With a net worth of $16.5 billion, Aliko Dangote, of Lagos, Nigeria, is the richest black man in the world. To get a sense of just how staggering that figure is, consider that Dangote’s fortune is 2.9% of Nigeria’s gross domestic product. For comparison, the richest man in American history, John D. Rockefeller, had a net worth of 1.5% of the U.S. GDP in 1937. Take it a step further, and if an American had a net worth of 2.9% of the U.S. GDP today, that person would be worth $500 billion. The Dangote Group, whose core business focus is to provide local, value-added products and services that meet the basic needs of the Nigerian population, has grown by leaps and bounds and has presence in 16 African countries. In 2000, the Dangote Group acquired a cement company from the Nigerian government, and by 2003, Dangote was ready to expand the business by combining a $479 million loan with $319 million of his own money to commission the largest cement plant in sub-Saharan Africa. Today, Dangote Cement Plc is valued at roughly $14 billion, which makes it the largest company on the Nigerian Stock Exchange and accounts for 25% of the exchange by market capitalisation. It’s also happened by way of multiple expansions at Dangote Sugar, which has grown to become the second largest sugar refinery in the world.
How does someone build such a massive net worth built, and what lessons can we learn? For anyone who values financial security, starting and succeeding in business is a necessity . With the current economic trend, high youth unemployment and inflation rates, creating multiple streams of income should be the desire of anyone who truly seeks financial freedom and overall success in life. The good news is that there greater opportunities to create wealth globally and especially in the thick of an economic downturn . From manufacturing to retailing, embracing services and entertainment all the way through to ICT sectors of the economy, a new breed of African entrepreneurs are emerging, creating small, medium and large scale enterprises. Swimming against the tide of events, these young entrepreneurs are growing businesses that contribute to the GDP of their economies not minding the numerous challenges the continent is contending with.
Questions ranging from Should I start a business and which one? How do I raise the much needed capital and how do I start and grow a successful business are uppermost in the minds of most people who desire financial liberty.
History has shown that the best way to succeed in business and indeed anything in life is to learn the lessons and secrets of business and life success from successful entrepreneurs and mentors who have gone ahead. According to Africa’s richest man, Aliko Dangote of Nigeria ‘I built a conglomerate and emerged the richest black man in the world in 2008 but it didn’t happen over night. It took me 30 years to get to where I am today. Youths of today aspire to be like me but they want to achieve it overnight . Its not going to work. To build a successful business you must start small and dream big. In the journey of entrepreneurship , tenacity of purpose is supreme’. According to Dangote starting and growing a business takes vision time and effort.
Below are my thoughts on how to engineer better outcomes in your business ventures using the Aliko Dangote model.
1.He started early
Dangote’s business acumen could be traced back to the age of 10, when he started buying and selling sweets. He knew what he wanted early and continued along the same trajectory by studying business in the University. He surrounded himself with people who were in business and as a result had “hands on” experience in the business world. If you do not have such a people in your immediate environment, you would benefit immensely from attending business seminars, buying and reading books on successful businesses. You may wish to join a business networking group to learn the rules that govern business engagements. This generation is witnessing an explosion of young billionaires. Mark Zuckerberg, Dustin Moskovitz, Eduardo Saverin and Aliko Dankote started early and are today icons in the global business space. You too can make that list!
While it may not be possible to start as early as this great entrepreneur, the value of starting as early as you possibly can cannot be overemphasized.
2.He determined to own his own business
Dangote, as earlier stated was in business by the early age of 10. Chances are, he determined to own his business from that time. So intense was his determination that he started his business at the young age of 21, with a loan of ₦500,000 ($250,000 at that time) from his uncle, Alhahi….. Dantata. If you are currently in paid employment and would like to own your own business, you could kick off part-time overtime evolving into full time operations upon leaving paid employment.
If unlike Dangote, you are unable to secure a loan, preferably from family and friends, developing a savings culture could bail you out. Resist the temptation to start your business by securing loans from banks, especially at the inception stage. The first 5 years of any business are understandably fraught with challenges and teething problems. Your determination to own and grow your business would serve you well to ride over the turbulent storms of business.
3.He located his business near prospective customers
Dangote understood this fact perfectly when he relocated his business from Kano, Northern Nigeria to Lagos, the commercial nerve center of Nigeria. According to him, businesses must be located nearest to your largest market i.e. where more people are likely to buy more of your products. Lack of patronage is the one big killer of business. Dangote manufactures and sells amongst other things, major household commodities like sugar, salt, flour, noodles, milk, tomato paste and fruit juice. As many Nigerians buy these products on a daily basis his company is located in every major city and town in Nigeria. Noteworthy is the fact that these products are mostly consumed by urban dwellers.
Most businesses are location sensitive. It is crucial that you determine well ahead of time where your business would be located.
4.He developed a wide distribution network
Dangote, considering the size of Nigeria invested heavily on haulage trucks to ferry his products to the nooks and crannies of the country. Since production is not deemed complete until goods and services reach the final consumer, Aliko developed a strong distribution channel which facilitated a faster delivery of his goods as compared to those of his competitors.
As your business grows, develop a marketing strategy to enhance delivery of products to your customers wherever they are located. You may need to employ the services of a dynamic sales team if possible with some form of vehicular mobility like bicycles, motor cycles, tricycles and cars to sell your products. If for the time being, you have one sales person without mobility, ensure that they are well compensated for their efforts.
6.He developed his own brand
Dangote made branding his business high priority. This, he corroborated during an interview by saying “to succeed in business, you must build a brand and never destroy it”. One competitive advantage I had when I ventured into manufacturing was my brand (Dangote), which I diligently built in the course of my trading.” We pride ourselves in having a vast array of brands and are dedicated to providing the highest quality products, so our customers will always find the product that truly expresses their taste. Some of Dangote’s brands are Dangote flour, Dangote cement, Dangote salt e.t.c.
Your branding defines your business and your customers readily identify you with it/them. Some popular brands are Coca Cola, Ariel detergent and Maggi cubes. It should not come as a surprise to you that many people may not know the companies that brands are attached to as a result of the versatility and acceptability of the brands.
7.He cut out the middleman
Dangote, In 1997, following his realization that acting as a middleman was a very costly endeavor, he built manufacturing plants to produce what he had been importing and selling for the past 20 years. His company began to produce pasta, sugar, salt and flour. Knowing that not having a cement manufacturing plant translated to the use of middle men, he significantly expanded the operations of the company in 2003 by constructing a multimillion-dollar manufacturing plant.
You may start your business by selling other peoples products. Your aim, however, must be to eventually produce what you sell. Your profit margin is likely to double if you manufacture and produce rather than sell finished products.
Dangote though a unique and polarizing figure built his conglomerate on simple and basic business models. His story provides interesting business insights and investment advice. We can expect to hear more from Africa’s richest man.
John F Fowler is business consultant, entrepreneur and trainer. He has produced many books on various business start-ups. For business advice contact him on firstname.lastname@example.org
By John Fowler
Monday March 06, 2017