African startups are making money by solving everyday business problems

African startups are increasingly building products for other businesses instead of trying to get millions of individual consumers to use their apps. The shift is showing up across areas such as payments, accounting, payroll, procurement, logistics and business software. For a startup, selling to another business can mean fewer customers are needed to build a sizeable business. The trade-off is that getting those customers can take longer, particularly when the product involves payments, financial records or other parts of a company’s operations. But there is a large market to work with. Africa has millions of small and medium-sized businesses, many of which still rely on spreadsheets, WhatsApp messages, manual bookkeeping and cash to run parts of their operations. That leaves plenty of room for startups selling software and financial services directly to these businesses.

Payments are an obvious place to start

Payments remain one of the areas where African startups are building products for businesses. Instead of creating another consumer wallet, these companies are working on ways for businesses to collect payments, pay suppliers, manage transactions and move money between countries. The customer is therefore a business that already has transactions taking place. For a startup, that can also create an ongoing relationship. Once a company starts using a platform to collect payments or pay suppliers, moving to another provider can involve changing processes that staff already use every day.

Accounting is another big market

Many smaller businesses still need to keep track of sales, expenses, invoices and cash flow without having dedicated finance teams. Startups are building accounting and bookkeeping tools aimed at these companies. Some combine bookkeeping with payments, invoicing, payroll or access to finance. The sales pitch is fairly simple: instead of having business information spread across notebooks, spreadsheets, bank statements and messaging apps, the owner gets it in one place. For the startup, the accounting information can also become useful for other products. A company that knows how much a business sells, what it spends and when customers pay has more information than a company simply processing a single transaction.

Payroll is becoming a startup market

Payroll is another area where startups are selling directly to businesses. For a company with a handful of employees, calculating salaries, deductions, leave and other payments can already become an administrative job. As the workforce grows, so does the amount of work involved. Payroll platforms are trying to take some of that work away from business owners and finance teams. There is also a financial services opportunity around payroll, particularly where companies operate across more than one African market.

Procurement is less visible but just as important

Businesses also spend a lot of time buying the things they need to operate. That can mean finding suppliers, comparing prices, requesting quotes, placing orders and keeping track of deliveries. Startups are building platforms around parts of this process, particularly for SMEs and businesses that buy frequently. The opportunity is not necessarily in helping a company make more sales. It is in helping the company spend less time and money buying what it already needs.

Logistics is another B2B opportunity

The growth of online commerce has created another market for startups selling to businesses. Retailers need to move goods from suppliers to warehouses, shops and customers. Small businesses often cannot afford their own delivery networks, while larger companies may need software to manage multiple delivery providers. That has created opportunities for startups working on delivery management, route planning, tracking, warehousing and fulfilment. Again, the customer is not the person receiving the parcel. It is the business sending it.

The money is already in the businesses

This is what makes the B2B market interesting. A consumer app has to persuade people to download it, use it regularly and, in many cases, pay for something they may already be getting elsewhere. A business already has money moving through it. It has employees to pay, suppliers to settle, customers to invoice, stock to buy and taxes to deal with. A startup does not necessarily need to create a new spending habit. It can make an existing business process easier and charge for doing it. That is particularly useful in markets where small businesses make up a large part of economic activity.

But selling to businesses is not easy

B2B does not automatically mean easy money. A business owner will usually want to know what the product will save or earn before paying for it. There can also be several people involved in the decision, particularly when the product handles company money or financial information. Startups also have to deal with different regulations, payment systems and business practices across African countries. That makes expansion more complicated than simply launching an app in another market.

The opportunity is in solving everyday problems

The most interesting B2B startups may not be the ones trying to create entirely new markets. They are the companies looking at things businesses already do every day and finding a way to make those processes less expensive, less manual or easier to manage. Payments.

Payroll.

Accounting.

Procurement.

Logistics.

These are not particularly glamorous parts of running a company. But they are also areas where businesses already spend money. For African startups, that makes the businesses themselves an increasingly important customer.