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2018-04-01 Entrepreneur

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THE “HOW-TO” HANDBOOK FOR BUILDING COMPANIES
WWW.ENTREPRENEURMAG.CO.ZA
INTERNATIONAL
EXPANSION
zero to
R120 million
APRIL 2018
MILLIONAIRE MINDSET
Chasing money
won’t make you
rich, this will
Mike Wright launched
Striata from his
garage, with no
savings or funding
Today Striata
operates
in the USA, UK,
Australia & the
Far East from its
base in Cape Town
Could you survive
150 rejections?
What you can learn from
the start-up that did
BAIN & CO
5 questions
to tell if
you’re ready
to scale
LAUNCH
A DIGITAL
MARKETING
CAMPAIGN
FOR FREE
WORK SMARTER
WAYS TO
DO MORE IN
LESS TIME
INSIDE THE BILLION-RAND PRIVATE EDUCATION INDUSTRY
R200 million in funding
APR 2018 — ISSUE 145
How SPARK Schools founder Stacey Brewer’s
low-fee model is up-ending private tuition
R35,90 (INCL.
R49,80
(INCL. VAT)
VAT)
15 SCHOOLS IN 5 YEARS
OUTSIDE IN
N$49,80
RSA:
NAMIBIA
R31,49
APRIL 2018
CONTENTS
32
Why startups like Uber
stumble
when they
scale
“If I hear the words
‘because this is how
we’ve always done
it’ or ‘that’s how it works’, I
immediately know I have to
change it. Too much is done
simply because it’s always been
done like that. If you want to
change an industry, you need to
find completely new solutions
to the same problems.”
— Stacey Brewer, co-founder,
SPARK Schools
21
Did you know that 85% of the time, barriers to growth are not funding,
the economy or even superior competitors? Instead, top growth
organisations say that their biggest barriers are internal, specifically, the
founder’s ability to scale.
Here are the five questions you need to be asking yourself if you want
to overcome your internal roadblocks and build your organisation.
ON THE COVER
46
GROWTH AT A
MILE A MINUTE
11
32
53
60
21
9
Mike Wright launched
Striata from his garage in
Kensington. He was 30 years
old, had no savings, and
had left an MD’s position to
pursue his dreams.
Today, Striata is an
international business with
offices in the US, UK, Asia
and South Africa. Some of
the company’s growth plans
have worked extremely well,
others have failed to gain
traction.
These are Mike’s lessons
in growth, and the do’s
and don’ts of international
expansion.
THE DISRUPTOR
Stacey Brewer has secured
R200 million in investment
funding for two key reasons:
Her business, SPARK Schools,
is focused on achieving
systemic change in a sector that
desperately needs it, and second,
because she’s a disruptor and
an innovator. Her focus is finding
new solutions for old problems,
and she’s receiving a lot of
support on her journey.
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
1
CONTENTS
APRIL 2018
HOW TO DO
BIG THINGS
Great journeys don’t happen overnight, great
goals aren’t accomplished in a day.
Local leadership and personal development
coach Erik Kruger unpacks why you need to
align everything in your life in the direction of
your vision to achieve big things.
SMARTS
9
How smart people work less and get
more done
11 6 ways to develop a millionaire
mindset
16 Investment funds that offer a 100%
reduction in taxable income
SCALE
25 Why the education sector is a massive
business opportunity
27 Top interview advice
30 Creating a community around
your brand
35 Building businesses of value
36 Why uninsured employees are bad
for business
41 Closing more deals
13
WINNING THROUGH
MARKETING
Digital marketing maverick
Dylan Kohlstädt unpacks how
start-ups can maximise their
marketing spend through savvy and
cost-effective digital campaigns.
“If you don’t
research, you make
assumptions. The
more time you spend on
this process, the cheaper
and more effective your
marketing will be.”
53
LAUNCH
56
59
60
61
62
Learning from failure
Start with the end in mind
Bouncing back from rejection
Where start-up founders go wrong
Ask Al
BUSINESS SHOWCASE
42
43
44
45
ACDC
Parity
Sage
Travelit
IN EVERY ISSUE
4 Contact Us
6 First Word
52 Digital Subs
2
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
38
SURVIVING
GROWTH
Scaling a business from
100 to 200 employees
is never easy. Taking
a business from ten
employees to 50 is near
impossible. Advisory
strategist Hasnayn
Ebrahim unpacks what
separates ordinary
businesses from the
exceptional.
PUBLISHING CREDITS
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SMARTS 6 Ways to Develop a Millionaire Mindset, By Nick Unsworth, 19 January 2018
* How Smart People Work Less and Get More Done, By Travis Bradberry, Entrepreneur,
4 April 2017 BUSINESS UNUSUAL 4 Ways Sleeping Naked Makes You Healthier and
Wealthier, By Travis Bradberry, Entrepreneur, 17 July 2017
FIRST WORD
better — it can even make you
worse.
Extensive research in a wide
range of fields shows that many
people not only fail to improve,
they frequently don’t even get
any better than where they were
when they started.
The concept of deliberate
practice is quite specific. It isn’t
work or play, and it certainly isn’t
‘practice frequently’.
Push yourself beyond
your comfort zone
IN A FAMOUS STUDY
of chess players,
Nobel Prize winner
Herbert Simon and William
Chase proposed ‘the ten year
rule’, based on their observation
that chess players only reached
the top ranks after at least a
decade of intensive study.
Subsequent research in a wide
range of fields has substantiated
this rule, from maths and
science to musical composition,
swimming, tennis and literature
— no one, not even the most
‘talented’ performers, became
great without at least ten years
of very hard preparation.
Malcolm Gladwell brought this
idea to the world of business,
entrepreneurship and personal
development in his 2008 bestseller, Outliers, when he said that
‘ten thousand hours is the magic
number of greatness.’
Since then, the 10 000 Hour
Rule has become the foundation
of the idea that we need to work
hard to achieve our goals and
become experts in our fields.
6
IT’S NOT JUST ABOUT PUTTING
IN THE TIME
Like many ideas, both the
10 Year Rule and the 10 000
Hour Rule have become oversimplified, so much so that
many psychologists debunk the
theories that practice is enough.
Gladwell agrees. His 10 000
Hour Rule was never intended to
focus only on putting in the time.
In fact, the key to becoming a
master in your field is what’s
known as deliberate practice.
Geoff Colvin, author of Talent
is Overrated, has found that
true greatness comes less
from an innate talent, genetics,
intelligence or even luck, and has
much more to do with deliberate
hard work and practice.
We see evidence of this
everywhere. There are many
people who have played sports,
musical instruments, worked in
a specific job for years, and yet
they’re still just ordinary people,
with ordinary performances.
Which means just putting in the
hours doesn’t always make you
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
PUSHING YOURSELF FURTHER
When we see great performers,
it strikes us that they’ve
practised for so long, and
done it so many times, they
can do it automatically. What
they’ve actually achieved is
the ability to avoid doing it
automatically. Great performers
never allow themselves to
reach the automatic, arrested
development stage in their
chosen field. The essence of
practice, which is constantly
trying to do the things you
can’t do comfortably, makes
automatic behaviour impossible.
Ultimately, your performance
needs to be conscious and
controlled, not automatic.
Consider great leaders and
entrepreneurs who never stop
learning, reading and pushing
themselves. They understand
that deliberate practice is:
» Designed specifically to
improve performance
» Repeated a lot
» Requires continuous feedback
» Highly demanding mentally
» Not much fun.
Deliberate practice is hard
work. It takes a lot of discipline.
But the rewards are as great.
Consider these words from
Geoff Colvin: “If it seems a
bit depressing that the most
important thing you can do to
improve performance is no fun,
take consolation in this fact: It
must be so. If the activities that
lead to greatness were easy and
fun, then everyone would do them
and they would not distinguish
the best from the rest. The reality
that deliberate practice is hard
can even be seen as good news.
It means that most people won’t
do it. So, your willingness to do it
will distinguish you all the more.”
THE CRITICAL ROLE OF A COACH
A key element of success is
having someone who holds you
accountable for your goals and
monitors your progress, picking
up things you won’t see. A coach
will also know the theory of each
activity and understand how
performance can be improved in
that area.
Great performers isolate
aspects of what they do and
focus on improving them. This
requires focus, and it’s easy to
get side-tracked. Many successful
entrepreneurs have this in
common — they have worked
with a mentor or coach.
Deliberate practice requires
immediate feedback from a coach
or mentor and systematic ways to
separate your opinions from your
results so that you can focus on
what generates good outcomes.
This is easier said than done.
The good news is that you are not
alone. If you’re truly serious about
becoming the expert in your field,
find someone who will keep you
on point. And then start putting in
the time — deliberately, of course.
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
SMARTS
IDEAS FOR MAKING WISER USE OF YOUR TIME & ATTENTION
WORK LESS & GET MORE DONE
How you work is far more important than how much you work. BY TRAVIS BRADBERRY
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
9
SMARTS
PRODUCTIVITY
SOME PEOPLE have an uncanny ability to
get things done. They keep their nights and
weekends sacred and still get more done
than people who work ten or 20 hours more
per week than they do.
A new study from Stanford University
shows that they are on to something. The
study found that productivity per hour
declines sharply when the workweek exceeds
50 hours, and productivity drops off so
much after 55 hours that there’s no point in
working any more. That’s right, people who
work as much as 70 hours (or more) per
week actually get the same amount done as
people who work 55 hours.
Smart people know the importance of
shifting gears on the weekend to relaxing
and rejuvenating activities. They use their
weekends to create a better week ahead.
This is easier said than done, so here’s
some help. The following are some things
that you can do to find balance on the
weekend and come into work at 110% on
Monday morning.
1
DISCONNECT
Disconnecting is the most
important weekend strategy, because
if you can’t find a way to remove
yourself electronically from your work,
then you’ve never really left. Making
yourself available 24/7 exposes you
to a constant barrage of stressors
that prevent you from refocusing
and recharging. If taking the entire
weekend off handling work emails
and calls isn’t realistic, try designating
specific times on Saturday and Sunday
for checking emails and responding to
voicemails. For example, check your
messages on Saturday afternoon while
your kids are getting a haircut and on
Sunday evenings after dinner. This
will alleviate stress without sacrificing
availability.
2
MINIMISE CHORES
Chores have a funny habit of completely
taking over your weekends. When this
happens, you lose the opportunity to relax
and reflect. What’s worse is that a lot of
chores feel like work, and if you spend all
weekend doing them, you just put in a
seven-day workweek. To keep this from
happening, you need to schedule your chores
like you would anything else during the week,
and if you don’t complete them during the
allotted time, you move on and finish them
the following weekend.
10
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
3
EXERCISE
No time to exercise during the week? You have 48 hours every weekend to make it
happen. Getting your body moving for as little as ten minutes releases GABA, a soothing
neurotransmitter that reduces stress. Exercise is also a great way to come up with new
ideas. Innovators and other successful people know that being outdoors often sparks
creativity. I know that a lot of my best ideas come to me while I’m surfing. While you’re out
in the ocean, the combination of invigorating activity and beautiful scenery creates the
perfect environment for an influx of creativity. Whether you’re running, cycling or gardening,
exercise leads to endorphin-fueled introspection. The key is to find a physical activity that
does this for you and then to make it an important part of your weekend routine.
4
REFLECT
Weekly reflection is a powerful tool
for improvement. Use the weekend to
contemplate the larger forces that are
shaping your industry, your organisation and
your job. Without the distractions of Monday
to Friday busy work, you should be able to
see things in a whole new light. Use this
insight to alter your approach to the coming
week, improving your efficiency and efficacy.
5
PURSUE A PASSION
You might be surprised by what
happens when you pursue something you’re
passionate about on weekends. Indulging
your passions is a great way to escape stress
and open your mind to new ways of thinking.
Things like playing music, reading, writing,
painting or even playing soccer with your
kids can help stimulate different modes of
thought that can reap huge dividends over
the coming week.
6
SPEND QUALITY TIME WITH FAMILY
Spending quality time with your family
on the weekend is essential if you want to
recharge and relax. Weekdays are so hectic
that the entire week can fly by with little
quality family time. Don’t let this bleed into
your weekends. Take your kids to the park,
take your spouse to his or her favourite
restaurant and visit your parents. You’ll be
glad you did.
7
SCHEDULE MICRO-ADVENTURES
Buy tickets to a concert or play, or get
reservations for that cool new hotel that just
opened downtown. Instead of running on
a treadmill, plan a hike. Try something you
haven’t done before or perhaps something
you haven’t done in a long time. Studies
show that anticipating something good to
come is a significant part of what makes the
activity pleasurable. Knowing that you have
something interesting planned for Saturday
will not only be fun come Saturday, but it will
significantly improve your mood throughout
the week.
8
WAKE UP AT THE SAME TIME
It’s tempting to sleep in on the weekend
to catch up on your sleep. Though it feels
good temporarily, having an inconsistent
wake-up time disturbs your circadian rhythm.
Your body cycles through an elaborate series
of sleep phases in order for you to wake up
rested and refreshed. One of these phases
involves preparing your mind to be awake and
alert, which is why people often wake up just
before their alarm clock goes off (the brain
is trained and ready). When you sleep past
your regular wake-up time, you end up feeling
groggy and tired. This isn’t just disruptive to
your day off, it also makes you less productive
on Monday because your brain isn’t ready to
wake up at your regular time. If you need to
catch up on sleep, just go to bed earlier.
9
DESIGNATE MORNINGS AS ME TIME
It can be difficult to get time to yourself
on the weekends, especially if you have family.
Finding a way to engage in an activity you’re
passionate about first thing in the morning
can pay massive dividends in happiness and
cleanliness of mind. It’s also a great way
to perfect your circadian rhythm by forcing
yourself to wake up at the same time you
do on weekdays. Your mind achieves peak
performance two-to-four hours after you wake
up, so engage in something mental while your
mind is at its peak.
10
PREPARE FOR THE UPCOMING WEEK
The weekend is a great time to spend
a few moments planning your upcoming week.
As little as 30 minutes of planning can yield
significant gains in productivity and reduced
stress. The week feels a lot more manageable
when you go into it with a plan. EM
© Entrepreneur Media Inc. All rights reserved.
TRAVIS BRADBERRY is the awardwinning co-author of the best-selling
book, Emotional Intelligence 2.0, and
the co-founder of TalentSmart — a
consultancy that serves more than
75% of Fortune 500 companies and is a leading
provider of emotional intelligence tests and training.
PSYCHOLOGY OF SUCCESS
SMARTS
6 WAYS TO
DEVELOP A
MILLIONAIRE
MINDSET
Chasing money has remarkably little to do
with getting rich. BY NICK UNSWORTH
S
o, you want to become a
millionaire entrepreneur? You’re
not alone. Many dream of leaving
their job and becoming their
own boss, enjoying the various
millionaire lifestyles we watch on TV. But
there’s a difference between those who
dream of becoming millionaires and those
who do. And it begins and ends with mindset.
If you don’t develop that mindset, you will
continue to spin your wheels, working just as
hard, but never going anywhere.
Developing a millionaire mindset requires
you to stretch your thinking. Start by
developing the following six attributes.
1. HAVE VISION
If you aspire to be a millionaire at some point
in your life, or you aspire to have a sevenfigure business, you’ve got to get really clear
on why you want it. Throughout my 20s,
making money was my ‘why.’ A number of
business successes and failures taught me
that it’s not about the money, but about
what the money can do for you.
Why do you want to be a millionaire? You
must be really clear on your ‘why,’ so that
when times get tough, or you don’t want to
wake up at 4 am or make another cold call,
you are pulled to do it anyway.
What impact do you want to have? What is
the positive impact of achieving your sevenfigure goal, and even more compelling,
what's the negative impact of not achieving
it? When we make our vision and our ‘why’
about others, there's an exponential increase
in the inspired action that we'll take to
achieve it.
Some of the greatest entrepreneurs in
the world have very big missions. They
know exactly where they’re going and why
they’re going there. They are clear on the
impact and the legacy they’re building. What
is your impact? And what kind of legacy do
you want to build? The more you connect to
your impact, the more willing you’ll be to do
the uncomfortable things that lead to rapid
growth.
In addition, millionaire business owners
have a ‘now’ mentality. Rather than putting
things off, they do what is necessary now,
no matter how scary or impossible it feels.
Knowing why you’re doing what you’re doing
and being a ‘now’ kind of person will push you
to get what you want.
2. LOVE WHAT YOU DO
When you love what you do, it doesn't feel like
work. And, when you love what you do, money
will inevitably flow to and through you. Even if,
at the moment, you’re working in a career or
job you don’t love, simply shifting the way you
think about it can shift your entire mindset.
Rather than bemoan your job, think of it as
your banker that’s supporting you as you work
to where you want to be. Speak life into your
present situation and shift your way of being
so that you cherish your job for providing you
with the means to pursue the work you love.
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
11
SMARTS
PSYCHOLOGY OF SUCCESS
3. BE SOLUTION-FOCUSED
Be very clear on the problem your
business solves.
In addition, being solution-focused
means that you see solutions where
others see problems, despite your
circumstance. So, when the going gets
tough and most people pack it up and
go home, the millionaire mind knows
that there's always a solution, and
that, no matter how big the problem
or challenge, it’s a blessing in disguise.
Even failure reaps benefits that will
serve you in the future.
By focusing on solutions rather
than problems, you maintain a
positive mindset and are not rattled
by circumstances beyond your control
that may derail others. The bigger you
grow as an entrepreneur, the greater
the pressure, the responsibility and
the problems.
Millionaires are excited by their
challenges because they know that
abundance lies on the other side.
Further, people who see solutions
attract others who seek solutions.
First and foremost, get a coach. My
life was impacted more by having a
coach than by anything else I’ve ever
done in business or in life, in general.
Secondly, be coachable. Often what
happens when you seek wise counsel
is that you put up a wall between you
and the feedback you’re receiving.
Know that a coach sees your business
and life from an outside perspective
that you cannot. Trust that your
coach has wisdom and a full picture
perspective that you just don’t have.
The more primed you are to hear and
assimilate feedback, the faster and
farther your business will grow.
6. FLIP YOUR THINKING FROM
DOING TO BEING
People, especially entrepreneurs,
are constantly doing in order to have
stuff — a new car, house, clients or
whatever it is that will make them feel
significant and good about themselves.
They believe that once they become
millionaires, they will truly be
significant and have done something
If you truly want to have a million dollars,
you must first be and think like a millionaire.
By doing so, you will attract the necessary
resources to you.
4. CONTINUALLY HONE YOUR
LEADERSHIP SKILLS
Focusing on your leadership skills is
going to dramatically shift and change
everything in your life and business.
Grab the book The 21 Irrefutable Laws
of Leadership by John C. Maxwell and
internalise it. The more you grow your
leadership skills, the more you’re going
to attract other like-minded leaders
into your business.
One of my favourite irrefutable
laws of leadership, the law of the
lid, teaches that you are the lid on
your container. In other words, you
are the one who limits the growth
of your business. By enhancing your
leadership skills, you will blow the lid
off your business.
worthwhile. But that’s backwards. If
you truly want to have a million dollars,
you must first be and think like a
millionaire. By doing so, you will attract
the necessary resources to you.
It’s not about doing something in
order to have something or in order to
be someone. You must be someone
first; someone who has what she
needs in order to take the inspired
action. To become a millionaire, you
must be a millionaire who thinks like a
millionaire, who has what a millionaire
has, in order to take the inspired action
that a millionaire takes. EM
© Entrepreneur Media Inc. All rights reserved.
5. BE GROWTH-ORIENTED
Millionaire business owners endlessly
pursue personal growth and
development.
12
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
NICK UNSWORTH is
CEO of Life On Fire,
a business coaching
company located in San
Diego, California.
WHY YOU SHOULD
DEFINE YOUR
FEARS INSTEAD
OF YOUR GOALS
JERZY
“Easy choices, hard life.
SAYS
Hard choices, easy life.”
— Jerzy Gregorek, four-time world
champion in Olympic weightlifting,
political refugee, published poet
“We suffer more often in
SENECA
SAYS
imagination than in reality.”
— Seneca the Younger, a
famous Stoic writer and ancient
Roman philospher
TIM
SAYS
“The hard choices — what we most
fear doing, asking, saying — these
are very often exactly what we most
need to do. And the biggest challenges
and problems we face will never be
solved with comfortable conversations,
whether it's in your own head or with
other people.
“I can trace all of my biggest wins
and all of my biggest disasters averted
back to doing fear-setting at least once
a quarter. It's not a panacea. You'll find
that some of your fears are very wellfounded.
“But you shouldn’t conclude that
without first putting them under a
microscope. And it doesn’t make all the
hard times, the hard choices, easy, but
it can make a lot of them easier.”
— Tim Ferriss, best-selling author
of the 4 Day Work Week
To find out
more about
Tim Ferriss’s
three-page
fear setting
exercise,
and the back
story of how
this exercise put him on the path to
writing his first book, watch the full
Ted Talk here.
GOALS
SMARTS
become bolder because you
become more confident.
Soon you find yourself taking
bigger and bigger decisions and
actions.
But they were born from the
thousands of small decisions and
actions that you took before.
BETTER YOU
HOW TO DO
BIG THINGS
The secret to achieving impossible
dreams is accretion — slowly and
steadily working towards your
goals. BY ERIK KRUGER
I
n 2005, four Navy Seals
were sent on a mission to
extract a high value target.
Unfortunately, the mission
didn’t go according to plan,
leaving the Seals to fight for their
lives. Three of them were killed
in action. The other was shot,
fell off a cliff, and in the process
shattered his back and legs. He
also bit off half of his tongue,
and endured multiple gunshot
wounds.
Yet, despite the fact that he
couldn’t walk, he managed to
crawl 11 kms to a nearby village
and to safety.
When he was asked how he
did it he said that he took a stone
in his hand, stretched his arm out
in front of him and drew a line in
the sand. All he wanted to do was
get across that line.
As soon as he managed to
drag his feet across the line, he
drew a new one. In fact, he kept
drawing lines and crossing them
for 11 kms.
That is how he did the
impossible. One line in the sand
at a time.
THE PARADOX
Motivational speakers love
telling us to take big actions; to
think and act big. Although I can
appreciate the sentiment, and
sometimes it’s apt, I think that
it often has a counterproductive
effect.
It scares people. It implies
that there is also the possibility
for massive failure. But it's not
just about the actual failure of
a project or business. It’s the
internal dialogue that goes
with it.
The inner voice that starts
telling you that you aren’t good
enough. That you shouldn’t
even try. I’m sure you can relate.
We all have a judger inside us
that rears its head when we are
trying to do meaningful things.
That criticises every move and
decision.
The judger has a great ability
to prevent us from taking any
action at all. Let alone massive
action.
When you
realise that
accretion is
about the
accumulation
of all the
things that
you do
and all the
decisions that
you make,
you start
to see the
importance
of aligning
everything in
your life in the
direction of
your goals.
THE WAY
It’s for this reason that I always
encourage entrepreneurs to
simply focus on the line in front
of them.
Keep in mind the direction
you want to move in, and the
goal you would like to achieve,
and then start by crossing that
first small line. And when you’ve
done that, cross the second.
As you continue, you pick
up momentum. Your actions
ACCRETION
I talk about this principle often.
Accretion is the accumulation of
all of your compounding efforts,
small wins, abilities, knowledge,
and experiences. Over time
this process accumulates and
perpetuates what you feed
into it.
When you realise that accretion
is about the accumulation of all
the things that you do and all
the decisions that you make, you
start to see the importance of
aligning everything in your life in
the direction of your goals.
The reason I am writing to you
today is because of the body of
work that I have accumulated
through the writing of my daily
email. An email that has gone out
more than 580 times. Every day
without missing a beat.
It’s my line in the sand that I
cross every day. And the result
of it has not simply been an
accumulation of 580 emails. It
has been a successful business,
the opportunity to become
a coach, to speak on stages
with well-known businessmen,
and write this column for
Entrepreneur magazine.
Remember that consistency
breeds success.
I’d much rather bet on the guy
who consistently executes well
than the guy who hits a homerun every now and then.
Draw a line in the sand.
Cross it.
Then tomorrow, do it again. EM
ERIK KRUGER is
a leadership and
personal development
coach. His daily email
on being better in
business and life goes out to
17 000 people.
@EricKruger | www.erikkruger.com |
www.bettermanblueprint.com
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
13
ADVERTORIAL
Q&A
True success starts with how much you’re
willing to do to achieve it. If you’re hungry
to learn and develop, the business world
is your oyster. BY NADINE TODD
Q
Why is it important for
entrepreneurs to focus
on personal development and
education, even after they are
no longer a start-up?
Research in South Africa has
revealed that 80% of SMEs fail
within the first two years of
starting a business. So, if an
entrepreneur makes it beyond
this stage, it’s worth investing
time, money and effort to
make sure that they succeed
by seeking entrepreneurial
education, training and
development to improve their
business offerings.
New competitors are
constantly entering the market
and established entrepreneurs
should make sure that they
maintain their competitive
advantage by educating
themselves in areas such as
the most current trends in
their industries, changes in the
market, offering more and better
innovative products and services,
staying close to their target
Q
Many start-ups conduct
thorough research, and
then don’t continue to focus on
development as the business
grows. Often, the reason for
this is lack of time. What advice
would you offer entrepreneurs
in this regard?
Time is a problem for all
entrepreneurs; there is never
enough of it. It’s a matter of how
effectively you use your time
and how you plan the activities
14
market to determine the most
effective marketing strategies
and providing a stronger value
proposition. For established
entrepreneurs, there is also
the risk of growing too fast or
not being able to manage
their growth.
These entrepreneurs should
then educate themselves
on the most effective
growth strategies suited
for their business. Personal
development is crucial, as
entrepreneurs progress through
the entrepreneurial process
because they learn as they go.
An example is when established
entrepreneurs conduct a
personality profile to determine
how to cognitively adapt to
their current entrepreneurial
environment. Weaknesses or
areas of improvement, such
as poor financial planning for
example, are highlighted and
entrepreneurs can then work on
these areas.
that should happen within
a specific time period. A big
problem with entrepreneurs
is also a lack of delegation,
as they want to be involved
in every area of the business.
Entrepreneurs need to
determine which activities can
be delegated to an employee
or partner and focus on
the core skills that they are
competent in and which help
the business to grow.
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
Professor Melodi
Botha is an associate
professor and
researcher at the
Department of
Business Management
in the Faculty of
Economic and
Management Sciences
at the University of
Pretoria. She is the
Programme Lead for
the MPhil degree in
Entrepreneurship.
Her research focuses
on training, educating
and supporting
entrepreneurs at
different stages of
preparing, starting and
managing a business.
Q
What skills should
entrepreneurs be
developing while they are
starting and then managing a
business?
We recently conducted research
on the skills that entrepreneurs
need as they progress through
the various stages of the
entrepreneurial process. We
identified two sets of skills,
namely functional competencies
and enterprising competencies.
Q
Are there any tips and
tricks you can offer to
people who want to study, but
still need the time to run their
businesses?
Studying or learning should be a
life-long journey that should not
necessarily have an expiry date. I
am talking about gaining life skills
and developing entrepreneurial
abilities through everyday
learning. Most professional
qualifications require continued
professional education and I see
no reason why entrepreneurs
should not adopt the same
approach.
Therefore, my first tip would
be to plan to study. It should be
part of a daily routine to study
or learn more about an area
where weaknesses arise. Many
universities offer short courses
such as three-day programmes in
different speciality areas, which
PHOTO: SUPPLIED
The power of lifelong learning
The findings further revealed
that established entrepreneurs
viewed functional competencies
such as marketing, financial,
operational, legal, human
resource, networking, technical,
communication and planning skills
as important skills to have during
the established stage. Both startup and established entrepreneurs
viewed enterprising competencies
such as creativity, innovation, role
model interpretation, opportunity
recognition, risk taking, need for
achievement and the ability to
gather and control resources as
important during both stages.
More specifically, financial
and legal skills should receive
more attention when starting a
business. In a similar study, we
found that potential entrepreneurs
should focus on opportunity
recognition, opportunity
assessment and creative problem
solving during the potential
entrepreneur stage. At the same
time, start-up entrepreneurs
should focus on opportunity
recognition, building networks
and resilience, while established
entrepreneurs should focus on risk
management/mitigation, building
and using networks as well as
resilience.
you can attend and not be away from
your business for too long.
In early stages of formal tertiary
education, my advice would be to focus
on your studies first and thereafter
focus on the business. This does not
mean that you don’t have to start
planning and acquiring resources while
still studying. For example, our second
year students, studying towards a
BCom in Entrepreneurship, prepare
their own feasibility studies and compile
business plans as part of the curricula.
Q
What startling facts and figures
has your research revealed that
many entrepreneurs don’t realise?
In a recent study we determined
that many potential entrepreneurs
(students) show a strong
entrepreneurial intention to start a
business in future but rarely go over
into action and the rate of actual startups, in South Africa, remains low.
This is also the case for
entrepreneurship education
graduates. However, prior
entrepreneurial exposure, such as
having entrepreneurial parents or
entrepreneurial role models during the
course of their studies, increased the
start-up rate.
Another interesting study we
conducted on women entrepreneurs
revealed that women are in
desperate need of entrepreneurial
training and education. The Women
Entrepreneurship Programme (WEP)
at the University of Pretoria measured
180 women who completed the
programme. These women were
measured on their skills level before
the programme, directly after the
programme, six months after the
programme and ten years after the
programme took place. They were
measured on eight different levels
and the WEP proved to be effective in
not only transferring entrepreneurial
and business skills to women, but also
improving their business performance
indicators (turnover, employees, sales
and profit). Some of the women (35%)
started multiple businesses six months
after they attended the WEP. Ten
years after the programme, the results
of the study confirmed that these
women’s businesses made a significant
difference in their communities and the
economy of South Africa as a whole.
EM
SMARTS
INVESTMENTS
Invest and save 100% of
your tax payable to SARS
Q&A
Section 12J funds were created in response to the South African
Government offering tax incentives for private investors to support
funds that support SME growth in South Africa. Three experts
unpack the benefits of investing in 12J funds — particularly for high
net worth individuals. BY NADINE TODD AND NICOLE CRAMPTON
THE EXPERTS
Clive Butkow is the former Chief Operating Officer
(COO) of Accenture South Africa. He has 28 years’
management consulting experience. During his tenure
at Accenture, he played numerous leadership roles,
including MD of Accenture’s Technology business, as well
as MD of Accenture’s Resources business. He is currently
the CEO of Kalon Venture Partners, a disruptive digital technology Venture
Capital Fund (VCC). He sits on various boards of the VCC’s underlying
companies, and is chairman of one of the companies. He also sits on the
board of a large privately held ICT company. Kalon Venture Partners focuses
on investing in disruptive digital technologies. Visit: www.kalonvp.com
16
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
Neill Hobbs is a Chartered
Accountant CA(SA), Registered
Auditor and Senior Business
Rescue Practitioner. For the last
14 years, Neill has been a partner
of Hobbs Sinclair, where his
skills have been utilised in building an accounting
practice specialising in tax structures. Four years
ago, Neill became a Business Rescue Practitioner
and has taken on many successful appointments to
date, which involved saving hundreds of jobs and
INVESTMENTS
Q
What is a 12J Fund?
Clive Butkow: In 2009,
the South African Government
implemented a tax incentive for
investors in enterprises through
a Venture Capital Company (VCC)
regime known as Section 12J.
These funds were set up to
help early stage companies
raise venture capital to stimulate
economic growth and job creation.
Section 12J was based on the
Venture Capital Trusts (VCT) in the
UK, which enable high net worth
Individuals to save tax and rather
invest in a VCT, which will then
invest in start-ups. Individuals,
trusts and companies can all
invest in a Section 12J company
and receive the respective tax
deduction.
Neill Hobbs: The South African
Revenue Services (SARS) has
written Section 12J into the Tax
Act, which offers taxpayers a
100% reduction in their taxable
income in the year of investment
for the amount they invest by way
of a subscription for shares in a
Section 12J VCC. The VCC then
invests into small and mediumsized enterprises (SMEs) with the
added intention of creating jobs
and securing employment. The
VCC must be approved by both
SARS and the Financial Services
Board.
Q
Why is it tax deductible?
Gidon Novick: The legislation
provides for a tax deduction
providing the fund complies with
returning the companies to profitability. His high
level strategic management was a key driver that
led to their success. Neill is passionate about SMEs
and has an interest in the South African Tax Act. He
is a director and co-founder of Anuva Investments,
a Section 12J VCC that has been operating since
2015. Anuva’s internal rate of return, excluding the
tax break, was 26% at the end of February 2017,
meaning that R1 million invested in February 2015
would have grown to R1,59 million in February last
year. Visit: www.anuvainvestments.co.za
the requirements of the Act.
The intent of the incentive is to
stimulate certain critical areas
of the South African economy
(such as tourism and hospitality)
through SME growth in the sector.
Neill: Section 12J advocates
investment into SMEs and junior
mining exploration to act as a
catalyst for a positive shift in
the economy. We know that
SMEs are a significant source
of employment in the economy
and provide a plethora of job
opportunities and income security
for households. This ultimately
creates a positive iterative loop in
the economy.
Q
How do the tax deductions
work?
Clive: The total amount invested
can be deducted from the taxpayers’ taxable income. This
results in a taxpayer (who is
paying tax at the marginal rate
of 45%), saving 45% of their
investment by reducing their
taxable income. For example,
a taxpayer who has a taxable
income of R1 million and would
normally pay R450 000 to SARS
will rather pay the R1 million to
the Section 12J company and
pay zero tax. The caveat is that
the taxpayer needs to hold
their shares for five years in the
relevant Section 12J fund, or SARS
will recoup their tax saving. The
tax is deductible to incentivise
taxpayers to rather invest in a
Section 12J company and promote
SMARTS
the growth of the South African
economy than pay tax on their
taxable income.
Q
This seems like a double
benefit to investors? Is that
correct and why?
Clive: There’s definitely a double
benefit, as the taxpayer receives a
once off deduction from SARS in
the year they invest in the Section
12J company, as well as an added
benefit based on the performance
of the Section 12J company.
Some companies are set up to
invest their capital in higher risk
ventures with others in lower risk
ventures. The returns to investors
range from 15% to 38% based on
the nature of the fund and their
investment strategy.
Gidon: The benefit to investors
would be in the form of their tax
deduction but importantly also
their investment returns. Investors
need to fully understand the
nature of the investments the
fund is making, the risks involved
and their ability to cash out after
the five-year minimum term, in
other words, the liquidity of the
investment.
Neill: Individual investors will
get an immediate tax saving, up
to 45% of the amount invested,
in addition to any dividends
and long-term capital growth.
A Section 12J VCC provides selfinterest value to the taxpayer
in the tax saving and growth
in investment, but in a broader
sense, marries business value
Gidon Novack is a socially-minded entrepreneur who has
created innovative, high growth opportunities within large
businesses and built new businesses from inception. He
served as Joint-CEO of Comair from 2006 to 2011, and as
CEO of Discovery’s world-leading wellness programme
(with a turnover of R2 billion) from 2012 to 2015. Since 2015
he has spearheaded Lucid Ventures, a registered 12J operator with a focus
on property-backed hospitality investments. There is a strong global trend
towards apartment style hotel accommodation, and Lucid invests in small units
in new residential developments in high-demand urban areas and operates a
hospitality business in those units. Visit: lucidventures.co.za
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
17
SMARTS
INVESTMENTS
with societal value through the
boost in the SME space.
Q
What are the pros and
cons of a 12J fund versus
more traditional investment
portfolios?
Neill: The benefit for a deduction
in respect of a retirement annuity
contribution is limited to
R350 000 in a year, whereas the
contribution and benefit of an
investment into a Section 12J VCC
is not capped and can be 100%
of taxable income.
Many SMEs require capital
and management support. With
the support from the VCC team,
stakeholder integration and
interaction takes place on the
factory floor, rather than just
Q
What is the amount you
can invest into a 12J fund?
Neill: CIPC requires that if a VCC
does not have a prospectus,
then the minimum amount that
can be invested is R1 million. The
intention with this is to make
sure that any general person
from the public, who might not
understand the investment
they are investing into, does not
invest more than is appropriate
for them.
Clive: Our recommendation at
Kalon Venture Partners is that
an investor should not invest
more than 7,5% to 10% of their
net wealth into a Section 12J due
to the higher risk profile of a
venture capital investment.
Section 12J is particularly attractive
to high income earners. It’s also
attractive to those taxpayers who
have made a capital gain, which will be subject
to capital gains tax.
in the boardroom. The investor
management team walks the
walk with the SME.
A VCC investment should
be viewed as a long-term
investment. The proceeds on the
sale of the VCC shares will be
subject to full tax recoupment
if the shares in the VCC are sold
within five years from the date of
investment.
If the shares are held for a
period exceeding five years, the
sales proceeds from the sale of
the shares will only be subject to
capital gains tax, albeit from a
zero base.
Clive: A major pro for investors
is the upfront tax advantage
where there is no limit to the
investment that you can make,
unlike an RA, which is limited to
a percentage of taxable income
and capped. A second pro is
the fact that investors can now
diversify their portfolio with 12J
investments and not only invest
in the traditional capital markets.
18
Q
Is there a ‘right’ time to
invest in a 12J fund with
regards to tax exemptions?
Clive: There is no right time to
invest, however with the current
rand strength we see this as
a vital time to diversify one’s
portfolio. The most effective
time to raise capital is at the
tax year end on 28 February. An
alternate time of the year that
capital is raised is during the
provisional tax season in August
or September each year.
Gidon: An investor should only
consider a 12J if they have the
taxable income and don’t need
access to the funds they have
invested for at least five years.
Investments must be made
before the tax year-end (ie 28
February) to qualify for the
deduction in that year.
Neill: Section 12J is particularly
attractive to high income
earners. It’s also attractive
to those taxpayers who have
made a capital gain, which will
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
Q
What questions should investors
who are interested in investing
in a 12J fund be asking?
Clive: The most important question is of the
experience and reputation within the management
team. Money follows management in the venture
capital asset class. The management team needs
to have experience in the investment strategy of
their Section 12J fund. At Kalon Venture Partners
we only invest in disruptive digital technologies
where the CEO and the board have significant
experience in buying, building and selling
technology companies. The CEO was the exCOO of Accenture South Africa and prior to that
led Accenture’s technology business. Another
important consideration is how the Section 12J
company creates liquidity for their investors as it’s
important for the investor to understand how and
when the Section 12J company will pay dividends
of the profits and surpluses on the sale of assets.
Lastly, investors must understand the governance
and investment disciplines, systems and processes
when making investments.
Gidon: What is the risk/return profile of the
underlying investments? Who are the fund
managers and what is their track record? What are
the assets that underpin the investments? How
will this fund make an impact on the South African
economy and job creation? How will I get my
money out after five years?
Neill: Confirm SARS and FSB approval. What is the
VCC’s investment strategy? The VCC’s industry
focus? What is the fund’s launch date? Track
record? Capital raised? Targeted return? Number of
investments made in qualifying companies? Annual
financial statements published? Basis for valuing
the underlying investment and the VCC’s dividend
policy and history? Fee structure? Minimum
investment?
be subject to capital gains tax.
For example, an individual who
realises a capital gain of
R5 million in the 2018 tax year,
will only have to invest the
inclusion amount of 40%
(R2 million) into a VCC to avoid
capital gains tax completely in
the 2018 tax year.
A VCC investment is the only
recognised manner in which
a corporate employee, who is
subject to PAYE on their salary,
can receive a refund of PAYE
deducted by the employer.
Although there is no provision
for a directive for the reduction of
the PAYE amount, an employee
who earns R2 million per annum,
and makes a R2 million VCC
investment, could receive a full
refund of PAYE on the submission
of their annual tax return.
The sunset clause is currently
30 June 2021. This means that
funds invested before that date
must remain in for the five-year
period, but any funds invested into
a 12J fund after that date will not
enjoy the current tax benefits. This
date could be re-assessed and
extended. EM
ADVERTORIAL
PLAYER:
Kate Holahan
FRANCHISE:
Sorbet
POSITION:
Franchisee
— Sorbet and
Sorbet Man
Benmore
ESTABLISHED:
2015
VISIT: www.
sorbet.co.za
Sorbet franchisee Kate Holahan went from corporate employee
in 2015 to owning two franchise locations in just over two
years. By September 2017, she had launched a new location,
acquired new clients and was learning something new every
day. It took a few learning curves and partnering with the right bank to lead
her to successfully running her Sorbet and Sorbet Man stores at Benmore
Shopping Centre in Sandton. BY DIANA ALBERTYN
Q&A
Q
Q
Q
PHOTO: DEVIN LESTER
What were you doing
before becoming a
Sorbet franchisee?
I was in the marketing
department of a corporate IT
company. The long hours and
the pressure made me realise
I needed a lifestyle change.
What drew you to
franchising?
It was purely because of
the backing you receive.
Franchising offers better
support systems than going
into entrepreneurship on your
own. Everything is structured
and ready for you to run.
Why did you choose to
invest in Sorbet?
I had been a Sorbet guest for a
couple of years and admired the
company’s culture and service.
I knew it would be an amazing
brand to be a part of.
What have some of the
challenges of operating a
Sorbet outlet been?
I’ve encountered minimal
challenges on the salon side,
but Sorbet Man has been a little
more challenging. Since opening
the male-focused grooming bar
I’ve had to deal with different
client personalities, but I’m lucky
enough to still have the team
working for me that I started with
when I opened my doors for the
first time three years ago.
Q
Why is it important for a
franchisee like yourself to
have a good banking partner?
As a franchisee in a specialised
field you need a bank that knows
your business intimately so they
are attentive and pre-emptive to
your needs.
Q
FOLLOWING YOUR
DREAMS? NAILED IT!
Q
and hygiene checks. From the
Sorbet Man side I’m getting a
lot of support because I’m new
to the concept. Sorbet helps me
source staff and run marketing
initiatives, although we’re
allowed some flexibility with
localised promotions, provided
they don’t clash with the brand’s
overall marketing calendar.
Q
Why did you decide on a
second location so soon
after launching your first?
It was always the plan to open a
couple of stores. The centre from
which I operate complements
both the target markets for the
men’s and women’s salons,
so it was an inevitable and
lucrative venture. Also, as an
entrepreneur, the earnings are
not the same as a corporate job,
so being a multi-unit franchisee
is a great way to meet my
financial needs.
How has
Nedbank
supported you
in your journey
since launching
the business, to
successfully running
and growing it to its
current size?
When I started my
business I was with a
different bank, then
I changed banks
for the second time
before opening my
Sorbet Man store,
which I set up through
Nedbank, on the
advice of Sorbet’s
head office. Unlike the
previous two banks,
Nedbank customised
its solutions to suit me
without any qualms
and I ended up moving
all my banking for both
outlets to them.
Q
How often do you
communicate with head
office and what support are
you offered?
I meet with my area manager
bi-weekly for quality control
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
19
SCALE
ACTIONABLE ‘HOW-TO’ INSIGHTS FOR COMPETITIVE ADVANTAGE
ADAPTING
AT THE
SPEED
OF SCALE
SPARK Schools is a
disruptive educational
business model
that has garnered
so much investor
interest, its founder,
Stacey Brewer, has
secured R200 million
in funding. Here’s
how she’s turning a
traditional, entrenched
industry on its head
to solve real problems
and bring about
systemic change.
PHOTO: DEVIN LESTER
BY NADINE TODD
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
21
SCALE
DISRUPTIVE MINDSET
I
n 2012, Stacey Brewer
raised R4,5 million in her
first round of funding. It
gave her an 18-month
runway to focus on
launching her low-fee
private school model, SPARK
Schools. This was followed by
R28 million from an international
fund, the Pearson Group’s
Affordable Learning Fund. The
business’s most recent round
of funding was a Series B round
that raised R150 million in 2016,
taking SPARK’s overall funding
to R200 million.
“We’ve committed to having
20 schools by 2019, which will
enable us to educate 12 000
children,” says Stacey. “Our
investors still expect a 10X
return, but it’s ‘patient’ capital,
designed to support impactful
business models. Educational
companies are highly valued.
They provide a good annuity
income, but investors also love
what we do because we’re
focused on achieving systemic
change, and funds are looking
for that. More and more, funding
mandates are focused on the
greater good.
“This is still a business though.
One school is not a business —
you can’t scale it, and so there’s
no growth opportunity. If you
can build a network of schools
however, you can benefit from
economies of scale.”
Here’s how Stacey and her
team are turning the traditional
education model on its head,
and in so doing, are providing
value for children, parents and
their funders alike.
IF THAT’S HOW IT’S ALWAYS
BEEN DONE, IT’S TIME TO DO
THINGS DIFFERENTLY
As a low-cost private school,
SPARK aims to make a quality
private school education
accessible to parents who
cannot afford traditional private
school fees. What Stacey and
her team soon learnt however,
is that everyone is looking for
quality, irrespective of social and
economic status.
“When we started, we thought
our price would be a huge selling
22
KEY INSIGHTS
Don’t do what’s
always
been done
Following an accepted industry
or business practice will only help
you achieve more of the same.
If you really want to radically
improve your business, a sector or
the lives of your customers, you
need to question everything.
Start with the
problem
If you can’t clearly define your
problem, you’ll never come up
with a solution that suits your
target market.
What’s your AQ, or
adaptability quotient?
Forget IQ and EQ — businesses
that are looking to scale need to
be highly adaptable.
point. We soon realised it actually
switched people off. There was
an assumption that you get what
you pay for, and that low fees
mean a poor-quality education,”
says Stacey. “South Africa is very
aspirational, and people want the
best for their children.
“We needed to reposition what
we were doing and focus on
the fact that our schools have
a modern, aspirational look and
feel, and that we deliver a quality
education. Once we had driven
those points home, we could
discuss price. Now that we’re
becoming known and our kids
are our ambassadors, this is a
different story, but it was very
important when we launched.
“Parents vote with their
feet — just being cheap isn’t
enough. We’ve received the
investment we have because
we’ve developed a model that’s
both affordable and can compete
internationally.”
A full year’s tuition at SPARK
for 2018 is R21 000. How do you
provide a quality educational
experience at a fraction of the
traditional price? To start with,
you need to embrace a disruptive
mindset.
Stacey says ‘no’ to doing
anything the traditional way, as
this will immediately drive up
the school’s price point, and the
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
business will lose its ‘why’.
So, what’s the solution?
“You need to embrace your
constraints. It takes a special
person to be involved in our
team. We need individuals with a
high level of accountability, and
who can focus on being lean and
agile. But it’s amazing what we
come up with when we’re forced
to think out the box. Raising our
fees is the easy answer, and
once you go that route it doesn’t
stop. Instead, we need to be
excited by the opportunity to
come up with solutions given the
constraints we’re faced with.
“If I hear the words ‘because
this is how we’ve always done
it’ or ‘that’s how it works’, I
immediately know I have to
change it. Too much is done
simply because it’s always been
done that way. If you want to
change an industry, you need to
find completely new solutions to
the same problems.”
THE BIG IDEA
Let’s take a step back to how
the idea for SPARK Schools
originated. Stacey was studying
an MBA in Entrepreneurship
at GIBS (the Gordon Institute
of Business Science). During
her economics lectures she
discovered that although a
high percentage of South
Africa’s budget is allocated to
education, South Africa still ranks
amongst the worst education
systems in the world. “I wanted
to understand what was going
wrong, and to research what the
solution could be,” she says.
Stacey wasn’t planning on
launching a new and disruptive
education model, but she did
need a theme for her thesis, and
she wanted to address a real
problem.
“I believe that all entrepreneurs
should be advancing the human
race. We need to question what
we’re doing to change society.
What problem are you solving?
How are you making the world a
better place? How are you making
it more sustainable?
“This view meant I gravitated
towards one of the biggest
problems I believe we face as our
country. One of my professors
agreed. She liked the thesis
topic, and advised me to start
networking in that space. I needed
to get on the map and speak to
other like-minded people who
were interested in education.”
Stacey took her professor’s
advice, and started networking.
“This was how I met our first
angel investor, David Gibb, who
was on sabbatical after resigning
from his position as head of
research at STANLIB. At the
time I had no plans to start this
business, which meant funding
wasn’t even a thought, but I found
a very supportive mentor who is
very passionate about business
and education.
“Dave and I had incredible
discussions around the problem,
and what the solution needed
to take into account. I still had
no concrete ideas of actually
launching a school, but I was
on a path that clearly showed
we needed to create something
completely new. Tweaking the
current model wouldn’t be
enough.
“The MBA and my thesis also
forced me to take a deep dive into
my research. I’m not sure startups always do this, and certainly
not to the level I took it. But it’s
been a very important success
factor for us. The research I
PHOTO: SUPPLIED
DISRUPTIVE MINDSET
conducted while completing my
thesis has allowed us to position
ourselves very well within our
market. More importantly, it
helped us get from ‘what?’
to ‘how?’”
Thanks to Dave and Stacey’s
own tenacity, she was also
developing a strong network
in the educational space.
“Dave introduced me to the
blended learning model in the
US. He then offered to fund a
trip overseas so that we could
evaluate if the tech the blended
learning model is based on
would be feasible in South
Africa.”
It was at this stage that
Stacey asked Ryan Harrison,
a tech-savvy friend from
university, to join her on the trip.
“I understood the educational
landscape, but not the tech — I
asked Ryan to join me so that he
could evaluate whether or not it
suited our local conditions.”
Stacey and Ryan returned
to South Africa, and she knew
this wasn’t just an idea or a
thesis anymore. “I knew I was
going to open a school. Ryan
was also excited by the concept
and wanted to join me. Our trip
introduced us to Rocketship
Public Schools, who have
pioneered blended learning in
the US. They were very open
to us, and shared everything
they’re doing. This feeds back to
purpose — they want to change
education and solve a real need,
and they’re supportive of anyone
who shares that passion. Two of
their staff came and joined us
when we launched, and one is
still with us today.”
THE LESSON: Stacey didn’t
start out thinking she wanted to
launch a business and trying to
figure out what that would be.
Instead, she found something
she was passionate about —
something she knew was broken
and needed real, innovative
solutions to fix. That passion
led her down a path where she
learnt as much as possible about
the topic, met other passionate
people with ideas and solutions
to share, and finally developed
a model that would help her
solve a societal need and drive
systemic change.
MATCHING PROBLEMS
WITH SOLUTIONS
Once Stacey and her co-founder
Ryan had their big idea, they
needed to launch. A school (or
more specifically a network
of schools) requires capital.
You can’t bootstrap a school.
This is one more reason why
you need an idea that will
drive real change (and returns)
— something investors are
increasingly looking for.
“David Gibb gave us some
seed funding and bridged the
gap to find formal investment,
and GIBS introduced us to a
network of angel investors. This
was how we raised our first
round of funding of R4,5 million
to launch our first school.”
Interestingly, raising funding
PLAYER:
Stacey Brewer
CO-FOUNDER:
Ryan Harrison
COMPANY:
SPARK Schools
NO OF
SCHOOLS IN
NETWORK: 15
2019 GOAL:
± 12 000
students and
20 schools
EST: 2013
VISIT: www.
sparkschools.
co.za
The basic
premise of all
innovation and
disruption is
starting with
the problem. If
you can clearly
define the
problem, the
solution will
often start to
present itself.
SCALE
isn’t just about pitching your
business to investors — it’s
also a dialogue between
the entrepreneurs and their
investors. At the end of the day,
it’s in everyone’s best interests
for the business to do well.
“At that stage, we were
looking at buying or building
a school,” says Stacey. “Our
investors disagreed. Their advice
was that we prove the model
instead of focusing on property.
We needed to focus all of our
attention on the problem at
hand. What makes education
expensive?”
The basic premise of all
innovation and disruption is
starting with the problem. If you
can clearly define the problem,
the solution will often start to
present itself.
In the case of education,
particularly providing lowincome earners quality but
affordable education, the
problem is cost. “Infrastructure
and salaries are the two biggest
costs. To bring down fees, you
need fewer teachers and smaller
spaces. You also need to achieve
both while improving quality.
That’s the benchmark. Once we
knew that, we just needed to
figure out how to do it.”
An added element was the
investment component. Funders
are interested in businesses
that can scale. As we’ve already
mentioned, one school is not
a business. But a network of
schools is. Once you have a
network, you can leverage
economies of scale, which is
when investors start seeing
their returns.
“Once we were introduced to
the blended learning model, we
realised it was exactly what we
were looking for. The traditional
model doesn’t support low fee
solutions. We needed a different
solution. I did not want to rely on
donor funding.
“NGOs become too dependent
on donors and end up
struggling over time. They’re
also constantly needing to raise
cash. I want SPARK to live far
beyond me. If we built it properly
from the beginning, with decent
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
23
SCALE
DISRUPTIVE MINDSET
margins and a sustainable
price point, we knew we’d
get investors on board —
particularly because so many
funds are now interested in
creating systemic change
as well.
“We quickly realised
blended learning was the
solution we were looking for.
It’s a model that drives cost
efficiencies by focusing on the
utilisation of assets. It’s also
data rich, which drives quality.
Most importantly, it can be
scaled.
“At first, we were fast
followers, now we’re evolving
into leaders in this space.
Our delivery of quality at our
price point is one of the best
in the world. We never, ever
throw cash at a problem.
Instead, we rethink and redo
the system — that’s where we
know we’ll find the solutions
we need.”
THE LESSON: Start with the
right problem and you will find
a solution. If you aren’t clear
on the problem though, you’ll
be working around it, either
following existing solutions
or making assumptions about
what people need. You need
to dig into the detail. The
problems that really need
solving are often complex,
so learn to interrogate things
from every angle.
FORGET IQ AND EQ,
WHAT YOU NEED IS AQ
Stacey is a firm believer
that the success of SPARK
is rooted in her team’s AQ,
or Adaptability Quotient.
“We’ve gathered a team
of smart thinkers who are
able to adapt quickly to new
challenges, based on the
ingrained idea that the old
solutions won’t work. The
problem is that you’re unlikely
to be adaptable if you don’t
also have passion.
“The name for our schools
comes from William Yates,
who said that education is
not the filling of a pail, but
the lighting of a fire. It’s about
igniting passion, and we
needed that same passion
to really start solving our
education crisis. We want to
spark a change across the
country.
“I bring passion, and
my team has passion and
common purpose — when you
have these ingredients, you
figure things out,” says Stacey.
“When you’re constrained,
both in terms of cash and
human capital, you need to
be smart. We call it ‘frugal’
innovation. If you don’t throw
people or cash at a problem,
you really find solutions.
You can also seldom cut
back costings once they are
there. I love a constrained
environment — I see it as an
opportunity.
“We had one major
advantage: We didn’t have
an education background,
which meant we questioned
everything. More importantly,
it means we’re not precious
about anything. We’re willing
to try new things to see if
they work, and if they achieve
LISTEN
TO THE
PODCAST
Matt Brown chats to
Stacey Brewer about
taking a business
from MBA thesis
to R200 million
funding.
24
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
our objectives. I’ve learnt that
too often, people don’t even
know why they do things —
they just do them because
that’s the way it’s always
been done.
“Infrastructure and salaries
are the two highest costs
we need to solve. We’ve
combined two blended
learning models to address
this. The first is lab rotation.
From Grade R, our students
are in and out of learning
labs. Our teachers introduce
a concept in the classroom,
and then the students rotate
to a learning lab, where they
practically work through
problems related to the
concept on computers. Data
is gathered during these
sessions and addressed.
Our teachers see multiple
students based on this
rotation. The learning labs
are run by facilitators, not
teachers. At full capacity it’s a
highly operational schedule,
and our students are always
in small, flexible groups of
four to six children. Our staff
cover multiple classes and are
experts within specific areas.”
THE LESSON: What skills
and attributes does your
organisation need most?
This may change as you
start scaling, but in order
to know who you need in
which positions, you need to
understand your organisation.
To listen to the podcast, go to
www.mattbrownmedia.co.za or find the
Matt Brown Show on iTunes or Stitcher.
The Matt Brown Show is a podcast with
a listenership in over 100 countries and
is designed to empower entrepreneurs
around the world through information
sharing.
SCALE FAST, BUT
LEARN FASTER
You’d think that finding a
model that solves the cost
versus output problem
South Africa’s education
system currently faces would
have been Stacey’s biggest
challenge. It wasn’t.
“Our biggest challenge has
been scale. We’ve doubled
our network of staff and kids
every year since we launched
our first school in 2013. In 2017
we had 4 000 students and
450 staff. This year we are
educating 7 000 kids with a
staff of over 700.
“We understood 4 000 kids,
but towards the end of last
year we needed to seriously
consider what 7 000 kids
would look like. You have to
think about it before you get
there. What does 20 000
kids look like? You’re going
from a village to a city. There
are changes, and you need
processes and systems
to cope.
“I personally need to grow
faster than the organisation.
I need to reinvent myself and
my role every six months and
stay ahead of everyone else.
It’s imperative that leaders
of organisations are selfaware and willing to improve
themselves.
“I have mentors and
coaches. I’ve built a network
of people that I can reach out
to when I have questions or
challenges. I love feedback,
and I’m always asking
‘what’s next?’ What does the
company need from me?
Today I’m less operational and
more focused on strategy.
What are we doing? How do
we start leading our industry?
Are we engaging other
stakeholders?
“These aren’t only local
questions. What are people
doing and thinking globally?
We can’t solve this by
ourselves. We need other
people to open schools, to
offer more choice for families.
OPPORTUNITY
People vote with their feet, and
that’s good for business. I’m
all for competition. The people
who benefit from healthy
competition in this sector are
the families and their children,
because it puts the power in
the family’s hands in terms of
choice and accountability. The
problem is also so big, there’s
room for multiple players.”
A big part of Stacey and
SPARK’s success is the team
she’s built around her. This
frees her up to focus on
strategy, but it also gives the
business a growth foundation.
“Hiring the right people for
their specific roles has been
essential for us. You need to
understand your organisation
and its needs to get this right.
At head office, we need two
different types of people:
Those who can build and
improve schools, and those
who can focus on operations
and structure.
“Scale is tough on people.
Things break when you’re
scaling, and you want them
to break quickly so that you
can fix them. If you’re too slow
you’ll actually miss stuff, but
it takes a very specific type of
person who can operate at
that pace.”
THE LESSON: Organisations
that are in scale-up mode
are changing quickly. Does
your team have the tools and
skills they need to handle that
change? Do you support them?
Does everyone understand
why changes need to happen
quickly so that you can solve
problems sooner rather
than later?
To learn more about
the opportunities in
this sector, read on
SCALE
Education: The growing
investment opportunity
The education sector continues to show remarkable growth and
opportunity as the private sector fulfils the increasing need for quality
education in South Africa. BY NICOLE CRAMPTON
“THE EDUCATION SECTOR is
interesting as it’s one of the few
sectors in South Africa showing
very strong fundamental growth,
almost independent of general
economic growth,” says Rory Ord,
head of unlisted investments at
27four Investment Managers.
“Education is highly demanded
across all sectors of South African
society, and this ties into a global
trend of increasingly educated
populations.”
Rory Ord, head of unlisted
investments at 27four
Investment Managers.
Demand creates an opportunity
for the private sector
There are two major themes in
education that make it interesting
from an investment perspective.
“First, it’s clear that government
cannot meet the demand for
the different levels of education
required by South Africans, and
neither can it meet the standards
required on a very large scale,”
says Rory.
He adds that beyond the top
performing government schools
and universities, the population
using these services want better
education and many are willing
and able to pay for it. This has
created an opportunity for
the private sector, which has
experienced huge growth in
private schools, to the benefit
BIG DEALS IN THE
EDUCATION SPACE IN 2017
GetSmarter
SOLD FOR R1,4 BILLION
2U, a Nasdaq-listed technology education
business acquired Cape Town start-up
GetSmarter for R1,4 billion. GetSmarter was
founded by brothers Sam and Rob Paddock.
The education business focuses on developing
online short courses in partnership with
higher education institutions, including
Cambridge University, Harvard University, the
Massachusetts Institute of Technology and the
Universities of Cape Town, Witwatersrand and
Stellenbosch (Business School).
Both companies focus on delivering “highquality, high-touch digital higher education
from world-class colleges and universities,” said
2U in a statement.
Milpark Business School
SOLD FOR R320 MILLION
Milpark Business School was sold to Stadio, in
partnership with Brimstone, for R320 million.
Brimstone will pay R96 million for a 30%
stake, and Stadio will pay R224 million for a
70% stake in Milpark Business School. Stadio,
which falls under the Curro umbrella, says this
acquisition is just the beginning; it intends
to acquire several additional programmes,
including degrees, higher certificated and
diplomas.
Mancosa
UNDISCLOSED
Yusuf Karadia sold Mancosa to UK private
equity firm Actis, two decades after he
launched the distance learning school to teach
South Africans business skills. Mancosa is
now a part of Actis’s expanding African higher
education portfolio. Since 2014, it has spent
R3.65 billion investing in educational institutes
across the continent.
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
25
SCALE
OPPORTUNITY
of companies like Curro and
ADvTECH.
“Both companies have
grown strongly in recent years,
with Curro achieving higher
percentage growth off a lower
base. Curro has been highly
valued by investors who have
been willing to pay for the
expected growth. ADvTECH
is a bit more mature as a
business, but has still delivered
growth of 20%+, and on a
much lower earnings multiple.
Private education is still a small
percentage of the whole, so
expect more growth, but it does
take time to deliver this growth
in large numbers,” advises Rory.
The investment opportunity of
education technology
“The second theme,” Rory says,
“is how technology can increase
the penetration of quality
education. In essence, the way
education is delivered has not
changed with the advent of
technology, but there are many
areas where change is possible.
“The best example of this
in South Africa is GetSmarter,
which partners with global
brand universities to provide
high quality online short
courses. Founded in Cape Town,
this business was acquired by
2U, a US based company doing
similar things in 2017, for
R1,4 billion.
“Technology also promises
more focused learning by
tracking the progress of each
student and adapting to make
sure no child is left behind.
We expect plenty of disruption
and change in this part of the
market.”
What’s next for education?
In the unlisted space,
Milpark Business School
was bought out by private
equity buyers several years
ago and has recently been
purchased by Stadio, Curro’s
tertiary education spinout
and Brimstone Investment
Company. A third theme
is consolidation. Scale is
important in education and
established players with
26
capital are likely to continue
purchasing smaller players to
achieve this.
premises, high teacher turnover
and late or non-payment of
school fees.
WHAT THE EDUCATION
SECTOR LOOKS LIKE TODAY
High income schools
ADvTECH, a listed private
education provider, reported
a 22% rise in revenue to
R2 billion for the first half of
2017. Operating profits grew
by 28% to R344 million,
while earnings climbed 6% to
38,6 cents per share, and a
dividend of 15 cents per share
was declared. ADvTECH’s
schools division comprises 90
schools across 47 campuses
under the following brands:
Abbots College, ADvTECH
Academies, Centurus Colleges,
Crawford Schools, Junior
Colleges, Maravest Group and
Trinityhouse.
There are also challenges
in this sector: “The difficult
economic climate and unsettled
socio-political environment
had a more significant effect
on enrolment numbers than
had been anticipated. We have
seen a consistent rise in the
number of families emigrating
and this trend had a negative
effect on enrolled numbers
as we lose students in grades
where it is difficult to replace,”
says ADvTECH. “In addition,
we have seen an increase in
withdrawals and exclusions as
a result of financial pressures.
Therefore, while actual new
enrolments have been in line
with expectations, net student
numbers have been adversely
affected by these two negative
influences.”
These factors, along with
costs of investments in
greenfield projects and school
expansions, are constraining
profits.
The education sector is divided
into three separate investment
and business opportunities,
namely: High income schools,
low income schools and
franchises. Before investing in
any of these sectors you’ll need
to understand them.
Low income schools
Low-fee or independent schools
are growing at a rapid rate in
South Africa. In its 2015 report,
Low-Fee Private Schools:
International Experience and
South African Realities, the
Centre for Development and
Enterprise (CDE), reports that
low-fee private schools that
charge annual school fees
of less than R12 000, are
educating an estimated
250 000 learners. The schools
fill in the education gap left by
insufficient or dysfunctional
public schools in disadvantaged
communities.
“The private education
sector is not well researched or
understood,” says Jane Hofmeyr,
policy and advocacy director
at the CDE. “But there is
considerable potential with new
players, local and international,
coming into the market, looking
for opportunities in South Africa
and Africa.”
The growth in the
independent school industry
emanates from for-profit and
not-for-profit chains of private
schools at all fee levels. The
main source of income for
low-fee independent schools
is school fees, government
subsidies and donations.
Investors in this sector
face a number of challenges.
A convoluted regulatory
environment can impede the
establishment of new schools.
You’ll also face high compliance
costs, and more accountability
with severe sanctions for noncompliance. Further challenges
are acquiring affordable
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
Franchising opportunities
Education franchises continue
to grow and spread across
South Africa, fulfilling parent’s
needs to invest in their
children’s early learning and
critical skills development
through enjoyable, educational
programmes. EM
CURRENT
OPPORTUNITIES
IN THE MARKET
A+ Students
» Investment:
R700 000 to R900 000
» Contact: +27 (0)11 958 2910
www.aplusstudents.co.za
Creative Minds
» Investment:
R200 000 to R300 000
» Contact: +27 (0)82 785
7763/ +27 (0)21 939 6344
www.minds.co.za
Innovatus FET College
» Investment:
R700 000 to R1 million
» Contact: +27 (0)32 541
0045/6
innovatus.co.za
Kip McGrath
» Investment:
R100 000 to R200 000
» Contact: +27 (0)31 903 5352
www.kipmcgrath.co.za/
franchise-opportunities
Kumon Education
South Africa
» Investment:
R50 000 to R100 000
» Contact: 0800 002 775
www.kumon.co.za
MiniChess South Africa
» Minimum investment:
R55 000
» Contact: +27 (0)12 347 6464
www.minichess.co.za
Sherpa Kids
» Minimum investment:
R150 000
» Contact: +27 (0)11 792 4679/
+27 (0)82 853 6479
www.sherpakids.co.za/
franchise-opportunity
Young Entrepreneurs
» Investment: R350 000
» Contact: +27 (0)87 287
4038/ +27 (0)82 442 6267
www.younge.co.za
INTERVIEW INSIGHTS
SCALE
Million Rand Questions
ILLUSTRATION: BENEDETTO CRISTOFANI
Don’t waste your time asking job candidates to name their greatest weaknesses
(yes, everyone will say they’re a perfectionist). Instead, try these four tips from
seven entrepreneurs who offer up their best strategies. BY NADINE TODD
1. INTERVIEW FOR GROWTH
Building and maintaining a
sustainable business is having
the right infrastructure to do so,
and that takes people — great
people. The problem is that while
you’re on your growth path, you
can’t necessarily afford the best
and most experienced in the
market, so the trick becomes
hiring people who you can see
will grow with the position —
you’re not hiring for now, you’re
hiring for where you want to be.
When we interview, we look for
hungry people. We want to know
where they see themselves five
years from now.
— Steven Kark, Paycorp
2. LOOK FOR ACCOUNTABILITY
One of our favourite interview
questions is ‘Tell me about when
you missed a deadline.’ It’s an
immediate red flag if they say
they never have; either they’re
lying or they’re not accountable.
We’re looking for an answer
that says they had an issue,
what that issue was, that they
recognised it, and how they
found a solution — solution
and accountability are key. We
also believe technology makes
the whole process easier,
particularly if you are stretched
for time. Spend time designing
questions and then get someone
else to ask them. Video each
interview, watch the interviews
in your own time, and then
select the top candidates for
face-to-face interviews.
— Elvira Riccardi and
Donna Silver, Afrizan
3. DIG INTO THEIR CURRENT
ENVIRONMENT
We can’t compete with
corporates on benefits, so we
offer something even more
valuable: Time and flexibility.
There is a caveat though: Don’t
employ someone whose benefits
were better than you can offer.
We interviewed someone who
was a perfect candidate, except
she was coming from a large
corporate that offered an on-site
masseuse for free, amongst
other things. As much as we
loved her, we knew we wouldn’t
hold on to her. She was used to
an office environment that we
could never offer. You need to be
hiring people who are stepping
up; not the other way around.
We always dig into what their
current office environment
is like.
— Renay and Russell Tandy,
Ngage
4. MAKE THEM SWEAT
For years we had issues around
high staff turnover. We realised
that the problem started in the
interview process. We were
hiring the wrong people who
didn’t suit our culture, and
they would quickly burn out, or
challenge our expectations. We
realised that 80% of the success
of a hire is culture. Natie Kirsh
used to recommend going for
a drive. He said that if you sit
in the passenger seat and just
chat, asking any questions that
come to mind, the candidate
will soon reveal themselves in
the simplest ways. You’ll see
the person, and you can make
a judgement call on whether
they suit the requirements of the
position and the company.
We also love the questioning
method of four-year olds.
Whatever the answer to a
specific question is, follow it
with a ‘why’. At the beginning
it’s not even about the answer.
Candidates will always arrive
at an interview with certain
rehearsed answers. If you keep
asking why, eventually they have
to start giving you completely
unrehearsed, unplanned
answers, and that’s when you’ll
get a real sense of who they are.
— Ran Neu-Ner and Gil Oved,
The Creative Counsel EM
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
27
ADVERTORIAL
“I don’t
believe it’s
possible to
successfully
run a
business
like ours
without a
solution like
this.”
28
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
ADVERTORIAL
MOVING FORWARD
Successful businesses need to find ways to improve their margins while
still delivering excellent and efficient customer service. VDM’s CEO,
Deon van der Merwe, explains why this wouldn’t be possible in his
business without TomTom Telematics’ solutions. BY NADINE TODD
W
PHOTO: SARAH SCHÄFER
hen TomTom
Telematics
entered the South
African market
in 2010, the local team took
a deep dive into the different
industry verticals they were
servicing. The more they got to
know their customers, the more
they realised a different solution
was needed to address local
conditions, and a subscription
model was introduced whereby
customers didn’t need to invest
a large capital outlay into
TomTom Telematics’ technology,
but would receive the tech and
software, including installation,
at no extra cost, in exchange for
a monthly subscription fee.
This model gives SMEs
affordable access to TomTom
Telematics’ solutions, but it’s
had another benefit as well: As
TomTom Telematics introduces
new innovations, existing
customers can benefit — without
the costs associated with
replacing all of their existing
technology themselves.
AN INDISPENSABLE TOOL
For a transport and logistics
business like VDM Group, which
has more than 160 vehicles
on the road, this means they
have access to incredible new
offerings, without needing to
replace their TomTom units
themselves.
“TomTom plays a critical role in
our business,” says Deon van der
Merwe, CEO of VDM Group. “It’s
an indispensable tool in ensuring
quality customer feedback and
the management of KPIs for all
supply chain stakeholders.
“Earlier this year, TomTom
Telematics launched their New
WEBFLEET product. We were
very satisfied with what we had,
and yet they still approached
us and offered to replace all
our existing units with new
tablets, and they’re covering
the installation costs,” explains
Deon. “New WEBFLEET is the
result of TomTom innovating
their product based on customer
feedback from around the world,
and the local team wanted to
ensure we had access to the
additional functionality and
innovations that had been
introduced.”
According to Deon, the
new TomTom PRO 8275 units
seamlessly integrate VDM’s
fleet scheduling software with
information they extract from
TomTom, including individual
vehicles’ standing time and
arrival notifications.
“The software from TomTom
is open API, which means that
all our various applications can
communicate and interact with
each other,” he explains. “From a
productivity perspective, we no
longer need to manually capture
any trip information. In addition,
we have every conceivable
piece of data available that will
assist us to run a leaner, more
cost-effective fleet, enabling us
to ensure that we are delivering
on all our KPIs — particularly
with regards to meeting our
customers’ needs.”
VDM is a large transport
business, but Deon believes the
benefits for SMEs are as great, if
not more so. “Many SMEs don’t
have the back-office support
that we do. The ability to capture
and use this information without
a team of admin specialists
at your disposal is a huge
competitive advantage for
smaller businesses,” he says.
THE COMPETITIVE EDGE
VDM offers a specialised
logistics service that creates
custom-made options for
clients. In order to ensure the
most optimal and cost-effective
solutions, while still ensuring
top quality delivery, they
need to consider special and
complex individual customer
requirements, from the point of
origin to the point of destination,
before finalising a customerspecific solution.
“We take into account a
host of factors, including
inventory carrying costs, volume
requirements, product specific
factors and route to market,”
explains Deon.
“Road transport significantly
impacts total supply chain costs,
and if not managed properly,
can have a severe impact on the
sustainability of any particular
channel. We try and manage this
risk by continuously improving
our service through innovative
logistical solutions, the use of
advanced technology, vertical
integration and a team of
passionate and talented experts.
“This focus has helped us
to develop a market offering
that includes dedicated and
completely flexible intermodal solutions, which is a big
differentiator for us. TomTom
Telematics plays a key role in
our total productivity, helping us
measure the performance
of road transport across our
supply chain.”
Deon believes that what you
don’t measure you won’t know.
“TomTom provides updated
fleet statistics that allow us
to constantly benchmark our
fleet against pre-defined route
surveys and, in so doing, enables
massive savings in fuel and total
turnaround time. Communicating
via the WEBFLEET platform also
helps us save time and creates
a formal trail of correspondence
with our drivers. I don’t believe
it’s possible to successfully run
a business like ours without a
solution like this.”
About TomTom Telematics
TomTom Telematics is a business unit of TomTom dedicated
to fleet management, vehicle telematics and connected car
services. WEBFLEET is a Software-as-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
785 000 subscriptions worldwide, servicing drivers in more
than 60 countries.
Visit telematics.tomtom.com/tellmemore and
follow us on Twitter @TomTomWEBFLEET
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
29
SCALE
MARKETING
BRAND BUILDING
How to build a community
around your brand
There’s a way to build your market without spending a fortune
on advertising and marketing — and it’s called community
building. Here’s why this should be the cornerstone of your
growth strategy. BY GREG TINKLER
IN THEIR FIRST three years
of business, social media
management tool Hootsuite
grew from zero to three million
users. It’s an impressive feat for
any company, but what’s even
more notable is that they did so
with virtually no advertising or
marketing budget.
Instead, they grew through
community building. A team
of 18 staff members and 100
influencers grew the company
in a grassroots manner —
all thanks to community
engagement, according to their
CEO Ryan Holmes.
Below are five steps that you
can use to grow your brand
or company using community
building as a key strategic tactic.
1
Define what your brand is
and what it stands for
Before you can build a
community around your brand,
you have to know what that
30
brand is.
Do you have a mission
statement? Do you know exactly
who your target audience and
community is? Do you have the
content ready and armed to
engage this community each
and every day?
Here’s a classic example: The
colour pink doesn’t try to make
itself greener, hoping to appeal
to everybody who loves both.
Pink is pink, and you either like
it or you don’t. There are no
apologies and no justifications.
So, what’s your ‘pink’? What
do you stand for that nobody
else does? What type of
people do you want in
your community and,
more importantly,
who don’t you want to
include?
Move on to the
next step only after
you’ve answered these
questions.
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
OFFER
VALUE AND
EXCLUSIVITY
The best brands
offer their
communities:
» Boundaries
» Emotional
safety
» Belonging
» Personal
investment
» Insider status
2
Find the right way to
connect to your community
Once you’ve identified what your
brand stands for and who you
are wanting to target, the next
step is the ‘where’ and the ‘how’.
That means choosing the right
platform based on the following:
» Size of your audience
» How your audience prefers
to engage
» The features you need
» Your technical skill level
» Your budget.
When you’re first starting out,
think small and simple. A basic
forum might be enough for your
website, or my favourite, utilising
Facebook groups if your users
access it via mobile devices.
Remember, Facebook organic
reach is dying at a rapid pace,
so groups will be the ideal way
to interact directly with your
customers.
Use these test forums to see
how your community
members interact. As their
numbers and engagement
grow, you’ll be better
equipped to choose the
right platform down
the road.
3
Make community
membership valuable
and exclusive
There are five factors that
make joining a community
valuable for customers:
1. Boundaries
2. Emotional safety
3. A sense of belonging
and identification
4. Personal investment
5. A common symbol
system.
Your community
members need to feel safe
sharing with others in your
group. They need to feel
that they’re accepted and
that they’ve ‘earned’ their
spot in the community.
They also need to be able
to understand the group’s
social norms and how
to communicate like an
‘insider’.
How can you build
these factors into your
community? Possible
strategies include:
» Clearly defining and
enforcing moderation
standards
» Limiting membership to
a select group who have
achieved certain status
(perhaps, by buying a
product or opting into
a challenge or course
from you)
» Encouraging the
development of inside
jokes and memes
» Giving top users
benefits — even if it’s
just icons for use in their
posts that denote their
status, or free products,
discounts, invites to
secret events and so on.
In other words, make it
exclusive.
4
Get the community
talking to each other
Every community
will go through an
‘awkward phase’ where
conversations feel a little
forced and people aren't
initiating conversations
on their own. It will
pass. Keep building your
community one person
at a time, and it will
eventually begin to flow
naturally.
Don’t be discouraged
by lack of engagement
or feedback — If you
have customers within
the community, they are
seeing your content and
taking it in, they just need
a little time to come out of
their shell.
The key? Keep providing
value.
5
Give more than you
get
Lastly, why would your
users remain part of your
community if they aren’t
getting any value out of it?
Invest whatever resources
you have into creating
a stellar community
experience. Provide
helpful resources. Answer
questions. Offer whatever
support you have to in
order to delight your
community members.
Your efforts will come
back to you in the form of
engaged followers, future
purchases, and possible
referrals. EM
GREG TINKLER
is a leading
expert in brand
building. He is
the founder of
The Cre8tive
Group, a boutique marketing
agency focusing on the health,
wellness and beauty sectors
and co-founder of the newly
formed influencer marketing
agency GossBoxx.
www.gregtinkler.biz
SCALE
STUMBLING BLOCKS
WHY
START-UPS
LIKE UBER
STUMBLE
WHEN THEY
SCALE
High-growth companies will more often than not stumble
and fall because of internal factors. Here’s what you should
be paying attention to in your organisation if you have
ambitions to scale. BY CHRIS ZOOK AND JAMES ALLEN
32
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
STUMBLING BLOCKS
THE NEWS last year that Uber’s
CEO was stepping down was
probably not a surprise to those
who had been following the
company in the headlines.
In our work over many years,
we have learnt enough to know
that you have to be on the inside
of any company to have the full
picture of what went wrong and
how. But we do know from our
research that rapidly growing
companies — especially unicorns
like Uber — face a high risk of
stumbling.
As a business term, ‘unicorn’
was coined to describe a
rarity: In 2011 there were just
28 early-stage companies, still
privately owned, with investment
valuations of $1 billion or more.
Today there are more than 200
unicorns, with a total value
estimated by CB Insights at
almost $700 billion. Uber is one
of them: Its valuation rose to a
record-setting $68 billion just
seven years after its founding,
despite reporting losses of more
than $700 million in the first
quarter of 2017.
But when we tracked those
28 unicorns (along with 11 similar
companies with valuations of
$600 million or more) over the
period from 2011 to the present,
we found that 33% failed to
grow at all and another 28%
grew less than expected. Nearly
two in three died or stumbled.
Unicorns and near-unicorns
actually are much more
prone to self-induced internal
breakdowns than they are
vulnerable to adverse events in
the marketplace.
And they’re not alone. One
of the hardest acts in business
is scaling a business rapidly
and profitably. Bain’s research
concludes that of all new
businesses registered in the US,
only about one in 500 will reach
a size of $100 million — and a
mere one in 17 000 will attain
$500 million in size and also
sustain a decade of profitable
growth.
WHY INTERNAL THREATS
ARE REAL
More often, they trip over
themselves. Research for our
book, The Founder’s Mentality
found that 85% of the time,
the barriers to growth cited by
executives at rapidly growing
companies are internal — as
opposed to, say, external
threats such as unreceptive
customers, a misread business
opportunity or the moves of a
dangerous competitor.
The title of the book
celebrates the internal energy
and sense of insurgency
that propels rapidly growing
companies, but the book also
warns of four predictable internal
growth barriers that all too often
trip up these companies during
their pursuit of scale.
One of these is what we called
the unscalable founder. We
believe the founder’s mentality
is a strategic asset. Nurtured
correctly, it can help a company
achieve scale insurgency — a
company with the benefits
of both size and agility. But
many individual founders aren’t
scalable. Individual founders
can become a barrier to growth
if they are unable to let go of
the details and micromanage,
fail to build a cohesive team
around them, or allow hubris
to get in their way. We found
that 37% of executives at
growing companies describe the
unscalable founder as a major
barrier to their success.
Scaling a business requires
enormous determination — it’s
like catching lightning in a bottle.
Typically, founders discover
a repeatable model of success
that is extraordinary and
are rewarded for ignoring
distractions and focusing
ruthlessly on that single
insurgent mission and the
repeatable model that delivers
it. But over time the market
changes and the company needs
to change its model. The same
founder who was rewarded for
SCALE
ignoring distractions previously
is often the last person to adapt.
The skills that help founders
get their company to take off
are often the opposite of those
needed to sustain new growth.
Founders focus on speed, ignore
good process and relish breaking
the rules of the industry they
are trying to disrupt. They cut
corners, ignore detractors, and
avoid naysayers. Their Herculean
efforts are responsible for
the firm’s creation, but also
its chaos. Once the company
reaches cruising altitude, its
leaders need to listen more
to competing voices and
invest more time in emerging
stakeholders.
Founders are also often
responsible for driving their
teams to stretch and accomplish
far more than ever seemed
possible, sometimes at
enormous personal sacrifice. Yet
this can make it impossible for
them to replace or supplement
these foundational team
members with new professionals
who can take the organisation
to the next level. The founder
remains too loyal to the original
team.
Founders who both create and
successfully scale their company
are like lightning striking twice
— the miracle of creation and the
miracle of sustainable growth in
the same person. That is rare.
INTERNAL BREAKDOWNS IN
ACTION
The other three barriers
described in our book
underscore the challenge. Some
55% of executives cite the
problem of revenue growing
faster than talent: The company
grows so quickly that it has
trouble attracting the quality
and amount of talent that it
needs. And as growth creates
complexity, complexity becomes
a silent killer of growth: 22%
of executives cite a lack of
accountability as the company
expands and the rules become
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
33
SCALE
STUMBLING BLOCKS
unclear. At its worst, this
can breed a toxic culture.
Perhaps most perplexing,
25% of executives cite loss
of the voices at the front line
as the growing company
becomes preoccupied with
internal matters, numbing it to
customer feedback that can
improve the business model
or to the concerns of frontline
employees.
In our study of unicorns,
we took a closer look at ten
that stumbled the hardest,
companies like Groupon,
Zenefits, Jawbone, GoPro,
and Zynga — a group that
experienced a peak-to-trough
valuation decline of about 75%
on average. We concluded that
about half encountered major
external market challenges
that clearly contributed to
the decline; we found that
these external factors always
impeded the progress of the
company in combination with
a well-documented internal
breakdown.
For instance, GoPro
discovered that to really fulfil
its growth potential it was
going to have to not just
become a manufacturer of
small camera devices — a
difficult business to defend
against the large consumer
electronics companies like
Sony — but also create
an ecosystem of services
(uploading to the Cloud) and
products (drones with cameras)
that would differentiate it in
the future. This is what founder
Nick Woodman described
as becoming a sort of ‘mini
Apple’, a much harder strategy
to successfully execute. That
challenge was reflected in a
near 50% revenue shortfall in
2016 from what analysts had
expected, ultimately triggering
a decline in the company’s
valuation down to $1 billion
from its onetime high of
$12 billion.
In contrast to the moderate
frequency of external
breakdowns, literally every
one of the fallen unicorns
we studied encountered
34
Only
15%
of
the time did
these leaders
feel that the
primary threat
to achieving
their plans
was external
(a superior
competitor, a
new business
model,
government
regulation,
market shifts
or saturation).
The majority
were internal
factors
— factors
they should
be able to
control.
WIN
THIS
Win a copy of Chris
Zook and James
Allen’s new book, The
Founders Mentality,
published by Harvard
Business Review
Press.
Email editorial@
entrepreneurmag.
co.za to enter
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
well-documented internal
issues that contributed to or
actually caused the stumble.
Consider Zenefits, a provider
of efficient online employee
benefits services for small and
medium-size companies. In
early 2015 Zenefits announced
that its revenues were going to
increase by a factor of ten that
year, to $100 million, causing
investors to flood it with money
at a valuation of over $4 billion.
The core idea for the company
had been well proven, the
market was certainly large
and untapped, and Zenefits
was clearly in the lead. Yet
according to the company itself,
Zenefits stumbled because it
wasn’t prepared internally for
scaling up. When its valuation
collapsed by 55%, and its
CEO-founder was replaced,
the new CEO wrote an email
to staff noting, “It is no secret
that Zenefits grew too fast,
stretching both our culture and
our controls.’’ For instance, the
company’s ‘frat-like’ culture
became too dysfunctional
to run a tight operation in a
highly regulated industry, and
some of the measures taken to
certify new employees in health
insurance law became severely
compromised.
ASSESSING YOUR ABILITY
TO SCALE
If these are the rock stars of
business — surrounded by the
best investors, boards and
advisers — what about the rest?
To dig deeper into the challenges
facing high-growth companies,
we held more than 25 workshops
across the world, assembling a
group we called the Founder’s
Mentality 100: Companies that
attained early success and scale,
and showed further promise and
desire to grow by five or even
ten times over the coming years.
When we surveyed executives
in these private discussion
sessions, we found a consistent
story: Only 15% of the time
did these leaders feel that the
primary threat to achieving their
plans was external (a superior
competitor, a new business
model, government regulation,
market shifts or saturation). The
majority were internal factors —
factors they should be able
to control.
When monitoring our health,
doctors use a set of proven
questions and tests. With so
many company growth stories
coming undone because of
internal causes that their leaders
could have controlled, what
is the equivalent protocol to
diagnose growing companies?
We suggest asking these five
questions to assess the general
health of a business and its
ability to grow to large scale:
1. Is your founder scaling the
team at a pace to address the
opportunities and challenges
of a scale insurgent?
2. Do we have a talent plan to
match our growth plan? If not,
how do we close the gap?
3. Is the voice of the customer
and the front line as strong
as it used to be? How do we
know?
4. Is our insurgent mission, so
inspirational in the early days,
still strong, or is it getting
diluted?
5. Do people still feel an
owner’s mindset that drives
accountability and immediate
problem solving?
If you are part of an
organisation with bold growth
ambitions, make sure you are
asking these five questions early
and often.
CHRIS ZOOK is a
partner in Bain &
Company’s Boston office
and has been a co-head
of the firm’s global
strategy practice for
twenty years.
JAMES ALLEN is a
partner in Bain &
Company’s London
office and a co-head of
the firm’s global strategy
practice.
Zook & Allen are co-authors of The
Founder’s Mentality: How to Overcome
the Predictable Crises of Growth.
SUCCESSFUL BOARDS
good idea it was going to require
guidance and critique to support
its success. The discussion got
to the point where I turned to
the shareholder-manager and
asked, “What questions are we
actually allowed to ask?” It was
in a slightly heated tone, I will
admit.
There were a few moments
of silence while the room took
stock. The point was made and
management relaxed a bit. We
then worked through the issues
as a team. The entrepreneur still
refers to that discussion and the
fact that if he is not prepared to
hear the board, then what is the
point of having a board.
If you
are not
prepared
to hear
challenging
statements
and answer
difficult
questions,
then do
not have a
board in the
first place.
IN THE BOARDROOM
WORKING TOGETHER TO BUILD
BUSINESSES OF VALUE
If you want to drive growth in your organisation, you need to listen
to your board at critical junctions. BY CARL BATES
IN SPEAKING with shareholdermanagers about creating a
board of directors, at some point
the most critical question of all
raises its head. “At the end of
the day, will you actually listen
to them?” Having a board of
directors is a great driver of
profitability and performance as
we have traversed in previous
articles. However, if you are not
prepared to listen to them you
will not receive the value from
having them there.
LISTENING AT CRITICAL
MOMENTS
It can be very easy to respond
to this challenging question
by saying, “Of course I would
listen to them.” In practice, it
can be a much harder reality.
More specifically, it can be one
thing listening to your board
when you like what they have
to say, and another thing
entirely when you disagree or
do not like what you are having
to hear. When your board
is challenging you, making
you feel uncomfortable or
suggesting you are going down
the wrong path, this is the time
to sit up and take notice.
Being the shareholdermanager and the entrepreneur
means having to take a step
back and take account of what
others are saying. It can be an
interesting change. I am sure
that on your entrepreneurial
journey you, as have I, have
occupied that comfort zone
of “what I say goes.” In the
SCALE
boardroom though, the last thing
you want your non-executive
directors to do is to turn-off
because of the way you respond.
DO NOT AVOID THE TOUGH
DISCUSSIONS
As a non-executive director, I am
not one who avoids the tough
discussions. In a board meeting
I once chaired, the board felt
that whatever we asked or said
about a particular issue we were
told we did not know the context
or management explained how
much work had already been
done. It was as though the
entrepreneur had decided what
was happening and did not want
the board to get in the way. The
project in question was at an
early stage and while it was a
IT TAKES TWO TO TANGO
If you are not getting this sort of
level of challenge and debate,
it may not only be your fault as
the entrepreneur. It may not be
because you have shut down
conversations or stopped lines
of questioning you have not
liked. It could be because you
do not have directors who are
naturally challenging enough. If
you have a board of directors,
including independent nonexecutive directors, my question
for you is, “When was your last
tough discussion?” If this is a
difficult question to answer then
you should ask yourself, “Has
my board turned off the tough
discussions because of how
I respond?” or “Do I need to
find non-executives who
are really willing and able to
challenge me?”
Building a high-performance
board is a journey, not a
destination. It is critical that you
have the right people around the
table to tango with you. EM
CARL BATES is a
global entrepreneur
and the founder of
Sirdar Global Group,
which helps SMEs to
achieve extreme business success.
His latest book Traversing the
Avalanche, is a practical guide to the
implementation of effective corporate
governance for SME growth.
@CarlBates
www.sirdargroup.com
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
35
SCALE
HUMAN RESOURCES
5 THINGS
YOU HAVE
TO KNOW
WHY UNINSURED EMPLOYEES
ARE BAD FOR BUSINESS
Often businesses assume that their employees will take the necessary
steps to insure themselves, but in reality, many people don’t. By covering
your employees you’re not just insuring their financial futures if something
happens, you’re covering your business too. BY ANTHONY MILLER
HEALTHY YOU,
HEALTHY BUSINESS
Why getting healthy is
imperative if you want to be a
high-impact entrepreneur.
ENTREPRENEURSHIP is not for
sissies. It involves dreams and
risks. Cash flow is crucial and
often thin on the ground, as
owners juggle the challenges
of overheads and growth.
An entrepreneur or SME
owner cannot fall back on the
financial cushioning that is
characteristic of much larger
corporate businesses.
That said, as an
entrepreneur have you ever
thought what would happen
if one of your staff members
were suddenly unable to
provide for their families
due to death or disability?
Would their family be left
destitute? Would you as a
business owner feel obliged
to contribute to cover funeral
costs and offer support to the
family concerned?
If so, you should be
considering a group life policy
as the financial and emotional
strain on the business can
be significant. Group cover
is generally far cheaper than
retail cover. In many cases,
employees can even cancel
their individual cover and, in
so doing, save a significant
amount of money.
Recognising both the
need and the opportunity, our
business, Simply Financial
Services, recently introduced
an online Group Cover
product. These are our top five
questions asked by business
owners when considering
employee benefits.
Health is a far more powerful determinant of an
individual’s happiness than his or her income.
Self-described ‘healthy’ people were 20% happier on average, while
‘unhealthy’ people were 8.25% less happy. The direction of causality
appears to move in both directions; healthier people are happier and
happier people are more likely to care for their health.
DID YOU KNOW?
— Economic Determinants of Happiness Study, 2010 US Census
36
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
HUMAN RESOURCES
1
Why is group life cover
better for my employees
than their retail alternatives?
Group life insurance holds
numerous benefits for individuals.
First, since the employer pays
the premium, persistency is
typically better and dependants
are more consistently protected.
Second, the cost of group cover
is often far lower (for equivalent
cover) than the individual could
get directly. Third, better cover
may be provided for people with
impaired health. And finally,
waiting periods are often waived
or shortened. We’re convinced
that good value group cover is
a net positive investment for a
company.
2
Is group life cover
affordable?
Group life cover starts at very
affordable levels. Meaningful
cover can be obtained from
about R49 per employee per
month. Also, there are ways
to structure the payment of
premiums in such a way that it
becomes part of your employees’
total remuneration package.
You may for example want to
structure it so that the employee
makes a contribution, which is
matched by the business.
Affordability is obviously
important to SME owners and
entrepreneurs. Costs need to be
weighed against benefits both
in terms of increased loyalty and
job satisfaction from employees,
and the potential cost to the
business if a key member of staff
is disabled or dies.
3
What does group life cover
typically include?
Cover varies a lot from provider
to provider and ranges from very
simple funeral policies to very
complex death and disability
cover. Cover can be a multiple
of annual salary or a fixed
amount of cover for both life and
disability, and a fixed amount
of cover for family funerals. You
should look out for the following
when selecting your product:
» Benefits. What’s included
in the cover? What benefits
does it include? In our view,
you should look for a product
that provides good value
protection products (eg. life,
disability, family funeral). This
caters for as wide a range
of scenarios as possible.
Be careful you don’t end up
with a bundle of value added
services (eg. free airtime)
and very little life or disability
cover.
» Free cover limits. Is there
a guaranteed amount of
cover (the ‘free cover limit’),
up to which your employees
are covered for death and
disability from both natural
and accidental causes
(full cover), irrespective of
employee numbers?
» Waiting period. How long
would you have to wait, from
when you take out the policy,
before your employees get
full cover, rather than just
accidental-only cover?
» Pricing. How does the
price compare with your
alternatives — both group
and retail — and how are
Eating unhealthily is linked
with a 66% increased risk
of loss of productivity, while
rare exercise is linked with
a 50% increased risk of low
productivity.
— Population Health Management Journal
Q
What’s hidden in
the fine print?
It’s really important to
check the fine print,
to ensure there are
no nasty surprises
when there’s a claim.
Many providers have
complex policy rules
and documents, and
SMEs only discover the
details when it’s too late.
A good barometer is to
look at how simple and
transparent the sign-up
process is, and how
user-friendly the policy
documents are.
premiums likely to change
over time?
4
What provider should I
choose?
Make sure your insurance
provider has a reliable track
record, and is underwritten by a
recognised insurance provider.
There are a lot of fly-by-night
players out there and you need
to ensure that the policy you
are buying has the backing of
established and well-recognised
market players. You need to be
confident that your insurer can
be trusted to pay when it comes
to claim time.
5
How do I go about buying
and administering the
policy?
Traditionally, brokers have sold
group life policies and provided
admin support to their clients.
MAKE EXERCISE A PRIORITY: A healthy
body will help cultivate a healthy mind.
According to the CDC (Centre for Disease
Control in the US), 80% of adults don’t
get the recommended amount of
exercise.
The Physical Activity Guidelines for
Americans say that adults should get
2.5 hours a week or more of moderate-
SCALE
Since quite a lot of work is
involved and commissions
are limited, brokers have not
typically been available to SMEs.
As such, there is a long tail of
SMEs who don’t have group
life cover and their employees
are at risk. Fortunately, there
are now options available that
allow SMEs to do it themselves
online and for brokers to serve
SMEs cost-effectively. You need
to decide whether you want
the peace of mind of working
through a broker or the speed,
control and convenience of
doing it yourself online.
In conclusion, we believe
group life insurance offers
much value and peace of mind
for SMEs. While many South
Africans have funeral cover, very
few have life or disability cover.
As an SME owner or manager,
you can show you care by taking
a policy for your employees.
Not only will you probably save
money relative to an equivalent
retail product, you’ll be amazed
at how much your employees
will appreciate your care and
generosity. And you’ll be able
to sleep easy, knowing their
families will be taken care of if
they die or become disabled. EM
ANTHONY MILLER
is CEO of insurtech
business, Simply
Financial Services.
The business aims to
secure the financial
futures for South Africa’s mass
market by selling easy-to-understand,
affordable life insurance products.
www.simply.co.za
intensity aerobic activity and two
strength training sessions per week.
FOR THE ENTREPRENEUR: Even if
you’re crazy busy, find ten minutes
here and there. It will help with alleviate
stress and get those endorphins pumped
up to take on business challenges.
Your company will thank you for it.
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
37
SCALE
GROWTH CHALLENGES
Scaling a business from 100 to 200
employees is never easy. Taking a
business from ten employees to 50
is near impossible. Why? Having the
correct growth strategy is important,
but executing it while exponentially
growing your staff and adding
complexity to your organisation
is what separates the exceptional
from the ordinary. Management
consultant Hasnayn Ebrahim shares
his secrets for high-level growth.
BY NADINE TODD
A
s start-ups,
most SMEs run
instinctively, rather
than strategically.
It’s a critical element
of their success. The ability of
founders and their teams to
see opportunities and pursue
them gives SMEs the agility to
take shape and grow. But this
also means that the business
is responding to stimuli in the
economy and through networks,
rather than shaping its own
strategy.
Every successful SME
reaches a point where a more
38
systematised approach to
business must be implemented,
or the company will stumble
at the growth phase. In other
words, the ability to scale
requires a strategy. This is hardly
a ground-breaking revelation.
Where many businesses fail
however, is in the execution of
that strategy.
“Strategy is only as good as
a management team’s capacity
to execute it,” confirms Hasnayn
Ebrahim, Executive Director at
Africa International Advisors
(AIA), and an ex-consultant at
a top-tier international firm.
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
“Strategy alone is fantasy. You need
to capacitate your organisation to
be able to implement and achieve
your strategy. Unless you do that,
you will always be a victim of
circumstance, instead of riding the
wave of opportunity.
“Execution begins with your
people, from employees right
through to management and
your executive level. Businesses
succeed and fail with their people.”
Here are the five rules of
strategic growth, based on
Hasnayn’s years of experience
in management consulting, and
building AIA and its subsidiaries.
PLAYER:
Hasnayn Ebrahim
POSITION:
Executive
Director
COMPANY: Africa
International
Advisors (AIA)
and Strategi.exe
ABOUT: An
advisory practice
that focuses
on end-to-end
strategy in the
multinational,
public sector
and mid to large
corporate space.
AIA’s offering is
integrated with
its human capital
and training
offerings, and
a new software
division, Strategi.
exe
VISIT: www.
africaia.com;
strategiexe.com
PHOTO: DEVIN LESTER
SURVIVING
GROWTH
GROWTH CHALLENGES
your gaps? What do you need
to do to fill, close and enhance
those gaps?”
KEY INSIGHTS
Play in a space where
there’s no competition
All business owners want to be in space where there’s no competition.
Sometimes, the way to achieve this is to take three different ideas or
capabilities, and bring them together in a unique way that benefits
your customers.
Be willing to change
As the founder of your organisation, your role remains critical in
the growth phase of your business. But in order to continue to lead
effectively, you need to be willing to change. This is how you’ll still be
able to spot opportunities as they arrive, and make the hard decisions
required to align your organisation to growth.
Could you handle
100% year on year
growth?
It sounds like a dream, but what would you do if your workload and
turnover suddenly doubled? Would your customers still receive the
service levels they are accustomed to? Would you be able to deliver
on all those additional orders? Scale is impossible without the right
structures and processes in place.
1
SCALE
Understand yourself and
your core competencies
What sets you apart from the
competition? How will you
compete in the market? How big
is the market? Unless there are
clearly defined opportunities to
pursue in a highly competitive
industry, what is your ability
to scale?
“Not every business is geared
to scale,” explains Hasnayn,
“which is why you need to begin
with these questions. In many
cases, a business is actually
better off not scaling, at least
in its current form. Either the
market won’t support them,
or short-term contracts that
require capacity can actually
hurt the business in the long
run, when the project is over and
you’ve got more staff and higher
overheads than your customer
base can support.
“Growth must be rooted. You
can’t lose sight of your present
reality. That doesn’t mean your
aim shouldn’t be to scale — it
just means you need to be very
strategic about where your
opportunities lie, and how to
pursue them.”
Have you critically and
strategically evaluated your
market? Is there room for growth
in your present market? “It’s
important to understand your
core when you’re answering this
question,” says Hasnayn. “Your
core isn’t necessarily a product.
It could be your customers. Who
are they, and what else do they
need, that you could deliver?
What is adjacent to your core
that you can pivot to?
“As AIA, we developed a
consulting solution for clients
in the public sector, and then
realised they lacked the capacity
to deliver our solutions. This
led to a training division for
us. Between 2006 and 2011,
5 000 mid- to senior-level
managers went through our
five-day training and consulting
programmes.
“Our software division began
in the same way. We realised
our clients were trying to
execute sophisticated strategies
with outdated performance
management solutions, and
so we developed a product to
help them. It’s created annuity
income for us, and it delivers on
a need for our clients.
“The subsequent acquisition
of a training company has also
allowed us to integrate our
system with a learning platform,
extending our solutions even
further, but still within our core
competencies and market.”
So, where do you begin?
“If there is a market, you
need to determine how you
can compete,” says Hasnayn.
“What are the specific market
opportunities, and what is your
unique value proposition and
competitive advantage?
“We all want to play in
a space where there’s no
competition. That might take
three different ideas, and
bringing them together is what
gives you your advantage. You
need to understand the market,
your competitors and the best
way to compete based on the
resources available to you —
what do you have? Where are
2
Be prepared to grow
As the founder of your
organisation, you need to be
the first person to grow. The
first gap to fill is yours. This
could be through business and
executive courses, through a
coach, a mentor or joining an
entrepreneurial organisation —
whatever it takes to grow and
develop yourself for the good of
your organisation.
“Founders have such a vital
role to play in the success of
organisations,” says Hasnayn.
“The best performing companies
globally are founder-led. Just
consider Amazon, Facebook,
Google and Tesla, or locally,
Discovery. In each case the
founder plays a critical role.
But an organisation is also not
a single individual. It’s a group
of people who have banded
together. Sustainable growth is
achieved when all parties are
nurtured and grow.
“You have to ensure you get
the right people for the right
jobs, keep them by your side and
capacitate them — and then as
their leader you need to grow,
evolve, change and adapt as
well — if you don’t, you’ll miss
opportunities too. Your most
important role is to cultivate a
willingness to change, which will
allow you to see opportunities
as they arise, and to be able to
make the hard decisions that
will be required to change your
organisation and align it for
growth.”
3
Evaluate and capacitate
your people
What do you need to do to
achieve your vision? What
resources do you need, and
how should they be deployed?
These are key questions to ask,
but understand that you cannot
execute even the best strategy
without your people. They are
the drivers of your organisation.
Success comes down to the
right staff, in the right positions,
adding the right value.
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
39
SCALE
GROWTH CHALLENGES
“Is your early staff right for
growth? You need to look at this
objectively from the view of the
organisation. Know yourself —
critically understand the strengths
and weaknesses of yourself and
your staff,” says Hasnayn.
“Where are the opportunities to
close gaps through training and
capacity building? Not all gaps
can be resolved, but many can be.
If you’re completely transparent
about the process, your team
will trust you, and everyone will
work towards the same goal: The
growth of the organisation.
“It’s important to evaluate and
understand who is the best fit for
each role though. For example,
engineers are excellent product
developers, but that doesn’t mean
they can take what they’ve built
to market, or manage teams. If
you have an upfront conversation
about what the organisation
needs, individuals can determine
whether they’d like to work at
closing specific gaps or not. You
can’t have those conversations if
you don’t understand your skills
base and competencies though.”
In Hasnayn’s experience,
transparency throughout the
process of scaling an organisation
is key. “If you don’t understand
what you need, or you’re unwilling
to communicate effectively with
your staff, whatever change
you’re aiming for is more than
likely going to fail,” he warns.
“Be as transparent as possible,
and give internal staff the
opportunity to develop — but
understand that marketing and
sales is a fundamentally different
skill set to tech consulting. If the
inclination and willingness is there
to adapt and grow, support it.
New skills can be learnt, as long
as a particular threshold is passed
in terms of natural ability. But if an
employee is resistant to change,
or doesn’t believe the changes
are right for them, respect that
as well. It is possible to part
ways on good terms if the right
conversations have been held at
the right times. It starts with clear
and transparent communication
though, and a willingness to
invest in your employees.
“Remember, the DNA and
40
culture of your organisation are
a key factor of your success.
As you scale and need to
add employees, your culture
is effectively under threat.
Upskilling people who are part of
the fabric of your SME is a good
way to ensure the longevity of
your culture, rather than simply
replacing everyone with more
experienced or skilled staff, who
don’t necessarily suit the culture
you’ve created.”
“When you
4
really start
to scale,
you often
experience
100% year-onyear growth.
Your turnover
is doubling,
your staff
complement
is doubling or
even tripling
— if you don’t
have systems
in place to
manage this
growth, you
will stumble
and fall.”
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
Put the right processes
and structures in place
“When you really start to scale,
you often experience 100% yearon-year growth. Your turnover is
doubling, your staff complement
is doubling or even tripling — if
you don’t have systems in place
to manage this growth, you will
stumble and fall,” says Hasnayn.
“You cannot not have
structures in an organisation
expecting to scale. You need
to recognise this and invest in
it. There are a number of tools
that can assist you to be more
organised and structured, and
most importantly, to assist
you in managing the new
complexities that are being
added to your organisation on a
daily basis.
“Our central view is that you
have to ensure you transition
from a purely instinctive entity
to a more holistic organisation
that has a degree of structure.
Too much structure is also
bad — both can prevent you
from growing — but you do
need a foundation of structure
and processes to handle
the changing nature of your
business.
“The problem is that there is
always significant resistance to
change at first, which is why it’s
so important to communicate
the reasons why you are doing
something. If you don’t, you’ll
quickly create a disconnect
between your executives and
the rest of your staff. You need
to manage and bridge those
gaps or destroy value.”
5
Gather momentum
The success of your strategy
lies in one key area: Your ability to
deliver on it. If your organisation
can’t gather momentum in this
regard, you’re doomed to fail.
“Remember, you formulated
your strategy for a specific
reason,” says Hasnayn. “Either
you wanted to grow, or your
market was under threat. You
considered all your options
and formulated a strategy. The
problem is in the follow-through.
We’ve seen it on numerous
occasions — an organisation
formulates a plan, and the
moment something happens,
they’re forced back into their
comfort zone and the strategy
is forgotten. Maintaining
momentum is therefore critical.
“There’s often a lot of talk
around strategy — ‘this is what
we’re going to do, this is how
and this is why.’ If you don’t
translate that strategy into
tangible measures though, and
put a mechanism in place to track
them, it remains just talk. This
creates an expectation within
your organisation that you’re
good at talking, but not following
through on real change, and you
lose the key executors of your
strategy — your staff.
“To counter this, you need
a performance management
framework that is aligned to
your strategy. You should have
a monthly process that tracks
how you’re doing against it.
Have you developed your new
product? Have you entered your
new market? You need to align
your strategy and action, and
then communicate these results
regularly. That’s how you close
the strategy execution gap.
“The beauty of it is that once
people are part of the momentum
they will keep it up. There will
always be initial resistance to
change — that’s why it’s so
important to track and measure
what you’re doing. Tangible
results engage employees. They
become a part of the process and
the wins — and then they become
your strategy’s champions. And
that’s when real success and
scale is achieved.” EM
SALES SUCCESS
SCALE
address the customer’s needs
and perspectives. Businesses
will frequently offer positive
reviews and testimonials of
their products to convince these
potential customers that they
offer the solution to their needs.
Offering a persuasive sales pitch
is only half of the solution: Make
sure that the customer feels that
you are concerned with what
they want.
3
COACH’S CORNER
SEALING THE DEAL
If you want to close more sales, you need to understand the three
phases of the customer buying cycle. BY PIETER SCHOLTZ
A COMMON misconception
is that business transactions
are simple affairs: Customers
express interest in something,
they buy, and then they leave.
This is a vast oversimplification
of what is at work.
Business majors and
entrepreneurs have spent
decades plotting out and
exploiting every step of a
customer’s buying process to
better attract and retain clients.
There are three sequential steps
that customers take when they
show an interest in purchasing
something. Each phase reflects a
different stage of their mentality,
meaning that the ideal strategy
to exploit each phase will differ.
These three phases are
awareness, interest, and
purchase. Awareness is the
phase where they first become
aware of the product or service
that you are offering. Interest
reflects the period where they
show that they might want to
buy your product — a customer
that enquires about specific
details relating to what you
sell would be a good example.
Targeted sales pitches are
usually made in this phase.
Lastly, purchase is the period
where they make their final
evaluation and the decision to
purchase from you.
Understanding how to address
the needs of each phase will go
a long way towards boosting
your sales and securing
long-term business from your
customers.
1
Awareness
This is the incipient phase
of a customer’s awareness of
who you are and what you are
all about. This phase of the
customer buying cycle is where
customers make their first
assessment of you. This phase
is important because it’s where
you can craft your message to
appeal to the desired market
segment.
Another important tool
that is commonly used during
this phase is Search Engine
Optimisation (SEO). This refers
to the practice of tailoring your
website to the demographic that
you wish to target. Businesses
will commonly insert relevant
keywords into their indexed
pages with the intention of
leading searching customers to
their website.
2
Interest
This phase of the customer
buying cycle is when customers
express interest in buying from
you. The awareness phase is
where you grab their attention,
and this phase is where you
have a chance to build upon it.
Customers are typically noncommittal during this phase;
they are usually conducting
additional research and/or
shopping around. Targeting
buyers during this phase means
that you need to give your
potential customer a compelling
reason to purchase from you
instead of your competitors.
The responsibility here is
two-fold: First, you need to
market yourself as the solution
to the customer’s unique
problem. Second, you need to
Purchase
This phase of the customer
buying cycle includes not
only the actual purchase of
the product or service itself,
but also the final evaluation.
During this phase they might
still be reviewing their options,
however, the difference is that
they have shown a distinct
desire to purchase the product
or service in question. This gives
you an opportunity to give the
customer a more comprehensive
overview of what it is that they
wish to purchase, and it is also
the appropriate time to upsell
additional products or features.
Car dealerships are especially
fond of this point in the cycle.
Once the customer sits down
and begins negotiating the
price of their future vehicle, the
sales team moves in and does
everything they can to get that
person to buy the car. Whether
they slash the price, throw in
extra bonuses or offer them
rebates, they will do whatever
it takes to turn that expressed
interest into an actual sale. This
is where you want the sales
team to take over: The amount
of persuasiveness and personal
magnetism they exhibit is
every bit as important as their
receptiveness and concern for
the customer’s needs. EM
PIETER SCHOLTZ is a
leading business and
executive coach and
South African Master
Licensee for global
franchise company, ActionCOACH.
He specialises in high-level personal
and business growth.
@BusCoachSA
www.actioncoach.co.za
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
41
BUSINESS SHOWCASE
OVERVIEW
PLUGGED INTO
BUSINESS
EXCELLENCE
THE POWER OF EXPERIENCE
As a serial entrepreneur, Andries knew that
his previous experience as a franchisee
would come in handy when ensuring
business success. “I’ve always been an
entrepreneur,” he says. “My father ran a
men’s outfitter shop while I was growing
up and that led me away from the path of
formal employment.”
Tsholo’s entrepreneurial background also
drew her to the franchise. “I have always
been interested in construction and I realised
that we can’t all be contractors. So, I decided
to look at a field that supplies into that
industry. I did my research and realised the
electrical field was an option,” she says.
42
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
Electrical Retail Franchise
Established
2007
Footprint
29 Stores Nationwide
INVESTMENT
Set-up Costs
Large Store
R4 740 000 (excl. VAT)
(Incl. R2 000 000 initial
stock)
Mini Store
R3 180 000 (excl. VAT)
(Incl. R1 200 000 initial
stock)
Above: Puseletso Ndzilili and Tsholo Wesi
Below: Seriska and Andries Mulder
BY DIANA ALBERTYN
ACDC Express has a vision to be the
preferred electrical retailer. Its franchise
network aims to be the best solutions-driven
electrical retailer, focused on customer
service and convenience to ensure that
customers’ electrical needs are satisfied. DIY
enthusiasts, contractors and large corporates
are all catered for in the product range of
over 75 000 individual items available at
ACDC Express stores.
It is this variety, extensive choice and
customer experience that led Andries and his
wife Seriska to invest in the flagship ACDC
Express franchise in 2008.
“My wife had a mining supply company
and I was a fuel retailer when we decided to
become ACDC Express’ first franchisee,” says
Andries, who relocated with Seriska from
Phalaborwa to Nelspruit to launch their new
venture. “Seriska’s company was successful
and we wanted to branch out into the
electrical industry. ACDC Express stood out
for us in this regard.”
ACDC Express
Nature of
Franchise
Initial
Franchise Fee
R150 000 (excl. VAT)
MANAGEMENT FEES
Gross monthly
income (Rands
excl. VAT)
Percentage of gross
income payable
R0 R1 999 999.99
4%
R2 000 000
upwards
3%
Marketing
Fees
R85 000 or 5% of
Gross Sales per annum,
whichever is the greater
HOT SPOTS
Bloemfontein, Durban South, Upington,
Vereeniging, Tokai, Mossel Bay
CONTACT DETAILS
SPARKING INTEREST
Tsholo, who runs her franchise alongside
her business partner Puseletso, has been
a business owner for over a decade and
still runs her events management company
alongside her ACDC Express store. She
couldn’t pass up the opportunity to capitalise
on the high demand for an alternative
electrical supplier in the Northern Cape when
she set up her 100% black women-owned
franchise in May 2017.
“A franchise enables a small business to
compete with big businesses, due to the pool
of support from the franchisor and network
of other franchisees,” she says. “Banks are
more willing to finance franchisees, because
the market has been tested. The effort to
start the business is less due to the support
provided by the franchisor.”
SEEING THE LIGHT
An ACDC Express franchise has a number
of draw cards for prospective business
owners. For Tsholo, it was the personalised
‘supermarket’ experience, whereby
customers are able to browse the store at
their own leisure. For Andries, it has been the
opportunity to provide greater input to the
franchisor and fellow franchisees to expand
the footprint of ACDC Express.
Contact
Person
Mario Mahlangu
Email
info@acdcexpress.com
Website
www.acdcexpress.com
Contact
Number
+27 (0)10 202 3360
“We helped determine the changes that
were invested into future franchises and
watched their implementation right before our
eyes,” says Andries. “The franchisor is always
prepared to listen to our suggestions.”
LEADING THE WAY
Tsholo and Andries both believe that the
support of ACDC Express is more than
sufficient, as the franchisor sets up the
business, provides continuous support and
training, and offers ongoing advice to its
franchisees. This combination of a hands-on
franchisor as well as franchisees who are
driven and hardworking ensures the success
of the business.
PHOTOS: SUPPLIED
As the global pioneer in electrical
franchising, ACDC Express is
built for success, according to
its franchisees, Tsholo Wesi and
Puseletso Ndizilili in Kimberley
and Andries and Seriska Mulder
in Nelspruit. Both are running
thriving businesses.
Company
BUSINESS SHOWCASE
GOING GLOBAL
WITH GLASS
Seventy-four years ago Consol was
just manufacturing glass in a single
plant. Today it has firmly established
itself in three other African territories and
continues to spread the word: The best things
come in glass. BY DIANA ALBERTYN
Q&A
PHOTO: DEVIN LESTER
WHAT STARTED as a single glass
plant supplying the beer and
beverage industries has evolved
into the company that supplies
80% of South Africa’s glass
containers. “We’re using South
Africa as a springboard to get
into the rest of Africa, starting
with acquiring a glass-making
business in Kenya, and another
in Nigeria,” says Johan du Plessis,
Senior Executive: Information
Systems and Technology at
Consol Glass. “We’re also in the
process of building a new factory
in Ethiopia.”
Q
What is Consol’s business
ethos?
The Consol Vision is to be the
supplier and pack of choice
across Africa — while continuing
to retain its status as the
industry leader in the South
African market. To achieve this
requires a particular approach
and as a business Consol is clear
and unyielding on its operational
parameters, and excellence is at
the heart of this position. A spirit
of innovation and collaboration
and working side by side
with customers to create a
product that adds quality to life,
underpins the Consol approach
to doing business. Determined
to always exceed customer
expectations in beauty, function
and quality is an attitude that’s
engrained in the company
and ensures Consol retains its
leadership position.
Q
How have you developed
a product that the market
responds to?
We’ve tapped into an existing
market with an established
product. Our client base ranges
from bigger home industry
and craft beer and craft gin,
to collaborations with brand
owners. We work closely with
major partners during the
concept and design process to
accomplish distinctive features
like embossing or debossing
and colour, to differentiate their
product. Our customers use glass
to premiumise their product.
Known as trailblazers, in
2017 alone, Consol launched
56 new product innovations.
This progress and innovation
is also why every year, Consol
products are recognised in the
IPSA Gold Pack Awards. Consol
is also committed to responding
to the needs of niche markets
and smaller clients, such as the
microbreweries industry, for
whom the company regularly
creates turn-key glass packaging
solutions.
We also co-brand with other
companies, like we recently
did with Crosse & Blackwell
mayonnaise.
Q
What inspired the
Consol Shop?
Consol is often perceived as a
‘vessel brand’, when in fact it’s
a versatile, recognisable part
of the consumer’s everyday
lifestyle — providing solutions for
storage, serving, décor and more.
Consol responded to the call for
greater access to its products
and opened its first shop in
2004. Today Consol has three
retail outlets: Woodmead (JHB),
Stellenbosch (CT) and Cornubia
(KZN) — all modern, industrial chic
stores. The Consol Shops give
consumers and small businesses
access to glass packaging in any
quantity — single items or bulk
purchases. The shops are also
the perfect setting in which to
illustrate how best to put glass to
good use and the concepts are
plentiful and creative.
WHY CHOOSE SAGE X3
POWERED BY PARITY?
» Time is money in
Consol’s world and
Parity enabled Consol
to deploy a full retail
solution in three months,
accommodating Consol’s
functional requirements
and a customised user
interface to Consol’s
corporate image.
» Real-time tracking of
business processes and
key business KPIs, with
the system accessible
from anywhere.
» The Sage X3 and
NextPOS system has
brought agility to our retail
business, we can costeffectively deploy more
branches in a short space
of time.
» Customer service levels
were improved with a
system that can work
seamlessly off-line when
required.
» Staff efficiencies
improved through system
processes, for example,
the ease of use of price
updates in the shop
environment.
without reinventing the wheel.
It’s a new-age type of software
where the user interface can be
operated from anywhere using its
state-of-the-art browser. Sage X3
is flexible and easily configurable,
so our retail-specific backend
could be built. It’s not as lengthy
as your typical ERP process,
the cost of training is lower and
owning and operating it is simpler.
We converted our Cornubia store
to Sage X3 after its amazing
success at our Woodmead and
Stellenbosch locations.
Q
What role has Sage and
Parity played in your
business success?
Sage X3’s cost-effective and
standard format not only helps us
with mining, but using it for our
retail section made us realise we
could create more of these stores
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
43
BUSINESS SHOWCASE
MANAGING THE VAT
TRANSITION
» The VAT Act stipulates that
the time of supply will be either
when an invoice is issued or when
payment is received — whichever
happens first. For example, if you
invoice for a sale on 31 March but
are only paid on 30 April, the VAT
rate of 14% will apply. If you receive
payment on or after 1 April but have
not yet invoiced for the sale, then
VAT should be charged at 15%.
SILVER LININGS
FOR SMALLER
BUSINESSES
IN BUDGET 2018
H
igher VAT, fuel levies and import
duties on luxury goods will crimp
consumer spending, which could
be bad news for SMEs, but we are
pleased that the Finance Minister has raised
his GDP growth projections and proposed
interventions to help grow South African
SMEs. Government is taking steps to restore
fiscal credibility, rein in spending, and hold off
another credit ratings downgrade, such as:
SME growth, reviewed competition policy
and improved market access
The hopes and concerns of entrepreneurs and
SMEs were extensively covered, including how
low market access and high barriers to entry
are constraining the growth of the country’s
SMEs. While government will take action
against anti-competitive behaviour that harms
these businesses, big businesses should
also play a constructive role in nurturing
the growth of SMEs through mentoring
and partnership.
An increase in SME funding
The Departments of Small Businesses and
Science & Technology and the National
Treasury developing a R2,1 billion fund to
benefit SMEs during the early start-up phase
is good news, but it’s important that the
44
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
Pieter Bensch is
Executive Vice
President, Africa &
Middle East at Sage
funding is spent efficiently and productively.
We’d like to hear more details about how
government will choose to allocate this
money.
A shift in public procurement participation
Government using public procurement to
support Black Economic Empowerment,
industrialisation and development of SMEs
see its billions of rand in procurement
spend used to empower SME owners — we
look forward to more details about how
government will increase participation of
small and micro businesses in procurement
opportunities.
It’s also critical that government follows
through on its promise to pay small
businesses within 30 days of invoicing. Cash
flow is a major challenge for small businesses
and few of them can afford to wait three to six
months for payment on a big project.
The rise in the VAT rate
The VAT hike will take some money out of
people’s pockets, but will probably have less
impact on business confidence than higher
corporate taxes, and less impact on consumer
spending than further personal tax increases.
SMEs will need to ensure their systems are
ready to cater for the new VAT rate, but this
» The VAT Act states that displayed
pricing and adverts must include
VAT (unless the product is zerorated). You have until 31 May to
complete this work. Until then, you
can display a notice at the till point,
stating that prices do not include
VAT at the new rate and will be
adjusted at the tills. But why delay
and risk confusing your customers?
» The next VAT201 return you
submit to SARS will be more
complicated because you will need
to calculate input and output tax at
different rates, not to mention the
apportionment rate that will need
to be calculated for contracts and
services taking place before and
after 1 April. If you’re using manual
processes, you might need to
consult an accountant to make sure
you’re not over or under reporting
VAT on your reconciliations.
should not be too much of a challenge for
those with automated accounting systems.
By international standards, VAT in South
Africa is still relatively low — we can just
hope that this increase is not followed by
another in the next year or two.
PHOTO: SUPPLIED
As expected, the Finance
Minister and Treasury have
proposed some tough
measures to address South
Africa’s tax collection
shortfall, growing budget
deficit, and new spending
priorities in the 2018 Budget
Speech. BY PIETER BENSCH
» Cloud-based, automated
accounting solutions, like Sage
One, were VAT-ready on 1 April.
Businesses using these solutions
don’t have to worry about staying
on top of the different VAT
rates because the system will
automatically generate the correct
VAT invoice, quote and debit or
credit note.
BUSINESS SHOWCASE
ahead from the manager/traveller.”
Mobility is about convenience, accessibility
and real-time information for the traveller.
The Travelit solution provides a fully backed
up 24/7 call centre to support travellers.
Wayne
Muirhead,
Travelit’s
Chief Sales
Officer
DID YOU
KNOW?
Travelit can
save you
30% on your
complete travel
bill. We provide
a complete endto-end travel
management
solution in
partnership
with Tourvest
Travel Services.
Online travel
Management at its best
Business travel made easier, more cost-effective and tailored
to your needs with Travelit. BY DIANA ALBERTYN
PHOTO: SUPPLIED
TRAVELIT, in partnership with Tourvest
Travel Services focuses on the SME, public
sector and the corporate market, which
means it has specific niche solutions suitable
for each one of these sectors. To deliver a
complete end-to-end travel solution to these
sectors, it’s essential to provide services to
procurement, HR, finance, IT, travel arrangers,
authorisers and the executive management
team.
“Our technology enables us to
configure and implement the solution
based on the client’s exact requirements,
to deliver on travel policy compliance,
finance and authorisation controls, and
process efficiencies every business is
looking for within the African market,”
says Travelit’s Chief Sales Officer Wayne
Muirhead. He delves into the ultimate
online travel solution’s simple yet powerful
implementation for businesses of all sizes.
The travel challenge for SMEs
The South African and African marketplace
consists of a number of challenges, the
largest concern being cost savings. With
Travelit, the traveller can select their
requirements based on a large range of
options across multiple suppliers, whilst
adhering to the company’s travel policy.
When faced with issues such as where
to stay, the best airline to choose, choosing
a car to rent, and transfer decisions, the
Travelit client is provided with every available
supplier to choose from, on one single
platform.
Another challenge within the industry
is information and communication to the
traveller on the move. Travelit’s mobile app is
designed to provide instant communication
to the traveller and support the company’s
duty of care programme. In addition to
supporting the company’s travel programme,
Travelit provides an expense management
solution, as part of its offering.
Authorisation, pricing, transparency
and finance are also priority on the list of
concerns for many business owners, says
Wayne. “It is extremely challenging to book
your trip directly on a website, which has
many limitations,” he notes. “The travel
arranger is required to jump from website to
website, prices are constantly changing and
they’re further frustrated by getting the go
The simple and powerful solution
Travelit is the leading online travel solution
within the African market place, with over
900 corporate travel clients, and over 30
Government Departments. What makes the
solution truly outstanding is that there is no
onsite implementation required. Users gain
access to the Travelit solution, which uses
the latest cloud technology. This significantly
reduces costs and implementation timelines.
Large clients can be set up within a matter
of weeks, and smaller clients can be trading
within a day.
“Payment within travel has traditionally
been cumbersome and costly. Travelit
has worked closely with leading players
in the financial services sector to deliver
modern virtual credit card technology to our
customers and our suppliers.”
In a nutshell, the virtual credit card solution
eliminates credit card fraud, dramatically
improves credit card reconciliation and
provides immediate payment to the supplier
for their services.
Travelit’s 375 000 users are supported
nationwide by over ten leading travel
management companies. These users
experience all the efficiencies and benefits
of the technology, along with personalised
service from a qualified travel consultant.
They travel in the comfort of knowing they
can always talk to a person who will have
access to all their online bookings.
Travelit simplifies the entire process, across
flights, cars, accommodation, transfers and
parking. Access to the solution is quick and
easy, online or via the Travelit mobile app.
All this technology has been developed in
partnership with global travel technology
giants. “Travellers also receive discounted
prices based on our aggregated buying
power, including individually negotiated
corporate deals and web rates,” says Wayne.
“Travelit is a full end-to-end travel and
expense management solution, who can
provide a tailored and unique travel solution
to meet your exact business requirements.”
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
45
COVER STORY
MIKE WRIGHT
GROWTH
AT A MILE
A MINUTE
Mike Wright launched Striata in 1999 from his converted garage in
Kensington, Johannesburg. He was 30 years old, had limited capital,
and had resigned from his job as MD of a leading web design firm
to follow his dreams. To get started, he rescheduled his bond and
provisional tax payments, and started working on his big idea.
Today, half of Striata’s R120 million+ turnover comes from
international business. It hasn’t all been easy. Offices in the US and
the UK are soaring, while the company’s foray into Australia and the
Far East has been far more challenging.
These are his lessons in high-level growth, and the do’s and don’ts
of international expansion.
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 A P R I L 2 0 1 8
COVER STORY
PLAYER:
Mike Wright
COMPANY:
Striata
EST:
1999
TURNOVER:
In excess of
$10 million
(+-R120 million)
VISIT:
striata.com
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
47
COVER STORY
MIKE WRIGHT
S
TRIATA is a R120 million+
business that operates across
South Africa, the Americas,
Europe from a base in the UK,
and Asia. Launched in South
Africa in 1999, founder Mike Wright reached a
point where the only way he could grow the
business further was to go offshore.
Expansion in the US has been extremely
successful, and Mike moved to the UK with
his family to spearhead European growth.
The business’s efforts in Australia have been
less successful however, and a second office
has since opened in Hong Kong to service
Asia Pacific. Here are Striata’s lessons on
international expansion — what worked
for them, what hasn’t worked, and how
to approach new territories to guide your
business’s success.
LEARNING FROM THE GROUND UP
Mike Wright’s first piece of advice to any
entrepreneur looking at international
expansion is not to rely on statistics. “In my
view, statistics don’t work for the individual,”
he explains. “You can be successful and be
doing the opposite of what the statistics say
should work, or you can do exactly what the
stats applaud and still be struggling.
“If you’re thinking of expanding beyond
your borders, hopefully you are already
successful in your own market. We reached
a level of success and maturity in South
Africa that led us down this path. Along the
way we’ve learnt that when you enter new
markets that aren’t in the business landscape
you know and understand, all bets are off.
Past achievements don’t guarantee future
success.
“You need to look at your business, what
you offer, your differentiators, strengths and
weaknesses, and use those to determine
your go-to-market strategy, based on
intensive research into the markets you’re
entering. You need to know how and why
people do business, and who they do it with,
in all the territories you’re looking at.”
In each of the three territories they
entered (Australia, the UK and the US), Striata
sent pioneers — people they knew, who had
worked with them or knew them, and who
understood who and what the brand stood
for — to spearhead the new international
offices.
“There’s a fundamental choice you have
to make when you launch a division in a new
territory: Employ a local with an entrenched
network, or send someone that you know
shares your values and company culture,”
says Mike. The most obvious way to tap
48
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
into an established network is to find a local
partner, or purchase a local business. The
downside to this strategy is culture. “The
bedrock of a successful business is a shared
company culture, but fundamentally you
can’t change people. If you go the acquisition
route, you need to be absolutely sure you
have cultural alignment, and too often it’s
only once you’re in business together that you
realise you don’t.”
Striata opted for door number two:
Supporting individuals from within the
organisation to spearhead international
growth and build networks on the ground.
“Building a network takes time. You need
to attend conferences and networking
events and make meaningful connections.
We saw this in action in the US. Our pioneer
was very good at growing his community
and leveraging contacts. The US is a large,
mature market, and no one cares where
you’re from as long as you deliver. We had a
product to sell, not just a concept, and a track
record. The right person, market, timing and
opportunity aligned for us, and our launch
and subsequent growth were successful.
We didn’t gain traction overnight, but there
was a market for our services, which is the
biggest hurdle.”
The strategy worked well in the US and the
UK — but not that well in Australia. “We learnt
the hard way that the Australian business
market is built on long-standing relationships,
and it’s a difficult market to break into as an
expat.”
As a result, Striata invested more in the
market that was working. From 2005 to 2008,
US growth was a top priority. “We hired more
people, attended conferences and ensured
we had a good product with exceptional
back-up support and account management.
Not every decision will be a win — even when
you’re accustomed to getting things right.
Sometimes you have to cut your losses and
focus on what is working.”
PULLING TOGETHER THE
THREADS OF SUCCESS
According to Mike, Striata’s South African
success was based on a simple formula:
To successfully run (and grow) a business,
you need to keep moving forward — hire the
next person, make the next contact, add
new partners where applicable, run a good
business with a great team that’s focused
on execution. You also need a good product,
back-up support and account management.
“The minimum level of all these parts
working together allows you to service your
customer. The maximum level creates a
TOP TIP
FINDING YOUR DIFFERENTIATOR
Ask yourself these three questions:
What do we do that’s unique? What
do we have that no one else has?
And if they do, how do we do the
next thing?
Then determine whether you’re
selling innovation or execution.
“Amazon is all about execution,”
explains Mike. “They just do it better
— more scale, greater efficiencies.
They weren’t the only online book
store, ecommerce website or cloud
service provider. The secret is that
you don’t always need to be first.
First mover advantage is good, but
better wins.”
Here’s the challenge — when
your model is built on execution,
you need to own the market. That’s
how you create efficiencies and
economies of scale.
Innovation is what sets you apart.
It gives you something no one else
has and therefore you do things that
others can’t do. This is a unique, real
differentiator.
Striata looks to straddle both
execution and innovation. “We
understand that some parts
of our business have become
commoditised by necessity. These
need to be incredibly efficient. But
you can’t take your eye off the
ball — you need to keep innovating,
because someone else might
become more efficient.”
Mike also likes the adage, ‘Where
there’s mystery, there’s margin’.
“The moment someone susses you
out, there’s no longer a mystery,
and your margin goes down. It’s too
easy in this day and age to figure
out what everyone else is doing,
replicate it and then do it more
efficiently.
“This is why you need to
understand your business from two
angles: What sets us apart, and
what makes us efficient. At scale,
you need the second especially
— you need to do lots, at volume.
What sets you apart are the things
that no-one else can do, and that’s
where your margin lies.”
MIKE WRIGHT
“If you’re thinking of expanding beyond your
borders, hopefully you are already successful
in your own market. We reached a level of
success and maturity in South Africa that
led us down this path. Along the way we’ve
learnt that when you enter new markets that
aren’t in the business landscape you know and
understand, all bets are off. Past achievements
don’t guarantee future success.”
customer who loves you and gives you more
business,” says Mike.
“There isn’t one secret to success. You
need to get lots of little (and big) things
right. A minimum level of service requires
repeatability, a focus on service, references,
and a good product. The problem is that when
you think most of them are ticked, you end up
finding one you ignored.”
For Striata, that has not been people. The
company’s senior team are all veterans of
the business. “A business becomes easy to
run — and infinitely more scalable, especially
across multiple territories — when your core
management team has been with you for a
long time. We value our team, offer the right
rewards, create wealth for them and give them
a career path. This has given us the foundation
of a phenomenal business.”
However, before you can get your people,
systems, processes and service right, you
need to start with a product and a business
model.
“When I launched Striata I knew I wanted
a business based on annuity income. I’d
been MD of VWV Interactive, a web design
company, and in my 18 months there I’d
learnt that when your business is built around
projects, you’re either snowed under with
work, or scrambling for your next project. I did
not want to pursue that business model.”
Prior to VWV, Mike was employed as an
accountant at Coopers & Lybrand (prePwC), where he was part of their Computer
Assurance Services. This was the beginning
of computer auditing. “The Internet had come
along, and we needed a website. I straddled
tech and marketing, so this became my
project. Next, we developed eTaxman, a form
that calculated your tax return online. It went
viral before the term viral even existed. I
was on TV, at conferences and on the radio
talking about eTaxman. Coopers was at the
top of the game and experts in the ‘Internet’.”
The exposure brought VWV knocking.
A team of brilliant young designers, they
decided they needed more structure in the
business. Being 28 and tech savvy meant
Mike qualified for the position. “They were
the best in the business in terms of creative
design, but they needed to build a business
around those capabilities as the market
shifted to eCommerce,” he says. “It was a
fantastic 18 months, but I realised I needed
more — I wanted to build something of my
own.” At the time, Mike was at the forefront
of what corporates could do with tech, and
how the Internet was changing the way
companies did business and interacted with
their customers. “I was looking for a gap, and
concentrating on where there were — and
weren’t — already players in the market.”
Paying attention led the young entrepreneur
to a key question: Who was handling
corporate focused emails?
“Corporate South Africa caught on to
email quickly — it was an excellent way for
companies to communicate with customers
and constantly tell them what they were
doing, and how they were building a better
online experience. The problem was that a
corporate exchange server can’t handle
100 000 messages in a queue, particularly
when that bulk message could delay the
CEO’s very important email. We needed
to provide a service that could deliver
personalised bulk emails.”
With his idea in hand, Mike’s first move
was to ‘take a loan from the taxman’ by
delaying his provisional tax payments. “I
spoke to SARS, acknowledging the debt,
and they charged me interest. I wouldn’t
COVER STORY
recommend this avenue to everyone. You
have to be extremely disciplined to pay it off
as agreed, and the interest was high, but it
worked for me.”
He also reached out to his network, and
secured some corporate funding. It was
enough to hire a techie who understood
email. “We bought a license for ‘list-serving’
software that allowed for personalisation,
and entered the market with our solution.”
Since pre-launch, Mike has consistently
asked himself these two questions: What do
we do/sell? Is there a market for that? “The
secret to any business success is being able
to take an idea or concept, put it together,
connect the dots and get someone else to
pay for it. Then you need to ensure you can
repeat what you’ve just done, and that you
have access to the resources you’ll need to
do so. Build it, sell it more than once, and
then iterate. That’s where you create value.”
THE FOUNDATIONS OF GROWTH
There’s a second set of questions Mike asks
himself, and these are the foundations for
growth: Where are my constraints? What’s
stopping me from getting to the next level?
“Within our first year, it became clear that not
being able to make changes to the licensed
software was constraining us. We needed to
be more flexible. If you have your own code,
you’re in control. 90% of competing software
solutions do the same thing. It’s the 10% that
gets you the job — you need that 10% to be
exceptional, and you need to own it.”
In Mike’s own words, to create the complex
and ground-breaking products that Striata
is built upon, you need a ‘serious’ rocket
scientist. Luckily, Mike knew where to find
one — he just needed to wait out the one
year non-solicitation he’d agreed on when
he left VWV. The second it was over, he
approached Nic Ramage to join the business.
“Start-ups generally can’t afford the top
experts in their field, even with VC backing,
so you need to get creative,” says Mike. “Nic
was up for the challenge, but he also came
on as a partner and shareholder. If you really
want to attract top talent, you need to give
them the right incentives.”
From year two Striata started making
money. Mike says, “It may be ‘old school’
but whether you have funding or not — or
perhaps even more importantly if you do
— I believe you must pay your own way by
becoming profitable as quickly as possible.”
Trained as an accountant, and growing up
with a parent in the financial services sector,
Mike admits he’s no gunslinger. His approach
to business is conservative, and he hates
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
49
COVER STORY
MIKE WRIGHT
unnecessary risks. But he’s also very focused
on growth. “You need to do the work, bill your
clients, pay salaries and then put what’s left
into R&D. As our development team grew we
needed to fund this from normal operations.
Perhaps this constrained our growth, but
we built a stable base, which worked in
our favour when we started focusing on
international expansion.”
Striata has chosen to stay focused and
niche. “We’ve built up domain experience.
It’s tough to be a mile wide and a mile
deep — you have to choose between being
a generalist or a specialist. We’ve chosen
specialist. But, this doesn’t mean we haven’t
added new solutions to our overall offering.
“We recently introduced a secure
document storage solution in the Cloud —
like a document vault. Online archiving and
storage is the second leg of our product set.
Our differentiator has always been security.
All documents we send or store (such as
bank statements invoices and insurance
policies), are encrypted and
password protected.
“We’ve learnt to listen to our
customers. That’s how we grew from
emails to encrypted documents.
Then we realised they needed a way
to store documents, so we built a
solution for that. We’re also clear
on the fact that we do message
delivery — not only email. Our model
is being ready for the next mode of
communication. We need to have
solutions before our customers ask
for them.
“Our value proposition is to enable
communication as an efficient
customer service and an engaging
customer experience. There’s more
interaction between companies and
customers than ever before. The
actual protocol might change (email,
SMS, WhatsApp), but our product
is communication. We can go deep
within this niche area of expertise.”
Striata’s plan was simple: Develop
the secure attachment market
in South Africa, until it become
a de facto standard. By focusing
on a need and creating the right
products to address it, while adding
functionality customers could benefit from,
this is exactly what happened.
“The first time we offered an encryption
service was for Diners Club statements.
Their parent company, Standard Bank, also
liked the idea and issued an RFP.” And this
is where Striata moved up a level — its
competitors were IBM, who were going to
50
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
build a similar solution, but hadn’t yet, and an
international company, ACI, who had no track
record in South Africa.
“We were ahead of the curve, and this
secured us the Standard Bank project. We
were local and we sold the hell out of our
software and capabilities.” Today, Striata
counts a number of South Africa’s top banks
as clients.
INTERNATIONAL EXPANSION
From 2004, Mike aggressively sought growth
avenues. His five-year-old business was
established, and servicing much of corporate
South Africa. “There are two ways to grow:
Add a product to sell to your current clients,
or look at new geographies. We did both.”
There are a few major points that work
in Striata’s favour. “Our currency gives us a
margin that international competitors can’t
match.” That said, many other international
tech companies, including Amazon, have set
up development hubs in Cape Town to
take advantage of local skills and the
exchange rate.
Second, South Africa operates in the same
time zone as the UK and Europe, so tech
support is only a phone call or email away.
“When we started looking overseas, we
were a relatively young software company
that had a software as a service (SaaS)
offering. We knew we had the capability to
sell anywhere and everywhere, and we had a
cost advantage based on the rand exchange
rate. We had the ideal business model for
international expansion, we just needed to
gain traction.”
By 2008 Striata — and Mike in particular —
reached a crossroads. The US was growing,
the Australian business was struggling, and
the UK presented a fantastic opportunity,
yet many deals just didn’t close. “I realised
I could make a difference in the UK market.
South Africa had a strong, established team.
I wasn’t needed there anymore to continue
ENTREPRENEURIAL
DNA IN ACTION
Mike Wright didn’t discover
he was an entrepreneur at
heart when he turned 30.
He had entrepreneurial DNA
from a young age. He studied
accounting because he knew
it would be good for business,
and he spent a few years in
the corporate world learning as
much about business, marketing,
sales and profit making as he
could. Then, when he was ready,
he took the plunge.
Grade 2: Mike sells silkworms
to earn pocket money. He has
a little silkworm factory, and
all of his mother’s friends are
compelled to buy a shoebox
full of mulberry leaves and tiny
silkworms.
Grade 8: Knowing he will go into
business one day, Mike chooses
accounting as a subject.
First year at Varsity: With his
partner and best friend, Mike
launches a business selling
‘Class of….’ silkscreened t-shirts
to matric classes. This business
runs profitably for six years.
the day-to-day operations of the business.”
Mike has spent the past nine years in the UK,
and travels between all of Striata’s operating
territories. “We’ve got a good base, but
we’re just getting started. Communication
is shifting so quickly; we have to stay on our
toes to ensure we’re the ones spearheading
new solutions and growing our markets.” EM
SALES LEADERSHIP
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LAUNCH
EXPERT ADVICE, YOUNG ENTREPRENEURS,
INSPIRATIONAL PROFILES & IDEAS CENTRE
WINNING
THROUGH
MARKETING
Digital marketing
maverick Dylan
Kohlstädt unpacks how
start-ups can maximise
their marketing spend, get noticed
and reach customers through savvy
and cost-effective digital campaigns.
Q&A
PHOTOS: SARAH SCHÄFER
VENUE: FOLK CAFÉ ON BREE STREET
BY NADINE TODD
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
53
LAUNCH
START-UP MARKETING
Q
How can start-ups go
about using social media,
networking and word-of-mouth
to grow their businesses?
You have to be active on social
media, that’s a given, but the only
way to cut through the content
marketing clutter is to produce
content that moves the needle,
and the only way to do that is to
really immerse yourself in your
customer segments. Ideally, it’s
video-based, and ideally, your
customers are creating the
content for you. Social media is
digital word-of-mouth — so if
you’re doing it well, customers
will become your sales reps, and
refer friends to you. Make it as
easy as possible for customers to
buy from you (usability testing),
and for them to refer you.
Q
How can start-ups access
their beachhead markets
through digital marketing
campaigns?
It’s important to be very clear on
who your customer is and what
your niche is before embarking
on a digital campaign. The more
niche your market, and the
more defined your product, the
more success you’ll have and
the cheaper your marketing
becomes. I encourage start-ups
to complete detailed market
analysis covering:
» Who is your customer? Include
market size, description,
demographics.
» What need drives them? What
is the gap?
Q
Why is it easier to market
your business than before?
Digital marketing is cheap, and
you can set it up and manage it
yourself. It also means that you
can segment your markets like
never before, and reach micro
targeted segments with just a
few rands. Facebook ads are
super cheap, as long as you’re
not chasing ‘likes’. You might
actually get a few sales from
them. Just remember, there’s a
lot of rubbish you’ll have to trawl
through first.
Q
On the other hand, why is
it also harder with such
overcrowded markets?
Everyone has competitors,
because all it takes is a website
and a few bucks and you’ve got
a business. Niching is critical.
You have to understand your
market. You have to be unique.
You have to appeal to them, and
their needs and emotions. You
have to understand their needs
really well. Marketing plays a
critical role in brand building —
without the research involved
in marketing your business, you
might not understand your target
audience well enough, and your
product or service might not hit
the mark as a result. Similarly,
without a clear brand, you’re
going to be lost in the sea of
competitors out there.
54
PLAYER: Dylan Kohlstädt
COMPANY: Shift One
Marketing
VISIT: www.shiftone.co.za
» What are their emotions?
What emotions cause them to
make decisions and how can
you appeal to these emotions,
bearing in mind that emotions
make people buy, while logic
makes them think.
» Which product is right for
them? Which product meets
their needs?
» What is your message to
them? How are you going
to package all of what you
know about them to create
messaging that is compelling?
» What channels are they on?
Where are you going to find
them? This is critical as you
need to target channels that
they’re using, and not only
the ones you’re comfortable
with using.
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
ON FUNDING
Q
Start-ups often
think they need
funding to launch. When
is this not actually the
case and why?
In a services industry,
you can get away with
bootstrapping. With
tech companies, you’ll
need to rely on sweat
equity (which generally
means partnering with
a developer and giving
them shares in the
business) if you can’t
afford to pay them. You
might just get stuck with
someone that isn’t that
great at development, but
at least they are working
on your project for free.
If you do go the
bootstrapping route, you
need to keep your costs
low. You definitely don’t
want offices. Instead, run
your small team through
collaborative online
platforms like Trello, Slack
or Asana.
Don’t be in a hurry to
get funding — it comes
with a whole new set of
trouble and it might kill
your business. Instead,
loan what you can from
the 3Fs (friends, fools and
family), or even a bank
loan if you can get one. At
least you retain ownership
of the business.
Q
Why is cash flow
more important than
funding in many cases?
Funding isn’t the panacea
that start-ups think
it is. There are many
alternatives to finding
an investor, including
overdrafts and loans
from friends. Cash flow is
critical for the day-to-day
running of your business.
Funding might only pay
out in a year’s time, based
on performance, and in
that time you might run
out of cash.
» What content do they need?
This will inform your content
marketing strategies.
If you don’t do research, you
make assumptions. The more time
you spend on this process, the
cheaper and more effective your
marketing will be. It will also help
you avoid one of the most common
mistakes start-ups make when it
comes to establishing who their
target market is — you want to be
niche, not broad.
Nearly all markets are accessible
via digital marketing, and if they are
not digital, then SMS and radio. The
more information you have about
your customers, and the more
niched you are in segmenting them,
the better your results.
Q
How can a start-up figure out
who their real target market
is? Any tips?
There are many forms of research
out there, but the ones I personally
advocate are:
Usability testing: Get six to 12
customers to use your website and
products. This gives you endless
insights into who they are and what
drives them, as well as the correct
wording to use throughout your
communication with them.
Dipstick research: We go to
customers, wherever they are, and
talk to them, find out who influences
them, find out what drives them,
find out their feeling about your
product and your competitors.
Content research: Once you’ve
identified the voices in the
community, reach out to them to
get content, establish them as
influencers to the community, and
create content that is appealing to
the market, because it comes from
the market.
Q
What should start-ups avoid
doing?
Many companies avoid the channels
they are not comfortable with.
Many agencies produce content
that appeals to the account
management team, and not
to customers. Don’t make big
production TV ads or sign up an
agency that just wants to win
awards — rather create YouTube
content that your customers will
respond to. EM
LESSONS LEARNT
YOU CAN’T ‘FAIL BETTER’
IF YOU DON’T REFLECT
ON WHAT YOU LEARNT
Failing better means trying and trying again, but
with a difference. BY LEAH WEISS
56
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
PHOTO: CAPTURER LE MOMENT ON UNSPLASH
LAUNCH
LESSONS LEARNT
“Ever tried. Ever failed.
No matter. Try again.
Fail again. Fail better.”
— Worstward Ho, Samuel Beckett
AT SOME POINT in recent
history, this bleak and somewhat
obscure line from existentialist
playwright Samuel Beckett
became the motto of the new
entrepreneurialism. It isn’t clear
if it was business mogul Richard
Branson, self-help author Tim
Ferriss, tennis pro Stanislas
Wawrinka (who has ‘Fail
Better’ tattooed on his arm), or
someone else who first adopted
the term, but somewhere along
the line the business crowd
embraced it. Perhaps because
‘failure’ sounds grander than
‘mistake’. Perhaps because so
many start-ups that failed out
of the gate went on to become
household names.
In any event, this Beckett
prose piece became a popular
catchphrase, first in the tech
world and now in just about
every sector.
People have always made
mistakes and sometimes tried
to learn from them, but the
entrepreneurial embrace of the
‘fail better’ philosophy suddenly
put defeat on a pedestal, making
it a cause for celebration.
Heroes who failed on the way
to success
An abundance of anecdotes
and examples was found to
affirm this ethos: Winston
Churchill failed the sixth grade.
Ben Franklin’s inventions didn’t
always work. Early in her career
as a television reporter, Oprah
Winfrey was fired. History is full
of persevering heroes who failed
on the way to success.
In a recent article he posted
to LinkedIn, Microsoft co-founder
Paul Allen wrote that Microsoft
might not exist if he and Bill
Gates hadn’t failed with their first
company (a traffic data analysing
project called, naturally, Traf-OData).
“While Traf-O-Data was
technically a business failure,”
Allen wrote, “the understanding
of microprocessors we absorbed
was crucial to our future
success. And the emulator I
wrote to programme it gave us
a huge head start over anyone
else writing code at the time.
If it hadn’t been for our Traf-OData venture, and if it hadn’t
been for all that time spent on
UW computers, you could argue
that Microsoft might not have
happened. I hope the lesson
is that there are few true dead
ends in computer science.
Sometimes taking a step in one
direction positions you to push
ahead in another one.”
‘Fail better’ captured the spirit
of the start-up business culture
As ‘fail better’ achieved meme
status in Silicon Valley, where
it captured the spirit of the
aggressive optimism and
disruptive thinking beloved by
start-up business culture, the
irony of the expression’s original
and famously pessimistic coiner,
Samuel Beckett, was lost on
most. In the backlash, however,
some non-literary critics
dismissed ‘fail better’ as wishful,
or even reckless, thinking.
Mindfulness acknowledges
both these points of view. From
a Buddhist perspective, ‘failing
better’ means acknowledging
human imperfection and
accepting that failure is part of
the learning process — if we give
people room to learn. Failing
better means trying and trying
again, but with a difference.
Reflection makes the difference,
and not just in Silicon Valley.
Harvard Business School
professor Francesca Gino has
researched the role of reflection
in the workplace and found that
it is worth the time not only in
the wisdom it generates but also
in the productivity that emerges.
One of her studies, which she
conducted at the IT firm Wipro in
Bangalore, India, examined how
providing structure for reflection
and for sharing about work
impacted follow-up on various
tasks. The researchers studied
several groups of employees in
their initial weeks of training for a
particular customer account and
divided them into three groups:
the control group, the reflection
group and the sharing group.
LAUNCH
group performed 25% better on
the test than the control group,
about the same increase as for
the reflection group. In addition,
the participants who had been
put in the reflection group
(rather than the practice group)
“improved their likelihood of
being in the top-rated category
of all trainees by 19,1%.”
The same researchers
also studied whether people
appreciate the power of
reflection, and they learnt that
when given the choice, 210 out
of 256 participants opted to get
more experience and only 18%
chose to have reflection time.
Reflection is clearly valuable but
it isn’t necessarily valued.
Just like pausing before we
jump into something (which is
what we do when we set our
intentions), pausing after we
have jumped into something
takes only a moment, but has
a profound impact. We pause
Physical, emotional and mental learning all
depend on non-judgemental pauses for
realistic self-appraisal, re-mindfulness of our
intentions and rededication to our purpose.
Reflection and sharing enhance
lessons learnt from failure
In the reflection group, on the
sixth to the sixteenth days of
training, workers spent the
last 15 minutes of each day
writing and reflecting on the
lessons they had learnt that
day. Participants in the sharing
group did the same, but spent
an additional five minutes
explaining their notes to a fellow
trainee. Those in the control
group just kept working at the
end of the day and did not
receive additional training.
Over the course of one month,
workers in both the reflection
and sharing groups performed
significantly better than those in
the control group. On average,
the reflection group increased
its performance on the final
training test by 22,8% compared
to the control group. The sharing
not to slow down, necessarily,
but to reperceive our thoughts,
emotions and context with fresh
perspective. Practice makes
perfect, perhaps, but in practice
we also see how far from perfect
we are.
Similarly, when we try to be
more compassionate, toward
others or ourselves, we also
notice how we’re not; and when
we care about suffering in the
workplace, we realise that we
often don’t know how to make
things better. It’s like the physical
assessment you have with a
trainer when you first join a gym,
testing your body to see where it
is weak, as part of the process of
building strength.
Physical, emotional and
mental learning all depend on
non-judgemental pauses for
realistic self-appraisal, remindfulness of our intentions
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
57
LAUNCH
THE FINE PRINT
and rededication to our purpose.
Sometimes what we see in these
moments isn’t what we’d hoped
for. But, instead of viewing our
failures as evidence that we
suck at our jobs or that we are
worthless as people, we can
choose to approach them as
evidence that we are engaging,
that we are working at it and that
we will get there.
Acceptance of failure is a
necessary part of innovation
With all the talk of embracing
failure, there is less talk in
corporate culture of reflection, but
that’s just what Severin Schwan,
CEO of biotech giant Roche,
touched on in a 2014 interview
with Reuters entitled For Roche’s
CEO, Celebrating Failure Is the
Key to Success. In the piece,
he emphasises the need to
foster acceptance of failure as a
necessary part of innovation.
“We need a culture where
people take risks, because if
you don’t take risks, you won’t
have breakthrough innovation,”
he said. But, he also went on
to suggest that it’s important
for managers to praise people
for the nine times they fail, not
just the one time they succeed.
Schwan even takes his direct
reports out to lunch to celebrate
their failures. Rituals like this offer
an opportunity for reflection.
The person who encouraged
me to attend my first-ever
meditation retreat, a mentor I
had known since childhood, told
me that transitions were the
times of the day to pay the most
attention to, for example, when
you are moving from morning to
afternoon, from one project to
another, or from work to home.
She told me not to think of the
cushion part of meditation as
the main event but, instead, to
notice the thoughts and habits
that come up when we’re not
meditating.
When we pay attention to the
transitions, the spaces in between
become their own instruction. EM
© Entrepreneur Media Inc. All rights
reserved.
58
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
START WITH A
CLOSING MINDSET
Legal compliance can often be a foreign language for
first-time entrepreneurs. Here are the legal ins and outs
you need to know before getting ready to launch.
BY SHERISA RAJAH AND PAUL FOUCHE
THE FINE PRINT
W
orking closely
with start-ups and
entrepreneurs, we have
found that there’s a
gap between business
savvy and understanding the areas that
your start-up should be compliant in. It
costs substantially less at the stage of
incorporation to get your house in order.
We call it starting with a closing mindset,
rather than needing to rectify crucial
areas of your business at a later stage.
Here are the five key areas of law that
require your immediate compliance prior
to trading.
1
Don’t build your
house on sandy land
It’s critical to ensure that
there is a complete separation
between your business and
your personal assets. This
requires that you incorporate
the correct type of entity to
best serve your end goal. If you
are ultimately looking for an
investor, or to obtain funding
under the banner of black
economic empowerment, you
need to structure your entity
correctly.
Have a shareholders'
agreement and a
memorandum of incorporation
in place. If your business has
more than one person, have
you considered the importance
of lock-up provisions,
borrowing, and voting rights —
to name just a few?
2
Own it
Every business, however varied,
carries intellectual property. Pause for a
moment and think about it — your selling
line, your logo, your company name. Your
intellectual property must be protected.
You must ensure that you retain full
ownership of the intellectual property.
This is necessary for the operation and
success of your business.
Two other key and equally important
components are confidentiality
agreements and proper service
agreements.
Your strategy, your vision, your
business plan — these are confidential.
Properly worded service agreements
will ensure that key customer and vendor
relationships become long lasting.
Often entrepreneurs, excited by the
opportunity presented, gloss over
these terms.
3
Fine-tuning the guitar
Have you ever thought about the
sound a guitar makes when out of
tune — not great! Similarly, once you
have built your house and ensured your
ownership rights, a few other trigger
points become important.
» Tax structures and compliance
VAT, annual returns and leniencies
afforded to start-ups are aspects you
should seek professional advice on.
» BEE investment
Investment and grants offered to
historically disadvantaged groups
could prove worthwhile. However, your
structure should be incorporated with
this in mind to make provision for such
an investment.
» Employment
Your time is the most valuable asset,
so it makes sense to employ people to
assist. Employees have access to your
proprietary information. Key employees
may be well positioned to compete
with you. Comprehensive employment
contracts, with retention clauses and
non-compete covenants, are critical to
ensuring the effective use of your time
while the business is assisted by the
hands of people you can trust.
Maybe the type of work you require
can be done by a contractor or an
employee for a fixed period. These
require specific types of employment
contracts.
Also, from the day you employ your
first employee, you are required to
comply with statutory contribution
provisions in a number of pieces of
legislation. EM
SHERISA RAJAH and
PAUL FOUCHE are
directors at Fasken, a
law firm specialising
in business law and
helping businesses
to grow.
LAUNCH
JOIN THE
ECOSYSTEM
New platform gives entrepreneurs
access to each other, funders,
business information and market
opportunities – for free.
Problem: South Africa’s fragmented
entrepreneurship ecosystem
Solution: The Venture Central portal,
South Africa’s first digital home
for entrepreneurs
“Educational
MATSI
SAYS
programmes, funders
and market access
opportunities are highly
siloed in nature, forcing
entrepreneurs to navigate
through complex environments,
regulations and islands of
content to shape and develop
their businesses.
“The digital landscape
provides a strong foundation
for a solution to assist, facilitate
and integrate the critical
resources required to develop
businesses at various stages,
including idea, start-up, growth,
and accelerate stage and to
stimulate economic growth.”
— Matsi Modise, MD of SiMODiSA,
the founders of Venture Central
WHAT YOU GET
» A single point of entry for all SME
information pertaining to registering,
starting and operating a SME
» Information and links to important
websites and organisations
reflected on the South African
entrepreneurship ecosystem map
» Advice and information on starting
and managing a business, business
tool templates and sector-specific
business information
» Links and information to a host of
free resources including training and
mentorship
» A list of working spaces,
incubators and accelerators
available within your city/town.
VISIT: www.venturecentral.co.za
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
59
LAUNCH
GETTING PAST ‘NO’
How to Survive
150 Straight
Rejections
And come away smarter, tougher, and
more successful. BY JOE KEOHANE
So he moved, failing to
understand that investors buy
into a team, not just an idea. He
promptly lost the funding. No
matter, he thought. He’d just
get more money.
Thus began Sam’s real
journey. He started pitching to
anyone and everyone, regardless of their field of expertise.
It went badly. By his count, he
was rejected around 150 times
60
in a row over 18 months. Worse,
he kept revising his business
plan based on their feedback,
reducing it to an ever-changing
muddle that made it even harder
to sell.
This beating culminated with
a meeting with a VC who,
humiliatingly, was a family
friend. “He threw my business
plan in the trash, right in front
of me,” Sam says. “And I just
remember thinking, Man, what
am I doing?”
Entrepreneurs hear a lot of
nos. In fact, it’s probably the
word they hear more than any
other, especially starting out. It
can come in torrents. It can get
crushing. The key, as Sisakhti
learnt, is twofold: To survive it,
and to learn from it.
And here’s what Sam realised:
He needed to stop pitching. Not
every business needs funding,
nor is every business ready for
funding.
“I was spending all my time
pitching, and I wasn’t spending
any time building the business,”
he says. So he scaled back. “I
went from wanting to create
the next Amazon to just saying
I wanted to grow a business
organically,” he recalls. “I just
wanted to pay for a modest,
middle-class lifestyle.”
Freed from the ceaseless
need to fundraise, Sam drew
on his natural creativity and
resourcefulness. He’d always
thought he needed funding to
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
help recruit young designers. But
now he started to get creative.
He recruited them right out of
design school — using student
brand ambassadors to get
around rules about recruiting
on campus. Soon he had a
thousand. Then he linked up with
London Fashion Week to do a
show for emerging designers. He
pitched a design competition,
and that got him 3 000 more,
along with a bunch of press
coverage.
Now he had inventory,
revenue, and exposure. He was
feeling good. One night, over
dinner, Sam sent a magazine
piece to mega-investor Tim
Draper, who had rejected him
twice already. Fifteen minutes
later, Draper responded, saying
he wanted to talk. Eureka.
“I think the reason he was
interested was that I’d shown
I was going to do this with or
without the money,” Sam says.
He even got a little cocky. “I
told him that it’s just a matter
of time: ‘If I have your money,
I’ll get there faster, but if I don’t,
I’ll still get there. And then the
valuation’s just gonna be that
much higher to get in.’”
Draper invested $1 million in
a first round, then came back
for a second round. In total,
UsTrendy has raised more
millions since, grown by 300%
annually in its first few years,
and worked with more than
20 000 designers from more
than 100 countries. It has
attracted more than two million
followers on social media and
other digital media channels.
Now when Sam reflects on
all those no’s, he thinks not
of rejection — but of how it
changed him. How it showed
him the way.
“It was awesome,” he says.
EM
© Entrepreneur Media Inc. All rights
reserved.
ILLUSTRATION: ISRAEL G. VARGAS
S
am Sisakhti had
an idea for an ecommerce company
called UsTrendy. It
would sell clothing
made by talented, unknown
fashion designers from around
the world — acting as a
marketplace for great styles that
could not be found anywhere
else. It didn’t matter that he
had no experience in fashion
or building a brand, or that he
had just quit his first job out
of college after only four days.
What mattered was that he
believed that this idea could be
huge. And to get it there, he figured, he needed to raise money.
A lot of money.
Initially, it seemed easy. On
their very first pitch, Sam and
his associate landed a $500 000
offer. “Crazy,” he says. But there
was a catch: The VC required
them to move to Silicon Valley
to receive the money. Sam’s
right-hand man didn’t want to
move. Sam decided he’d just do
it himself.
START-UP FOUNDERS
LAUNCH
LEARN
TO GROW
If you can keep learning
along each step of the startup journey, you’ll continue
to grow, and your business
will be a success, says entrepreneur and
author, Matshona Dhliwayo.
Q&A
BY NADINE TODD
PHOTO: JODIE MAMELA
Q
What is the difference
between a ‘learn it all’
entrepreneur, and a ‘know it
all’ entrepreneur, and why is
it imperative that a start-up
strives to be the former?
A ‘learn it all’ is one who is driven
by the desire to learn and a
‘know it all’ is one who is driven
by the desire to prove how
much he knows. It’s imperative
that you focus on the former
because, in life, we are only as
successful as what we know.
Knowledge is more than power,
knowledge is wealth.
PLAYER:
Matshona
Dhliwayo
ABOUT:
Matshona
Dhliwayo is a
Zimbabweanborn and
Canadian-based
philosopher,
entrepreneur,
and author of
books such as
The Little Book of
Inspiration, 100
Lessons Every
Great Man Wants
You to Know, and
Lalibela's Wise
Man.
@MatshonaD
How can someone go about
being a 'learn it all'? First, be
humble; humility allows you to
learn from others. A humble
student is better than a proud
scholar.
to help you steadfastly execute
your objectives. In good times,
be cautious; in bad times, be
hopeful; and in busy times, be
level-headed, never taking your
eyes off your goals.
Q
Q
Energy is a great thing,
but it needs direction. How
can a start-up entrepreneur
calm down, focus, and find
their direction?
You find direction from having
well-defined goals in a business
plan. You keep a tab on those
goals by using a daily planner
Why is it important to
have direction?
A chariot can’t travel in two
directions, and when you know
where you’re going it’s easier
to get there. When you lose
direction you lose opportunities,
and when you lose opportunities
you lose rewards.
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
61
LAUNCH
START-UP FOUNDERS
Q
What are the pitfalls
and limitations of ego?
Ego is an inflated sense
of self and is therefore no
different from arrogance.
The pitfalls of conceit, which
shouldn’t be confused with
confidence, are endless. You
start thinking you are better
than others and the moment
you do, this means you can’t
learn from them. If you don’t
learn you don’t grow, and if
you don’t grow, you die. Most
experienced entrepreneurs
understand the importance
of being humble because
people buy from people
they like, and people don’t
like egotistical personalities.
Humility opens people up to
you, but arrogance drives
them away. And the more
people an entrepreneur
draws the more people he
can serve, and the more
people he can serve, the
more money he can make.
daily and emptied of hubris
incessantly. The higher you
rise with ego, the lower you
will also descend in the end
because of it.
Q
Why should you never,
ever feel threatened
by someone smarter or
with more skills than you?
In fact, why should you
be partnering, hiring or
learning from these people?
I am never threatened by
people who are smarter and
better than me because I
see them as gifts, and not
as competition. I view them
as assets, not threats, so I
allow them to do what they
do best, thereby benefiting
from it. It also frees me so
I can do what I do best. We
can be Jacks of all trades but
we can’t be masters of all
disciplines. Partnering with
people who are cleverer than
you elevates you.
LAUNCH CO-ORDINATES
FINDING A
FUNDER
What you really need to know to land an
investor. BY ALAN KNOTT-CRAIG
“We can be Jacks of all trades but we
can’t be masters of all disciplines.
Partnering with people who are
cleverer than you elevates you.”
Q
That said, a degree
of arrogance allows
you to push through the
hardships. Where is the
balance, and how do
entrepreneurs find that
balance without getting
discouraged? Only a few
people in history like Julius
Caesar and Nebuchadnezzar
II rose to great heights with
arrogance, but their very
egotism destroyed them in
the end. I prefer courage, not
pride, because it rises from
conviction; and also faith, not
ego, because it rises from
hope. These two have helped
the weakest of men and
women achieve the greatest
feats. An entrepreneur
must be filled with courage
62
Q
Many entrepreneurs
trust the wrong people.
Why does this happen, and
what is the solution? People
are complex creatures.
The best of us can’t always
predict human behaviour.
Entrepreneurs, like everyone
else, make mistakes. What
they should shy away from
are the avoidable ones. My
advice: Take time to get
to know people. Do your
due diligence. Ignorance
is your opponent, fear is
your enemy, vice is your
adversary, virtue is your
friend, and wisdom is your
helper. EM
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
Q
How do I find an
investor? — Charlie
You have 4 options:
Angels. Applicable if you
only have an idea, and you
need cash to make your idea
a reality. Usually between
R500 000 and R1 million. You
need to milk your network:
Parents, friends of parents,
colleagues, parents’ friends,
friends. If you have no
network, you need to build a
network or use your savings.
There is no math to these
investments. You get money
because they believe in you,
not because they seriously
expect a return.
Early-stage VC. Applicable if
you already have a working
product with traction, ie:
users and/growth, and you
need cash to build out.
Usually between R1 million
and R2,5 million. There are
a number of early-stage
VC’s in South Africa, just ask
around. Knife Capital are
amongst the best. Ideally
you want an introduction
from a trusted party. Failing
that, just email them directly.
Give a simple pitch. They’re
looking for 15X return on
investment.
Late-stage VC. Applicable
if you have a critical mass
of users and meaningful
revenue, ie: R10 million a
ATTRACTING INVESTORS
Focus on one
customer at a
time. Make that
customer happy.
Move to next
customer. Aim
for ‘1 000 true
fans’, then keep
them happy.
The rest will
come.
year, and you need cash to grow.
The late-stage VC’s are the
likes of 4Di, hard to get access
without an introduction from a
trusted third party, usually one
of your existing investors. They
are looking for a 5X return
on investment.
Private equity. Applicable if you
have a cash-generative business
that requires capital to either
exit a shareholder, or to grow
profits exponentially. Looking for
25% IRR.
There are also statesponsored sources of capital for
entrepreneurs from previously
disadvantaged backgrounds,
for example the Technology
Innovation Agency. This is ‘soft’
money, requiring no equity or
personal surety. If you can get
it, take it.
Investors are looking for
return on capital. If I invest R100
in an early stage company, I
want to get R1 500 (15x) back
within a reasonable period of
time, ie. no longer than five
years.
The key metric is Total
Addressable Market (TAM).
The size of the market you’re
targeting determines the
potential size of your business.
Assume you target a market
with a TAM of R100 million
(profit), and you assume you
can get 10% of that market by
2020. That means your business
will have R10 million of profits
in 2020.
A private company is valued
at a maximum of 7x profit, so
your company will be worth
R70 million in 2020.
If you ask me to invest
R1 million today, I need 21% of
your company in order to realise
a 15x return (R15 million) by
2020.
Start with TAM, work from
there. Remember, every
assumption you make will be
questioned.
Minimise your assumptions.
Maximise the evidence for your
assumptions.
Q
If you are a startup, what’s the most
important thing you can do to
grow? — Charlie
Focus on one customer at a
time. Make that customer happy.
Move to next customer. Aim for
‘1 000 true fans’, then keep them
happy.
The rest will come.
For consumer products,
always make it easy for your
customers to share. Friction-free
sharing is the easiest marketing
tool you can have.
Feature-creep is a big risk
and can be a big distraction.
You need one single value
proposition that is enough
to get customers. Having
fifteen cool features will never
compensate for the lack of one
killer use case.
Q
Our staff is growing, more
than 20 now. Any tips on
management? — Martin
Having four or five staff is not
hard. You don’t need to be a
good manager or leader. You
can muddle along.
It’s when your team starts
growing past the twenty number
that management becomes a
skill rather than a word.
There are hundreds are
articles written on the art of
management, but Jack Welch
(former GE CEO) broke it down
to this:
People want to know who
they report to.
People want to know how
they’re being measured.
People what want to know
how they’re doing.
That’s it.
One boss. Clear KPIs. Regular
feedback sessions. E
ALAN KNOTT-CRAIG
is a 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
LAUNCH
READ THIS
Alan Knott-Craig’s
latest book, 13
Rules for being an
Entrepreneur is now
available.
WHAT IT’S ABOUT
It’s easy to be an
entrepreneur. It’s
also easy to fail.
What’s hard is
being a successful
entrepreneur.
For an
entrepreneur, there
is only one important
metric of success:
Money. But life is not
only about making
money. It’s about
being happy.
This book is a
collection of tips and
wisdom that will help
you make money
without forgoing
happiness.
GET IT NOW
To download the free
eBook or purchase
a hard copy, go to
www.13rules.co.za.
To browse Alan’s
other books, visit
bigalmanack.com/
books/
ASK AL
Do you have a
burning start-up
question?
Email: alan@herotel.
com
A P R I L 2 0 1 8 E N T R E P R E N E U R M AG .CO. Z A
63
BUSINESS UNUSUAL
4 Ways Sleeping Naked
Makes You Healthier
and WealthieR
What if I told you in just ten seconds a day, you can
sleep better, make more money, reduce stress and
lose weight? BY TRAVIS BRADBERRY
S
leeping naked can
improve your sleep
habits and income
earning capacity,
while reducing stress
and helping you to lose weight.
All you have to do is take off
your clothes. While there are
countless strategies floating
around out there to help you
improve in these areas, none is
as simple — and many are less
effective — as stripping down
before you go to sleep.
Since only 8% of people sleep
naked, almost everyone can
discover the benefits of sleeping
in the buff. This may sound farfetched, but hear me out before
you throw those cozy flannel
pajamas on.
1
You sleep better naked
We’ve always known that
quality sleep is good for your
brain, but recent research from
the University of Rochester
demonstrates exactly how so.
The study found that when
you sleep your brain removes
toxic proteins from its neurons
that are by-products of neural
activity when you’re awake. The
catch here is that your brain can
only adequately remove these
toxic proteins when you have
sufficient quality sleep. When
you don’t get high quality, deep
sleep, the toxic proteins remain
in your brain cells, wreaking
havoc and ultimately impairing
64
your ability to think. This
slows your ability to process
information and problem
solve, kills your creativity and
increases your emotional
reactivity.
Researchers at the
University of Amsterdam
found that lowering your
skin temperature increases
the depth of your sleep and
reduces the number of times
you wake up at night. Stripping
down to your birthday suit is
a great way to lower your skin
temperature without changing
the temperature of the room.
2
Sleeping naked
reduces stress
We all know that prolonged
stress is bad news. It
suppresses your immune
system and increases your risk
of heart disease, depression
and obesity, in addition to
decreasing your cognitive
performance. Stress throws
your cortisol levels out of
whack. Proper rest helps to
restore normal cortisol levels,
which improves your stress
level, regardless of what’s
happening around you. As
described in the section above,
sleeping naked will help you to
get a better night’s sleep.
E N T R E P R E N E U R M AG .CO. Z A A P R I L 2 0 1 8
Sleeping
naked is
healthier
Sleeping naked has a
slew of health benefits,
including helping you
to lose weight. A study
conducted by the US
National Institutes
of Health found that
keeping yourself cool
while you sleep speeds
the body’s metabolism
because your body
creates more brown
fat to keep you warm.
Brown fat produces
heat by burning calories
(300 times more heat
than any organ in the
body), and this boosts
your metabolism all day
long to help you lose
weight. In addition to
the metabolic effects
of sleeping in the
buff, removing your
clothes improves blood
circulation, which is
good for your heart and
muscles. The quality
sleep you’ll enjoy also
increases the release
of growth hormone
and melatonin, both of
which have anti-ageing
benefits.
4
Sleeping
naked builds
confidence
Confidence
doesn’t
just feel
good; it’s the
pillar of success. It pushes
you to try new things, take on
challenges and persevere in the
face of adversity. A University
of Melbourne study found that
confident people earn higher
wages and get promoted more
often than their less confident
counterparts. Sleeping naked
makes you more comfortable in
your own skin. As your comfort
with your body increases, so
does your self-esteem and
confidence.
Bringing It All Together
The benefits of sleeping naked
are many — so many that you
owe it to yourself to give it a
try. EM
© Entrepreneur Media Inc. All rights
reserved.
TRAVIS BRADBERRY
is the award-winning
co-author of the bestselling book, Emotional
Intelligence 2.0, and
the co-founder of TalentSmart — a
consultancy that serves more than
75% of Fortune 500 companies and
is a leading provider of emotional
intelligence tests and training.
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