land grabs by creating good governance guidelines for the private sector to regulate itself. And African farmers’ organisations from across West, East and Southern Africa are now mobilising around an alternative vision for the future, not of corporate-dominated industrial agriculture, but family farming feeding Africa and the world.

Central to their programme are two inter-related concepts. Land sovereignty means that development should not be based on dispossession but on securing the rights of communities to their land, water and forests, and to supporting their types of farming methods, including low-cost agroecological farming. Food sovereignty means privileging the local, ensuring the farm and trade policies support local and regional markets, and limit the access and control over resources by corporations. In these ways, they argue, investment in African farmers – rather than investment that dispossesses them – can produce ample, healthy and safe food.

From ‘land grabs’ to ‘responsible agricultural investment’
These arguments reflect the ongoing battle over how to define and ensure responsible agricultural investment. Last November, the Committee on World Food Security presented its zero draft for discussion at an Africa-wide consultation held in Johannesburg – and the response was telling.

African farmer organisations insisted that transparency is just a starting point; any responses must grapple with the substantive question of what kind of changes are being brought about, in land use, in social relations, in wealth distribution. Following years of chronic neglect, African agriculture clearly is in desperate need of investment. Farming continues in the face of official neglect, poor infrastructure, farm subsidies in Europe and North America, and competition with these cheap imports in local markets. What is needed for a turnaround in African agriculture must start with reconsidering the slashing of subsidies, agricultural deregulation and trade liberalisation that constituted the policy formula foisted on many African states over the past three decades.

Responsible investment frameworks tend to wrongly assume that investments are necessarily external, private and land-based. Other possibilities include public as well as private investments in infrastructure, goods and services to enable farmers to commercialise and scale up production, access cheap and appropriate inputs, improve their productivity, add value to their products, access better markets, and fetch better prices for improved quality products.

As observed by Ambassador Mary Mubi of Zimbabwe, permanent representative to the Committee on World Food Security, at the Africa consultation: “Women provide most investment in food production in Africa. It is smallholder farmers who are the biggest investors. When we talk about investors, too often we think of a man coming off a plane with a briefcase – we need to rethink this. Most people in the world are fed by smallholder farmers, and they are women.”

The challenge remains to develop concrete alternative development programmes that confirm land and other resource rights in the hands of local farming families and invest in them.

The Psychological Price of Entrepreneurship

2014-01-24T16:58:00.000+00:00

BY Jessica Bruder

No one said building a company was easy. But it's time to be honest about how brutal it really is--and the price so many founders secretly pay.

By all counts and measures, Bradley Smith is an unequivocal business success. He's CEO of Rescue One Financial, an Irvine, California-based financial services company that had sales of nearly $32 million last year. Smith's company has grown some 1,400 percent in the last three years, landing it at No. 310 on this year's Inc. 500. So you might never guess that just five years ago, Smith was on the brink of financial ruin--and mental collapse.

Back in 2008, Smith was working long hours counseling nervous clients about getting out of debt. But his calm demeanor masked a secret: He shared their fears. Like them, Smith was sinking deeper and deeper into debt. He had driven himself far into the red starting--of all things--a debt-settlement company. "I was hearing how depressed and strung out my clients were, but in the back of my mind I was thinking to myself, I've got twice as much debt as you do," Smith recalls.

He had cashed in his 401(k) and maxed out a $60,000 line of credit. He had sold the Rolex he bought with his first-ever paycheck during an earlier career as a stockbroker. And he had humbled himself before his father--the man who raised him on maxims such as "money doesn't grow on trees" and "never do business with family"--by asking for $10,000, which he received at 5 percent interest after signing a promissory note.

Smith projected optimism to his co-founders and 10 employees, but his nerves were shot. "My wife and I would share a bottle of $5 wine for dinner and just kind of look at each other," Smith says. "We knew we were close to the edge." Then the pressure got worse: The couple learned they were expecting their first child. "There were sleepless nights, staring at the ceiling," Smith recalls. "I'd wake up at 4 in the morning with my mind racing, thinking about this and that, not being able to shut it off, wondering, When is this thing going to turn?" After eight months of constant anxiety, Smith's company finally began making money.

Successful entrepreneurs achieve hero status in our culture. We idolize the Mark Zuckerbergs and the Elon Musks. And we celebrate the blazingly fast growth of the Inc. 500 companies. But many of those entrepreneurs, like Smith, harbor secret demons: Before they made it big, they struggled through moments of near-debilitating anxiety and despair--times when it seemed everything might crumble.

"It's like a man riding a lion. People think, 'This guy's brave.' And he's thinking, 'How the hell did I get on a lion, and how do I keep from getting eaten?"

Until recently, admitting such sentiments was taboo. Rather than showing vulnerability, business leaders have practiced what social psychiatrists call impression management--also known as "fake it till you make it." Toby Thomas, CEO of EnSite Solutions (No. 188 on the Inc. 500), explains the phenomenon with his favorite analogy: a man riding a lion. "People look at him and think, This guy's really got it together! He's brave!" says Thomas. "And the man riding the lion is thinking, How the hell did I get on a lion, and how do I keep from getting eaten?"

Not everyone who walks through darkness makes it out. In January, well-known founder Jody Sherman, 47, of the e-commerce site Ecomom took his own life. His death shook the start-up community. It also reignited a discussion about entrepreneurship and mental health that began two years earlier after the suicide of Ilya Zhitomirskiy, the 22-year-old co-founder of Diaspora, a social networking site.

Lately, more entrepreneurs have begun speaking out about their internal struggles in an attempt to combat the stigma on depression and anxiety that makes it hard for sufferers to seek help. In a deeply personal post called "When Death Feels Like a Good Option," Ben Huh, the CEO of the Cheezburger Network humor websites, wrote about his suicidal thoughts following a failed start-up in 2001. Sean Percival, a former MySpace vice president and co-founder of the children's clothing start-up Wittlebee, penned a piece called "When It's Not All Good, Ask for Help" on his website. "I was to the edge and back a few times this past year with my business and own depression," he wrote. "If you're about to lose it, please contact me."

Brad Feld, a managing director of the Foundry Group, started blogging in October about his latest episode of depression. The problem wasn't new--the prominent venture capitalist had struggled with mood disorders throughout his adult life--and he didn't expect much of a response. But then came the emails. Hundreds of them. Many were from entrepreneurs who had also wrestled with anxiety and despair. (For more of Feld's thoughts on depression, see his column, "Surviving the Dark Nights of the Soul," in Inc.'s July/August issue.)"If you saw the list of names, it would surprise you a great deal," says Feld. "They are very successful people, very visible, very charismatic-;yet they've struggled with this silently. There's a sense that they can't talk about it, that it's a weakness or a shame or something. They feel like they're hiding, which makes the whole thing worse."

If you run a business, that probably all sounds familiar. It's a stressful job that can create emotional turbulence. For starters, there's the high risk of failure. Three out of four venture-backed start-ups fail, according to research by Shikhar Ghosh, a Harvard Business School lecturer. Ghosh also found that more than 95 percent of start-ups fall short of their initial projections.

Entrepreneurs often juggle many roles and face countless setbacks--lost customers, disputes with partners, increased competition, staffing problems--all while struggling to make payroll. "There are traumatic events all the way along the line," says psychiatrist and former entrepreneur Michael A. Freeman, who is researching mental health and entrepreneurship.

Complicating matters, new entrepreneurs often make themselves less resilient by neglecting their health. They eat too much or too little. They don't get enough sleep. They fail to exercise. "You can get into a start-up mode, where you push yourself and abuse your body," Freeman says. "That can trigger mood vulnerability."

So it should come as little surprise that entrepreneurs experience more anxiety than employees. In the latest Gallup-Healthways Well-Being Index, 34 percent of entrepreneurs--4 percentage points more than other workers--reported they were worried. And 45 percent of entrepreneurs said they were stressed, 3 percentage points more than other workers.

But it may be more than a stressful job that pushes some founders over the edge. According to researchers, many entrepreneurs share innate character traits that make them more vulnerable to mood swings. "People who are on the energetic, motivated, and creative side are both more likely to be entrepreneurial and more likely to have strong emotional states," says Freeman. Those states may include depression, despair, hopelessness, worthlessness, loss of motivation, and suicidal thinking.

Call it the downside of being up. The same passionate dispositions that drive founders heedlessly toward success can sometimes consume them. Business owners are "vulnerable to the dark side of obsession," suggest researchers from the Swinburne University of Technology in Melbourne, Australia. They conducted interviews with founders for a study about entrepreneurial passion. The researchers found that many subjects displayed signs of clinical obsession, including strong feelings of distress and anxiety, which have "the potential to lead to impaired functioning," they wrote in a paper published in the Entrepreneurship Research Journal in April.

Reinforcing that message is John Gartner, a practicing psychologist who teaches at Johns Hopkins University Medical School. In his book The Hypomanic Edge: The Link Between (a Little) Craziness and (a Lot of) Success in America, Gartner argues that an often-overlooked temperament--hypomania--may be responsible for some entrepreneurs' strengths as well as their flaws.

A milder version of mania, hypomania often occurs in the relatives of manic-depressives and affects an estimated 5 percent to 10 percent of Americans. "If you're manic, you think you're Jesus," says Gartner. "If you're hypomanic, you think you're God's gift to technology investing. We're talking about different levels of grandiosity but the same symptoms."

Gartner theorizes that there are so many hypomanics--and so many entrepreneurs--in the U.S. because our country's national character rose on waves of immigration. "We're a self-selected population," he says. "Immigrants have unusual ambition, energy, drive, and risk tolerance, which lets them take a chance on moving for a better opportunity. These are biologically based temperament traits. If you seed an entire continent with them, you're going to get a nation of entrepreneurs."

Though driven and innovative, hypomanics are at much higher risk for depression than the general population, notes Gartner. Failure can spark these depressive episodes, of course, but so can anything that slows a hypomanic's momentum. "They're like border collies--they have to run," says Gartner. "If you keep them inside, they chew up the furniture. They go crazy; they just pace around. That's what hypomanics do. They need to be busy, active, overworking."

"Entrepreneurs have struggled silently. There's a sense that they can't talk about it, that it's a weakness."

No matter what your psychological makeup, big setbacks in your business can knock you flat. Even experienced entrepreneurs have had the rug pulled out from under them. Mark Woeppel launched Pinnacle Strategies, a management consulting firm, in 1992. In 2009, his phone stopped ringing.

Caught in the global financial crisis, his customers were suddenly more concerned with survival than with boosting their output. Sales plummeted 75 percent. Woeppel laid off his half-dozen employees. Before long, he had exhausted his assets: cars, jewelry, anything that could go. His supply of confidence was dwindling, too. "As CEO, you have this self-image--you're the master of the universe," he says. "Then all of a sudden, you are not."

Woeppel stopped leaving his house. Anxious and low on self-esteem, he started eating too much--and put on 50 pounds. Sometimes he sought temporary relief in an old addiction: playing the guitar. Locked in a room, he practiced solos by Stevie Ray Vaughan and Chet Atkins. "It was something I could do just for the love of doing it," he recalls. "Then there was nothing but me, the guitar, and the peace."

Through it all, he kept working to develop new services. He just hoped his company would hang on long enough to sell them. In 2010, customers started to return. Pinnacle scored its biggest-ever contract, with an aerospace manufacturer, on the basis of a white paper Woeppel had written during the downturn. Last year, Pinnacle's revenue hit $7 million. Sales are up more than 5,000 percent since 2009, earning the company a spot at No. 57 on this year's Inc. 500.

Woeppel says he's more resilient now, tempered by tough times. "I used to be like, 'My work is me,' " he says. "Then you fail. And you find out that your kids still love you. Your wife still loves you. Your dog still loves you."

But for many entrepreneurs, the battle wounds never fully heal. That was the case for John Pope, CEO of WellDog, a Laramie, Wyoming-based energy technology firm. On Dec. 11, 2002, Pope had exactly $8.42 in the bank. He was 90 days late on his car payment. He was 75 days behind on the mortgage. The IRS had filed a lien against him. His home phone, cell phone, and cable TV had all been turned off. In less than a week, the natural-gas company was scheduled to suspend service to the house he shared with his wife and daughters. Then there would be no heat. His company was expecting a wire transfer from the oil company Shell, a strategic investor, after months of negotiations had ended with a signed 380-page contract. So Pope waited.

The wire arrived the next day. Pope--along with his company--was saved. Afterward, he made a list of all the ways in which he had financially overreached. "I'm going to remember this," he recalls thinking. "It's the farthest I'm willing to go."

Since then, WellDog has taken off: In the past three years, sales grew more than 3,700 percent, to $8 million, making the company No. 89 on the Inc. 500. But emotional residue from the years of tumult still lingers. "There's always that feeling of being overextended, of never being able to relax," says Pope. "You end up with a serious confidence problem. You feel like every time you build up security, something happens to take it away."

Pope sometimes catches himself emotionally overreacting to small things. It's a behavior pattern that reminds him of posttraumatic stress disorder. "Something happens, and you freak out about it," he says. "But the scale of the problem is a lot less than the scale of your emotional reaction. That just comes with the scar tissue of going through these things."

"If you're manic, you think you're Jesus. If you're hypomanic, you think you're God's gift to technology investing." John Gartner

Though launching a company will always be a wild ride, full of ups and downs, there are things entrepreneurs can do to help keep their lives from spiraling out of control, say experts. Most important, make time for your loved ones, suggests Freeman. "Don't let your business squeeze out your connections with human beings," he says. When it comes to fighting off depression, relationships with friends and family can be powerful weapons. And don't be afraid to ask for help--see a mental health professional if you are experiencing symptoms of significant anxiety, posttraumatic stress disorder, or depression.

Freeman also advises that entrepreneurs limit their financial exposure. When it comes to assessing risk, entrepreneurs' blind spots are often big enough to drive a Mack truck through, he says. The consequences can rock not only your bank account but also your stress levels. So set a limit for how much of your own money you're prepared to invest. And don't let friends and family kick in more than they can afford to lose.

Cardiovascular exercise, a healthful diet, and adequate sleep all help, too. So does cultivating an identity apart from your company. "Build a life centered on the belief that self-worth is not the same as net worth," says Freeman. "Other dimensions of your life should be part of your identity." Whether you're raising a family, sitting on the board of a local charity, building model rockets in the backyard, or going swing dancing on weekends, it's important to feel successful in areas unrelated to work.

The ability to reframe failure and loss can also help leaders maintain good mental health. "Instead of telling yourself, 'I failed, the business failed, I'm a loser,' " says Freeman, "look at the data from a different perspective: Nothing ventured, nothing gained. Life is a constant process of trial and error. Don't exaggerate the experience."

Last, be open about your feelings--don't mask your emotions, even at the office, suggests Brad Feld. When you are willing to be emotionally honest, he says, you can connect more deeply with the people around you. "When you deny yourself and you deny what you're about, people can see through that," says Feld. "Willingness to be vulnerable is very powerful for a leader."

7 Ways to Generate Great Ideas

2014-01-24T13:37:00.000+00:00

BY: Kevin Daum, an Inc. 500 entrepreneur with a more than $1 billion sales and marketing track record. He is the best-selling author of Video Marketing for Dummies.

You don't have to be a deep thinker to come up with new ideas. Here are 7 ways to break your conventional thinking and make that light bulb appear.

What makes the difference between a good idea and a great idea? Good ideas come along all the time and help people solve minor problems in work and daily life. Great ideas appear a little less frequently and require a little more work to execute. Great ideas aren't necessarily the result of highly-paid think tanks or drug-induced vision quests in the desert. Often they are unexpected moments of inspiration that help keep the napkin companies in business.
The big challenge of generating great ideas is freeing yourself from the conventional, mundane thoughts that occupy most of your brain time. Here are seven tips to help you open your mind and stimulate your great idea generator.

1. Engage in Observation Sessions
Great ideas won't happen in a vacuum. You need some way of getting your brain to think in new and creative ways. Commit time to specific sessions where you stimulate your brain into thinking differently. Being a New Yorker, my favorite method is people watching. A simple walk through Manhattan can introduce me to exciting activity and behavior that makes me think anew. Any crowded urban area, mall or zoo can do the same.

2. Socialize Outside Your Normal Circles
Hanging around with the same friends and colleagues can get you in a thinking rut. Take advantage of all those LinkedIn connections and start some exciting conversations. New people don't know all your thought patterns and old stories, so you'll have to revisit your existing inner monologues. The refreshing perspectives will help to surface new thinking and possibly a lightning bolt or two.

3. Read More Books
Books are wonderful for creating new thoughts and stimulating great ideas. For a long time, I didn't read much. When I added business books to my routine, it helped me learn more and expand my way of thinking. But several years ago, I started again reading fiction and histories. These stories really got me out of my daily headspace and activated my idea generator. Even if you can't make the time for a novel, go hunt down a bookstore and spend an hour browsing. You'll find plenty of thought stimulation.

4. Randomly Surf the Web
Google is great when you know what you are looking for, but the best way to generate new ideas is with unexpected learning. Take an hour each week and go on a web journey. Start with the I'm Feeling Lucky button and just take it from there. Try to pick the stranger and more obscure references as you surf and stretch your brain a bit.

5. Keep a Regular Journal
A journal is great for recording thoughts, feelings and the history of your life. It also is a great way to structure and develop ideation habits. If you don't keep a journal, start today. If you already do, simply add the practice of finishing every entry with: Here is my new idea for the day ...

6. Meditate
It's hard to come up with great ideas when your mind is crowded with everyday thoughts and concerns. You need quiet space. Meditation will help you clear your mind of daily business and stress. Then you can quietly focus on your future -- or solving world issues. Commit to two hour-long sessions every week and soon you'll find new ideas flowing.

7. Use Structured Exercises
Structure breeds creativity. Simple exercises can get your brain working in a focused manner to yield great ideas. My favorite comes from author and Baylor University professor Dr. Blaine McCormick. With a partner, take ten minutes (timed) to come up with 42 ideas on a specific topic or problem. You may only think of 30 or 35 but no matter. You'll find that there are at least two or three gems in the list.
All of these methods require a commitment of time and energy, but that's the key to great ideas. You need to give your brain the time and space to work for you. If you try each of these methods, you are bound to come up with a great idea or two. Make sure you record them and set a plan of accountability. The execution is up to you.

How to Build a Company That Lasts Forever

2014-01-22T13:21:00.001+00:00

BY Leigh Buchanan

1. Narrow your horizons.
Sometimes it is good if you stick to your core competence, and then one day, if you have the patience, there is a topic where you can suddenly jump on," says Christopher Mennekes, CEO of Mennekes. That word, patience, rarely comes up when you talk to American business owners. Granted, waiting 80 years before testing new waters may sound unacceptably passive to CEOs wired for action. But at a time when technological change mercilessly strikes down first movers, patience is an appealingly simple risk-mitigation strategy.

2. Go global fast. Go global hard.
Globalization is the future. It is also a skill that requires development. German mid-size companies have had a lot of practice and are very good at it. This is less common in US, where more than half of small to midsize companies have no sales or operations outside North America, according to a study by the National Center for the Middle Market.

3. Innovate incrementally and internally.
"Often, innovation is defined as something that changes a market," says Klais. "But to me, it is where you individually develop something for your customer. It may be a very, very small detail. But it shows understanding and respect."
Competitors find it harder to copy your thing if they must also copy the thing that makes your thing. At the same time, it's easier to maintain equipment you've designed yourself and to ensure quality when you make your own materials. Vertical integration is all about control.

4. Go the extra mile for customers.
Be generous with pre- and post-sales consultations and services. It will cheerfully customize and ship a single tiny part or manufacture discontinued items for customers with aging machinery.

5. Run your business as if you expect it to live forever.
The lure of entrepreneurship may ultimately benefit succession. It is imperative for the potential family or community business. young successors to launch start-ups after university, then return after a few years to run them.

Responsibility.That word came up again and again. Leadership, by contrast, they largely dismissed as an abstraction. "I think leadership is a very, very, very strong word," says Klais, Mittelstand CEOs "I see it more as a responsibility issue.

Mobile money is the Best route to the Consumer in Africa

2014-01-17T09:11:00.002+00:00

By: Naziha Bagui, manager at Infomineo a business research company, focusing on Africa and the Middle East

With a growing middle class and a population that is moving into the cities, Africa is on a positive growth trajectory. According to the African Development Bank, African consumers will spend about US$2.2tr annually by 2030.

Africa is ushering in positive indicators across the board. The challenge is how to reach this growing demand in a continent where not everyone has access to financial services, rural areas are still highly populated and the costs of expanding ATMs and bank branches to remote rural areas are prohibitive.

The best solution for Africa seems then to be mobile commerce. Mobile phone penetration in the continent is much higher than bank account penetration. According to a report by TA Telecom it reached 80% in December 2013 of which 63% was 2G, 26% was 2.5G (also called EDGE, adding low-speed data), and only 11% was 3G connections. This sets Africa for diverse payment methods, however the ultimate channel to reach the largest portion of African demand is by SMS (2G) through which M-banking, M-retail, and M-payments are made possible. Business Monitor International estimates that the value of mobile transactions on the continent will move from $12bn in 2011 to $85bn in 2016.

Mobile commerce has proved to be a winning formula in a number of African countries. In Kenya it is a true success story. M-pesa, the largest and most developed mobile money platform in the world, has 19.5m subscribers (cellphone users). The platform has also been adopted by 10 Kenyan banks. Central Bank of Kenya data shows that mobile payments in Kenya grew 21.8% to $13.9bn by the end of August 2013 compared to the same period last year. The government has also found the solution perfectly suited to fulfil its goals of financial inclusion, welfare disbursement and inward international transfer promotion.

The Kenyan model is proof that the unbanked segment of the population holds great promise of growth. It is also solid evidence that other countries need to adopt the Kenyan model and tune it up to their specific needs. Should we expect the Kenyan model to move across borders and serve as a continental platform allowing mobile money to flow freely between countries? With a mindset of possibility and optimism, I’d leave it to time to answer the question.

10 Tips on How to Be a Better Entrepreneur in 2014

2014-01-12T21:30:00.000+00:00

By: Lawton Ursrey, a product marketing manager of Sage One, an online accounting application for small businesses

The start of a new year is a great time to put our work habits under a microscope, toss the ideas that haven't been working and put new action into play. Each year has its lessons, so it's always good to reflect on what you've learned and optimize the knowledge for the coming year.

Below are 10 tips on how entrepreneurs can start 2014 on the right foot.

1. Confront and work on your challenge areas
Knowing your strengths is easy. Facing and fixing your weaknesses can sometimes create inaction in all of us. But to grow, it is important to make this change.

There are a billion "I can't" reasons and most are founded on nothing but fear -- many times we are simply standing in our own way.

Use 2014 to pinpoint and build up the areas that are challenging you. Classes are great, but as entrepreneurs we need action now. Be proactive by turning to the internet. Look for information, articles, mentors and online tutorials for help.

2. Blend work-life and personal life
Professional life and personal life can be horrible counter weights to each other, creating an imbalance. Scrap the balancing act. Focus on what you're passionate about and maintain your intention to have more of it in your life.

For 2014, look for quick and convenient ways to blend personal life and professional life into a healthier lifestyle that works better for you, the people you love and your job. Honestly, if you add value it doesn't matter how the job gets done.

3. Let apps do the hard work
What's taking up your time? There's probably an app for it. Let it do the work. For instance, Cardmunch is awesome. It automatically converts business cards into contacts with a click of a button. Or 1Password stores all your logins and passwords in a safe, easy to access place. If you find a task taking up too much time, see if there is a tool that can make your life easier.

4. Give a little help
When someone hands me a business card I make a note of how I can help that person. I like to connect people and have always valued when it's done for me, so I try to give back when relevant. It could be as easy as connecting them with a colleague or sending a book or digital article relevant to a conversation.

5. Play tag
Another business card tip? "Tag" business cards when you receive them. Immediately jot down tags, or notes, to help you remember what the business card doesn't tell you, such as their interests, goals, alma mater or a mutual contact, among other details. Act fast, while the light bulbs are coming on in your head and be succinct.

6. Have the difficult conversations
A friend and advisor told me something a few years ago that has really stuck with me. He said, "The person who can't have the difficult conversations won't be around long." What a profound, true statement that is -- both personally and professionally.

Have the difficult conversations in 2014: at work and at home, with others and yourself. If you approach these conversations in the right way, you're likely to learn and grow in the long run.

7. Make a game out of KPI (Key Performance Indicator)
In everything you do this year, find the KPIs by looking for the things that signal success or failure.

Make a game out of KPI and have fun. For example, when we make a big announcement at my accounting app company Sage One, we try to beat the high score for opened emails, clicks and trials.

8. Have a two-minute rule for no-brainer tasks
Save your perfectionist and OCD tendencies for the important stuff. I like to blaze through the mindless tasks first thing in the morning when I am planning my day and setting daily goals. When things pop up and take two minutes or less, I like to figure them out immediately.

The time to kick the OCD into high gear and give proper attention is when focusing on higher priorities and early-stage ideas. Otherwise, they will die on the vine.

9. The visual bypass
What is the best way to receive buy-in on ideas to ensure they reach market? Who knows: I still haven't figured it out yet.

But lately I've found I saved a lot of time by presenting my ideas visually. Aside from it saving time, telling your story, plan or strategy visually creates more groupthink within the team. How so? A visual of an idea with succinct requirements tends to be shared more across groups, thereby, increasing early-stage comprehension of a new idea or project. This is always a good signal that you're on the right path, and it accelerates the validation from important stakeholders -- a key requirement for any idea to gain early traction.

My go-to tool is Omnigraffle. It's great for mapping the journey of our customer and finding areas where we can improve.

10. Take an improv class
I took a weekly improv class for six months. I can't tell you how much this helped me professionally by allowing me to be myself more, took away my jitters and taught me the ever-important fearlessness to fail.

Improv is challenging, but you're with a tight-knit group, and the teacher creates a comfortable environment for true participation.

Five New Year’s Resolutions for SMEs

2014-01-12T20:32:00.002+00:00

2014 brings with it new challenges and opportunities for business owners, all of which need to be incorporated into a business’s plans going forward. This is according to Gerrie van Biljon, executive director of Business Partners Limited, who says business owners should make use of the first few weeks of the New Year to reflect on what worked well in 2013 and what needs to be improved or changed for the year ahead.

He says proactive planning, with clear timelines, will positively benefit the long-term development of a business. “Business owners who avoid planning ahead may increase their exposure to risks during the upcoming year.

“Implementing changes early in the year will ensure that the business is prepared for the period ahead and will assist in evaluating whether it is effectively prepared for upcoming opportunities or possible challenges within the landscape that it operates in.”

Van Biljon shares five New Year’s resolutions that small and medium enterprise (SME) owners should consider when planning for 2014:

1. Managing cash flow as effectively as possible
Cash flow is the life blood of any business and effectively managing this aspect of the business will allow more flexibility when there is a need to address emerging dilemmas, such as late payment, or when critical decisions need to be made, such as having the capital available to purchase additional stock in order to satisfy client demand. Regularly updating a budget and a statement of cash flow will enable business owners to keep an eye on where money is spent, and allow them to cut back where applicable.

2. Create and maintain valuable partnerships
A new year provides businesses with the opportunity to establish new and beneficial partnerships, as well as cement any present valued partnerships. Building relationships with the right individuals and businesses is key to the success of any business, due to the long lasting and powerful effect a favourable relationship can bring about. In order to make a successful partnership thrive, establish a win-win solution that is fair to both parties.

3. Attending networking events
Building a successful business takes a lot of time and drive, so it’s advisable for business owners to surround themselves with individuals who share a similar ambition. As an entrepreneur, networking is crucial as it provides the opportunity to build those much needed business contacts and relationships.

4. Continuously seek mentorship
Seeking regular advice and guidance from a mentor can prove invaluable for business growth, as well as personal development. It is simply impossible to know everything about running a business as everyone has their individual strengths, and a fresh pair of eyes can identify possible gaps in business practices and assist with strategies which the business has not yet considered. Not only will a mentor enable a business to focus on its objectives more effectively, but it can also boost morale. When selecting an appropriately experienced business mentor, seek a mentor who has experience in the skills you may lack and ensure the terms of the mentorship – time, costs and outcomes – are as clear as possible in order to ensure that the match works effectively.

5. Establish a successful online presence
Having a successful online presence and strategy is becoming increasingly important for SMEs due to the growing number of consumers making use of online tools to find suppliers and solutions for their needs. The increasing number of online users and growing popularity of online mediums such as a company’s website, Twitter, Facebook and LinkedIn have created many opportunities for SMEs to directly interact with both their current and potential customers. These tools have also dramatically changed the way brands interact with their target audience. It is therefore key that SMEs utilise these platforms effectively in order to maximise the exposure and awareness for their business. Having a constant stream of engaging content will ensure that the business maintains a favourable online presence.

Van Biljon says the New Year creates an opportunity for businesses to better themselves and their offerings. “Like many New Year’s resolutions, the list may seem daunting. However all business owners require is a shift in mindset and most likely a change in habit. Allocating time for each goal and a realistic date of conclusion will assist you in achieving your New Year’s resolutions,” concludes van Biljon.

Source: How We Made It in Africa