10 secrets to winning tenders

By Kristina Mills

If you think about it, sealing that deal is all about salesmanship. It is all about addressing the needs that your prospect wants to be fulfilled as well as proving you fulfill those needs in the most results-oriented ways.

Below are the top 10 rules to follow when preparing your tender document.

To find out their needs, always call them

When you phone your prospect, don't just ask for a copy of the tender document or a list of specifications. You need to find out why they are calling for tenders, what is important to them and why they want to undertake the project. Have a conversation with them and get to know them a little better, to discover what they are all about. You would be surprised how much information you can find out. This would be priceless information when going through the process of creating the tender.

Follow the salesmanship formula that is already proven

Instead of just talking about being able to carry out the work, start by identifying their problem, or the core reason that they included that criterion. Then you can talk briefly about the downside of the problem. When you have done that, you can talk about the solution - how you are really going to get their needs fulfilled. You need to include specifics about the mechanics behind the processes that you use. Prove your claims by including case studies, results, guarantees and testimonials.

Send them a pre-proposal letter

When you have made the initial telephone call finding out the facts, always send a quick note thanking them for their time. The letter should also thank them for the information provided, and should include something that makes them feel good about what they want to have achieved. Finish off the letter by thanking them again and letting them know that you are looking forward to putting together a tender document for them, or some quotes and ideas. An important factor in your success is to establish a relationship with your prospective clients, a relationship that begins from when you first call them.

Do a lot of research

Find out everything you can about the company - even if you are only submitting a 'quote' for an easy job. Do an online search; get them to send you a brochure; know what their competitors are doing; find out what their customer service philosophy is, their mission statement, and what their culture is about - regardless of the job you need to do. By doing this, you get a feel for what is important to the company, as well as some priceless ammunition that you can include when preparing your tender documents.

Follow the guidelines so precisely

When you are tendering for Government contracts, there are always specific guidelines to follow. Structure your documentation around these guidelines, which makes it easy for the prospect to assess your tender. If there are any other sections that you'd like to include, you can place them towards the end of your tender document.

Use graphs and tables

Show figures in a graph, rather than in text format. Include a comparison of your results with other companies' results.

Make a list of your most impressive customers

By listing your customers, it gives prospects an understanding of how you can cope with a business of their size, reputation and type.

List the best results you have achieved

List any great 'claims to fame', if you have any. Doing this proves that your company has 'runs on the board' and suggests to them that they can also get results from you. Include a brief description of the project, industry and the results which were achieved.

Include a guarantee

In the tendering process, people can be very sceptical. They are fearful of being ripped off and of not getting the results that they expect. If you include a powerful money-back guarantee that reverses the risk, it takes away one of their major buying fears. In effect, that lowers their barriers against doing any business with your company.

Include some testimonials

If you say something, they may not believe you, but if someone else says it, then it must be the truth. This is definitely true when you are talking about selling your services to them. When you tell someone how good you are all the time, it's not until they can hear it from the 'horse's mouth' that they will believe you. For this reason, you need to include in your documentation as many testimonials as you possibly can.

Bonus points

• Talk in benefits - Because people are basically selfish they don't really care how big you are, or how professional you are, or even how long you have been in business. They just want to know what you are going to do for them, how you are going to deliver those results and what it will mean for them. You need to tell them. Talk benefits, Instead of talking features. Tell them what is in it for them.
• Use the word YOU more frequently - 'You' is the most powerful word in the English language, because people are so self-absorbed. Use the word 'you', instead of 'we' and 'us' to keep your prospect interested.
• Present it professionally - You should include action plans so your clients know what to expect and when to expect it. It is a bit difficult to know how a project is going to work, what needs to happen, and when it should happen  - particularly with large projects. Include a comprehensive action plan which clearly sets out each step. This gives your prospective client a much clearer picture of how you are going to deliver these results. 
• Do not stop when you have submitted the tender - That is only part of your process. You need to develop a structured follow-up system, which includes some nurturing follow-up letters or a series of telephone calls, which are designed to 'check-up' and provide them with further information, if it is required. This shows that you're committed to helping to get results for them.
• Never give in - Because you didn't win a tender, it doesn't mean that the company will not want to do business with you sometime in the future. Make sure you keep in touch with them, with telephone calls, newsletters, interesting news articles as well as 'how are things' letters. These show that you care about them.

Kristina Mills is an author and business consultant

Guide to investing in Senegal

Senegal offers a competitive destination for investments, thanks to its strategic geographical position, stability and access to the West African markets.

Many international organisations, businesses and NGOs have set up their West African headquarters in Dakar City, confirming Senegal's growing influence in the region.

To boost economic growth, Senegal’s government has strong investment projects in various sectors.

The Doing Business in Senegal report offers you important information on how and where to invest in Senegal. 

The report covers: 

• The business climate
• How to register a business
• The tax and customs framework
• Investment opportunities
• Insight from an established British investor 
   

This report is brought to you in partnership with Developing Markets Associates.

Click on this link to access the 'Doing Business in Senegal' report 

5 steps to planning a business trip to China

By Fredrik Grönkvist

So, you’ve found a couple of suppliers online and want to find out if they are everything they claim to be. That’s a good first step.

But, boarding the next flight to China, with a list of three random suppliers you found online, is most often a complete waste of both time and money.

In this article, I explain how you need to prepare yourself before your business trip to China, and what to should look for while you’re there.

#1: Is the supplier able to show compliance with product regulations in your country?

In most industries, less than 5% of the suppliers are able to show previous compliance with American, European and Australian product regulations and standards. Assuming you don’t verify their compliance prior to your visit, you’ll waste a lot of time visiting suppliers that are neither willing nor technically capable of complying with the relevant standards.

Besides, compliant suppliers tend to be above average in other aspects. Apart from the obvious legal requirements, I also consider compliance a strong indication of the supplier’s technical expertise.

#2: Schedule meetings with as many suppliers as possible

All manufacturers are not equal. Expect at least 50% of them to not be what you expect. It’s bad out there. I’ve been taken to factories that have not been operational for months. Factories that would barely pass for junkyards.

I can even recall one really weird situation a couple of years ago, in Xuzhou, when I was taken to the same factory twice in the same day. First in the morning, when a representative of a Trading Company took me there. The second time in the afternoon, when the actual owner of the factory picked me up.

It felt quite awkward to tell the boss that I had already visited their factory earlier that day. Not to mention that I wasted my entire afternoon. Not that there’s much else to do in Xuzhou…

The lesson here is that you’ll return home empty handed if you visit one or two random suppliers. It’s not enough. Schedule visits with at least five or six suppliers, and list a handful of backup suppliers – in case the first round fails to live up to expectations.

#3: Make yourself familiar with the geography

China is a big country, with hundreds of industrial clusters on the east coast. If you’re lucky, you can limit your visit to a single city. Certain industries are in fact concentrated to single cities, such as Shenzhen. However, in other industries, suppliers are scattered all over a province – or even the entire east coast.

First of all, you need to make a traveling plan. Getting to China is easy, and there are direct flights to major cities such as Shanghai, Hong Kong, Shenzhen, Guangzhou and Beijing. But most suppliers are not located in these cities (with the exception of Shenzhen). Instead, you are likely to find yourself spending time provisional cities like Taizhou, Foshan, Dongguan and Changzhou.

Getting there is not that much of a hassle though, thanks to China’s high speed train network. You can get to basically any city on the east coast by train. And that’s about as far as you need to get on your own. Any supplier worthwhile visiting will take you from there to their factory by car.

#4: Confirm the suppliers factory address

It’s common that suppliers, even those who are manufacturers, trade products supplied by subcontractors. It’s not always a bad thing though, but I prefer to be aware of such arrangements before I make my way to whatever village the supplier is located in.

All Chinese companies have a registered address. If the supplier is actually manufacturing the products, the factory should be located at the same address as specified on their Business License. There are exceptions, but this is the general rule.

If the supplier brings you to another address, they are probably taking you to a factory that’s not theirs. But then again, sub-contracting is not always a bad thing. What’s important is that you make your supplier understand that they are going to be held liable for defective products. This is a relatively small issue when dealing with qualified and organized manufacturers, that are in turn outsourcing certain products to sub-contractors. They have assets, and it’s not so easy for them to “disappear” in case things turn out bad.

But that doesn’t apply to smaller trading companies, that consist of little more than an a small office and a few employees. Apart from old laptops and dusty product samples, these companies have no assets. They can’t afford to compensate you if they would run into quality issues. It may also be in their interest to align with the manufacturer, rather than you, in case of a dispute. Stay away from these companies.

That being said, there are also reputable Trading Companies that act as exporting platforms for tens, sometimes hundreds, of manufacturers.

#5: Prepare product related questions

When communicating with a supplier on the internet, you rarely get further up their organization than the sales agents. However, you can expect a lot more attention when you show up in person at the suppliers factory. This means that you’ll get access to their managers and engineers - the people who are actually qualified to talk about their products and manufacturing capabilities.

Whenever I go out to visit suppliers and sit down with their engineers, I get to hear things the sales agents never told me. Probably because they are more concerned with making the sale, rather than telling me the truth. But also because sales agents are not engineers, they spend their days drinking tea and gossiping with their friends on WeChat -  apart from a few occasional conversations with potential customers. The engineers, on the other hand, are qualified to tell you what they can do, and what they can’t. I can recall plenty of times when the sales agents had promised things the supplier was simply not able to deliver on.

While you got the manager’s attention, it’s also a golden opportunity to make them understand that you’re not a gullible idiot. Make them aware of planned quality inspections and lab tests. It’s always good to put pressure on a supplier to comply with your quality requirements and product specifications.

Chinese companies are top heavy, and the only way to make things run smoothly on the production line is by applying pressure on the people in charge.

Inspecting the factory

The production line tells a lot more about a supplier than their brand of instant coffee or what car the owner is driving. Perhaps his new Audit was (involuntarily) financed by the last customer who didn’t bother to hire a quality inspector. The first thing to look at is how well they monitor product quality during the different stages of production. This is what you need to take a closer look at:

#1: Incoming materials

Manufacturers are not “Santa Claus workshops” that make every single material and component in house. They purchase components and materials from tens, sometimes hundreds, of domestic and foreign subcontractors. When quality issues occur, these subcontractors are often to blame (and many suppliers try to use that card).

What really matters to you is that the supplier checks the quality of the incoming materials and components. They shall also separate components and materials that are compliant with certain standards (such as REACH), from those that are non compliant. A supplier that’s not able to manage such separation is a major liability.

#2: Production lines

Manufacturing is not a science, there are always quality issues. What differentiates a good supplier from a bad supplier, is that the former monitors quality during the production process – and minimizes the number of defect units that slips through unnoticed.

A supplier that cares about maintaining a high quality standard has several checkpoints throughout the assembly line. They shall also be able to show how they define and manage defective units. A supplier claiming to have a zero defect rate during production is simply not monitoring their production well enough – if at all.

#3: Assembled products

Products coming off the assembly line shall also go through a final check. While a supplier is not necessarily testing every single unit, a final quality check shall include 2-5% of the batch. Finally, the supplier shall also maintain quality control records. If they claim to be ISO certified, they are even required to maintain records.

Is the supplier’s production lines busy?

It speaks for itself. A supplier with empty warehouses and dozing workers is obviously not doing that well. There’s a lot of overcapacity in China. Plenty of suppliers barely get enough orders to make ends meet. Doing business with such manufacturers is a liability. Even if they have the best intentions, suppliers operating on the edge of bankruptcy are not liquid enough to compensate buyers in case serious quality issues occur.

Before you leave, check out the factory warehouse

Not all manufacturers in China are geared towards Western markets. Many, of not most, are primarily made products for the domestic Chinese market, and developing markets in Asia, Africa and Latin America. That’s not saying that these suppliers are “bad”, but it may indicate that the supplier is not that knowledgeable about Western quality requirements and product certification requirements.

That’s why spending some time in the factory warehouse is a wise decision. This is where the suppliers stack hundreds of cartons, before being loaded into containers and shipped to buyers around the world. There’s only one thing that’s better than a warehouse full of goods about to be delivered, and that’s a warehouse full of goods addressed to buyers in your country.

These are strong indications that the supplier is not only kept busy with regular reorders, but also that they are well aware of product regulations and quality expectations in your market. And that is something you shall never take for granted when doing business in China.

This article was first published here

Fredrik works at ChinaImportal, an e-commerce platform that assists businesses looking to import products from China.

The hottest selling oil and gas products in Africa

The oil and gas sectors will continue to thrive due to the rising demand for energy on the continent.

By John-Paul Iwuoha

The severe shortage of electricity in many parts of Africa is causing people who can afford it to spend more on petrol and diesel to generate their own electricity. Millions of individuals and companies in Africa now spend a lot of money every year on oil products like petrol (gasoline), diesel and kerosene to provide their own electricity, and the demand is expected to continue increasing. 

There are more than five major products that result from refining crude oil, but I will focus on the top four that are highest in demand and most popular with consumers in Africa. There are many other products that are applied for various uses such as road construction, aviation and marine fuels, and in chemical and manufacturing industries.

Petrol

Petrol (technically known in the oil business as Gasoline, Premium Motor Spirit or ‘PMS’) is one of the most popular and widely consumed oil products in Africa. It is estimated that Africans consume more than 100 million litres of petrol every day. The number of vehicles (especially private cars) is increasing across Africa. The volume of petrol Africans buy will continue to increase as more people buy cars or depend on petrol-powered buses and other means of transportation. The electricity problem is also likely to encourage the petrol business as most individually-owned power generators run on petrol.

Diesel

Diesel is technically referred to in the oil business as ‘AGO’, an abbreviation of ‘Automotive Gas Oil’. It is commonly used by heavy-duty engines which power many of the large trucks, tankers and trailers that transport heavy goods (and people). Diesel may not be as popular as petrol (or gasoline) but it remains a very important fuel to the economy. It helps to move most of the heavy goods (like agricultural produce, building materials, imported goods and raw materials) that drive trade and commerce. There is growing potential for trucking and haulage businesses across Africa. As the demand for trucking and haulage increases, so will the volume of diesel that will be consumed. Diesel is also commonly used as fuel for bigger power generators that produce electricity for factories and medium-large companies. As more of these factories and companies demand more electricity and (if) the electricity supply situation worsens, the demand for diesel is also likely to increase.

Kerosene

Technically known as ‘Household Kerosene (HHK)’, Dual Purpose Kerosene (DPK) or Paraffin, kerosene is one of the most widely consumed fuels in Africa. It is commonly used in homes and households to provide heating, lighting (in kerosene lamps) and for cooking food. Especially in low and middle income households, kerosene remains the cleaner, more effective and often cheaper alternative to charcoal and firewood. Kerosene is very likely to remain a hot-selling fuel as environmental awareness discourages more people from destroying our forests to produce wood for firewood or charcoal.

Cooking Gas

Cooking gas, also known as ‘Liquefied Petroleum Gas’ or LPG is expected to become the preferred fuel for household cooking and heating in Africa’s future. Although cooking gas is not yet as popular as Kerosene in many parts of the continent, it is considered a cleaner, more efficient and cheaper option than kerosene. Unlike Kerosene, charcoal and firewood which produce soot and other harmful particles when they burn, cooking gas burns more efficiently and is much safer for the health of humans and the environment. 

As more Africans join the economic middle class and migrate to the cities, the demand for cleaner and cheaper fuels like cooking gas will surely increase. Climate change concerns and a growing consciousness to preserve our natural environment will lead to higher adoption of cooking gas as the preferred fuel for households.

Tips for succeess in the oil and gas business 

You may need a lot of start-up capital

Most entrepreneurs often do not consider the oil and gas business because they think it’s exclusive to the ‘big boys’ who have a lot of capital at their disposal. While this is not entirely false, it is not impossible for individual entrepreneurs and small businesses to play in the oil and gas business. You don’t have the money? Start small. Look for like-minded partners to invest or you could consider other proven ways to raise capital for your business. You could start a low-capital kerosene retail business in your neighbourhood or invest in a cooking gas refilling station. If you can find the capital, you could become a supplier of diesel or petrol to businesses in your area who will need it to power their generators.

Watch out for the risks

While there is money to be made in the oil business, you shouldn’t forget that the products you will be dealing with are very high inflammable. So, safety should always be a priority for you. Applying safety procedures at all times and using the right safety gear (like fire extinguishers etc.) are very important. Theft and loss (through spillage) are also common ways to lose your products. Taking out an insurance cover is always a good strategy to protect you in this regard.

Get the necessary licenses and permits

The oil and gas sector is usually well-regulated. In most countries, a permit or license may be required for anyone who wants to start an oil and gas related business. You will need to contact the relevant government office in your country to find out the required registration, licenses or permits for businesses that operate in the oil business. If you don’t comply with the rules, your products may be seized, you could pay a fine or serve jail time for running an unauthorized business. In countries that offer subsidies to operators in the business, it may be difficult (if not impossible) to claim these subsidies if you’re not registered with the relevant government agency, trade or workers’ associations.

It works best if you can find a niche for yourself

There already exists a huge demand for oil and gas products on the continent. However, there is a lot of competition because it’s relatively esasy to start if you have the capital. To avoid the crowded marketplace and unhealthy competition, this business will work better if you can find dedicated customers or an undersupplied area of town and dominate it. For these two customer segments (dedicated customers and areas suffering from scarcity of oil products), there is a good potential to make more profit. Rich homeowners, businesses, factories, schools, office buildings and shopping malls are just some examples of customers who can become dedicated to a supplier who can meet their needs for petrol and diesel. You just need to think of creative ways to separate yourself from the crowded competition.

Browse insights, credible business opportunities and investment opportunities in the oil and gas sectors here 

John-Paul is chief editor at www.smallstarter.com, Frontier's content partner. 

10 best-selling building and construction products in Africa

Africa's booming construction sector is creating new opportunities for distributors and manufacturers to supply products.

By John-Paul Iwuoha

Building and construction activities are often signs of growing economies. Africa is home to six of the world’s fastest growing economies in the world. It also has the world’s fastest growing population which is expected to reach 2.3 billion in less than 40 years. It’s no surprise then that Africa’s richest man, Nigeria’s Aliko Dangote, has made a fortune manufacturing cement - one of the most important and hot-selling building materials in Africa. Entrepreneurs, investors and governments are spending billions of dollars on real estate projects in a bid to satisfy the huge demand for residential and commercial accommodation across Africa.

Factors responsible for the growing demand for building and construction materials across Africa.

• Economic growth
• Fast-growing population
• Rapid urbanisation
• Expanding middle class
   

The top selling building and construction materials and products 

Cement

Cement is one of the most widely used building materials in the modern world and nearly six billion tonnes of this very important commodity is produced every year. It is the main ingredient used in the production of blocks, which are the single-most used items in building and construction work. Cement is combined with aggregates (sand, gravel and stones) to make concrete and used as slurry for filling cracks in all kinds of structures. It is also used for masonry work, plastering and pointing. This versatile capability allows cement to be used in all kinds of structures including buildings, bridges. dams, docks, harbours and roads. Manufacturing cement is capital-intensive and requires huge investment in quarries, labour, plants and equipment. As a result, only national governments and businessmen with deep pockets are able to set up cement manufacturing plants. However, small-scale businesses and entrepreneurs can get involved in the cement business by joining the distribution chain. You could become a major dealer who buys directly from the cement manufacturers or major importers. Or you could start up as a retailer who sells the product directly to home builders and contractors. Depending on the volume of cement you decide to deal in, it’s likely you will need a sizeable store or warehouse to keep your stock. It is important that you know the cement brand(s) that are favoured and preferred by builders in your area.

Wood

Wood is one of the oldest and most commonly used material in building and construction. Despite the growing threat of deforestation, wood has remained in high demand as a building material because of its reasonable cost, availability, attractive appearance and long life (if protected from insects and moisture). Wood used in building and construction work is commonly referred to as timber (or ‘lumber’ in the US and Canada). Timber is sawn into planks or poles and used as supporting materials (beams and pillars), in roof and ceiling construction, door and window frames, and exterior cladding. Timber is also commonly used in flooring, paneling and general finishing. It is most commonly used to form the mould in which liquid concrete is poured, compacted, and allowed to harden. Before wood is used for building and construction work, it has to be felled in the forest, processed and seasoned (the process of removing moisture from wood). It is then sawn into logs and planks and sold on the market. Although Africa has extensive (but fast depleting) forest reserves, the conservation efforts in many countries are forcing builders to look for alternatives to timber. In Kenya for example, innovative entrepreneurs like Lorna Rutto of EcoPost are using waste plastic to produce a strong and durable substitute to timber; and making a lot of money in the process. Entrepreneurs who intend to harvest trees to be used as timber will likely require a permit or license from their government’s forestry department or agency responsible for forest resources. Permits have become necessary to avoid indiscriminate logging that cause damage to the environment. If you intend to buy wood from loggers and process them to timber, it’s likely you will need to invest in machinery and experienced labour who know the techniques of treating, seasoning and curing wood to avoid damage caused by moisture and insects.

Aggregates

Aggregates are raw earth materials which have been used since prehistoric times in building and construction. Aggregates fall into two broad categories - coarse aggregates (such as crushed stones, gravel, pebbles, and granite) and fine aggregates (usually sand and clay). In modern construction work, aggregates are combined with cement to produce concrete and mortar. Using aggregates gives volume, stability, resistance to wear or erosion, and other desired physical properties to all kinds of structures – buildings, bridges, roads etc. As you may have guessed, aggregates are the most mined materials in the world. Operating a mine (or quarry) is very capital-intensive and requires large earth-moving equipment, belt conveyors, and machines specifically designed for crushing and separating various sizes of aggregates.  Entrepreneurs who intend to play in this space could buy aggregates from quarry operators and sell them directly to builders in truck loads or much smaller sizes.

Roofing materials

All buildings (especially houses) usually have a roof over them. Roofing materials form the outermost layer on the roof of a building and provides shelter from the natural elements (wind, sunlight and rain) and insulation against heat and cold. Commercially available roofing materials can range from corrugated iron and aluminum, clay tiles, plastic, fiberglass and concrete. In choosing roofing materials in Africa, builders and home owners usually consider cost, style and quality, suitability of the material to the climate, low maintenance and long life span. Materials like asbestos (which used to be very common) are becoming increasingly undesirable due to its adverse health effects. Entrepreneurs who intend to start a business in roofing materials must constantly look out for changes in taste and trends in the market. New products are constantly being developed to overcome the shortcomings of older roofing materials, meet the demands of modern building techniques, and conform to increasingly stringent building codes. 

Plumbing materials

Plumbing usually refers to the system of pipes, drains, fittings, valves, valve assemblies, and devices installed in a building for the distribution of water for drinking, heating and washing, and the removal of human and domestic waste (sewage). The main categories of plumbing systems include: potable cold and hot tap water supply; drainage venting; septic systems; rainwater, surface, and subsurface water drainage; and fuel gas piping. The common materials used in modern plumbing include copper, brass and plastic. In fact more than 70% of materials used in today’s plumbing are made of PVC or PEX plastic. This is because plastic is very flexible, easy to install, has a low cost, does not rust like most metals and can last for a very long time. A lot of the plumbing materials supplied to local African markets are manufactured locally or imported from overseas. Depending on the taste and requirements of customers, the quality and cost of plumbing materials in the market can vary considerably.

Steel and metal products

Steel and metal products are widely used in building and construction. Steel is commonly used to make reinforced concrete that supports structures in buildings, bridges, dams etc. Steel is made up of iron combined with a small percentage of carbon. High-carbon or ‘hard’ steel is used to make tools with cutting edges. Medium- carbon steel is used for critical structural components of buildings such as I-beams, reinforcing bars and frames. Low- carbon or ‘mild’ steel is used for pipes, nails, screws, door and window hinges, wire, screening, fencing and corrugated roofing sheets. Metals such as aluminum and copper have become popular building materials due to their ability to resist rust and corrosion. Copper is used for electric wires, tubing for water supply and for flashing. Aluminum is most commonly used for roofing sheets, gutters and the accompanying nails. Brass is another corrosion-resistant alloy of copper and zinc used extensively for building hardware. Like cement, running a steel production plant is expensive. The opportunity for entrepreneurs lies in retail and distribution of steel products to home builders and construction contractors.

Electrical materials and accessories

Electrical materials are the parts and elements used in the electrical system of any building and construction project. This includes a huge inventory of materials used to supply electric power or telecommunications to different parts of a building and will typically consist of: electrical conduits and fittings, wires and cables, explosion proof enclosures, meters, circuit breakers, connectors, and electrical products such as wiring devices (switches, plugs) and lighting (bulbs). Solar energy products are becoming a popular way of providing electricity to millions of Africans who are not connected to the grid. Entrepreneurs, like Tanzania's Patrick Ngowi of Helvetic Solar Contractors, are building million dollar fortunes from providing solar electricity to residential homes and government buildings. While some of the electrical materials mentioned above are made locally, a variety of brands are imported from North America, Europe and Asia and may be preferred for their higher quality. Before entering this business, entrepreneurs must ensure that they are well aware of customer preferences in their area.

Glass

Glass is fast becoming one of the most preferred materials of modern building architecture. Clear windows have been used since the invention of glass to cover small openings in buildings and provide us with the ability to both let light into rooms while at the same time keeping undesirable weather outside. Glass controls light, letting in the good rays and keeping out the bad ones; it also saves on energy costs by providing natural day lighting. As a result, more designers are finding that glass fits quite nicely into today’s green building environment. Other qualities that make glass such a hot-selling building material include its roles in heat, sound, fire and solar protection. It also provides an interesting means of design and electromagnetic dampening. Glass sold on the market is of varying types (reinforced, laminated and tempered) for all kinds of uses. Glass has also found popular use as a decorative material in designing building exteriors. Entrepreneurs can source glass from both local and foreign glazers.

Paints

Paints are the colourful substances applied to interior and exterior walls of buildings to make them beautiful, enhance texture and protect from cracks, wear and tear. There are paints of all colours and types in the market which typically include : emulsions (water-based paints), matte finish, gloss, varnish, enamel and lacquers. A growing number of local businesses now manufacture paints to compete with dominant foreign brands. We advise that you understand the tastes and preferences of home builders and construction contractors in your area before you go ahead to invest in stock.

A final note…

The materials and products on this hot-selling list are just a handful of the opportunities that exist in building and construction market. Depending on your location and the preferences of home builders and contractors, the types of materials required may differ considerably. It’s important that you study the existing materials and products in your market before you decide on which ones you will start a business around.

John-Paul Iwuoha is chief editor at www.smallstarter.com

Top tips for distributors in frontier markets

Planning on moving goods in Africa? An expert points you to the best path to success. 

Setting up a distribution system in emerging and frontier markets can be a challenging undertaking. Below are a number of issues to consider:

Fragmented markets 
What is the balance between modern and traditional trade? Modern trade (e.g. Shoprite supermarkets) in most African countries, with the exception of South Africa and Kenya, is still in the very early stages of development. The contribution is in the low single digits. Reaching large numbers of traditional outlets (e.g. Mom & Pop, Dukas) is a difficult and costly business.

Product flow and reasons for purchase
How do products flow in the market? Often small groceries purchase product directly from the wholesale channel. The wholesaler is often in close proximity to these outlets (2-5km radius). They provide a basket of goods, and in some cases credit, if they have a good relationship with the small grocery.

Market and key business areas 
Define the key market and business areas. Identify feeder markets and hubs for product distribution.

Regional differences 
Define the regional, urban and rural differences in distribution. 

Channel strategy
How do channels function and operate? Define the key channels, characteristics and key buying decisions.  Are traditional and non-traditional channels well defined?

Outlet base 
In most emerging markets, determining the outlet base can be a challenging undertaking. Companies need to understand both the existing and potential outlet base, including the outlet density. A well defined every dealer survey (EDS) is a key component of any successful distribution strategy.

Territory 
When working with distribution partners, does the distributor have the ability to service the territory? Are routes and maps in place?

Services
Assess the service and delivery for each channel and the service partners. Review the key issues with service and delivery and map out the distribution models employed.

Customer service frequency
What is the frequency of product replenishment and reasons for the frequency? Outlets in emerging markets often have limited cash flow and, in some cases, limited space to stock product. Review the required service frequency and the need for micro supply depots or wholesalers.

3rd Party Logistics 
Where do the 3PLs operate in the country?  3PLs often cover the major roads well. However, in emerging markets they normally have a limited footprint in rural areas.

Selection criteria 
What are the key components of a successful distribution partnership? Many distributors fail because critical components of the selection criteria are overlooked. The selection criteria will likely include important components such as capital, infrastructure, warehousing, transportation and required organisational structure.

Role definition
When working with distributors, are the roles for the company and distributor well defined? It is important to review the organisational structure and how the company will support the distributor. Ensure that each profile (e.g. salesperson) has a clear understanding of his or her role.

Account development
How should account development be managed? This a critical component of any distributor operation. Not all accounts are equal. In most cases, companies need to prioritize and focus their attention on high value or strategic customers. Companies also need to determine how they will split the account development activities between the company and the distributor.

Value chain
Do we understand the value and margin of partner in the system?

Cost to serve 
What is the true cost to serve? The true cost to serve is sometimes underestimated and companies must have a clear understanding of the cost to serve for both the distributor and the company. In many cases in emerging markets, financial cost centers provide limited data and financial modeling is essential to determine the true cost to serve. Many distributors fail because the remuneration is set too low and not adjusted for inflation on a periodic basis.

Low cost distribution
What local distribution solutions exist in the market that can be leveraged? Often small groceries are situated in congested areas, with narrow gravel roads where trucks can’t enter. In these markets you might find pushcarts, trolleys or motorbikes (e.g. Tanzania). Tapping into their distribution structure can lower cost and increase product availability.

Key performance indicators
What are the key performance drivers? By focusing on the key performance drivers of your business, avoid overextending yourself. Sometimes less is more. Include key performance measurements in your business planning process and evaluate on a yearly basis whether you are using these measurements to track and improve your business. There is no point in tracking something just for the sake of tracking.

Processes
Are processes and systems well defined and standardised? Always aim to eliminate non-value adding activities where possible. Standard Operating Procedures (SOPs) simplify your business procedures and help to ensure the same quality in all operations.

Skills
What skills need to be recruited or developed? Emerging market operations often lack critical skills.  It is dangerous to make assumptions about what people can and can not do. For any principal working with a distributor, conduct a skills gap analysis to determine the training recruitment needs.

Complexity
Can the distributor handle the level of complexity in the business? In many cases distributors that distribute all SKUs (Stock Keeping Units) to all channels fail. Always aim to reduce the complexity in the business.

Collaboration
How will the distribution partners share information with the company? Too often critical information is only available at distributor level and not shared with the company. Also consider the role that technology can play in information sharing.

Appropriate technology 
What technology is necessary? Evaluate mid tech solutions and identify the “appropriate technology” for your operation. Don’t overdo it.

Patience
How much time do you have? Ensure you have management buy-in. A Route-to-Market roll-out requires patience and a continuous improvement mindset. Small incremental changes can sometimes go a long way.

Regulatory environment
Review the regulatory environment including cross county or district tariffs where applicable. In some countries distributors and transporters are subject to multiple charges for crossing county borders. Assess transport bands (e.g. times truck can enter central business district) and traffic restrictions.

Culture
What are the culture issues? Take time to understand culture issues and don’t assume anything. Change your thinking when working in other markets.

Take note of the evolution
Are you taking the necessary steps to adapt to change? Too often supply chains in emerging markets evolve without any strategic plan. Modern trade and retailing are expanding and middle class consumers shopping patterns are changing. Consider how these changes in the market will affect your distribution.

This article is supplied by Frontier's content partner, The Supply Chain Lab. 

The Supply Chain Lab is is a group of supply chain improvement specialists with a focus on factory to village supply chain solutions in frontier and emerging markets. The company focuses on strategy, assessments and implementation.

Contact Tielman Niewoudt to learn more about the company's focus areas.

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Free download:  How to source goods in Africa

Water producer's success story in Ghana

Voltic's successful distribution strategy primed it for investment from leading brewing and beverage company, SABMiller.

By Tielman Nieuwoudt

In the early 2000s, Voltic Ghana’s leading bottled water producer faced a common problem encountered by many beverage companies in emerging markets. How to sell water to the bottom of the pyramid (BoP) with hundreds of informal vendors already selling sachets at cut throat prices? The BoP water market held significant potential, but with low prices and little brand loyalty among consumers, it was viewed as a segment with high volume but with very low value. At the time, Voltic’s focus was concentrated on higher income Ghanaians servicing high-end outlets including hotels, bars and restaurants.

Rethink the business strategy

The company clearly had to rethink its business strategy in order to compete. Voltic realized that transporting water from centralized bottling facilities to the respective markets and high traffic areas was costly. Furthermore, with smaller package sizes the transportation cost per liter would increase, as sachets (or pouches) are not really known for stowability. Poor infrastructure and transport utilization in emerging markets likely compounded the problem. So, Voltic took a radical step to decentralize its bottling through more than a dozen franchisees and in the process, brought their water product closer to the market.

Selecting the right partners and sharing cost

Franchisees are local entrepreneurs with the ability to invest and grow the business. This includes bottling (including quality control) and distribution. In this partnership, Voltic pays for just over half the capital cost, with the rest of the costs covered by the entrepreneur. Voltic and the franchisees split the operating margin.

Branding and pricing

Voltic introduced a new brand called Cool Pac and priced it at a slight premium above the numerous informal competitors. In the BoP segment where water functions more as a commodity, Voltic changed all of that with a strong emphasis on the brand and quality. Even though Voltic outsourced bottling and distribution, the company maintains close control over all brand building activities.

Route-to-Market

The sachets are distributed using a network of informal street hawkers. Sachets (500ml) are sold to consumers for $0.03 per sachet  on a cash and carry basis. Today more than 10,000 street hawkers sell nearly 480,000 Cool Pac sachets daily.  Following Voltic’s success, in 2009 Voltic was acquired by SABMiller.