Running or managing a business in Africa is not for the faint-hearted, it’s a lot like digging for gold.  To put this in context, Nigeria Africa’s largest market is ranked 131 in the ease of doing business, according to World Bank’s Doing Business 2020 index. It is a market that even the bravest of entrepreneurs and investors still struggle to understand or navigate.

Today we’ll share an insight we’ve shared with some of our clients, this insight has enabled them to navigate difficult times.

So let’s begin. Have you ever wondered why we have so many airtime recharge voucher sellers but only 4 major telecoms companies?  Or why it is easier to import and market cell phones than it is to set up a phone manufacturing company?

Think about it, if it was easy, everyone would have done it, but the reality is that for every industry, there will always be a barrier to entry.

UNDERSTANDING THE BARRIERS TO MARKET ENTRY

Barriers to entry in any market are the major obstacles that make it difficult for entrepreneurs to start or grow their business in a given market.

  • A barrier may be securing the necessary certification or navigating your way through complex government regulation such as tax policies or raising enough startup capital for your business to launch and thrive. It could even be that you need to build or acquire a certain type of technology or secure a patent to bring your product to market.
  • For some businesses, it may be that the economies of scale apply significantly which means that they can only break even if they produce in large quantities.
  • For others, they need a reliable supply chain network that guarantees efficient access to suppliers and distribution channels from day one to succeed, or the industry they are in, is already so competitive that they require a stronger or unique selling point to be able to respond to the competition.
  • For some, it may be that they need to acquire top talent to power their business operation but they are operating in an industry with a shortage of skilled talent… the list can go on.

In summary, there will always be barriers… and the reality is that the larger the market opportunity, the tougher the barriers and hurdles an entrepreneur will likely encounter. These hurdles are constant and they affect all players in any given market.

What this means is that whatever difficulty you may be experiencing in your business, you are not alone, your competitor is experiencing something similar or may have experienced something similar in the past.

What then is the winning formula to scale these barriers?

STRATEGIC INSIGHT- IT IS ALL ABOUT PERSPECTIVE.

The principal strategic insight here is that you are not just competing in your industry for clients and customers or who can capture the largest market share, but you are actually competing on who can surmount the unique barriers to entry for your industry.

You are competing on who can raise more money before they run out of cash, who can get that government certification faster, who can grow their distribution channels faster, who can recruit the best talent etc.

In every market, there are those who succeed and those who don’t. Winners or losers in any market are decided by those who surmount the barriers unique in their industry better and faster than their competitors.

The key differentiating factor that separates winners and losers in any industry is perspective. It has a lot to do with how they see and react to these barriers to entry irrespective of their industries.

LOSERS see these barriers as a challenge, as a problem they have to surmount.

WINNERS, on the other hand, see these challenges as an opportunity, they understand that their success depends on their innovative ability to surmount these barriers better than their competitors. So they embrace the hard and turn these challenges into their competitive advantage.

Which category do you belong to?

Nigeria has been projected to be among the world’s top ten economies by 2050 with her GDP pegged at $3.3 trillion. Entrepreneurs who are able to brave the storm stand a chance to profit immensely from this market.