How do you turn a medium-sized business into a powerhouse?
These companies have taken things to the next level, and the entrepreneurs involved describe how they managed to grow their companies to eight figures… and beyond.
Successful businesses need to be trading — money in and money out
- The player: Albe Geldenhuys
- The company: USN (Ultimate Sports Nutrition)
- Turnover: R1 billion
- Launched: 1999
- Visit: www.USN.co.za
“Initially, I had my finger on everything: Stock, our warehouse twice a day, finance. I even stuck labels on bottles if I had to. But as we grew, our team had to grow,” explains Geldenhuys.
“At first this meant sales people, but soon I needed to pull people into other roles as well, create a management structure and eventually even hire a CEO.”
And then the entrepreneur had a major wake-up call. In 2010, based on USN’s market presence and massive sales figures, investment firm PSG approached Geldenhuys with an offer to purchase. While he had no intention of selling, Geldenhuys did invite PSG to conduct an audit and evaluation. The results were devastating.
“They discovered R12 million in stock losses. At the time, our turnover was R300 million, with a projected profit of R28 million, which I was already unhappy about — where had our great margins gone? Then PSG came along and said, sorry, you’ve actually lost R12 million in stock, and you’re making no profit.”
“I realised how badly I’d taken my eye off the ball. We had employed managers from big corporate backgrounds, but they didn’t run a tight, lean ship. They weren’t focused on margins and efficiencies. For example, we had started out with service levels of 95%, which meant that 95% of our stock reached the shelves where they were meant to go. Under the helm of a new logistics manager, this had dropped to 72%, which I was told was standard. I don’t believe that’s good enough.”
Instead, Geldenhuys took the business back to basics. “We’re not a logistics company. We never will be. We need to focus on what we’re good at, and outsource the areas that we’re clearly not good at. Today, we focus on developing products and marketing. As soon as we went back to our roots, we started making more money and more profits.”
A great business is the result of great people working together
- The players: Sam and Rob Paddock
- The company: GetSmarter
- Turnover: R128 million
- Launched: 2008
- Visit: www.getsmarter.co.za
According to brothers Sam and Rob Paddock, the two biggest lessons they’ve learnt while building their business are people-related. “The first is that if you want buy-in from your staff, you need to be communicating with them all the time. Everyone needs to understand and embrace the business’s strategy. The second is that performance management, particularly in a growing company, keeps everyone focused,” says Sam.
“It took us a while to realise that some employees can’t be coached into better performing team members. You need to be honest and clear up-front. If you’re not clear on good performance or bad, how can you expect your team to know what your expectations are?”
And then the brothers received invaluable advice: They were told to read Mastering the Rockefeller Habits, by Verne Harnish, and to implement the learnings from the book. “Implementing the Gazelles system was a complete game-changer for us,” says Sam.
Gazelles follows a clear and regulated path. “First, you need to clarify the performance expectations of each and every role in the company. The performance criteria follows a 90-day cycle and includes five priorities.
“These priorities are evaluated every three months according to competence and alignment to the company’s six core values. Because the priorities are in black and white and agreed on up-front, managers can have honest discussions with their team members and credible reviews. Each review is rated on competence and attitude.”
Understand the power of disruptive thinking
- The player: Steven Kark
- The company: Paycorp
- Turnover: R1,2 billion
- Launched: 1999
- Visit: paycorp.co.za
If you want to make a mark in an established industry, you have to be willing to disrupt the market — and fail a few times in the process. This is how Steven Kark approached his start-up, and how he continues to look at his R1-billion business.
“I’ve always called it ‘changing the game,” says Kark. “In every market there are incumbents who aren’t adequately prepared to service the new market that innovative disruptors create. That’s why we were able to launch and capture market share with our ATMs — we focused on under-serviced areas and customers. Because the incumbents can’t adapt their business models quickly enough, the new guys on the block move up, compete in the existing market share and create new ones as they go.”
The problem is that disruptive innovators who do their jobs properly end up becoming incumbents themselves — which just opens them up to becoming casualties of disruptive innovation in turn.
“This is such an important point for sustainable businesses today – first, how to get there, and then, how to stay there,” says Kark. “We’re a non-traditional company in a traditional banking environment. We started out life and built a business by being disruptors. But you need to be careful, because you don’t want a new disruptor to catch you.
“A lot of businesses run into problems because they can’t scale. For example, running one fish and chip shop is very different to running ten. With ten there’s ten times the complexity. But 1 000 stores isn’t 100 times as complex. It’s a million times more complicated. Scale and complexities are exponential. You need to invest in people and the right technology to deal with this. Part of building and maintaining a sustainable business is having the right infrastructure to do so. And then of course you need to stay flexible and keep a close eye on the market.”
Related: Paycorp’s R1.2 Billion Success Story
Colleagues first; everything and everyone comes after
- The players: Gil Oved and Ran Neu-Ner
- The company: The Creative Counsel
- Turnover: R700+ million
- Launched: 2001
- Visit: www.creativecounsel.co.za
While this is one of The Creative Counsel’s six core pillars, it’s not something that came to founders Ran Neu-Ner and Gil Oved naturally. “Clients come first, that had always been our motto. So much so that in our start-up days Gil was called our ‘doctor on call’. It didn’t matter what he was doing, if his phone rang he’d answer the call and see to the client. Nothing was more important,” says Neu-Ner.
“As we grew though, we realised that it wasn’t just the two of us anymore, and you can’t deliver to clients without a happy family. That’s why this pillar is so important,” adds Oved.
“If you walk out of a meeting and have two calls, and one’s a client and the other’s a colleague, your first instinct is to call the client first. That’s the wrong response. You don’t know why your colleague is calling. It could be to warn you about something related to the client. It could be because they have three clients waiting on an answer or input only you can provide. Family must come first.”
“It’s also important for everyone on the team to know that their managers, colleagues and Gil and I have their back,” adds Neu-Ner. “Once you know that you’re supported, you’re more likely to make key decisions on your feet, and those are generally the decisions that drive the business forward.
“Of course we try not to lose clients, but the reality is that there’s no real client loyalty. It’s the nature of the industry. You’re always pitching for your next campaign, and the client will choose what’s right for them, not for you. But your team should be here to stay, so care about them and look after them.”
Focus on what you know best and understand your market
- The players: Irfan Pardesi and Hina Kassam
- The company: ACM Gold
- Turnover: R400 million+
- Launched: 2005
- Visit: www.acmgold.com
Irfan Pardesi has built ACM Gold based on two core principles: First, the best businesses aren’t masters of everything — they’re specialists in one key area, and invaluable to their clients as a result. Second, localisation is everything. You can be a big, multi-national company, but always take your current, on-the-ground clients into account. Design your business offering with their needs in mind. And remember that what works in one market won’t necessarily work in another.
Pardesi and his sister and business partner, Hina Kassam, learnt the trading environment in London, launched in Pakistan, and then moved the business to South Africa. These are three very different markets, with different consumer needs.
“I think one of the single biggest lessons I’ve learnt in business, and one we’ve carried through to every decision we’ve made since, is the importance and power of localisation,” says Pardesi. “Entrepreneurs are problem- solvers. That’s what we do. But that doesn’t mean much if you’re trying to solve a problem that’s not your target market’s main concern.”
The key to this shift is not trying to change the social behaviour of clients; instead, you must adjust your offering to suit their behaviour.
Next Article: The 10 Strangest Secrets About Millionaires
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.
- Player: Appanna Ganapathy
- Company: ART Technologies and ART Call Management
- Launched: 2016
- Visit: art-technologies.co.za; art-callmanagement.co.za
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
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.”
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.”
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.
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:
30 Top Influential SA Business Leaders
Learn from these South African titans of industry to guide you on your entrepreneurial journey to success.
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.
- Zareef Minty
- Roger Boniface
- Khanyi Dhlomo
- Zuko Tisani
- Phuti Mahanyele
- Nunu Ntshingila
- Dr. Judy Dlamini
- Tshego Sefolo and Londeka Shezi
- Nonkululeko Gobodo
- Dudu Msomi
- Sibongile Sambo
- Ian Fuhr
- Esna Colyn
- Ryan Bacher
- Nicky Newton-King
- Adrian Gore
- Terry Volkwyn
- Richard Maponya
- Sisa Ngebulana
- Wendy Luhabe
- Polo Leteka
- Vusi Thembekwayo
- Marnus Broodryk
- Thuli Madonsela
- Lebo Gunguluza
- Dawn Nathan-Jones
- Nicholas Bell
- Ran Neu-Ner and Gil Oved
- Vinny Lingham
- Patrice Motsepe
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