Watch this video on Trudi van Niekerk, Nando’s, with advice on running a company.
- Player: Trudi van Niekerk
- Position: Business Development Director
- Company: Nando’s
- Visit: nandos.co.za
Running a company — regardless of size — in South Africa can be challenging. Resource constraints, economic and political uncertainty all make consumer spending rather conservative at times. Nando’s Business Development Director Trudi van Niekerk knows this.
“The biggest daily challenge is that we are people-reliant, so we are driven to make the guest experience a good one,” says Van Niekerk.
“We ensure the guest leaves with the best possible experience, even if the staff is having a bad day.”
Nando’s knows what it’s doing. Van Niekerk says it’s about the people who make the chicken. “We invest heavily in our people; our Nandocas. Be it training or taking care of their basic needs such as health care and ongoing education.” It’s a differentiator that has seen the franchise chain continuing to grow year-on-year, even with the massive amount of global competition flooding the market.
“We operate in a very competitive environment and over the past 30 years many large international food brands have entered the local market,” affirms Van Niekerk.
Related: Make Krispy Kreme Happen
“Despite this, we have shown very impressive growth in both sales and market share in recent years. We have invested heavily in our brand and today it is one of the most loved brands in South Africa. We never compromise on product quality and we truly believe we sell the best tasting flame grilled peri-peri chicken in the world.”
Keeping the brand grounded
“Nando’s owns a third of its existing footprint, which helps it to stay in touch with its market and the restaurant business model, which in turn, benefits franchisees,” says Van Niekerk. Not only does this mean the company will suffer most if the business goes awry, but it’s a great way to try out new products and ideas without using franchisees’ funds.
“It provides us with a great platform for trialling new staff incentives, looking at different layouts and testing new menu products’ viability.”
Nando’s has established itself in around 21 countries and plans to continue expansion in the near future, along with rolling out a lot more of its drive-thru models, which have proven very successful within the South African market, according to Van Niekerk.
“We’re potentially taking that idea into other markets we’re currently trading in. We’re also very focused on some new menu innovation ideas.”
Van Niekerk delves further into Nando’s success, future plans, and how Nedbank is helping to get them there.
Why is it important for successful franchises to have a strong relationship with their banking partners, and how does it benefit both the franchisor and the franchisee?
Having a strong relationship with their banking partners is critical for franchisees as it will assist them both in their short-term cash flow needs as well as their future growth plans. They need to have a financial partner that understands their business and can advise them of the best funding or investment mechanisms.
Nedbank’s Franchise Division has built up a strong track record and understanding of franchised businesses over the years. They understand the financial implications of a franchised business and are geared to tailor-make banking packages for a particular brand.
What attracts franchisees to Nando’s?
The important thing in business is to have a business model that works. Franchisees need a healthy pay-back period so that they can generate a good return on investment. In addition to this, we provide a strong support base to our franchised system.
What are some of your biggest achievements that other franchise brands can learn from?
We have always stuck to our core values, namely pride, passion, courage, integrity and family. Those values are the point from which we make all of our business decisions, and act as a guiding light, no matter what challenges or innovations we are facing.
Related: 3 Secrets To Franchising Success
What role do your marketing campaigns and social media presence play in your success as a business?
Our ads define and create the brand character that is Nando’s. We have become a social commentary brand in SA and we can say what other people are thinking. But we never lose sight of the fact that the goal of the advertising is to get guests to the restaurants, and to make people remember and think about the brand.
Fundamentally we are a brand that cares about the things that most South Africans care about, and so when we’re ‘firing things up’ (be it online or on TV) we are connecting with the hearts of our consumers. That connection builds brand love and has built the Nando’s business you know and love today.
Banking on success
“Nedbank has made a significant contribution to our business, especially in supporting us and our franchise base to effect changes, which keep us ahead of the pack,” says Van Niekerk.
“They understand franchising and individual franchisees’ needs. They don’t lose sight of the fact that they’re banking a brand and they give the franchisee the benefit of being part of a bigger umbrella organisation.
“Nedbank has been a key business partner to Nando’s over the years. This helped us to grow both the brand and our franchisees.”
Is Your Business Ready To Be Funded?
A venture capitalist and an entrepreneur who has secured funding weigh in on what you need to become funding-ready.
1. Ability to Scale
According to Clive Butkow, CEO of VC firm, Kalon Venture Partners, there are many important criteria VC firms evaluate when making an investment decision, but the ability to scale is the most important.
“At Kalon Venture Partners we only invest in businesses if we believe we can make a 10X return on our investment when we exit the company. If we do not believe the business can scale, both in South Africa and globally, we will not invest,” he says.
“Scalability can swing an investor valuation discussion towards a ‘blue sky’ scenario, presenting an endless opportunity for revenue multiples on an initial capital cost-base,” agrees Benji Coetzee, founder and CEO of EmptyTrips.
“However, unless the potential is paired with execution capability it remains irrelevant,” she warns. “As a founder you need the perseverance and commitment to prove that your product will be scalable. In other words, you need to demonstrate your capability to replicate the offering to unlock upside, clients and product growth.”
2. Founder’s Mindset
“The founders and CEOs of businesses are the visionaries. They are the fuel in the engine and the Lieutenant General on the front line fighting fires. A founder’s attitude, resilience and ability to rally their troops is therefore paramount,” says Benji.
“Before a company can scale it needs to go through painful growing pains. The product evolves, customer orientation flips, the team matures and competition increases. To navigate this changing multi-faceted journey, the CEO is critical in the fight. Founders create the strategy, rally the army and lead the effort, in both the tough times and the victorious ones. Without a good fight-plan, and consistent implementation of it toward the objective, the company cannot scale.”
Clive agrees. “In my experience, what got you here will not necessarily get you there. Meaning the skills that helped you build a R10 million business are not the same required to build a R100 million business. Some founders either have the skills or are able to re-skill themselves and take the business to the next level, while others can’t. Sometimes the founder needs to be replaced with a professional CEO that can scale the business. This does not imply the founder leaves, but rather that they take on a new role that is more aligned with their strengths.”
3. Take Action
Clive doesn’t believe it’s right or wrong to scale a business – instead, it comes down to what the founder wants. “Many founders are happy to grow their businesses organically and maybe only build a lifestyle business,” he says.
“Other founders want to build a business that will change the world. We call these exponential entrepreneurs. The key to scaling a business, in my experience, is having the right skillset, as well as a mindset that embraces a ‘can do’ attitude and has a bias for action.”
“I call it AA or Attitude of Abundance,” says Benji. “Founders are the alphas. They need to lead, aspire to and believe in scale.”
See Benji Coetzee, Clive Butkow and Keet van Zyl live at the second Secrets of Scale event, which will be taking place at the MESH Club in Rosebank on Monday, 28 May. Buy your tickets online here: www.qkt.io/secretsofscale
What’s Stopping Your Business From Growing?
Three masters of scale unpack the reasons why you might be failing at growth – or in danger of doing so.
So, what’s stopping you from scaling? If you ask Rich Mullholland, founder of Missing Link, the reality is that most entrepreneurs don’t need to understand what it takes to scale. “Scaling speaks to exponential growth,” he says, “which for the vast majority of business owners simply shouldn’t be a consideration. Growth by itself is okay, and even then, it should be growth as and when it’s required.”
Rich’s key point is that growth for the sake of growth should never be a business owner’s primary goal. Growth should be strategic, and good for the company. Growth without a solid foundation can actually harm – or even kill – your company.
If your goal is growth though, here are three key points to keep top of mind.
1. Too many business owners don’t understand what it takes to scale a business
“Entrepreneurs are so focused on getting through the month with their cash flow intact that they often fail to lift their heads and look to the horizon,” says Allon Riaz, CEO and founder of Raizcorp. “Scale requires strategic thinking, while most entrepreneurs are in operational thinking mode.”
Howard Mann, president at Brickyard Partners and a US-based business turnaround specialist, advises business owners to stop focusing on revenue growth alone. “Scaling a business is about balance and too many entrepreneurs just focus on the speed of revenue growth. When revenue grows without the infrastructure to support that growth, clients leave as quickly as they come in.
“Instead of focusing on top-line growth, focus on maximum profit margins. This will completely change where you focus your efforts. I would rather have a $10 million business with 50% margins over the false glamour of a $50 million revenue business with razor thin profits.”
2. Without the right systems, process and people, you’ll never be able to scale
Allon believes the biggest mistakes entrepreneurs make are:
- Not arranging sufficient cash reserves for a growth period
- Believing that the people who brought you to point A are the same people who will take you to point B
- Having insufficient systems to scale the business
Rich agrees, adding that you need to focus on the business you want to be, and not the business you currently are. “Businesses often commit legacide,” he says. “They allow the legacy systems, put in place for a business of a smaller stature, to hold them back. Not to get too cheesy here, but to quote the Great One, NHL hockey legend Wayne Gretsky, you need to skate to where the puck is going. The systems you put in your business should be systems appropriate for the business you want, not the business you have. Sure, you’ll possibly be paying more in the short term, but it will be a fraction of what you lose trying to play catch-up later.”
Howard believes that losing track of managing the expenses required to manage growth is one of the biggest stumbling blocks entrepreneurs face. “To intentionally over simplify it, you want to figure out the most efficient and effective way to rapidly attract and close new clients while being able to serve and delight them at the lowest possible cost,” he says.
“Another mistake is taking on too much debt in the name of growth. We are all mesmerized by VC backed start-ups that put out press about their massive growth. You do not see how much cash they are burning through and that most of these companies have net losses that are growing as fast (or faster) than their revenue growth. Again, protect your profit margins. That is your growth fuel and protection against shocks in the economy.”
3. Growth for the sake of growth can actually kill your business
Before you embark on your growth journey, understand that growth, without sufficient structural foundations, can often lead to a business collapsing. “Some scale has the opposite of economies of scale, and actually becomes more expensive as the business becomes more complex,” says Allon. “It’s important to restructure the model as the business grows to ensure the highest possibility of economies of scale.”
Howard warns that a business structured to lose money as it grows is a poorly structured business. “Making the switch back to strong profitability after a growth phase is difficult to pull off,” he says. “Yes, we all know Amazon.com eventually did it. You are not Amazon.com. Growing with a net loss is a straight road to the business graveyard.”
Rich disagrees with the notion that growth in and of itself will lead to death. He believes that growth is, generally speaking, healthy. “I’ve seen businesses grow too quickly and not know how to deal with it, and I’ve seen businesses that out-grow the maturity of their management teams and get strangled by the firm hold the management team try to keep,” he says, but for Rich, this is the product of a business ill-prepared for growth, rather than a product of the growth itself.
“This is why slow is often better, as opposed to scale,” he says. “I remember when my son was young, and I was still his hero. I couldn’t imagine him shouting at me the way I did to my folks as a teenager – I’d be destroyed. So, I asked my dad about it, he smiled and said, don’t worry kiddo, they ease you into it, it all happens over time. By the time they start screaming, you’re ready. That’s true too for business growth. Most entrepreneurs are running their businesses as a real-time business school. You can’t always rush that education.”
Allon: One top tip for business owners on scale is to remain strategic by knowing what you want to create and by ensuring a healthy balance of capital resources, sufficient people skills and the appropriate support systems.
Howard: Famed business owner Ricardo Semler said “Only two things grow for the sake of growth: Businesses and tumors.” Get crystal clear on why you want to grow. Once you do, find your balance between accelerating new business and the cost to manage that business.Scaling, like a scale, needs balance
Rich: Stop thinking about scale, and start thinking about solving an important problem that world has, even (especially) if they don’t know it yet. It the problem is real, and big enough, you will have a scale-able business.
See Allon Raiz, Rich Mulholland and Howard Mann live at the first Secrets of Scale event, which will be taking place at the MESH Club in Rosebank on Thursday, 24 May. Buy your tickets online here: www.qkt.io/secretsofscale
Why Customers Don’t Respond To Disruption
You’ve got chatbots running your customer service, interactive screens across your stores and you’ve just appointed a chief digital officer. Why aren’t you seeing sales going through the roof?
PwC partner Quinton Pienaar says there could be many reasons for this. But the short answer is probably that in your understandable rush to stay relevant and keep up with the latest technology trends and developments, you lost sight of your number one priority. You’re just not that into your customers – and they know it.
It’s fairly easy to get dazzled by the array of technologies out there. But the trap that you’ve got to guard against is that you start seeing the world through a technology lens, rather than a customer one. Remember, technology is a tool, not an outcome. It’s the means to the end, not the end itself.
That’s not to say you shouldn’t be transforming your business digitally. You absolutely should. But there’s a big difference between investing in technology to keep up with the Joneses, and investing in technology that’s going to drive specific business outcomes and improve the customer experience.
Related: Reimagine The Use Of Technology
In fact, it would be downright dangerous to ignore the game-changing benefits that the current wave of emerging technologies brings to the table. To understand what they can do for your business, you have to know what they are. We at PwC talk about the ‘essential eight’:
- The Internet of Things (IoT) and Artificial Intelligence (AI) are the building blocks for the next generation of digital work.
- Robotics, drones, and 3-D printing are all about machines that extend the reach of computing power into the material world.
- Augmented reality (AR) and virtual reality (VR) merge the physical and digital realms, and offer incredible advances in customer experience.
- Blockchain rethinks our approach to commercial transactions by allowing participants to exchange value, and verify ownership of something, without a third party.
Some of these technologies are verging on science fiction. So how do we use them in a way that supports customer obsession? The starting point of any successful customer transformation is a customer-focused design that brings together three essential elements – business strategy, customer experience and technology – into a coherent, fully-fledged digital strategy.
In other words, today’s most successful companies have a strategy that is focused around a simple and regularly-updated list of priorities. They incorporate the new generation of technologies like IoT, blockchain and AI. But they keep their people, and their customers at the core of their business by designing strategies that directly address customers’ underlying needs and desired outcomes.
This sounds dead obvious. But what we find is that many companies we talk to are focused on growing their revenues, or making improvements to their products and services, rather than creating better customer experiences. Or they have the strategy, but are battling to execute it effectively.
Of course, to underpin this customer transformation journey, you’re going to need some data and the foundational technologies on which today’s innovations depend – data mining and analytics, mobile, and cloud. You may also need to rethink your processes to manage, enrich and maintain data, and operationalise it throughout your business.
So you have all of that in place? Good. Now stop. Breathe. Ask yourself whether your technology and data are truly supporting an unwavering focus on the customer. Because if you take one message from this article, let it be this: in today’s marketplace, putting your customer at the centre of your business is imperative to driving growth and profitability, winning market share and unlocking the value of your technology investments.
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