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How First Health Finance Profited From the Hottest Market Trends

First Health Finance pioneered the patient finance industry in South Africa and the results have been stunning. Here’s how co-founders Mark Dowson and Jason Sive saw the gap and took it.

Monique Verduyn

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Vital stats

  • Players: Mark Dowson and Jason Sive
  • Company: First Health Finance
  • Est: 2008
  • Visit: www.fhf.co.za

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In countries like the US, the UK and Australia, the concept of patient finance is successful and hugely popular with people who want to finance the procedures they require at a monthly cost they can afford.

Given that more than 23 million cosmetic surgical and non-surgical procedures were performed worldwide in 2013, according to statistics released by the International Society of Aesthetic Plastic Surgery, it’s a highly lucrative market to target.

Related: Paying Attention To This Will Generate You More Profit

South African entrepreneur Jason Sive thought so too – he spotted a gap in the market for specialist finance to pay the costs of procedures such as breast augmentation, rhinoplasty and liposuction after spending a year working for a specialist finance company in Australia, where he came across patient finance for procedures not covered by medical aid – anything viewed as elective or non-essential surgery.

On his return to South Africa, he rejoined the Transunion Group for three years before meeting up with Mark Dowson, an ex-banker, and the two decided to open a niche finance company focused on a few key areas: Cosmetic and reconstructive surgery, fertility treatment, dental procedures, corrective eye surgery, and a few others. Sive brought consumer finance and risk experience to the table, while Dowson added sales and marketing expertise, as well as a strong financial background.

It was a fantastic idea, but then the recession hit. The team’s focus on educating the market, fine-tuning customer service and being willing to adapt to fluctuating market conditions not only got the company through that tough time, but has also resulted in an exceptionally healthy business that today processes more than R170 million worth of applications for finance every year.

We asked him how he did it.

Why start a finance company?

People often asked us that. It’s true, our competitors were large and well financed, but the consumer lending space was very broad, we focused on a ‘niche play’. When we launched First Health Finance (FHF), we pioneered a new industry in South Africa.

This was a unique type of medical finance. Being first to market with a patient finance product meant that we could build strong relationships with medical practices, and be nimble and ingenious where big financiers could not be.

We were determined to improve on the existing consumer lending solutions by introducing an innovative product while taking advantage of a growing global demand for elective procedures. We service a niche market that continues to expand.

How did you finance the business?

In a start-up finance company, your stock in trade is your cash. You have to ensure the business is adequately capitalised to carry itself into the second phase of the funding process.

Our initial funding was provided by myself, Mark and four other private investors. That capital carried us initially, after which we secured finance from banks and hedge funds, once we had proven our business model.

You launched the business in 2008, as the recession took hold. How did you survive?

The global financial crisis was a terrible time for any business, let alone a start-up. Lenders were being battered. A few years before, an on-lender would have been able to raise funds against an existing debtors’ book, which would have been seen as an asset. By 2008, things had changed radically and that funding mechanism was no longer available.

People thought we were crazy to launch a consumer finance business at the start of a recession. But we had the advantage of starting with a clean slate, with no non-performing loans. We kept the business in holding mode for about two years while the market recovered, we recalculated our projected performance, managed shareholders expectations, and by years three and four, we were in a stronger position.

Related: Adapt or Die: 3 Business Strategies for Thriving in a Recession

What were some of the early business challenges?

Our first task was to educate doctors about our product. We initially faced some scepticism. Doctors were concerned about exposing their patients to credit.

Before we hired a single employee we spent three months on the road, visiting medical practices, and understanding all the concerns that practices may have. We had to convince them that by helping their patients afford the treatment they wanted; they would increase their bottom line

In addition, FHF mitigates risk by paying the doctors directly, which they prefer. It was important that practices provided patients with all payment options, including a finance one.

As a result, we now have a database of more than 2 000 practices covering many types of procedures. Growing that database was critical to our success. We provide practices with a simple-to-implement service that allows patients to spread the cost of a treatment/procedure over time.

It was critical to get the doctors and practice staff on board because they provide the patients with an introduction to our services and add credibility to our business. It’s like a car dealership recommending Wesbank.

By 2010, the company had R130 million in applications, 30% up from 2009. How did you get this right?

Companies often claim that excellent customer service is their top priority, but for us it’s non-negotiable. Our customers are given access to finance for procedures that can be life-changing.

Vanity plays a role, of course, but looking good can often lead to feeling great psychologically. And the reality is that elective procedures are no longer the preserve of the wealthy; we live in an era where it has become very popular.

We’re well positioned to take advantage of that and meet people’s need to feel better about themselves. So in terms of ‘getting it right’, I believe it was a combination of improving our product, further educating the market, and growing with the increased demand. Mark and the entire sales team really understand the market we play in, and have done a great job.

A personalised and caring service is critical in this industry. Procedures such as IVF fertility treatment and breast augmentations are very intimate and people would rather not explain to a bank why they need to borrow money. Not only do our patients apply discreetly online, but the consultants are also trained to deal with patients in these situations and make them feel completely comfortable.

At first, we didn’t recognise that we’re really an extension of the practice, because the patient is referred to us. So our processes have to be absolutely streamlined to take this into account. The patient does not see us as separate from the practice; instead they view us as part of the value chain. We use certain communication tools, such as email ‘get well’ cards to let them know we are thinking about them. That personal touch differentiates us from just another consumer lender.

Related: Market Stifled? Create Your Own

How do you remain competitive when there are so many finance options available to consumers?

The banking industry is bureaucratic and highly regulated. The changes in banking regulations have had a positive impact on our business, as banks have modified their product offering over time.

Today, finance applications take a long time to process, and many are turned down. We are more flexible with our customers because we analyse risk slightly differently, and although sometimes we may not match certain banks on the cost of credit, we beat them on the personal service front. Our payment plans are designed to be conservative and affordable in line with the patient’s disposable income.

The business was unique when we launched it, but now we have one or two smaller competitors. However, the relationships we have developed with practice managers, doctors and receptionists are not easily replicated.

We’ve also kept the business small and nimble with a team of just 16. For workflow and systems, we outsource to the experts and focus on what we do best in-house.

How has the current economic climate impacted the business?

The unsecured lending crisis and irresponsible collections practices have not been good for us, as all consumer lenders have been painted with same brush. However, we are not a micro lender, and our aim is to educate our target market that certain types of credit are healthy.

Local consumers, for example, believe that buying clothes on credit is okay and many people are happy to pay over 24 months for items they will wear for only six. Surely financing a life changing procedure is much ‘healthier’?

What about bad debt?

We do our best to manage risk, and while we have had a few defaulters, our bad debt numbers are lower than those of other consumer lending players, mainly because of the lower risk profile of our customers who borrow money to finance a specific procedure. Credit cards are our biggest competitor in this space.

We have developed our own internal score cards to assess client applications to ensure we do not allow irresponsible lending.

Taking advantage of an evolving industry

We started off thinking we would be completely reliant on the support of medical practices, and that doctors’ buy-in was essential.

Over the last five years, as technology has progressed and the concept of self-service has become a consumer trend, people are doing their own research online and seeking out service providers.

That has worked in our favour and it highlights how important it is to have a great online presence, as well as the back-office system to deal with customer requests. A larger percentage of clients now find us online first, and then approach the doctors we recommend, instead of the other way round.

It also helps that South African medical practices have not had a significant web presence to date, but that too is changing as the medical profession begins to understand the value of an online presence.

Another interesting trend is the transformation of medical practices, from just ‘a practice’, into a business. Doctors see our product as a tool to help increase turnover.

Over the past year we have used the systematic growth of FHF to launch our second, allied business, First Asset Finance, which provides finance to medical practices buying expensive equipment. We think it’s a very exciting space right now, and a great extension to FHF.

Related: 4 Steps to Being Market Focused

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

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What To Look Out For When Seeking A Mentor Or Coach

There is value in choosing a mentor or coach to help you build your business, says Dr John Demartini. Here he offers some sound advice on how to go about doing this so that you benefit from the experience.

Dr John Demartini

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When I was in practice I noticed many doctors attempting to build a business would seek out mentorship from management consultants, from people who have already been down that path. And there’s wisdom from learning from foresight and not learning from trial and error. But there’s a pitfall – I noticed that not everybody is able to do or sustain the actions that these consultants would suggest. Where some would follow and immediately go and succeed, there were others who would sometimes feel self defeated because they couldn’t sustain the actions that the consultants would suggest and recommend.

So a small percentage would excel and do extremely well. But there were those who would spend their money on the coaching and they’d never get anything in return.  So the question is – what made the few excel with the help of a coach, consultant or mentor? And why is it that the majority of them didn’t do as well? And it boils down to how congruent the actions of the coach or consultant are with the values of the person that’s striving to build a business.

I have listened to numerous professional consultants all offering slightly different information about how to build a business. I have taken and learned from all of them. Some of them would suggest things I just couldn’t do – it just wasn’t me – and other things that I could do. And when I couldn’t do something, the coaches and consultants believed I just was not disciplined, not driven. They would imply that I didn’t have the drive… Their material works, but I wasn’t following it.

And those of you who have had the same experience will understand what I’m saying. And you need to know that the reason you don’t do what these coaches suggest is because it’s not aligning to your values. So you are labeled lazy, undisciplined, not driven. You are given these labels instead of realising that you’re self defeating because what they suggest is not congruent with your values. And so you go to different consultants until you finally find the one who matches, whose values are aligned with yours.

So it’s important to not envy and imitate somebody with a drastically different set of values. If you’re seeking a coach or mentor, make sure the coach/mentor has a value system that is closely enough aligned to yours or you will be setting yourself up to fail. Just because somebody is successful doesn’t mean if they are your coach or mentor that they will have the values that will lead you to that same form of success. You need to either shift your values to be able to succeed in their system or you need to find the mentor that aligns more with your values. Otherwise you’ll be beating yourself up thinking there’s something wrong with you when there’s nothing wrong with you. When you find the right mentor, you will take off.

So you either have to change your values to match the objectives of the coach, or change the coach to match the truth of your own values.

So the bottom line is, if you’re going to get mentorship, coaching or consulting from somebody, don’t just select the person because they’re successful. Select them because they’re successful and they have some alignment with your mission and your values. Make sure you select your mentorship and a consultant that is truly valuable to you; don’t live in a fantasy about who you are.

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The Link Between Scaling, Relationship Building And Technology

It is the first solution of its kind in South Africa, this platform supports entrepreneurs to effectively establish legal foundations in their businesses for optimum growth and overall business success.

Nicolene Schoeman-Louw

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The challenges and opportunities of this new world and that the world is more connected than ever. The constraints of distance is no longer applicable and as a result business has little constraining borders. Networking is therefore still a component in key relationship building.

It brings me to my real point – in a world so busy and connected, what we cannot make more of is time and time, unlike any other commodity is invaluable when it comes to forging important relationships and sustaining them. So, if technology can break barriers when it comes to legal cost and time spent on it… why not? Especially when so many have experienced the consequences of not documenting the most important relationships in their business.

The SchoemanLaw SME Self- Service DeskTM is the ideal tool for any member-based organisation wanting to capacitate and empower members. It is an affordable and reliable online solution for start-ups and SMEs, where Users can customise and download their own contracts online and in minutes. It is the first solution of its kind in South Africa, this platform supports entrepreneurs to effectively establish legal foundations in their businesses for optimum growth and overall business success.

The following documents are examples of those available on the platform (currently hosting over 35 documents / agreement types):

  • Confidentiality and Non-Disclosure Agreement (“NDA”)
  • Independent Contractor Agreement
  • JV Agreement
  • MOI and Shareholder’s Agreement
  • T&C’s
  • Supplier Agreement
  • Letter Demanding Payment
  • Various HR Documents and Company Resolutions
  • BBBEE Affidavits (EME and generic QSE)

and many more!

Prices range from R195 and R895 per document if downloaded on a pay- as- you- need- basis or R249 / R495 per month on a subscription basis, this is over 75% less than usual rates if traditionally drafted by an Attorney. What is more, Users have the support of a Law Firm not only having created, but who maintains the platform and supports each User. We even offer customisable solutions. So, there support and a solution for any business regardless of size and industry are on offer.

The platform is easy to use, no prior legal training is required, and Users are supported through help texts, free podcasts, videos and training events. In the case of a legal incident occurring, you can consult with an attorney with the click of a button.

The platform is also ever evolving and completely customer- driven.  Documents are added as and when customers request them. All the documents are also frequently updated to ensure that they align to the latest best practice. There is no need to leave your legal needs unattended ever again!  The SchoemanLaw SME Self- Service DeskTM  therefore ensures that SMEs are no longer invisible and capacitates them to free up time needed to build relationships, grow and scale their businesses.

Empower your business today, go to: https://www.schoemanlaw.co.za/online-legal-services/

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To Survive And Thrive, You Need A Growth Mindset

The business case for a growth mindset is not what you think it is — if you’re serious about success, you need to start believing in yourself.

Rob Jardine

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Any leadership and personal mastery principle that booms in popularity is ripe for misinterpretation. Growth Mindset has been hailed as one of the defining leadership principles of top international companies and is believed to be one of the core skills that will keep individuals future fit in disruptive times.

Despite its popularity and importance, many companies still think a growth mindset is about the profit growth of a business. It’s not. And if you don’t know what it really is and how to apply it, you and your business might not be around to grow at all.

Growth Mindset is about Belief in Ability

Studies that we have done at the NeuroLeadership Institute (NLI) have shown that many businesses still believe that having a growth mindset means keeping eyes towards profits and striving for business growth.

Having a growth mindset is really about the continuous belief that improvement is possible and that failures are opportunities to learn. It is much larger than the objective of improving earnings, although applying a growth mindset makes one more resilient and engaged in times of change, which can only improve earnings overall.

Another study completed at NLI revealed that there are five reasons why businesses are applying a growth mindset to drive business success.

Related: 3 Strategies For Growing Your Online Business Fast

1. Digital Transformation

The most popular reason is to stay agile in the face of technological uncertainty. Digital technologies are continuing to disrupt the way that we do business and a growth mindset is put forward as a priority to ensure businesses thrive through digital disruption.

2. Business Improvement

A growth mindset encourages feedback and continuous improvement and many businesses look to embed this when they are streamlining work streams, teams and business processes.

3. Reinvention

When organisations are pivoting they use a growth mindset in their approach to reinvention of culture, operating model and leadership challenges. The growth mindset principle of seeing challenges as opportunities and not threats has an impact here.

4. Growing up

In an effort to scale a business, organisations see the benefit of applying a growth mindset to navigate the challenges and turmoil that accompanies growth.

5. Performance Management Transformation

Some businesses interview for and reward demonstration of a growth mindset. This means that they value improvement over time as a priority.

Clearly a growth mindset has business success at the core of its value-add to many organisations. It helps businesses be more agile and engaged during change, but how does it work, and how can we cultivate it?

When faced with a challenge we either tackle it head on, hoping for positive results, or we shy away from the challenge, feeling inadequate. In the brain, this is caused by how we view the challenge. If we view it as a threat, our body reacts with duress (negative stress) and we don’t prioritise our best thinking, going into survival mode instead. But if we view it as an opportunity, our body goes into euress (positive stress) and we are energised, our body is able to prioritise its best thinking. This type of behaviour can be categorised into two groups, that of a growth mindset and a fixed mindset.

Psychologists have studied these behavioural traits and found that individuals who believe in their ability to succeed are seen to have a growth mindset, whereas people who give up instantly or constantly harp on the negative aspects of a situation are seen to have a fixed mindset. Therefore, a fixed mindset sees no room for improvement and in return devalues their ability to perform.

A fixed mindset is linked to a belief that our ability is fixed and a growth mindset is linked to the belief that our ability can be grown. The surprising finding here is that our default wiring is wired to that of a fixed mindset.

Related: 10 Ways To Grow Your Business For Entrepreneurial Success

Creating a Growth Mindset

growth-mindset

Researchers have found that to incorporate the growth mindset into organisations, leaders should focus on factors such as transparency, empowerment and development.

With the digital age that we are currently living in and even trying to adapt to daily, organisations need to constantly reinvent, improve and manage performance based on digital transformation. A growth mindset assists in the rapid changes that organisations face even on a digital platform.

For a growth mindset to be established in organisations, management needs to lead the overall process. Thus, there needs to be a shared language. To ensure that there is a shared language, managers should encourage employees to build the right behaviours, and have systems and processes in place that promote a growth mindset throughout the organisation.

This can be done by:

  • Valuing and rewarding progress in others
  • Focusing and highlighting learnings from mistakes and challenges
  • Role modelling this behaviour.

Researchers have shown that a growth mindset can have measured benefit in organisations. An internal survey at a technology company showed that 92% of employees agree that learning is a lifelong exercise and 82% of managers displayed growth mindset behaviours. The growth mindset enhances the quality of an organisation for the greater good of future and current employees.

When calamity strikes in organisations, the growth mindset aids in seeing change not as a threat but rather as an opportunity to improve based on a positive mindset.

Shifting Away from a Fixed Mindset Approach

A fixed mindset hinders progress. For businesses to prosper, there needs to be an attitude of constant learning, even when failure occurs. There are certain things one can do to shift your fixed mindset to a growth mindset.

Firstly, eliminate any thoughts of inadequacy. Your thoughts determine your actions, therefore shift your thinking to that of a “can do” attitude. You need to recognise your potential, understand your abilities and that they can be improved, and know that stressful situations are opportunities to learn and grow, rather being a threat.

The minute you find yourself in a fixed mindset with a negative thought process, talk yourself into remembering your capabilities. Try replacing those negative thoughts with, “I know that I am not excelling in this area, but I am going to learn how to improve and come back stronger than before”.

A growth mindset is a phenomenon that you must constantly think about and instil in your daily life, both on a personal and professional level to see positive results, remembering that you are in a cycle of lifelong learning.

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