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How Lize Fouche Started with Nothing but Blood, Sweat, and Fears

Lize Fouche is the founder of Number 1 Foods with product ranges Nutristart, Hemel&Hawer and Chunky Muesli available in Pick n Pays nationwide. But did you know this venture, launched a little over two years ago, was prompted by hard times, with a few thousand rand and a kitchen oven? Here are her start-up success lessons.

Tracy Lee Nicol

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The Start-Up Story

My career before entrepreneurship was under new product development in Woolworths. Then in 2006 I left to run my own luxury guest house in Summerstrand, Port Elizabeth.

I would make our own muesli using healthy ingredients and guests loved it so much they wanted to buy it. Cadbury’s was also a regular guest and they wanted to buy my recipe. I was very flattered but didn’t act on the idea, focusing instead on the guest house and other entrepreneurial projects.

By May 2013 my husband and I were struggling to make ends meet, we shared his car, and I was now raising a baby girl. I had to do something to bring in extra income. That’s when my attention returned to muesli.

The Lean Approach into Launch

March 2013. With almost no money I couldn’t buy large quantities of ingredients so I used the kitchen oven, lived very sparingly and started small by selling muesli to guests, friends and family.

Related: Turning a Perfect Formula on its Head: The Lean Start-Up 

As my daughter grew, it became harder to care for her and watch over roasting muesli, so we took our last few thousand rand and tried to build a steel roasting drum. It didn’t work.

Undeterred I approached a local engineer to help design a muesli roaster and he told me about a nearby chicory roasting factory. It turned out they had extra capacity, so I negotiated to rent one of their roasters and pay after sales.

Turning Hiccups into Wins

April – June 2013. The first few batches in the bigger roaster were a complete flop, but there was a positive outcome – we had inadvertently created a muesli pop that would later become a popular product in our range. With a few tries we then mastered roasting muesli in the bigger oven.

With increased production, I approached local hotels, but learnt that the larger chains have strict regulations. The answer was smaller chains and independent hotels. I had to be really persistent to get meetings with chefs, but once they tried it they realised the quality and cost worked out to be a huge convenience for them!

Setting Audacious Goals

June – July 2013. While I was giving samples and building clients around Port Elizabeth, I signed up for the four-day Kirkwood Wildsfees, a large annual expo. That gave me just two months to get a professional logo, packaging and produce enough to sell there.

I approached my local SEDA and, impressed with my business plan and numbers, they agreed to assist with packaging and design which only arrived three days before the expo. I poured everything into Wildsfees. I’d played with numbers gestimating visitors and likelihood of sales and came to 1,2 tonnes of muesli that I financed with previous sales. I recruited two of my friends to help and we camped to save money.

We got people sampling and we didn’t just sell out everything; we had orders for another 800kgs! We had to start roasting the minute we got back, and I used some of the profits to buy equipment to help grow the business further.

Getting into Retail

August – October 2013. The Wildsfees really excited and motivated me, which is why I turned to retail. I approached some Eastern Cape grocery stores and began stocking there, while I continued attending national festivals to build brand awareness.

I wanted to get into national retailers but discovered we didn’t have the necessary food and ISO accreditations, so I hired a consultant who helped me implement the necessary systems in my business to get the right accreditations.

Making Big, Bold Moves

Unfortunately the chicory factory didn’t have the needed accreditations, so we had to find a new plan. I applied for R30 million in IDC funding but it was rejected.

In hindsight it was a great learning curve that forced me to gain a better understanding of my business, that would help with future funding applications, plus I don’t think we were ready back then.

With research we learnt about contract manufacturing, which meant we rented space in an existing manufacturing plant, and could therefore grow without huge debt. We found a facility in Joburg and customised it with some of our machines.

By October 2013 we were roasting and distributing from Joburg and we had all the right accreditations to approach Pick n Pay. There are horror stories about buyers steam-rolling entrepreneurs, but we found them eager to help and supportive of our business. The negotiations to supply Pick n Pay increased our production considerably.

Related: This Mental Trick Can Help You Bust Through Obstacles on the Way to a Goal

The Right Time to ExpandNutristart-cereal

November – December 2013. Early in the business I got the Nielsen Report for the cereal market and saw big growth for functional cereal – food that’s nutritious, not just filling. Now, with a steady income we knew the time was right to break into the functional cereal market and develop Nutristart, but this would require a lot of finance.

SEDA put us on to Anglo Zimele, and we approached them and the Eastern Cape Development Corporation (ECDC) for finance.

Anglo’s fund manager told us what documents we’d need to submit with our application and we realised we didn’t even have a tax clearance certificate; I was just a one woman show at festivals. I went into overdrive working for weeks and through the nights so I could compile everything accurately.

Both Anglo and ECDC could see the business’s potential and we landed R4,8 million from Anglo Zimele, which went into six months of product development and testing, and a further R4,9 million from ECDC for launching and financing key staff. Through our contract manufacturer we found and employed a great general manager to allow me to focus on product development and relationship building.

We’re now looking into export deals to the US, and I’ve developed recipes with another company and supply them with ingredients for their products which helps with revenue streams and mentorship.

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Top lessons for aspiring entrepreneurs

  • Start small
  • Learn as you go
  • Just keep trying
  • Negotiate your butt off
  • Get yourself out there
  • Set big hairy audacious goals
  • Don’t be afraid to ask for help

Don’t be defeated when you get rejected

  • Get busy partnering
  • Keep doing research
  • Be prepared
  • Focus! Chase one rabbit at a time.

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What Lize Did Right

Lize is not your typical entrepreneur who spent years dreaming about being her own boss and running her own business, instead she became an entrepreneur through circumstances. The advantage of this was that she wasn’t chasing a ‘blue sky’ dream – she had to make this work!

The first thing that she did right was returning to basics. She used her previous experience and made that her business focus. She knew that muesli was popular, there was a market demand for it and there had been a market pull with Cadbury’s requesting the recipe. She also kept her inputs minimal, her process lean and cultivated expenses throughout her operating process.

Lize did not allow setbacks or disappointments to deter her business focus. Remaining positive helped to overcome obstacles and keep her business moving forward. Lize also promoted her business in clever and visible ways so that she would reach her target market effectively.

One of the greatest limitations that most entrepreneurs face is their inability to ask for help. Or their unwillingness to share a piece of their pie by engaging in partnerships. Lize saw the positive opportunities which could result from getting help and from linking her strengths with others. The outcome proved constructive.

Finally, Lize paced her company growth conservatively and intelligently. She took logical steps to grow in the right direction and when the time was right.

Related: 10 Truths That Sustain Successful Entrepreneurs

The bottom line is that Lize kept level-headed about her business. She did not allow her ego or emotions to derail her focus, and most importantly, she knew there was demand for her product, which was something that she was familiar with and able to work with comfortably.

Tracy-Lee Nicol is an experienced business writer and magazine editor. She was awarded a Masters degree with distinction from Rhodes university in 2010, and in the time since has honed her business acumen and writing skills profiling some of South Africa's most successful entrepreneurs, CEOs, franchisees and franchisors.Find her on Google+.

Company Posts

Register A Company In South Africa

With over 120 Start-up Services, Company Partners is the perfect Partner for Company, Tender and Contract compliance.

Company Partners

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Company Partners is the leading Company Registration Service Provider in South Africa, offering a One-Stop-Shop for all the Company Registration and Tender Compliance Documents.

With over 120 Start-up Services, Company Partners is the perfect Partner for Company, Tender and Contract compliance.

Established in 2006, Company Partners guarantees that the services they offer meet the standards of the best in the industry. Over 30 full-time Consultants offer services and standards of the highest quality.

Company Registration Benefits

Your Company Structure is the first consideration you need to make when you want to register a new Company at the CIPC. The preferred choice of a legal entity for most Businesses is a Pty Company.

Related: Business Model Design – Picking The Business Model That Works For You

Here’s why:

  1. You protect your personal life and assets from your business when you register a company. If one runs a business, it is necessary to operate in a safe legal structure where your business assets and risks are separated from your personal ones.
  2. You look more professional when you operate under a registered company name. If you want to obtain a large contract or a tender, it appears more professional to trade in a Pty Company capacity than in your own name.
  3. Most Suppliers and Government Departments require businesses to be registered as a Company to apply for their Tenders and Contracts.

How to Register a Company

Step 1: Complete and submit the easy online sign-up form here.

Step 2: Your dedicated Consultant will call you to assist you with any questions you may have.

Step 3: Email your ID and easy supported documents – which your Consultant will explain.

Step 4: Within a few days you will receive your brand new Company ready to use for Tenders and Contracts, via email. You can contact your Consultant at any time on a toll-free number.

Related: New Fund For Small Businesses To Be Developed

Need a Company fast? Perhaps consider a Shelf Company

Company Partners offer a variety of Shelf Company Options to suit your needs, including 2016- year Registration Number Shelf Companies. Within 24 hours after purchase, you will receive the registered Shelf Company.

You can start using your Company Registration Number and Bank Account (for income) immediately.

Each Shelf Company includes a 2016 Year Registration Number, Free Share Certificates, a Free ‘Tax Number’ and a Free ‘Official BEE Affidavit’.

You can also make use of a Nedbank Business Bank Account that’s active for your Shelf Company.

Luckily, getting your own Shelf Company is easy in terms of compliance. All that’s required is that you are at least 18 years of age, an ID document / Passport and a South African Business Address.

Why use Company Partners to Register a Company?

Fast timeframes: Your Company will be registered fast and effectively online. Your documentation is set-up in less than 24 hours, after which CIPC will process it.

Simple requirements: The only requirement for Company Registration is an ID / Passport. Everything gets done online, so you can be based anywhere in South Africa or the World.

Dedicated Consultant: Your own dedicated professional Consultant takes care of the entire process – he or she is available on his / her email and also on a toll-free number.

Professional Service: With years of experience of representing our Clients in Government, the entire process runs smoothly over the Internet. No lost documents and no frustration.

Company Partners completes all necessary applications correctly and reviews all the paperwork for you. You simply have to wait for your company documents via e-mail, confirming when you may start trading using your registration detail.

Related: Beauty Of Failure: The Art Of Embracing Rejection

After Company Registration

Any new Business needs guidance to prepare for Tenders and Contracts. After Company Partners gets you registered for your Company, Company Partners can assist you through the entire Company start-up process (optional).

That means they will ensure you have everything you need for a Tender or Contract application like a new PTY Company, BEE, Tax Clearance, VAT Registration, Logo Design, Website, Business Plan, COID, Letter of Good Standing, NHBRC, Accounting, Payroll and more.

Get Started

To start, just complete and submit the easy application form here and a friendly Consultant will contact you. Alternatively contact Company Partners toll-free on 0800 007 269 (toll-free from landlines and cell phones).

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Start-up Advice

Alan Knott-Craig Answers Your Questions On Money And Partners

From starting the right business, to managing business partners and finding your magic number, there is a secret to happiness.

Alan Knott-Craig

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If I get rich will I be happy? — JC Lately

Does money equal happiness? Mostly, yes. Research in the US shows that your happiness is proportionate to your earnings up until you earn $80 000 per annum. Thereafter, incremental income gains have a negligible effect on your happiness.

In other words: More money will make you happy as long as you’re poor. Once you break out of poverty and enter a comfortable middle-class existence, more money will not make you happier.

These are the top three for old folks:

  • I wish I’d spent more time with family.
  • I wish I’d taken more risks.
  • I wish I’d travelled more.

Therein lies the secret to happiness. Spend time with your family. Take risks. Travel.

But first, make money. Don’t do any of the above until you’re making enough money not be stressed about money.

Related: Your Questions Answered With Alan Knott-Craig

What is the magic number? — Mushti

The magic number is the amount of money you need to not worry about money ever again. If you don’t need toys like Ferraris, yachts and jets, the magic number is R130 million. Here’s the math: R130 million will earn R9,1 million in interest annually (assuming 7% interest). After tax that is R5,46 million.

Assuming you need 50% to maintain a good lifestyle, that leaves approximately R2,7 million for reinvestment, which is enough to keep your capital amount in touch with inflation for 50 years. The balance of R2,7 million (after tax) is for your living costs. In South Africa, R2,7 million will afford you a lifestyle that allows you to send your kids to a great school and university, to travel overseas a couple of times a year, and to live in a comfortable house.

Over time your living costs (and inflation) will eat into your capital amount. After 50 years you should be down to nil, assuming you earn zero other income in that time.

In 50 years, you will probably be dead. If you’re not dead, your kids will be able to support you (because they love you and they have a great university education).

I am the sole director of a company (the others still have full-time jobs and don’t want to be conflicted) and there is pro-rata shareholding based on our initial shareholder loans. However, I am putting in most of the hard work, together with one of the other actuaries. How best do I manage the director/shareholder dynamic? I obviously want to make as much progress as possible but there are times when I need the input from the others (and their responses aren’t always as quick as I would like). — Mike

If you have any perception of unfairness regarding effort/risk vs reward, deal with it NOW! You can’t do so later. The best approach is honesty. Call your partners together. Explain your thinking. Perhaps argue for 25% ‘sweat equity’ for yourself. Everyone dilutes accordingly. Ideally cut a deal whereby you have an option to pay back all their loans, plus interest, within six months, and you get 100% of equity (unless they quit their jobs and join full-time).

Equity dissent must be resolved long before the business makes money, otherwise it will never be resolved.

Related: Alan Knott-Craig’s Answers On Selling Internationally And Researching Your Idea

What do you think of WiFi in taxis?— Ntembeko

It’s a good idea, but not original. Before embarking on a start-up, you should survey the landscape for competitors. Just because there are none doesn’t mean no one has tried your idea.

It just means that everyone that tried has failed. You need to be 100% sure that you have some ‘edge’ that makes you different from everyone who came before you (and failed). Otherwise you will fail. What is your advantage that is different to everyone who came before?


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Start-up Advice

What You Need To Know About The Lean Start-up Model

The Lean Start-up philosophy was developed by Eric Ries, a Silicon Valley-based entrepreneur who also sat on venture capital advisory boards. He published The Lean Startup in 2011, igniting a movement around a new way of doing business.

Entrepreneur

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The model follows key precepts that include:

Taking untested products to market

The fact that too many start-ups begin with an idea for a product that they think people want, spending months (or even years) perfecting that product without ever testing it in the market with prospective customers.

When they fail to reach broad uptake from customers, it’s often because they never spoke to prospective customers and determined whether or not the product was interesting. The earlier you can determine customer feedback, the quicker you can adjust your model to suit market needs.

The ‘build-measure-learn’ feedback loop is a core component of lean start-up methodology

The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a start-up can work on tuning the engine. This will involve measurement and learning and must include actionable metrics that can demonstrate cause and effect.

Utilising an investigative development method called the ‘Five Whys’

This involves asking simple questions to study and solve problems across the business journey. When this process of measuring and learning is done correctly, it will be clear that a company is either moving the drivers of the business model or not. If not, it is a sign that it is time to pivot or make a structural course correction to test a new fundamental hypothesis about the product, strategy and engine of growth.

Lean isn’t only about spending less money

It’s also not only about failing fast and as cheaply as possible. It’s about putting a process in place, and following a methodology around product development that allows the business to course correct.

Progress in manufacturing is measured by the production of high quality goods

The unit of progress for lean start-ups is validated learning. This is a rigorous method for demonstrating progress when an entrepreneur is embedded in the soil of extreme uncertainty. Once entrepreneurs embrace validated learning, the development process can shrink substantially. When you focus on figuring the right thing to build — the thing customers want and will pay for, rather than an idea you think is good — you need not spend months waiting for a product beta launch to change the company’s direction. Instead, entrepreneurs can adapt their plans incrementally, inch by inch, minute by minute.

Source: theleanstartup.com

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