- Company: Shopstar
- Players: Jens Herf
- Est: 2013
- Contact: +27 (0)21 424 1579
- Visit: www.shopstar.co.za
South Africans are waking up to the joy of online shopping. In 2013 alone, the industry made up R4,2 billion of South Africa’s GDP. At the same time, our big cities are seeing an influx of small entrepreneurs peddling food, fashion, jewellery, art and design, turning revitalised urban spaces into hipster heaven.
That’s what got web developer Jens Herf thinking. There had to be a place for a home-grown e-commerce platform to allow anyone to create and manage their own online shop with minimal effort.
He launched Shopstar in September last year and, after a slow start, it now has 1 200 registered shops that have sold 20 000 items totalling R5 million in transactions, and it’s growing by 30% every month.
“Most of our clients employ three to four people and our goal is to help them streamline their operations through e-commerce, make more sales, and employ more people,” says Herf. “To get that right, we are demystifying e-commerce for them.”
A three-pronged method
Herf’s approach was to go to market quickly. He designed a ‘minimum viable product’ (MVP), an agile technique in which a website is developed with just enough features to satisfy early adopters.
The final set of features is only designed and developed after considering feedback from the product’s initial users, making the product more user-friendly and tailored to market needs. It also meant the business was developing its final product.
He also partnered with a logistics company that gives Shopstar preferential rates which are passed onto his clients, sorting out one of the biggest headaches for small online retailers – product delivery.
Next, he had to find clients who would use the platform to trade. To get that right, he had to educate them. He ran lots of e-commerce courses and events with organisations like the Cape Craft and Design Institute, bringing in specialists to inform people about the benefits of ecommerce. That was how the traction started.
Shopstar’s first client was jewellery store Dear Rae, which grew its social media ‘likes’ from 200 to 9 000 after signing up, and upped its employees from two to six.
“That shows you what e-commerce can do, when it’s more than just a technology solution,” he says. “Our product goes beyond web hosting and offers the extra services that are essential to running an online business, like marketing and building communities. An e-commerce platform is not about writing code – it’s about learning how to sell online.”
Herf loves his job, adding that e-commerce for SMEs is a huge untapped market in South Africa. “These small businesses are the ones that will continue to generate employment for people and they are selling beautifully crafted locally made merchandise. We want to help put them on the map.”
Next, he wants to target traders who sell their goods at the Neighbor Goods Markets, at The Old Biscuit Mill in Cape Town and in Braamfontein, giving them the opportunity to sell a lot more outside of market days.
When less is more
Don’t overbuild a product before releasing it. Many entrepreneurs tend to overbuild their first product release.
They want a compelling product, and they don’t want to give competitors a chance to leap-frog them. But overbuilding doesn’t guarantee that customers will want your product. It also delays potential failure rather than assessing and overcoming it.
Creating an MVP will:
- Bring focus to the product’s core value proposition and efficiency to the process
- Reduce rework by lowering the risk of building unwanted features
- Create relationships with customers as soon as possible
- Bring focus to the most critical business functions.
Your Questions Answered With Alan Knott-Craig
Which comes first, customers or revenue? To make revenue, you need customers. Here’s how you build a business that people will care about.
How can I start a small Internet service provider ISP business? — Tonderai
This is similar to the hoary chestnut, “How can I take over the world?” The answer is the same. Sit at the knee of a master for two years (at least) and learn the game. When you have a sufficient network of contacts, and understanding of the business, head off on your own. How do you find a ‘master’? Identify an ISP that appeals to you. Get your foot in the door somehow, even if it’s just making coffee. Work your way to as close to the CEO’s door as possible by continuously over-delivering. Learn like a sponge.
The possible alternative to ‘find knee of master’ is to find a technical guy with zero sales inclination. Make him your partner. You become the front office (sales — find customers). He becomes your back office (tech — product delivery). If you can’t find a master or a tech partner, you can’t start an ISP.
How do I find a co-founder? How do I find a development team? — Kirsten
For a technical co-founder, Tinder is best. Jokes. In fact, Tinder is the last place on earth to find a technical co-founder. Rather try family and friends. Conferences. University. Milk your networks by letting everyone know that you’re looking for a technical co-founder. Failing that, you must hire a development team.
The days of compensating software developers with equity in lieu of cash are long gone. Absent a technical co-founder, there is only one way to develop software: Pay for it. How do you find the right dev-house?
Word of mouth is best. The rules of thumb are:
- Maximum project duration = three months.
- Scope it once. Don’t change the scope.
- Keep it simple.
For your first iteration, it usually makes sense to go with a young and relatively inexperienced crew (try www.avochoc.com). Yes, the product will not be future-proof, but your first version need not be future-proof. You just need something to start signing up customers and getting market feedback.
If you get traction, then you can start worrying about scalability and consider engaging with more experienced (and expensive) dev-houses.
I have invented a hamburger roll that ensures the patty and toppings cannot escape. Would you suggest I patent it? — Albert
Interesting idea. From the photos, it seems your solution is a variation of a pita bread. It may be worthwhile reading Zero to One by Peter Thiel.
He argues that consumers will always resist change, even change that is very obviously good for them, ie: non-leaking hamburger rolls. The only way to introduce innovation into an established market is if it represents a minimum of 10x improvement over the status quo. Only such a quantum improvement will induce people to change behaviour.
Although undoubtedly a big improvement, I’m not sure the non-leaking hamburger roll qualifies as 10x innovation. And so it probably will not succeed in the market place.
Before patenting, I suggest you try sell some rolls to establish whether you can get traction and prove revenue potential.
I’d like to launch an app with an advertising revenue model. What do you think? — Mvelo
I’m sorry to be the bearer of bad news, but advertising is an insufficient revenue model in South Africa. You need to figure out another way to make money. Most times, the paths to non-advertising revenue streams only reveal themselves once you have users.
You should work on the assumption that it will take you at least two years to get sufficient traction, therefore you need to have two years’ worth of runway before plunging into your entrepreneurial adventure. In those two years, you should be growing your users as much as possible.
The size of your user base will determine your negotiating power with potential investors and/or customers, and will determine the odds of success in finding a non-advertising revenue stream.
Okay, forget advertising. I’m going to charge my users a monthly subscription of R20. — Mvelo
I realise that it’s a chicken and egg situation, but it’s very hard to find backing until you have proof of your theory working in the real world. On other hand, it’s hard to get proof without first finding backing. That’s the entrepreneurial quandary.
Generally speaking, the egg comes before the chicken. The egg is users. The chicken is revenue. Before you can test your revenue theories, you need users. Refer to previous answer.
Read ‘Be A Hero’ today
How The Black Umbrellas Programme Can Boost Your Local Black Business
Going it alone and succeeding isn’t unheard of in entrepreneurial circles – but getting the right backing can accelerate your success. South African SMEs have a ‘big brother’ in Black Umbrellas, explains CEO Seapei Mafoyane.
Going it alone and succeeding isn’t unheard of in entrepreneurial circles – but getting the right backing can accelerate your success. South African SMEs have a ‘big brother’ in Black Umbrellas, explains CEO Seapei Mafoyane.
The networks that the programme has are extensive. Along with mentorship, when these building blocks come together, they do something really majestic for the outlook of SMEs.
“The perception of SMEs in corporate South Africa is that they’re risky, unreliable and incompetent,” says Seapei. This results in a lack of opportunities for SMEs because large corporates still view them as potentially risky.
Joining Black Umbrellas offers the following:
Belonging to a group of people who are going through the same challenges that they are. I think it’s extremely encouraging to find people who understand the challenges in the environment you’re going through.
2. Entrepreneurial spirit
You find businesses in different sectors and at different maturity levels in their business lifecycle. It’s very encouraging for someone starting out in their business to find a more mature business, perhaps in their second or third year, that has banked some projects.
3. Relying on a big brother
Black Umbrellas has been able to build a brand that is recognised for understanding the needs of corporate South Africa and being able to empathise with the requirements and support structures of SMEs. What entrepreneurs look for in the programme is that big brother that helps them weather the storm.
“In a market where there’s quite a visceral relationship between corporate South Africa — where the majority of markets are — and smaller, medium enterprises trying to locate those opportunities, Black Umbrellas really is a meeting place,” says Seapei.
“We provide a marketplace for corporate buyers and SMEs to come together in an environment that is trusted. Some of the opportunities our businesses are able to access would not have been accessible to them if they were flying solo.”
SMEs abound, but it’s not always easy for larger corporations to find, vet and mentor them.
SMEs that join the Black Umbrellas programme have reported reaching levels they never saw themselves achieving outside of the programme.
“It sounds overly-simplistic, but I think the change is tremendous when SMEs join Black Umbrellas,” says Seapei. “It’s quite a thing to watch: A business trying to do this on their own and how their outcomes change when they join the programme.” Black Umbrellas opens them up to a network of help that is as wide as it is deep.
The Power of Partnership
“We’d never be able to do anything we do without relying on collaboration,” emphasizes Seapei. “We rely very heavily on corporate partnerships to avail those opportunities to us and those markets for SMEs to be able to do what they do.”
Black Umbrellas has an extensive network of funders and donors that is expanding continuously and prides itself on being the custodian of SME development in South Africa. She says the programme aims to ensure high-impact SMEs produce incredible results to turn the outlook of the economy around.
One of Black Umbrellas’ longest-standing partnerships is with Transnet:
- Transnet understands the mandate set out by Black Umbrellas and the need to invest in entrepreneurs.
- We’re able to support their supply chain through the development of these dynamic businesses that go on to transform their supply chain and respective communities
- Transnet has an incredible impact on the economy — through just two small incubators in Richard’s Bay and Port Elizabeth, with almost 500 jobs, which is a huge social return on investment.
BECOME A BLACK UMBRELLAS SME
Black Umbrellas’ mandate
Many start-ups don’t make it beyond the first two years because of inadequate planning, lack of support, financial or knowledge resources. Yet the growth of the SME sector in South Africa is vital for economic development of our country and in solving the unemployment crisis.
Black Umbrellas offers a platform through which to develop a business from its start-up phase to full independence. Because the programme addresses the multidimensional components required to develop an emerging business into a sustainable one, entrepreneurs are 100% supported on their business journey, which gives them the leverage to succeed. This support includes access to markets, networks and finance.
Emerging businesses are supported with infrastructure, mentorship and collaboration, to assist their transition from incubation to viable, independent businesses.
For committed, hardworking and dedicated entrepreneurs, this multi-tiered business support programme is an important catalyst in enterprise development.
Related: 10 Dynamic Black Entrepreneurs
Black Umbrellas’ contribution to the economy
- In seven years 1 000 SMEs have achieved a collective turnover of over R2 billion
- The programme has contributed a combined R118 million in taxes back to the fiscus
- Over 10 000 jobs have been created through our SMEs
- R436 million in salaries has been contributed as a result of the programme.
Mistakes to avoid when establishing your SME within a large supply chain
Focus on a specific area where you can add real value. You’ll never be able to maximise every opportunity by trying to be all things to all people, says Seapei. “As an SME you want to find a particular niche that you can fill successfully, thereby maximising your unique value proposition.”
Who should apply?
- Entrepreneurs with a business enterprise at its start-up phase
- The business should be registered with the Companies & Intellectual Property Commission (CIPC), and for small business tax
- You must have the passion to succeed and be willing to work to achieve your business goals
- You must be South African and black according to the BEE definition.
The 2017 National Enterprise Development Awards
Top performing small and medium enterprises have been recognised at the Black Umbrellas National Development Awards. Black Umbrellas established the National Enterprise Development Awards (NEDA) in recognition of the achievements of the entrepreneurs in their business incubation programme. These awards highlight the hard work and dedication required to establish and sustain a successful business that creates jobs and contributes to the economy.
The finalists were selected from regional enterprise development awards ceremonies held at each of the Black Umbrellas incubators across the country. The businesses in the incubators have altogether created and preserved over 10 000 jobs across key economic sectors, which include mining, construction, engineering, security services and project management.
Overall winners were:
- Most Jobs Created: Hula Minerals and Processing
- Best Performing Company: Aquila Projects (PTY) LTD
- Best BU Ambassador: Recycle 1st
- Overall National Winner: Modi Mining
- Incubator of the Year: Johannesburg incubator
- People’s Choice Award Winner: Recycle 1st
Seven Years 1 000 SMEs R2 billion collective turnover
- Contributed a combined R118 million in taxes back to the fiscus
- Created more than 10 000 jobs
- Contributed R436 million in salaries
- Expect more from your ESD Investment.
The Business Of Anxiety In Business: Giving Heroes Permission To Feel Vulnerable
Lesley Williams, Helen During and Marc Feitelberg have all built successful businesses from the ground up. They have also all experienced anxiety and depression along the way. Many entrepreneurs would relate to their stories. But the stigma attached to mental illness has prevented many from speaking out. Is it time for mental health issues to come out of the closet?
Entrepreneurs need a bit of crazy
Lesley Williams is Chief Executive Officer of Tshimologong Digital Precinct in Johannesburg. She had initiated various ventures over the years, including the first Impact Hub in Africa. In 2015, Lesley came to a grinding halt. Her business partner absconded, the business was in flux, her health failed, her social infrastructure dried up and a bus smashed into her car. The individual events caused a perfect storm, triggering burnout and depression. It took five months of soul-searching, counselling and crying before she gradually began to rebuild her life.
“Entrepreneurs sign up for a lifestyle that requires a bit of crazy,” she says.
“We get so caught up in the obsessive task of building our business, taking responsibility for the livelihoods of others. When you play at this level, you’re constantly telling others how awesome you are – you’re the hero in the organisation.” But ultimately, she says, every entrepreneur has the same level of human vulnerability.
What goes up must come down
Integral coach and facilitator Helen During relates to this. Her aromatherapy business was a nine-year overnight success, selling products around the world. “As an entrepreneur you’re driven by a pulse. There’s nothing to stop you, despite the pressure of turning a profit without a cash flow.” In During’s case that pulse manifested physically. “I was so driven, but I would wake up with heart palpitations and fibrillations.” During sold the business when she realised just how much her health was compromised.
Anxiety, she says, is a consequence of a rapidly changing, volatile, uncertain, complex and ambiguous world. “Uncertainty can cause anxiety. For entrepreneurs, our success is defined by our results and our results are defined by our actions. Anxiety is a gentle nudge – a reminder to stop and reflect,” says During.
In the rush of achieving success, she explains, “it’s important to create places of reflection and physical places of nourishment. This is valuable time for strategic planning that will bring about greater certainty and longevity in the business. That’s how you build resilience.”
The trap of the whiz-kid
Williams also talks about resilience as a key component, but with a tone of caution: “Entrepreneurship is a respected club, but it’s also a very isolated existence. All eyes are on you, because what you’re doing is not the norm. A pioneering entrepreneur’s success can be very public. But when the business hits a rocky path it can be difficult to admit to vulnerability or failure. Instead, those feelings are supressed. Some might interpret that as resilience, but I don’t think it’s healthy. I call it the trap of the whiz-kid.”
“The question is, is the individual resilient enough to withstand obstacles? Symptoms of depression and anxiety manifest when resilience is absent,” says Marc Feitelberg, psychologist and founder of the South African College of Applied Psychology (SACAP). He has first-hand experience of dealing with obstacles. Battles on several fronts threatened to destroy his dream of establishing a psychology school, sapping him of all internal and financial resources. But, he says, he was driven by a deep conviction and belief in his vision for the business.
Related: 12 Apps To Help Ease Anxiety
How are you serving your why?
“Entrepreneurship is a risky business. You’re stepping out of your comfort zone, so it’s important to know what are the best conditions to help you achieve your goals.” Feitelberg suggests that internal and external conditions play a part in helping entrepreneurs find the equilibrium to support their appetite for risk.
External conditions relate to the ability to meet financial requirements. Internal conditions, he explains, are the entrepreneur’s mental state. “Depression arises when people aren’t doing what they love – irrespective of whether they’re a corporate employee or an entrepreneur,” says Feitelberg.
During agrees: “It’s so important to know why you’re doing what you’re doing. How are you serving and sustaining that ‘why’?”
Symptoms of depression and anxiety range from lack of sleep to anger outbursts, eating disorders and addictive behaviours. “Depression is not the enemy,” says Feitelberg, “it’s a signal. The trick is to understand what the signal is for. What is triggering the depression?” While the mix of symptoms and triggers differ between individuals, there is a commonality: “Often the individual recognises a need to integrate planned or recent changes into their life, or they are overwhelmed by unexpected changes.” When this happens, it’s important to acknowledge the vulnerability and ask for help from trusted supporters, says Feitelberg.
Exposing the elephants in the room
Many entrepreneurs find that difficult, however. Williams say that “the narrative around depression and anxiety needs to change – they’re the elephants in the room.”
Feitelberg refers to the shame associated with mental health issues. “Society has imposed a culture that requires individuals to manage their emotional issues on their own,” he says.
“Admitting the business is in trouble heightens anxiety because of the sense of shame attached to it. The truth is that it’s okay to be honest about failure or vulnerability; to own the emotion,” adds Williams.
That said, Feitelberg suggests that mental health is becoming less of a taboo subject. He refers to the plethora of articles, podcasts, books and videos that populate mainstream business content. This makes it easier for individuals to see that they are not alone in feeling what they feel and to ask for help.
How can incubators help?
Individual networks and the broader entrepreneurial ecosystem can help too. Incubators, for example, have a role to play in recognising that entrepreneurs are, ultimately, human beings.
“Incubators need to be very intentional in their belief and support,” says Williams. At the same time, she says, it’s also important to establish supportive models that can facilitate exit strategies when required. “Don’t provide oxygen when it’s clear that the business model won’t succeed.” says Williams.
Programming is important too. Events that facilitate interactions beyond the business model or pitching can bring more interpersonal support into the incubator environment.
You are your business
During concludes with a note about self-care through good nutrition, exercise and taking time out for thinking, reflection and planning. “Look at the bigger picture: you are your business. You need to invest in yourself to create the right balance that will sustain the possibilities for it to succeed.”
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