Anzisha Youth Entrepreneurship Survey 2016 fileEntrepreneurship has an important role to play in creating ... With a relatively small sample size of 101, the survey does not purport

Anzisha YouthEntrepreneurship

Survey 2016

www.anzishaprize.org

Anzisha YouthEntrepreneurship Survey 2016

1. Introduction

2. Executive summary

3. Respondentprofile

4. Growth

5. Salesandmarketing

6. Human resources

7. Funding

8. Support

Table of contents


2


Africahastheyoungestpopulationintheworld,withanestimated200millionpeoplebetweentheagesof15and24,accordingtotheAfrican Economic Outlook report. But despite fast economic growth overthepastdecade,manyyouthsstillstruggletofindproductiveemployment.Unlesstheseyoungpeoplecanbeputtomeaningfulwork,thedemographicdividendcaneasilyturnintomassfrustrationandunrest.Entrepreneurshiphasanimportantroletoplayincreatingemployment. Thegoalofthe Anzisha Youth Entrepreneurship Survey 2016 is to pro-videasnapshotoftherealitiesfacingyoungentrepreneursinAfrica.Itfocusesonfiveareasofoperatingabusiness,namely(1)Growth,(2)Salesandmarketing,(3)Humanresources,(4)Fundingand(5)Sup-port.Itisintendedthatstakeholderssuchaspolicymakers,supportorganisations,andentrepreneursthemselveswillbenefitfromtheseinsights.Witharelativelysmallsamplesizeof101,thesurveydoesnotpurporttobeascientificstudy.However,theresultscanbeseenasindicativeofbroadertrendsandattitudes.

Introduction 1

Methodology

The Anzisha Youth Entrepreneurship Survey 2016 isbasedonanemailedquestionnaireansweredby101youngentrepreneurslocatedacrossthe continent. Respondents were within the 15 to 25 age group at the timeofcompletingthesurvey,althoughthemajorityedgedtowardstheupper-endofthisbracket.Allquestionnaireswerecompletedbetween3Septemberand25November2015.


Executive summary 2

3

· Those who participated in the survey are confidentaboutthefuture.Morethanthreequarters are“verypositive”(79%),while21%are“somewhat positive”abouttheoutlookfortheirventures.Noneex-pressed any negative sentiments.

·Fundingisbyfarthegreatestimpedimenttogrowth,with48%ofrespondentshighlightingitasthebiggestobstacletoexpandingtheircompanies.

·Only14%ofrespondentscurrentlydobusinessinterna-tionally,indicatinganuntappedgrowthopportunity.

·Whenitcomestomarketingtheirbusinesses,youngentrepreneursinvestinpaid-foradvertisementsonsocialmedianetworks(58%),aswellasexhibitionsandevents(50%).However,word-of-mouth(83%)isbyfar themostpopularmarketingmedium.Relativelyfew makeuseofmoreexpensivechannelssuch astelevision(10%),outdoor(17%)andradio(18%).

·Intermsofhumanresources,employeecost(43%)isthebiggestchallengefacingyoungentrepreneurs, followedbyalackofadequately-skilledtalent(20%), motivatingstaff(12%)andattractingtalent(10%).

·YoungCEOsrewardandincentivisetheiremployees inavarietyofways,withtrainingprogrammes(51%), bonuses(47%)andgifts/daysoff(43%)beingthemostpopular.Alargepercentagealsoallowtheiremployeestoparticipateinthesuccessofthebusinessthroughprofitshare(37%)andequitystakes(22%).

·Only27%ofrespondentshavesecuredoutsidefunding/investmentfortheirbusinesses.Familyandfriends(59%)arethetopsourceofcapital,inadditiontogrants(52%)andcrowdfunding(22%).Themajorityofthosewhohavenotsecuredoutsidefundingsaiditisbecausetheydon’tknowhowtofindpotentialbackers. ·Over50%indicatedtheydohaveapartnerinthebusi-ness,andinmanycasesmorethanone.Thetopreasoncitedfornothavingabusinesspartneris:“Ihaven’tbeenabletofindsomeonesuitable”(46%).

· Respondents receive support and advice from a variety ofsources,suchasnetworkingevents(64%), mentors(62%),trainingprogrammes(54%)and onlineresources(52%),tonameafew.

·Themajoritydescribedthelevelofsupportavailabletoentrepreneursintheircountryas“fair”(43%).However,24%and17%labelledthesituationas“poor”and“verypoor”respectively,suggestingsignificantworkremainstomakeiteasierforyoungbusinesspeopletosucceed.

·Whenaskedwhatshouldbethetoppriorityforgov-ernmenttobettersupportyoungbusinessowners,themajoritysaidthatentrepreneurshipshouldbetaughtinschools(32%).Thesecondmost-popularsuggestionwastoimproveinfrastructure(20%),followedbytheintroduc-tionoftaxincentivesforyoungentrepreneurs(14%).



Respondent profile 24 Nigeria

13 Kenya

4 Ethiopia

6 G

hana

2 Iv

ory

Coas

t2 Morocco

2 Eg

ypt

8 Ugand

a

6 South Africa

1 Namibia

1 Lesotho

2 To

go

1 Angola

1 Tu

nisia

4 Ca

mer

oon

1 Bu

rund

i

6 Zimbabw

e

3 Malaw

i

3 D

.R. C

ongo

3 Rw

anda

4 Zambia

4 Ta

nzan

ia

Gender representation

Male Female

81% 19%

In what sector do you operate?

15% Agriculture

15% Education

15% Technology

8% Social upliftment

7% Business services

6% Media & marketing

6% Fashion & art

5% Consumer products

5% Environmental

5% Healthcare

4% Finance

4% Energy

3% Construction

2% Tourism

Whydidyoubecomeanentrepreneur?

57% To make a difference in the world

15% To take advantage of an opportunity

12% To leave a legacy

9% Other reason

6% To take control of my own destiny

1% To become wealthy

3

4



Followingyearsofrapideconomicgrowth,manyAfricancountries arefacingheadwindsintheformoffallingcommodityprices,lessaccommodativeglobalfinancialconditionsandastrongUSdollar.However,theentrepreneurswhoparticipatedinthesurveyareover-whelminglyupbeataboutthefutureoftheircompanies.Some79%indicatedtheyare“verypositive”,whiletheremaindersaidtheyare“somewhatpositive”.Noneexpressedanynegativesentiments.

Fundingisbyfarthegreatestimpedimenttogrowth,with48%ofrespondentshighlightingitasthebiggestobstacletoexpandingtheircompanies.Interestingly,only3%ofrespondentscitedtechnologicalchangeaffectingtheirindustriesasthelargestchallenge.Thisissur-prisinggivenhowtechnologicalinnovations–suchasAirbnbandUber–aredisruptingtraditionalindustriesacrosstheworld.

Growth

Funding 48%

9%

7%

6%

5%

5%

4%

3%

3%

3%

3%

2%

2%

Economic climate

Marketing

Access to market info

Managing HR

Other

Managing growth

Competition

Regulatory compliance

Sales

Technological change

Ability to innovate

Attracting talent

Whatisthebiggestchallengetogrowingyourcompany?

4

5

Whattermbestdescribesyouroutlookforyourventure?

Very positive

Somewhat positive

Somewhatnegative

Verynegative

79% 0% 0%21%



Thevastmajorityofthosesurveyedarecurrentlyonlydoingbusinessintheirhomemarkets,thereforemissingoutonregionalandglobalopportunities.Only14%indicatedtheyexporttheirproducts/services.Thissuggestsaneedtomakeyoungentrepreneursmoreawareoftheopportunitiestoselltheirproducts/servicesinternationally,especiallyin other African countries. With initiatives such as the Tripartite Free TradeArea,momentumforgreaterregionalintegrationisgatheringsteam,anditislikelytobecomeeasierforAfricancountriestotradewith one another.

Whilemanyentrepreneursdreamofonedaysellingtheirbusinesses,68%ofthosewhoparticipatedinthesurveyhavenosuchintentions;14%indicatedtheyareunsure.

Areyourproducts/servicessoldinternationally?

14% Yes 86% No

Doyouplanonsellingyourcompany in the future?

18% Yes 14% Not sure68% No

6



Some56%ofrespondentsuseface-to-faceclientvisitsastheir primarysaleschannel,followedbyonline(24%),walk-ins(11%),directcustomerenquiries(7%)andtelephonesales(2%).

Almostthreequarters(73%)indicatedtheydon’temploycustomerrelationshipmanagement(CRM)software,highlightinganopportunitytooperatemoreefficientlybyutilisingtechnology.

Word-of-mouth(83%)isbyfarthemostpopularmarketingmedium.Ascouldbeexpected,giventherelativelysmallsizeofthebusiness-essurveyed,moreexpensivemarketingchannelssuchastelevision(10%),outdoor(17%)andradio(18%)arelessutilised.

Theseyoungentrepreneursdo,however,makeuseofpaid-foradver-tisementsonsocialmediaplatforms(57%)aswellasexhibitionsandevents(50%).

Sales & marketing

Whatisyourbusiness’sprimarysaleschannel?

56% Face-to-faceclient visits

24% Online

11% Walk-incustomers

7% Customerenquiries

2% Phone sales

Almost three quarterssurveyed said they don,t use any CRM

software .

5

7



Whichofthefollowingmarketing platformsdoyouuse?

83%

57%

50%

30%

24%

22%

18%

16%

10%

17%

Word of mouth

Paid-for social media

Expos & events

Direct mail

Print advertising

Professional PR

Radio

Outdoor

Google AdWords

Television

8



Thebulkofrespondentsemployrelativelyfewpeople–56%haveonetofiveemployees,while19%hiresixto10people.Some16%havenoemployees.

Employeecost(43%)isthegreatestobstaclefacingentrepreneurswhenitcomestohumanresources.Thisisunderstandableasthema-jorityofcompanieswhichparticipatedinthesurveyarelessthanfiveyearsold,andthereforelesslikelytohavetheresourcestohiretoptalent.Alackofadequately-skilledtalent(20%)isthesecondbiggesthurdle,followedbymotivatingstaff(12%)andattractingtalent(10%).

Human resources

Howmanyfull-timeemployeesdoyoucurrentlyemploy?

16%

19%

8%

1%

0%

56%

No employees

1-5 employees

6-10 employees

11-20 employees

21-100 employees

100+ employees

Howmanyemployeesdoyouexpectto hire in the next two years?

17%

22%

19%

22%

10%

10%

1-5 employees

6-10 employees

11-20 employees

21-50 employees

51-100 employees

100+ employees

6

9



YoungCEOsrewardandincentivisetheiremployeesinavarietyofways,withtrainingprogrammes(51%),bonuses(47%)andgifts/daysoff(43%)themostpopular.Arelativelylowpercentagecontributetomedicalaid(14%)andpensionschemes(3%).Overathird(37%)indi-catedtheyshareprofitswithemployees,while22%haveprovidedanequitystakeintheircompanies.

Whatisthetopchallengeyoufaceinterms of human resources?

43% Employee cost

6% Unfavourable labour regulation

9% Retaining talent

10% Attracting talent

20% Lack of adequately-skilled talent

12% Motivating staff

Mostpopularformsofemployeebenefits,rewardsandincentives:

51% Training programmes

47% Bonuses43% Gifts/days off

37% Profit share

30% Certificates

22% Equity stake

14% Medical aid

5% Other 3% Pension

10



Only27%ofrespondentshavesecuredoutsidefunding/investmentfortheirbusinesses.Familyandfriends(59%)arethetopsourceofcapital,alongwithgrants(52%)andcrowdfunding(22%).Bankloans(4%)aretheleastcommon,trailingventurecapital(7%),angelinvestors(11%)anddevelopmentfinanceorganisations(11%).

Thetopreasonfornotsecuringoutsidefundingis:“Unsurehowtosourcefunding”(32%).Thishighlightsaneedforgreatersupporttoed-ucateyoungentrepreneursonavailablefinancing/investmentoptions.Some28%ofrespondentssaidtheyhaveapproachedfinanciers/in-vestors,buthadnosuccess.

Funding

What are the main reasons you have not secured outside nvestment?

32%

28%

16%

14%

5%

5%

I value ownership over investment

Bootstrapping without investment

I don’t want to take on debt

No-one willing to back me

Unsure how to source funding

Other

Fromwhichofthefollowingsourceshaveyoureceivedfunding?

59% Family & friends

52% Grants

22% Crowdfunding

11% Angel investors 11%

Private equity

7%Venture capital

4% Bank loan

11% Development finance organisation

7

11



Withoutbusinesspartnersandothersupportstructures,entrepre-neurshipcanbealonelyworld.Some54%oftheentrepreneurssur-veyedindicatedtheydohaveapartnerinthebusiness,andinmanycasesmorethanone.Thetopreasoncitedfornothavingabusinesspartneris“Ihaven’tbeenabletofindsomeonesuitable”(46%),fol-lowedby“Iprefertogoitalone”(19%)and“Theopportunityistoosmalltoshareprofitswithothers”(15%).

Respondentsalsoreceivesupportfromavarietyofothersources,suchasnetworkingevents(64%),mentors(62%),trainingprogrammes(54%)andonlineresources(52%),tonameafew.

Support 8

12

54% of recepients have a partner who owns a stake in the business

What is the main reason why you don’thaveapartner?

I fear that we won’t get along

Other reason

Profits too small to share with others

I prefer togo at it alone

Lack of suitable partners 46%

19%

15%

11%

9%

Whichofthefollowingprovidesupportforyourbusiness?

64% Networking62% Mentor

54% Training programmes52% Online resources

23% Business incubator

15% Business coach

6% None



ContrarytoconventionalwisdomthatthereislittleassistanceforyoungentrepreneursinAfrica,themajoritydescribedthelevelofsupportavailableintheircountryas“fair”(43%).However,24%and17%labelledthesituationas“poor”and“verypoor”respectively,meaningsignificantworkremainstomakeiteasierforyoung entrepreneurs to succeed.

Whenaskedwhatshouldbethetoppriorityforgovernmenttobet-tersupportyoungbusinessowners,themajoritysaidthatentrepre-neurshipshouldbetaughtinschools(32%).Thissuggestsmanywereill-preparedfortherollercoaster-worldofentrepreneurship. Thesecondmost-popularsuggestionwastoimproveinfrastructure(20%),followedbytheintroductionoftaxincentivesforyoungentre-preneurs(14%).

Howwouldyoudescribethelevelofsupportavailabletoyoungentrepreneursinyourcountry?

3%Very good

13%Good

43%Fair

24%Poor

17%Very poor

13

Whatshouldbethetoppriorityforyourgovernmenttobettersupportyoungentrepreneurs?

32%

20%

14%

12%

9%

5%

8%

Entrepreneurship taught in schools

Improve infrastructure

Tax incentives for young companies

Reduce red tape

Improve regulatory environment

More support from trade agencies

Other



TheAnzishaPrizeisthepremierawardforAfrica’sbest young entrepreneurs. The Prize is managed out of the African LeadershipAcademy’sCentreforEntrepreneurialLeadership,

whichwasestablishedthroughamulti-yearpartnership withTheMasterCardFoundation.


Thisreportwasproducedincollaborationwith

MaritzAfricaIntelligence.

www.maritzafrica.com

About the Anzisha Prize

Documents

Anzisha Youth Entrepreneurship Survey 2016 fileEntrepreneurship has an important role to play in creating ... With a relatively small sample size of 101, the survey does not purport