The challenges of starting a business at 24
- 17 January 2012
- From the section Africa
When Ghana's Kofi Dadzie first thought about the impact that the marriage of information technology and business could have in Africa, he realised that it would offer some opportunities too good to miss.
It was in the late 1990s. He was in the United States, studying at Vanderbilt University in Nashville, Tennessee, and after a summer internship he started to reconsider his dream of becoming a mechanical engineer.
On second thoughts, he decided to get a degree in computer engineering instead.
"I was just very excited about what I felt that could be done back home," he told the BBC's series African Dream.
Today the company that he started in 2001 with his business partner Ehizogie Binitie, Rancard Solutions Ltd, is considered one of the leading IT firms in West Africa.
Last year, Rancard Solutions was selected as one of the top 15 companies of the continent during the Africa Awards for Entrepreneurship, out of 3,300 candidates.
The firm has now offices in Ghana and Nigeria and mobile service delivery in 32 markets in Africa, the Middle East and Asia.
It develops software and services that clients such as Vodafone, Tigo, Google and Voice of America use to communicate with mobile phone users.
Too young for business?
Mr Dadzie was 24 when he started the company and, according to him, sometimes his age "could be a bit of a barrier".
"The way we held ourselves up and the way we communicated helped people who would be challenged by how young we looked get around that, but there were some cases where people made comments that suggested they believed or wanted to believe we were much older than we were," he said.
He said that it seemed difficult for some of his first clients to accept the idea that he was probably 15 years younger than themselves and they had to sit at the same table and sign a contract.
However, in his opinion, being very confident helped him break the ice.
"To be honest, the most fundamental hurdle was our own lack of management experience because when we look back now, we realise that everything we did over those years we could have performed three to five times better with stronger marketing and stronger management and, as an entrepreneur, that has been the most significant lesson," Mr Dadzie said.
The learning curve included transforming the focus of his senior team from pure engineering to business management.
"We're business managers now and we're constantly looking at what it means to effectively market and manage what we're doing," he explained.
"We think that was more important than the infrastructure challenges because a strong management team will meet an obstacle and will develop a way around it. So the obstacles won't be our excuses for our past performance, in our earlier years, compared with how much better we are performing now."
'Learn the system'
Rancard Solutions' starting capital was raised at a family level and "ran out early", according to Mr Dadzie.
"There wasn't a venture capital industry locally and, in my opinion, there still really isn't, it's nascent," he said.
"So, as the business matured - that is necessary for the banks to do anything with you in this part of the world - we started accessing short-term credit financing with the banks at tremendously high interest rates, and so that's what it's been."
However, Mr Dadzie believes that entrepreneurs should not spend their energy battling against the system.
"Learn the system and apply yourself to it. Understand your marketing, understand your accountant, understand ethics and understand operations because you've got to be able to manage yourself, your people, your market and your product," he suggests.
Another of his tips to aspiring business people is that they should start developing as quickly as possible a client base.
"It's very important to get one or two clients, even if it means to get some things in pro bono, just so you can develop some track record before you start generating some revenue.
"Once you can show some revenue stream and you can show some visible client list then people have a little bit more confidence that you've entered the system and therefore they can operate with you. It's a thing about transparency."
Having said that, Rancard's managing director warns budding entrepreneurs to avoid starting too quickly.
"Spend a whole lot more time planning and understanding your market, and keep redeveloping your market and planning strategy until it makes sense in numbers - that is until you can clearly see that with X amount of money in Y time I can break even. Don't start until you figure that out," he said.
"Secondly, get a good team. It's the structure of management, the structure of the business plan. Get those right. There will always be market demand for something good and something better. There is never a reason to rush ahead of preparation."
African Dream is broadcast on the BBC Network Africa programme every Monday morning.
Every week, one successful business man or woman will explain how they started off and what others could learn from them.