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CEO Michael Sassoon Shares Sasfin’s Successful Strategies To Stand The Test Of Time

Michael Sassoon unpacks the thinking behind staying agile as well as building products and offering solutions that meet customer needs.

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Vital Stats

  • Player: Michael Sassoon
  • Company: Sasfin Holdings
  • Position: CEO
  • Visit: www.sasfin.com

Have a long-term vision

Although Sasfin is a listed business, the Sassoon family still owns 40% of the company, and the recent succession of Michael Sassoon to CEO means the bank’s leadership has also remained in the family. The appointment had to be approved by both Sasfin’s board and the Reserve Bank, and so it wasn’t a foregone conclusion, but it does mean that there is a high degree of continuity between founder Roland Sassoon’s vision and his son’s continuation as CEO.

“It comes down to the agency theory question,” says Michael. “Because of reward structures that focus on short-term gains, professional managers can tend towards short-term orientations and decisions. This could mean they invest less in the short-term for long-term projects or goals.

“We’ve always taken a different approach. The strategic benefits of ownership mean that we are not only focused on what this business looks like tomorrow. We are far more interested in what the business looks like in 20 years’ time.

“Many of the decisions that this business has taken in the past only reaped results and bore fruit ten years later. It’s an important distinction. Without those decisions this would be a completely different business today.

“We’ve had cash cows that weren’t part of our long-term vision. Instead of investing more in those for short-term gains, we went into a different spread of activities. If we had a short-term view only, the importance of a banking license may have not been as significant then and the long-term gains would not have been realised. Even entering transactional banking four years ago against some very large and established players is the result of a future-forward view.”

Make decisions based on your competitive space, not what you think you should be doing

When Sasfin entered the transactional banking space four years ago, it wasn’t because that’s what banks did and they felt they needed to add ‘banking’ products to their portfolio. Instead, the competitive space was extensively researched.

Related: Think Beyond The Box

“Always start by trying to understand the customer need,” says Michael. “Is there a need that isn’t being met in the market? If the answer is no, move on. But if it’s yes, then you can start to figure out how you can meet that need, or if you can address it in a different way to your competitors in that space.

“Through our research we found many SMEs who were frustrated with the engagements they were having with their banks. We believed that there was an opportunity to address a customer need that wasn’t being effectively met in the market, and that there was a way to do so that would give us appropriate return while addressing a client requirement. That’s the starting point of any new endeavour.”

The entire process follows a client-first approach, rather than focusing on the business’s menu of products and what can be added to increase revenue streams. “Any great entrepreneurial business needs to address a need in the market,” adds Michael.

Marry your business imperative to a social imperative

Michael believes firmly in the ideal that the most successful businesses link a social imperative to the business’s imperative. “Before joining Sasfin in 2009 I was very involved in Jewish non-profit community work throughout my early 20s. Because of this, I was fortunate to be put into leadership positions at a young age in my life, but I was also immersed in social imperatives, and how they cannot be put aside for business imperatives. Ideally, you want to marry the two.

“The best way to do this in the context of South Africa is to realise that the real challenges we face as a country are economic. If we can address them, we can make a difference. That’s the core of our business.

“There is always a lot of charity work you can do, and like all South African corporates we have CSI projects, but the reality is that thriving economies have a much bigger impact on the state of healthcare, education, jobs and poverty than charity work and CSI projects will ever achieve. For-profit business done well can be the most important driver of social reform.

“As a bank, it’s our job to enable a lot more businesses to access finance and banking, which in turn should increase the tax base, create jobs and positively impact the economy. The most successful social reform occurs when there’s a business imperative that’s married to a social imperative.”

Michael isn’t advocating reckless lending on behalf of banks though. “SMEs want banks to be robust with credit assessments. If they aren’t and they lose money, they will stop offering as much credit in the future. It’s not good for anyone if banks are not lending well; it has the potential to result in a retraction of the market.”

Finding solutions to meet needs

One of the ways that Sasfin is looking at meeting the needs of SMEs in South Africa is through its recently launched B//YOND banking platform, a digital platform that pulls everything into one place, from transactional banking to the company’s payroll and book-keeping needs.

“We started working on B//YOND three years ago. We looked at the frustrations SMEs had, as well as our own frustrations as a bank, and we realised that the biggest need many SMEs have is a way to handle their administration hassles. We wanted to create a platform that results in better quality information that is accurate and easily accessible.

“This helps us evaluate businesses better when it comes to financing needs, but it also helps SME owners run the financial side of their businesses with greater accuracy and less hassle. So often the quality of information we receive is poor — recons don’t work, we don’t get a good view of the business’s cashflow, it’s difficult to understand what’s happening in the business, and ultimately SMEs get frustrated with banks, but banks are equally frustrated with the quality of information they have access to.

Related: What To Consider When Investing Your (Hard-Earned) Money

“We asked ourselves how we could help SMEs address this issue, first to ensure they are generating better information to manage their businesses, and secondly to improve their cash management and therefore increase their chances of receiving funding.”

Sasfin’s approach to new products and services follows Agile methodology. “What B//YOND is today and what we conceptualised three years ago is not the same thing. We built it in such a way that we knew there would be learnings and they would inform certain changes. We’ve made a big move towards the Agile approach in our business. It’s entrenched in the tech space, but it’s a business methodology as well — fail fast and learn quickly as you’re developing anything new.

“Our vision is the same, but you need to adjust and tweak everything as you build it. In a year or two it will look differently to what we think it will look like in a year or two as well, and we’re comfortable with that uncertainty. It’s part of business, and ultimately it leads to a solution with better product-market fit than something built with no input from your customers.”

High touch on client experience, digital on admin

One of Sasfin’s biggest market differentiators has been its high-touch model. “We try and understand people, their businesses and what’s underlying those businesses,” says Michael. “It’s less of a credit scorecard approach and more of a qualitative approach.

“Because of this approach, we’ve often been able to finance businesses that couldn’t access finance elsewhere. Many businesses look terrible on a scorecard basis alone. Working capital is under strain, the viability of the business is in question and so on.

“When you actually meet the owners and their team though, and can evaluate their model, supply chain and contracts, as well as unpack their vision, you realise that with the right assistance they can right the course of their businesses and grow. These aren’t easy things to quantify though.

“We’ve learnt that comparing two businesses on paper, one might look more fundable. Then you actually meet the business owners and you realise that the one that didn’t look as good on paper has done more homework, presents their case better, is more on top of their numbers and their business. Remember, it’s incumbent on the entrepreneur to convince the lender to give them money. Our high-touch model gives them the opportunity to do so.”

The problem with a qualitative approach is that it’s high-touch, and therefore difficult to scale. In a Y Combinator hosted series of lectures at Stanford, Y Combinator alum Walker Williams, founder of Teespring, shared the biggest lesson they’ve learnt: To do things that don’t scale for as long as possible.

The longer you can do things that don’t scale, the bigger your advantage over the competition. There will come a time when you’re too big to do these things, but don’t fret over it in the early days.

“To address scale in our business, we’re in the process of digitising the administration as much as possible,” says Michael. “The administrative side of accessing banking and funding is huge — there’s a host of paperwork that needs to be completed, covering anti-money laundering, credit analysis and security schedules to name a few. The more we digitise this, the more we can improve the client experience by freeing up our team to focus on qualitative assessments. That’s how we maintain our differentiator but still scale the business.

“We can’t lose the high-touch, last mile offering we’ve built, but we do need to grow it. That requires opening up the time and fostering the IP and people who can assess clients, giving SMEs the opportunity to engage with our organisation at a high-touch level.”

Compete on your terms

To build B//YOND, a team has been created that covers business skills, banking, IT and marketing. “With tech initiatives, a lot of focus is given to building the product, which is important, but in the process distribution is often neglected, when in fact this is absolutely key,” says Michael.

“When you embark on any project, build a team that covers all aspects of what you’re trying to achieve. It doesn’t need to be a big team; robust teams are able to cover all the angles. You still want to maintain agility.

“Malcolm Gladwell’s David and Goliath is an excellent look at how SMEs can compete with big players. In essence, you need to compete in an area where big players have a disadvantage. That doesn’t mean you need a big team. You just need to find something that you can do that big players can’t do. That’s how SMEs can compete in big, mainstream markets, but it all begins with the right mindset. Big corporates have a lot of complexity. Take advantage of that.”

Related: Raising Capital In A Worsening Macro-Economic Environment

Another move Sasfin has made is building B//YOND on an Open API platform. “Traditionally, banks don’t want to share their clients’ information. It’s viewed as a competitive advantage. We want to service our clients as best as possible, and we understand that by linking with other service providers, such as Xero Accounting Software, and allowing our clients to share their information at the touch of a button with other service providers, we’re making their lives easier.

“We are late entrants into transactional banking and it’s not our core, so we have far less to lose, but we also recognise that you need to be willing to disrupt yourself. Often incumbents don’t want to disrupt themselves. It will hurt. We’ve got far less to lose, we’re happy to do it, and we know that partnering with third party providers will ultimately help our clients, which engenders loyalty because we’re adding value. It all goes back to finding those areas where you can differentiate and compete.”

Review your business and move forward

Sasfin’s recent results have shown a drop in earnings. “It’s been a difficult credit environment and we have suffered some bad debts due to credit losses. There’s been zero economic growth in South Africa and challenges in the economy.

“That said, it’s never a good idea for a business — any business — to blame external forces for current situations.

“While you need to recognise external factors, it’s essential to look at what’s happening internally. We’ve experienced some internal changes over the past 12 months; we’ve been investing a lot into the business and we’ve recognised that there were some areas we could have done better.

“While we have a new strategy, we are not changing our purpose, which is to support the SME and investor market long-term. To do that, we need to be continually reviewing what we can do better, where we can improve, and where we can enhance what’s happening.

“If you do that, you’ll improve. If things go wrong and you look for things to blame, you end up in a downward spiral. Instead, always ask, what are we going to do better next time?”

Sasfin Corporate Finance focuses on providing innovative commercial and banking solutions to our clients. As an accredited sponsor and designated advisor with the JSE, we offer our sponsor and designated advisor clients independent advice on a full range of corporate finance transactions including advice relating to continuing obligations in terms of the JSE Listings Requirements. Sasfin Capital is a division of Sasfin Bank Limited, a subsidiary of Sasfin Holdings which listed on the JSE in 1987

Entrepreneur Profiles

6 Lesson Gems From Appanna Ganapathy That Helped Him Launch A High-Growth Start-Up

Twenty years after first wanting to own a business, Appanna Ganapathy launched ART Technologies, a business he aims to grow throughout Africa, starting with Kenya thanks to a recently signed deal with Seacom. As a high-growth entrepreneur with big plans, Appanna spent two decades laying the foundations of success — and now he’s starting to collect.

Nadine Todd

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Vital Stats

Like many entrepreneurs before him, Appanna Ganapathy hadn’t even finished school and he was already thinking about his first business venture. A friend could secure the licensing rights to open Nando’s franchises in Mozambique, and they were very keen on the idea — which Appanna’s mom quickly dampened. “You can do whatever you want,” she said. “As long as you finish your degree first.”

Unlike many other entrepreneurs however, Appanna not only finished his degree, but realised that he had a lot of skills he needed to develop and lessons to learn before he’d be ready to launch the business he wanted.

“We launched ART Technologies just over two years ago. If I had started any earlier, I don’t think I would have been as successful as I am now,” he says.

Here are six key lessons that Appanna has learnt along his journey, which have allowed him to launch a high-growth start-up that is positioned to make an impact across Africa.

1. You don’t just need a product – you need clients as well

Business success is the ability to design and execute a great product and solution, and then be able to sell it. Without sales, there is no business. This is a lesson Appanna learnt while he was still at university.

“I was drawn to computers. I loved figuring out how they worked, playing computer games — everything about them,” he says. “My parents lived in Mozambique, and during my holidays I’d visit them and a friend who had a computer business. I helped him assemble them and thought I could do this too while I was studying. I convinced my dad to buy me a car so that I could set up my business — and never sold or assembled a single computer. I delivered pizzas instead.”

So, what went wrong? The simple truth was that at the time Appanna had the technical skills to build computers, but he lacked the ability to sell his product.

“If someone had said, ‘I’ve got an order for 30 computers’, I would have filled it — but to go out and get that order — I didn’t really even know where to start.”

2. Price and solution go hand-in-hand

As much as you need the ability to sell your solution, you also need a market that wants and needs what you’re offering, at a price point that works for everyone.

In 2007, Appanna was approached by a former supplier whom he had worked with while he was based in Mozambique. The supplier had an IT firm and he wanted to expand into South Africa. He was looking for a local partner who would purchase equity shares in the company and run the South African business.

“I loved the opportunity. This was something I could build from the ground up, in an area I understood well,” says Appanna. The firm set up and managed IT infrastructure for SMEs. The value proposition was simple: “We could offer SMEs a service that they could use for a relatively low cost, but that gave them everything an enterprise would have.”

The problem was that although Appanna and his team knew they had a great product, they were competing on price with inferior products. “If we couldn’t adequately unpack the value of our solution, an SME would choose the cheaper option. It was a big lesson for me to learn. It doesn’t matter how good the solution is that you’re offering — if it’s not at a price point that your target market accepts, they won’t choose you.”

It was this understanding that helped Appanna and his team develop the Desktop-as-a-Service solution that ART Technologies now offers the SME market.

“While I was developing the idea and the solution, I needed to take three key things into account: What do SMEs need from an IT infrastructure perspective, what is the most cost-effective way to offer them that solution, and what will the market pay (and is it enough to cover our costs and give us a small profit margin)?”

Appanna’s experience in the market had already taught him how cost-conscious SMEs are, and so he started developing a solution that could deliver value at a price point SMEs could accept. His solution? A unique Desktop-as-a-Service product that combines all the processing power and Microsoft products a business needs, without any capex outlay for servers or software.

“It’s a Cloud workstation that turns any device into a full Windows computer,” Appanna explains. “We hold the licences, and our clients just access our service. A set-up that would cost between R180 000 and R200 000 for 15 users is now available for R479 per user per month.”

It took Appanna and his partners time to build the solution, but they started with the price point in mind, which meant a solution could be designed that met their needs as well as the needs of the market.

“Too many businesses set everything up, invest in the solution, and then discover they can’t sell their product at the price point they need. My time in the market selling IT and infrastructure solutions gave me invaluable insights into what we needed to deliver on, and what we could realistically charge for our service.”

3. Get as much on-the-ground experience as you can

appanna-ganapathy-art-technologies

The time that Appanna spent building the IT firm he was a part-owner of was invaluable. “I started as a technical director before being promoted to GM and running the company for three and a half years. Those years were very, very important for me. They’re where I learnt everything about running a business.

“When I started, I was responsible for sales, but I didn’t have to actually go out and find clients, I just had to meet them, compile quotes and handle the installations. Everything I did was under the guidance of the company’s CEO, who was based in Mozambique. Being the guy who did everything was the best learning ground for me. It set me up for everything I’m doing today. In particular, I learnt how to approach and deal with people. Without people and clients your business is nothing.”

Appanna didn’t just learn by default — he actively worked to expand his understanding of all facets of the business. “At the time I wasn’t planning on leaving to launch my own business,” he says. “I was a shareholder and I wanted to grow that business. That meant understanding as much as possible about how everything worked. If there was something I wasn’t sure of — a process, the numbers, how something worked — I asked. I took personal responsibility for any errors and got involved in every aspect of the business, including areas that weren’t officially ‘my job’. I wanted to really grow and support the business.”

4. Stay focused

Interestingly, while the experience Appanna has accumulated throughout his career has allowed him to build a high-growth start-up, it also taught him the importance of not wearing too many hats as an entrepreneur.

“I’m glad I’ve had the experience of wearing multiple hats, because I’ve learnt so much, but I’ve also learnt that it’s important to pick a lane, not only in what you do as a business, but in the role you play within your business. I also race superbikes in the South African Kawasaki ZX-10 Cup; through this I have learnt how important it is to focus in the moment without distractions and this is a discipline I have brought into the business.”

“If you’re the leader of an organisation, you need to let things go. You can’t be everything to everyone. When I launched ART Technologies, I knew the key to growth would be the fact that although I’m technical, I wasn’t going to run the technical side of the business. I have strong technical partners whom I trust, and there is an escalation framework in place, from tech, to tech manager, to the CTO to me — I speak tech and I’m available, but my focus is on strategy and growth. I believe this is the biggest mistake that many start-ups make. If you’re wearing all the hats, who is looking at where you’re going? When you’re down in the trenches, doing everything, it’s impossible to see the bigger picture.”

Appanna chose his partners carefully with this goal in mind.

“All the partners play a very important role in the business. Ruaan Jacobs’s strength is in the technical expertise he brings to the business and Terry Naidoo’s strength is in the support services he provides to our clients. Terry is our technical manager. He has the most incredible relationship with our customers — everyone wants to work with Terry. But there’s a problem with that too — if we want to scale this business, Terry can’t be the technical point for all of our customers.

“As partners we have decided what our blueprint for service levels will be; this is based on the way Terry deals with clients and he is developing a technical manual that doesn’t only cover the tech side of the business, but how ART Technologies engages with its customers.

“Terry’s putting his essence down on paper — a step-by-step guide to how we do business. That’s how you build a service culture.”

5. Reputation, network and experience count

Many start-ups lack three crucial things when they launch: Their founders haven’t built up a large network, they don’t have a reputation in the market, and they lack experience. All three of these things can (and should) be addressed during start-up phase, but launching with all three can give the business a valuable boost.

Appanna learnt the value of networks at a young age. Born in India, he moved to Zambia with his family as a young child. From there he moved to Tanzania and then Mozambique, attending boarding school in Swaziland and KwaZulu Natal. At each new school, he was greeted by kids who had formed strong bonds.

“I made good friends in those years, but at each new school I recognised how important strong bonds are, particularly as the outsider.”

Appanna’s early career took him back to Mozambique, working with the UN and EY on various projects. When he moved to South Africa, as a non-citizen he connected with his old boss from the UN who offered him a position as information officer for the Regional Director’s team.

His next move would be to the tech company that he would run for just over three years — also the product of previous connections. “Who you know is important, but how you conduct yourself is even more so,” says Appanna. “If your reputation in the market place is good, people will want to do business with you.”

Appanna experienced this first hand when he left to launch his own business. “Some key clients wanted to move with me,” he says. “If I had brought them in it would have settled our business, but I said no to some key customers who hadn’t been mine. I wasn’t ethically comfortable taking them with me.”

One of those multinational clients approached Appanna again six months later, stating they were taking their business out to tender and that they were hoping ART Technologies would pitch for it. “Apart from the Desktop-as-a-Service product, we also provide managed IT services for clients, particularly larger enterprise clients. Due to the client going out on tender and requesting for us to participate, we pitched for the business and won. The relationship with this client has grown, allowing us to offer them some of our services that they are currently testing to implement throughout Africa.”

“I believe how we conduct ourselves is essential. You need your own personal code of ethics, and you need to live by it. Business — particularly in our environment — is built on trust. Our customers need to trust us with their data. Your reputation is key when it comes to trust.”

Interestingly, although Appanna and his team developed their product based on a specific price point, once that trust is built and a certain standard of service is delivered, customers will pay more.

6. Start smart and start lean

Appanna was able to launch ART Technologies with the savings he and his wife, Kate, had put aside. He reached a point where he had ideas he wanted to take to market, but he couldn’t get his current business partners to agree to them — and so setting up his own business became inevitable.

Although he was fortunate to have savings to bootstrap the business, it was essential for the business to be lean and start generating income as quickly as possible. This was achieved in a number of ways.

First, Appanna and Kate agreed on a start-up figure. They would not go beyond it. “We had a budget, and the business needed to make money before that budget was reached.” The runway Appanna gave himself was only six months — highly ambitious given the 18-month runway most start-ups need. “Other than my salary we broke even in month three, which actually extended our runway a bit,” says Appanna.

Appanna had a server that he used to start with, and purchased a second, bigger server four months later. He also launched another business one month before launching ART Technologies — ART Call Management, a virtual PA services business that needed a PABX system, some call centre technology and two employees.

“I’d been playing around with the idea for a while,” says Appanna. “We were focused on SMEs, and I started noticing other challenges they faced. A lot of entrepreneurs just have their cellphones, but they aren’t answering them as businesses — it’s not professional.

“In essence we sell minutes — for R295 you get 25 incoming calls and 50 minutes of transferred calls. We answer the phone as your receptionist, transfer calls and take messages. How you use your minutes is up to you. For example, if you supply the leads, we can cold call for you. ART Technologies uses the call management business as a reception service and to do all of our cold calling. It’s kept the business lean, but it’s also brought in an income that helped us with our runway.” In 2017 ART Call Management was selected as one of the top ten in the SAGE-702 Small Business Awards.

The only problem with almost simultaneously launching two businesses is focus. “It’s incredibly important to know where you’re putting your focus,” says Appanna. “The call management business has been essential to our overall strategy, but my focus has been pulled in different directions at times, and I need to be conscious of that. The most important thing for any start-up is to know exactly where your focus lies.”


Into Africa

Thanks to a distribution deal signed locally with First Distribution, ART Technologies was introduced to Seacom, which has available infrastructure in a data centre in Kenya.

“It’s a pay-per-client model that allows us to pay Seacom a percentage of every client we sign up,” says Appanna. “First Distribution will be our sales arm. They have a webstore and resellers, and we will be opening ART Kenya with a shareholder who knows the local market.”

From there, Appanna is looking to West Africa and Mauritius. “We have the product and the relationship with Seacom gives us the foothold we need to grow into East Africa.”

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Entrepreneur Profiles

Kid Entrepreneurs Who Have Already Built Successful Businesses (And How You Can Too)

All over the world kids are abandoning the traditional notion of choosing a career to pursue until retirement. Gen Z aren’t looking to become employable job-seekers, but creative innovators as emerging business owners.

Diana Albertyn

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Do kids have an advantage or disadvantage when it comes to starting and building a company? It depends on how you look it. Juggling school, friends, family and other aspects of childhood and adolescence comes with its own requirements, but perhaps this is the best age to start.

“Being an entrepreneur means having to learn, focus, and connect to people and these are all traits that are valuable throughout life. Learning this when you are young is especially crucial, and will set you up for success and to be more open to other opportunities,” says billionaire investor, Shark Tank personality and author Mark Cuban.

Here are some of the most successful kidpreneurs who have cashed in on their hobbies, interests and needs to start and grow million dollar businesses borne from passion and innovation:

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Entrepreneur Profiles

30 Top Influential SA Business Leaders

Learn from these South African titans of industry to guide you on your entrepreneurial journey to success.

Nicole Crampton

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Entrepreneurship is said to be the answer to South Africa’s unemployment challenges and slow growth, but to foster entrepreneurship we ideally need business leaders to impact grass root efforts. Business leadership is vital to improved confidence and growth. These three titans of global industry say:

  • “As we look ahead, leaders will be those who empower others.” – Bill Gates
  • “Leaders are also expected to work harder than those who report to them and always make sure that their needs are taken care of before yours.” – Elon Musk
  • “Management is about persuading people to do things they do not want to do, while leadership is about inspiring people to do things they never thought they could.” – Steve Jobs

Here are 30 top influential SA business leaders forging the path towards a prosperous South African future.

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