There have probably been as many business lessons to learn from the year 2019 as there have been days in it.
From our phone screens, we watched companies announce and pursue their strategies to success or failure; we witnessed the demise of ventures and the emergence of new commercial giants; and we saw authorities enact new rules for doing business in the country.
In this article, we’ll recall the most significant of these events, and what they teach us about doing business in today’s world, and in Nigeria’s peculiar commercial landscape.
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1. Use Strategies that Are Tailored for the Local Market
In 2019, we’ve had what may be a positive example of this lesson: OPay’s expansion strategy. The startup has attracted huge patronage by offering ultra-low prices for its services.
They have managed to do this because they have deep pockets. But they’re also using information that they’ve gained about what attracts buyers in Nigeria and making it work for them.
OPay’s parent company is Opera, a web browser and artificial intelligence (AI) software firm. The Opera browser has been the second most widely used internet search tool in Nigeria for years now. They’ve harvested huge data about Nigerians’ buying habits from that tool, and are now deploying it to brilliant effect.
You don’t need to have an AI or machine learning tool to understand your customers’ motivations for buying things. Just know what groups are most likely to buy your products, and target them with language that they’re familiar with.
2. Investors Look for Proven Products, Not Just Potentials
That’s why Visa, a global payments giant, was willing to get a $200 million stake in Interswitch this year. The deal, announced in November, values the Nigerian IT company at $1 billion, and ushers it into the club of unicorns.
Interswitch has been around since 2002. They’ve helped Nigeria’s financial institutions transit into the electronic banking age and paved the way for the rise of fintech startups that followed.
They have built a platform that serves a vast sector and made a good profit from it. Investors have seen this, and they want a share of that profit.
Even if you haven’t launched a mammoth-sized corporation as Mitchel Elegbe has with interswitch, you can at least make your company a success in its niche. Then investors will be willing to help you go further- if you still want them.
3. Deeper Pockets Spin Bigger Successes…Thanks to Strategy
We return to OPay and its entry into the Nigerian market. The fintech startup has only been in Nigeria for just over a year. Thanks to two rounds of investments from Chinese VCs, they have now rammed their way to dominance in multiple industries.
But that’s not the whole story.
As we’ve already suggested, they had data that told them what Nigerian consumers wanted. They knew that they were working with a population that subsisted on low incomes. And they had plenty of money to work with.
With these facts before them, they chiseled out a strategy: they were going to capture portions of the market with heavily subsidized products. Not surprisingly, the strategy appears to be working.
If you have the right kind of strategy, you can achieve a lot more with what you have.
4. Business Conferences Can Set You Up for Big Wins
Business conferences and exhibitions provide SMEs and startups with the opportunity to reach larger and more specific audiences, find out where the next best markets are and know where their industries are headed.
One such event is the Connect Nigeria Business Fair, Africa’s biggest gathering of small and medium scale entrepreneurs. The seventh edition of the annual event was held this year, at the Tafawa Balewa Square in Lagos.
The businesses in attendance sold to numerous attendees and the entrepreneurs picked up insights from the success stories of the startup founders and corporate executives at the panel sessions.
5. Watch the Economy, Even if You’re a Small Business
The ₦50 stamp duty on electronic bank transfers exceeding ₦1,000 has affected merchants who use PoS machines. Because they have attempted to pass on the price to consumers, they’ve seen customers’ use of the electronic payments system drop significantly.
A planned 5% tax on online transactions has also been bemoaned by many e-commerce businesses in the country. And a Finance Bill recently passed by the Senate is proposing major changes to tax regimes, which may come into effect next year.
If you’re going to stay ahead with business, you’ll have to get a handle of these policies beforehand and work out ways to deal with them early on.
6. Reputation Can Make or Mar Growth
A number of companies have had to close shop in several regions, after admitting that their business hasn’t been profitable in those locations. This has happened in the e-commerce sector, where customers have frequently complained about poor service delivery, and as a result, shied away from purchasing things online.
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7. Expansion Can Happen in Many Different Ways
This year, we have seen at least two expansions in the world of tech. First, there was Lidya, a Nigerian digital bank, which announced the establishment of new branches in Eastern Europe. Then we had GigaLayer, a web hosting platform, which gained control of Hub8, a Russia-based, Africa-focused web hosting company.
A merger between Access Bank and Diamond Bank was completed this year. Access Bank went on to acquire Transnational Bank, a Kenyan financial institution, thus establishing a presence in that country.
8. In Today’s World, Your Competitors are Global
Not only are companies buying up others far away from their local markets, but they’re also competing with businesses in distant lands for the same set of customers.
Nigeria’s Federal Government realizes this. Analysts say it was initially reluctant to sign up to the AfCTFA because it feared that local businesses would not be able to compete with their counterparts from elsewhere in Africa.
With more deals like the AfCTFA in the offing, we’ll see more of these issues raised.
9. Even the Most ‘Steady’ Industries Can Be Disrupted
Technology is changing the way businesses operate in many sectors of the economy. From banking and insurance to agriculture logistics, whole industries have become subsumed in the tech revolution.
This trend continued in 2019, with startups and established companies introducing new tech-driven solutions. Kobo360 got funding to help disrupt the trucking space. Livestock 247, an online cattle trading platform, partnered with agritech startup Farmcrowdy, to expand their operations.
These sectors don’t figure much on the techies’ radar. But they are being transformed by tech all the same.
10. Good Work Eventually Gets Rewarded
In December, we got the news that Adewumi Adesina, President of the African Development Bank, was named African of the Year for 2019 by Forbes. The magazine says he was given the award for his efforts at his current role.
In Nigeria, Dr. Adesina is known for the reforms he introduced to the agricultural sector in his time as minister of agriculture. On the whole, his receipt of this years’ award is seen as a recognition of the outstanding work he’s done over the years.
It’s news fitting enough to cap off a year. It should also be an encouragement for us to put in the best work we can in the next twelve months.
Featured image source: International Policy Digest
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I found this quite insightful. ..well done Ikenna
Thanks, Chinonso. I’m glad you found it interesting.