Vusi Thembekwayo has made mistakes and learnt hard lessons, but he’s also built a R140 million plus business before his 30th birthday, and he’s managed to do it without killing the proverbial chicken.
These are his top lessons for entrepreneurial success:
You’ve Got to Practice your Skills
For Thembekwayo, most of what he knows today in business he learnt during that four year period.
“My own experience has taught me that former middle-managers of large corporates often have the skills to succeed as entrepreneurs. Entrepreneurship is a practice thing. You’ve got to practice the skills of general management, and corporates teach you that.”
Cash is King: Learn to Manage Money
Thembekwayo’s a natural entrepreneur. He sees an opportunity and wants to go for it – but there’s an ecosystem of things that need to collude in order for you to succeed.
“I wouldn’t have been able to do what I’ve done today if I hadn’t spent that time at Metcash,” he says.
“First, I learnt how to manage money. The business had a very strong treasury function. Cash is king, especially if you’re trading high volumes at low margins. My worst nightmare was the MD of the treasury department. He was always asking me questions I hadn’t thought of. I admired his technique but despised our conversations.
He saw the risks that we hadn’t spotted, and was the first person to tell us when we were not on track to collect our aged debtors and the impact that had on our profit and loss statements. But thanks to his attention to detail, I learnt how to manage money, and more importantly, how to be frugal. Today, if I don’t have to spend on it, I don’t spend on it. It’s amazing how far a rand can go if you’re clever.”
Small Clever Decisions Lead to Big Profits
“One of the most important lessons any business owner can learn is that success on profit is nothing more than the accumulative sum of rand decisions.
“Lots of small, clever money decisions lead to big profits, and without the disciplines of frugality, money gets lost. It’s that simple. Question every single line item on a quote. Do we need it? Can we get it cheaper? This is what it’s about.
Your Vision is Transferable
“I learnt how to manage people. Vision is transferable. It’s your job to help your team see the future that you see. You need to get them to really invest in the process, because business is a process.
Differentiate. Differentiate. Differentiate
“I learnt how to differentiate. We were operating in a very commoditised market. At the end of the day I sold mealie meal and baked beans. It’s tough to differentiate in a market that’s all about price. Some of our competitors tried the BEE route. I didn’t see the point.
Sometimes You Must Take The Risk
Did our customers really care if we were black empowered? Instead, I needed to figure out what they did care about. What did they want? And what could I give them that wasn’t inextricably tied to price? The answer was lines of credit.
All procurement officials have the same problem. They need stock to give to their end clients, but they need money to pay for that stock. In this market, most businesses want cash upfront.
We turned that around and said we were happy to take the risk. I had a R17 billion balance sheet that I could leverage to offer credit. And so we went to market offering a R500 000 credit facility for stock, to be paid after 30 days.
If after three months the customer traded according to certain terms, we’d extend the line of credit to R1 million over 45 days. All of a sudden the sale went from, ‘Are you going to deliver Iwisa at R19,99?’ to ‘Hold on, what did you just say? You’ll give me credit? Can I give you the order tomorrow?’”