Small businesses still go global
“All failure is failure to adapt, all success is successful adaptation.”- Max McKeown
Coca Cola is probably sold in every store in your neighbourhood; served at every party along with its counterparts, Fanta and Sprite. These drinks are preferably the go-to drink for most people on a good or bad day particularly Coke, its vibrant red logo recognized by 94 percent of the world’s population (according to Business Insider). You will find it at any food outlet, from the bukkas by the roadside to the most luxurious restaurants around the world. This drink, present in more than two hundred countries and five operating regions from Asia, the Middle East to Europe and Africa has been around for 133 years.
In 2018, The Coca Cola Company raked about 31.9b dollars in revenue. Recognized as a top ten private employer, providing a means of livelihood to more than 700,000 people – for a business that was started as a concoction experiment and has survived different strategic transitions, we can say that The Coca Cola Company is a testament that small businesses can go global.
For a local business, the Nigerian situation inhibits its chances of survival; talk more of one whose intent is the expansion to surrounding cities and other parts of the world. There are the problems of lack of infrastructure; high exchange rate; new taxes being introduced every other day; restricted access to capital or credit; expatriate competition and so on. In spite, we still see other brands which have emerged from the country pushing through these challenges while spreading to reach other parts of the world. Jumia is an example.
Recently, Jumia became the first tech startup from Africa to be listed on the New York Stock exchange. This leading e-commerce rooted in Lagos started in 2012 and now operates in thirteen other emerging African countries. The company currently enjoys 15m monthly visitors on its website and over ten thousand active vendors listing six million products. In 2018, Jumia processed more than 13 million packages generating 147million dollars.
Although there been a consistent increase in its revenue over the years, the company is yet to make any profit. An explanation for this may be that the company has had to build its own surrounding infrastructure from scratch since inception, bearing huge startup costs. However, they enjoy investor confidence from some of the biggest companies like MTN, Goldman Sachs, Orange, Rocket Internet, AXA, etc. posing a strong indication of potential. This company originally co-founded by Tunde Kehinde, Raphael Afaedor and Sacha Poignonnec reportedly started with less than 10 staff. Seven years later, it boasts of a 4000 staff strength who are working towards making shopping easy and convenient by utilizing the internet to connect consumers with sellers.
A company looking to gain new markets will enjoy increased revenue in terms of sales from new consumers. More so, expanding to emerging markets especially where there is the first mover advantage allows a business to have an edge over its competitors. It can then be able to diversify its assets mainly when it has to counterbalance a negative growth in a different market to protect its bottom line. There is also access to rich human capital; these talents whose unique skills, experiences and educational background if properly utilised can shoot a business upward in a shorter time period. Nonetheless, such a company needs to conduct due diligence on the market it intends to operate in. Its leaders should know the risks involved.
Are there government policies that could impact on your business? How do you adapt your products to local needs such that are suitable to your key market? What constraints are you likely to encounter and how does it plan to overcome them? How it plans to reach its target market in the new country. Would it rather partner with existing businesses within the country? It is important to have a viable approach before accessing this new market as this will ensure there is clarity and that the most crucial tasks are taken care of before committing time and resources.
Another important point to consider is the legal impacts of doing business in this new country. Are there regulatory or industry-specific requirements that may pose barriers? What are the local law regarding taxes, restrictions, trademark requirements, incorporating or dissolving a company? What about labour laws, including laws concerning the type of goods or services such company plans to introduce? Is there any licensing that may be required? Doing business in some countries can be highly litigious, hence it is very crucial to have strong legal back up that will help reduce unnecessary commercial risks.
Attaining a global brand status positions a business for even more rewarding international partnerships. Nevertheless, the many advantages of this feat will only be realised if an intending business has a working strategy. In their quest to expand, founders should not neglect virtues like persistence and patience because the journey is an adventure. Successful entrepreneurs who have gone ahead have similar stories of their doggedness and grit amidst many challenges. Sometimes they have had to change strategy, other times they have had to evolve. Like the Coca Cola Company and Jumia, the story of Dangote Group also paints a succinct picture of the kind of growth that is attainable.