9dfdfvdfv

THE “HOW-TO” HANDBOOK FOR BUILDING COMPANIES

WWW.ENTREPRENEURMAG.CO.ZA

SEPT 2017

DOUBLE YOUR TURNOVER How Christi & Maeson Maherry took their business from R103 million to

R198 MILLION IN 15 MONTHS

SUCCESS HABITS OF 6 TITANS

5 tactics you can use

PLUS Monalisa Zwambila built her agency from

R18 MILLION TO R80 MILLION IN 4 YEARS

COUNTERINTUITIVE START-UP ADVICE FROM AIRBNB

How, despite operating in a highly competitive industry, Euphoria Telecom is achieving steady

50% YEAR-ON-YEAR GROWTH HOW TO LAUNCH YOUR OWN MONEY-MAKING PODCAST

5 FREE WAYS TO MARKET YOUR START-UP

SEPT 2017 — ISSUE 138

PRODUCERS CAN EARN UP TO R65K PER EPISODE

How-to guide & expert advice from Gareth Cliff

R49,80 (INCL. VAT) N$49,80 IN NAMIBIA

Personal development through your smartphone

CONTENTS

8

SEPTEMBER 2017

Unsure how to fit personal development into your alreadystretched schedule? Podcasts are a great way for busy CEOs and execs to brush up on top local and international business knowledge — while you’re in the car or even at the gym. We unpack six podcasts to add to your life, from longer listens like LinkedIn founder Reid Hoffman’s Masters of Scale to the bitesized ten-minute episodes of The $100 MBA Show.

FROM R103 MILLION TO R198 MILLION IN 15 MONTHS It took Maeson Maherry and Christi Maherry a decade to build a R103 million business, but just 15 months to almost double their turnover to R198 million.

If you’re looking to scale your business, here are their top 5 lessons in high-impact growth.

ON THE COVER 46

14 34

64

16

59

56

“We’ve learnt that ‘overnight’ successes are actually ten years in the making.

They take a vision, and a roadmap of how you’re going to get there.”

— Maeson Maherry

34

PROPEL YOUR GROWTH

46

Monalisa Zwambila has built Riverbed into a through-the-line agency with a turnover of R80 million and a 40-strong staff complement. Just four years ago she had a 15-man business with an R18 million turnover.

Here’s how she geared her business for growth, and plans to take multinational agencies head-on in the future.

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

1

CONTENTS

The success multiplier Zizipho Nyanga, MD of the Masisizane Fund, reveals why preparation is the foundation of success, and what this means in the funding space.

“Success takes time. It takes hard work.

And it takes a willingness to patiently and systematically follow a growth path. In other words, success begins in the mind.”

12

“Local service providers have told us that podcasting in South Africa doubled from 2014 to 2016 and keeps growing i incrementally.” t ll ”

SMARTS

14 6 habits to take you to the top

TACTICS

20 Finding new markets with existing products

22 Why share registers (really) matter

24 Finding and keeping top talent 26 Recession-proof your business 30 Dialogue is your most critical team-building skill

56

32 Cash flow management

BUILD

38 Raising working capital finance 40 Is private equity right for your business?

43 The power of authentic leaders 44 Legacy of growth

16

LAUNCH

52 Lessons learnt 55 Spotting opportunities 59 5 free ways to market your start-up

60 Ask Al 62 Building a market place

BUSINESS UNUSUAL

64 Airbnb’s take on why you should build your business in a way that can’t scale

2

TOP TACTICS TO BOOST YOUR BUSINESS The founders of Euphoria Telecom have found a niche in a highly competitive sector — here’s what you can learn from their six rules of success, as well as how to implement these lessons in your own business.

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

TALK YOUR WAY TO SUCCESS Interested in launching your own podcast and monetising it? We unpack the ins and outs of podcasting, as well as advice from South Africa’s king of podcasting, Gareth Cliff.

IN EVERY ISSUE

4 Contact Us 6 First Word 42 Subscription digital

PUBLISHING CREDITS EDITORIAL PUBLISHER Andrew Honey DIRECTOR: PRINT & DIGITAL Nicole Honey MANAGING EDITOR: EMSA Nadine Todd COPY EDITOR Lesley Lambert WRITERS GG van Rooyen, Nadine Todd, Diana Albertyn CLIENT ADMINISTRATOR: Diana Albertyn WEBMASTER & TRAFFIC CO-ORDINATOR Chelsea Gillespie CONTENT MARKETING MANAGER & ONLINE EDITOR Catherine Bristow CONTENT EDITOR Pritesh Ruthun BUSINESS WRITER & CLIENT LIAISON Nicole Crampton ART CREATIVE DIRECTOR Saveer Sugreem PHOTOGRAPHERS GG van Rooyen, Mike Turner, Sarah Schäfer, Devin Lester ADVERTISING BUSINESS SOLUTIONS MANAGER Nadine Todd SENIOR MEDIA SOLUTIONS CONSULTANT Jann Becker

MEDIA SOLUTIONS CONSULTANTS JHB: Clarise Sha, Nivesh Singh CAPE TOWN: Samantha Peel MEDIA SOLUTIONS ASSISTANT Seipati Modise GROUP MANAGERS MARKETING, CIRCULATION & COMMUNITIES Dean Harty ADMINISTRATION BOOK KEEPER Genevieve Kuijpers EXECUTIVE PA Verna Lombard GENERAL OPERATIONS CO-ORDINATOR Yvonne Botha RECRUITMENT AND SPECIAL PROJECTS Janine Lombard DIRECTORS MANAGING Andrew Honey DIGITAL & PRINT Nicole Honey ENTREPRENEUR MEDIA INC. CHAIRMAN/CEO Peter J Shea VICE PRESIDENT/EDITOR-IN-CHIEF Amy Cosper LEGAL COUNSEL Ron Young

ENTREPRENEUR SA PUBLISHED BY Entrepreneur Media SA (Pty) Ltd • First Floor, Fernglade, Fernridge Office Park, 5 Hunter Street, Ferndale • PO Box 20, Pinegowrie, 2123 TEL +27 (0)11 886 6880 FAX +27 (0)11 789 9113 ONLINE www.entrepreneurmag.co.za SUBSCRIPTIONS SUBSCRIBE, RENEW OR GIVE A GIFT: EMAIL subs@entrepreneurmag.co.za ONLINE www.entrepreneurmag.co.za TEL +27 (0)11 886 6880

ADVERTISING ENQUIRIES +27 (0)11 886 6880 LETTERS TO THE EDITOR* ONLINE www.entrepreneurmag.co.za EMAIL editorial@entrepreneurmag.co.za FAX +27 (0)11 789 9113 MAIL PO Box 20, Pinegowrie, 2123 EDITORIAL SUBMISSIONS* EMAIL press@entrepreneurmag.co.za FAX +27 (0)11 789 9113 MAIL PO Box 20, Pinegowrie, 2123 * Please include your contact details. The editor reserves the right to edit for space and clarity.

Entrepreneur and Franchise Zone are registered trademarks of Entrepreneur Media, Inc., 2445 McCabe Way, Irvine, California 926614 USA. Entrepreneur (USSN 1818-7706) considers its sources reliable and verifies as much data as possible. However, reporting inaccuracies can occur, consequently readers using this information do so at their own risk. Each business opportunity and/or investment inherently contains certain risks. It is advised that prospective investors consult their attorney/s and/or financial advisor/s prior to pursuing any business opportunity or entering into any investment. Entrepreneur and Franchise Zone are sold with the understanding that the publisher is not rendering legal or financial advice. Although persons and companies mentioned herein are believed to be reputable, neither Entrepreneur Media Inc, Entrepreneur Media SA (Pty) Ltd (2005/009255/07), nor any of its employees, sales executives or contributors accept any responsibility whatsoever for such persons’ and companies’ activities. © Entrepreneur Media SA (Pty) Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form without prior written permission of the Publisher. Permission is only deemed valid if approval is in writing. Entrepreneur and Franchise Zone buy all rights to contributions, text and images, unless previously agreed to in writing.

SMARTS 6 Habits That Took These Titans to the Top, By The Oracles, Entrepreneur TACTICS Billionaire Richard Branson Credits To-Do Lists as a Key to His Success, By Rose Leadem, Entrepreneur, 10 July 2017 BUILD How Steve Jobs Misled a Room Full of Tech Media and Changed the World, By Gene Marks, Entrepreneur, 14 July 2017

FIRST WORD

PUT IN THE TIME — AND BECOME A MASTER HERE’S AN interesting fact: Talent is overrated. Many of the world’s top performers in the arts, sports and even business, don’t necessarily have an innate talent for their chosen field or profession. Instead, they have goals, determination, and a willingness to outwork everyone else around them.

Dwayne ‘The Rock’ Johnson, a prolific movie star, is the poster child for outworking everyone around you. He argues there is no magic formula for success.

“I’m up at 4am daily and putting in the hard work that I already know my competition is not willing to do,” he posted on Instagram. “If they’re willing to get up at 4, then you bet your a** I'm getting up at 3. And if they’re willing to get up at 3am, then well... I’ll be getting up at

6

2:59... I don’t pretend to do it. I do it. Daily. It’s my anchor and will always be my edge over my competition.”

While Johnson is showing what working hard can achieve (his current net worth is $190 million), it’s not a new concept. Masters as diverse as Mozart and Warren Buffet have followed similar mantras.

In his book Talent is Overrated, Geoff Colvin describes what Mozart, Buffet and even The Rock have done to perfect personal mastery over their chosen professions as deliberate practice. According to Colvin, deliberate practice is designed to improve performance; it’s repeated a lot; it’s reliant on continuously available feedback and it’s mentally demanding. In other words, mastery is created by design.

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

Deliberate Practice in Action Mozart started an intensive training programme at age three.

He had a domineering father who was interested in education and a well-known composer and teacher in his own right. Mozart’s first masterpiece was Piano Concerto No 9, composed when he was 21. While this is young, remember that by this stage he’d been through 18 years of extremely hard, expert training.

If Mozart did have a ‘divine spark’, it certainly didn’t enable him to produce world-class work quickly or easily. It still took him 18 years of training, and emulating other musicians of the time. The results were magnificent — but they were written just as other composers wrote them. Basically, Mozart became Mozart because he worked incredibly hard.

Warren Buffet is another great example of deliberate practice in action. As a boy, he wanted to make money, and he saw business and investing as the channels to achieve this goal.

As a pre-teen he ran several newspaper routes, and at age 11 he bought his first stock. At 15 he and a friend bought a used pinball machine, installed it in a barbershop, and then added two more machines. With the profits, Buffet bought farmland, which he rented to farmers.

By all accounts, Buffet was good at figures. He was very interested in investing, and would later be the only person to ever score an A+ with famous investing authority Benjamin Graham at Columbia University.

But this ability was worked at, practised and refined from a young age. Buffet made sure he wasn’t just making money — he was making money work. He wasn’t spending his cash on cool things but on making more

money, and learning valuable market lessons.

As a youngster he tried — and failed — at many investing strategies. He wasn’t particularly good at investing then, disproving any notions of an innate talent.

He worked hard and consistently, and only began accumulating world-class performances in his thirties — after he’d been diligently working in his chosen field for over two decades.

Finding your own success We’ve seen this focus in the entrepreneurs we feature on our cover each month. Success hasn’t come easily, or without hard work and sacrifices.

Take Christi and Maeson Maherry, our cover profile this month and the founders of LAWTrust. They have successfully built a R198 million business, and continue to focus on honing their business skills.

If you’re serious about your business, you need to be serious about self-development. Keep the key advantages of deliberate practice in mind as you embark (or continue) on this journey: » You’ll perceive more » You’ll know more » You’ll remember more And success will follow.

Entrepreneur continues to be South Africa’s top-read business magazine because of you, our loyal readers. Thank you. We hope you enjoy reading this issue as much as we have enjoyed putting it together.

Nadine Todd, Managing Editor

IDEAS FOR MAKING WISER USE OF YOUR TIME AND ATTENTION

PODCASTS

LISTEN AND LEARN Podcasts aren’t just for start-up founders.

They’re also a great way for busy company CEOs to brush up on their business knowledge and learn from some of the best businesses in the world. BY GG VAN ROOYEN 8

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

1

How I Built This How I Built This is produced by NPR (National Public Radio) in the US. As its name suggests, the podcast looks at famous brands/companies and the founders behind them. Each episode features a guest entrepreneur who discusses the highs and lows of building a massive brand. The show is hosted by Guy Raz and is intimate and conversational in nature. Founders are often remarkably frank, speaking openly about the challenges they faced. Episodes are fairly long (around 30 minutes), but worth the investment.

Great episode: Zappos: Tony Hsieh The head of the most famous online shoe company in the world discusses how he leads as an extreme introvert, and reveals that he doesn’t care about shoes at all. In fact, he only owns two pairs: Black Asics and a pair of flip-flops.

Time invested: 30 minutes

“I’m actually not passionate about shoes at all. I’m passionate about customer service and company culture, so I can talk about those two things, but I can’t say anything about shoes.”

— Tony Hsieh

that you think will have value for you, and ignore those that won’t.

Great episode: #895 — Selling to Big Corporates ‘Guest lecturer’ Steve Glaveski discusses the mindset and approach needed to sell to big corporate companies.

Time invested: 10 minutes

2 LEARNING ON STEROIDS

Game changing lessons you can learn while you’re driving or at the gym — in 30 minutes or less

The $100 MBA Show Hosted by Omar Zenhom, The $100 MBA Show is short and to the point, delivering useful info and actionable lessons. Episodes are brief (around 10 minutes) and don’t have any fluff. Some focus on personal development, while others look at the nitty gritty of building and managing a large organisation. The name of each episode makes it very clear what that particular podcast is about, so you can listen to the ones

“Understand the KPIs of who you’re targeting so you can speak their language.

Understand what their challenges are and how they make purchasing decisions.

Price might be one factor, but other things companies consider when making purchasing decisions could include things like switching costs, the quality of your brand, reputation, brand awareness, trust, security, privacy concerns, social proof and compatibility.”

— Steve Glaveski

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

9

SMARTS

PODCASTS | SUCCESS MINDSET | TOP HABITS

“These days, more than any other question, I’m asking: ‘What would this look like if it were easy?’

If I feel stressed, stretched thin, or overwhelmed, it’s usually because I’m overcomplicating something or failing to take the simple/ easy path because I feel I should be trying ‘harder’.”

3

Trailblazers with Walter Isaacson Trailblazers with Walter Isaacson is hosted by, well, Walter Isaacson. He’s one of the greatest living biographers — having penned best-selling biographies on people like Steve Jobs, Albert Einstein and Benjamin Franklin — so he knows how to take a true story and turn it into a riveting narrative. With Trailblazers, he looks specifically at disruption. He looks at how and why it happens, and why large companies are often too slow in reacting to it. The show is expertly produced, with Isaacson interviewing various thought leaders and showing how industries like film, music, electronics and gaming have been disrupted.

Interestingly, the podcast series was commissioned by Dell Technologies, but it doesn’t feel like a piece of marketing content.

Great episode: Lights… Camera…

Disruption Streaming services like Netflix and Amazon are threatening to disrupt the film and television industry, but it’s not the first time this has happened. The entertainment industry has been forced to deal with disruption before. Will the traditional system survive in the age of Netflix?

Time invested: 30 minutes “[Netflix] have brought a very Silicon Valley type of culture into Hollywood. And they have played a pretty hardball game. Unlike the TV competitors they have, they know exactly how much you watched. They know if you watched 13 minutes and stopped. They know if you've watched to the end.

They know if you binged. That’s the kind of granular information TV networks don't have.”

— Kim Masters, editor-at-large, Hollywood Reporter

10

— Tim Ferriss

4

Masters of Scale As both the founder of LinkedIn and a partner at investment firm Greylock, Reid Hoffman is a Silicon Valley insider with access to some of the most famous entrepreneurs on the planet. His podcast, Masters of Scale, hasn’t been around for very long, but it already boasts a guest list that includes Mark Zuckerberg and Sheryl Sandberg from Facebook, Brian Chesky from Airbnb and Eric Schmidt

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

from Google. As the name suggests, the podcast is all about the tricky process of scaling a business.

Great episode: Imperfect is Perfect Mark Zuckerberg talks about the early days of Facebook, explaining the company’s growth strategy and how it managed to spread from one college campus to the entire world. As you can imagine, what works for one campus doesn’t work for the whole world. Facebook’s motto of ‘Move fast and break things’ quickly became problematic.

Time invested: Between 30 and 90 minutes “So ‘move fast’, I think, is interesting, because you actually have to be willing to give something up to get it. And the question is, ‘What are you willing to give up?’ And early on, the trade was, ‘Move fast and break things.’ The idea was, we will tolerate some amount of bugs and flaws

in the service of moving faster and learning what our community wants faster. But we got to a point where it was taking us more time to go back and fix the bugs and issues that we were creating than the speed that we were gaining by going faster.”

— Mark Zuckerberg

6

The Matt Brown Show Matt Brown is a local entrepreneur, speaker and the founder of the global media platform the Matt Brown

5

The Tim Ferriss Show The Tim Ferriss Show is one of the biggest podcasts on the planet. Most of the time, it is the most popular business podcast on iTunes, and it was the first business/interview podcast to achieve more than 100 million downloads. Ferriss (author of The 4-Hour Workweek) interviews high-achievers on his podcast and deconstructs their habits and behaviours to examine why exactly they are so successful.

He doesn’t focus only on entrepreneurs and business people, though, often also interviewing

Show. He is also the CEO of Digital Kungfu, a strategic business consultancy that specialises in helping companies accelerate innovation and disrupt traditional markets by enabling them with new ways to do business that serve their customers more effectively and responsively.

Unlike the other podcasts on this list, which are all from the US, this podcast is South African, and it focuses on some of the most interesting and dynamic local entrepreneurs.

Great episode: Gil Oved & Romeo Kumalo Matt Brown speaks to South African Shark Tank

celebrities, athletes and scientists, but the podcast is almost always worth listening to. Generally speaking, these interviews don’t offer very specific business advice, but they do provide great insights into the mindset and self-talk of the supersuccessful.

Great episode: Testing The Impossible: 17 Questions That Changed My Life A sample chapter from Ferriss’s book Tools of Titans, where he examines insightful questions that have helped him reframe situations and overcome obstacles.

Time invested: 90 minutes

READ BY • • • • •

Visionaries Innovators Disruptors Employers Wealth Builders

entrepreneurs Gil Oved and Romeo Kumalo.

Time invested: Between 25 and 60 minutes “Very simply, if I have two entrepreneurs with exactly the same features in front of me: Same business, same opportunity — two entrepreneurs asking for the same amount of money, with only one difference separating the two: One guy had succeeded in his last three business ventures and the other failed in his last three business ventures, ten out of ten times, I will pick the guy who failed.”

— Gil Oved EM

Interested in launching your own podcast?

Turn to page 56 to find out more

FACT: SOUTH AFRICA’S NO.1 READ BUSINESS MAGAZINE AMPS 2015 B

www.entrepreneurmag.co.za

SMARTS

PODCASTS | SUCCESS MINDSET | TOP HABITS

SUCCESS IS IN YOUR HANDS Often, the difference between the super successful and their less fortunate counterparts is preparation. Being in the right place at the right time isn’t luck — it’s working towards a goal and ensuring that all the pieces come together. Zizipho Nyanga (née Mqwala), CEO of the Masisizane Fund, unpacks how this attitude helps business owners access funding and build sustainable businesses.

AS TOLD TO NADINE TODD

12

brought me closer to where I am today, and built on my personal skills and understanding of business and the support that SMEs need. If you’re doing what you love, and you’re willing to build the necessary skills, you’ll forge the right path, whether that’s in a corporate career or your own business.

As a dealmaker at the IDC I got my first clear look at why people are rejected for funding.

Too often it comes down to a simple lack of preparation: Not preparing an adequate business plan; not taking the time to really understand your market, competitors and even your own positioning; and not researching the funder you’re approaching to ensure their mandate aligns with your business offering.

I was particularly surprised

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

ASK YOURSELF

Are you willing to put in the time to really make a success of yourself?

Funders look at the entrepreneur as much as the business model. They evaluate the entrepreneur’s mindset. Are you working on yourself as much as you’re working on the business?

by how many people outsourced their business plans. How do you run your business if someone else does the plan for you? We saw so many entrepreneurs who weren’t willing to do the most basic things. Getting funding requires patience; there’s a lot of necessary legwork. People want the money, but they’re not willing to do the work to get it, and that’s often just their first big problem. Success takes time.

It takes hard work. And it takes a willingness to patiently and systematically follow a growth path. In other words, success begins in the mind.

If you want to be successful, you have to look to the future, keep your eye on the ball, and then painstakingly work towards your goals. From a funding perspective, step one is

PHOTO: DEVIN LESTER

M

y own career and the path that led me to developmental finance has enhanced the certainty in me that we create our own futures.

What you put in is what you get out. I was a CA(SA) who worked within EY’s external audit and risk advisory services. I've always wanted to add value and help people in everything I do.

I quickly realised that I enjoyed identifying challenges that companies faced and helping them find and implement solutions. It’s the reason why I left EY to become a financial manager at Kagiso Media. It was an entrepreneurial business in a high growth phase. From there I joined an investment firm, and then the Industrial Development Corporation (IDC). Each step

SMARTS

VITAL STATS

PLAYER: Zizipho Nyanga (née Mqwala) COMPANY: The Masisizane Fund POSITION: CEO QUALIFICATION: CA(SA) WHAT THEY DO: The Masisizane Fund is an Old Mutual initiative that was established in 2007 following the closure of the Unclaimed Share Schemes Trust in consultation with the National Treasury of South Africa. Masisizane was set up as a non-profit funding company to provide loan financing and support to SMEs. LAUNCHED: 2007 VISIT: dogreatthings. co.za/masisizane/

developing your own business plan and all that this entails.

Step two is researching each organisation you’re thinking of approaching and learning what they offer and what their mandate is. Step three is planning ahead.

So many business owners approach funders when they are under pressure and need cash immediately. Not only does this reveal a detrimental lack of fore-planning, but it means the whole process becomes rushed, and owners approach any and every fund they know about.

This means there’s little regard to whether it’s the right funder whose mandate matches the business. The more a business owner does this, the more it discourages them should they be rejected by funders.

Funding takes time. Start

your business. Bootstrap it if you can, and begin the process of identifying and approaching the right funders with a goal of securing funding in 18 to 24 months, instead of a few weeks.

Those are the businesses that attract attention. If you can show you’re a planner who is willing to go the distance, you’re already ahead in the game.

You need to leave your ego at the door. This is one of the best pieces of advice that I can give to any business owner. Passion is great, but be careful of being too internally focused. If you spend too much time celebrating your business idea and your own cleverness, you won’t focus on how to access your market.

Who is going to buy what you’re selling?

Understand that you have to have a market you’re serving, and that this is the single most

might lack.

The reality is that no-one has all the skills and experience necessary to build a robust and sustainable business. The best businesses are built by teams who complement each other. If you can leave your ego behind, and find someone who can take a stake and help you scale up the business, you’re already well on the path to success.

Success is all about partnerships. I was fortunate to have the experiences I did at the IDC with SMEs looking for funding, because it gave me the peripheral vision I needed to really understand the important role the Masisizane Fund can play in South Africa’s entrepreneurial development.

First and foremost, it’s about working with other funders and corporates to achieve our goals.

It’s through partnerships that

at, and increases a business’s chance of success. We’ve found that the right combination of debt, equity and grant solutions gives businesses a real chance at success.

Partnerships go beyond finance however. They’re also about skills, support and mentorship.

It’s said that it takes a village to raise a child. The same is true of business. The stronger your network and support system, the higher your chances of success.

We’re all about capacity building.

We identify entrepreneurs who we believe have the right attitude, mindset, willingness to put in the hard work required, and either technical skills or business acumen — and then we put support systems in place. This could be through a mentor who co-manages the business, business courses, or placing financial managers in the

“Getting funding requires patience; there’s a lot of necessary legwork. People want the money, but they’re not willing to do the work to get it, and that’s often just their first big problem. Success takes time.” important thing a funder is interested in, because they know that without a market, you have no business. It’s amazing how many entrepreneurs start with ‘me’ instead of their target market. As a business owner, your goal is to serve someone else’s needs. Who is the customer? And what are their needs?

Entrepreneurs tend to want to run the business alone.

We call these ‘one man bands’, and they’re far too prevalent.

They’ve had an idea, it’s theirs, and they’re precious about it. So precious that they don’t appreciate a sense of partnership. This can be a technical partner, a financial partner, someone with the necessary business acumen and experience that the entrepreneur

real change is achieved. No one ever achieved real success alone.

We see this within SMEs, and will always support partnerships at the helm of a business and in the roles we play. Our model is to partner with organisations with a similar mindset to our own, such as the SEFA, IDF, Anglo-Zimele and various government departments that offer grants. This allows us to achieve measurable impact and de-risk. Many entrepreneurs don’t have owner’s contributions and can’t afford 100% debt.

They will never be able to repay it and build a sustainable business. We’re an organisation that offers loans, and so we partner with organisations that can assist entrepreneurs with equity/grants. This reduces the debt entrepreneurs are looking

business. It’s all about identifying what the business needs are. We have a partnership in place with SAICA that places CAs(SA) in the SMEs we support, creating jobs for graduates and supporting entrepreneurial businesses simultaneously.

Often, the difference between success and failure is the right support at the right time. This isn’t about waiting for someone to come and assist you though.

It’s about walking a journey with the right partners. This begins with accepting that you need assistance, and being willing and able to continuously learn and develop yourself and the business. If you can do that, and you have the patience to see your own goals through, you will be successful. EM

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

13

SMARTS

PODCASTS | SUCCESS MINDSET | TOP HABITS

6 HABITS THAT TOOK THESE TITANS TO THE TOP Habits help or hurt us. The qualities of your health, wealth, relationships and happiness are the products of your habits. Here’s how six entrepreneurs and members of The Oracles embraced and ingrained their success rituals.

1

If you can’t see it, it doesn’t exist

Write everything down! I’m known for my punctuality, which I attribute to writing everything down. Before smartphones, my entire life was inside my agenda book. I carried that little thing everywhere.

God forbid I would ever lose it — there would go my life.

Thankfully, today, technology makes our lives immensely easier: If you lose it, well, there's always the cloud. I use my iPhone to schedule my tasks, meetings, appointments, and goals. I'm a very visual person.

I write big yearly goals and smaller short-term goals and refer to them often.

Writing everything down not only increases your daily productivity, you also literally bring your goals to life.

— Leyla Milani-Khoshbin, founder of Leyla Milani Hair®.

2

Early to rise, look on the bright side

Several habits, consistently

14

applied, have given me incremental growth to higher success. But two have particularly skyrocketed my success. First, I’m a member of the 5am club. Each day, before the rest of the world wakes, I’m working on my dreams and crushing my daily tasks. By noon, I’ve executed 80% of my to-do list.

Second, I’m an incurable optimist. No matter how many negative things happen in my

to back and today, runs a ninefigure empire with over 600 employees.

3

Show me your habits, I’ll predict your future A powerful morning routine trumps all habits. The average person starts their day with the snooze button, negative TV news, poor nutrition, and traffic

goals. I view them as already accomplished. This routine can be done in under five minutes to shape your day in a powerful way.

Then, I elevate my heart rate with physical exercise: Weight training, yoga, going for a walk.

I finish the routine by reviewing my day, the meetings I’ve scheduled, how I want them to go, the calls I need to make, and the results I want to produce.

— Tom Ferry, founder and CEO

“Writing everything down not only increases your daily productivity, you also literally bring your goals to life.” — Leyla Milani-Khoshbin life, I always transform them into positives. Being loyally committed to a positive mindset has helped me solve problems faster than anyone I know. I joke that I never experience problems in life like most people; all I get are opportunities.

Start your day early. Prime your mind to seek opportunities instead of solving problems.

— Com Mirza, The $500 Million Man and CEO of Mirza Holdings; failed in eight companies back

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

— not a cocktail for a highperformance day.

Make a conscious choice to wake up earlier. I start my day with the ‘10/10’ visualisation.

First, I ask: “What ten things am I most grateful for?” I experience overwhelming gratitude for my health, the love of my family, where I live, how I think, my partners, clients, teammates, and more.

Second, I think about my top ten short-term and long-term

of Tom Ferry International, ranked the number one real estate coach by the Swanepoel Power 200, and NYT-bestselling author of Life! By Design.

4

Balance intense focus with overall growth

We accomplish so much because we are inherently unbalanced. We focus on a quest

SMARTS intensely and excel beyond what most believe is possible.

However, being fulfilled requires a certain amount of balance.

How can you have both? By splitting your achievements from your measurements.

The measure of a good person is not what they’ve accomplished; it’s who they are, day to day. Embrace intense periods of focus to make substantial strides in your main quest. At the same time, measure yourself on diverse metrics to recognise your overall growth.

I track the eight core areas we grow in: » Charisma: Have I connected with someone I care about? Am I tending to my relationships? » Dexterity: Have I moved my body? » Health: Have I eaten clean, drunk enough water, and cared for myself? » Intelligence: Have I learnt, taught, or created? » Luck: Have I helped someone? » Strength: Have I lifted something heavy? » Willpower: Have I gotten uncomfortable? » Wisdom: Have I connected to myself?

Growing in five of these categories makes a good day.

Doing seven is amazing. All eight? That’s stellar. It’s easier once you realise that the right leveraged actions help fulfil the others. I no longer have bad days, because every day, I see my overall growth.

Start by taking time daily to connect with yourself through meditation and journaling. I practice Zazen meditation and free-form journaling. Experiment and find a practice that works for you. Stick with it. You’ll be amazed where it takes you.

— Chris Plough, author, speaker, advisor, and founding partner of ExponentialU; equips epic entrepreneurs for the world that’s coming.

5

Achieve perfect discipline We are only our habits, our rituals and our patterns. These determine the outcome of our health, wealth, relationships, and ultimately, our happiness.

The single most important habit I maintain is a disciplined plan. This is related to knowing my outcomes and then instigating a disciplined plan to deliver on them. Focus on your vision and your passion, and use a disciplined plan to execute.

But be cautious to how your mind can become chaotic. Don’t let it distract your plan. Take the time to regularly calm your mind. Maybe sit in silence, listen to a guided meditation, or chant a mantra. Affirmations will get you out of your head and guide you to achieving your greatest desires. Even reading a nonfiction book for ten minutes each day will massively impact your mindset.

— Roy McDonald, founder and CEO of OneLife.

6

Commit to consistent, realistic shortterm goals Every successful entrepreneur needs to incorporate meditation into their daily lives to break from the daily all-consuming chaos and free up room for creativity. Meditation can take the form of prayer, silence, writing in a gratitude journal, even dancing — anything that takes you out of your own head.

Start with a realistic goal.

Substituting the daily technology obsession for sitting in silence for three hours will be too overwhelming for most people.

My initial meditation goal was just 60 seconds a day. Such a small goal removed all the pressure of completing the task.

It was impossible to say, “I don’t have the time to meditate today.”

By setting a realistic goal, I’ve stayed consistently committed for years. First thing in the

“I’m an incurable optimist. No matter how many negative things happen in my life, I always transform them into positives. Being loyally committed to a positive mindset has helped me solve problems faster than anyone I know. I joke that I never experience problems in life like most people; all I get are opportunities.”

— Com Mirza morning, I sit on the edge of my bed and meditate for at least 15 minutes; this isn’t a remarkable amount of time to take out of your day, even though sometimes it feels like you’ll never find a spare second.

Download apps like Headspace or Brain.fm if you need help getting started.

Stay consistent and really commit to the process.

— AJ Rivera, seven-figure marketing expert, business advisor, and CEO of PT Freedom. EM © Entrepreneur Media Inc. All rights reserved.

The Oracles is an invitation-only brain trust comprised of the world’s leading entrepreneurs who share their top advice and success strategies to help others grow their business, live a better life, and achieve success faster.

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

15

ACTIONABLE “HOW-TO” INSIGHTS FOR COMPETITIVE ADVANTAGE

GO-TO-MARKET STRATEGIES

The foundation of any great business is solving a need. That’s step one. How you put your solution in place and support it in the market is what will ensure top and bottom line growth. Here’s how Euphoria Telecom is ticking all the boxes, achieving 50% year-on-year growth as a result. BY NADINE TODD EUPHORIA TELECOMS was launched from a living room. It was bootstrapped by founders George Golding and Conrad de Wet who promptly spent all of their startup cash on a bad PABX software system from the US and had to start over. It took them six years to build a R45 million business, and one year to take that to R65 million. Here are their rules for laying the right foundations and following the best strategies for high-level growth.

RULE 1: SOLVE A NEED This sounds obvious, and yet it’s the cornerstone of successful businesses, and lacking in so many businesses that don’t make it past start-up phase.

Euphoria Telecom is actually George and Conrad’s second business together. Their first was

16

a merging of both their previous businesses. Having met while delivering pizzas as students, George and Conrad ran into each other a few years later, and realised the start-ups they had launched independently of each other would work well together; George was often asked if he did web development by his clients, and Conrad’s clients frequently requested visual production and photography. Together they could offer all three, and they soon worked with a number of large clients, including FNB, SABC Women of the Year Awards and Home Choice.

The business didn’t work out, as a third partner tried to move in a different direction, but the experience gave George and Conrad a valuable gift: They had worked within the South African market as

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

No one cares about fancy products; they care if you’re solving a need

Often, the best way to develop a solution is to solve a need you experienced yourself. As long as you’re solving a real need, your business is relevant.

Say no to business if it’s not your core focus

Saying no to money is tough — particularly if customers are asking you for solutions you know you can develop.

Learn from Apple. When Steve Jobs took over in 1997, one of the first things he did was reduce the company’s product line by 70%. Apple had been producing multiple versions of the same product to satisfy requests from retailers. His rule?

Deciding what not to do is as important as deciding what to do.

Make it easy for customers to leave and they’ll come back

Euphoria doesn’t lock customers into contracts — but they do have nonnegotiable payment terms, exceptional customer service levels and a price point that ensures they can deliver that level of service. When customers leave because they don’t want to pay upfront or have their accounts debited, or because someone offers them a cheaper package, they invariably come back with a new appreciation of what they’re paying for.

PHOTOS: DEVIN LESTER

FEELING EUPHORIC

KEY INSIGHTS

VITAL STATS

PLAYERS: George Golding and Conrad de Wet COMPANY: Euphoria Telecom EST: 2010 TURNOVER: R45 million in 2016; projected R65 million for 2017 WHAT THEY DO: Cloud-based business telephone systems VISIT: www.euphoria.co.za

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

17

TACTICS

GO TO MARKET | MAKING SALES | SHARES | TALENT | SURVIVING RECESSIONS | COMMUNICATION | CASH FLOW

an SME, which offered insight into the biggest pain points SMEs suffered. This in turn gave them an idea for a different business; one that would solve a real need.

“In 2004, VOIP didn’t exist.

Companies were trying to push it into the market, but it wasn’t working,” says George.

“We knew this because it had been a big problem for us. We wanted to buy a PABX system, but we couldn’t find one that didn’t come with a three to five-year contract. On top of that were maintenance costs, and if you wanted to scale there were additional costs, you were capped at lines and problems were expensive to fix. As an SME we didn’t want to commit to any of it. The risk was too high.”

They didn’t get a PABX system, but they recognised an opportunity to offer the right solution for SMEs. “When we started discussing the possibility of launching a new business together, this was the solution we focused on,” says Conrad. “It didn’t just draw on our skills, as our previous businesses had — it was solving a real need in a way that no other companies were.”

But they needed to move quickly. “The buzz word was the Cloud. South Africa was still a few years away from wide-scale adoption, but we knew it would eventually become the status quo, and we needed to have the right product when it did.”

A Cloud-based solution would be more affordable for SMEs because it didn’t require a PABX system in the office; everything would run off a software solution with a VOIP switch. This made it scalable, cost efficient and easy to manage. The only problem was finding the solution.

“We identified solutions in the US where you could choose three or 100 users at the click of a button. You could set it up online, switch your package on and off — there was nothing like it available here,” says Conrad.

“We decided to take the US model, work on it, and create something of a similar standard.

18

We felt inspired; we were doing something that solved a significant problem.”

To get started, George and Conrad invested everything in an off-the-shelf product from the US. “The decision had been whether to build it or buy it, and we decided to buy it — and then we discovered it was a bad product. We realised we needed to develop a platform through open source technology, and build it from the ground up.”

Conrad and George still needed to educate their target market on how Cloud worked and the benefits of a Cloudbased VOIP system, but they had a product they knew the market needed — and that was a start.

The rule in action: If you aren’t solving a problem, your business might remain operational for a number of years, but you’ll find it difficult to scale. Whether you’re a start-up or operational, keep thinking about your market: Do they need your solution, and does it significantly improve their circumstances?

RULE 2: HAVE THE RIGHT PARTNERSHIP IN PLACE “Partnerships are essential,” says Conrad. “No one person can do it all. You need to work together with complementary skill sets. We both have strengths and weaknesses, but they’re different, and so we don’t clash.”

Conrad’s strengths are tech product building, engineering and development architecture.

George is excited by what he can do with that technology commercially. In other words, the business has a tech guy and a sales guy, which according to most venture capitalists is all a business needs: Someone to make the product, and someone to sell it.

Success lies in how well those partners operate together, and whether they respect each other, because two people will never be in agreement 100% of the time. “Tech guys are excited by their technology. When they figure out something new, or add a new feature, they want to give it to everybody,” says George. “As the sales guy, I have

RULE 3: STAY FOCUSED, NO MATTER WHAT The reason Conrad says no to some customer requests is to keep the business true to the vision. “We can generally deliver what customers want but if we go straight there, we’re ultimately hobbling ourselves,” he explains.

“Our long-term vision requires a number of steps to happen first. We will get there, but on a much better platform if we don’t rush the process. It’s easy to give in to market demand, and have your development team constantly making quick fixes, but these create walls that make the product unscalable and uniterative down the line, and that’s the opposite of our vision. Our solutions are developed with 100 000 customers in mind, not 100.”

For Euphoria, focus has worked. The partners also resisted selling fibre. “PABX systems are complicated. To offer good service, you need training and support staff. We didn’t want to dilute this focus.”

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

to hold him back. We’re running a business. That means we sell our products; we don’t give them away for free.”

On the other side of the coin, George is in the market, learning about customers needs, and he’ll often go to Conrad with ideas, that if implemented immediately, could be highly profitable. But, as the tech guy, Conrad has to say no, keeping the team focused.

“We understand and respect our different roles, and know that we both work in the best interest of the business,” says Conrad.

The rule in action: It’s impossible to always be in agreement with your partner. For many business owners, the solution is to be a solo entrepreneur, but as investors point out, partnerships are much stronger, because you can develop a balance of skills.

To make a partnership work, you need to respect each other’s opinions and decisions, and have clear demarcations of areas in the business where one partner’s decisions are final.

Instead, the business partners with connectivity companies that offer Euphoria’s voice solution when they instal fibre, and vice versa.

“We work in parallel,” says George. “They know their network, and we know ours.

Plus, they were doing it. Why staff up and do it ourselves, when this isn’t our focus?

We have a niche solution that we don’t want to dilute.”

The rule in action: This is one of the hardest business rules to follow.

It’s tempting to say yes to customer requests if customer centricity is built into your business model. But if you know your niche, stick to it and stay focused. No businesses are equally good at everything. Great businesses are very good at only a handful of things because they know how to stay focused and build excellent products and solutions.

TACTICS RULE 4: EMPOWER YOUR CLIENTS Customers gravitate towards solutions that offer one or more of these four key things: They empower them, they simplify their lives, or they make or save them money.

Euphoria’s solution is designed to offer at least three of these decision factors, but empowering customers and simplifying their lives is at its centre.

“The first decision we made was to take contracts out of the equation,” says George. “If we need contracts to keep our clients, we aren’t delivering the right solution. We want to keep customers because we have the best solution, not because we’ve locked them in.”

This decision has empowered customers in their decisionmaking, but Euphoria has taken it a step further. “The solution is designed as a dashboard on your desktop, in real time, so that a business owner or manager can monitor their phone lines and how much they’re spending.

They can also change on-hold music and messages at the click of a mouse. They have control over the entire system and their spend,” says Conrad.

“The Internet empowers you,” adds George. “You can action anything immediately. Once people have that experience, they can’t go back. Imagine you were told to delete your banking app or online banking and do all transactions from an ATM. Would you do it? We’ve done that for the PABX. It took some time, because our solutions were ready before South Africa’s highspeed Internet infrastructure was in place, but we knew widespread Cloud adoption was coming, and we were ready for it when it did.”

The rule in action: Old school business thinking dictates that a customer should be utterly reliant on your solution to ensure customer loyalty. In truth, this level of reliance on another brand makes people uncomfortable and trapped.

RULE 5: THE RIGHT PEOPLE CAN MAKE A BUSINESS “We’ve learnt that a large part of how you treat your employees starts with your own vision and goals. If you’re only driven by profits, this will be transferred to your employees,” says George.

“But if you have a greater purpose, and you want to solve a problem, that becomes the centre of the culture shaping the business.

“The people we hired aligned with our mission.

We’re ethical, honest and transparent — we always tell our customers the truth. We’ve found that as long as we are completely clear about who we are, and what our goals are, money becomes a reward instead of a goal, and we attract like-minded people.”

Placement is another key focus. George and Conrad understand how their own passions and abilities define the commitment they make to their roles, and they promote this philosophy with employees. “When someone is inspired, they go for it — get them in the right role and they’ll fly. It’s how we treat ourselves, and how we hire,” says George.

Today Euphoria has offices in Cape Town and Johannesburg, and a lean focus has remained essential. “We would rather improve efficiencies and keep our staff compliment low so that everyone has a bigger share of the rewards,” says George. “We’re constantly improving our back-end, and this opens a lot of capacity for us.”

The rule in action: Businesses are not built in isolation.

They’re the culmination of the vision and energy of founders, and the ability of employees to execute that vision. Get the right people on board, and retain their loyalty, and you have the foundations of a great business.

Instead, focus on providing solutions that give your customers complete control.

Ensure there are no hidden costs, that customers feel empowered, and that their lives are simplified, and you’ll foster customer loyalty.

RULE 6: CASH IS KING George has two key rules when it comes to cash flow. First, if the market doesn’t accept your price point, it’s not a sustainable business and you need to rework your model. However, make sure you know your value

and your worth, and then price accordingly — without offering massive discounts. If your price is right, target customers who value what you’re offering.

“Customers have left us before for price,” admits George.

“But they come back for service.

They even ask us why we didn’t stop them from leaving.”

The second rule involves cash flow and billing. “Growth can damage a business if you aren’t paying attention to your cash flow,” says George. “You make sales, but suppliers need to be paid, and before your cash is in the bank, you’re paying other people, and end up in negative cash flow. The more you sell, the more it costs you.”

George and Conrad have followed a few simple principles.

They always negotiate the best terms possible with their suppliers, and they have fixed payment terms with their customers. All accounts must be prepaid, or settled within two weeks of receiving an invoice.

“We say no to customers who don’t agree to a debit order or won’t do upfront payments,” says George. “We’d rather turn away business than break this rule. It’s the foundation of our business and how we’ve been able to fund our own growth.”

In return, customers get full transparency into their accounts and the ability to manage expenses on their dashboards.

There are no hidden costs or surprises, and Euphoria to Euphoria calls are free.

The rule in action: Focus on getting your income into the bank before you pay your suppliers. Always have more cash than what you’re selling — sales have a cost. Get next month’s income in before making payments. To achieve this, you need good terms with your suppliers, and an efficient billing system. Put the right system in place to ensure all invoices are sent timeously and that they’re correct. This is the foundation of your business’s health and ability to grow. EM

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

19

TACTICS

GO TO MARKET | MAKING SALES | SHARES | TALENT | SURVIVING RECESSIONS | COMMUNICATION | CASH FLOW

Are your sales declining?

It’s time to find new markets

Fish where the fish are Shift your focus from barren and ‘over fished’ markets to customers who are looking for the right solutions.

J

UST AS some anglers forlornly cast their lines into fishedout waters, some companies and sales people continue to focus on markets where nobody is buying any more.

Sales and profitability decline and business owners blame downgrades, corruption and labour issues, while their real problem is chasing nonexistent sales.

Many sectors in the economy have declined, and suppliers to those sectors will face reduced sales and increased competition. The poultry, steel and mining industries have experienced sharp reductions and face serious challenges. The automotive and manufacturing sectors have experienced reduced volumes, cost cutting and retrenchments. If your primary target market is in any similar sector, and you continue to operate as if nothing has changed, you are taking very high risks.

In some instances, the decline of the target market stems from an event like the horrific massacre at Marikana and the changes that brought to the mining industry. Then you know you need to react, but most

20

change is gradual, and some entrepreneurs may not notice, or shut their eyes to the bad news. Others cling to the hope that this decline is temporary, and do nothing. We all love our comfort zones and find many excuses to stay there, and so we sink with the declining market.

MAKING THE RIGHT CHANGE Once you have appreciated the problems with your current markets, look for similar markets that are stable or growing. For example, if you sell mining supplies, the construction industry may offer good prospects. Be creative; think how you can use your expertise to supplement declining markets by entering more successful ones.

Focus on high growth business sectors. Perhaps health and fitness, education, green energy or IT services could provide opportunities. Where could you leverage your technology, source of supply and sales processes to enter growing markets?

Look for success stories, there are many, including those profiled in this publication. It is clearly

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

MY MENTOR

BY ED HATTON Backed by 25 years of experience in the SME marketing landscape, with a focus on new ideas and strategies for SME growth.

@Edhatton www.themarketingdirector. co.za

preferable to sell to a company growing rapidly than to one clinging to the edge of the cliff by its fingernails. If you sell business to business, examine the state of your customer’s customer. If your customer is operating in a declining market, you will follow them downhill unless you take action. Find ways to use your products and services to make them more competitive, to halt their slide and grow at the expense of their competitors.

This is a good time to look deeper into the real needs

SUCCESSFULLY ENTER NEW MARKETS » Which sectors are similar to yours?

» How can your

current solutions be repackaged for different uses?

» How can your

solutions help customers to be more competitive?

of your existing customers.

While we are selling well, we assume that we are satisfying customer needs appropriately. Are we really doing that? Are there other products or services that would be valuable to our customers? Find out, and then provide solutions.

GET OUT OF YOUR COMFORT ZONE It’s easy to say that you should move out of your comfort zone and switch your efforts to more lucrative sectors, but less easy to do. Institutional knowledge, systems, databases, credit records, sales processes and products are all geared to the once-successful industries.

Instead of throwing away all of this know-how, it makes sense to adapt the systems and information to new markets in a gradual transition. Start new initiatives by withdrawing resources from the old and using working processes and skills to open new markets.

You are likely to need a core of your operations for your existing markets and customers, but your focus should be on the new initiatives.

Your sales teams may need additional training to work in new areas. They must learn to understand the customers and their needs and adapt to their terminology and business practices. Continual retention of sales people is a good idea even without change; it is highly desirable if you want to enter new markets successfully. Train all staff who will be a part of that drive, so your whole company becomes capable of delivering great products and even better service to new customers. EM

ADVERTORIAL

Make smarter travel decisions

37

TOMTOM TELEMATICS

TIME IS MONEY — IT’S TIME TO SAVE BOTH Imagine you could determine the best way to reach a destination in the fastest way possible.

What would this mean for your business?

THE LESS TIME your vehicles take to reach their destinations, the more loads they can transport and deliveries they can make. Time is money, and you don’t want to waste yours while your vehicles sit in traffic.

An extra 37 minutes per day amounts to 141 hours per year — per vehicle. What is that costing your company?

The right tools can make a significant impact on your bottom line. Business critical fleet information includes locating your vehicles on a map, keeping an eye on traffic,

FEATURES INCLUDE 1. Vehicles & trips Check the location and status of individual vehicles and groups of vehicles. View trip data by date for a single vehicle or the entire fleet.

TomTom is on a mission to reduce traffic congestion for all road users by providing information to help make smarter travel decisions. TomTom Traffic Flow uses the information from millions of GPS EXTRA TRAVEL TIME devices in vehicles and shows a detailed realtime view of traffic speeds on the road network. Real time traffic services are available from TomTom min in 52 countries, PER DAY including South Africa.

With the support of millions of h drivers, TomTom PER DAY Traffic monitors road conditions and provides the latest traffic because it shows at a glance reports for South Africa. where your vehicles are and

monitoring current orders and receiving automatic notifications as their status changes.

REAL-TIME SOLUTIONS How do you keep control of your fleet? TomTom’s WEBFLEET Mobile Applications gives you access to information that enables you to stay in control of your operation, wherever you are. All you need is a smartphone or flash supported tablet, and you’re able to implement tighter quality control across your business.

REVOLUTIONARY TOOLS » Manage on the move: WEBFLEET Mobile makes fleet management easy. With a handy app on your smartphone, you can view and control your dispersed operation, anytime and anywhere. WEBFLEET Mobile helps you to increase efficiency

2. Traffic & orders Plan around traffic with access to TomTom Traffic on the TomTom map. Dispatch orders and view their progress.

3. Messages & notifications Have an at-a-glance overview

141

which ones are available, enabling you to send the best placed person for a new job. Monitoring the activity of your vehicles in the field also enables you to spot where changes need to be made to increase performance. » Offer better customer service: If a customer has a query, you can summon up the relevant information in seconds.

See at a glance where your drivers have been, their current position and the status of the orders they’re working on. Keep clients impressed with your service offering by keeping them informed when things aren’t going to plan, when they need an ETA, or manage the relationship if an order is overdue before the phone rings with a complaint.

Best of all, you can handle it from the road.

of text, status and order messages. Get instant alerts when a vehicle enters or leaves a nominated geozone.

4. WEBFLEET Mobile Manage your fleet from the road with ease.

About TomTom Telematics TomTom Telematics is a Business Unit of TomTom dedicated to fleet management, vehicle telematics and connected car services.

WEBFLEET is a Softwareas-a-Service solution, used by small to large businesses to improve vehicle performance, save fuel, support drivers and increase overall fleet efficiency.

TomTom Telematics is one of the world’s leading telematics solution providers with more than 763 000 subscriptions worldwide, servicing drivers in more than 60 countries.

Visit telematics.tomtom.com/ tellmemore and follow us on Twitter @TomTomWEBFLEET

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

21

TACTICS

GO TO MARKET | MAKING SALES | SHARES | TALENT | SURVIVING RECESSIONS | COMMUNICATION | CASH FLOW

The business of shares in a private company

LEGAL WRANGLING

The not-so-glamorous but extremely necessary realities of creating an investable and saleable company starts with statutory records and share registers.

B

RACE YOURSELF, this article is a thriller, if you can make it to the end. Genuinely though, corporate governance is something that is increasingly becoming relevant in every company, and ensuring that your statutory records and share registers are in order and regularly updated is essential to creating an investable or saleable company. It’s definitely not glamourous, but it is very necessary.

We’ll start with some basics and continue with corporate governance tips in the issues to follow.

AUTHORISED AND ISSUED SHARES Every company has an authorised share capital, which refers to the number of shares authorised and ‘created’ by the Memorandum of Incorporation (MOI). The creation of shares takes place, initially, during the registration process and is reflected on the incorporation certificate, available from the Companies and Intellectual Properties Commission (CIPC).

All companies must have at least one share, and thus, at least one shareholder, in order to be validly incorporated as a private company. It is usual to have 1 000 shares allocated, although there is no limit to the number of shares that a private company can allocate in its MOI. After registration, if the company is a newly registered entity, the shares will be ‘issued’ to the shareholder(s).

The company does not need to issue all the allotted shares and may decide to only issue

22

BY ANDREW TAYLOR Co-founder of Legal Legends, which is revolutionising the legal industry by being Africa’s first eCommerce website for quality legal services aimed specifically at startups and entrepreneurs.

www.legallegends.co.za

» The type of shares issued (remember, all shares issued under the new Companies Act (2008) have no par value) » The name and registration number of the Company (the Issuer of the shares) » The registered and postal addresses of the Company » The name of the person or entity to whom the shares are issued — the shareholder » The identity number or registration number of the shareholder » The address of the shareholder » The signatures of the director(s) and the company secretary, if applicable.

TAKE NOTE

If you want to sell your company or attract an investor down the line, it’s essential to have your share capital in order.

a percentage of the allotted shares. This is recommended to allow the company to issue further shares to new shareholders down the line, if necessary, and allows the company to remain flexible without going through the process of passing further resolutions to create (or allot) additional shares.

Shares are then issued to the shareholder(s) by the directors of the company, who are authorised to do so by means of a resolution to that effect.

Upon issuing the share(s), the company, through its

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

authorised directors will provide the shareholder(s) with a share certificate and enter the name and details of the shareholder in the company’s register of members. Once issued, the share certificate is conclusive evidence of ownership, unless proven otherwise and allows the shareholder to exercise their rights as a shareholder.

The share certificate needs to contain the following details: » The share certificate number, which must be sequential and unique » The number of shares issued

It’s important to note that there can only ever be a single original share certificate. The share register and the company register must be updated and amended every time a new shareholder enters the business or there is any movement in the issued share capital of the company.

The views expressed above are some general tips on dealing with the shares of a company and you should always seek specific advice related to your specific legal or corporate governance needs. EM

ADVERTORIAL

PHOTOS: MIKE TURNER

buy into the franchise was enough for Nivi to get into Body20. “We’re an agile brand that never rests,” she says.

FIT BODY, FIT FINANCES Nivi Kassiram abandoned the corporate life for a career in health and fitness by investing in a Body20 franchise. She never looked back. BY DIANA ALBERTYN NIVI KASSIRAM, owner of Body20, Atholl Square in Sandton, left behind her career in finance to focus on being a new mom. Little did she know that this decision would lead her into a venture that would enrich her physically, financially and emotionally. “After I had my baby I struggled to lose the weight,” she says. “I attended a Body20 trial session. I was new to the concept and curious to try it.”

Nivi loved the experience, but she saw something bigger than simply meeting her weight-loss goals — she saw a business

opportunity. A franchise gave Nivi a way to join an established brand with proven systems, while still owning her own business. “My husband and business partner, Priyesh, who is a doctor, has always been my support and was instrumental in showing me the upside of the business and the validity of the science involved.”

After doing her due diligence, Nivi confirmed that Body20’s unique electro muscle stimulation training concept has established a niche in an untapped market, making the

brand a worthwhile investment.

LEAVING THE COMFORT ZONE As a new franchisee in a pioneering location, settling into her role as a first-time business owner was a challenge, but a supportive franchisor eased her in. “Bertus Albertse is hands on and extremely smart,” Nivi says of her franchisor. “We’re close to him and understand how he operates. His energy, passion and approachability influences everyone in the business network.” The personalised support coupled with the easy

From Start-up to FASA Newcomer Franchisor of the year in under 3 years!

Download the Franchise Info Pack and Join one of our exclusive Franchise Presentations www.body20.co.za/key-activations/

The fastest growing fitness movement globally with 36 Body20 studios www.body20.co.za / 087 231 0359 / franchise@body20.co.za

LESSONS LEARNT Many franchisees buy a business and get someone else to run it.

“Owner-operation is vital. You need to be part of the brand. It all ties in with having your finger on the pulse of your industry and the business, and knowing your clients personally. Your clients’ goals become your goals, you feel their pain and celebrate their achievements,” she says.

“We change lives doing what we do every single day,” says Nivi.

“Some clients have undergone so much of a transformation that they are even able to come off their blood pressure medication, or complete a sports event that has always been a goal.”

To keep clients motivated, Nivi’s team focus on a personalised touch, ensuring each Body20 client feels special when they walk through the door. “Your staff are an extension of your business and if they love what they do, clients will enjoy being there and look forward to each session. Our trainers all have their unique strong points and we’re always keeping the training fresh and dynamic, making sure we’re effective and ensuring the training is not boring. We’re a lifestyle brand and work relentlessly in the pursuit of a holistic, sustainable solution for our clients’ ultimate goals.”

TACTICS

GO TO MARKET | MAKING SALES | SHARES | TALENT | SURVIVING RECESSIONS | COMMUNICATION | CASH FLOW

Finding and keepingtoptalent In just ten short years digital solutions have revolutionised the way we do business — but have they changed the way you hire and engage staff? Here’s how you can use online tech to find and retain top employees. BY JACQUES DU BRUYN

T

HE WORLD is more connected than ever before.

This has opened up endless possibilities for businesses, and allowed companies to understand their markets better, to collaborate more effectively internally and target prospective clients and talent more accurately.

Having said that, I don’t believe that human resources as a discipline has been given the necessary attention online, especially alongside other disciplines such as marketing, sales and customer relationship management. Those who work in human resources, particularly within medium to large businesses, know that there are challenges when attracting the best talent and doing so within tight deadlines.

24

I’d like to share with you a simple model that I’ve developed that should help you effectively consider how HR management lives within the business and operates online. The model is called the TOE: Talent, Organisation and Employees. It answers the very simple questions of: How do you attract talent; retain your best employees; and enable your employees to engage with prospective talent — all encompassed by technology?

This model demonstrates how businesses can no longer rely on B2C or B2B communications, but that the key to successful communication is H2H: Humanto-Human. This is where empowering your current employees to attract talent on your behalf becomes powerful.

I break this model down into three steps: Attract, Retain and Engage.

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

1

ATTRACT: HOW DOES YOUR ORGANISATION ATTRACT TALENT? Here you outline the type of talent you’re after and you draw up a persona that includes the possible online ‘watering holes’ where this talent may be found.

You may want to make use of the four dimensions of audience profiling as well: Motivational (the why behind the career); Demographic (the affluence and life stage); Attitudinal (emotions, preferences or needs states); and Behavioural (what are they doing online?).

From there you evaluate the type of content that would most likely resonate with this talent group. It may be something like an eGuide within their field of interest; a How To guide similar to this one; a video interview with a big player in the industry that speaks positively about your business. You also want to

showcase your business as an employer of choice and so this content needs to showcase the inner working of the business, the culture, the people and the ‘team’. From there you would use programmatic media buying (or platform marketing) to effectively target this talent group online.

With the use of offline and online data, targeting carefully selected channels, the ability to address this talent group personally and at scale is very possible.

Channels that work for attracting talent include: » LinkedIn: Particularly sponsored stories and inmail » Programmatic third party: Especially when an effective data management platform is incorporated, such as a tool like Google Double Click as a DSP (demand side platform) and Blue Kai as a DMP (data management platform)

TACTICS

3

ENGAGE: ARE YOU ENABLING YOUR EMPLOYEES TO BE YOUR VOICE? We all know that when a brand talks about itself it’s not as believable as when our peers talk about a brand.

That’s the gist here. You

Tech

Talent

Channels that work for engaging include: » Twitter: This is the foremost tool for easily jumping into conversations online » LinkedIn: LinkedIn groups which are industryspecific are the best place to get involved in conversations online and to connect with peers

IF YOU WANT TO ACHIEVE IT, DREAM IT

Employees

How does our organisation create an environment online that allows for employees to assume the role of ambassadors and engage with talent?

need to develop an online policy that enables your employees to engage with prospective talent online.

From here you want to identify certain passionate employees that you feel most embody your brand values. The next step is to encourage them to connect with and converse with their peers online, thus portraying why working for your organisation is preferable.

You want to equip your ambassadors with great content to share so that they engage as thought leaders. Great content may come in the form of thought leadership blog posts generated by your organisation that can be shared by your ambassadors online.

GOALS

Richard Branson has written to-do lists his entire adult life, and they’ve ranged from daily tasks to his big hairy audacious goals.

n

t

Channels that work for retaining include: » Facebook for business: Chances are your employees are on Facebook already » Slack: A collaboration tool for task teams » Intranet: With chat and forum capabilities

Organisation

ac tr At

RETAIN: HOW DOES YOUR ORGANISATION RETAIN TOP TALENT? If there’s one thing that can be said about social media and the Internet, it’s that it has opened doors of communication in a new way. Communication between top executives and personnel is what breaks down the barriers of hierarchy and builds the sense of ‘team’.

This is where you want to enable effective communication through tools like Facebook for business, the Intranet, and smaller huddle groups that can be formed on tools like Slack. This is also where you want to find ambassadors within different business units and clusters that can be catalysts for conversation between the different layers of hierarchy.

Through this process you want to equip your employees and make them believe they’re working for the best business in the industry. That’s why sharing success stories, sharing tools for career advancement, and competitions, is important.

How does our organisation retain employees using online platforms?

Re ta i

2

How does our organisation attract talent using online platforms?

Engage

» Facebook: Focusing on dynamic content that can easily be shared.

» Forums: Industry-specific forums are a great place to get connected and to share your expertise THE ROLE OF EMPLOYEES Human resources is any business’s cornerstone. Even the most machine-heavy businesses need people.

And that doesn’t mean only people who can do a job, but rather, people who make a difference in an organisation.

That’s why attracting the best talent is not only a must, it’s imperative.

Through the abovementioned model, I demonstrate how communicating from the organisation to the talent pool is only one piece of the pie. The most important piece is, without a doubt, the human-to-human element; the channel where your current employees become your ambassadors, and in turn start attracting talent on your behalf. EM Jacques du Bruyn is the co-founder and MD of Flume, a digital marketing agency. He also sits on the Vega School Of Brand Leadership's Advisory Council.

Visit www.flume.co.za

In a recent blog post, the Virgin Group founder shared a page from an old diary: a to-do list he wrote on 6 November, 1972.

From learning to fly to opening more Virgin Records stores, the list shows 22-year-old Branson’s ambitious nature that ultimately drove him to success. And the list even features smaller, simpler tasks as well, such as cleaning up and inviting more people to his record studio The Manor.

Fast forward 45 years and take a look at where Branson is today. He has a net worth of about $5 billion and is the founder of an organization that houses more than 450 companies. It’s safe to say Branson is doing more than okay. In part, he thanks to-do lists for this.

“Lists not only provide great structure for getting things done, but they also help us to set goals and achieve our dreams,” Branson wrote in the blog post.

Do you list your big goals and daily objectives?

Perhaps it’s time to start. EM © Entrepreneur Media Inc. All rights reserved.

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

25

TACTICS

GO TO MARKET | MAKING SALES | SHARES | TALENT | SURVIVING RECESSIONS | COMMUNICATION | CASH FLOW

BUSINESS DISRUPTED

Smart entrepreneurs spot the opportunities in tough times

How to recession— proof your business South Africa is in a technical recession. Here’s how to navigate the turbulent times ahead.

F

OR THE LAY-MAN like myself, it’s important to understand that a technical recession is an economic term that describes two consecutive quarters of negative growth in an economy. For South Africa, gross domestic product (GDP) declined 0,7% during the first quarter of 2017 after contracting by 0,3% in the fourth quarter of 2016.

Why is this a big deal?

Because the economic outlook, even without the technical recession, was bleak. Ratings agencies are losing confidence in South Africa. S&P downgraded the country to junk status earlier this year, followed by Moodys, which revised South Africa down a notch.

HOW ORGANISATIONS RESPOND TO RECESSIONS There are a number of kneejerk reactions to a recession as a direct result of decreasing

26

revenues and profits. The most relevant to SMEs are: » Cutting R&D spending. This means no new product lines, and no incremental innovation expenditure unless it returns direct value to the business. » People get fired. In a time where underperformance has a double impact on the business, people that aren’t performing are performancemanaged out the door. » Market shares shrink. This is often due to reduced R&D spends. » Processes are evaluated.

Companies start looking for efficiencies that should have already been in place.

OUTLOOK AND OPPORTUNITIES FOR SMEs For SMEs, sales and product planning in a recession is key and must align to the way big business is responding to the recession. Fundraising for capital expenditure is more expensive,

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

BY MUSA KALENGA Author, marketer and entrepreneur. Musa Kalenga is a lauded speaker and strategist who has been recognised as one of the Top 200 young South Africans by Mail & Guardian.

@musakalenga iconoclasts.co.za

but not impossible. It may be valuable to invest ahead of the curve to capture the emergent big businesses during this period and therefore external investment may make sense.

In an increasingly collaborative economy, SMEs should look to each other for partnerships and complementary projects that cost little to assemble, but amount to great value for a big business.

SURVIVAL OF THE NIMBLEST 1. Cut down. SMEs have the ability to be nimble and move quickly to change organisational structures and deliver on just-in-time value. This can be hamstrung by unpredictable fluctuating expenses like cell phone contracts that may vary in cost in an unpredictable way from month to month. The fewer of these costs on your books, the better.

2. Sell harder. The term ‘always be closing’ is a famous sales

mantra, it’s also applicable in a recessionary context. First, because you don’t know what they don’t know and unless you tell them — who will?

Second, the feedback loop of understanding the concerns and actions from your customer or client can only be understood through interaction.

3. Position smarter. Is it clear that you are the best provider for the job that needs to be done?

If not, it is important to build a stakeholder strategy that puts your business in front of the key procurement and strategy custodians. This may be a great opportunity to exhibit demos, case studies and showcase the efficiency that you offer.

4. Focus on value. I can’t overstate this. Value, value, value.

It goes without saying that one of the key reasons anyone would consider an alternative supplier is because of the specific problem they solve, so this should be your approach in reinforcing the value you bring to the table. Repetition builds memory structure.

ONE RECESSION DOESN’T FIT ALL It’s important to understand that for SMEs a recession can have an expansionary effect in the same way the lipstick effect applies to luxury goods and services. The lipstick effect is the theory that when facing an economic crisis, consumers will be more willing to buy less costly luxury goods. Instead of buying expensive fur coats, for example, people will buy expensive lipstick. A series of psychology experiments have confirmed for the first time that while tougher economic times decrease desire for most items, they also reliably increase women’s yearning for products that boost their attractiveness.

PARTING SHOT So, for SMEs, the formula is simple — don’t panic, analyse your customer value chain and position your solution accordingly and then sell, sell, sell. EM

ADVERTORIAL

SABLE INTERNATIONAL

GOING GLOBAL Expand your business or invest in an existing business in the UK. BY GARY KOCKOTT

THE UK HAS ALWAYS been a popular destination for South African investors and entrepreneurs. Low Corporation Tax, pro-business policies and an economy that offers you access to the global market are just some of the reasons for its popularity. Whether you want to move to the UK or not, there are many ways to expand your business or diversify your wealth.

We can help you decide which route is best for you.

EXPANDING YOUR BUSINESS TO THE UK As a business owner in South Africa, it’s never a bad idea to look at ways to grow your business beyond the borders of the Republic. If you want to expand to the UK, there are a few things you’ll need to consider: » Choose an ideal location: Consider your staffing needs, your business models and where your customers are likely to be situated. » Choose between a branch or subsidiary: Each has its own particular consequences, so understand what you’re getting into before you decide which is best. » Sustainable funding: It’s best to ensure you have the capital to give yourself a chance to get started properly. » Choose trusted advisers: You’ll need a trusted team of advisers on the ground in the UK. Expanding your business to the UK doesn’t mean you have to leave South Africa. You can continue living in your home

28

country with your family for years while your business finds its feet in the UK. If at a later stage you decide to move to the UK, you’ll already have a head start. You’ll be able to continue helping your UK operation to thrive, rather than trying to slug it out in the ultra-competitive UK job market.

EXPAND YOUR BUSINESS AND SECURE A UK VISA The UK’s Tier 1 (Entrepreneur) visa allows you to expand your existing South African business into the UK or start a new company there. The entrepreneur visa is aimed at encouraging medium- and small-scale business ventures in the UK. To be eligible for this visa you’ll need to invest £200 000 in your operation. As a holder of this visa, you will be allowed to move yourself and your family to the UK with you.

The only major restriction attached to this visa is that you cannot work outside of the business you have started up. However, after five years of being on this visa, you may apply for permanent residence and these restrictions will fall away.

If you’d rather take a slightly easier route to setting up business interests in the UK, there are several other ways to do so.

INVEST IN A PRE-EXISTING UK BUSINESS AND GET A VISA If you’re not sure you want to expand your current business into the UK, or if you do not own a business, there are still ways

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

for you to be an entrepreneur and an investor in the UK. There are many UK businesses looking for investors. These businesses range from start-ups to mediumsized established ventures. One of these businesses could be your ticket to the UK. If you invest £200 000 into a pre-existing UK business, you will be eligible for a Tier 1 (Entrepreneur) visa. Choosing the right business to invest in can be tricky, which is why we’ve set up a programme specifically aimed at people who wish to go this route.

Our UK Tier 1 Entrepreneur visa Investment Programme will match you with one of the over 200 pre-approved UK businesses we have on file. In this way, we will ensure that your business and investor skills are matched to a business that needs them.

GET A FOOTHOLD IN THE UK MARKET If you’re not yet ready to move to the UK and don’t want to apply for a Tier 1 visa (because you already have a UK visa or EU passport), we can still help you invest in any one of our preapproved UK businesses.

This is a great way for you to get a foothold in the UK market.

Investing in this way comes with no restrictions in terms of what you can or cannot do in the UK at a later stage. Should you choose to move to the UK later, you can always re-invest in the same business and apply for the Tier 1 (Entrepreneur) visa if you need to.

BUSINESS STARTUP AND UK VISA ADVICE Expanding your business is an exciting and complex endeavour. The rewards are massive if you get the right advice and implement it properly. It’s important to know when to take advice and when to follow your gut.

Our UK-based SME accounting team can help you ensure you set up your business in the correct way and that it continues to run as efficiently and profitably as possible.

While the accountants are crunching the numbers, our team of experienced UK visa experts will handle your visa application so that you have complete peace of mind throughout this entire process.

Gary Kockott is the Managing Director of Sable International

Call us on +27 (0)21 657 2180 or send an email to ukinvest@sableinternational. com and we’ll figure out how best to help you expand into the UK.

TACTICS

GO TO MARKET | MAKING SALES | SHARES | TALENT | SURVIVING RECESSIONS | COMMUNICATION | CASH FLOW

Your most critical team— building skill The best team members play well with others — they collaborate effectively, and know how to open meaningful dialogues. BY BRUCE MSIMANGA

T

O BECOME an effective collaborator, there are certain skills that a leader needs to develop, including the skill of communicating effectively in order to build solid relationships.

Effective communication involves listening, something most of us think we do well because we do it all the time.

The reality is that even though we spend a large part of each day listening to our spouses, family members, friends, managers, co-workers and customers, most of us are pretty poor at it. Our listening skills become even worse when there’s high tension or when tempers are about to flare.

A cornerstone of effectively playing well with others is learning to use listening to really understand what people

30

are saying. This partly includes developing inquiry skills so that you can extract information from your colleagues, employees and even customers. The heart of dialogue is inquiring and advocating, and this consists of sharing our point of view and listening to the point of view of others until we have created a pool of shared understanding.

ADVOCACY vs EMPATHY Advocacy has to do with concern for self. People high on this dimension stand up for their own rights, look out for their own needs, and defend their own position.

Empathy has to do with concern for others. People high on this dimension consider the needs of others and try to help others meet their goals.

In terms of these two dimensions, there are four styles of communication that we

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

typically fall into.

When we dominate, we are high on advocacy and low on empathy. There are many examples of how we dominate.

These include: Refusing to listen, lecturing, arguing, yelling, defending, criticising, belittling, controlling, blaming, slamming/ throwing, gossiping, being sarcastic, and so on. People who use this style of communication tend to be individualistic, opinionated, and verbal.

Dominators communicate the message “I’m okay and you’re not okay.” They also communicate that “if you do not do what I want, I will intimidate, coerce, or overpower you until you do.” At the extreme, dominators go on the offensive and attack other people, trying to win through intimidation, power, and control.

When we accommodate, we are high on empathy and low on

advocacy. Being accommodating to others includes being silent, conceding, giving in, appeasing, harmonising, taking the blame, placating and apologising.

Accommodators try to get along with people, showing lots of patience, even though they might be struggling inside. At the extreme they will feel and act like martyrs, pout, get sick, be depressed, or act out their feelings in passive-aggressive ways. They try to get others to change using indirect tactics.

Accommodators communicate the message “I’m not okay and you’re okay,” and “You can have your way.”

When we avoid, we are low on both advocacy and empathy. How do we avoid? The difference between avoiding and accommodating is that avoiders disengage and deny the existence of conflicts or concerns.

TACTICS They tend to tune out emotionally and act as if everything is okay.

Accommodators acknowledge a problem and feel responsible (even over-responsible) to fix it or make others feel better. We avoid by denying, suppressing feelings, leaving, disengaging, being apathetic, rationalising, acting as if it’s business as usual, using humour, distracting and dismissing. The message that is communicated by avoiders is “Let’s pretend that everything is okay.” They hope that by glossing over a situation it will go away.

Low

ADVOCACY

DOMINATE

DIALOGUE

Concern for Self

High

Dialogue has three objectives: Mutuality, creating a pool of shared understanding, and synergy.

AVOID Low

ACCOMMODATE Concern for Others EMPATHY

High

THE POWER OF DIALOGUE While one style may be dominant, each of us uses all three styles of communication at different moments and in different situations. Our native tongue is our most natural style and probably one which we learnt at a young age, when in distress. Are you mostly a Dominator, an Accommodator or an Avoider? It’s important to understand your native tongue, so that you can understand how to shift your natural style into one of dialogue. When we dialogue (collaborate), we are high on both advocacy and empathy.

The concept of dialogue is an alternative to the communicating styles of dominating, accommodating, and avoiding. At DLA, we define dialogue as creating a pool of shared understanding in an atmosphere of respect and goodwill in order to arrive at a mutually beneficial outcome.

This is communication that seeks to maximise both the dimensions of advocacy and empathy and it’s based on the premise that the more openly we talk, the better our solutions and the more committed we will be to carrying them out.

DIALOGUE CONSISTS OF FOUR SKILLS: » We establish an atmosphere of unity, mutual respect, and goodwill through mutuality » We then encourage others

to disclose their point of view and/or inner experience through inquiry » We disclose our own point of view or inner experience through advocacy » We arrive at win/win outcomes through synergy The heart of dialogue is inquiry and advocacy, consisting of sharing our point of view and listening to the point of view of others until we have created a pool of shared understanding.

Only when all the data is in the pool of shared understanding do we go to the step of synergy, in which we make a decision or solve the problem.

Dialogue has three objectives: Mutuality, creating a pool of shared understanding, and synergy. It’s not always intended to meet all three of these objectives. Sometimes the purpose of dialogue is simply to establish mutuality, for example when a resentment has built up between two individuals that keeps them from working together effectively.

On other occasions, the purpose is to build a pool of shared understanding. The US and Vietnam have recently met on a number of occasions to understand each other’s decision process during the war, in order to learn the lessons necessary to prevent future tragedies.

The purpose of dialogue could also be to solve a problem. For example, a management team must decide how to allocate limited financial resources among all departments. This third objective cannot be achieved without meeting objectives one and two. And the second objective cannot be achieved without meeting objective one. EM

Bruce Msimanga is the president of DLA Consulting, a consultancy that focuses on leadership and team development.

Visit www.dla-c.com

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

31

TACTICS

GO TO MARKET | MAKING SALES | SHARES | TALENT | SURVIVING RECESSIONS | COMMUNICATION | CASH FLOW

Staying out of the red Cash flow management is always essential, but in a recessionary environment it’s even more crucial to the overall health of an organisation. Here’s how you can keep your business growing and out of the red.

COACH’S CORNER

BY PIETER SCHOLTZ Leading business and executive coach and South African Master Licensee for global franchise company, ActionCOACH. Specialises in high-level personal and business growth.

@BusCoachSA www.actioncoach.co.za

I

N EVERY adversity there is an upside. This saying is particularly valid when it comes to managing your cashflow in a recession. As we all know, cashflow is the lifeblood of any business.

Banks are implementing stricter lending criteria and this places greater strain on your business as the availability of cash

10% and then review these costs with each department. A really good example to follow are costs that once trimmed have a ripple effect of cost reduction in other areas of the business. Scaling down on office rental has the advantage of reducing your utility bill, insurance and possibly also your telecommunications bill.

INVOICING Ensure that you are invoicing your customers at the completion of ‘project’ and do not delay invoicing for a particular day in the month. This ensures that your customers are required to pay you timeously for the work done, for example within seven days of invoicing.

“This is an ideal time to review your cash flow cycle to determine the length of time it takes from receiving an order to invoicing and receiving the cash in your bank account.” becomes limited.

For savvy entrepreneurs there are a number of strategies that one can apply to ensure that you have the required cash to continue funding your business operations.

CONDUCT A RIGOROUS OVERVIEW OF YOUR COSTS This is a particularly good time to review all your costs in your business and truly question each expense. Often this exercise reveals unnecessary costs that do not impact the effective operation of the business. Set yourself and your team a target to be able to reduce costs by

32

MANAGING YOUR DEBTORS BOOK If you are not already doing it, you should be reviewing your debtors book at least weekly, dependent upon the type of business you are running.

Keep regular contact with all your customers, particularly those outside of their credit terms. Chase payments from these customers regularly but fairly and ensure that you apply your own debtors policy and procedure. If you find this difficult to do, appoint a third party to manage your debtors book for you but do not lose touch with your customers.

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

REVIEW YOUR SUPPLIER CREDIT TERMS This is an important process to go through but recognise that your suppliers will be managing their cashflow as well. If you are a regular supplier and have a good payment history, they will be more willing to discuss an extension of payment terms with you. It’s very important that you discuss any ‘broken agreements’ with them as soon as you are aware of them. If new payment terms are agreed, ensure that you can manage them.

CASH FLOW CYCLE This is an ideal time to review your cash flow cycle to determine the length of time it takes from receiving an order to invoicing and receiving the cash in your bank account. Identify each step in the process and determine whether there are ways to shorten the cycle.

BANK FINANCE It’s always good advice to keep communication with your bank open but this is even more important in a recessionary environment. Should you require additional financing from your bank to be able to fund shortterm shortfalls, ensure that you have a good business plan to support your application, as this will give the bank the comfort that you are ‘on top’ of your game, particularly where your cashflow plan is concerned.

While bank finance should be your source of last resort, do not leave it until the last minute.

Following these strategies will largely negate the negative consequences that a shortfall of cash may have on your business.

EM

ADVERTORIAL

IS YOUR STRONGEST LEAD-GENERATING TOOL DOING ITS JOB? Custom web design or DIY? With today’s tech platforms there’s a lot you can do in-house, but should you be designing your own website, or are there some things best left to the professionals? Leigh-Ann O’Hagan from LIT Creations unpacks your options. BY NADINE TODD

Q&A

Q

PHOTO: MIKE TURNER

What’s the difference between Custom Web Development and WordPress?

With a custom website design, we create a look and feel for you specifically tailored to your business and not based on any particular pre-existing theme.

If you have a unique idea that you’d like to implement, then the custom development route is best for your business. Perhaps you’d like to have various levels of logins with functionality associated with each. Today there are plugins available for just about anything you need, but your site will always be defined by the restrictions of the template or plugin you’re purchasing (or downloading).

On the other hand, if you’re more interested in a website that effectively describes your business but with pages that you’d like to be able to update yourself, then Wordpress is a great platform for you. Just be careful though — while there are a lot of things you can do with a WordPress theme, you’re bound by available templates. You’ll never have complete control over your website’s look and feel.

Q

What are the pros of Custom Development?

When codes are scripted in-house by talented developers, there are three core pros to your website: 1. The code is private and not available on the world

THE POWER OF A STRONG WEBSITE wide web to be exploited or hacked. 2. If you want to move one image two pixels to the left it’s no problem — the code is yours, and your developers know exactly where to go to make any change you would like. 3. You control the process. For example, as developers, we do a design proposal for you at the outset of the project, so that you can see what your website will look like and suggest changes to the design before going ahead.

There are however, some cons as well. Custom development takes longer than a WordPress site, and not every aspect of your site will be Content Management System-driven, which means you may need to go back to your developers to make certain changes on your behalf in future.

Q

What about WordPress?

Development is quicker — you can get a basic website up and running within two working days and go live. There are also a lot of templates and themes to choose from. And finally, you also get a WordPress admin login so that you can update anything on the site yourself.

Unfortunately, WordPress sites are frequently hacked because their code is freely available on the Internet. LIT Creations do all of our WordPress websites with a WordPress security plugin, but this is still not a failsafe.

“All businesses need a website,” says Leigh-Ann. “We get so many people telling us that their website generates no income for them. But this doesn’t need to be the case. If you’re selling something through your site, you need to ensure that it’s geared towards making sales as simple and secure as possible.

“On the other hand, your website should be generating leads for you. People research everything they need through the Internet.

“Look at your website’s bounce-rate. How many people are landing on your home page and immediately going elsewhere? If it’s high, there might be a problem with your landing page.

Assess why people aren’t staying on your site. Are they the wrong prospects, or is your site difficult to navigate?

I always prompt our clients to think of their wording carefully — especially for their home page. Start with a question and then provide an

answer. If you’re a plumber, don’t start with ‘Welcome to ABC Plumbers. Our business started in 2001 and we have a wealth of experience.’

This means nothing to a fast-paced society who are solutions-driven. Rather say ‘Do you have a leaking toilet?

We can help! We service the Gauteng area and provide 24/7 support. Call us today.’

“In addition, if your website is not responsive, you need to get it redesigned into a responsive format. More people view websites on mobile devices than on PCs. If your budget is not big, then start out small and build on your website as and when you can. You should never feel stuck with a site from the outset — your site should grow as your business grows and as new ideas occur to you, such as adding testimonials or linking enquiry forms to specific offers. Your website is a powerful lead-generating tool — is it working for you?”

Call us today for a free website assessment. We’ll give you an honest assessment of what’s working and what isn’t, as well as cost comparisons between Wordpress and custom web development solutions.

Tel: +27 (0)11 022 6060, Email: info@litcreations.com Website: www.litcreations.com

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

33

ACTIONABLE INSIGHTS TO ACCELERATE HIGH GROWTH

GROWTH

A RIVER DEEP AND WIDE To build a great business that can grow from R18 million to R80 million in under four years takes strong foundations and a key purpose that employees and clients can believe in. Here’s how Monalisa Zwambila learnt to articulate her vision to propel her company’s growth. BY NADINE TODD

34

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

KEY INSIGHTS

No man (or woman) is an island

The greatest entrepreneurs recognise the importance of a team. They know that their role as leader is to articulate their vision in such a way that they attract and retain the right employees, who are ultimately able to execute that vision.

Own your decisions

Don’t cast blame when things don’t work out as planned. Take the time to evaluate all possible outcomes, weigh your options, and then own your decisions. As a leader, you need to be decisive, and the best way to make that a habit is to have confidence in your decisions, good and bad. Remember, ‘no decision’ is worse than the wrong decision.

When you buy a business, you’re buying its skills and people

Due diligence processes look at a business’s books and finances. They evaluate cash flow, current and potential clients, and growth possibilities. What is often overlooked is the core of the business and what makes it tick: Its people. Spend time getting to know the people — they could be your greatest asset, or your greatest burden.

VITAL STATS

PHOTO: DEVIN LESTER

PLAYER: Monalisa Zwambila COMPANY: Riverbed LAUNCHED: 2007 TURNOVER: R80 million AWARDS: Winner of the Regional Business Woman of the Year 2017 VISIT: www. theriverbedagency. co.za

THERE COMES A TIME in a business’s lifecycle when you realise you are through your start-up journey, and if you want to build a high-growth organisation, you need to put the right foundations in place.

For Monalisa Zwambila, founder of Riverbed, a throughthe-line communications agency, that realisation happened in 2013, six years after she had launched the business.

“Four years ago I had an epiphany,” she says. “We had 15 employees and a turnover of R18 million. I realised that if we were ever going to get bigger, I needed to find a way to get my vision out of my head, and into the organisation. It needed to be more than just me working towards a goal. It needed to be the whole organisation working together towards a shared dream.”

Today Riverbed employs 40 people and has a turnover of R80 million, with 100% yearon-year growth. These are the foundations Monalisa has put in place to achieve this growth and they remain the foundations of where she plans to take the business.

1

Articulate your vision and get the right people on board For Monalisa, growth had always been a constant. She had never wanted a two-man operation.

But when you’re starting out, it’s not always possible to follow a clear vision. You can have a sense of purpose and fundamentals in place, but you’re also a start-up, and you’ll take what you can get to keep the business operational.

“I was MD of a large communications firm before I struck out on my own,” Monalisa explains. “I had built a reputation based on excellence, hard work and tenacity, and this opened doors for me, and secured our first two clients. Building an ethical and best-of-breed business has always been important to me. I’m a firm believer that if you continually give your best work, something will come of it, and this is what I look for in my employees.

But when you’re launching a business, you also need to be a realist.

“In the early days it was just me, formulating the firm’s strategy, and helping my clients

develop the right PR strategy and events for their brand. But I needed people to implement, and when you’re starting out, you’ll take anyone. The shift happened for me when I realised that I couldn’t do it alone. I needed like-minded, great people to get on the journey with me. This would only work if they had a sense of purpose beyond just an ad agency, and I realised that it was up to me to give them that.

Once I got it, once I realised that to attract and retain the right people, you need to be able to articulate your vision, it brought about amazing changes, both in the character and the culture of the organisation.”

But articulating your vision is easier said than done, as Monalisa, and countless business owners before her, have learnt.

You need to be able to get your vision out of your head and into your employees’ hearts.

DO THIS: If your goal is growth, having the right people in key strategic areas is vital. To attract and retain the best people for your organisation though, you need a clear vision and culture that they can believe in and add value to.

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

35

BUILD

GROWTH | FINANCE | PRIVATE EQUITY | LEADERSHIP | SCALE

2

Find a clear growth path To move from where they were, Monalisa recognised a step change was needed for the business. There is only so much room for growth for a PR and eventing agency, and so the next logical move was to become a through-theline agency. In PR, billings are capped. The advertising space offers a bigger creative outlet, and combining these capabilities makes it possible to offer the same clients more.

“There are two ways to do this. You can either bring in heavy-hitters with a client base and expertise in a different channel to your own, or make an acquisition, and grow the business in that way,” she says.

This is true of any business, operating within any industry.

If you want to grow through additional revenue streams and areas of expertise, you can build them slowly and organically, or bring in experts and an existing client base. Monalisa decided to make a strategic acquisition.

“We weren’t a big name in the world of agencies, and didn’t hold the right appeal for a creative with their own clout in the market. We weren’t attractive enough at that time for the level of talent that I was looking for. The only other option was an acquisition. The timing was perfect. The owner of Chillibush Communications wanted to sell the business and exit completely, which suited me well. I didn’t want a partnership; I was looking for new, abovethe-line skills and an existing client base. Chilibush had a good

reputation in the industry, and a solid client base.”

With the due diligence and an agreement in place, Chillibush and Riverbed merged. Monalisa had achieved her objective of becoming a through-the-line agency, but not without some serious growing pains.

“Chillibush had 30 people, and we had 15. It was a bit like the fish swallowing the whale.

I had also debated what we

drive, and what we’re trying to deliver on, but we did lose people during the transition. I learnt a valuable lesson. Once your vision and culture is clear, people are able to determine if it suits them or not. If it does, you have full buy-in. If it doesn’t, it’s better for everyone to move on.

It took me time to understand this, and to have the courageous conversations when I needed to. You can’t be everything to

“We’re competing against the huge multinationals. We don’t stand a chance unless we get our story out there. We need to let them know that we can do the job just as well, with better local insights, and probably at a better price — but it’s not up to them to find us.” would be called, and I’d settled on keeping Riverbed, instead of Chillibush/Riverbed. I had a very clear vision and purpose, and I didn’t want to dilute that, or lose focus. But it did mean that I was making the conscious choice not to keep the name of an agency that had a good industry reputation, and a larger employee base than my own.

Ultimately though, I decided that didn’t matter. There would be teething pains — and there were — but it would be worth it. I just had to stick to my vision.

“It was a challenging time. I was clear about the upside, but it was still challenging. Today we are stronger. We’re clear about our purpose, culture and

everyone. Rather know exactly who you are, and create an incredible space for people who share your vision.”

DO THIS: Are your decisions short-term money decisions, or long-term growth decisions?

From a practical business perspective, Monalisa could have kept the Chillibush name and leveraged it to make money.

But even though she believed the acquisition of Chillibush was the best growth move open to her, Monalisa had her own vision — one she worked 16-hour days to achieve. To stay true to this vision, she needed to stay true to the brand she was building.

It was a long-term decision, but it’s paid off.

3

Keep your clients happy When you’re on a growth path, there’s a fine line between landing big deals and keeping your existing clients happy.

This is even more true when it comes to a merger. Riverbed’s team identified the key clients from both businesses, and ensured they were kept happy.

“We needed to win Chillibush’s clients over,” says Monalisa. “We promised it would be a smooth transition — and kept that promise — plus we unpacked the value of what they could now tap into with our additional services, which was to their benefit. These accounts were key — we had higher overheads and a much larger staff complement to take care of. We also made sure we didn’t alienate existing clients.”

DO THIS: When you’re on a growth path, communicate with your clients often and openly. Be transparent about your plans, and any challenges you’re facing.

Unpack the benefits to them, and ask for support when you need it, while giving assurances that any upheavals are short-lived. You never want to alienate existing clients that have supported you up until that point.

4

Build your brand With the right capabilities in place, Riverbed has now focused on brand building. “We’ve been under the radar,” says Monalisa.

“If we want to start securing really big deals, we need to position ourselves in the minds of the right companies. In this industry most pitches are closed tenders, and the process is managed by two or three search companies. We need

BUILD IT

HOW THE PROMISE OF THE iPHONE EXISTED BEFORE THE PRODUCT Have you ever purposely misled a customer? The public? The media?

Steve Jobs did. And he did it to change the world.

36

The story goes back to 2007, when Apple was first introducing the iPhone. Jobs knew that he had a product that would have an enormous impact on the way humans use technology.

THE PROBLEM First, the iPhone didn’t really

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

exist. Despite this, Jobs planned to announce it to the world at a conference in January. According to Shawn Knight, who wrote about this story in Techspot a few years after Jobs’ death, the iPhone at the time was ‘riddled with bugs’, many of which caused the phone to crash. All Jobs

had was an unfinished, flawed model and some big ideas.

THE SOLUTION Steve Jobs demonstrated his idea instead of the reality.

He demanded a workaround that would fool his audience.

His development team created a ‘golden path’ that

BUILD to be on their radar.”

To achieve this, Riverbed has embarked on its own PR strategy, but this would have been impossible without the tenyear track record that Monalisa and her team have patiently built up.

“The market needs to know who we are. We’re competing against the huge multinationals.

We don’t stand a chance unless we get our story out there. We need to let them know that we can do the job just as well, with better local insights, and probably at a better price — but it’s not up to them to find us.

It’s up to us to make sure they see us, and can’t ignore us. That takes time — you need to build up a track record. But once you have, it’s time to make use of it, and show your potential clients what you’re made of.”

DO THIS: Build the right foundations. Most overnight successes are ten years in the making. You need to build credibility and a good reputation.

You need the right systems and processes in place to ensure delivery. And you need the confidence to bid for large tenders — and win them.

LESSONS LEARNT » It’s all about people.

When you go through the process of a structured deal, you tend to do a due diligence on the balance sheets and income statements, but you don’t look at the people, and yet that’s what you’re buying. That’s where the skills lie. This was Monalisa’s biggest mistake — she didn’t spend enough time looking at the people. » Leadership is a journey.

Recognise that your leadership skills are always a work in progress — and work on them. As the head of your organisation, how you lead your team is essential to your growth prospects. » When you make a decision, own it.

Monalisa interrogates

everything. However, this means that once she makes a decision, she takes complete ownership of it, and never casts blame if it doesn’t work out as planned. » Learn to be decisive.

When you’re growing a business, you have your head down, working, working, working. And then you look up and realise how many people are now following you.

This is often a rough transition for business owners, because you have to own your position — including the tough decisions and conversations that come with it. In this position, decisiveness is crucial.

You can’t take time making key decisions that affect your team, business and clients.

You need to be decisive.

5

Have a purpose — and share it with the world “We’ve found that to be considered by clients, you need to share your story. People need to notice you, and want to share your story too because it resonates with them,” says Monalisa.

“For us, we’ve launched an initiative called the Greater Good initiative based on my business

was basically a step by step, scripted procedure of features that he could show in a specific order so that the phone wouldn’t malfunction. But that wasn’t all. The iPhone developers still hadn't fixed major issues with the device's memory management, which

philosophies. I’ve always held these philosophies, but it took time and experience before I was able to fully articulate them. People and clients have approached me wanting to work with us because we always strive to do Great things for Good. They don’t always

frequently caused a restart.

The workaround was for Jobs to keep a few iPhones on stage and switch from one to another when memory became low. In the end, the 90-minute demonstration went off without a hitch and Apple would soon make history.

remember all the details of what I said, they just know it resonated with them, and that’s the start of the conversation. Ultimately, people do business with people, and so what you care about, and how you do business, matters.”

Monalisa’s path to articulating her vision began with her

epiphany four years ago. She realised that all businesses exist within their environments, and impact the world around them.

This can either be a force for good or not. “I started thinking about how we can do great things for good,” she explains. “I wanted to align all our campaigns and the clients we choose to work with to this ideal: Where is the good?

“We’ve broken this down into three key areas: Greater good for our clients, which is doing great work and asking what greater good idea can come out of that campaign, and is there a benefit to people?

“Then we look for the greater good for employees. Is there excellence for its own sake? And how do we build, monitor and recognise greatness?

“Finally, is there greater good in the communities we serve?

We quantify the pro bono work we do, and we’ve already put two graduates through university.

We’ve found that this philosophy gives us purpose, and keeps us all on the same page. We have a benchmark that we can measure our decisions against, and this keeps us on point and all working towards the same goals, which is essential in a growing organisation.”

DO THIS: Develop a clear vision and purpose, and align this with your core strategy. This gives you a clear point to benchmark all decisions against. What’s your north star and does the current decision support it? This will help you maintain focus and give you and your team fulfilment. EM

Sure, there was no way that Jobs was fully certain that all the features he promised on the iPhone would actually work in the real world. But he plowed ahead anyway with his fake demonstration.

Why? Because he believed he was doing the right thing.

Do you sometimes mislead your customers? Of course you do.

Hopefully you’re doing it for the right reasons too — for the promise of a better future that you will deliver on, no matter what obstacles are currently in your way. EM © Entrepreneur Media Inc. All rights reserved.

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

37

BUILD

GROWTH | FINANCE | PRIVATE EQUITY | LEADERSHIP | SCALE

GROWTH FUNDING

Raising working capital finance There are more than 150 working capital funds available for SMEs in South Africa. Here’s what you need to know to access them.

A

HEALTHY CASH FLOW is the life blood of a business.

The reality is that most businesses experience cash flow problems from time to time, which could be caused by a structural problem in your supply chain, inadequate debtor controls, poor pricing structures, bad planning, too much capital being tied up in stock or possibly the impact of unplanned growth on your existing resources.

Whatever the reason, the good news is that there are more than 150 different working capital funds available for SMEs in South Africa. Working capital loans are short-term loans that are designed to provide financial bridging to address cash flow needs. The more you understand about how these funds work, the better you will be able to identify the most appropriate option for your specific needs.

WHAT’S AVAILABLE Overdrafts and credit cards Overdrafts and credit card facilities are a good option for relatively small, short-term cash

38

WORKING CAPITAL LOANS Working capital loans are short-term loans that are designed to provide financial bridging to address cash flow needs. The more you understand about how these funds work, the better you will be able to identify the most appropriate option for your specific needs.

flow problems. Most banks are willing to provide profitable businesses with overdrafts and credit facilities and you will only be charged interest on the money you use. Some banks charge a small monthly fee for these facilities even if you don’t use them, but this is a small price to pay for the convenience of being able to meet financial obligations.

Contract finance Also known as getting upfront

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

cash to fund the work for an approved contract. If the reason for the cash flow problem is high sales volumes that result in a temporary cash flow issue, contract finance can be a good option. Contract financiers want to know that your client is reputable and has a good payment history. They’ll also want assurance that you have the knowledge and experience to fulfil the terms of the contract.

First prize is contract finance that enables you to control both the finance and the contract work although in some cases the lender will insist on controlling the finance and may even want involvement in managing the project. Most contract financiers charge an interest rate linked to prime and you will also be charged for drawing up cession documents if this is relevant.

Debtor finance or invoice financing Also known as getting cash while waiting for customers to pay invoices. If the cash crunch is caused by customers who will take a long time to pay you, debtor finance can be useful.

BY DARLENE MENZIES CEO of Finfind, SA’s leading access portal to finance solutions for SMEs. She is a tech innovator and serial entrepreneur, the founder of three successful fintech businesses and has raised venture capital from eight different VCs in the last five years. @darlenemenzies www.finfindeasy.co.za

In this case, unlike contract finance where the finance is provided prior to the work being completed, debtor finance requires that the work has already been done and that the customer has been invoiced.

As with contract finance, the credibility and credit history of the client is key to lenders as they rely on their ability to pay your invoice.

On average you can raise between 75% and 80% of the value of the invoice within a day or two of sending the invoice to your customer. There is usually an administrative fee to be paid plus interest on the loan — it can be an expensive way of getting finance but it is better than waiting 90 or 120 days for your customer to pay you if you have cash flow constraints. Debtor financiers offer two options — invoice discounting and

BUILD factoring. Factoring is when your client pays the lender who then returns the outstanding portion of the invoice to you (less their fees). Invoice discounting is where the customer pays you and you pay the lender i.e. the client does not know that you have borrowed against their invoice. There are usually big penalty costs for late payments.

Be aware that if the client does not pay by the specified date agreed with the lender, you will incur additional penalty costs.

Retail Finance For businesses that operate in the retail sector and generate their revenue from debit or credit cards or EFTs there are lenders who provide loans that are repaid by deducting a small percentage of daily sales. You will need to generate a regular income of at least R30 000 monthly to qualify for this type of finance. The useful aspect is that repayments vary according to income generated. During busier months, you’ll pay more, and less during quiet periods.

Terms Loans Term loans are another popular way of raising finance to cover cash flow gaps. The money is loaned for a fixed period and you agree to repay at regular intervals. Interest charges are usually linked to prime and the rate is linked to your risk profile.

The duration of term loans varies according to the business’s needs and lender’s terms.

You will be expected to provide collateral to raise a term loan. Lenders will also check your credit rating and financial statements, business plan and possibly the order book before they agree to lend you money.

WHAT WORKING CAPITAL FUNDERS EXPECT The key to obtaining working capital funding is understanding the lenders’ risk. To minimise their risks, lenders will require security for the loan. Providing collateral is often difficult for entrepreneurs who do not own property or have assets or

investments that can be ceded to the lender for the duration of the loan. Lenders will ask you for a list of personal assets and liabilities and based on this information, they may ask you to sign personal surety for the loan. If you do not own sufficient assets, you’ll need to find someone who does who is willing to stand surety for your loan. This means that if the business fails to repay the loan, the lender will approach the person who signed surety, to settle the debt.

For terms loans, retail finance, overdrafts and credit cards, the lender will focus on the financial strength of your business and its trading history. They usually only consider companies that have been in operation for at least a year and can show that the business is profitable, has a regular income and achieves good credit scores. For contract finance and debtor finance, lenders focus on the quality of your client and may fund working capital advances to businesses that are not yet profitable. EM

RESOURCE Finfind is SA’s leading access to finance solutions for SMEs. This revolutionary online platform links finance seekers with matching lenders, providing easy access to over 200 lenders and over 350 loan options. Finfind is supported by USAID and sponsored by the Department of Small Business Development.

Go to www. finfindeasy.co.za to find the business finance you need.

It’s free and easy to use.

POTENTIAL

STOP SAYING YES Knowing when to quit is a skill that can be learnt. If you tend to get stuck on things long after it’s obvious that what you’re doing isn’t working, you can train yourself to do better. You just need to practice quitting.

Thankfully, life provides plenty of opportunities to do this. Here are some things we should all quit doing.

1. Quit doubting yourself. Confidence plays a huge role in success. HewlettPackard conducted a study that analysed the process through which people applied for promotions at the company. Women only applied when they met 100% of the criteria for the job they wanted, while men applied when they met 60% of the criteria. The researchers postulated that one of the (many) reasons men dominated the upper echelons of the company is that they were willing to try for more positions than females. Sometimes confidence is all it takes to reach that next level.

2. Quit thinking you have no choice.

There’s always a choice.

Sure, sometimes it’s a choice between two things that seem equally bad, but there’s still a choice.

Pretending that there isn’t one makes you a victim who is voluntarily taking on a mantle of helplessness.

3. Quit doing the same thing over and over again and expecting a different result.

Albert Einstein said that insanity is doing the same thing and expecting a different result. Despite his popularity and cutting insight, there are a lot of people who seem determined that two plus two will eventually equal five. The fact is simple: if you keep the same approach, you’ll keep getting the same results, no matter how much you hope for the opposite. If you want different results, you need to change your approach, even when it’s painful to do so.

4. Quit saying ‘yes’.

Every ‘yes’ you utter is a trade-off. By saying “yes” to one thing, you’re saying “no” to something else. Saying “yes” to staying late at work, for example, might mean saying “no” to the gym or to time spent with your family. Research conducted at the University of California, San Francisco, showed that the more difficulty you have saying “no,” the more likely you are to experience stress, burnout and even depression. EM © Entrepreneur Media Inc. All rights reserved.

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

39

BUILD

GROWTH | FINANCE | PRIVATE EQUITY | LEADERSHIP | SCALE

IS PRIVATE EQUITY RIGHT FOR YOU? Q&A

Private equity (PE) is a common form of funding for companies looking to grow, but what exactly is it? And how do you know if it’s right for your business? Entrepreneur spoke to Martin Coetzee and Mike Donaldson of RMB Corvest about the finer points of private equity. BY GG VAN ROOYEN

Q

What exactly is private equity, and how does it differ from angel investing and venture capital?

Martin Coetzee: Private Equity investment is similar to other forms of investment in that it is funding provided by an outside source in order to grow a business. As with angel investing and venture capital, the aim is obviously to see a significant return on investment. Unlike the other two, however, private equity is a form of funding that typically only gets involved once a business is more mature and has a track record. So, it is growth funding more than seed funding.

Mike Donaldson: When we talk about private equity, we most often also talk about PE firms, like RMB Corvest, that provide the funding. Private equity is far more established than angel investing or venture capital in South Africa, with many significant players on the scene.

For many businesses looking to grow, PE is often one of the most sensible forms of funding.

Q

What kind of companies do PE firms invest in?

Martin: In the case of RMB

40

Corvest, we invest in a wide range of businesses, from the industrial sector to retail and financial services. As mentioned, though, we are specifically interested in established businesses that are looking to scale to the next level. We want to invest in high-growth companies — companies with a value of between R100 million and R1 billion. However, we do not invest in listed companies.

PE is always a private arrangement, with terms that depend on the nature of the deal. A PE investor typically gets quite involved. This means that entrepreneurs have experience, expertise and connections to draw on, but they can no longer make unilateral decisions. That’s worth keeping in mind when looking at PE investment.

Mike: You also can’t talk about private equity in South Africa without talking about BEE. At RMB Corvest, BEE opportunities and funding form a substantial part of our portfolio. So, we would provide funding to firms like Zico Capital and Shalamuka Capital, who would in turn invest in other businesses.

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

VITAL STATS

PLAYERS: Mike Donaldson & Martin Coetzee POSITIONS: Directors COMPANY: RMB Corvest ABOUT: RMB Corvest is a private equity company that’s a member of the FirstRand Group. It participates predominantly in management buy-outs and buy-ins, leveraged buyouts and BEE transactions involving businesses with a value of between R100 million and R1 billion.

VISIT: www. rmbcorvest. co.za

Q

How do you know if PE is right for you?

Mike: The most inexpensive form of finance is always a loan.

You can borrow money from a bank at a fairly low interest rate, which will almost always end up being cheaper than any other form of funding. However, there is a limit to the kind of growth you can fund purely through debt. No matter how successful your business, your bank will eventually turn off the tap when you start asking for massive loans. That’s when private equity becomes a good choice.

Martin: So, as PE investors, we’re looking for companies that want to grow aggressively.

Generally speaking, we’re not interested in small businesses.

We want to invest in companies that will scale and provide a good return on investment.

That doesn’t mean that we won’t invest in companies that are in debt. If that debt is a consequence of trying to grow, we’re not too worried. However, like any investor, we’re wary of investing in a business that is fighting for survival.

BUILD

TAKE NOTE

In South Africa, private equity is often your best bet when it comes to accessing growth funding. However, be aware that PE funding is in many ways a partnership that will not allow unilateral decision-making.

PHOTOS: SUPPLIED

Q

What else do you look for in a business?

Martin: Apart from a growth trajectory, we also want the business to have a decent track record, and we want the entrepreneurs to have skin in the game. We’ve learnt time and time again that founders who have real skin in the game are more likely to succeed, and less likely to give up. We also want to see some sort of succession plan, and solid financial controls.

Many businesses don’t have adequate controls, and we’ll sometimes invest in a company on the provision that a good financial director be put in place.

Mike: When we invest in a business, we view it as a partnership, and we expect the entrepreneurs to be ready to take on a partner. As mentioned earlier, PE investment is not hands-off, so you need mutual respect and the ability to work

“The most inexpensive form of finance is always a loan. You can borrow money from a bank at a fairly low interest rate, which will almost always end up being cheaper than any other form of funding. However, there is a limit to the kind of growth you can fund purely through debt.” well together. You need a culture fit. Don’t take money from someone you can’t work with, as this can result in a lot of trouble down the line.

Q

What sort of horizon do you look at when investing in a business?

Martin: Five years is a typical timeframe, but it can vary.

We’ve been involved in some businesses for over a decade.

As long as there’s growth, and a good ROI, we’ll remain involved.

Unless, of course, a company decides to list, since we don’t invest in listed entities.

Mike: It’s important to talk about the exit at the start of the PE process. There should be some strategy in place that explains how and when the PE investor will exit. This can obviously change down the line, but everyone should be on the same page from the start.

Q

What’s the best way to contact a PE investor?

Mike: Too many businesses go to their accountants or lawyers for help. Rather go to the advisory arm of the larger audit firms or any corporate finance business. They usually employ

experts who focus on corporate finance, and can put you in touch with the right people. You’ll end up paying some fees, but it’s definitely worth it.

Martin: We sometimes get cold calls from entrepreneurs, and these can result in deals, but it’s important to have everything in place before approaching a PE firm. Don’t try to get PE funding before you have a clear growth strategy and good financial controls in place. PE firms will do a thorough due diligence and expect you to be able to talk meaningfully about the financial state of your company. EM

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

41

DIGITAL SUBSCRIPTION Have your “How-to” handbook with you 24/7.

Don’t get caught without it.

• No waiting • No postal delays • Always on hand Get it directly to your digital device every month

Subscribe for 12 issues and save 10% now.

BEST VALUE

$27.99

View on iPad & iPhone

42

R359.99

View on PC, Mac & Tablets

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

View on PC, Mac & Tablets

$27.99

View on PC, Mac & Tablets

BUILD

Effective leaders know their limitations — and are able to build top organisations because of it

SHIFT QUESTIONS

The Power of Humility

BY ALLON RAIZ

Authentic humility can give you the perspective you need to build a high-growth organisation.

WEF Young Global Leader, a member of the Global Agenda Council on Fostering Entrepreneurship, the Entrepreneur-in-Residence at the University of Oxford’s Saïd Business School and founder of Raizcorp.

DO THIS

E

NTREPRENEURS often battle with the blurry line between arrogance and confidence. Very often, what they perceive as being confident is interpreted by others as arrogance. For me, confidence is internally driven and arrogance is externally driven and too often, arrogance is used to mask a lack of confidence. But there is a more important approach to life that serves entrepreneurs far better than arrogance, and perhaps even confidence, and that is the concept of authentic humility.

In my experience, entrepreneurs with authentic humility tend to be more successful in the long run, compared to those that present a false sense of humility, or worse, arrogance. According to a study directed by the University of Washington Foster School of Business, people who show humility have a higher propensity to make the most effective leaders.

However, the characteristic of authentic humility does not exist in isolation; it has a symbiotic relationship with confidence in two parts. Entrepreneurs that

@allonraiz www.raizcorp.com

» Evaluate your skills and personality traits: What are you good at, and what is best left to others?

» Leave your ego at the door and be willing to learn from others.

» Understand

that it takes real personal confidence to admit when you don’t know something.

are closely rooted to authentic humility are blatantly aware of what it is that they can and cannot do, without allowing it to take away from their value.

Authentic humility sits firmly atop two pillars — one of confidence, the other of zero confidence (areas where you lack expertise).

When authentic humility rests on these two pillars, it brings to light the fact that, as

an entrepreneur, you are not afraid to admit that there are things that you will not know.

Not only does it prove that you leave your ego at the door, but it also makes it clear that you are willing to learn from others.

It’s always important to remember that there will be times where stumbling is inevitable, and it is during these phases that humility is an entrepreneur’s greatest ally.

Authentic humility allows for team work, and it allows those around you to offer their help so that you can find solutions together.

Over time, I’ve come to learn that those who exude arrogance do so because they are trying to mask their lack of confidence.

From experience, entrepreneurs who present themselves in an arrogant way often evaporate into obscurity; the behaviour that results from arrogance is often a magnet for failure.

An entrepreneur who masks their lack of confidence with humility is often interpreted as a pushover. Both constructs present a false sense of humility and, if you look at the longterm game of sustainable entrepreneurship, these types of

entrepreneurs quickly disappear.

To be authentically humble, you must understand that there are things that you do know really well and things that you do not. This is the sweet spot in which entrepreneurs are able to best manage their organisations.

Humility makes an entrepreneur more approachable, and ensures a sense of trust to which colleagues and peers gravitate.

The trick is to always focus on what it is that you’re good at and what you know, and spend time reflecting on how to improve on the things that you’re not good at or don’t know.

The best approach is to remember that everything is contextual — the confidence that you portray on a tennis court is vastly different to how you might conduct yourself during a presentation to 13 people in a boardroom.

The power of authentic humility is potent and necessary, especially to entrepreneurs.

Focus on this important approach to life and you will reap the benefits. EM

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

43

BUILD

GROWTH | FINANCE | PRIVATE EQUITY | LEADERSHIP | SCALE

VITAL STATS

PLAYER: Ernest Corbett POSITION: Chairman COMPANY: Tintswalo Safari Lodges ESTABLISHED: 2003 VISIT: tintswalo.com

LEGACY OF GROWTH Ernest Corbett has been an entrepreneur for decades. These days, he is the chairman for Tintswalo Safari Lodges. Entrepreneur spoke to him about cultivating a growth mind-set and creating an experience clients keep coming back for. AS TOLD TO GG VAN ROOYEN

44

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

BUILD KEY INSIGHTS

You can only manage what you measure

Identify the primary goals in the business and focus on the metrics that will help you get to where you want to be.

Track all activities in your business

There should be no guesswork in business.

You want to know exactly what’s driving growth so that you can double down on it.

Every challenge is a test of success

Life gives us challenges so that we can overcome them. All growth comes from viewing challenges as opportunities.

PHOTO: DEVIN LESTER

WHEN ERNEST CORBETT moved with his family from the Eastern Cape to Johannesburg in the mid-1980s he had no money and very few prospects.

The Corbett family had lived an idyllic existence in the Cape, but the focus had not been on making money.

Eventually, the money ran out and the family was forced to move to Joburg, where there were more financial opportunities. “I realised that I had failed as a father and a breadwinner,” says Corbett. “I viewed it as a sort of treason.”

But he didn’t give up. Corbett used this realisation as a motivator to create some of South Africa’s most successful property developments. These days, he is heavily involved in the exclusive Tintswalo Safari Lodges. Here is his advice on creating a company that not only shows solid growth, but surprises and delights customers as well.

Have a good partnership in place.

Very few entrepreneurs have all the skills necessary to run a successful business. I believe that the right partnership is essential. For me, that partner is my wife, Gaye. I have always been the goal maker and Gaye the financial and detail controller. This is possibly the biggest single reason for our success — the two of us working together.

If you don’t have a purpose, you’re not even in the starting blocks.

Very few people will attain long-term

success if they care only about making money. Financial success alone is not a good driver for long-term growth. If you want to create a business that lasts, it’s important to figure out exactly what your purpose is. What do you ultimately want to achieve? For me, it’s always been about family. I wanted to create a business that could offer work, opportunities and financial freedom for my whole family — that was my purpose. Of course, this isn’t the only worthy goal, but it’s important to have a goal. Pursue something that has true value for you. If you care only about money, you’ll lose your drive when the business becomes successful, and that’s when a company stagnates.

Real growth comes from pursuing something bigger than money.

Never underestimate the value of data. We’ve always placed great emphasis on tracking statistics. When you experience great growth, you want to be able to identify the reasons behind it. You don’t want to have to guess. You want to know exactly what’s driving growth, and you want to be able to double down on it. This is only possible when you track all activities in a business. Similarly, you want to know the moment that there is a downturn in the business. Without comprehensive data, it can take you too long to notice an issue, so by the time you start tackling it, it could be too late. The adage is true: You can only manage what you measure. Identify your primary goals in the business, and focus on the metrics that’ll get you where you want to be.

Know when to spend and when to save. Many companies start cutting back on expenses the moment that the economy takes a dip. This isn’t a bad idea in principle, but it’s important not to cut back on the wrong things.

I’ve never believed in cutting back on marketing, for instance. That could easily end up just slowing your growth even further. When the competition is marketing less, that’s when you should get your name out there and increase market share. That said, you only want to push aggressive growth when the company is on a solid footing. Let the data tell you when it’s the right time to grow.

Don’t be a debt slave. Success and growth can often lead to unnecessary

spending. As soon as you become ‘successful’, there’s a temptation to splurge and show the world just how successful you are. That’s not how you build a great business. Sure, incurring debt is often necessary when building a business, but it needs to be the right kind of debt. Don’t spend money on fancy cars and offices. Don’t get into debt just to impress the world. More money and success can too easily just result in more debt. If you want to build a great company and enjoy long-term success, you need to first break out of the cycle of debt.

Hire a good financial director. If you want to grow your business, you can’t be too operationally involved.

You need to be able to step away and take a more strategic view, and you can’t do that if you’re putting out fires every day. You should be the goal setter — the one who gives the business direction. Find great people and delegate. Specifically, find a great financial director who can handle the money. In my opinion, it’s hard to lead the organisation and focus on the bottom line.

Every business hits barriers. And every time you hit a barrier, you have the choice to either back off or swing for the fences. The important thing is to not view challenges as barriers, but as tests. Life gives us challenges so we can overcome them. Every great business is the result of immense tenacity. Ultimately, it is defined by the challenges that it faces and manages to overcome. Growth comes from viewing challenges as opportunities.

Surprise and delight your clients. We go to extreme lengths to surprise and delight the guests who visit our lodges, specifically those who are regular clients. When a business becomes a certain size, you run the risk of losing touch with your customers. You start focusing too much on the big picture, and not enough on the individual people who have played a role in your success. My wife and I often fly to a lodge just to greet regular guests, or we’ll arrange for drinks and snacks to be set up specially for them during a game drive. Regardless of the size of the business, the little things are important. Never take your customers for granted. Treat every client like your first. EM

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

45

PROFILE

LAYING DOWN THE LAWS OF HIGH-IMPACT GROWTH Christi and Maeson Maherry took their R103 million business to a turnover of R198 million in just 15 months. How? With a strong vision, the right foundations in place, and the understanding that ‘overnight’ success is a ten-year journey. This is how they’ve built LAWTrust, an industry specialist that owns its niche, has created a highly defensible position for itself, and is now poised for global growth.

WORDS BY NADINE TODD I PHOTOGRAPHY BY DEVIN LESTER

46

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

PLAYERS: Christi Maherry and Maeson Maherry COMPANY: LAWTrust EST: 2006 TURNOVER: R198 million WHAT THEY DO: Digital information security solutions TEAM: 90 people, 28 of whom are developers and security engineers VISIT: www. lawtrust.co.za

PROFILE

PROFILE KEY INSIGHTS

Sometimes you need to go slow if you want to grow

From 2006 to 2015 Christi and Maeson Maherry built a R103 million business.

They then almost doubled their turnover to R198 million in 15 months. This was because they focused on building solid foundations, and then integrating new client projects and employing the teams needed to run those projects, before focusing on next-level growth.

The best defence is a good offense

There will always be competitors entering your market. The best way to ensure a defensible position is to always be looking ahead, maintaining an innovative mindset, and securing a niche position within your field. No matter what, you want to be the subject matter expert in your field.

Principles come first, solutions second

How you deliver a solution changes with the times. Technology changes, and you don’t want to be left behind when it does. What is your core? What do you do? This is step one.

How you deploy your solution is step two.

48

W

HEN CHRISTI AND MAESON MAHERRY launched LAWTrust in 2006, they had a grand vision: They wanted every person in South Africa to have a digital ID. With the launch of the national ID card in 2013, they achieved that vision.

But here’s the thing about a grand vision. First, no goal can be achieved without laying specific foundations and building blocks.

When the tender was awarded to LAWTrust by the Department of Home Affairs, they had just six weeks to implement. Christi and Maeson’s international product partners said it couldn’t be done — that no national project of that scale had ever been completed in six weeks.

“The rollout was scheduled for Nelson Mandela Day, and we couldn’t miss our deadline. We had to deliver,” says Christi. “If we had won the tender when we launched in 2006 we wouldn’t have been able to meet the deadline,” adds Maeson. “But we had spent seven years working on our core competencies, systems, processes and products. It was still a massive project, but we’d built up the internal competencies to pull it off. You have to systematically prepare for growth.”

Second, successful companies are built because they get into the market and they start trading.

Elon Musk’s ultimate goals are to build solar roofs that seamlessly integrate battery storage; to expand his electric vehicle product line to address all major segments; and to develop a selfdriving solution that is ten times safer than manually operating vehicles. To get there, he’s built the Tesla: A low-volume, expensive and exclusive car.

That product range is funding a medium volume car at a lower price, which in turn will fund an affordable, high volume car — which will fund his ultimate goals.

The point is that you need to be in the market. You need to build solutions that customers will pay for and that bring in revenue, but also allow your business to grow and develop.

For LAWTrust, those solutions were built

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

for the banking sector. When the opportunity to tender for the national ID card project came up, it was the culmination of Christi and Maeson’s vision — but under no circumstances could it be achieved at the expense of their existing client base.

And finally, what happens once the grand vision is achieved? Truly innovative companies that achieve market longevity are able to look beyond their own goals to the next ground-breaking vision. You need to simultaneously live in the future and in the here and now.

Here are the top five lessons Christi and Maeson have learnt while building their business.

1. DEVELOP PRINCIPLES YOU BELIEVE IN LAWTrust was launched because Christi and Maeson wanted to focus on cyber-security within the digital space, as well as digital identities and authentications. They were both working in the crypto space, but wanted to create something of their own, and so they found a partner who would bankroll the business in exchange for a solution that allowed for the authentication and protection of digital contracts in the legal sector. Unfortunately, the solution ultimately needed local laws to change, a factor they hadn’t considered and which was taking much longer than expected. But it gave the business a platform from which they could build encryption solutions for other sectors, most notably the banking sector.

In a nutshell, LAWTrust authenticates ‘safe’ websites, and provides user protection once you are in those websites, so that your details cannot be accessed by anyone else. These solutions work for Internet sites as well as Intranet sites, and have been extended to create personal, life-long digital IDs through the new national ID cards.

But the success of these solutions has stemmed from a set of core principles, rather than specific tech solutions.

“You need to develop a set of principles that you believe in, and then find a way to deliver solutions based around those principles,” says Christi. “For us, identity is the key to security. How you prove identity may change, but the principle is sound, and that’s been imperative to how we develop solutions.

“We’ve always believed in PKI — public key infrastructure — which is a set of roles, policies and procedures that create, manage, distribute, store and revoke digital certificates and manage public-key encryptions. Ten years ago, Gartner said PKI

PROFILE was dead. We disagreed. Not because we were married to one set of tech or solution, but because we held to our core principles, and believed that PKI was the best way to deliver on those principles. We spent a lot of time convincing our clients of this fact, until Gartner ultimately retracted their statement.

“We agree that you can’t be married to your solution. The next interesting tech is blockchain. If we ignore this, we may no longer be the niche experts in this field in the future.

But we also really believe that the principle comes first — the method of delivering the solution based on that principle is secondary.”

For Maeson, this isn’t just true of technology companies, but all businesses across sectors and industries. “In the late 1800s and early 1900s the primary mode of transport was wagons. A company whose name and products only focused on wagons was left behind once the automobile was invented. A company whose name and products focused on transport solutions, however, could move with the times. It’s all about how you view your business and your product. Are you in the business of producing horse harnesses, or are you in the business of helping people get from point A to point B? Your view will determine the company’s focus, and how agile you are.

“This has been the cornerstone of how we view our place in the market. We provide digital identities that protect personal and company information. How we do that might change over time, but the principle remains the same.”

2. BE COURAGEOUS IN EVERYTHING YOU DO Christi is no stranger to courage. In fact, her personal motto is that you should invest everything you have in the journey. “No guts, no glory,” she laughs. “I was the first female in South Africa to complete the VIP protection course for the National Security Agency, and it was because I wouldn’t take no for an answer. I got to serve the President. I was on his protection detail. I met Barbara Bush in the White House, and was assigned Prince Philip’s protection detail when he visited South Africa.

You need to know what you want and go for it — and the beauty of it all is that courage is a habit that you can build and repeat.”

It might be Christi’s personal mantra, but it’s the cornerstone of the business she and Maeson have built together as well. “If your executive judgement is sound, then you have a solid business,” says Maeson, whose background is in electronic engineering.

“Business is all about accepting certain levels of risk. If you’re focused on growth, you spend most of your time in unchartered

LESSONS LEARNT Courage is a habit.

Get into the habit of holding courageous conversations with staff and customers.

Business is about accepting certain levels of risk. If you’re focused on growth, you spend most of your time in unchartered territory.

Take big bites and then focus on figuring it out.

Fail fast. This is crucial. Business and technology are changing all the time and you need to change with them. You’ll make mistakes — that’s okay.

Just make them quickly so that you can learn and move forward.

Believe in principles, not a solution.

Solutions — and how they’re deployed — change. Make sure you have a set of principles at your core; how you package those solutions shouldn’t be at the centre of your business.

Focus on operating costs first. We’ve done this with our annuity income streams, which has enabled us to focus on specialist projects.

To scale, scale people.

This is where the real growth happens — with your people and what they can deliver.

Be transparent with them, support them, help them to grow and develop. Great teams build incredible businesses.

territory. This often means taking on big tasks and figuring them out along the way.”

While Maeson is naturally more cautious than Christi, the partnership works well.

Christi’s focus is on the future, and she’s always ready and willing to blaze ahead, while Maeson requires data to plot their course and growth plans. Together, they balance out, and with an agreement in place that courage is a necessity, and that risk is inherent in business, they walk the line between focusing on big, hairy, audacious goals (BHAGs) and putting the necessary systems and processes in place that will get them there.

“If we didn’t have this mentality we would never have pitched for the national ID card project,” says Maeson. “But without Maeson’s systems — and his entire team’s willingness to work 20-hour days for six weeks straight, we wouldn’t have delivered,” adds Christi.

Being courageous goes beyond just taking business risks though. It’s also about having courageous conversations with your employees and customers.

“Some of the most intimate customer relationships we’ve built have started with a problem, which we gave 110% to fix. This is the foundation for a fantastic relationship — but not if you aren’t honest,” says Christi. “Always be honest; don’t say that you have a solution when you don’t. Rather tell clients that the issue is tougher than you assumed and you need another week to find the solution.

There’s a temptation not to communicate with customers while you fix a problem, but we’ve learnt that there’s no such thing as overcommunication. People feel secure when they have all the facts. It’s not always easy to be this transparent, but it’s essential to successful relationships built on trust.”

3. OWNING YOUR NICHE CREATES DEFENSIBILITY One of the key areas investors evaluate businesses on is defensibility: How difficult is it for competitors to come into your market and encroach on your market share?

Maeson and Christi have concentrated on three key factors to ensure defensibility in their market. The first is that although they stick to a niche within PKI and crypto solutions, they work across multiple industries and sectors.

“We follow a strategy of never playing in only one sector,” says Maeson. “We have a base of solutions that we tweak according to industry-specific needs. This means that we aren’t reliant on the success or growth of any one sector.”

This strategy was developed on the back of LAWTrust’s first big failure, which was developing a product for their first clients

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

49

PROFILE and investment partners that could not be implemented because the law lagged behind the solution.

“On spreadsheets, the business model looked great,” says Maeson. “What we didn’t take into account was that the business plan involved changing the law, and you can’t put a timeline on that.”

Christi and Maeson didn’t let this early failure deter them. “We are security specialists and we knew that our vision was rock solid,” says Christi. “The first product didn’t work, but it gave us the building blocks for three other products. We were trying to solve the fact that legal contracts have to be sent via registered mail. We created an encrypted mail solution, which established building blocks for a number of other solutions. The product didn’t work, but it created a great start for the company.”

Both Christi and Maeson considered themselves to be PKI visionaries, and so they unbundled the first product, and repackaged it into three different solutions that were not industry-specific.

“We convinced our shareholders to continue this journey with us, and we made the decision to create solutions that worked across sectors and industries going forward,” says Christie.

Two years later, in 2008, LAWTrust signed its first banking client. “Specialists can go up against giants,” says Maeson. “We knew we didn’t want to be small generalists. This isn’t a defensible business model but being very specific niche experts is a different ball game. We can’t be commoditised by larger companies, and we aren’t really competing with them. Instead, we’re the OEM experts that large integrators use when they’re delivering on a project.”

Maeson and Christi both believe that specialising in an area offers protection. “We have 90 people working for us who are all crypto experts,” says Christi. “Someone who is passionate about this field will come and work for us, because it makes up 100% of their job instead of 10% or 20% at a large IT firm. This means we have the best in the field working for us, and we’re completely focused, putting us at the top of our game.”

LAWTrust’s core focus is on customer success, which requires exceptional customer service. “Everyone says customer service is their key differentiator, but for us it’s a non-negotiable if you’re building a defensible position,” says Christi. “Substantial deals have come from answering the phone at 10pm on a Friday night to help a client out of a jam.

We know that if banks or the Department of Home Affairs aren’t delivering, it’s our fault.

Protecting them is our number one priority. I would rather be disturbed at 2am than hear the next morning on 702 about long queues outside Home Affairs.”

50

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

LESSONS LEARNT Have foundations and sub-strategies. For us, the foundation is to remain a niche and specialist provider.

However, we have very specific growth plans that require sub-strategies. These are to diversify our product offering, build our people, and balance our currency earnings.

We’re cost-effective and highly skilled, which is a good combination for international growth.

Build partnerships based on trust. This is essential across the business, from client partnerships, to teams, to the founding partnership. We are very different people with specific skill sets, and we approach ideas from different perspectives.

It’s important that we trust that our goals are the same, and we’re arguing about the best way to get there.

Ultimately, we know that each argument is in the best interests of the business, and that’s the result of trust.

Building a high-growth organisation takes time. So put in the time.

Don’t expect instant traction. The best businesses are built on solid reputations and referrals, and those take time to develop.

Always be honest. Be honest with your staff and your customers.

Don’t take the easy road and be quiet when you’re solving a problem. Rather let everyone know where you — and they — stand.

This focus on customer success shines a light on your sector, which in turn attracts competitors to your space. Christi and Maeson understand that this is the cost of doing business, and that it makes creating a defensible position an ongoing process, rather than a once-off.

“The best defensibility is to know what you’re doing and to enjoy doing it,” says Christi.

“If you’re passionate about what you do, you’ll naturally put in 120%. You’ll shine and attract the best people. This will in turn drive you to deliver exceptional service, which will give you a strong track record. We have incredibly strong references. Any new players to the market will find it difficult to compete with the level of delivery we’ve achieved.”

4. LAY THE FOUNDATIONS FOR GROWTH It’s never too early to start laying the foundations of growth. “When the opportunity for a large contract comes along, and you put yourself and the business out there, you need to have scaled the business already,” explains Maeson. “To even win the deal in the first place you need to prove you can implement and support your idea. We’ve learnt that ‘overnight’ successes are actually ten years in the making.

They take a vision, and a roadmap of how you’re going to get there.”

This is true of everything LAWTrust has done since its launch, but can be seen in action in the national ID project. “The ID card tender was ten years in the works,” says Christi.

“It came up a few times without successful contenders securing the project. Then the last time it came up there was a digital component.

We had spent a few years in the market, had developed a reputation for delivery, and we had the product. The timing was right for both of us — we had a solution that matched their need, and we were confident we could deliver in the extremely tight timeframe.”

Christi and Maeson had a grand vision — but on the ground is where you make grand visions work. “The heavens don’t magically open after 18 months in business,” says Maeson. “We knew where we wanted to go, and we had to figure out the best path to get there. We needed to do the time. Our entire business is based on trust, integrity and security. There are no short cuts to this. We needed to develop the right products and build a reputation, and that takes time in the market, and an unwavering focus on delivery.”

Maeson has focused on developing two different sets of products: Commodity products that are cash generative, because they offer annuity (subscription) income, and can be housed in the cloud or on client

PROFILE premises. These solutions are developed with international partners; for example, LAWTrust is the Entrust partner in Africa, and has Adobe and Microsoft international accreditations.

Maintaining these requires annual three-month audits from KPMG, and solutions are built onto international products to integrate into existing systems. On the whole, they are subscription based, which frees the team up to develop specialist solutions, like the national ID project.

“These have a much longer sales cycle, and so we need the mix of both commodity and specialist projects to make our business model work,” says Maeson.

These solutions can be deployed anywhere in the world, and this has opened an additional revenue stream for LAWTrust in international markets. Moving into international markets also hedges currency risks. “Every company around the world has a digital strategy. We can provide the trust that clients need to feel comfortable sharing their information online for any business, anywhere in the world,” says Christi.

Interestingly, sometimes part of the growth journey is to not grow. This happened to LAWTrust after the implementation of the national ID Project. “The project took six weeks to implement, and during that time we communicated regularly with our banking clients. It was a huge project that required an enormous amount of our team’s focus, and we needed to ensure that they didn’t feel abandoned by us,” says Christi. LAWTrust’s clients understood their constraints, and because the solutions they employ are subscription-based, managed PKI solutions, they continue operating without LAWTrusts’s express focus.

This is one of the challenges of growth. You need to have scaled to be able to handle a project of this magnitude, but you can’t double your team overnight. You need to deliver with what you have. Many companies fall short when they’re trying to scale because they either over-spend in preparation for a large project, or they can’t invest in the growth needed to deliver the project.

In LAWTrust’s case, Maeson’s team worked day and night to deliver, with the understanding that it was short-term only.

Thereafter, the business knuckled down and focused on ensuring all the systems, processes and teams were in place to handle the new contracts.

It’s for this reason that there was almost no revenue growth between 2013 and 2015, but the business then doubled its turnover in 2016, taking it from R103 million to R198 million in 15 months.

“Revenue growth is good — it’s the focus of all high-impact, growing businesses,” says Maeson. “But it cannot be the be-all and

end-all of what you’re doing. We needed to consolidate the business and ensure our foundations were ready for the next level of our growth before we embarked on it. Once we had everything running seamlessly we could start focusing on growth again — with a large focus on international markets.”

5. NEVER STOP LEARNING Christi and Maeson have a strong belief that great businesses are built when you attract — and retain — the right people. There’s a strong leadership component in talent management however, not just from the perspective of managing your teams, but in having the ability to step back and give your upper management the freedom to make decisions and take ownership of their roles.

“When you give people the opportunity to do their thing, you’ll build a better business — provided you have the right people on board,” says Maeson.

Interestingly, this ties in with the two founding partners’ focus on self-development as well. “We’re continuous learners,” says Christi. “You can’t step away to focus on your personal growth and business acumen if you’re always working in the business, and without that growth you can’t adequately work on the business. To do both, you need to trust your team to continue with the day-to-day operations.”

Christi and Maeson have both taken numerous executive courses. Christi started with the Management Advancement Programme (MAP) at Wits Business School, which ignited her renewed love of learning.

“I realised the value that ongoing learning adds to my business and myself,” she says.

This was followed by programmes at EY and even Stanford. Maeson is completing his PhD, and has also completed online courses through Stanford. They also regularly attend international conferences in their sector.

“Our aim is to globalise, and to do that we need a broader view of international markets and challenges, as well as a global network.

These courses help us achieve that goal and set up new channels, and give us insights into different cultures and drivers,” says Christi.

“They also help you leapfrog your organisation,” adds Maeson. “Why make the same mistakes that other businesses make when you can learn from them? Business theories and case studies have been invaluable in our growth and understanding of our business. We’ve laid the foundations for global growth because we’ve focused on getting all the right elements in place — and that includes ourselves and our own knowledge base.” EM

“When the opportunity for a large contract comes along, and you put yourself and the business out there, you need to have scaled the business already.

We’ve learnt that ‘overnight’ successes are actually ten years in the making.

They take a vision, and a roadmap of how you’re going to get there.”

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

51

LAUNCH EXPERT ADVICE, YOUNG ENTREPRENEURS, INSPIRATIONAL PROFILES AND IDEAS CENTRE

LESSONS LEARNT

HELLO AFRICA From a student DJ to the founder of Pop Bottles, Tumi Mooi aka DJ Dimplez is taking his brand from a national hip hop phenomenon to Africa, starting with his first Mauritian event. Here are the three key start-up lessons he’s learnt to get him there. BY NADINE TODD

52

spearheads his own creation, Pop Bottles, a national hip hop experience that in December 2017 will make its first foray into the international market with Pop Bottles Mauritius.

Here’s how a kid who liked to spin tables has built a brand and a business off the back of his passions.

1

Do what you love When Tumi started out, DJing wasn’t a business. It was a hobby; services he could charge for. By the time he graduated, he made the decision to stick with his passion. He didn’t have a clear business plan, but if he enjoyed what he did, it wouldn’t be work, and he’d build on his personal brand.

At first, Pop Bottles developed organically. Tumi wanted to host his own birthday party, and call it Pop Bottles. He negotiated with a club he DJed at every

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

Friday. Could they host a Sunday afternoon party and take it out of the club and onto the deck?

“I was very clear about the idea. I wanted to create a different, branded hip hop experience. By then I’d been DJing for five years, so I knew the scene well. Nothing much happened on Sundays, and taking the party out onto a deck in the afternoon would be a whole new experience. It took some convincing, because the club was in a residential area, and the owners were worried about noise levels. We eventually agreed to try it once, and see what would happen.”

The party was a hit, and soon became a monthly event. On top of that, clubs and friends in Durban began requesting their own Pop Bottles.

To maintain the exclusivity of the brand, and ensure that hype surrounded each party, Tumi

DO THIS

Do what you love. Passion gives you focus and determination, two key ingredients to start-up success.

VITAL STATS

PLAYER: Tumi Mooi aka DJ Dimplez COMPANY: Pop Bottles EST: 2008 VISIT: www. popbottles.co.za

PHOTO: MIKE TURNER

T

UMI MOOI started DJing in 2003 while he was a student at Wits.

Some students waiter or tend bar. Others become au pairs. Tumi became DJ Dimplez, joining the Wits DJ Society and finding gigs at student parties and local clubs.

By the time he graduated with a sports psychology degree, he realised two key things. First, his side hobby and way to make cash while he was a student had grown enough to sustain him, and second, he loved DJing. It was his passion. He’d already switched from a commerce degree to sports psychology because he recognised he’d rather follow his heart than money. Now he made that same decision again. His heart was in hip hop music. The rest would fall into place.

Today he’s a well-known local DJ who also successfully

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

53

LAUNCH

LESSONS LEARNT | OPPORTUNITIES | PODCASTS | MARKETING | ASK AL | SMART START-UPS

and his manager and business partner, Glen Mavunda, made the strategic decision to limit the number of parties each year. Joburg now has three annual events, Durban and Bloemfontein each have one, and Cape Town has two. And each year guest numbers grow as anticipation builds.

The lesson: There’s a simple start-up rule that says you should do what you know.

more than just a hip hop party.

“We’ve built an experience that people love, and they’ll actually follow the parties around, traveling to Durban, Bloemfontein and Cape Town for the next Pop Bottles event. It has developed into a community that we’re very close to.”

The more you understand your target market, the better you can tailor your offering to their needs, which is how the

every suggestion. Instead, use that understanding as a lens through which everything in your business is evaluated. After all, an idea is just an idea until someone is willing to pay you for it.

3

The right partnerships are the foundations of good businesses Tumi has forged a number of key partnerships over the years.

“You need proper procedures upfront. So many start-ups try to do everything themselves to save on costs. We did — and we learnt our lesson the hard way. Stick to what you know, and where your expertise lies, and work with partners who are experts in their fields.”

Tumi’s career and subsequent business development follows this rule. He immersed himself in an industry he loves, and learnt how it operated and who the target market was before launching his own branded experience. The success of Pop Bottles didn’t happen by accident. Tumi has made a number of strategic decisions.

He stuck to his core market, recognising that compared to house music in South Africa, there is still a lot of room for growth in the hip hop market.

He’s developed an experience that wasn’t on offer in his segment, and he maintained exclusivity by limiting the experience. All in all, he created a desirable brand, based on his own in-depth knowledge of the hip hop music scene.

2

Don’t lose touch with your market As DJ Dimplez, Tumi continues to DJ regularly. “This is my first love,” he says. “I’m very focused on the business and Pop Bottles brand, but I never want to lose touch with why I do this in the first place. It also keeps me relevant, and on the ground floor in terms of the local hip hop music scene, which I believe is really important if you’re building a business in this space.”

The Pop Bottles experience is

54

idea of Pop Bottles Mauritius began to take shape. “We’ve realised two things over the past nine years hosting these parties,” says Tumi. “There isn’t anything like them in South Africa or the African continent. There’s also still a lot of room for growth in the hip hop scene. We’ve been perfecting our model and learning a lot of lessons over the past few years, and we’re now ready to take our brand to new markets.

“We wanted to create a party that was close enough to South Africa to be reasonably simple to organise, but still in a different country, so that we could learn about the ins and outs of hosting events beyond our borders. The second realisation is that many black South Africans don’t travel. We just don’t have a travel culture. We’ve created an event where we take care of everything — travel, accommodation, the event. And our community can travel as a group. It’s a great way for many of our supporters to broaden their horizons in a safe, familiar way. That’s been one of our key driving forces.”

The lesson: The deeper your understanding of your target market and audience, the more you can tailor-make your offering to their needs. This doesn’t mean implementing

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

The first was with his friend and later manager and business partner, Glen Mavunda. “We knew each other from Diepkloof Soweto where we both grew up, but the friendship developed at Wits.” As Tumi’s career as DJ Dimplez became more serious, it soon became apparent that he needed a manager and financial partner, and Glen was ideal for the role.

As Pop Bottles grew, a team was added. Tumi has always understood the value of partnerships, even when he was a solo DJ working from his laptop at coffee shops in Melville. “For the first four years I worked every single day from coffee shops. I was finding gigs, venues and building relationships with brand managers. I needed sponsors, and so those relationships were crucial. I worked with Vuzu and Channel O for seven years, and Miller for five. Sponsorships come and go, but maintaining relationships is crucial. You never know when the next opportunity will come along.

“I’ve learnt that developing relationships outside the business is important. I’ve built trust with my contacts and they call me for advice about other events they’re running that have nothing to do with me.

“You need to be trustworthy

and reliable. People work with people they like, and who make life easy for them. That’s our secret. We make everything as seamless as possible for our partners. We take responsibility for everything. We pitch an idea, present it, and do it ourselves.

We’re very easy to work with.”

Another key lesson Tumi and the team have learnt while building the business is that key partnerships aren’t just important brand sponsors, but also local experts.

“You need proper procedures upfront. So many start-ups try to do everything themselves to save on costs. We did — and we learnt our lesson the hard way. Stick to what you know, and where your expertise lies, and work with partners who are experts in their fields.

“One of our most expensive mistakes was in Cape Town. The mayor personally came out to shut down our event. We had our paperwork in order and a liquor licence, but we didn’t know we needed an event licence. We had sold tickets; people were expecting a Pop Bottles event.

Not only do you have to pay them back but it hurts the business and the brand. We haven’t made that mistake again. We work with local experts who understand what we need to do to be compliant. We’ve done the same thing with Pop Bottles Mauritius, by finding the right hotel and travel partners to create a seamless event.”

Tumi and the team’s next step is to find Mauritian partners who can develop Pop Bottles locally.

“This event is an experience for South Africans in Mauritius.

Our next goal is to create a local event for Mauritians.

This will be our testing ground for expansion across Africa, working with local partners and tailoring the experience for local communities.”

The lesson: Start-ups should be lean. However, don’t skimp on the quality of your product or service. Find the right partners and subject matter experts to work with and spend money strategically. EM

LAUNCH

OPENING UP A WORLD OF OPPORTUNITY rooster feels the fire burning inside him. Necessity becomes the mother of invention — this gem, this idea will help him finance and build a business.

He can buy some inventory, build a network of distributors, take some accountancy and marketing classes. His discovery, together with his expertise, ideas and plans will benefit his children, provide them with opportunities he never had — expand their horizons, provide them with tools and skills to think out of the box and improve their lives.

When an idea comes your way, do you recognise and fight for the opportunity to see it through?

Because that’s what marks the heart of an entrepreneur. BY ALEX F GOLDSBOROUGH IDEAS ARE a precious thing; it’s the entrepreneur’s job to recognise them as such and exploit the opportunity.

Focusing only on what’s before him, the rooster seems content with his fate. He limits himself to the single task of gathering corn. He doesn’t consider expanding his horizons, and opening up whole new worlds of opportunity. His task is singular, narrow, dull, without curiosity or ambition — there is no vision, no passion.

Brutishly, he can’t be bothered with the discovery of

ADDING VALUE TO YOUR IDEA — AND YOURSELF Entrepreneurs add value to business ideas but also to themselves.

Self-esteem and self-actualisation are the result of personal growth and discovery through new experiences and lessons learnt from overcoming challenges.

As the best dramatic characters have rich arcs,

“Without change there is no innovation, creativity, or incentive for improvement.

Those who initiate change will have a better opportunity to manage the change that is inevitable.” — William Pollard a gem of an idea. He doesn’t understand how a good idea has the potential value of thousands of barleycorns. He doesn’t have to throw caution to the wind.

Positive change will come with discipline and a good plan, hard work and vision.

Entrepreneurs are pragmatic dreamers, always keeping it real. But the rooster, unable to recognise any potential, without drive to develop and exploit, gets right back to his mechanical tasks; the comforts of his little box and the scarcity of food. He will never become an entrepreneur who seizes opportunities to solve problems and add value, and is curious about new life experiences, a sense of purpose, and a search for fulfilment.

entrepreneurs become actors in their own dramatic journey.

Their need for independence and a personal locus of control are driven by passion, discipline and steadfast commitment. To the rooster, fulfilment is simply to peck at corn, day in, day out; and not to consider the gem as anything more than a pretty stone. His world starts and stops at the corn. But not so with the entrepreneur.

THE ROOSTER AS ENTREPRENEUR Now consider the difference if the rooster was an entrepreneur at heart. The sight of his starving family weighs heavily on his mind and soul — he has to do something to change their destiny. As a family man, the

THE ROOSTER AND THE JEWEL A rooster, scratching for food for himself and his hens, found a precious stone and exclaimed: “If your owner had found you, and not I, he would have taken you up, and held you high in the light; but I have found you for no purpose. I would rather have one barleycorn than all the jewels in the world.”

THE LESSON Precious things are without value to those who cannot prize them.

The rooster’s drive comes from within, a struggle to effect change; fuelled by a powerful sense of love, duty, and care towards his family; strengthened by a strong sense of self-esteem and self-actualisation; and a thirst and hunger satisfied with the nutrients of creativity and spiritual growth. With this vision in mind, the rooster understands the importance of seizing this gem of an idea, to become an entrepreneur and become the change agent of his family’s destiny and that of his own. EM

Alexander F. Goldsborough previously researched entrepreneurship at OECD (The Organisation for Economic Cooperation and Development) and was an Associate Professor of Practice at the China campus of Liverpool University (XJTLU). He is now the creator of Aesop For Entrepreneurs and the author of Creativity, Strategy and Leadership for Entrepreneurs.

Visit www.aesopforentrepreneurs.com for more information

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

55

LAUNCH

LESSONS LEARNT | OPPORTUNITIES | PODCASTS | MARKETING | ASK AL | SMART START-UPS

TALK YOUR WAY TO SUCCESS Podcasting is taking the world by storm. Not only can it be extremely profitable, but it can be a great way to grow and market your business.

BY GG VAN ROOYEN

T

IM FERRISS’S 2007 book The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich was a phenomenon. The selfhelp/business book spent more than four years on the New York Time’s bestseller list and has been translated into 35 languages. To date, around 1,3 million copies have been sold.

It’s fair to say that every author on the planet would be happy with this sort of success. When it comes to book publishing, it doesn’t get much better than this.

Now compare the success of The 4-Hour Workweek with that of Ferriss’s podcast, The Tim Ferris Show. At the end of 2016, the show reached 100-million downloads, meaning that since the creation of the

56

DID YOU KNOW? show, individual episodes have been downloaded more than 100-million times through iTunes and other podcasting channels.

Ferriss hadn’t anticipated that level of success. In fact, he started podcasting on a whim, just to see what the response would be.

“I was burned out after The 4-Hour Chef, which was nearly 700 pages, and I wanted a casual but creative break from big projects,” says Ferriss on his blog. “Since I enjoyed being interviewed by Joe Rogan, Marc Maron, Nerdist, and other podcasting heavies who really move the needle, I decided to try long-form audio for six episodes.

If I didn’t enjoy it, I would throw in the towel and walk.

“My rationale: Worst-case scenario, the experience would help me improve my interviewing, which would help later book projects. This is a

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

Podcasts are the single fastest growing medium in the world.

great example of what Scott Adams, creator of Dilbert, would call ‘systems’ (win even if you lose) thinking.”

So, he saw it as a win-win.

Even if the response wasn’t great, it would have been a worthwhile experience. Ferriss also applied one of his regular approaches to podcasting, asking himself: What would this look like if it was easy?

Some popular podcasts, like Freakonomics Radio, for example, are highly produced and have a strong narrative structure. Ferriss knew that he was most likely to stick with it

if he made it as easy as possible to do. So, instead of a complex podcast that required a script and heavy editing, he opted for a freeform conversational structure. He simply turned on the microphone, and started talking to people.

MONETISING A PODCAST Even though podcasts are generally free to download, they can create a nice revenue stream. But, as is often the case in the digital sphere, it’s a numbers game. You need some real traction before the money starts to roll in. Like banner ads, podcasts work on a CPM (cost per impression) model. Popular podcasts have sponsors who pay for a pre-roll message/ad at the start of the podcast. A typical figure is $18 (R234) per 1 000 downloads for a 15-second spot, or $25 (R325) for a 60-second message. Many podcasts have

LAUNCH

The rise of the average Joe Some of the most successful podcasts in the world were created by relative unknowns.

more than one sponsor, so you could make more per 1 000 downloads. Also, as the popularity of a podcast increases, the CPM rate also goes up.

“Premium podcasts tend to charge between $25 and $100 CPM. By ‘premium’, I mean highconverting, single-host, iTunes top-50 podcasts,” says Ferriss.

So, if your CPM is $50 and you’re getting 100 000 downloads, you multiply 50 with 100 to get an income of $5 000 (R65 000) per sponsor per episode.

Tim Ferriss could be making millions a year from his podcast alone, but he chooses not to monetise too aggressively.

“If I wanted to fully monetise the show at my current rates, I could make between $2 million and $4 million per year, depending on how many episodes and spots I offer. So

why only ‘if I wanted to fully monetise?’ Because ‘fully monetising’ — bleeding the stone for all it’s worth — is nearly always a mistake, in my opinion,” says Ferriss. “I want to convert casual listeners into die-hard, fervent listeners, and I want to convert casual sponsors into die-hard, fervent sponsors. This requires two things: Playing the long game, and strategically leaving some chips on the table.

As a mentor once told me: ‘You can shear a sheep many times, but you can skin him only once.’”

Indeed, if you want to create a successful podcast, it’s important not to try and monetise too early.

“Novice podcasters (which I was) and bloggers get too distracted in nascent stages with monetisation,” says Ferriss. “In the first three to nine months, you should be honing your craft and putting out increasingly better work. Option A: You can waste 30% to 50% of your time to persuade a few small sponsors to commit early and stall at 30 000 downloads per episode because you’re neglecting creative. Option B: You can play the long game, wait six to twelve months until you have a critical mass, then you get to 300 000 downloads per episode and make 10x per episode with much larger brands. If you can afford it, don’t be in a rush. Haste makes waste. In this case, it can make the difference between $50 000 per year and $1 million per year. To reiterate a phrase more often used for blogging: Good content is the best SEO.” Of course, you could argue that a self-help guru like Ferriss has a much easier time launching a podcast than your Average Joe, and he certainly has an existing audience, but he believes that anyone can start a great podcast. Being a ‘famous’ person doesn’t guarantee success, and some of the biggest podcasts around were created by relative unknowns.

“Coming to the party with a pre-existing audience isn’t

enough. Celebrities, YouTube icons, and bestselling authors start podcasts every week that get abandoned three weeks later,” says Ferriss. “Like everyone else, at one point, I had zero readers and zero listeners. We all start out naked and afraid. Then your mom starts checking out your stuff, or perhaps a few friends give a mercy-listen, and the fragile snowball grows from there.”

CREATING YOUR OWN PODCAST Starting a podcast is relatively simple and cheap. All you really need is a microphone, a guest and an iTunes account. As mentioned earlier, it’s better to start small, gain momentum, and then think about monetisation down the line.

“Upload at least two or three pre-recorded episodes when you launch your podcast. This appears to help with iTunes ranking, which — like bestseller lists — can be self-propagating.

The higher you rank, the more people see you, the higher you continue to rank,” says Ferriss.

He also recommends that you keep things simple. “Most wouldbe blockbuster podcasters quit because they get overwhelmed

subway or car anyway, and they’ll forgive you if recordings are rough around the edges.

Audio engineers will never be fully satisfied with your audio, but 99,9% of listeners will be happy if you’re intelligible and loud enough.”

OTHER WAYS OF MAKING MONEY The CPM/sponsorship model is not the only way to make money with podcasting. You are, of course, also free to approach companies about sponsorship outside the CPM model. If you’ve got a podcast that will align well with a specific brand, you could approach the company about funding the show.

You could also ask your audience to sponsor the show.

Neuroscientist and philosopher Sam Harris has a popular podcast called Waking Up, which is created entirely through audience contributions. Harris doesn’t believe in the CPM model, since he thinks it can sometimes seem a bit greedy and also forces listeners to sit through a lot of ads. The popular Joe Rogan Experience podcast typically has around 12 minutes of ads, while The Tim Ferriss Show usually has about six

“Like everyone else, at one point, I had zero readers and zero listeners. We all start out naked and afraid.”

— Tim Ferriss

with gear and editing. I decided to record and publish entire conversations (minimising postproduction), not solely highlights.

I also use a tremendously simple gear set-up and favoured Skype interviews for the first 20 or so interviews, as the process is easier to handle when you can look at questions and prep notes in Evernote or a notebook.

“As Tony Robbins would say: Complexity is the enemy of execution. You do not need concert hall-quality audio. Most people will be listening in the

minutes of ads. Harris has no ads, but does ask his listeners for donations. Of course, only a fraction of listeners will ever decide to pay for the content you create, but if you have enough listeners (Harris has around 800 000 every week), a relatively small number is enough to make it worthwhile.

You can ask for donations through your own website, or through a service like Patreon, which is an American Internetbased membership platform that provides business tools

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

57

LAUNCH

LESSONS LEARNT | OPPORTUNITIES | PODCASTS | MARKETING | ASK AL | SMART START-UPS

for creators to run a subscription content service.

You should also keep in mind that a podcast can be a smart investment, even if you make no money from it whatsoever. A podcast can be a great way to position yourself as an expert or thought leader in a particular industry. So, instead of trying to monetise your podcast directly, you can use it as a form of content marketing to promote your products and services. Importantly, though, you should not be too aggressive in your marketing. If the podcast feels like nothing more than an extended ad for your business, listeners will be put off. Instead, focus on creating great content that will drive people to your online channels.

A podcast can also be a great networking tool. You might not be able to get a meeting with a successful CEO, but you could invite him or her onto your popular podcast. Once that relationship has been created, talking business becomes easier. You could also offer your podcast to customers as a platform to discuss their own business successes and challenges.

Regardless of how you choose to utilise the medium, podcasting provides an excellent opportunity to speak directly to an audience that no entrepreneur should ignore.

Q

More and more companies (like Dell and McAfee) are launching branded podcasts. What do you think of this as a content marketing strategy?

We think it’s terrific, as long as it’s relevant and interesting. Take a listen to what Gimlet Creative are doing for Microsoft and Virgin Atlantic. They’re not ads, and they’re great to listen to. AutoCentral on CliffCentral is our motoring show, hosted by the guys from AutoTrader — and it’s really good, because they are so passionate about cars. T-Systems also host their own podcast during which they interview ‘disrupters’ in the industry.

TAPPING INTO A GROWING TREND Well-known South African DJ Gareth Cliff left radio a few years ago to start his own podcasting company, CliffCentral. The company celebrated its third birthday in May of 2017, and has shown steady growth, both in terms of content and listeners.

CliffCentral has definitely shown that there is a South African market for this new medium. Here are Gareth Cliff’s tips for starting your very own podcast.

Q&A

LISTEN TO THIS THE RISE OF GIMLET MEDIA Gimlet Media in the US was created a few years ago specifically as a podcasting company. Gimlet’s first season of its first podcast show, Startup, follows the launch of the company. It’s a warts-and-all look at how the company tried to secure funding, find offices and hire staff.

If you want to get into podcasting, it’s definitely worth a listen.

58

Q

How easy is it to start a podcast if you don’t have a large team/ company behind you?

Anyone can start a podcast. You don’t need staff, a studio or expensive equipment. The hard part is delivering quality content and being consistent.

Q

What advice do you have for people looking to start a podcast?

What are some of the dos and dont's?

What can you do that nobody else can, or what can you do better than anyone else?

That would be the start of the content plan for the podcast. Also, be prepared to grow the audience slowly. Building a solid listenership takes time. It isn’t something that happens quickly.

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

Q

What does the local landscape look like? How is the local popularity of podcasting growing? Do you need to aim your content at an international audience?

Local service providers have told us that podcasting in South Africa doubled from 2014 to 2016 and keeps growing incrementally. In the US, podcasting has increased by 70% year on year for the last three years. That makes it the fastest growing medium of all. Our audiences are local and international. They choose us, we don’t target them.

Q

What is it about podcasting that you think sets it apart from other channels/mediums? What are its strengths, and what are its weaknesses?

Podcasting is replacing long-form journalism. People don’t have time to read reams of stuff. You can listen to a podcast while you’re driving, cooking or training. Also, mainstream media try to be everything to everyone. As Dion Chang recently told me in an interview, individuality is the way of the future — and niched content will become much more sought after than bland content crafted to appeal to the masses.

Q

What are some of the challenges of doing a regular podcast that people don't tend to think of starting out?

Keeping content fresh, unique and relevant. That sounds easy, but it’s hard to consistently up your game and keep delivering. Listening to podcasts is an active choice — people don’t stumble upon them like you stumble upon a music radio show. That means the audience are discerning; they understand all the choices they have. EM

LAUNCH Strategic marketing doesn’t need to break the bank

MARKETING YOUR START-UP Marketing your start-up is all about the right strategies, not how much money you spend. You need to build your reputation from the ground up. Here’s how you can get started. BY MONGEZI MTATI

B

UILDING A fledgling business is as much about increasing your client base as it is about building a positive reputation around the business and its expertise.

Many experts and seasoned entrepreneurs argue that clients buy from people they trust and building that trust hinges on various parameters.

Take Steve Jobs, Wendy Luhabe, Richard Branson and many other leading business minds whose brands are built on years of credibility and trust.

The truth is that equal attention needs to be given to great products and building trust within your client base.

Here are five skills that we’ve used to build our reputation at WordStart.

1

Sharpen your writing skills for media and general communication Create media coverage. Write on a company platform (like a blog) or for established media outlets. This will position you and your business in ways that get people to listen and share your knowledge.

Having your name next to an article on a respected platform can lead to useful connections with relevant contacts. A series of media features and industry commentary also help to position your business and team as experts in your field.

2

Share industry trends People will generally do research in and around an industry to find insights and trends, sometimes before they buy anything in that industry — and even afterwards. When I search for information on photography, Canon appears more than any other brand and they tend to set the scene on which device to buy.

Imagine your business is construction and that homeowners endorse your skills as a home improvement specialist. Packaging your knowledge into industry trends is also a great way to use your own lessons about the industry as you grow and it also helps you to connect with potential customers. Useful information with your name on it can increase your sales and client base.

3

Edit. Edit. Edit.

Something that cannot be stressed enough is that your writing in client documents can tarnish your brand. Many businesses tend to overlook the importance of grammar in their documents.

It can be difficult to reread and rewrite documents that you use in the business, but that is precisely what can lead to the loss of new and existing business. Pay attention to how your business uses language and edit that work. When in

doubt, read it again and be sure that nothing was missed.

4

Practice public speaking and search for opportunities After you have written for various publications, you increase the likelihood of being invited to speak at conferences and seminars, which means that people put a face and voice to the written expertise.

In some instances, the speaking engagements can be paid for by conference organisers which can be an additional revenue stream.

Public speaking, especially industry-related speaking, will increase the likelihood of selling more products or services and this will separate you from the competition. By increasing the trust customers have in you, you can improve the likelihood of them buying from you.

Once a business is positioned as a team of experts with the ability to speak for their industry, opportunities open up for that business to create unique content. Industry leaders who are able to help the public to connect the dots through the information they share are regularly on guest lists.

Is there anything you can share that your industry peers and the public may find eye-opening? There may be a conference organiser looking for you.

5

Educate the market and build a client base One of the advantages of being part of an industry is that you have inside information that the general public does not have.

This presents an opportunity for you and your business to become a self-nominated industry mouthpiece. When an individual and business share news about an industry, they can create a new client base because the public associates them with that information.

One of the best cases in South Africa is Discovery’s Vitality rewards programme, where you earn points for being healthy. This does not mean that Momentum, Bonitas, Sanlam, Sizwe and other players do not have similar or even better offerings. Vitality is more visible and more vocal about the fact that leading a healthier life can get you rewards.

A great reputation may lead to positive word-of-mouth for your business and increased sales over a longer period than a single marketing message. EM

Mongezi Mtati is the founder of WordStart, a boutique wordof-mouth firm that connects companies with influencers and develops digital strategy. Visit mongezimtati.co.za or follow him on twitter @Mongezi and @WordStarters.

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

59

LAUNCH

LESSONS LEARNT | OPPORTUNITIES | PODCASTS | MARKETING | ASK AL | SMART START-UPS

START-UP BEDROCKS

Choosing which opportunities to focus on, making sales and finding the right partners to work with.

Q

I launched my business while I was employed full time. It took off, I reached a point where I needed to resign and concentrate on the business full time, and I found an investor, which has given us a year of runway. We deliver beer and gin and tonic on tap. What we are currently experiencing though is a flood of opportunities. Should I try and do everything, and increase my revenue streams, or focus on one thing at a time?

— Jonathan Rule Number One: Focus. A bird in hand is worth two in the bush.

Until the day you give up on the commercial prospects of your first idea, do not chase any others.

As soon as you get into the game you will find plenty of opportunities coming your way.

Say NO to everything. Give 100% of your energy to making a success of ONE thing at a time.

Once you’ve made a commercial success of your first product, use that foundation of capital and expertise to chase the next product, ie: G&T. Don’t stress about missing out. Most opportunities don’t go away. Most opportunities go begging because most people can’t focus on one thing at a time. I get what you’re saying, but what about setting up the Gin and Tonic bottling business for someone else to run with you as the primary shareholder?

If I were you I’d put 100% of my energy into your primary line.

When that’s pumping cash, move to G&T. But I’m not you. Only you can make the right decision for your business. Whatever you choose, you can never say it wasn’t your choice.

60

Q

You mention the book Anti-fragile in Be a Hero. I’ve just finished it and my understanding is that optionality is extremely important. If this is the case, then doesn’t having multiple businesses give you the greater opportunity that one will take off? — Anonymous You must balance optionality with focus. You can’t succeed without focus. In order to focus, you need to be anti-fragile (ie, have no fear of adverse events).

For example, my personal balance sheet is diversified, so I’m not entirely reliant on the success of my business.

That frees me up to be super-focused on my business.

Diversification in business is for professional investors, not entrepreneurs.

Q

One of our clients wanted us to develop a solution, but because we didn’t have enough resources in-house we had to approach an outside company to work with us as business partners. However, I am not happy with their contract. I don’t think they’re being fair to us. What should I do? — Portia At the end of the day, you need

LAUNCH CO-ORDINATES

BY ALAN KNOTT-CRAIG Successful businessman, bestselling author and social entrepreneur.

Named a Young Global Leader by the World Economic Forum in 2009, and now passionate about sharing what he wishes he knew when he started his own business. @alanknottcraig www.bigalmanack.com

partners. The only way to know whether you can trust a partner is to trust her. If the agreement is difficult to understand, they’re probably trying to trick you. If they’re trying to trick you, steer clear. Have a clean, simple agreement. See what happens. If they screw you, move on.

Q

My partners aren’t as passionate as I am, and I often find them to be lazy. I spend a lot of time telling them what they should be doing, or just doing a task myself. Should I cut my losses, move on and start my own business with investors who do add value? — Charles You need to trust your partners.

Trust = integrity x competence x commitment. If you don’t

think your partner has integrity, competence or commitment, then the entire equation equals zero. Which means you have zero trust. Which means you can’t be partners. If this is the case, you have no choice: Get rid of your partner, or leave the business and start again.

Q

I have recently started my own wine business after spending 7+ years in the wine industry. A question I ask myself daily is whether I spend my time pushing sales over and above building the business platform first. I’ve dealt with a few start-ups from a procurement point of view who send sales consultants to me without the basics in place, and I often find it rather unprofessional. — Richard You only get one chance to make a first impression. Don’t mess it up by not having a business card or website. Create as credible an impression as fast as possible, while spending as little money as possible. Personally, the first thing I do before I start selling is register a URL, design a logo, build a website, and print business cards. WordPress is easiest for URL registration and web hosting. If you want to design a logo and a website there are plenty of freelancers around. For business cards, the best is www.moo.com (they deliver to South Africa, get the Luxe option). Only then do I start selling. Only once I’ve sold something do I worry about fulfilment. Of course, the golden rule is Keep Your Promises. If you sell something and then don’t deliver the goods, you won’t find it easy to sell again. EM

LISTEN TO THIS Alan’s audible book Be a Hero: Make Life an Adventure is now available on amazon.com and Audible.com Read by Alan himself, Be a Hero is a collection of stories on how to make your life an adventure by changing your mindset and tackling adversity.

Go to amazon.com or audible.com to download your copy. Be a Hero is also available in Kindle and paperback through Amazon.com.

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

ASK AL Do you have a burning start-up question?

Email: alan@ herotel.com

LAUNCH

LESSONS LEARNT | OPPORTUNITIES | PODCASTS | MARKETING | ASK AL | SMART START-UPS

BUILDING A MARKETPLACE OfferZen was conceived in Silicon Valley but launched in Cape Town. The company founders discuss the advantages (and disadvantages) of starting a tech business in South Africa. BY GG VAN ROOYEN

Q&A

Q

How did you get the idea for OfferZen? We enjoyed running the incubator, but we also knew that we loved start-up life and wanted to launch our own business. We identified education and recruitment as two areas where a tech start-up could be particularly

62

successful and have a real impact. We settled on developer recruitment because of how skewed that marketplace is.

Companies are so desperate for good developers, that they get spammed constantly on sites like LinkedIn. We decided to create a site where developers could upload their details and companies would approach them — the opposite of your typical job or recruitment site.

Q

Why launch in South Africa instead of Silicon Valley?

We knew the South African recruitment market well, so we felt more confident launching locally. Also, South Africa is home to some great developers, as well as many large companies in need of their services, so we knew that a market existed for what we were doing. Another big reason was the fact that we could bootstrap this business in South Africa, while we would have needed to raise funds if we wanted to operate in Silicon Valley. Living and operating there is extremely expensive, so you need a lot of runway. There’s

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

also a lot more competition, so you need big names and big money behind you.

Q

Is visiting a place like Silicon Valley worthwhile if you want to launch a tech business in South Africa?

It is definitely worth it. There is an unbelievable concentration of talent and expertise in Silicon Valley, and people are very willing to speak to you. While we were there and preparing to launch OfferZen, we spoke to countless similar recruitment businesses. Figuring out what could be handled via software/ computers versus what we would need people for was

one of our major questions, and it was great to discuss this with experts on the ground.

So, yes visiting Silicon Valley can be very useful, but you should be working on a specific project. People there don’t mind engaging with you, but they want to address specific issues and challenges. They don’t want to chat in general. If you’re not actually busy working on a business, you won’t find it as useful.

Q

How did you manage to attract enough developers and companies to create a viable marketplace?

It really is a chicken/egg

PHOTO: SARAH SCHÄFER

A

S SOON as they graduated from university, brothers Philip and Malan Joubert entered the start-up scene. Their first business, FireID, met a rather swift and ignominious end, but they kept the name and launched an incubator under the same moniker in Stellenbosch.

This endeavour was far more successful, helping to launch local start-ups like SnapScan and JourneyApps. Soon, a few of the businesses in their incubator were scaling and in need of funding, so the Jouberts relocated (with the start-ups) to Silicon Valley.

While living in the world’s most famous tech hub, the idea for OfferZen was born.

LAUNCH

“South Africa is home to some great developers, as well as many large companies in need of their services, so we knew that a market existed for what we were doing.

Another big reason was the fact that we could bootstrap this business in South Africa, while we would have needed to raise funds if we wanted to operate in Silicon Valley.”

VITAL STATS

situation. You need a bunch of companies on the site to attract developers, and you need developers to attract companies, so how do you build up your database to a point where the whole thing becomes viable? That was one of the biggest challenges we had. Our advantage, though, was that good developers are so sought after. Companies are desperate to find developers, so they were quite keen to support what OfferZen was doing and join the marketplace. We started by building up a solid database of companies, and then started signing up developers. Once we had the companies, it was easier

PLAYERS: Philip and Malan Joubert COMPANY: OfferZen ESTABLISHED: 2015 VISIT: www. offerzen.com ABOUT: OfferZen is a curated online marketplace for software development talent.

It has over 500 companies since it launched, including big industry names like Barclays, GetSmarter, Takealot, FNB, Superbalist, Allan Gray, and 24.com. Founders Malan and Philip Joubert have been included in Quartz Africa’s annual Africa Innovators list for 2017. The list features 30 of Africa’s leaders in technology, business, arts, science, agriculture, design and media.

to convince the developers. We also offer developers who find employment through OfferZen a R5 000 bonus. Importantly, we started off quite small. Initially we just focused on Cape Town and created a viable marketplace there. Once that was up and running, we expanded to Johannesburg. If we threw the net too wide, we ran the risk of not having enough developers and companies in one place.

Q

You have a very impressive developercentric blog on your site. Why the focus on the blog?

We realise that only a small portion of developers are actively searching for a job at any given time, so we wanted to create something that would allow us to engage and offer something useful to the rest. Ultimately, we want all developers to be aware of OfferZen and its website, and a great way to do this is to generate useful content that drives traffic to the site. But we don’t think this would work if the whole exercise was just a thinlyveiled marketing exercise. So, we decided to create genuinely

useful content that would interest local tech entrepreneurs and developers. Creating this kind of content takes time and money, but we believe it’s worth it.

Q

You’ve grown massively over the last twelve months, from five people to more than 20. How do you make good hires when having to fill roles that quickly?

We’ve posted an article on our blog where we go into the minute details of our hiring process, which people can read, but I would add that people should seek out the book Who: Solve Your #1 Problem by Geoff Smart. It’s a fantastic book on the hiring process. Another thing worth mentioning, which OfferZen does, is to have what we call ‘simulation days’, where a candidate comes in and does actual work for a few days. It requires time and energy from the rest of the team, and it is also risky, since the candidate is doing real work and interacting with real clients, but we find that it’s an excellent way to gauge capability and culture fit. EM

S E P T E M B E R 2 0 1 7 E N T R E P R E N E U R M AG .CO. Z A

63

BUSINESS UNUSUAL

DO THINGS THAT DON’T SCALE Unless you want to be a small-business owner with a lifestyle business, you’re probably looking for an idea that scales – something that allows you to 10x your customers and profits in record time – but how do you accomplish this? Here’s some counterintuitive advice. BY GG VAN ROOYEN

I

N THE EARLY DAYS of Airbnb, when the site had just a handful of hosts in its website, the founders of the company did something surprising: They offered to have the accommodation hosts were offering professionally photographed for free. As they didn’t have the money to actually pay professional photographers, they did this themselves.

They showed up, introduced themselves and took some pictures.

In the world of Silicon Valley, this seemed absurd. Silicon Valley is all about scaling. You want an idea that’s easy to expand exponentially. For instance, the marginal cost of adding a single user to Facebook or Dropbox is small, which makes these companies extremely scalable.

Service businesses, meanwhile, are typically not very scalable, since they are limited by the time and energy you can physically put in. Every new client brings more complexity and demands more time and resources.

With their free photography, the Airbnb founders had turned an Internet start-up into a service business. There was no way you could scale this kind of behaviour, so, according to the dominant Silicon Valley philosophy, this was not worth doing. If this was what was required to sign up people on Airbnb, it could never be a success.

Y Combinator has funded many, many successful start-ups (including Airbnb and Dropbox), and one of its most common pieces of advice to new startups is to do things that don’t scale. Recruiting users manually is not a failure or proof that your concept won’t scale. Most of the time, it’s simply a necessity.

“The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all startups have to. You can’t wait for users to come to you. You have

How Airbnb went against the grain and common business sense to build an incredible business

THE MANUAL APPROACH So, why did the founders do it? Because Paul Graham at the famous Silicon Valley incubator Y Combinator suggested that they do it.

64

E N T R E P R E N E U R M AG .CO. Z A S E P T E M B E R 2 0 1 7

to go out and get them,” says Graham. “This can’t be how the big, famous start-ups got started, they think. The mistake they make is to underestimate the power of compound growth.

We encourage every start-up to measure their progress by a weekly growth rate. If you have 100 users, you need to get ten more next week to grow 10% a week. And while 110 may not seem much better than 100, if you keep growing at 10% a week you’ll be surprised how big the numbers get. After a year, you’ll have 14 000 users, and after two years you’ll have two million.”

SURPRISE AND DELIGHT Another reason, according to Graham, why the manual approach is important, is because it allows you to really know and understand your customers. By visiting all those Airbnb hosts, the founders quickly learnt what they loved and hated about the service.

By doing things that don’t scale, you get a much greater

understanding of your customer, which comes in handy once you’re ready to flip the switch and grow quickly.

“You should take extraordinary measures not just to acquire users, but also to make them happy. Your first users should feel that signing up with you was one of the best choices they ever made. And you in turn should be racking your brains to think of new ways to delight them,” says Graham.

LIGHTING THE FIRE The only opportunity you’ll ever have to thoroughly engage with all your customers on a personal level is when your business is still small. That’s why it’s important to do things that don’t scale early on. It creates the foundation for successful scaling.

“Sometimes the right unscalable trick is to focus on a deliberately narrow market. It’s like keeping a fire contained at first to get it really hot before adding more logs. It’s always worth asking if there’s a subset of the market in which you can get a critical mass of users quickly,” says Graham. “Most start-ups that use the contained fire strategy do it unconsciously.

They build something for themselves and their friends, who happen to be the early adopters, and only realise later that they could offer it to a broader market.”

You can read Graham’s entire blog post, Do Things That Don’t Scale, on his blog www. paulgraham.com. EM