How to choose an expansion location for your business in Africa
A business that's performing well in its own country of origin is very likely to start eyeing international markets where it can expand even further; it is a logical step for most. However, there are multiple components to consider: Will the chosen location for the expansion have a demand for a fresh service or product in this niche? How could the political and financial environment impact overall operations of the business? Does it make sense to register an entity immediately?
Assessing these considerations will contribute to wise decisions towards the expansion on the African continent. Ultimately, choosing the 'right' location to set up your operations will definitely impact the return on investment you make.
Here are some pro tips on how to choose the best possible location for your business in Africa.
Tips to choose an African expansion location
Tip 1: Consider the political and financial situation of the location
When expanding into a new market, it is crucial to have a solid knowledge of the political structure and economical environment of country you have chosen for your business expansion. This will mitigate certain risks and ensure your Organisation is compliant to local laws.
While every international growth strategy differs, it is always a good idea to verify the following:
- Will you have access to all materials and resources you need for production?
- Are there any regulations in place concerning the import of raw materials if necessary?
- Does the location's government have any business assistance programs in place?
- Does your finished product or service meet the needs of the local market?
Some businesses may find it hard to answer these questions, especially when considering there often is a lack of information available online for different African locations. If this is the case, consider turning to business specialists in Africa (such as Africa HR Solutions) to find your answers.
Tip 2: Check if the location has the required 'talents' for your business
Another critical element when expanding to a foreign location is knowing whether the locals will make decent employees. The manpower needed to effectively run your production line will vary according to which vertical you are in, but it is essential you sort this out before starting your expansion process. This way, you will be able to figure out if your future employees will require any sort of specific training, or if they already have the skills required to handle the job.
Moreover, it is important to check out the salary ranges for the different positions you may want to fill. While most of the time employing a local on the African continent may cost lower than taking on an Expat, it is worth verifying salary surveys to avoid any unexpected surprises. Additionally, this step will help you better budget your expenses and you may even find yourself in the local government's 'good books' if you will be providing long term local employment.
Tip 3: Consider the right legal steps according to your timeframe
Setting up a registered entity in a new market may not be as easy as it seems, especially on the African continent. Luckily, this is not the only option available: you can use an Employer of Record instead.
Your ultimate decision should be based on what your business objectives are and what time-frame you have at hand. Depending on the country of expansion, it may take months to finally get your entity approved and registered. On the other hand, using a PEO service can get you up and running within weeks. This also allows you to 'test' a new market with minimal investments.
In the end, it all comes down to your business situation: your finances, your timeframes, your requirements and your objectives. It is worth considering both sides of the coin before taking a step ahead.
Tip 4 (Bonus): You don't have to expand alone
Africa HR Solutions offers a full range of business services dedicated to Organisations looking to get a footprint in Africa.
You can get a definite advantage over the competition by using our services.
- Simplest and fastest way to hire people without having a registered entity
- We manage the payroll and employment duties
- Single solution for all your HR requirements in Africa & a central point of contact for all your queries
- Always available for your queries and reports
- Full compliance with local legislation’s – expert across Africa
- Centralising of payroll functions
- Team dedicated to quality and flexibility to meet your requirements
- Up to date statutory changes through multiple sources
- Professional indemnity and employer liability
