I love following development and inspiring stories from Africa, by Africans. Such stories not only put a stamp into the Africa Rising narrative but are also an encouragement to budding leaders in business and in other focus areas.
I first bumped into the story of two brothers- Ngozi and Chijioke Dozie and their Café Neo business while watching CNN’s Africa Start-Up last month. I was intrigued by how they have transformed their coffee shop into what they call a “‘third space’, where customers can escape, meet like-minded dreamers and create great things.”
Lately though, several coffee shops have sprung up to tackle a growing need for the product among business people, expats and well traveled professionals who are mainly found in cities, and major towns across Africa.
Their intention is not to just create coffee chains across Africa, but it’s more about “building communities around powerful ideas, with strong links to entrepreneurship, creativity and innovation,” a statement reads on Café Neo’s website. Their business model like those set up in Cape Town’s Woodstock or Silicon Valley – is a world-class African coffee- with a modern approach (music, free wifi, workspaces, working environment), which is captivating to corporate and business people.
For the past four years, the business has grown to seven separate stores and six office locations in Lagos. They have also franchised the business in Ghana and Côte d’Ivoire.
From their inspiring story, here is what you learn as you embark on establishing or advancing your venture to the next level.
Opportunity knocks once
According to Ngozi, he lost his job as an investment banker at a major financial firm JPMorgan Chase & Co. in 2008. His brother Chijioke had just completed an MBA at Harvard, and they were both ready to come back home to Africa to invest in their own venture.
They carried out thorough research and settled on investing in collapsing African companies- and that is how they settled on a Rwandan coffee roasting company.
It is during the process of finding new markets for their product that they realized they couldn’t sell much coffee locally as they wanted. They saw potential in starting their coffee shop which has since grown into chains of outlets in Lagos, and they plan to expand to other countries in the future.
Even before they embarked on a venture, the two brothers carried out an investigation into what kind of business would flourish.
According to Ngozi, at the time they were thinking of coming back to Africa “a lot of money was running into private equity in Africa, but the opportunity that was being ignored was good companies with bad balance sheets.” This is what they went for.
“In the West… these companies can just negotiate a bankruptcy package with equity shareholders. But in Nigeria and, for the most part, everywhere else in Africa, there was no bankruptcy or insolvency structure. So you would have good companies that once they had gotten into a bit of trouble, inevitably fall down and die.”
Read/project future market trends
One of the major challenges that Neo Café experienced in the face of failing Nigeria’s economy, like many other companies in the region, is the reduction of oil prices.
“I think one of the biggest mistakes entrepreneurs do is they divorce the macroeconomic indices from their microenterprise. So they go along thinking everything is going to stay great, but then the economic winds change… And that is a mistake we have certainly made and others have as well.”
The weakened naira has made it costly to import coffee and machines. Ngozi noted that had they known earlier, they could have “potentially borrowed locally to buy machines, and just stocked up on machines and coffee. We would have saved a lot of money.”
Their advice to aspiring entrepreneurs is to avoid being caught up in a media hype especially in the beginning of a unique business and not being prepared for the worst.
Do you have a business model or strategy that has worked for you? Feel free to share with us about your venture and your unique style.
Image credit: ©Pius Utomi Ekpei (AFP)