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Governance = Value Creation + Massive Business Growth

South African biotechnology company Deltamune, launched by Hannes Swart and three partners after a management buyout of the in-house laboratory of Golden Lay Farms in 1995, more than doubled in size over 36 months – from R40 million to R90 million.

Monique Verduyn

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An animal health business focusing on veterinary and public health solutions for the production animal sectors, the challenge for Deltamune was one faced by many companies that are started by scientists and engineers: How to turn a business founded on the owners’ expertise into a sustainable enterprise with a structure that will enable it to grow and evolve separately from the founders.

It was a challenge that founder Hannes Swart began to address in 2007, when he brought in HL Hall & Sons Investments.

The well known Mpumalanga-based company became the majority shareholder in the business under the guidance of Richard Franklin, who is responsible for the group’s pharmaceutical portfolio.

“As professional investors, we look at businesses from different angles, and with a long-term perspective in mind, unlike a business’s management team and original shareholders,” says Franklin.

“With Deltamune, we identified a company run by founders who were passionate about science and laboratory technology. What we needed to do as a team was to introduce business processes and practices that would enable the company to really flourish.”

The path to transformation

It’s worth noting that the business was achieving turnover of around R40 million up until 2010, which is not bad in anyone’s terms, but it was clear to everyone  that a shift in thinking could enable a much more exciting level of expansion.

Swart agreed and the transformation of the business was set in motion.

“As scientists, we struggled to find the right business language to enable communication between the investors and the existing management team. We needed to learn investment speak to be able to make more informed decisions.”

It was in 2010 that the business had reached a new level of complexity, thanks to its steady growth. That was when Franklin and Swart attended a business summit run by Sirdar South Africa, which helps businesses identify and address the management challenges of growing businesses.

“Our focus is on growing the bottom line through the practical application of effective governance and management,” says Carl Bates, chief executive of Sirdar.

“We help businesses like Deltamune to set up sound procedures, backed by regular governance and management meetings. The goal is to achieve immediate, increased and sustained profitability and value in the business.”

Related: Ubertech Meets Ubergeek: Stafford Masie isn’t Just Changing the Rules… He’s Changing the Game

From craft to enterprise

Bates’ fundamental premise is this: Success requires people to recognise that a business is about more than the personalities within it. It’s about the purpose it promises. He draws an important distinction between a ‘craft’ and an ‘enterprise’.

The existence of a craft depends on the active involvement of the owner because they represent the expertise required to keep the business going. An enterprise is a business with a promise and a structure that makes it sustainable beyond the people who founded or operate it.

“When you hold on to being the craftsman and making it all about yourself, you lose the game,” he says. “To achieve success, you must move your passion from practising your craft to creating an enterprise, and understand that the enterprise is separate and distinct from you. It’s about keeping your ego in check.”

Following the Sirdar Business Summit, the whole Deltamune management team went through a training exercise to equip them all with a common language to enable them to translate scientific ideas into financial reward. Much of what was discussed was stuff that everyone in the business knew, but suddenly it was coming from an independent source.

How governance enables business growth

Deltamune’s journey to its almost R100 million turnover has been built on governance, which Bates defines as “the accountability and responsibility for the performance, conformance and corporate social responsibility of a business at the highest level.

“Governance is often perceived as a dirty word in business, but if understood and applied properly, it’s a mechanism for success.”

Governance is essentially the practice by which companies are managed, controlled and driven to perform. It encompasses:

  • Putting a focus on the measurable performance improvement in the company’s results  by ensuring management is held accountable for the strategic and business objectives
  • Providing a broader reference point for debating and agreeing strategic objectives and issues to ensure independent perspectives are considered in guiding the company’s long-term performance
  • The creation and ongoing monitoring of a system of checks and balances to ensure a balanced exercise of power within a company
  • The implementation of a system to ensure compliance by the company with its legal and regulatory obligations
  • The implementation of a process whereby risks to the sustainability of a company’s business are identified and managed within agreed parameters
  • The development of practices which make and keep the company accountable to the broader society in which it operates.

It‘s essentially about the responsible leadership of companies. This is leadership that is transparent, answerable and accountable towards the company’s stakeholders.

Bates stresses that without effective governance there is no way a business owner can measure and manage their business effectively, or achieve outstanding success.

Related: Funding Growth

The reasons are simple. No governance results in:

  • Lack of accountability for their actions to each other and the business
  • A limited view of the vision and purpose of their business, often due to the myopic focus on day-to-day operational issues
  • Operational needs limiting the time spent reflecting objectively and developing the business accordingly
  • Not setting standards and sticking to them or setting standards too low
  • Lack of awareness of their legal and corporate social responsibilities as directors
  • Having skills and abilities incongruent with the life stage of the business
  • Avoiding the difficult decisions that sometimes need to be made for business success
  • Effectively operating in a silo as a ‘craftsman’ rather than effectively being an enterprise.

To implement effective governance at Deltamune, the leadership team, along with Bates who came in as independent, non-executive chairman, and one other independent director, were provided with monthly board meeting papers and clear minutes of meetings.

All actions and resolutions of the board are now recorded and the team is held accountable by the board to effectively implement those at a management level.

“We don’t get the CEO’s PA to do the minutes,” Bates adds. ”The minutes are independently recorded and they are detailed and professional, ensuring that everyone is held to account. That is a critical part of the governance process.”

Wearing different hats

Deltamune_Entrepreneur-Profiles_Success-Stories

Looking at the growth of the business over the past 36 months, Swart recalls one of the most valuable lessons: Learning how to keep the three hats of business separate and distinct.

“SME owners generally do not treat their businesses as they would if they were big corporates,” he says. “Most SME owners get stuck working in their businesses and forget their strategic responsibilities as a director and their investment goals as a shareholder.

“What has enabled us to grow at such an amazing rate is defining roles for shareholders, directors and managers. A shareholder focuses on their investment return, a director focuses on setting strategy and ensuring performance, and a manager ensures the job gets done. You can be all three, but if there are no other independent non-executive directors in the business, there is no physical way to separate roles.”

Bates explains: “When one person owns all of the company’s shares, is the sole director and the manager responsible for the day-today running of the business, the company can never become sustainable. For Deltamune, introducing governance to the business and – as part of the process – distinguishing the roles of shareholder, director and manager has resulted in the development of a business that is now able to work without the founder. This not only means it‘s sustainable, but it also makes it more saleable in the future.”

Personal growth

Swart says that the biggest benefit for him has been his own personal growth and the access he has gained to other people’s expertise in various management disciplines.

“This has led to an overall increase in the intellectual capital of the business, and it has also enabled the management team to maximise all our resources and assets.”

Franklin adds that this level of growth is only possible if the founder of the business is willing to relinquish some control. He applauds Swart for being ready to do so. “It really is about recognising that if you want to grow the business beyond your own capacity as a founder, you have to bring in external controls. If you are not willing to stop being the sole decision-maker in the business, this process is not for you.”

Bates offers a pertinent example: “In 15 years of heading up the business, Hannes had never had a performance review. He’s now gone through that process as an employee of the business he started. It’s a critical development in the life of any business founder.” Remuneration structures and performance bonuses have been introduced for all employees, including the CEO.

Swart agrees. “As an entrepreneur, you start a business because you really love what you do. By bringing in the right external shareholders, you can still live your passion, but you can also work towards getting the most out of your investment and ensuring the other parties do the same.”

He points out that the journey was not always an easy one. “It took commitment from everyone to develop a way of understanding each other better, and it was tough at times,” he says. “Now, things take much longer than they did when I was the sole decision-maker, which is something you should bear in mind as an entrepreneur. If you want to bring shareholders on board, you have to be prepared to let go.”

Bates is more candid.“The first six months of this process can be awful. But if you are able to get through that, the benefits are amazing. It changes your perspective as a business owner when the board disagrees with you. Yes, it’s tough, and every entrepreneur has an ego to some degree, but handing over some of your original authority can have major benefits, as the Deltamune experience has shown.”

Swart says he and the team spend much more time dissecting ideas and analysing decisions, but the result is that they make more considered, better decisions.“We now also speak in a common language. On the financial side, we are very clear about the responsibility to investors, and monitoring financial performance every day is now par for the course.

“Added to that, we have really tackled the skills side of the business, and we provide coaching and mentoring for employees to help them grow with the business. It has equipped us to deal with expansion and helps to ensure we are better able to manage the size of the company now.”

“As the non-executive chairman, among other key activities, my goal is to see profitability and shareholder returns increase,” says Bates.

“When we started working together, we analysed the natural abilities of the directors. It was clear that the team’s strengths were strongly scientific, but there were several areas of business that were lacking, including sales and marketing, which are disciplines that I am particularly interested in, so I put a strong emphasis on that. One of the other independent directors has a particular interest in stakeholder relationships and employee wellbeing. These elements did not come naturally to the original team and the benefits of integrating these aspects into the business have been
enormous.”

A promising outlook

Looking ahead, Swart says the company is focusing on formalising its acquisition strategy and is actively looking to acquire complementary businesses.

Having opened offices in Oudtshoorn, Western Cape, expansion into the rest of the continent – where there is a big market for its products – is also on the cards for Deltamune.

“We are realistically bullish about the market for veterinary health products in South Africa and beyond,” he says. “Several South African companies are expanding up north to take advantage of the growth potential on the continent.”

“Businesses have processes for a reason,” Bates concludes. “I’ve heard people say, ‘My business is not all about money,’ but if you want to be a master baker, you actually have to be a master business person too. The fact is that whether big or small, businesses are not all that different from each other. Governance and processes pave the way for growth in any size company. Most importantly, directors are there to add value, not to whip people into shape. In Deltamune’s case, they have enabled the company to double in size.”

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

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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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Take note

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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