Doing Business in South Africa: Call Him Mr. Flexible
If one of the keys to entrepreneurial success is flexibility, Greg Marchand could be a yoga master.
The demand for IT products in South Africa is solid? No problem, move there. The demand in Zambia is also great with less competition? OK, let’s go there instead. Global recession is making tapping into lines of credit harder and costlier? All right, we’ll focus on servicing where overhead is lower and work doesn’t begin until we get a down payment.
The 34-year-old is founder and managing director of Gizmos LLC, a communication, computer and technology company that supplies hardware, software, enterprise solutions and IT support to members of the Zambian business, government, development and diplomatic community. Their customers include MTN Group, a South Africa-based multinational mobile telecommunications company, UNICEF, United States Agency for International Development (USAID), the government agency providing US economic and humanitarian assistance worldwide.
Based in Lusaka, the capital and largest city of Zambia with over 3 million people, the company is projected to earn over $1 million in 2010.
At the age of 29, while working at Deloitte Consulting LLC, a global consulting and accounting firm, Marchand decided he wanted to start a business of his own. So he took a leave of absence from the job, did some research, met people and traveled to Western Europe and Africa with the intent of becoming an entrepreneur. He identified a need for IT products and services in Sub-Saharan Africa.
“My mentors liked the idea of doing IT in Sub-Saharan Africa but the advice was ‘Don’t do it in South Africa’ because I’d have to compete with everyone here who is every well established,” the Chicago native told me while visiting Johannesburg for a business conference. “So my theory was to go to a smaller market that I didn’t need as much investment capital to penetrate and that I’d just build there.” He did the homework, found a local partner (a Zambian guy who went to school in Atlanta) and secured investment from friends and family and packed his bags for Zambia. Six months later and Gizmos was a reality.
The company generated about $900,000 (U.S.) last year, but it wasn’t without its share of challenges. Since access to credit became harder and more costly due to the recession, over the last year, Gizmos moved to business lines that are more service oriented, like instant card issuances—debit and credit card issuances. These things don’t require the company to pay for equipment upfront and wait 30-60 days for reimbursement from clients. As Marchand related, “Until they sign a purchase order and give us a down payment, we don’t have to do anything.”
Travel: Make a plan for what you want to learn. Study the market. A good place to start is the CIA World Factbook (https://www.cia.gov/library/publications/the-world-factbook/) which offers information on every country. Find out when there’s business conference there and attend it for networking and fact-finding.
Meet the locals: Speak with people in the financial community to see where the investment and opportunities are. Get the pulse of the business climate by speaking with local businesspeople.
Tap the alumni: Check with your college’s alumni association to see if there’s any living in your country of interest.
Just keep in mind that doing business in Africa shares some of the rules of doing business stateside—your business plan should be adaptable and malleable. Just like the yoga master’s.