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How R1 500 Can Become A R14 Million Business

6 South African entrepreneurs who bootstrapped their business to success.

Entrepreneur

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Mohamed Rasivhetshela

When Mohamed Rasivhetshela launched his micro-lending business, Makanda Finance, he had R1 500 borrowed from a friend (which he paid back within the month), a notebook and a bicycle. Today he runs a sophisticated online lending and investment portal with a turnover of R1,2 million per month.

How did he do it? Simple. He recognised that his community needed access to small loans at a smaller interest rate than local loan sharks (or ‘mashonisas’) offered and that there were other community members who wanted to invest their money and see short-term returns.

His solution brought these two groups together. It was an ingenious solution that required no start-up capital, since his investors provided the capital used for the loans. He then saved his profits until he could start building a sophisticated online platform and move into proper offices, although he still keeps the business as lean as possible.

Read more on Makanda Finance here: Makanda Finance Proves That You Can Start A Business With No Capital

Start small, test your market and gain traction

Nicholas Haralambous

When Nicholas Haralambous launched NicSocks.com he set himself a goal: He gave himself eight weeks to launch a niche online retail store that sold socks, and he wouldn’t spend more than R5 000 doing it.

The website was easy. WordPress and other open-source platforms mean you can set up a website simply and stylishly for less than R500. He then used the remainder of his cash to design, manufacture and stock his first batch of socks, and tapped into his social media channels. He sold 800 pairs of socks in ten days for R99 each. Those profits went into purchasing more stock, and so the business grew.

Today he has rebranded the business to NicHarry, and has five retails stores across Cape Town and Pretoria, and 70% of his sales are in-store, with 30% online. All from R5 000 seed money.

Read more on Nicholas Haralambous here: Kickstart Your Business Through Crowdfunding

Pretend you’re bigger than you are while keeping costs down

Justin Stanford

Justin Stanford, founder of venture capital firm 4Di Capital and the licence holder of ESET South Africa, launched his business from a garage in Cape Town. He had no start-up funds, and created an entire business through digital channels to keep costs down and because he simply couldn’t afford to ship software that was on discs and in packaging. Instead, he offered ESET’s products and support entirely online.

It was a genius move: It kept costs down, and it also allowed his company to seem much bigger than it actually was. If someone called him, he and his one intern employee would swop phones between them to make it seem like calls were being transferred to different departments — when in fact they shared a desk in a garage.

Read more on Justin Stanford here: Justin Stanford: 4Di Group’s Risk-taking, Convention-bucking Lunatic

Get your clients to pay you upfront

Karabo Sepharatla

When Karabo Sepharatla launched his camping butler service, Camping Khapela, he had a piece of advice from Vusi Thembekwayo, a serial entrepreneur and investor, firmly in mind: The best businesses are built around clients who pay you upfront.

With no start-up capital of his own, he used his first client’s upfront payment to purchase all the camping equipment and food he would need for the trip. He made sure he earned nothing on the trip to keep it affordable for his guests, but he walked away with all the equipment he would need to continue offering this unique service: A fully serviced camping experience for the uninitiated camper.

Read more on Karabo Sepharatla here: Customers Will Pay For Amazing Experiences – If You Deliver Explains Karabo Sepharatla

Start small but dream big

Simphiwe Majozi and Sihle Ndlela

Simphiwe Majozi and Sihle Ndlela, co-founders of Majozi Bros Construction, have always dreamt big. Their goal is to become one of South Africa’s biggest construction companies, and they’re funding this vision through their own organic growth.

Starting out as builders who needed almost no start-up capital because they could use client money to buy materials, they saved up enough profits to buy a small property in an up-and-coming area bordering suburbia and a township. They built a house and sold the property for a profit. They then used that profit to build a second property.

In this manner, they moved into a high-end gated community in KwaZulu Natal. Because they couldn’t secure a contract as the official construction company for the development, they purchased a stand and developed it themselves, and then another, and another.

It’s a slow and steady process, but with each development they achieve three things: They prove their abilities, grow their capital (which goes straight back into the business), and get one step closer to their dream.

Read more on Simphiwe Majozi and Sihle Ndlela here: How Majozi Bros Construction Built Their Business, One Brick At A Time

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Launch

3 Actionable Insights To Make Your Investment Pitch Perfect

The best pitches aren’t just short and to the point, they deliver on investor expectations and needs.

Nadine Todd

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sales-pitch

The best pitches aren’t just short and to the point, they deliver on investor expectations and needs. 

1. Confront your product and market flaws from the start

Investors come from business and investment backgrounds. They will recognise the potential dangers in your business model. If you ignore these elements, you’re not addressing key concerns they may have, and how you will protect the business against them.

DO THIS: Look at your business from every angle. Where are your potential weaknesses, and what is your plan to overcome them?

2. Pitch to the right investors

The sectors and mandates that different investors and funds follow dictates the businesses that will interest them. Pitching your business to the wrong investors wastes their time, your time, and potentially damages your brand in the market place — waste the time of too many investors, and the word will spread.

Related: 6 Great Tips For A Successful Shark Tank Pitch

DO THIS: Research the investors and funds you are pitching to thoroughly. This will narrow your focus, and help you develop your pitch deck. It will also help you unpack the areas of the business that you’ve discovered are important to the particular investors you’re pitching to.

3. Don’t follow fads

Investors aren’t interested in ‘flash in the pan’ business ideas. They care about products that stand a chance of long-term success. You might start off selling to a niche audience, but the goal must be to reach a wider audience as the product develops and matures.

DO THIS: Critically evaluate the staying power of your business idea. Is it a product that’s trendy but could lose traction as market fads change, or does it solve a real and enduring need?

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Launch

5 Tips To Get You Ready To Launch That Business Now

Are you dreaming about becoming an entrepreneur, but not sure whether you’re ready to take the plunge? Some of the world’s top entrepreneurs weigh in on what it takes to be a success.

Nadine Todd

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SARA BLAKELY

1. Think out the box

A general rule of thumb is that you should do what you know. Spend time in an industry before launching your business, build up a network and understand your target market and their needs. This is all sound advice, and has been the foundation of many successful start-ups.

However, there is an inherent danger that entrepreneurs should avoid at all costs: Many industries are bound by legacy ideas and systems that are the enemy of disruption and innovation. Entrepreneurs who didn’t know something couldn’t be done are often the ones who find a way to make it happen.

Approach an industry or idea with fresh eyes. Take lessons from other industries. Don’t be limited by your lack of knowledge — go out and learn, even if you’re learning on the fly.

Airbnb, Uber and Netflix are three of the most disruptive businesses in the world today, and they’ve achieved phenomenal success because they didn’t buy into the simple and engrained idea that an accommodation business should own property, a taxi service should own vehicles, or a movie rentals business needed to own DVDs.

If you really want to differentiate, you need to lead, not follow.

“Don’t be intimidated by what you don’t know. That can be your greatest strength and ensure that you do things differently from everyone else.” — Sara Blakely, Spanx founder and self-made billionaire

Related: 9 Answers You Need About Yourself Before Starting Your Own Business

2. Be an open-source person

Have you been delaying launching your own business because you’re not sure if you’re ready? Some of the most successful entrepreneurs have taken the plunge and learnt along the way. Gil Oved and Ran Neu-Ner, founders of The Creative Counsel — South Africa’s biggest advertising agency with an annual turnover of R750 million — followed this simple rule in their start-up days: They always bit off more than they could chew, and then chewed like hell.

Their philosophy was that ‘no’ was never the end of a negotiation, but the beginning of one. This tenacity kept them going, even though they spent their first year barely making ends meet.

Gil and Ran are not alone in their thinking. Robin Olivier, founder of Digicape, a R240 million Apple products and services business, prepared himself for entrepreneurship by putting his hand up for anything and everything that came his way. “I’ve always been like that. I jump in with two feet and figure things out along the way.” For Robin, that’s the only way you learn.

Joshin Raghubar, founder of iKineo and the chairman of Bandwidth Barn and the Cape Innovation and Technology Initiative, began his career working for Ravi Naidoo at African Interactive. At 23, he found himself project managing the African Connection Rally, a massive partnership with the Department of Transport. Why? Because he was always ready to step in, learn something new, offer his opinion and take on any challenge.

Joshin believes that successful entrepreneurs are open-source people who are willing and able to consistently and continuously learn new things. If you’re moving forward every day, you’re already on the path to success.

3. Be significant

Oprah Winfrey

Oprah Winfrey

Start-ups are tough. They are lonely, and they take a lot from you physically, mentally and emotionally. Passion and significance are two key components that will keep you going through your darkest hours. If you can answer why you are doing something, you’ll be able to forge on, even when the challenges ahead seem almost insurmountable.

“If something is important enough, even if the odds are against you, you should still do it,” says Elon Musk, who isn’t letting go of his dream to colonise Mars during his lifetime, despite many challenging tasks ahead of him. The lesson is simple: Whatever you endeavour to accomplish, out of this world or not, do not allow yourself to be deterred by the odds. Bravely forge ahead.

Steve Jobs shared a similar outlook. Before entering into business with Steve Wozniak, he dropped out of college and took time off figuring out what he wanted to do with his life.

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work,” he said. “And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”

If you know you want to be an entrepreneur, but you aren’t sure what you should be doing or haven’t found the right business idea, think about the things that truly matter to you. What problem would you ultimately like to solve? Sometimes you need to build up to it, and start with one thing that will lead you to the next (consider how Musk built the Tesla to fund other parts of his business), but once you’re on the path to significance, nothing will hold you back.

“The key to realising a dream is to focus not on success but on significance — and then even the small steps and little victories along your path will take on greater meaning.” — Oprah Winfrey, self-made billionaire media mogul

Related: 5 Books To Read Before Starting Your Business

4. Look for opportunities in every challenge

lori-greiner-shark-tank-us-investor

Some people see challenges, others see opportunities. The latter are known as entrepreneurs. Some of the most successful businesses have been launched in the midst of recessions. How? Because entrepreneurs aren’t daunted by a challenge. In fact, challenges are great, because they keep the competitive pool smaller.

Vinny Lingham, Shark Tank South Africa investor and serial entrepreneur, says that he would rather have been homeless than not start a company because he didn’t have any finances. He sold his house, rented back a room in his (now former) home, and launched Clicks2Customers, a business that hit the R100 million turnover mark three years later. He didn’t see the challenge; he focused on the opportunity.

You’ll have to keep a close eye on cash flow and find some really smart solutions to real-life problems, but that’s the foundation of a great start-up. It’s all about the lens you see the world through. Are you open to opportunities, or limited by challenges?

“Dear optimist, pessimist, and realist — while you guys were busy arguing about the glass of wine, I drank it! Sincerely, the opportunist!”— Lori Greiner, Shark Tank US investor

5. Failure is a critical element of success

drew-houston-ceo-of-dropbox

Don’t let failure hold you back, or worse yet, keep you from trying. You already know that failure is a part of the business of entrepreneurship, but it’s easier said than done when you’re picking yourself back up after a bad break. Remember that with a shift in your perspective you can transform the stumbles and falls into opportunities to improve yourself and your business offerings. What didn’t work? What did? Keep at it — you only have to get it right once.

Oprah agrees. “At some point, you are bound to stumble, because if you’re constantly doing what we do, raising the bar; if you’re constantly pushing yourself higher, higher, the law of averages — not to mention the Myth of Icarus — predicts that you will at some point fall. And when you do I want you to know this, remember this: There is no such thing as failure. Failure is just life trying to move us in another direction.”

And what about Richard Branson? The billionaire mogul has launched more than 200 successful ventures, but he’s also had some dismal failures, including Virgin Cola and Virgin Brides. If he didn’t ‘screw it, just do it’ in the face of failure, where might he be today?

Related: 10 SA Entrepreneurs On What They Wish They’d Known Before Starting Their Businesses

Instead, he believes in getting back up and pushing on. “The main thing is, if you have an idea for business, as I say, screw it, just do it. Give it a go. You may fall flat on your face, but you pick yourself up and keep trying until you succeed,” he says.

There’s no such thing as a successful entrepreneur who didn’t fail while they found their success. But, there are many, many entrepreneurs who haven’t found success because they’ve been too afraid to fail. Which will you be?

“Don’t worry about failure. You only have to be right once.” — Drew Houston, CEO of Dropbox

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Launch

The 3 Blueprints For Starting A Business

There are three templates to starting a business. Get this first step right, and success will fall into place.

Douglas Kruger

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learning-from-start-up-business-experience

“One reason that America continues to do so well as a market,” an economist explained to the audience at a recent conference, “is that they are still leading the charge to do new things. In addition to pioneering new products, they are still pushing the boundaries of frontiers like space-travel and technology. They don’t merely copy the products made in other countries. They make and do entirely new things, and that matters.

“By contrast,” he explained, “many of the older economies, like Europe, are just ‘kicking the can down the road’. They don’t really have a vision for the future. They’re just trying to maintain what is, to survive a little longer.”

Grow or shrink

Companies, countries and entire economies are all broadly following one of these two approaches. One is the bold, growth option, while the other is only about maintaining what already exists. The trouble with maintaining, however, is that, in a dynamic system, you tend to be either growing or shrinking. A dynamic system rarely tolerates anything simply standing still. To stand still is, often, to shrink.

Related: The Hard Truth About Launching A Business

Once in a lifetime chance

Your company, team or organisation’s founding moment is a once-in-a-lifetime opportunity to get this one right. Are you simply going to kick the can down the road? Or do you want to build spaceships? Are you going to be a soulless ‘also played’? Or would you prefer to do something new and meaningful? Mission matters greatly.

In Exponential Organizations: Why New Organizations are Ten Times Better, Faster, and Cheaper than Yours (and what to do about it), Salim Ismail calls it a ‘Massive Transformative Purpose’. The stronger your purpose, the more you attract tribes of people, both as aspiring employees and as a supporting community of customers.

This is not to say that you are obliged to invent something brand new and original. A good deal of research is showing that pioneers in a new industry do not tend to do as well, or last as long, as the ‘settlers’ who come after them. One reason is that the pioneers have to make all the initial mistakes. The settlers get to enjoy greater leverage, by observing what has already worked or failed, then capitalising on that learning.

The idea of founding a company that thrives on meaning has more to do with how meaningful the work is, and how much of a drive to achieve goals is built into your corporation.

Elon Musk’s SpaceX is certainly not the pioneering organisation in space-travel. We have left earth’s atmosphere before, decades ago. In that sense, SpaceX is a settler, and not a pioneer. That said, it is nevertheless a strongly goal-oriented, purpose-driven organisation. You don’t have to invent something entirely new to create a mission-driven company.

The Israeli Defense Forces is highly mission-driven, because it has to be. Pixar is mission driven, because it chooses to be, and because it believes in magic.

Being mission-driven, from the top to the bottom of an organisation, changes the energy. It converts ‘mere work’ into ‘shared purpose’.

Which blueprint?

blueprint

Sociologist James Baron and his group of experts led a study in the mid-90s looking at how people founded their companies, across a wide spectrum of industries, including hardware, software, medical devices, research and manufacturing.

The study asked about their original blueprints. What organisational models did they have in mind when they started?

Baron determined that there were three templates for starting a business. You might start your company based on:

  1. A Professional blueprint, in which you hire people with a preference for specific skills (prior to its fall from grace, Kodak hired people based on specific educational qualifications)
  2. A Star blueprint, in which you hire ‘superstars’ based on future potential, placing a premium on choosing or poaching the brightest hires. You look for raw potential, not current knowledge
  3. A Commitment blueprint, in which you believe that skills are nice, but cultural fit and buy-in to shared values is more important. You build strong bonds to the company. Employees tend to be passionate about the mission.

Baron and his experts tracked the firms through the 1990s and into the next decade. Those that used the Commitment blueprint, which prioritises a shared sense of mission and values, greatly outperformed the others. The failure rate for firms with a Commitment blueprint was zero.

Failure rates were substantial for the Star blueprint, and more than three times worse for the Professional blueprint. It seems these approaches don’t keep people going in the same way that buy-in to a mission does.

Nevertheless, the Professional blueprint, which prioritises the specific skills on people’s CVs, tended to be the most common.

There were two other rare blueprints: Autocracies and bureaucracies, focusing on detailed rules and procedures. These blueprints were the most likely to fail, and autocratic was most likely to fail out of the two. This is an important point: Rules-based organisations and dictatorships, according to this finding, are so likely to fail that investing in them is not worthwhile. But where a culture of people is part of a mission, they are most likely to succeed. Translation: Autocracy rarely ever works, and systems of intense rules and guidelines work slightly less badly.

Rules and dictatorships = likely to fail.

Mission-driven culture = 100% success rate.

Most real-world autocrats would probably agree with this finding, if they heard it. Then they would continue to run their business as autocrats, because, they’d say, “My situation is different, I happen to be right, and people should do what I say.”

When you’re an autocrat, it’s hard to know that you’re an autocrat. When you create your business to follow a mission from the word go, and you allow a degree of genuine democracy in which others can outvote you for the good of the mission, you instil the possibility of overcoming this blind spot, sometimes in spite of yourself.

Related: Bongiwe Mhlongo Knows Launching a Business Means Starting What What You’ve Got Now

But wait

Now, here’s the kicker: The Commitment culture is extremely effective in starting an organisation and ensuring its initial survival. But over time, the same study found, it is not the best performer.

The challenge is that when organisations mature, encouraging layer upon layer of like-minded people tends to discourage innovation and original thinking. Too much shared value = groupthink.

So, what’s our total moral? In a best-case scenario, we need to start with a common mission and committed people, and focus on growing. Once we’ve matured, we need to make a point of bringing in diverse thought, in order to avoid too much homogeneous thinking and yes-mannery.

In Originals: How Non-Conformists Move the World, Adam Grant shows how these findings map perfectly onto the rise and fall of Polaroid. Like-mindedness worked well to get the brand going initially, but then, ultimately, the same like-mindedness prevented them from learning, growing, changing and adapting in a volatile market.

Like the IDF, they had a strong sense of shared purpose. But unlike the IDF, they were incapable of a belief system that said ‘the only tradition is that we have no traditions’. They were not a learning and growing organisation.

The more a company develops a culture, the more it will tend to hire for that culture, and the more resistant its own people will be to new ideas or contrary views.

So what if…?

What if you decided to be an organisation on an important mission, rather than merely a group of people kicking the can down the road?

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