Ask Allon Raiz about his darkest moment and the answer comes quickly. “When my first child was born I had to borrow money from two different people to pay the hospital bill so they would release him. It was about R22 000. I brought him home and was watching him sleeping in his crib and I just collapsed on the floor in tears. I thought, ‘What am I doing? What AM I doing? I can’t even pay for my own baby to come home.’”
They were difficult questions to answer. He was trying to make Raizcorp work and things weren’t going well. Today the business is arguably the most successful incubator in South Africa, and one of the few profitable incubators in the world, but back then it just wasn’t working.
Raiz had poured everything into it, ignored the research that said it was impossible for an incubator to make money, and followed his passion and his dream. But none of that had made a difference. On his child’s bedroom floor that night he asked himself another important question, one that countless entrepreneurs have asked themselves: “Shouldn’t I just give it all up and go out and find a job?”
The power of a different perspective
It wasn’t the first time Raiz had tasted failure. When he was in his 20s he was noticed by a multi-billionaire local businessman who offered to back him in any business he wanted to embark upon. It was a spectacular opportunity and with his mentor’s support Raiz opened South Africa’s first New York Sausage Factory in Pinetown, Durban. “It was a complete failure. The business never made money,” he recalls.
At the time Raiz remembers being acutely aware of the fact that he had no right to fail. “I’d been given everything. A private school education, a tertiary education, funding, a mentor and the privilege of starting a business of my choice. I had what most young, aspiring entrepreneurs can only dream of. How could I, given all of those things, fail? And yet I did,” he says.
Over a difficult lunch with his mentor, he admitted defeat: “It was a really tough moment. I felt like I’d let everyone down. I told him I’d failed and that I’d pay back all his money, even if I spent my whole life doing so. And when I got up to leave, he told me in no uncertain terms to sit back down.
He asked me what I would do if I could do it all over again and I told him I’d change the size of the store, move it, change the menu and the pricing structure, and he said, ‘I didn’t back the business, I backed you, so go and do those things. And this time, don’t fail.’” Today Raizcorp is built on the principle of backing people, not businesses.
Raiz took his new ideas and turned the business around, eventually selling it. The experience taught him a number of important things about failure, one of the most valuable of which was about the power of another person’s perspective. “When you’re in a difficult position, the only thing you can see is obstacles.
My reality was that I had failed. That’s all I knew, and I couldn’t break free from that reality to start finding solutions. But when someone else looked at my situation and started asking valuable questions, like how I’d do things differently, it suddenly freed me from my reality.
For the first time I could think about possibilities and that was key to helping me find a way out,” says Raiz.
Bringing old lessons to a new business
It’s a lesson he’s carried with him throughout his career and one that he applies almost daily when dealing with entrepreneurs at Raizcorp. “You often hear entrepreneurs say, ‘I’ve tried everything. Nothing will save this business,’ but they’ve only tried all the things they could think of.
The questions they are able to ask are constrained by their view of the situation. Getting another person’s perspective often leads to different questions, and asking different questions is key to finding different solutions. It sounds simple and obvious but in practice it can be immensely powerful,” he adds.
Asking the right questions also forces you to let go of certain ideas. Doing so played a crucial role in helping Raizcorp find the shift it needed. One of the problems facing the business was that resident entrepreneurs couldn’t always afford to pay. If the incubator (Prosperator) was full there was no way of finding additional income.
“I was just burning cash that I didn’t have,” says Raiz. At the time the business had a strictly resident-based model whereby incubatee companies had to reside within Raizcorp’s premises.
He explains, “My partner kept asking me why we couldn’t open up the business to entrepreneurs who wanted to partner with us but didn’t necessarily want to move into Raizcorp, and I kept saying no. I was stuck in my own paradigm and I refused to let go of the idea that businesses had to be resident.
But he just kept pushing, kept asking the question and, crucially, kept asking ‘Why not?’, which forced me to interrogate my own logic. Eventually I realised that I was the problem. The question he was asking was pointing to a solution, but I was standing in the way.”
Today, a handwritten note is stuck on the wall next to Raiz’ desk. It reads: “How are you standing in the way of Raizcorp’s growth?” Releasing the business from the resident-only model increased the size of its market. Today it offers a number of different ‘products’ that allow it to deliver services to a range of different entrepreneurial companies. Some are fees-only based while others include fees and equity.
It also gave way to other important questions about which entrepreneurs were selected and the selection process itself. One of the keys to Raizcorp’s success is its rigorous selection processes, and its model is recognised as a blueprint for incubator success around the world.
Last year, it was accredited as a Centre of Excellence by the Small Firms Enterprise Development Initiative, the standards-setting Body for Business Support and Business Enterprise of the United Kingdom government.
Judith McHale, the past United States Under-Secretary for Public Diplomacy and Public Affairs, visited Raizcorp and lauded it as a “model for Africa” and Raiz has been invited to address numerous organisations and government bodies around the world on incubator and entrepreneurship strategy.
These include the World Economic Forum, the African Development Bank EMRC Annual Conference, South Africa’s Human Resource Development Council Entrepreneurship and Education Technical Task Team, and the President-led Competitive Investment Climate Strategy (CICS II) in Kampala, Uganda. He also advised the Mauritian government on effective incubation and entrepreneurship strategy.
“A great deal of Raizcorp’s success has been triggered by asking different questions when we got stuck,” says Raiz, whose latest book What to Do When You Want To Give Up, describes the process of helping a particular entrepreneur to find solutions to her failing business by asking the right questions.
“One of the most important of these is, ‘What do I have?’,” says Raiz. In the early days when Raizcorp was struggling and most needed a cash injection, Raiz was forced to look at what he had and how he could use it to make money.
“I wrote everything down on post-it notes and stuck them up in front of me. I wrote down everything, from my cell phone to my intellectual property regarding entrepreneurship and all the contacts I had. Then I sat and stared at these things and tried to flip them into different permutations to see how they could be put together to make money,” he explains.
Leverage your assets
What he came up with turned out to be an important money spinner at a time when the business needed it most. “I had entrepreneurial knowledge, an advertising company that was a client of Raizcorp, and a contact I had made through my work setting up Entrepreneur’s Organisation (EO) who was willing to put her company’s brand behind a venture that would market it to the large-scale entrepreneurial community.
She worked for one of the financial institutions and had actually turned me down when I asked her for support with EO as the EO market was too niche for her purposes. But I wrote her name down anyway,” he explains.
He took his entrepreneurial knowledge, wrote down 52 inspirational messages for entrepreneurs, got the advertising agency to put these on a pack of cards it designed on risk, and took it to his contact. “She loved the idea, sponsored the production, put her company’s brand on it and they bought 10 000 packs, which gave us a massive cash injection. It was the oxygen we needed,” he says.
Today he takes entrepreneurs through the same process. “Again it’s all about perspective. When you’re struggling with your business all you see is what you don’t have, what you think you need. You forget to look at what you do have and to ask questions about what you can do with all this ‘wealth’ to make yourself money,” he says.
One of the things the exercise taught him was the importance of being able to pitch ideas well. “Once I saw what I had, I could see a way to put those things together so that I could pitch them correctly,” he says. This is part of what he does during Pitch and Polish, a platform which gives a voice to entrepreneurs in small towns across South Africa to pitch their business ideas.
The entrepreneurs pitch and re-pitch all day and are given harsh and real feedback by the Raizcorp facilitator and the audience.
Finally at the end of the day they pitch to a panel of expert judges. Pitch and Polish is underpinned by the same theme of getting an outside perspective, what Raiz calls ‘the other lens’.
Fear hinders entrepreneurial growth
In his own journey, mentors have played an invaluable role in providing this lens. “I think mentors are critical. A good mentor will ask the right questions to keep you looking for answers,” he says.
They also keep you from getting ahead of yourself. Along with fear, Raiz identifies ego as one of the biggest hindrances to entrepreneurial growth: “The minute you think you’ve ‘arrived’ you’re in danger. It’s one of the downsides of finding your way through those really dark periods.
You hit on a solution, you achieve success and you start to think you can stop searching for answers because you believe you’ve found them all.”
He relates a story about spending half of one session with his mentor telling him how well things were going in the business. “He sat very quietly and listened to me and then asked me if I had any intention of making the session valuable in any way, or if I was just there to talk about how great I was. It was a real wake-up call,” he smiles.
Success, like failure, is just a point in time. “I think you have to bring the same perspective to success that you bring to failure. It’s a point on the entrepreneurial journey and it could change. We’re all walking the same path. Some people are two steps ahead of others, some are further behind. Success and failure happen all the way along the continuum,” he says.
It’s the knowledge of how often entrepreneurs face failure and feelings of doom that prompted him to write his latest book. In it he talks about ‘sirens’. “In Greek mythology sirens would lure sailors to rocky outcrops with their irresistible singing, and entrepreneurs are frequently enticed by similar things that promise an easier path to the one they are on. Anything seems easier to what you’re going through in those moments,” he explains.
This brings us back to that moment in the dark on the bedroom floor of his infant son. Raiz’ own ‘siren’ was a lucrative job offer from a financial institution. “The money would have been good. I could have just walked away from all the hardship and the struggle and got a pay cheque at the end of every month,” he recalls.
So why didn’t he? “I’m addicted to my business. I’m addicted to the way it makes me feel when we turn a struggling business around. And I’m incurably pro-life when it comes to entrepreneurship,” he answers.
It’s an overwhelmingly positive stance but it does beg an important question: Is there never a time at which its appropriate to admit defeat, pack up and move on? Is every business worth fighting for? And how do you know when to push through and when it’s time to stop throwing good money and energy after bad?
These are questions he deals with extensively in the book but he sums up his position in a single, simple answer: “So long as you are able to ask new questions — whether they come from you or from other people — and you are able to get to new answers, it’s not yet time to throw in the towel.”
Allon Raiz’ advice to ‘failing’ entrepreneurs
- It’s all relative. It’s very important to realise that this is your perspective at a point in time based on your perception of reality. If you understand this you will accept that it’s possible for someone, viewing it with a different lens, to have a different perspective that could help you shift your stuff.
- List your resources. Look at what you have – everything from your cellphone and your car, to your friends, relationships, skills and intellectual property. Then look at how you can connect and combine these resources to make money.
- Reach out. Stop being insular. Lose the ego and ask for help.
- Mentors are critical. They give you the ‘other perspective’, but don’t view them as teachers or as an access point to networks. A mentor should be a person in front of whom you can be completely vulnerable and from whom you want nothing other than external insight and perspective.