Covid_19 | Lessons for African Entrepreneurs

As part of TAP Magazine Issue 14, we asked different leaders and expert to discuss how their specific fields, work and industries have been impacted by Covid_19. This is an article by Michael Manirakiza, Co-Founder and COO of Plendify Inc. on how African entrepreneurs have been impacted and the lessons they can learn from this crisis. Official magazine issue will be released on Saturday October 31.

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COVID-19 has shaken the ecosystem of African entrepreneurship and created supply and demand shockwaves in economies across the world. Entrepreneurs hoping for a post-Covid-19 future must act decisively and seek solutions that will allow their businesses to not only survive but to thrive. With its inherent unpredictability, Covid-19 presents unique challenges for   African entrepreneurs. In the next few paragraphs, we will explore how entrepreneurs can meet these challenges through the omnichannel transformation of their businesses, right-sizing operations, and by building a resilient balance sheet. 

The pandemic has proven that consumers can quickly change their shopping habits and resilient businesses can be responsive by deploying an omnichannel strategy. Across Africa, where most consumers prefer in-person experiences, many brick and mortar businesses have been reluctant to prioritize online platforms. While online consumers previously represented a small percentage of sales for African businesses, the Covid-19 paradigm shift represents an opportunity for survival and sustained growth. Smart brands that adapt now will reap immense benefits from their early adopters and the guaranteed expansion of online consumers. 

The steps required for a successful omnichannel strategy start with thoughtful planning around the target customer and knowing where they usually spend their time. This exercise will guide you in updating your inventory management system to capture both online and instore sales, producing a 360 view of the business’ performance. For businesses that are new to this strategy, it is vital to consider all aspects of the business to avoid sales leakage and to capitalize on all available opportunities. As part of this strategy, prioritize branding to ensure that clients quickly recognize your business, and either develop or maintain loyalty to your brand. Clients should be incentivized to either follow the business online or provide details so they can be updated with offerings. Some platforms that work well in Africa are Facebook, WhatsApp, and Instagram. Try market testing to measure which platforms yield the best sales growth and customer experience. A successful omnichannel is not just a nice-to-have, it’s a survival tactic. 

A well-implemented omnichannel strategy allows the business owner to make adjustments to their operations and prioritize the channel yielding the best performance. This approach is called right-sizing operations. Right-sizing operations entail investing in the right areas. With the reopening of many economies, most business decisions have focused on cutting staff and shrinking inventory. Although some of these decisions are inevitable, businesses need to be deliberate about investing in the right areas to drive revenue. For instance, shifting marketing dollars and resources away from conventional avenues to more digital options make better sense than eliminating the marketing budget altogether. Improving inventory turnover by carefully addressing how it is managed will also avoid over-buying to improve cash-flow management. 

Often, the most difficult decisions are about staffing but compromise can be achieved by reviewing job descriptions to determine whether employees can be reassigned to other areas of the business. Right-sizing is different from down-sizing as the focus is on driving revenue while reorganizing and trimming waste from the company. The strategy requires carefully reviewing company practices and eliminating some expenses while retaining valuable resources such as trained employees to help keep sales and customer service running smoothly. This approach demands an all-hands-on-deck management style, and it might be an adjustment to employees who are used to specific roles and duties. Using a right-sizing strategy will save your business and might, more importantly, allow you to keep key staff.

Finally, COVID-19 has emphasized the importance of a resilient balance sheet. Many small businesses don’t usually have more than three months of cash-on-hand. This is reasonable as many of these businesses are new, and some might have obligations for large inventory purchases to maintain operations. One of the more difficult lessons from the pandemic is that low liquidity does not bode well for the survival of businesses. Building a resilient balance sheet requires bringing in revenue more quickly. This can be accomplished by using sales promotions, 

managing expenses while the business is growing and spending only where useful to keep a healthy cash-flow. Additionally, businesses can improve receivables turnover by giving clients incentives to pay earlier. 

A smart business would also focus on a long-term vision, make investments in remote tools to reduce its physical needs and the overhead cost of the rent. Another great long-term investment is implementing better accounting systems to capture all out-flows and provide a more in-depth review of expenses that might have been considered normal pre-Covid-19. A resilient balance sheet will propel a business forward from a position of strength.

The future of the African continent remains bright, even amidst the uncertainty created by the Covid-19 pandemic. Businesses that adopt omnichannel strategies, right-size their operations, and build resilient balance sheets will be well-positioned to successfully weather the setbacks and take advantage of the promising decade ahead for intra-African trade.  

Michael Manirakiza is the co-founder & COO of Plendify Inc. 

Plendify is a financial technology company focused on widening access to working capital for businesses across Africa. Plendify is focused on creating strong supply chains and powering African businesses through leading-edge platforms.