4 Tips How To Start Your African Business With No Capital

4 Tips How To Start Your African Business With No Capital

Are you worrying about how to start your African business with no capital in hand? It is no secret that African business startups face a huge challenge in accessing finance, and the tragedy really is that many never get started as a result of it. Or the slower growth makes them impatient and they put their venture on hold. Here are 4 tips how to avoid getting stranded 

1. Start a business that has little capital requirements

Don’t plan to open a supermarket or import solar power solutions if you have no money to invest. No other advice may give you more hope than this one: There are business ventures that simply require no major capital input: sell your knowledge and services instead or products, start small and focus on your big vision with discipline one step at a time, or start an online business. Many African entrepreneurs have done just that and today they run hugely successful businesses! You simply need to find an area that has a clear gap in the market and that you feel passionate about, so you can see it through! I have shared many posts how African entrepreneurs have started extremely successful businesses with no capital in hand. Here is one of the most popular ones in case you missed it: $100 – How These Poor African Entrepreneurs Started Extremely Successful Businesses

2. Build mutual partnerships

Again, this is of high value and you can use it actively as a start-up or a growth strategy: Look for people who have access to something you need and then see what you could offer them in return. Let’s say for example you don’t have land, but want to start an agribusiness with poultry or flower production for example. You can find someone who is happy to give you the land to start production if you offer him for example the knowledge about a popular cash crop and a percentage of the sales you will make – a lot of people own land, but do not have much knowledge about non-traditional methods and markets or if they live in the cities, they don’t even want to get into farming themselves.

Maybe you want to start an online publication, but you cannot afford the web designer. Ask someone to become your web designer for a reduced fee, and in return you will have a free advertisement on your blog and online publication with his services, so he can get exposure and more clients through you.

3. Bring producers or other small businesses together – run a platform

Again, such a powerful strategy, which really works across sectors. For agribusinesses it could look like this: you gather farmers who are already producing into a cooperative – you will enable them this way to produce in bulk and you find the buyers for them. Or bring together a group of small businesses that offer private accommodation for tourists, or children entertainment, advertising and business services, wedding services, that manufacture local baby products and so on. Now you build a platform – for example an online market place  – where you gather their products or expertise for a certain niche together getting a percentage of every single sale made through your platform without handling any of the products yourself.  If done well, you can make considerable income only by empowering a niche and aggregating their service and products in a single place, which you are running. It also works as an offline company, for example an agency for translators, cleaners, professional speakers …… you are becoming the hub for a certain niche bringing certain skills and services together while you coordinate the work among independent freelancers or small businesses offering them the exposure and more clients.

4. Crowdfunding

Yes, there is increased access to crowdfunding sources these days, because crowdfunding is gaining in popularity. You can fundraise on existing crowdfunding platforms online for Africa such as VC4A, or build your own little crowd funding group to kick-start your investment or business in Africa. It works in a way that you all ship in putting some money forward towards a joint investment or start-up. Or if you don’t have any capital at all, you could propose to the group to run the business (so investing your time), while 2-3 people invest their money and get a share in the company. Crowdfunding is something that would work among friends or within a local community and has great chances to work out for you if you are credible and present a compelling case. Remember, a compelling case is rarely just a new idea, it is usually a concept on which you have already worked proving the viability of your business concept and your dedication. People invest in people with stamina and proven concepts and rarely just in great ideas.

There are many ways around the lack of capital, just continue to keep the flame for your business dreams alive and continue to search for avenues. Get started!

Would be great to get your feedback and questions! And if you’d like to get my latest articles on Africa business opportunities and tips as soon as they are published, feel free to click the little box ‘Notify me by e-mail’ below the comment section. 

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Dr. Harnet
Dr. Harnet Bokrezion is the Founder of africajumpstart.com and co-author of the book '101 Ways to Make Money in Africa'. She coaches individuals and consults existing companies assisting them to make smart and strategic business decisions in Africa’s new emerging markets faster and more confidently. Dr. Harnet also regularly writes for the renowned DHL powered publication howwemadeitinafrica.com. Get in touch to inquire how she can be of assistance to your own Africa business endeavors: harnet@africajumpstart.com

User Comments ( 14 )

  • Thanks Dr Harnet.This is such a brilliant idea and from all you have written,i can fully understand that you are talking about leveraging.So my question is this:If i have an idea and a prospective investor is bringing in 100% of the capital,what will be the sharing formulae without any negotiation from both sides? Thanks

    • Dr. Harnet

      Hi Richard

      Thank you for your enthusiastic feedback and your question. I would not be able to give you a definite answer, I do not know your business idea and circumstances, and it will above all, depend on you and the investor as individuals, and also on the amount to be invested and what you will put in (time, skills, connections etc). What I can say is that investors hardly invest solely in an idea. So he must have a lot of trust in you as a person and the idea if he is ready to invest. Having said that, both responsibility and risk at your end are increasing, because you only have an idea and not a proven business concept for which you seek investment. Make sure you do not rush the process!

      Wishing you all the best!

  • Ismail

    Thank you for this article, Dr. I’m preparing to start opening a website where I can do an online business as well. I pray to see good results out of it. . This a very good, thank you again.

    Ismail

    • Dr. Harnet

      Great, Ismail. As a quick advice: Make sure you are very clear about your business model and sales model (!) before you spend money on the site. Building that and getting a name is the easy part, but first know your ‘WHY’ (why are you starting a business, and why in this particular niche? That’s your context, your engine!). Then think about your ‘WHAT’ (What are you building to meet your why? What are your goals? What business model and system will you put in place to reach there?), only then ask yourself about the HOW. Building a website is part of that last leg.

      Hope this helps!

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  • Ted

    Nice article. These are really great ideas. I cant wait to try them out.

  • Anthony oluwatobi Emordi

    This are amazing revelations on how to get started, thank you so much for these wonderful write-up. I will be glad to get more useful information from you on the issue of doing business in Africa, especially in Nigeria,thank you.

    • Dr. Harnet

      Thank you, Anthony for your kind feedback. I am glad you found the information useful to your own Africa business plans.
      And a warm welcome to Africa Business Jumpstart!

  • Hallo Dr harnet
    Im living in sweden and planning to start bussiness in Kenya..which advice can you give??

    • Dr. Harnet

      Hi Caroline, I think I replied to you via Facebook. As you said import-export is one way, e-commerce is another (selling products or services online) possibly even linking the two countries up. You could also go into event management between the two countries, where you start networking events, or company exhibitions in Kenya for Swedish or Nordic companies who are interested in doing business in Kenya and the East of Africa. I think a great starting point is to research what exactly connects Sweden with Kenya and East Africa, where are the areas of interest, or the challenges. Once you understand that better you could see how you can step in and fill a certain gap or demand. I hope this helps!

  • Maesela

    I like number 3. I think it would work out well. Iv met a number of people who have great products but they battle because they are too small. Thanks for the great tips

    • Dr. Harnet

      Great, Maesela, I am glad you find the information useful!

  • Frank Kofi Osei

    Great Piece and thanks Dr.Harnet for being a firelighter in our lives so far as African business is concern.
    Greetings from Ghana to you and your wonderful team.

    • Dr. Harnet

      Thank you for your kind words, Frank, much appreciated! All the best to you in wonderful Ghana!