How To Save Money as an African Startup

Jason Calacanis recently wrote a blog post entitled “How to save money running a startup (17 really good tips)” that got me thinking. Does any of this apply to my business here in Uganda? If so what and why? It turned out a lot applied. I’ve bootstrapped this company from nothing, and now I’m still bootstrapping for the sake of my investors at Kuv Capital so I do have some insight into cutting costs. So I decided to do a redux of the Calacanis article for Africa, specifically Uganda, to let you know my tips for keeping costs down as a startup here…

• 1. Buy second-hand laptops, spend a lot on ram and run Ubuntu on them. In most parts of Africa the power grid isn’t stable resulting in frequent outages or ‘hiccups’. Laptops will be immune to these drops in powers as the battery is always ready to kick in when it needs to. Also, if the Internet drops, you can send your employees to a cyber cafe to work so they don’t lose any days. For most office tasks the processing power of a computer is irrelevant, all you need is a lot of storage space and ram. Even in a software company like mine, all my guys are running nothing faster than 2.0ghz processors. You can always buy one powerhouse machine for compiling but in most cases this isn’t necessary. Another point is that laptops can be used from anywhere. I have a few guys who work as hard at home as they do at work. This not only saves time, but helps projects get completed faster, thus saving money.
• 2. Buy an inverter. Here in Kampala, we lose on average about 5 hours a week to power outages. That’s twenty hours per month, nearly a whole day! Across a year, that’s nearly an half a month you’re paying your staff to sit around and do nothing. Do the math on that. Actually, the more you spend on your inverter and batteries, the longer it will last. I have friend who spent about 5 grand on a power solution that can last him up to three days if necessary. Very rarely is there a lost workday due to power for him.
• 3. Hire a cook. Most African cities have massive traffic problems. Even if you designate a ‘lunch hour’ most people will be late or they’ll spend a lot of time waiting around to reheat their lunches. Instead I’ve hired a cook at about 100 dollars a month. I spend about 300 a month on food but I’ve also factored that into everyone’s salaries so it’s not an unaccounted for cost. From an accounting perspective, the staff has already paid for their lunch, I’m just providing it for them.
• 4. Keep coffee and snacks around. I keep a healthy supply of coffee, snacks, soda etc around at all times. When people work nights or when they’ve got the munchies during the day it’s a time-saving solution versus their going out looking for snacks. This goes back to the traffic thing but also, it eliminates potential unnecessary distractions and excessive socializing outside of work. Actually encourages socializing inside work as people often stand around the snack table conversating.
• 5. Tell your staff to take frequent 5 or 15 minute breaks. I know especially for software developers, we have a tendency to overwork. At some point you’re not only not being effective, you’re just rethinking the same problems in the same way. When I’m abroad I always buy the latest WIRED, FASTCOMPANY and other magazines to bring back. I keep them in a pile with local faire like THE DAILY MONITOR and NEW VISION. This is because I want my employees to rest their minds before going back to a problem because that’s often all you need to find a new way of looking at things. Hopefully, it also creates a better work environment.
• 6. Use opensource everything. If you are considering a startup in Africa, unless you have a few million in startup capital (and even then) it will save you untold amounts of money to avoid any software with a license. Especially if that company is foreign operated. The amount you’ll spend down the road upgrading, or getting support will be exponentially higher. Instead, use open source products and try to find a local company that offers support for the product. If you can’t find one, just consider hiring or contracting a local guru who can be your companies go-to for all it’s IT needs.
• 7. If you can, offer 24 hour access. Appfrica Labs is technically never closed. Okay, I haven’t made keys for everyone yet but it’s because I live across the street from the office and I have no problem making sure people can always get in when they want to. Since the staff know they have access whenever they might want or need it, sometimes they work overtime to get things done, again, saving time and money.
• 8. Hire students. Appfrica Labs began hiring students who showed promise originally to help them avoid graduating into an unfavorable market for young software developers. What I learned is that what these people lack in experience, they more than make up for in enthusiasm, ideas and passion. It’s not that older, more experienced people aren’t worth the money, it’s just that they can often be jaded. For my workplace, I really the youthful energy of the guys around me.
• 9. Bargain. Many African countries have a culture of bargaining. When you’re buying laptops, tables, chairs, food whatever; if you’re buying in bulk, make sure you try to work in a better deal. You can usually get a better deal. That said, whenever possible, do business with the owner of the shop. They can almost always give you the type of deals that their employees would get fired for doing.
• 10. Don’t hire, contract. This tip will piss a lot of people off but I stand by it. Rather than making the commitment of hiring new people, contract them to an assignment. It’s hard to fire people, it’s even harder to tell someone they aren’t getting hired after an evaluation period. Instead contract new people to a new job, then if they’re good, offer them a full-time position. This way they don’t have unreal expectations and they may work harder on their contract jobs to prove their worth for the possibility of hire. I’ve learned this one the hard way.
• 11. Offer a transport budget. The reason why I started doing transport budgets was because most people here don’t have cars. This means they will have to use public transport, which is fine, but it also takes the element of time out of their hands. With my guys I give them a budget to get to work each month, then it’s up to them to do so. I can’t control how they spend this money, but at least I’ll never get a call saying ‘I can’t afford to get to work today’. I doubt that would ever happen but I know it won’t ever come up. Plus, I’ve noticed some of them share transport options so as to save money, the rest they can just pocket. I also considered adding a special hire taxi to the staff so that we wouldn’t have to pay extra for meetings but it I’ve yet to implement this. It’s coming though.
• 12. Use an in-house or local server. Let’s face it, uploading and downloading files using the Internet is not super reliable. For us, we use an in-house server with a repository and project management system for sharing files with each other. This server is a used desktop which only cost $200 and runs Ubuntu Server which was free. We also occasionally use a local server for sharing files with people outside the office. It’s way faster for interoffice communication. Also if you use Bonjour instead of Skype, you can IM internally, even if the Internet connection goes down.
• 13. Fire anyone who can’t explain their absence. Time is viewed a bit differently here, call it a cultural thing or whatever. Unfortunately you can’t run a business with people showing up whenever they choose, unexplained. I initiated a three strikes policy. All everyone has to do to be ‘safe’ is call in or SMS in advance if they’re going to be late. If they fail to do so, it’s an unexplained absence and it’s a strike. Because at the end of the day if you can’t take the time to make one phone call or send one message, you aren’t valuing my time anymore than I should value yours.