Free tips for entrepreneurs to prepare for equity funding

Investment experts give SMEs and start-ups in Africa tips on growing successful businesses.

Globally, Small and Medium Enterprises (SMEs) are considered the single largest driver of economic growth and job creation. In Africa, there is growing importance to support local entrepreneurs in order to build a pipeline of future deals for equity investment. To attract funding, there are basic fundamentals that start-ups and SMEs must effect, for instance, having sound business plans and implementing best practices in business governance. 

Frontier, in partnership with investment gurus at SME-focused private equity group, Jacana Partners, brings you the second part of a three-part series of tips to help you successfully start your business and get it ready for funding. 

Starting to grow a business

Initial growth - Barnaby Terry, Investment Director, West Africa

​When planning your new business, you need to focus on a simple product or service that has a clear value proposition and business model.

Product-line profitability

Many businesses have multiple activities, whether they be a mix of products and services; multiple product lines and different territories. Find out which activity makes money and put resources behind it. Find out which activity loses money and either fix it or close it.

Focus on gross margins
Gazing at revenues can be seductive, but they are often not the right thing to measure. Make sure you know your margins, and also make sure you know them at a customer level.

Plan your exit 
Most companies sell to companies they know already. Remember this when you are dealing with business relationships.

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Key Performance indicators - Stephen Antwi Asimeng, Partner, West Africa

Choose less than five key performance indicators that best reflect your business and measure them on a timely basis. You wouldn’t fly an aeroplane without instruments after all.

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Be decisive - Paul Fitzsimons, Investment Director, West Africa

If things obviously aren’t working in a part of your business, act quickly and cut your losses. A half-hearted approach to important business decisions wastes time and money.

Manage your cash
Cash flow is everything in a growing business – a business must have a robust method of forecasting cash receipts and payments – on a very detailed basis for the next 12 weeks and on a broader basis for the next year. The business should look at actual versus budget on a weekly basis and follow up on any variation from the original plan.

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Be competitor savvy - Stephen Dawson, Chairman and Investment Director, East Africa

Be aware of your competition. You  may think you do not have competition but they are always there (even if indirectly); by studying your competitors you can learn from the things they do better than you and make sure you make the most of the things you do better.

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Frontier African Success Story

Zambia-based Zambeef Group, began 20 years ago, delivering meat around Lusaka in the back of an old Land Rover. The company has has since grown into one of the largest agribusiness companies in Southern Africa. Zambeef is now replicating this success in West Africa.

Download a complimentary eBook on the company to learn more about how Zambeef found success.