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Boardmans: Tom Boardman

How can I learn about business? What does it take to be an effective business leader? How do i foster business acumen and insight? What are the key lessons that lead to success in business?

Greg Fisher

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Tom Boardman of Boardman's

These are important questions that any aspiring entrepreneuror business manager will ask themselves many times in their career. TomBoardman, the current chief executive officer of Nedbank and founder ofBoardman’s Retail Stores learnt his most important business lessons throughexperience, by being out there on the frontline, making important decisions andleading employees through good times and bad. He says: “A fundamentalphilosophy I have is that nothing you learn in life is ever wasted. Sooner orlater you will be called upon to use every bit of knowledge and experience andinformation that you have collected along the way. And that’s why when you areyoung you can be very smart and you can be well educated but actually only timeand experience can create wisdom.”

Tom Boardman started his career as financial manager forSouth Africa’s largest corporation, Anglo American. From there he went on tolaunch the country’s first ever chain of retail “home stores”, Boardman’s, andin so doing, paved the way for a whole new retail category in South Africa.After leaving Boardman’s in the hands of the Pick n Pay Group in 1986, he wenton to join BOE when it was still a private company. Boardman helped list BOE onthe Johannesburg Stock Exchange and was later named chief executive of thecompany. In 2002 BOE was acquired by Nedbank and a year later Boardman wasappointed chief executive of Nedbank with the task of turning the financialinstitution around after a few years of disappointing results and a consequent lossof market faith. He set ambitious goals for Nedbank in 2004 and achieved themin 2007, returning the bank to healthy profitability and ensuring that it wasstrong enough to weather the financial storm that lay ahead in 2008.

On the surface, it may seem as if Tom Boardman’s career hasbeen a smooth, successful journey as he has transitioned from one leadershipposition to another but when you delve into the details, you realise that hepaid a high price for some of the lessons learnt along the way. You alsorealise that he took both success and failure in his stride and learnt fromevery opportunity, and it is those lessons that have given him the wisdom,confidence and management insight to lead one of South Africa’s largestfinancial services companies through one of its most challenging times.

The first deal

Boardman obtained a Bachelor of Commerce Degree in Law atWits University and then served articles at Deloitte & Touche to qualify asa chartered accountant. After completing his articles he was offered a job infinance at Anglo American Properties where he concluded his first major deal, amerger: “On the Monday we had very broad range discussions on the merger. Weagreed to meet again on a Thursday with the company with whom we were doing thedeal. We did a little bit of work on the Tuesday and my boss played golf everyWednesday, so he went off to play golf. When we arrived at the office onThursday we had a couple of notes sketched out. At the meeting the managementof the other company had a complete blueprint of the merger. They were so muchbetter prepared at that meeting that we were on the back foot from then on. Itwas a great lesson in preparing for meetings. He who prepares best gets what hewants.”

Boardman described how this lesson has stuck with him since1973 and it is evident that he still lives by this philosophy today. Before mymeeting with him he asked for an outline of our discussion and arrived at themeeting prepared with printouts of slides, documents and a clear idea of the directionof our conversation. Having had to scramble for position in the merger talks backthen, Boardman’s team eventually consummated a deal. It was then that he wasexposed to the realities of a corporate merger. He had learned about thestructure and purpose of mergers in his accounting and law classes but no oneever warned him about this thing called culture. “One can potentially cutcosts, achieve economies of scale, share systems etc…. but when you try tomerge two very different cultures it’s a very difficult and complex thing,” hereflects. Ever since that first deal he has been much more aware of culture inorganisations. He always works on fostering the right kind of culture in hisorganisation and takes time to assess culture when considering a merger or apartner organisation.

Getting lucky

A few years into his tenure at Anglo American Properties,Boardman was relocated to Cape Town to be finance director of Sam Newman’s – abuilding supplies company in the HL&H Group, also part of Anglo American.“I went to Cape Town early in 1977. After the riots in 1976 South Africa was indeep trouble. Things were looking really, really bad and the building industrywas in a nosedive. Cape Town had some of the wettest winters ever so theresults of the building materials division were dreadful. Eighteen months afterI arrived there the chief executive left. The other execs looked around andsaid: “Tom, can you just hold the fort while we look for a new CE?” I was 28 atthe time and the company employed around 3 000 people. So I held the fort asacting MD and I learned another of life’s great lessons… that a huge amountin life depends on luck. Now obviously if it comes your way you had betterseize the opportunity. You may be absolutely brilliant and talented and you getno breaks. But when a break comes, you have to seize it.”

“In the first 12 months while they were still looking for anew CE, the economy improved. Massive housing projects were initiated on theCape Flats and we had the driest season in 25 years. Every month the numbersgot better and better. It was not genius; it was the way the things work. Theresult was that a year had gone by and they hadn’t found a new CE and they saidto me: “You are it, GO!” Boardman points out that business people must monitorevents in the external environment and respond with conviction to changes. Thatmay mean seizing opportunities when the environment works in your favour orputting contingency plans in place when it works against you.

Knowing the numbers

Not yet 30 and leading a company employing 3 000 people –many of them older and more experienced than him – Boardman had the advantageof being able to understand the numbers in the Sam Newman business. Numbersbring everything down to a common unit of analysis and enable a person to seethe big picture, he says. “What happens in any business is that you put moneyin. It either goes in as debt or equity. Then it fragments and it goes intoinventory, people, buildings and plant and equipment. Eventually it comes outthe other side as profit, which is reinvested or distributed as dividends.While it is fragmented, it is very difficult to interpret. A person whounderstands the numbers in a business can be like the only interpreter in thecity of Babel where nobody spoke the same language. So if there is one personwho can speak all the languages, imagine the power that person is sittingwith… as a 29 year old with one year in the business, the big picture that Igot from having all the financial pieces was very powerful.” Boardman suggeststhat all people who want to succeed in business should develop the skills tointerpret financial reports, “without that you will always be at the mercy ofthe person who can provide such an interpretation” he says.

One of the major developments that Boardman introduced atSam Newman’s was the transformation of the company’s struggling retail hardwarestores. The company had many wholesale yards and just two retail stores andBoardman realised that retailing hardware goods in a store is different towholesaling building supplies from a yard. He revamped the stores to make themmore appealing and brought in a Swiss store designer. By displaying items in amore logical, accessible way, turnover started to increase: “When things aregoing well you need to understand as much as you can about the reasons why.When business is going well people seldom ask why. But if it’s going badly theywant answers. Things were going well so I set out to find out why,” hereflects. “We did in-store surveys and discovered that more and more women werecoming into the hardware store. So we asked them why they were coming to thishardware store.

They said it was because they liked it. We found out that womenmake the majority of home décor decisions and hardware had traditionally beensold in an environment where women didn’t feel happy. We discovered that bycreating a hardware store with a pleasant environment we had hit on somethingbig.” The business took the next step to leverage this opportunityand a new Sam Newman’s store was built – “a whole new concept” which took off immediately because there was nothing like it in SouthAfrica at the time. It was a home store but it retained items such as paint andwallpaper. “We scaled down the range of technical fittings but we had a toolsection. With this new concept we took what Sam Newman’s was known for, butadapted it for women.”

Taking a leap

Even though the new Sam Newman’s retail stores were doingwell, the HL&H board questioned whether the concept fitted into theirportfolio. HL&H was an industrial group and the directors saw the retailstores as non-core. Boardman was tasked with finding a buyer. He looked aroundfor a few weeks and then started toying with the idea of buying the retail storeshimself. He approached the board and was told that if he could raise the moneyin 30 days, they would consider selling to him. He mortgaged everything, andborrowed as much money as he could to raise the capital for a 51% share in thenew business. The Swiss store designer and one of the other Sam Newman’smanagers put up the capital for the other 49%.

One of the real challenges of the acquisition wasnegotiating the price of the sale: “When you are buying, you want to get theprice as low as you can.…if I had been a total outsider, I would have arguedand haggled to knock down the value of the stock. But having been MD of thebusiness, it is very difficult to argue against what you have on the books. Iprobably paid too much for the business and, with hindsight, I would haveinterposed an independent person to act on my behalf.” After agreeing on aprice, Boardman and his partners developed a plan to turn the retail storesinto a sustainable, growing business.

They decided to call the business “Boardman’s Retail Stores”encapsulating the Boardman family name in the same way that quality departmentstores like Garlicks and Masons had, recalls Boardman.One of the benefits of working for a large successfulcompany early in your career, is that you may learn relevant managementpractices and pick up some useful strategic tools. At HL&L, Boardman wasexposed to a framework for understanding business that resonated with him andhe has applied it in every business he has run since. He found that certainbasic business principles apply equally whether you are running a start-upretail business with only two stores or a large listed financial servicesinstitution. The framework he uses, which came from HL&H, and is still usedin Nedbank today, is depicted on the left.

“It starts with vision” says Boardman. “At Boardman’s, ourvision was: ‘To develop the first national retail chain, mass marketing qualitycontemporary design, household goods at affordable prices’. Twenty five yearslater I can still recite it. So could every person in the business. And eachone of those words had a great deal of importance.” Values were not as high apriority for leaders in the early 1980s as they are today, says Boardman, butin launching Boardman’s, they did try to be explicit about what was importantto them as a company. Boardman relates how they crafted strategy and identifiedcritical success factors: “When you have your vision, you need to establishstrategy; within strategy, you need to decide what your critical successfactors are. Every business has critical success factors, three or four factorsthat determine the success of the business. You may have to go out and do someresearch and scenario planning to understand what is happening in the market. Look at the macro side, do your normal old SWOTanalysis to ascertain exactly what those success factors are.

At Boardman’s, our critical success factors were:

  1. To have unique and different merchandise. To be different
  2. To display items in a way that people can visualisethemselves in a room
  3. To achieve store efficiencies to minimise shrinkage

According to the Boardman adopted framework, you need todetermine the critical success activities attached to the critical successfactors: “This is about ascertaining what different people within the businessmust do to achieve the critical success factors. Linked to that you need toestablish an appropriate structure for the business so that people caneffectively carry out the critical success activities, and then you need tofind the right people for each role,” says Boardman. “Very often managersselect people and then look for a job for them. They should first identifytheir critical activities and then find the best people for those activities.

“With the right people in place you ensure that each personhas specific objectives stipulating exactly what you want them to achieve. Youmeasure people-performance based on those objectives and reward them for goodperformance,” says Boardman. “In thirty five years, the reward performanceblock is the most difficult block I have ever had to wrestle with. It is morecomplex than all the other things in managing a business and if you get itwrong it drives the wrong behaviour. Once you have got the reward system inplace you have to constantly ask whether the reward system is driving youtoward your vision. Is it rewarding the right value systems and driving yourstrategy?”

Making it work

Having mapped out his strategic plan, Boardman set about thehard work of building a business. He thought he had worked hard as a 29 yearold managing director of a building supplies business, but he worked evenharder when it was his own capital on the line and he was running a growingretail business with his family name in the brand. To be really effective as amanager he found that he had to be visible. “There is no substitute for’management by walk-about’; visible leadership is the first step in leadership.Initially it was easy because we had two stores. As the business grew it becamemore challenging but still essential. I also travelled with my buying teams tothe trade fairs in Milan. On my first visit to Milan, I asked: “Where does allthe wood come from?”

I knew from HL&H that moving timber around is veryexpensive and if I could find the source of the wood, the factories producingthe furniture would be nearby and I could buy directly from them. I discoveredthat the wood came from Yugoslavia and most of the manufacturing was in anortheastern corner of Italy. So we hired a car and drove up to visit smallmanufacturers in the area. We negotiated deals with them and in so doing cutout the middleman. None of the other retailers were doing that and it gave us acost advantage. Our willingness to get intimately involved in the operationsand work with the buyers allowed us to establish this advantage.”

Today, Boardman is still renowned for being highly visible.On my way into Nedbank, the ladies at the main reception told me how much theyenjoy it when the CE spends time talking to them and finding out how they are.

In search of growth

After eighteen months in business, the Boardman’s managementteam decided they were expanding too slowly. To help grow the business theyresolved that they needed a partner. After considering a number of retailorganisations in South Africa, they received a call from Pick n Pay. Boardmanliked the family values of Pick n Pay and after some rounds of negotiation theydecided to enter into an equal partnership in which Pick ‘n Pay would buy 50%of the equity from the original partners, allowing them to pay off their debtsand providing some capital for growth in the business. The partnership meantthat they shared the profits but also needed to fund additional capitalrequirements on the same basis. Boardman saw the upside of this relationship,but failed to pay enough attention to the potential downside.

When the deal wasconcluded, the plan was to open two new stores annually for the next threeyears, rolling out two additional stores in the Western Cape in 1985, another twoin the Western Cape in 1986 and then moving up to Gauteng in 1987. After signing the deal, the business began to grow accordingto plan. Two large new stores opened in the Western Cape in 1985, one inTygervalley and the other in Stellenbosch. Then, out of the blue, that sameyear, Boardman was offered a lease for a new store in Midrand. TheVerwoerdburgstad Mall was opening up and had 2 000 m2 of prime retail spaceavailable. Pick n Pay wanted to proceed even though it deviated from the plan.Boardman flew to Gauteng on Raymond Ackerman’s private jet, met with his oldbosses from Anglo American Properties, saw the development in the Midrand areaand decided it was too good an opportunity to pass up. He was confident thecompany would be able to accommodate the additional capital requirement if therand did not weaken any further. If it did weaken, he would be in trouble, buteconomists told him that the currency was undervalued and would probablystrengthen. Boardman relates: “A big lesson here, when you look at scenariosand see bad news don’t ignore it. You have to contemplate theuncontemplatable.”

He signed the lease for a Midrand store and a few weekslater a lease for a new store in Eastgate became available. Once again Pick nPay wanted to build an additional store, at odds with the original plan, andagain Boardman rationalised it and signed the lease. When he signed the two newleases in Gautengthe exchange rate was at about R1,25 to a dollar. Within five months, PW Bothamade the “Crossing the Rubicon” speech and the rand fell to R2,63 to a dollar.There was now no way that Boardman could find the money to fund the workingcapital requirements of the expanded business; he just did not have the cash.The only way out was to sell the company. Boardman realised that he had takensome risks and the environment had turned against him. There was nothing hecould do. He sold Boardman’s to Pick n Pay for R1. Even though Boardman did not remain involved in thebusiness, what he had started continued to be successful. A new category of“home store” retailing had emerged in South Africa as a result of thepioneering spirit of Tom Boardman and the retail stores bearing his name stilloperate successfully in most major shopping malls in South Africa today. Boardman’sis now part of the Edcon group but the Boardman’s retail format that youexperience today is not very different from what Tom Boardman originallycreated in Cape Town in the 1980s.

Although he was sad to have to leave the retail businessthat he had put so much effort into creating, Boardman realised that he hadlearned some valuable lessons in the process of building and then losingBoardman’s. Those lessons laid the foundation for a superb career thatfollowed. After selling Boardman’s, he joined BOE while it was still a private,relatively niche financial service institution and played an integralleadership role in listing the business. He went on to become the BOE chiefexecutive, in the process expanding the base of the business substantially. BOEwas acquired by Nedbank in 2002 and then in 2003, Nedbank was in trouble. Thebank had issued four profit warnings to the market in 12 months and the mediawas reporting that analysts had “given up all trust in its numbers”. In hisfirst four months as Nedbank CE, Boardman reportedly uncovered a myriad ofaccounting problems.

“That so many holes have been found is Boardman’sachievement” reported Finweek. Multiple media reports stated that Boardman hadsteadied the ship and regained Nedbank’s lost credibility. He was open andtransparent and put a plan in place to address the problems one at a time,based on a well thought out priority list. In 2004, he set significant goalsfor the organisation – to achieve a 20% return on equity and bring the efficiencyratio below 55% within three years. The 2007 results reflected that, under theleadership of Boardman, Nedbank had achieved these goals and was, once again, astable, credible, well regarded financial services institution, effectivelyserving customers and generating good returns for shareholders. Boardman’sbusiness acumen and leadership helped re-establish the company and set it on apath to sustained profits when it looked like it was on its way down a painfulspiral. These leadership skills and business insights were developedwhile he was engaged in a tough and challenging process of building anentrepreneurial business. Entrepreneurship has many benefits of which learningis one of the most significant.

What you can learnfrom the Boardman’s story

It has been shown that human beings are naturally morereactive to negative information. If we get feedback on something, we willtypically spend more energy focusing on the negative aspects of that feedbackthan on the positives. A degrading comment from someone we care about will staywith us for a lot longer than a compliment or word of encouragement. Inpsychology this is called negativity bias. The implications of this forbusiness are significant: Managers and business owners tend to over-react to negativesituations – sales dropping, a customer leaving, a late shipment – andunder-react to positive situations. When things are going well, we seldom tryto uncover why they are going well. This means that we often don’t understandour own success and therefore fail to replicate and capitalise on that success.

One of the things that Tom Boardman did when sales werepicking up in the Sam Newman’s stores was to understand the trend. He conductedin-store surveys to find out why people were coming into the shop and makingpurchases. By understanding the success of the business, he discovered a wholenew market – women shopping for hardware items. None of the other retailers hadprovided for this market, and his effort to display the hardware items moreeffectively, attracted them. By understanding who was shopping in his storesand why they were there, he was able to further extend that offering through awhole new concept and in the process create a massive new market.

So how can you understand your success?

1. Survey customers – ask them what they like, why theybought something and what attracted them to your product or service.

2. Keep a track record – try to maintain a clear record ofmarketing material, product designs, packaging and promotional materials. Whenyou have had a successful period, look for relationships between all theseitems and revenue. Try to understand what is giving you increased revenue.

3. Employee focus groups – after a successful year or a goodmonth, hold focus group discussions with employees asking them what wasdifferent? What worked well?  Why do theythink you achieved success?

4. Keep a personal business diary – on a more personallevel, keep a notebook in which you record the nuggets of wisdom that youdiscover along the way. These may be things that you hear from others or ideasyou read about. They may also be things that you discover for yourself inmanaging a business, things that work well or fail miserably. Both providevaluable lessons.

Greg Fisher, PhD, is an Assistant Professor in the Management & Entrepreneurship Department at the Kelley School of Business, Indiana University. He teaches courses on Strategy, Entrepreneurship, and Turnaround Management. He has a PhD in Strategy and Entrepreneurship from the Foster School of Business at the University of Washington in Seattle and an MBA from the Gordon Institute of Business Science (GIBS). He is also a visiting lecturer at GIBS.

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Going The Extra Mile With Neil Robinson Of Relate Bracelets

In business, your offering is only as good as your relationships. Neil Robinson from Relate Bracelets explains how FedEx Express has helped the business grow into Africa and beyond.

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  • Who? Neil Robinson
  • Company: Relate Bracelets
  • Position: Managing Director
  • Visit: relate.org.za

Neil Robinson, MD of Relate Bracelets understands the importance of business relationships. While Relate is a non-profit organisation, it is run like a business. It does not rely on donors, but instead produces and sells a product.

For each bracelet sold, one third of the income goes towards the materials and operating costs, one third supports the people who produce the bracelets, and one third goes to the charity for which that particular bracelet is branded.

In order for the business model to work and be sustainable, Relate’s partners are incredibly important. These include the retail chains that stock the product and who provide prime point-of-sale positioning, the charities who Relate works with, and most importantly, Relate’s logistics service provider, FedEx Express.

“Retail is all about visibility and availability,” explains Neil. “A brand is a living, breathing thing. People can see it, use it, and comment on it, but if they can’t access it, it’s all for naught. And so, at the point of purchase, it’s both visible and available, or it’s not.

“Logistics is key. You need to get your product to the retailer on time, 100% of the time. The expertise and focus that FedEx displays in supply chain and logistics encompasses far more than just retail, they understand our specific needs, making them a strategic partner, rather than merely a supplier.”

Related: Zenzele Fitness’s Clever Tactics To Grow In Next To No Time

Building a relationship

The FedEx/Relate Bracelets relationship stretches back to 2009, when Relate Bracelets launched its first campaign with ‘Unite Against Malaria’ leading up to the 2010 FIFA World Cup.

“We did the first campaign in partnership with Nando’s,” says Neil. “Robbie Brozin was passionate about the cause, and he pulled in strategic partners to launch the campaign. Within two years we’d shipped hundreds of thousands of bracelets. FedEx was an incredible partner, ensuring the integrity of our product and time-sensitive deliveries, and we’ve worked with them ever since.”

As with all good B2B relationships, the FedEx and Relate Bracelets teams understand that regular strategy sessions and updates are important.

“FedEx understands the inner workings of our business,” says Neil.

“A successful campaign has multiple elements, from planning and strategy, to marketing support, pricing and distribution planning. Of these, distribution planning is the most critical. For us, the bridge between our brand and the consumer is logistics. FedEx have delivered beyond expectations. They literally and figuratively go the extra mile for us.”

Protecting a brand

FedEx has customers across different industries and each of their needs are different. In the case of Relate, who operate in the retail sector, buying patterns are important. “Retailers run a tight ship,” explains Neil.

“They have planning cycles and seasons. Besides the fact that penalty clauses are built into contracts, you can’t miss a deadline by two days, or you’re in the next cycle, and that might be two weeks later. Not only are you missing out on valuable shelf time, but this can affect an entire campaign. Lost sales can also influence the retailers’ buying decision the following season. FedEx has made it their business to understand our business, so they know what’s at stake and what’s important to us.”

Supporting growth

FedEx has also played an integral role in the overall expansion of Relate Bracelets, particularly into new markets. “As a global organisation, FedEx has been absolutely critical in supporting us to grow our business into Africa, the US, Australia, the UK, Western Europe, and now New Zealand. They play an enormous role in the delivery of our products, with sophisticated tracking systems ensuring that the quality and integrity of our products are maintained.”

Through the relationship with FedEx, Relate experiences the benefits of working with a globally recognised and credible brand. “When you work with quality, you get quality.”

Related: Entrepreneur BB Moloi’s Inspiring Story of Rise To Success Through Grit And Hard Work

The business

If you’ve ever bought a beaded bracelet that supports a cause (for example: United Against Malaria, Operation Smile SA or PinkDrive), chances are it was a Relate Bracelet. If you bought it at Woolworths, Clicks, Sorbet or Foschini, it most definitely was.

To date, Relate Bracelets has raised more than R40 million, which supports various charities and ‘gogos’, women living on government grants and supporting their grandchildren, and who desperately need the additional income Relate Bracelets provides.

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Entrepreneur Profiles

Slikour’s Moto: If You Dream It, You Can Be It

Rapper and entrepreneur Slikour believes his success is the result of one key element: The aspiration to make something of himself, and create a platform for his voice to be heard. Now he’s bringing that mindset to South Africa’s black urban youth.

Nadine Todd

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Before you can achieve great success, you have to believe in the possibility of success. This is the single greatest secret to changing your circumstances — you have to believe it’s possible.

Did music or entrepreneurship come first? Siya Metane, aka rapper Slikour, isn’t sure himself. The two have worked hand in hand for him since he started selling cassette tapes of his own music when he was 12 years old.

What has developed over time however, is an innate and deep understanding that with his success comes a responsibility to pay it forward, and help his community and kids like him see that they can be anything they put their minds to.

Related: 10 SA Entrepreneurs Who Built Their Businesses From Nothing

If they can dream it, they can be it — provided they realise they can dream it in the first place. This is his challenge, and greatest driving force.

Start small, but dream big

I bought cassette tapes on Smal Street in the CBD for R5. My best friend, Lebo and I recorded our own rap music onto them and sold them in our neighbourhood for R15. We needed the mark-up — it meant we could buy more tapes, and also that we were making a profit.

Related: Zuko Tisani Learnt These 7 Invaluable Lessons On His Path To Success

I’m not sure if we were trying to start a business or launch our rap careers, but if you’re living in a hood like Leondale you don’t always recognise that there are opportunities open to you. No one is going to do it for you — you have to have your own aspirations, and find a way to make them happen.

Keep dreaming big, no matter what

That was one of the biggest and earliest lessons I recall growing up: The ability to dream big can be stifled out of you. I lived in a hood where there were no aspirations past our neighbourhood — the neighbourhood and its opportunities were everything. If 90% of the people you know are suffering, who are you to not suffer?

It’s a very limiting mindset, and one that does a lot of damage to our youth. I knew kids who had incredible potential, but could only look at their immediate environments for opportunities. So a budding young scientist doesn’t find a way to change the world — he finds a new way to make drugs.

Those are the limiting aspirations I was surrounded by. I call it the Trap, and it’s the driving force behind everything I do today. I want South Africa’s urban youth to recognise the Trap, and understand that they should have aspirations beyond it, because they have the abilities and potential necessary to break free.

Work hard, be determined and believe in yourself

I was lucky, I wasn’t a victim of the Trap. What so many people don’t understand is that I could have been. Hard work, drive and discipline aren’t enough to break free of the Trap. You need to believe you can break free — to look beyond your current circumstances. In my experience, that seemingly simple mindset shift is the biggest hurdle to overcome. It’s more complicated and pervasive than you can imagine.

Two things showed me a different way. First, my mom got me bursaries at Holy Rosary Convent and then St Benedict’s College. I was surrounded by rich white kids, full of privilege, and it struck me that here were the same talents and opportunities, but with a wealth of aspiration in the mix.

Related: Self-Made Millionaire At 24 Marnus Broodryk On How To Build A R1 Billion Business

That was the real difference — not ability, but recognising that ability and having the aspiration to do something with it. It was eye-opening. The second was meeting my best friend, Lebo Mothibe. Lebo, or Shugasmakx, as he’d later be known in the music world, had one foot in the privileged world, and one foot in our world.

His mom lived in the hood, his dad was a wealthy entrepreneur who lived in Illovo. And Lebo straddled both worlds effortlessly, and with humility. But he looked beyond the limiting beliefs held by many of his neighbourhood peers.

Find people to inspire you to reach success

His dad was also the first self-made, wealthy black man I met. But when I heard his story, I realised that it wasn’t overnight success. He’d slept on Lebo’s mom’s couch while he slowly but steadily built his business. It gave me an understanding that success is earned. You need to work at it, and push on against adversity. This had a huge impact on me.

Lebo was the ying to my yang. Even though we didn’t think of each other as business partners, that’s what we were, from the age of 12. We formed Skwatta Kamp, we hustled and shook up the music industry together, and changed the face of rap music in South Africa.

I was the dreamer, the visionary, and Lebo was the executor. He found a way to make my crazy schemes and ideas come to life. This is exactly what a partnership should be — helping each other grow, and complementing diverse skill sets.

Build your success, one step at a time

We built our success, brick by brick. I entered a TV show competition, Jam Alley, and won. I used the cash and Dions vouchers to buy recording equipment. Lebo’s dad helped with speakers and a keyboard. My brother, who was studying IT, downloaded software and helped us with our recording quality. Everyone pitched in with what they could. 

Be your own biggest cheerleader

We tried the recording contract route for a while, but realised that the only people who cared about our success were us. And so we hit the streets — hard. We had street crews, we sold our own CDs and negotiated with music stores to carry our albums.

Recording studios kept saying they’d sign us, but they never had a studio available. They just didn’t see the value in rap and hip hop. They didn’t believe there was money in it in South Africa. We needed to prove there was.

Gallo finally approached us and signed us after we won at the South African Music Awards (SAMAs) as an independent act. We used real guerrilla tactics to get our name out there — on stage, with that platform, we told our fans that if a music store didn’t carry our album, to burn it down. We wanted the attention — that’s how you build a name.

Related: Entrepreneurial Powerhouse TBO Touch On How Success Is Built From Small Acts

Our first album went gold, and we used that to push the idea of rap into mainstream media. If 20 000 people bought the album, another 200 000 had bootlegged it. There was money here; and slowly brands and advertisers started realising we were right.

Drive a movement with your business

We were musicians, but first and foremost we were driving a movement, and that meant we needed to be businessmen as well. We hosted end of year parties, and got brands on board, realising we had a captive audience that aligned with their target market demographics. We started our own label, Buttabing Entertainment.

Our goal was to find and nurture young musicians from the hood to get them established in the industry, and show other kids in the Trap that it could be done: Anyone can create their own destiny. One of the things I’m proudest of is discovering a kid in Katlehong, Senzo Mfundo Vilakazi, who would develop into Kwesta.

He’s doing phenomenally well, and recently appeared on Sway in the Morning, one of the biggest hip hop shows in the US. Our success spilt over into Kwesta, and now his meteoric rise will hopefully inspire a whole new generation to dream bigger than they ever thought possible.

Pivoting to further growth

All success has its pinnacle. By 2010 we had achieved so much as Skwatta Kamp. We’d brought rap music into the mainstream and opened opportunities for countless kids, as music labels actively sought rap and hip hop acts. I realised that I’d hit a ceiling. I needed to step back, regroup and figure out what to do next.

What I did was something I’ve only ever associated with privilege. I moved home, spent a lot of time lying on the couch, and wrote. I wrote my life, my lessons, my dreams, my ideas. I don’t know how I reached a point where I was able to do that, but I’m grateful. I started collecting my thoughts and understanding my purpose.

During that time I was approached to join a few marketing agencies. I had no formal marketing training, but we’d worked with big brands at our parties and activations.

Sprite was the first to recognise that they had an opportunity to authentically connect with the black urban youth through us, and so we partnered up. I learnt above-the-line marketing in a Coca-Cola boardroom, and built onto what we’d learnt on the streets about below-the-line marketing.

Take a step back, and rediscover your purpose

That experience had drawn attention, and so for a while I joined an agency. But its mandate was sponsorships, and my heart was with the black urban youth. I’d discovered my purpose, even if I’d subconsciously been living that purpose for almost 20 years.

I wanted to create a platform that gives young black artists a voice; established artists a way to reach out to the youth that other platforms don’t offer; and brands a way to authentically connect with that audience — not just to sell products, but to show black urban youth that their culture is important, that it holds value, and that they, in turn, hold value.

Related: Shark Tank’s Romeo Kumalo Weighs In On High-Impact Entrepreneurial Businesses

Adidas’s support of Run DMC in the US showed that kids from the ghetto had a message worth listening to. Big brands have the power to connect the unheard and voiceless to the mainstream, if it’s done correctly. I had the marketing experience to understand the ROI that brands need, as well as what I could do with that to support black urban youth.

All I had were dreams and a URL, but that was enough. I quit my job and launched my website, Slikouronlife.

Reveal opportunities and create aspirations with your message

This is my politics and CSI. If we can get marketing to marry culture, and change the positioning and perception of young black South Africans, we can show there are opportunities out there, and create aspirations.

But we need to put culture first and tap into the authenticity of who we are as South Africans. We need to recognise and acknowledge the mental traps that exist in our neighbourhoods, and that we are victims of limiting beliefs, and then show that there is another way.

Everyone told me I was nuts. That black people don’t go online. I did it anyway. With Skwatta Kamp we had created a market for our music. Kids supported us; my name added value — and then brands came on board. We now average between 200 000 and 250 000 unique visitors a month, which is impressive for a mainstream website, let alone a niche music site.

Ten months ago we were a team of three operating from my house with one desk. Today we’re a team of ten with one focus: To make a real difference on the ground. To give the voiceless a voice. To prove that if we can drive the aspirations of South Africa’s urban youth, the sky will be the limit.


Related: Watch List: 50 Top SA Small Businesses To Watch

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Entrepreneur Profiles

Edward Moshole Founder Of Chem-Fresh Started With R68 And Turned It Into A R25 Million Business

Edward Moshole started a business in 1999 with just R68 in his pocket. Today he has a company that not only has a turnover upwards of R25 million, but is also on the cusp of expanding to the next level. Here’s how he’s turning clients into partners.

GG van Rooyen

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Vital Stats

In 1999, Edward Moshole was a cleaner with just R68 in his pocket, but he noticed a business opportunity.

Good quality detergents and disinfectants could make a tough cleaning job much easier, so he started buying quality products in bulk and selling them to his fellow cleaners. He wasn’t satisfied, though. He wanted a business that made and sold its own products. So, he tackled the long and arduous process of creating cleaners and detergents that could pass strict regulations and compete with the best products on the market.

It wasn’t easy, but he kept at it. In fact, he only got his first real breakthrough in 2006 when a supermarket agreed to start stocking his products. Today, his Chem-Fresh products can be found all over Africa, and he counts Pick n Pay as one of his main clients. How did Moshole manage to turn R68 into an empire?

Here are his rules for building a large and sustainable operation.

1. Find the right clients

“Very early on, I identified Pick n Pay as a must-have client. I could see that the company was changing its strategy — it was starting to move into townships and rural areas, places where it hadn’t been operating until then — and I thought it would be the perfect place to sell Chem-Fresh products,” says Moshole. But getting in wasn’t easy.

“As a small business, you don’t get to sit down with decision- makers. Becoming a supplier to a large retailer is a difficult process. It took me years to get a foot in the door, but I didn’t give up. I just knew that Pick n Pay was the right company to do business with, so I kept at it.

I refused to take no for an answer. Today, Pick n Pay operates more like a partner than a client.

Related: Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds

Thanks to my partnership with Pick n Pay, I’ve been able to scale Chem-Fresh quickly and access a distribution channel that allows Chem-Fresh products to be sold all over the continent. Once you have the right clients, you gain instant clout and reliability.”

2. Own the manufacturing process

chem-fresh-products

PC: risingafrica.org

When starting out, entrepreneurs often have little choice but to buy other companies’ products and resell them. It’s not necessarily a bad thing — it can be a successful strategy. However, it can eventually limit your growth.

Firstly, buying and reselling products places a cap on your margins. When you own the manufacturing process, you can increase your margins, since making and selling products tends to offer wider margins than merely buying and reselling.

That said, you have to keep in mind that this is only true when you operate at a certain scale. Making and selling something in small quantities can often be more expensive and time consuming than simply buying it from a supplier. You need to crunch the numbers and make sure that the expense of a manufacturing facility is actually worth it in the long run.

Secondly, it allows you to keep control of the quality of your product. “The secret to any great brand is consistency,” says Moshole.

“People should know what they can expect from the brand, and one of the best ways to ensure this is to have total control of your product. If you make it yourself, you’re in charge of the quality.”

3. Be willing to diversify

Some companies can grow while sticking to a very specific niche, but most have no other option but to diversify. Although Chem-Fresh started out selling just one or two products, Moshole soon started to expand the range. The company now has more than 100 products.

“Generally speaking, you can only capture so much of a market. Sometimes it makes sense to actively try to grow your market share, but it’s also a good idea to diversify. Not only does this open more revenue streams, but it also protects the business against market changes. So, if the sales of one product slows down, another speeds up and everything evens out,” says Moshole.

Related: Sibongiseni Mbatha’s Top Collaboration Techniques To Grow Your Business

But the important thing is not to stray too far from your comfort zone. Chem-Fresh now has a large product range, but it has stuck to an industry that it is knowledgeable about. The company has built a name for itself within a specific industry.

4. Build a strong foundation

“Don’t wait too long to start thinking about the long-term life of your business,” advises Moshole. “The stronger the foundation of the business, the easier it is to grow it, so you need to implement the right systems and processes early on. If you don’t, the business will fall apart without you.

“You will always be very involved at an operational level. You’ll be so busy with the daily grind, that you’ll never be able to take a strategic view and focus on building the company.

So, you need the right systems and the right people. You need to know that the business can keep going without you. If you do this, you will be able to grow the company while others deal with the operational demands.”


Key Insights

There’s no substitute for perseverance

It took Edward years to get his product onto Pick n Pay’s shelves, but he wouldn’t take no for an answer. Today, the relationship is more like a partnership.

Own the process

In the right quantities, producing and selling your own product can significantly increase your margins over selling someone else’s products.

Strategically increase revenue streams

Diversifying your product range within your niche allows you to offer the same clients a greater range, tap into new markets, and protect the business against market changes.


TAKE NOTE

Take a long-term view when contemplating the growth of your company. It’s never too soon to prepare a business for growth. Implementing the right systems and processes right now can make it much easier to scale the operation down the line.


Related: 6 Of The Most Profitable Small Businesses In South Africa

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