Great idea, wrong spot
- Borjan and Lidija Ivanonic are the founders of Balkan Burger.
- What started as an experiment at a farmer’s market has grown into a full-time, highly profitable and successful business.
“We bought a 1967 short-body school bus that we converted into a mobile food truck. We took it to Arts on Main in Maboneng and parked it at the entrance of the market, but that didn’t work out for us. It was a great marketing tool – people would stop and chat and want to learn more, but they’d always say they’d come back after looking around and then forget about us.”
Borjan Ivanovic is very candid about the wins and losses of growing Balkan Burger. Effectively pioneers of mobile food trucks in Joburg with no one to guide them, they spent a lot of money buying and outfitting a very cool mobile food truck that was not yet needed.
A combination of being a purchase made too soon and positioning it in a bad spot for food sales, it was a costly trip-up that only started paying itself off once they joined other markets and started landing catering jobs.
Wanting to start a business? You should read these books first
Give people what they want, not what you want
- Andrew Leeuw and Herzon Louw are the founders of Sumting Fresh.
- Starting out as a food trailer in the streets of Midrand and making negative profits at first, they’ve since grown by 9 000% and have a staff contingent of 18.
“I’m a qualified chef and opening my own restaurant was just far too expensive to consider. I figured I could bring people restaurant-quality food from a food truck but learnt hard and fast that that’s not what people wanted. They wanted street food.”
Andrew Leeuw and Herzon Louw learnt a costly lesson in their early days as street food vendors. They were serving expensive food, expensively, because that’s what Leeuw thought people wanted. The minute they pivoted and focused on selling quality street food at value-for-money prices, sales rocketed. They went from 80 portions and – R480 a day, to 120, 240 and beyond.
“We really had to take a hard look at ourselves, develop our own identity and style, and then bring it to the people. Be flexible, take criticism constructively, and don’t wait for the customers to decide who you should be.”
Read more: 4 Ways Entrepreneurs Can Become Truly Great
Estimate how long you think something will take, then double it
- Yossi Hasson is the co-founder of Synaq.
- Established in 2004 the firm underwent major changes that allowed the business to scale much more efficiently.
- In 2011 Dimension Data bought a 50,1% share in the business, allowing them to scale at even greater speed.
“When we made the decision to convert from a product-based business to a service-based business, we lost R1,8 million, we owed SARS half a million rand, and grossly underestimated the complexity of the change and planning for it. What we thought would take six months actually took two years.”
It was an incredibly tough time for Yossi Hasson and his business partner David Jacobson, but they maintain it was the best move they ever made.
“We recovered through management pay cuts, we froze salaries, cancelled outsourced providers, managed expenses like crazy, managed to get clients to pay upfront for a small discount, and convinced shareholders to give a little bit more money.” The major lesson they learnt about change?
“Now we always get advice and manage expectations before we start, so we have a more realistic timeline of how long something will take.”
Read more: Yossi Hasson’s full story here
Look before you leap
- Chris Ndongeni is the co-founder of Twin Cities Cleaning Services.
“We should have done more research about the contract cleaning business and industry before we started. We’d landed our first contract with Man Truck and Bus, and on our first day we were shocked to find that there was absolutely no cleaning equipment or detergents and the previous contractor hadn’t left anything behind. We scrambled and made expensive purchases because of that.”
Business plans belong to the last century. Gone are the days of creating 40-page, detailed documents about your business, it’s target market, competitors, finances and so on.
Today it’s about the lean canvas: Starting with a hypothesis, testing it, and quickly iterating depending on the results of your test. Even though this method requires less research, research is still very necessary.
Ensure you know what permits, certificates, and approvals are required to operate in your industry, how competitors are operating, and then figure out what you can do differently.
Do what you know
- Ross Wilson is the founder of urbantonic, a Cape Town-based eventing agency.
In 2007, Ross Wilson made a business decision that would take him almost five years to recover from. Despite his background in eventing, he bought a joinery business.
“Urbantonic was a successful, growing business, but I’d been building it for almost a decade and I thought it was time to branch out. My ego was sky-high. I thought I could do anything, in any industry.”
This would turn out to be a very expensive assumption. 20 months after buying the joinery business, Wilson managed to close it down. It would take a further three and a half years to pay off the debts associated with the business.
“I kept thinking about that Top Gun quote, ‘Son, your ego’s writing cheques your body can’t cash. We built up urbantonic slowly. We offer incredible customer service because we’ve never over-extended ourselves, so our growth has been organic and self-funded. We’ve never spent what we don’t have. And most of all, we know this industry inside out. The joinery business was none of those things.”
Read more: Ross Wilson’s full story here
Hire for cultural fit, not skills
- Irfan Pardesi and Hina Kassam are the founders of ACM Gold, a R350 million + gold and foreign exchange trading company.
Of course skills are important, but many entrepreneurs have learnt to their detriment that a person with the right skills who is a complete cultural mis-match with the company will bring everybody down, and even put your business at risk.
Irfan Pardesi and Hina Kassam, founders of ACM Gold, learnt this the hard way. As their start-up grew, they started building up a team. The problem came when they made the decision to bring in an experienced management team. They focused on the credibility that they thought big names would bring to the business, instead of whether those same names suited the company’s culture.
“The whole culture of our company started shifting – it was no longer what we had worked so hard to build. It took us months to rectify, and cost us a lot as well. Today we know, always hire for cultural fit. Attitude is everything. Skills can be taught, experience gained, but you’ll never change a person’s values and personality.”
Read more: The Midas Touch: Hina Kassam & Irfan Pardesi
Know your numbers
- Kerryne Krause-Neufeldt is the founder of I-Slices Manufacturing, the producers of eyeslices.
When Kerryne Krause-Neufeldt launched her business, she was so focused on customers and making sales, that she neglected the inner-workings of her own company.
“I particularly wasn’t good with numbers,” she says. This was Krause-Neufeldt’s biggest lesson.
“It’s easy to abscond the numbers to the ‘finance guys’, especially if you don’t have a background in finance. I didn’t even know we weren’t paying PAYE, and ignorance is no excuse. You need a basic understanding of numbers at the very least.”
Once she realised the shambles her start-up’s finances were in, Krause-Neufeldt realised the buck needed to stop with her.
“I did accounting for dummies, followed by financial management workshops. It was time consuming, but worth it. It was the only way for me to truly be in control of my own business. Now I can spot problems in the figures at a glance.”
Read more: Kerryne Krause-Neufeldt’s full story here
Everything will always take twice as long as you think it will
- Vusi Thembekwayo is the founder of Motiv8.
- He is a Dragon on South Africa’s Dragon’s Den, and the youngest JSE director in SA.
Vusi Thembekwayo is not the first entrepreneur who learnt this lesson, nor will he be the last.
“By the time I launched my motivational speaking and strategic consulting business I had top tier experience at a local FMCG giant. I knew business. I had seed money from ring-fencing and selling the division I’d built up and ran.”
Thembekwayo certainly wasn’t green behind the ears, and yet his start-up journey ended up being very different to how he imagined it to be.
“I used that money to get set up in fancy offices with a PA. I thought that was what you needed. And then it took eight months to get my first client.”
Eight months of zero income, and expensive overheads. Thembekwayo was sleeping in his car, fending off the bank who wanted to repossess it because he wasn’t meeting the payments.
Today that business has a turnover of R140 million, but Thembekwayo will never forget his first real start-up lesson: However long you think it’s going to take to get going, triple it. And you still won’t be there.
Read more: 10 Tips From The Dragons Of Dragons’ Den SA
Not everything is an opportunity, some are a waste of time
- Mongezi Mtati is Founder and MD of WordStart, a word of mouth marketing firm that connects brands with influencers.
“Your time is yours to pour into the business, not to use on non-paying efforts that present themselves as opportunities,” said a mentor who was discouraging Mongezi Mtati from taking on more work for exposure. “The advice fell by the wayside,” admits Mtati. “Unfortunately, he was right.”
Mtati knows the situation well: When you’re starting out, people offer you the opportunity of ‘exposure’ in lieu of billable work and hours. Start-ups that are desperate to build up their portfolios often agree.
“The reality is that most of that exposure does not amount to billable work. It ends up being a waste of time that could have been used to either make money or spent in the business waiting for the phone to ring or drumming up sales. It could even have meant going to SARS for an hour or two, which saves you pain and punishment later in the year.
“The rule is simple: Don’t work for free,” he says. You’re there to make money, so do it.
Never treat the business’s cash like your own
- Lebo Gunguluza is the founder of the GEM Group and a Dragon on South Africa’s Dragon’s Den.
Like many young entrepreneurs, Lebo Gunguluza treated the money his start-up made as his own. After a few weeks, he realised that he needed to start saving the cash he was making in a bank account if he wanted to hire some help. It wasn’t a lesson that translated into good cash flow principles. The more the young entrepreneur made, the more he spent.
On the one hand, he was a bootstrapper, and he made his first million at the age of 27 without funding, tenders or loans. This just meant that he at least didn’t owe anyone money when he went bankrupt a year later.
“I spent my first million in one year,” he says. “Instead of using the money I was making as seed capital, I bought a GTI and partied like there was no tomorrow. It didn’t take long before I was flat broke.”
He learnt from that lesson, built himself up, and never squandered cash again, and to this day he warns other young entrepreneurs: Never treat the business’s cash like your own.
Read more: Lebo Gunguluza’s full story here
Should Entrepreneurs Lie? It’s A Tricky Question
In the hustle of the startup world, entrepreneurs often drop little white lies – and don’t even consider them to be lies. Where’s the ethical line?
Gary Hirshberg knew the exact amount of money he needed to save his company: $592,500. It was 1988, and his fledgling yogurt brand, Stonyfield Farm, was near collapse – rocked by the closing of its third-party manufacturer, hemorrhaging money as it struggled to fulfill orders and unable to find new investors. But with that exact amount of cash, Hirshberg and his co-founder, Samuel Kaymen, calculated, they could open their own facility and regain their footing.
So Hirshberg drove down to his local SBA office with an informal proposal. “We’ve got a bank willing to provide the loan,” he told an officer, and he said his shareholders agreed to put up $100,000. All he needed from the SBA was its 85 percent loan guarantee, which would make the bank comfortable executing the financing.
The SBA liked what it heard, and that positive response set in motion the funding that would save Stonyfield Farm and enable it to grow into one of today’s most recognisable yoghurt brands. But in truth, the SBA didn’t know the whole story. Hirshberg didn’t have a bank lined up. His investors hadn’t committed the money. All he had was a vision for his company, a plan to save it…and, ugly as it may sound, a lie that would pull it all together.
Let’s put it bluntly: This is common. Entrepreneurs lie. It’s not like they regularly drop Theranos-level falsehoods to defraud customers and investors, but the scrappiness of entrepreneurship inevitably leads to some kind of deception. People say their company is bigger than it is, that they’re more prepared than they are, that they know how to do something they don’t. They spot an opportunity and they lie to get it, and that becomes part of their story – an origin that may one day even be celebrated, like how Steve Jobs famously faked his way through the first iPhone demo at Macworld even though the device itself was a buggy mess.
But here’s a question the entrepreneurship community has been struggling with for centuries: Is it OK to lie? And when does a lie go too far?
It’s tricky, because most entrepreneurs don’t see their deceptions as lies at all. Hirshberg doesn’t. “I mean, look – you beg, borrow, steal, stretch. You do what’s necessary,” he says today. In truth, the editors of Entrepreneur can get drawn into this logic. Just recently, this magazine ran a series of articles on bootstrapping, which featured a number of stories about entrepreneurs stretching the truth. One of them, for example, was about Anthony Byrne, the CEO of a Dublin-based company called Product2Market.
In the start-up’s early days, Microsoft considered hiring it but first wanted to conduct a site visit to make sure Product2Market had the necessary manpower. In reality, it didn’t. So in advance of Microsoft’s site visit, Byrne brought friends, family and neighbours into his office, having them pose as employees to make his startup seem twice its size. It worked. Microsoft signed on.
After that story ran, an Entrepreneur reader emailed an objection. “I don’t think the magazine should be promoting people who got ahead by lying as an example for others to follow,” he wrote. But Byrne doesn’t think of his action as lying; he sees it as a simple act of survival. In a crowded industry dominated by big players, he needed to look larger and capable.
“As soon as we got our first big deal, I did in fact hire the right number of people to fulfill the contract,” he says.
This is also how Hirshberg of Stonyfield Farm sees his own circumstance. Rather than lying, he was creating an opportunity he knew he could fulfill. True, he didn’t have a bank or his investors on board with his plan. But he knew a banker that was interested in his brand and figured that if the SBA seemed on board, the bank and investors would follow. And that’s what happened. “It’s OK as long as you ultimately do deliver,” Hirshberg says.
But context is also important, he thinks. If entrepreneurs lie for the sake of lying, or for their own personal gain, that’s a problem. But what if it’s for a common good? Consider his plight, he says: Stonyfield Farm may have been small at the time, but it was employing people and supporting their families. Hirshberg’s wife was pregnant, and his mother-in-law and other family and friends had put significant money into the company. He’d tried repeatedly to save it by more direct means. He even found a potential manufacturer that promised to step in and help – but at the last second, the manufacturer tried changing the contract to steal the brand away.
Hirshberg and his co-founder nearly gave up. Then they made one last-ditch effort — going to the SBA. “I believe that determination is the most undervalued and essential ingredient for success,” he says. “More than a great product. More than financial acumen. More than great marketing. It’s just absolute determination, and as a corollary, believing in yourself when no one else does.” If they went out of business, lots of people would lose. He was determined for that to not happen. The lie was worth it, he says. It was just an entrepreneur doing what was necessary.
Not everyone is going to accept this. Purists will surely say Hirshberg and Byrne and others are just liars justifying their actions. But Tomas Chamorro-Premuzic, a professor of business psychology at University College London and Columbia University, who has written about lying in entrepreneurship, thinks they’re onto something.
“If you can somehow measure harm to others, that is the limit,” Chamorro-Premuzic says. He believes most entrepreneurs tell lies when they think the falsehoods will do no harm. Had Hirshberg failed to get bank financing, the SBA simply wouldn’t have offered the loan guarantee. Had Byrne been caught, his deal with Microsoft would have fallen through. They were largely victimless crimes, wasting little more than someone’s time.
The way Chamorro-Premuzic sees it, the greatest lie we all tell is that we don’t lie. “There’s a reason why we have to all pretend the world is more honest than it actually is,” he says, “and that’s because we’re part of the same world that thrives with at least a certain level of getting away with some deception.” And he says creative people — the kind of fast-thinking, big-dreaming people who often become entrepreneurs – tend to lie more than others. The truth, he says, is that people in business expect some kind of transactional lie – whether it’s from a job applicant, a potential partner, or someone else.
“The system is encouraging at least some form of fact distortion, and rewards it,” he says. “If you ask an interviewee if they enjoy working with others and they say, ‘Most of the time I don’t,’ they won’t get brownie points for being honest. You’ll say, ‘This guy is antisocial.’”
So what’s an entrepreneur to do? Simple, says Chamorro-Premuzic: Treat lying as a tool to be used in very particular moments. It cannot result in harm to individuals. It must lead to an opportunity you can genuinely succeed in. And very critically, it cannot become a foundation you build on with other lies. “The brands that people trust, the products that people trust, clearly are created and run and owned by cultures that respect the customer,” he says. “Long-term focus requires honesty.”
Seen this way, a lie is a gamble – a slight tilting of the odds in a critical moment. But what follows must be truthful, because, as our liars say, that’s the only way to build an honest company.
This article was originally posted here on Entrepreneur.com.
The ‘Anything’ Entrepreneur
Most entrepreneurs are told to ‘stick to their niche’ but what happens when you make diversification your key to success?
Traditionally, entrepreneurs are told to stay focused and stick to their niche. But what if this advice isn’t always the right thing to do? What if this isn’t the perfect plan for your business, especially when you are facing a mercurial economy and a complex market? The instructions to build a thriving business aren’t set in stone, they’re as fluid as the customers and markets that inspired their creation in the first place. So, instead of hugging that niche rut, here are seven steps to intelligent diversification that could make a huge difference to your business…
1. The price tag
Having a niche business can become expensive, especially if you purchase stock from a specialised or niche supplier. They tend to charge a premium as they have the expertise and market position that allows them to do so. If you instead look to selling a variety of products and solutions, you can reduce the prices for your own bottom line as well as that of the customer.
Often, you are paying for a brand and not the deliverables so ensure that you’re investing into solutions that add value to your business not weight to your bottom line.
2. Variety is key
To survive in this economy, small business owners can no longer afford to only offer single product lines. By adapting and diversifying, you ensure your business isn’t the one left behind. Your competitors may very well be planning on introducing complementary products and services that boost existing offerings or add value. Don’t be the business that hasn’t been paying attention to the customer’s need for more bang for their buck.
3. Bolt on is bolting in
Offer your customers bolt-on extras where you can. This furthers the value you can add to your service and the value that the customer perceives you are offering to them. Extended warranties and value-added services not only add value, but they add longevity to your customer relationships. This means that you build depth with your customers as opposed to a hit and run sale.
4. Build a fence
When you diversify into a variety of solutions and services, you are giving yourself the opportunity to ring fence client spend. They won’t need to go to a multitude of suppliers as you will become their trusted one-stop-shop. You can then use this as an opportunity to showcase other products and services and to use your relationships to pitch clients into new areas of your business.
5. Client retention
When you have a rich pool of resources and strong client relationships, then you build trust and you prove to your clients that you have what it takes to get them what they need. When you’re trapped into single product lines you can’t offer this level of depth to your clients and they will simply go elsewhere.
6. Communication and collaboration
Diversification also offers you the opportunity to communicate more regularly with your clients. Instead of only selling to your customers seven or eight times a year, you can talk to them several times a week. Instead of just supplying products, you are helping them to deal with their day-to-day challenges and requirements. This allows for richer upselling and even more opportunities to engage.
Read next: 21 Steps To Start-Up Success
How To Forge Your Own Path In Business
Finding your own way doesn’t require reinventing the wheel.
You don’t need to be a visionary to forge your own path in business.
Honestly, you don’t even need to be a business owner to forge your own path. It’s more about a state of mind where you’re able to think for yourself professionally. To clarify, that doesn’t mean you’ve got to be a lone wolf: ideally, you want to be able to to work with and even for others, but without being a follower.
The ability to balance being an independent thinker yet simultaneously remaining accountable for your actions will make you a much more valuable worker, no matter what field you’ve chosen. The good news is that with targeted effort, anyone can adopt this mindset. Here are some of my tips for how to forge your own path in business, and why it matters.
Learn the rules first
This might sound out of place in a post about how to forge your own path in business. After all, aren’t we talking about independence?
Here’s the thing. Before you want to break the rules, you have to actually learn what they are. Take the time to learn the “rules” of your trade before you start trying to reinvent the wheel. You’re likely to pick up wisdom that will serve you, even if you intend on using the rules to inspire new and creative ways of breaking them.
Once again, you might find yourself thinking: Why should I seek out guidance if I want to forge my own path? Picture a cliche movie scene of a parent teaching their kid how to ride a bike. There’s that magical moment where the parent lets go of the back of the bike, and the kid is doing it on his own.
In business, you often need that initial helping hand before you can ride smoothly on your own. Before you can think for yourself, it can be helpful to absorb all of the wisdom you can from others.
One powerful way to do this is to find a mentor, or someone established in your field or a similar field who can give you words of advice and help you avoid making mistakes. Another is to make sure to take part in networking groups and to engage with other entrepreneurs. The more people you connect with and the more knowledge you gain, the better!
Set realistic and specific goals
If you want to gain confidence, become an independent thinker, and a better problem solver, do this one thing: Set realistic and specific goals.
Say that you want to increase sales for your business. It may not be realistic to say that you want to double your sales, but to simply have a goal to “increase sales” isn’t specific enough. However, setting a goal of increasing sales by 20% this year might be more realistic and is definitely more specific.
A goal like this is motivating, as it gives you something specific to work toward. It also allows you to break it down into actionable steps. You can begin to problem-solve, making specific plans for ways in which you could make your goal a reality. As you reach these milestones, you’ll gain more confidence in your abilities, which can help you move forward more confidently in your career.
Observe, but don’t copy
It can be very helpful to look at what your competitors and other entrepreneurs are doing. It keeps you relevant, gives you ideas, and can help keep you nimble in your chosen field.
However – this is important – you should never copy what others are doing. For one thing, it doesn’t work. Say you see someone killing it with a brand new hummus restaurant start-up. You can’t just start crushing chickpeas and expect success. There are lots of inner workings to the business that you’re not privy to, so even if you were to try, you couldn’t quite replicate someone else’s success.
Further, by the the time you copy, you’re already a follower and behind the curve. It’s better to use the information you observe as data, so that you can gain insight on things like effective marketing techniques and aesthetics, and apply these things to your own original ideas.
Think for yourself
You probably already guessed this one, but to forge your own path in business, you need to learn to think for yourself. So…how do you do that? Education is key. You need to absorb all of the knowledge you can, talk to as many people as you can, and observe as much as you can.
It’s almost like you’re forming your own personal library of data and resources. As time goes on, you’ll become better able to use this knowledge that you’ve gained to put your own unique ideas out in the world. You’ll be better able to generate ideas and to come up with intelligent solutions.
Let yourself grow over time
Ultimately, if you want to forge your own path in business, you need to be patient. Expertise, independent thinking, and autonomy won’t all happen overnight, so take the pressure off of yourself.
Remember: Patience is a trait of some of the most successful people. Focus on progress, not perfection. If you want to be successful for the long haul, allow yourself to learn and grow and continue to improve over time. Slow but steady, right?
This article was originally posted here on Entrepreneur.com.
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