Connect with us

Company Posts

(Watch) Franchising Refuelled: The Road To Tshepo Maboa And Andrew Sehata’s Partnership

Tshepo Maboa and Andrew Sehata have gone from an independent business owner and petrol attendant respectively, to running two successful fuel retailer franchises in Pretoria. Eight years later, their partnership is growing strong — both within their businesses and with their banking partner.

Nedbank Franchising

Published

on

tshepo-maboa-and-andrew-sehata

Watch this video on Tshepo Baboa and Andrew Sehata, Engen Fuel Retailers

Vital Stats

  • Tshepo Maboa and Andrew Sehata
  • Franchisees since: 2009

What made you decide to become franchisees?

Tshepo: I found it difficult to run a business from scratch having attempted to keep a laundromat and pub, among others, afloat before joining a franchise. I had all the business knowledge I needed to grow the businesses, but found myself lacking in terms of systems required to drive the business, and I learnt the hard way that it can be a dangerous combination.

Andrew: I used to be an employee at a fuel retailer franchise and my dream was always to be my own boss. By owning a franchise I knew I’d be able to create a steady income and help those in need of employment, as our country is facing an unemployment challenge.

How did you secure your first, and subsequently second, franchise?

Tshepo: I attended a lot of seminars and used any information I could get my hands on. The capital required is high, especially the unencumbered funds, so when Andrew told me he needed a partner for a fuel retail franchise he had been offered, I was already looking around.

Andrew: I think my journey from being a petrol attendant helped me to get to where I am today. I already knew the franchise basics so it became much easier for me to adjust to being a franchisee.

Related: Ocean Basket’s Top Lessons Learnt From 21 Years Of Being In Business

What has been the most challenging part of your journey?

Tshepo: Raising the capital to finance the business. Our first site was small, comparatively speaking, and we had to grow to acquire a second site. Rapid growth required a capital injection to keep up with the pace of growth. For example, our second site had a very primitive design when we acquired it, and with the revamp, the whole site had to be completely knocked down and rebuilt from scratch, and we added a fast food franchise in the process. All this was a very costly exercise. 

Andrew: Money is tight all around, but more so in the township. This often makes it difficult to sell items in our area of trade. Sometimes we have robberies late at night and shoplifting is rife.

Why did you opt for a partnership?

south-african-franchisees

Tshepo: Andrew needed a partner because he didn’t have enough cash to open a franchise on his own. I didn’t either, so it made sense to join forces.

Andrew: Tshepo helped in raising the franchise fees, and as you know, two minds are better than one. That’s why we are running two sites today.

How do you run the two sites jointly?

Tshepo: We have a 50% stake in both businesses. I manage the site in the CBD, because I live in Midrand and it’s easier for me, while Andrew runs the Mamelodi site as he lives in the area.

Andrew: We have been faithful to each, and sometimes we swap the running of the sites.

Related: Pick n Pay Franchisees Share Powerful Insights Into Running a Pick n Pay Franchise

Why is it important for successful franchisees to have a strong relationship with their banking partners?

Tshepo: When we moved our banking from our previous bank, the funds needed for any upgrade were easier to acquire. Nedbank really understands the nature of our business. They have a team that specialises in fuel retail so it’s made it easy for them to ask the right questions.

Andrew: Nedbank has put some orderly daily systems in place to make it easier for someone to understand his business needs. They also provide you with a professional team of staff.

Nedbank recognises the contribution franchising makes towards growing South Africa’s economy. Nedbank Franchising is all about partnerships – a concept we pioneered in the area of business banking in South Africa. With our client-centred philosophy ‘partnering with you to grow your franchise’, Nedbank Franchising offers clients a banking partnership founded on our willingness and ability to understand your franchise and provide you with a solution-driven service. Our unique approach allows us to deliver, through a single contact point, an integrated franchising solution centred on three key principles: localised decision-making with national support, access to specialised expertise and customisation.

Company Posts

Balancing Business And Investment Risks

It is vital that entrepreneurs develop additional revenue streams and create wealth outside of their business to ensure their financial security. Sheldon Friedericksen unpacks the benefits of including Fedgroup’s Secured Investment offering in a diversified portfolio.

fedgroup

Published

on

sheldon-friedericksen

Entrepreneurs tend to have a natural affinity for risk-taking. While carefully calculated, they bet big on their businesses, often going all-in when investing financial resources to start and grow their companies.

“Given this commitment, many entrepreneurs view their business as their ultimate retirement plan. This can be a mistake, because it places all their proverbial financial eggs in one basket,” explains Sheldon Friedericksen, Chief Financial Officer at Fedgroup.

As an entrepreneur, it’s important that you consider how a diversified investment portfolio that spreads risk can offer greater financial security, while still delivering robust returns.

“Paradoxically, while most successful entrepreneurs excel at diversification – they often pursue multiple opportunities, or pivot their business to exploit new gaps in the market – their investment portfolios seldom follow suit,” continues Friedericksen.

Exposed to volatility

This inherent appetite for risk means entrepreneurs often also employ a different approach to investing. “Allocations tend to reflect this risk profile, with portfolios heavily skewed towards high risk, high return assets such as equities.”

Related: More Than Sun In Your Eyes: Fedgroup’s Impact Farming Solar Offering

However, entrepreneurs need to carefully consider their asset allocations, taking into account their business in relation to their other investments. “As the sole or majority shareholder in a business, an entrepreneur already has massive exposure to equity risk, whether the company is listed or not,” says Friedericksen.

It’s also important to insulate investment portfolios from the potential impact of stock market corrections. The recent slump in the value of shares in companies that were previously considered mainstays in the portfolios of astute investors and leading fund managers has highlighted the variability in risk inherent in a concentrated equity investment approach.

“Since the start of 2018 a range of blue-chip JSE-listed companies have shed significant value as equities shrugged off positive market sentiment and reacted to weak economic fundamentals and, in certain instances, corporate governance irregularities,” says Friedericksen.

In the face of these developments, he believes that entrepreneurs should ask if they can solely rely on stock investments, especially when the bottom drops out of heavily-weighted shares like Steinhoff?

“While investing in equities has long been considered one of the best ways to achieve above-average returns, in the context of an entrepreneur’s risk profile there is always a need to include lower-risk, secure investments in your portfolio to ensure a degree of security and certainty.”

Your capital secured

A suitable option is Fedgroup’s Secured Investment participation (part) bond offering, which combines fixed, high returns with capital security. “We created our Secured Investment product to help investors earn a higher level of income than that offered by money market funds, while protecting their capital value.”

Part bonds are a low-risk, high-yield fixed deposit investment fund backed by first mortgage bonds on a physical properties.

This type of secured investment offers predictability with a fixed, guaranteed interest rate for the full term of the investment, allowing for accurate calculations and projections on growth.

“It is also a type of collective investment, which is governed by the same strict regulations as unit trusts and is regulated by the Financial Sector Conduct Authority (formerly the FSB). This means invested capital is secure and protected by law.”

Income or growth

Entrepreneurs can choose to invest for income, as interest earned at the nominal rate of 8.75% p.a. can be paid out monthly.

“Alternatively, investors can choose to invest for growth. By reinvesting the income, investors benefit from the power of compound interest, earning an effective rate of 10.9% p.a. over the five-year investment period,” continues Friedericksen. Investors also have the flexibility to switch from the growth option to the income option without attracting penalties.

What’s more, Fedgroup charges no fees on the investment amount, or on the interest earned, so returns aren’t eroded. “Our income is earned from the properties we finance and the interest income generated.”

Since launching its Secured Investment offering in 1990, Fedgroup has experienced significant inflows from both institutional and private investors, particularly for lump-sum cash investments. “We are currently managing over R2 billion within our Secured Investment portfolio,” confirms Friedericksen.

Related: What Should I Know Before I Invest My Hard Earned Money?

“Investing in assets that are counter cyclical to the industry within which entrepreneurs operate, and including more conservative, stable investments like our Secured Investment in a portfolio, is a smart diversification strategy for any business owner. This investment approach mitigates risk and offers greater financial security, which ultimately enables entrepreneurs to pursue a more aggressive business strategy,” he says.

The benefits of investing in a Secured Investment:

  • A high-yield, no cost fixed deposit investment
  • A low-risk investment that is secured by first mortgage bonds on physical properties and is highly regulated
  • Every property investment opportunity is objectively analysed and evaluated against a strict set of criteria, with a maximum of 75% of the asset value loaned for the mortgage
  • The fund has close on double the ratio of security (value of the properties) to outstanding loans (value of mortgage bonds), ensuring that investors are well protected
  • Offers predictability with a fixed, guaranteed interest rate for the full term of the investment
  • Offers flexibility to invest for income or growth to meet specific investor requirements

Continue Reading

Company Posts

Public Private Partnerships Can Work For Entrepreneurs

Property Point will develop 16 small business in the property sector of which two thirds are youth and women owned.

Property Point

Published

on

property-point

In a landmark partnership for collective economic growth in South Africa, the Department of Small Business Development (DSBD) joined forces with Property Point, a Growthpoint Properties initiative, to develop more small businesses for South Africa’s property sector. DSBD has allocated a R5 million grant to Property Point for a one-year small business development programme as part of its Enterprise Incubation Programme (EIP). This breakthrough initiative is the first public-private partnership of its kind in the property sector. It will develop 16 small businesses in the property sector of which two thirds are youth and woman-owned.

For  this  unique  16-business  intake,  Property  Point’s  programme  is powerfully market driven. It will raise the profile of the entrepreneurs and strengthen their competitiveness, with a deep focus on market integration. The programme aims to create market linkages for these small businesses that will see them included in procurement opportunities in the broader property sector, as well as Growthpoint. It is expected to set new benchmarks for small business integration into private sector supply chains.

Related: 4 Black-Owned Businesses Participating in This Enterprise Development Programme That Are Growing – Fast

Estienne de Klerk, CEO of Growthpoint South Africa, says: “We believe in the principles of social and economic transformation and empowerment on all levels, and we are committed to achieving this. As a hands-on property owner, we own and manage our buildings – we recognise our unique position to develop small businesses to increase their access to market opportunities. We are proud to contribute to this pioneering public-private partnership designed to deliver on South Africa’s transformation, small business, economic growth and job creation objectives.”

Shawn Theunissen, head of Property Point and head of Corporate Social Responsibility for Growthpoint Properties, says:

“Property Point’s  objective  has  always  been  to  contribute  to  South  Africa’s economic growth. Using a best practice model, we have delivered positive results in our new partnership with government. This will escalate our impact on transforming the economy at a crucial time when South Africa is dealing with high unemployment and low economic growth.”

The beneficiaries of the Property Point and DSBD partnership have advice on how other entrepreneurs can make the most out of similar programmes:

Advice from Zoleka Ngema of Senzee Trading

zoleka

Contact www.senzee.co.za.

  • Be honest this helps you define your position and helps you view the real issues in your business.
  • Do every task diligently every business is different and what works for one might not work for you, so working diligently personifies the tasks and therefore adds value to your business.
  • Lessons are continuous remember & do the tasks done as these will create a cycle of growth even after the course is over.

Related: Want To Start A Property Business That Buys Property And Rents It Out?

Advice from Sibongile Shikwambana of Sandwind Coatings

sibongile-shikwambana

Contact www.sandwind.co.za.

  • Be fully present, participate and take advantage of every single opportunity
  • Drive your own business agenda; recognise that you and no one else can make your business successful
  • Build and maintain meaningful relationships.

Advice from Teko Motlhabi of Techmo Air

teko-motlhabi

Contact www.techmoair.com

  • Try to be present and involved with all the activities and opportunities handed to you
  • Ask for help from the Programme Managers and the rest of the team when you need it
  • Create relationships with your fellow entrepreneurs and collaborate.

Continue Reading

Business Landscape

How SMPs Can Support Businesses Looking To Internationalise

Key findings from a new global research report from ACCA suggest Small and Medium Sized Accounting Practices (SMPs) recognise many of the key challenges and opportunities that internationalising SMEs face in today’s global economy. This provides them with an excellent platform towards providing additional value-added support to clients.

ACCA

Published

on

By

accounting-company

Much has been written in recent years about how SMPs are experiencing a growing number of commercial challenges that are disrupting the client services they have traditionally relied upon for revenue.

Equally, many have argued that more SMPs need to consider whether diversification into new advisory services could be the key towards the sector’s future success. However, such change can be difficult when talent flows in the sector are uncertain and competition is fierce.

Whilst not appropriate for everyone, ACCA was therefore interested to explore whether international trade is one area where SMPs’ unique experience and expertise might lead to the development of new service provision.

Our findings suggest that many SMPs are equipped with an excellent platform towards providing additional value-added support to clients. However, despite SMPs stating that most of their clients had been involved in some form of international activity over the last three years, their current provision of relevant support remains highly focused around a small number of limited areas.

The new report, Growing Globally – How SMPs can support international ambitions, also revealed the following about internationalisation and the relevant advice landscape for SMEs. 

Although the research was global, specific findings from five key markets have also been extracted and presented. These markets are Ireland, Malaysia, Nigeria, Singapore and the UK. They were selected on the basis of their representation of markets in various stages of economic development, and their global and regional importance to international trade.

SME internationalisation today

  • Just under half (45%) of SMEs said the main benefit of internationalisation was access to new customers in foreign markets. Increased profitability (35%), faster business growth (33%) and access to new business networks (30%) followed.
  • Both SMEs and SMPs considered ease of doing business and high growth potential as the most important factors when choosing an export destination. Geography was seen as less important, which may be a result of new technologies reducing its significance as a perceived barrier.
  • Both SMEs and SMPs recognised foreign regulations as the most significant barrier to internationalisation. For SMEs, the second most important was competition (27%) though for SMPs it was foreign customs duties.
  • In terms of the future, SMEs’ international ambitions are focused on building the capacity of their business (45%), building networks in foreign markets (45%) and introducing or developing more products and services to market (44%).

Related: Technology In Accounting – Race For Relevance

The advice landscape

  • A wide breadth of professional advice and support is used by internationalising SMEs, who tend to reach out to different sources as they move along their internationalisation journeys. Government or relevant public agencies (39%) are the most widely used source of professional advice, closely followed by lawyers (35%) and then banks (33%).
  • Accountants are most likely to be used by SMEs when looking for support on international tax, regulatory compliance, foreign exchange and accessing external finance.
  • Only 9% of SMPs said they had no clients who had been involved in any international trade activities over the last 3 years. Importing and exporting activities were the most common, as was participating in broader international supply chain networks.
  • SMPs mainly rely on internal and informal resources when advising clients about internationalisation. However, this gradually shifts towards a reliance on more external and formalised resources as practices grow in employee size.
  • Just under half (47%) were not members of any networking organisation, potentially missing out on valuable resources that could enable the development of more effective forms of international support.

Using these findings, ACCA conducted a series of interviews and roundtables with SMPs and SMEs globally. The subsequent insights were used to develop recommendations on how practices can look to develop their international advisory provision.

  • Specialisation is key – For those developing their international advisory provision, it is vital to first identify an area of the market where you believe your practice has the opportunity to effectively develop its expertise, resources and intelligence to best suit the needs of your clients. SMEs’ demands for international advice vary according to sector and size of business. Building a market focus is more likely to make any future expansion of international support more achievable and successful.
  • Adopt a strategic mindset – Identifying where you could best add value in terms of international support requires SMPs to think strategically and embark on initial planning and research. The best place to start is with existing clients rather than prospective ones, as they provide a readily accessible (and more approachable) evidence base to explore where demand is likely to be greatest. Making efforts to understand your clients’ internationalisation needs can then help you shape your wider international advisory offering.
  • Expand your international network – Networks are integral for the development of new professional advisory services but particularly with regards to internationalisation. This is because global value chains often necessitate close and efficient coordination of activities between businesses. SMPs should therefore aspire to become the central referral point for clients looking to find the most appropriate source of professional advice.
  • Invest in professional development – Practices must have highly skilled staff with the appropriate intellectual knowledge for clients to recognise the value in the services offered. Creating a structured programme of learning activities for staff around international trade could be useful for SMPs looking to upscale their international advisory provision. This could involve introducing formal learning activities across more technical areas of international trade (such as tax, compliance and foreign exchange) as well as working with other firms to develop knowledge networks where staff can learn, collaborate and access good practice.

Related: Investing In Value Creation Tools Can Help Your Business Grow

As SMEs continue to seek new ways of engaging in international trade, partly brought about by developments in technology, practices are being presented with opportunities to develop and widen their international advisory provision.

For some SMPs providing additional support to clients involved in international markets will not be feasible or practical. Nonetheless it is important for all practices to continue recognising the changing realities of how SMEs are operating globally.

The key challenge in taking advantage of such opportunities is centred on the risks that inevitably come with the business model optimisation required to provide new and relevant client services.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending