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Why South African Talent-preneurs Die Poor

So why then do our artists die poor?

Vusi Thembekwayo

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So please explain this to me:

Freddie Mercury died at the age of 45. He was worth an estimated $100mln.

The legendary Mahlathini – who in my view was a talent equal to that of Freddie Mercury – died at the age of 61. There are no reliable sources of information for his net worth, but it is common cause that it was not much.

South Africans are as talented as anyone else is from any nation in my view. So why then do our artists die poor?

  • Are they lazy?
  • Are the financially illiterate?
  • Are they too dependent on someone else to make a living?
  • Alternatively, do they just have a fresh batch of bad luck?

I have pondered on this question, and here are my three reasons why South African artists seldom escape the poverty trap:

You are a businessman

South African artists need to understand that they are not just artists or creative beings. They are talent-preneurs. They make their living through their talents. They must concern themselves with all aspects of their business, sales, marketing, logistics and even financials.

Numbers are not only for accountants

Getting well versed with the numbers of your business and knowing the difference between mark-up & gross margin, net cash & accounts receivables or payment terms & working capital are not boring concepts only for the accountant.

They are logical pieces of information that tell you how much you are creating, if at all.

Marriage is for lovers, not professional colleagues.

No one was born and bred to ensure that you are successful. No, one! You do that for yourself. I have seen countless talent-preneurs (singers, actors, idols judges, dancers and even speakers) sign away their business to someone else. They sign with an agent who earns 25% of their money (off the top) for facilitating a transaction.

Therefore, for merely picking up the phone, taking a booking, sending a contract and getting the often non-complex logistics in order, talent-preneurs will pay 25c of every rand they earn to someone else. That is ridiculous. Imagine Standard Bank giving away 25% of everything they earn to someone else.

Often these agencies expect the talent to sign an ‘exclusivity agreement’ with them but they never sign ‘exclusivity’ with the talent, which means they represent as many artists as they wish & have no vested interest any particular artist being successful.

A TV show does not a brand make

Many talent-preneurs need to understand that personal branding is not marketing.

Just because you are on TV, radio or any other media does not mean you have a ‘compelling value proposition’ that customers can only access through you. This is often why for many of our talent-preneurs, radio or TV is a necessity. Without it, they cannot make a real living.

So why is Jay-Z amongst the best selling hip-hop artists in the world & unlike LL Cool J and the like, he does not know nor have he ever had a TV show? Why did Michael Jackson set world record music sales even though he did not have a reality TV show on Bravo?

Why did Lebo Mathosa leave an incredible trail of commercial success as an artist even though she did not have a show on Vuzu?

The answer is easy: Each of these talent-preneurs were so well versed in their trade and I would argue understood the levers upon which their commercial success rested that they didn’t need the platform. They ran their business like a business. They were in charge. They took their own bookings or managed the office the does. They built an extraordinary brand around consumer experience. That is why Afro-Jack has his plane, and tour bus and booking agency.

They run it like a business.

Recommendations to our talent-preneurs:

  1. Tear the exclusivity agreement. It is your life, your business. Take ownership and drive it.
  2. Know your numbers. Know how many inquiries you are getting, from whom, for what. If they do not book, you ask them why. That is how you gather market intelligence. Is someone else hotter at that time, better, more affordable? The list is endless. The trick is to find out.
  3. Invest in your brand beyond an acting role, a radio show or TV presenter gig. Actually, market yourself.

Mr. Vusi Thembekwayo has been an Independent Non-Executive Director of at RBA Holdings Ltd. since May 14, 2013. Mr. Thembekwayo has already collected numerous accolades and awards as businessperson, entrepreneur and international public speaker. Mr. Thembekwayo completed a PDBA and a course on advanced valuation techniques with the Gordon Institute of Business Science and completed a Management Acceleration Programme (Cum Laude) with the Wits Business School. His speaking achievements include the international hit talk “The Black Sheep” which he delivered to the Top 40 CEOs in Southern Africa, addressing the Australian Houses of Parliament and speaking at the British House of Commons. To add to this, Vusi speaks in 4 of the 7 continents over 350 000 people each year.

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2 Comments

2 Comments

  1. Lunda Wright

    Aug 6, 2014 at 08:31

    Hi Vusi, crowdfunding through platforms like Thundafund.com is a viable way for talent-preneurs to take the edge off their financial woes in South Africa, as well as increasing their profile in their target market.

  2. Dave Reynolds

    Aug 20, 2014 at 10:34

    hola Vusi. thanks for posting this, it’s an important conversation – in fact one of THE most important conversations. the reason why? let’s consider and african brand of car – will it compete with the german and japanese cars on our road ? it’s possible but unlikely. they are well established and very few could take them on. any other local manufacturing that we consider is at risk of being swallowed by the chinese, but the arts are unique. a south african story, like tsotsi, or a live performance is something no one can take and do better or cheaper. do it well and it can make a lot of money for the owner but also many other subsidiaries.

    this article is thought provoking which is great, but, i must say, it’s not totally well-researched or presented. did freddy mercury own the rights to his work, or did he sign them away ? was michael jackson a numbers man – did he get a kick out of saying 19 x 7 is 133 as a kid, or did he just leave the numbers to someone else ? did sting’s accountant steal millions from him (without him noticing), or was he looking over his accountant’s shoulder ? if simon mahlathini had insisted on owning the rights to his recorded work, would he have had any recorded work when he died ? did lebo mathosa run her business like a business or did graeme do it for her ? what percentage did graeme take ? did lebo make an album, which, like “dark side of the moon” is still selling many moons later, or did she just drive a fancy car to the interviews with business magazines and exude the image of commercial success without having a long tail like freddy mercury and michael jackson ?

    i’m trying to inspire you to do some research, vusi ! theory is easy for educated people, and it has it’s place, but you ask real questions, and i think you could find real answers too.

    i think a good way to talk about talent-preneurs in 2014 is to talk to artists that are doing it now. the world’s changed so much in the last 4 years that maybe everything prior to 2010 doesn’t count.

    don’t get me wrong. i agree with the three points made, but i find them kinda obvious.

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Business Landscape

Doing Business From Your Home, What Are The Insurance Implications?

Whether you run a small business from home or have a secondary home industry to supplement your income, it is critical to consider all the risks that your home business is exposed to in order to ensure that it is sufficiently covered.

Tarina Vlok

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Besides the standard damage risks of fire, water, and theft, that all policies should cover, people who run commercial operations from their home need to consider a number of other risks that may not be covered by their personal lines policy. These typically include:

1. Business contents

While most home policies will cover basic computer equipment and home office furniture, these policies will usually not cover stock, tools of the trade or machinery. People running business operations from home also need to consider risks relating to their computer equipment (especially if they remove portable equipment away from the premises), and the software related to their business.

2. Manufacturing risks

Any business that involves manufacturing or requires the use of flammable or dangerous materials, must be specifically insured under a commercial policy.

3. Employee theft

While “theft” is likely covered by a personal lines policy, it is important for home business owners to be aware that any theft or fraud committed by their employees will likely not be covered by a home policy.

4. Liability risks

Liability risks that are not insured against, such as a visiting client tripping and falling at the private home from where you operate your business, can have a massive negative impact on your financial health.

Related: Insurance For Small Businesses: What Should Be Covered?

5. Professional indemnity risk

Anyone who offers professional services or advice could be held legally accountable and it is therefore important to be covered for this risk under specialist commercial liability policies.

6. Products liability

If you make foodstuffs or manufacture cosmetic treatments from your home, you will likely require a commercial policy which is structured correctly to ensure that you have products liability cover.

7. Load shedding

Many home businesses need to consider the risk of business interruption due to interrupted power supply, as well as the potential power surges which can cause serious damage to any electronic equipment once the electricity supply is turned back on. Typically, these risks are limited under most home insurance policies.

8. Vehicle use

It is also important to read the terms, conditions and exclusions of your personal lines motor policy carefully to determine whether any vehicle you use for your business operations (to make deliveries or visit clients, for example) will be covered under the terms of your policy. It is extremely important to disclose to your insurer whether your vehicle is used for private purposes, or whether it is used for commercial purposes.

At the end of the day, when running any type of commercial operation from your home – regardless of the business’ size or nature – it is best to talk to a broker or your insurer to ensure that your policy (whether it is personal or commercial) covers the risks that you do not have the resources or appetite to  cover yourself.

Home business owners that are looking to upgrade their level of cover should do their research and find a suitable product that can grow with their business. The Old Mutual Insure product provides a comprehensive package that can be tailored to the insured’s specific needs. The insured can decide how much they can afford and add cover as the business grows. While the product is not specific to small home businesses, the advantage is that the policy will remain appropriate as the business grows and the needs of the insured changes.

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Business Landscape

How Black Umbrellas Is Thriving Through The Challenging Business Landscape

Even against the challenging economic climate, it is very encouraging and impressive to see growth by our clients and their businesses growing to being sustainable businesses of the future, explains COO Emmanuel Mdhluli.

Black Umbrellas

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Vital Stats

As an enterprise and supplier development incubation organisation, Black Umbrellas partners with the private sector, government and civil society to address the low levels of entrepreneurship in South Africa.

“The programme focuses on promoting entrepreneurship as a desirable economic path and nurturing 100% black owned businesses in the critical first three years of their existence through the provision of our nationwide incubators,” explains Emmanuel Mdhluli, Chief Operating Officer at Black Umbrellas.

“Our model is aimed at supporting emerging and existing black businesses through a three-year incubation programme, so that they are able to emerge as independent, viable businesses. By providing a structured and highly subsidised programme, using a national footprint of business incubation offices, clients are afforded the expertise, office infrastructure and resources to create the necessary foundations to achieve sustainable businesses.”

Currently, BU has eight incubators in Cape Town, Johannesburg, Pretoria, Mooinooi, Lephalale, Port Elizabeth, Durban and Richards Bay.

Client insights on Black Umbrellas’ tangible impact

Here are four examples of the direct impact BU has made to each of its selected clients including their turnover, net profit/loss, net asset value and number of jobs created:

large-table

Related: How The Black Umbrellas Programme Can Boost Your Local Black Business

Black Umbrellas currently has clients in various sectors, including:

  • Construction
  • Industrial engineering
  • Pharmaceuticals
  • Oil equipment
  • Services and distribution
  • Consulting and advisory
  • Electricity
  • Telecommunications
  • Healthcare.

“Even against the challenging economic climate, it is very encouraging and impressive to see growth by our clients and their businesses growing to being sustainable businesses of the future,” says Emmanuel. 

Black Umbrellas’ Collective Impact

The collective SME turnover grew by 33% year on year from R2bn to R2.66bn. Job creation and preservation also saw solid growth of 15% on a year on year basis from 10 137 to 11 687 total jobs created since inception. For the year under, BU was able to remain operationally efficient with the average cost per job figure deteriorating by only 12% on a year on year basis from R32 286 to R36 262 at the end of the financial year. Despite the drop, this figure is still extremely competitive and is testament to the continued operational prudence employed within BU to ensure that capital and resources are optimised for greater impact.

“Most enterprise development service providers focus a lot more on financing mechanisms, whereas Black Umbrellas focuses on all aspects of enterprise development that are inclusive of business management training.” – Client Testimonial

What’s next for Black Umbrellas?

Over the past 5 years, Black Umbrellas has observed a growing trend by corporates to develop their own ESD programmes internally in order to fulfil their requirements. Being that ESD is not core business for most corporates, these organisations have tended to reach out to Black Umbrellas to seek guidance and advice for their internal programmes.

This culminated in the formation of Nextgen Consulting which was officially registered in November 2017. Nextgen Consulting offers Advisory services focused on B-BBEE and Supplier Development at full market rates to corporates, Qualifying Small Enterprises (QSE) and generic companies.

This is an exciting project that will see our third year and graduate businesses benefit from an opportunity to expand their businesses.

Black Umbrellas Contact Details

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Business Landscape

Why You Need To Use NDAs To Protect Your Business

Don’t think of them as aggressive – instead, think of nondisclosure agreements as a fast-track toward trust.

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I’m a small-business owner, and we’re in a stage of growth. Do I really need employees and potential partners to sign NDAs? – Chris P., New Jersey

There are many big-business practices that don’t necessarily apply to smaller companies. When you’re a start-up, you can cut a lot of red tape without worrying about repercussions. The use of NDAs – that is, nondisclosure agreements, which serve as legal contracts of confidentiality – is not one of those cuttable corners.

Chris, here’s a cautionary tale of my own early ignorance. When I started Pen Name Consulting, I used a basic NDA – just a file I found on the internet. I wasn’t blind to the importance of NDAs, but I was cheap and stubborn, even though my father is a lawyer and advised me against this move. (He eventually became my general counsel.) My NDA was flawed; it didn’t cover enough of the information at my company or place the right restrictions on how people could share it.

I discovered my error after a business meeting, where I mentioned a potential client and what they needed help with. The person I was meeting with (who signed my weak NDA) then went after that client themselves – ultimately stealing work from me. There was nothing I could legally do. It probably cost me $30,000 in potential revenue.

Don’t make my mistake. Creating a strong NDA for your business is simple and not that expensive. Even if you enlist the best lawyer, with a ridiculously high hourly rate, the value you’ll receive to protect your company and your ideas is arguably worth the potential value of the company itself. Or at least the value of one client.

Related: Understanding the Terms of Agreement

Now, I understand that it can be awkward at first to ask people to sign an NDA – it seems like you’re telling them you don’t trust them. But think of it this way: If you don’t value your IP, your thoughts and your inventions enough to protect them, then why the hell are you running a business in the first place?

An NDA doesn’t have to feel like a sign of distrust. Because of the scrappy nature of startups and small businesses, partnerships and strategic hires are the lifeblood of scale and smart growth – but they’re also rife with danger. Every potential partner is also potential competition. Every meeting for growth could be a leg up for the other guy. And every time you share your next big move, you need to know you can trust people.

NDAs are valuable because they force that trust. They make it legally binding. With the NDA in place, you can be vulnerable, open up and speak more candidly with potential partners. Rather than view the NDA as a barrier, it’s best to look at it as an exclusive invite.

This is a good thing – the NDA is the front door to learning more and being on the inside. The same can be said for hiring. The moment you have a signed NDA, you’ve connected with someone and you’ve closed the deal. It’s a sign of respect. And when you have respect, you have strong partnerships and hires. That is the foundation of growth for any business.

Pride and ownership are big parts of owning a company. If that comes across as a little “preachy,” it’s because you need to bear witness to a simple reality: Those who do not invest in protections for their business are likely to watch it fall apart. Or they will be too guarded with information to ever let others in. Either way, an NDA solves those problems.

This article was originally posted here on Entrepreneur.com.

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