Connect with us

Entrepreneur Profiles

From Dirt Poor to Self-Made Millionaire: Lebo Gunguluza

Dirt poor as a child, Lebo Gunguluza, entrepreneur, motivational speaker and all-round mover and shaker, became one of South Africa’s youngest self-made black millionaires at 27.

Monique Verduyn

Published

on

Lebo Gunguluza

R60 and a whole lot of nerve. That’s what Lebo Gunguluza had on him when he arrived in Durban in 1990, determined to enrol for a BCom at the University of Natal. His father died when he was a child and his mother worked as a nurse. There was not much money to go round and what she had managed to save for his tertiary education went on getting him, his brother and his sister through high school in the turbulent late 80s.

“There were so many boycotts at the time that I missed two years of school, so my mother took her savings and sent me to Woodridge College, just outside Port Elizabeth, which was a multiracial school,” he says. “It was a great move on her part as I managed to get a really good education there, but it meant there was nothing left over for varsity.”

Driven from an early age

Gunguluza says his dream to study business was enabled by his appetite for risk. He had no money and no place to stay, but he also had nothing to lose. “Whatever you do, the higher the risk, the higher the reward. I had been accepted at the university, but I could not pay the fees so I was not allowed to register. But it didn’t matter – all I knew was that I had to get in so that I could do a business degree and become an entrepreneur.”

That level of resolve so early on in life, coupled with his understanding of how important a solid education can be, were to stand him in good stead later on at pivotal moments in his work life. It also highlighted how determined he was to lay a solid foundation for the development of his career.

By chance, and probably thanks to his colourful personality, he met a guy on campus who let him sleep over a few nights while he tried to arrange finance. On the last day of registration his tenacity paid off and he secured a bursary to pay for his studies at the Pietermaritzburg campus. It was to be the beginning of a turbulent but inspiring career. But, by mid-year, his funder decided to pull out of the country, leaving him high and dry. With no resources, he had to find another way to stay on and complete his degree.

“I’ve always been a creative thinker. At school I won a national essay competition on how to launch DSTV. I have applied that skill where possible throughout my life. I knew I had to earn some cash so I went to Edgars and offered to become an agent for the retailer on campus. I would sign up new accounts and they would pay me commission. They agreed, and I did so well that I ended up working in-store. I was making enough money to survive by working during the day and catching up on my studies at night. But it was a struggle to pay fees, so I got a loan to help me get by.”

Learning on the job

That meant that when he graduated in 1994, he had a debt to pay back. But, armed with a degree, some work experience and a formidable ability to sell, he took his pick from several job offers and went to work at the SABC as a sales executive.

“I wanted to be in an environment that was creative. I can’t stress enough how important it is to find out where your talents lie when you are young so that you can make choices that hone your skills.”

It was also at this time that he set his financial goals. “I had grown up so deprived that I was determined to make a lot of money and never experience poverty again. I set three goals: to become a millionaire by age 25, a multimillionaire by 35 and a billionaire by 45.”

Gunguluza did well at the SABC. His drive to succeed was unremitting; he was promoted four times in the space of two years and became marketing manager for Metro FM by age 24. But his impoverished family back in Port Elizabeth was still dependent on him and he was simply not earning enough to take care of everyone, even though they believed he was coining it in Joburg.

That was when he decided to save enough money to go to the US for a few weeks and do a specialised broadcasting course which would boost his earning potential. But his gameplan changed when he got back and was recruited by advertising mavericks, Herdbuoys.

Read Next: Tim Tebeila on the Importance of Recognising a Gap

Making a million

“My salary doubled, but the ad industry is a tough business to be in. I was working really hard but still not making much headway. There was no way I was going to make that first million. Then something struck me. I was really good at throwing big parties at home. Why was I getting all these people to eat my food and drink my alcohol for free, when I could be making money from them?”

That was 14 years ago and he was then 26. He took the plunge once again, leaving Herdbuoys and the comfort of a monthly pay cheque behind. Fuelled by the desire to build a business that would earn him enough to take care of his family and achieve his first big goal, he started Gunguluza Entertainment.

He had no money for cash flow in the business, but he put his considerable ability to leverage situations to great use. In addition to being a skilled salesman, Gunguluza is a networker of note. It’s a talent that comes easy to a person who’s passionate about entertainment and media.

“There was a night club called Insomnia in Sandton that was not doing too well. I approached the owners and told them I would bring the crowds if they let me take the door. That way they could make their money by selling drinks.”

It was a great idea that took off immediately. Why? “Because there were no clubs for young and trendy black people in the north at the time. Most of them were in Hillbrow or in the townships. On the first night I made R7 000 and I knew I was on to a good thing.”

But like many young entrepreneurs, Gunguluza treated the money as his own and not the business’s. After a few weeks, however, he realised that he had to start saving the cash he made in a business bank account if he wanted to hire some help. For about four months he did really well, earning more than R5 000 per event. But then a copycat came along – a celebrity who had kept an eye on Gunguluza’s parties and started to throw his own. The clubbers descended in droves, leaving Gunguluza with an empty dance floor.

Changing direction slightly, he started to book artists he had come to know over the years and quickly became a popular talent manager. By this stage he was making about R100 000 per event, and also taking the opportunity to build his brand. “I made sure I was on radio all the time and I positioned myself as a local entertainment expert,” he says. Then, in 1997, he heard that a new youth radio station was about to be launched and his skill in sales came to the fore once again.

“I was far from reaching my R1 million goal, but I knew radio and I knew parties so I called YFM and convinced them to give me half a million rand’s worth of airtime to organise the launch event on their behalf. Kwaito was big at the time, and I knew all the stars. I met with sound, stage and lighting guys and used the media space I got from YFM to barter with them so that we ended up with R4 million production. I also made sure I partnered with a team who were used to hosting huge events in the white market because they had the experience. 15 000 young people came to that party, and they each paid R100 to attend. I made R1,5 million cash, with all costs covered, and YFM got a fantastic launch party.

“That experience reinforced what I found out early on in business. You don’t always need money to acquire things – it’s often possible to use your resources and barter when you don’t have cash. Without funding, tenders or loans, I had made my first million at the age of 27. It’s a principle I still live by today. I never borrow money from the banks. It can cripple you forever. The other problem is that many young people who secure a loan treat it as a lotto win and live the high life on it. That’s why so many projects are abandoned half way.”

Living the high life

Gunguluza knows what he’s talking about when it comes to squandering. He spent that first million in one year. Instead of using that money as seed capital, he bought a GTI and partied like there was no tomorrow. By the end of 1999, he was flat broke. His car was repossessed and he was blacklisted.

“I hit rock bottom for a few reasons. Aside from the flashy lifestyle, I realised then that you have to choose your market sector carefully. Entertainment is a fickle industry and promoters can be unscrupulous. Often we would not get paid on time. I made up my mind that whatever I went into next, it would be in a space that pays well and has structure.

“At that time I was sharing a townhouse with my cousin, and I was so down and out that I would walk to the CNA and stand in a corner reading business books that I could not afford to buy. Often the staff would come and chase me away so I’d go home, change my clothes and come back. I read about Aristotle Onassis, Richard Branson and Donald Trump and realised that if I wanted to succeed, I would have to change my mindset. These people had huge personalities which impacted their business lives.”

Three key points stood out for him:  Whatever business you go into, you had better know it inside out, down to the last bolt; you must always have a strong sales ability in the business; and cash is king, so whatever money you make, try to retain as much of it as possible and use it to advance the company.

Applying the lessons

Although he did not have much experience in communications, Gunguluza was a media maven. He approached Penta Publications and started to sell media space for them. It was a steep learning curve and Gunguluza took full advantage of it, getting to know the tough world of magazine publishing and corporate events. Satisfied that he had picked up enough, he left nine months later and started working on his communications business, Corporate Fusion, a name that indicated a new direction for him – the rigour of the world of big business. Within 18 months it was generating more than R2 million. He ran it from his townhouse with a single telephone line.

With his appetite for risk growing stronger, Gunguluza knew it was time for him to go to the next phase if he really wanted to grow the business into something substantial. He contracted with several big clients and, through his knowledge of radio and print media events, he launched several awards shows – lavish evenings that became the talk of the town.

He also began to build an extensive public sector network that saw him consulting on communication strategies with several municipalities. By 2003, at 33, his business was turning over R14 million, a result of several big ticket contracts he had secured with blue chip companies. He’d reached his next milestone before the age of 35 and had become a corporate communications specialist by applying his now considerable media and publishing experience.

Read Next: Paul Veltman on Why Bigger is Always Better

Living large, falling hard

But then he dropped the ball once more. Blinded by his success, he bought a Porsche and started travelling the world. Although he did not repeat the same mistake he’d made before with cash flow, this time round he left the business in the hands of others.

He soon lost touch with what was going on in the company and came home one day to the biggest crisis he had yet confronted. An event for one of the country’s largest financial services companies had turned into a shambles. It was so bad that Sunday Times columnist Gwen Gill went on about it for several weeks in her social pages, ripping the event to shreds. Gunguluza lost the client, as well as R7 million worth of other business in three weeks. Four months later he was in debt to the tune of R4 million. He could no longer pay salaries and had to retrench staff, a period he recalls as the most painful time of his life.

To quote Japanese-American academic Samuel Ichiye Hayakawa, “Notice the difference between what happens when a man says to himself, I have failed three times, and what happens when he says, I am a failure.”

Gunguluza refused to see himself as a failure. He sold the office building he had bought back to its original owners for R1 million, and bought a Primi Piatti franchise in Rosebank. With his background in entertainment, he and his wife were determined to build the restaurant and use the cash they made to pay back all their debtors. As a result of his flair for fun, it soon became one of the most popular Primi sites in the country, and turnover growth was high. It was the place to seen in Rosebank and was frequented by Joburg’s who’s who. But Gunguluza’s relationship with his wife soured and they separated in 2008.

He handed Primi over to his ex-wife and started focusing on the other business interests he had been growing quietly in the background. “I hardly ever slept at that time. When I was not at the restaurant I was developing a new media business and creating new partnerships. I had managed to settle all my debt and build a company that had already turned R2 million by the time I was out of Primi.”

The birth of an empire

Media, hospitality, technology, property and investment – those were the five sectors Gunguluza wanted to be in. “I wanted to use the media business to develop other companies within the GEM (Gunguluza Enterprises & Media) Group of Companies. I was now chasing my R1 billion goal, but I knew that if I started from scratch it would take far too long. My strategy was to acquire an interest in existing companies and triple their turnover by boosting their sales and marketing. Really, it was the same strategy I had applied years back to quadrupling the airtime I got from YFM, just on a bigger scale.”

Next, he partnered with Uhuru Communications, the publishers of SAA’s Sawubona magazine, that same year and several other youth and campus publications. He also leveraged his public sector experience by launching Municipal Focus, also in partnership with Uhuru, which covers the business of local government with a nationwide distribution to municipalities and government departments. He continues to grow his publishing footprint through a series of 12 publications.

The next phase

Indeed, there’s no rest for Gunguluza. He has acquired an interest in several hotels and also launched a car hire company that does not require credit cards and that will soon be providing flight services too.

Is there a logic to all these acquisitions? He says it’s part of his strategy to own every link in a chain – eat, stay, drive, fly.

He is also growing his capital interest through projects he invests in and which make him easy returns. That’s what’s enabled him to grow GEM into a multimillion rand business in just two-and-a-half years. The big news is that he plans to launch the first African television channel early next year – a concept along the lines of MTV Base – which he says is a R400 million deal that will turn GEM into a media powerhouse.

These days, he leaves nothing to chance. Each of the dozen companies in the GEM group has its own MD, with Gunguluza playing an operational role in running the group which now employs about 150 people.

“In the past, my HR was a mess. I would hire people just because I liked them. Today, we have strict hiring policies and procedures and we are particular about the people we employ.”

Gunguluza says that because he was born to sell and market, his focus as chairman is on building the brands of each of the companies in the group so that they can attract more business and seek out new opportunities.

Gunguluza has not forgotten his roots or his family. His mother, sister and brother all have senior positions within the group. His success is testimony to the impact that one person can have on a family and a community. Naturally, he is a far more cautious man now than he was in his 20s and 30s, but that goal of becoming a billionaire by 45 is firmly within his sights.

Read Next: Top Business Tips From a Few Millionaires

Support for black business owners

Having seen his own star rise and fall many times, Lebo Gunguluza is determined to help young black entrepreneurs to understand the value of having a business plan and holding onto cash. That’s why he founded the South African Black Entrepreneurs Forum (SABEF) in 2008.

Its membership has grown to 30 000 and he himself has become a sought-after spokesperson for black entrepreneurs, as well as a popular motivational speaker whose journey inspires others.

There were several reasons for founding SABEF, he says. Following his divorce, he was alone and realised that he and others could benefit from some sort of support system. Many people were being retrenched at the time and he was also keen to help them see that it was possible to become self-employed if you did not have a job. There is no need, he stresses, to sit at home and wait for help from government. Beyond that no one realises more than he the value of structures and plans, which is something SABEF seeks to provide for young business owners.

“SABEF is not only a great network for entrepreneurs, it helped me to grow my own relationships with both the public and private sectors. I have a huge base of people to tap into, which has also enabled me to become a successful consultant to government.”

He is also the co-founder and chairman of the Local Government Business Network (LGBN), a voluntary organisation set up to promote the relationship between local government and the private sector. Find out more about SABEF at www.sabef.co.za

Lebo’s Lessons

  1. Cash runs out very quickly and it does not come back. Cash gives you flexibility and mobility so use it carefully.
  2. The customer is everything. How you treat your customers has serious implications for the business. Treat your clients badly and they will not only take their business elsewhere, but they’ll also tell as many people as they can what a terrible company you have. Don’t fob off customers. Always get back to them and maintain the personal touch.
  3. Respect compliance. If you do not comply with rules and regulations and have the necessary certificates,  you will never be paid.
  4. Chase your invoices. Make sure you are invoicing on an ongoing basis or you won’t get the cash.

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+.

Continue Reading
Advertisement
1 Comment

1 Comment

  1. richard swarts

    Feb 19, 2015 at 16:10

    I just heard the final bits of the SAFM interview, of Lebo Gunguluza on SAFM. He sound like a very brave & interesting, entrepreneur, that are involved in diverse enterprises. Intercellcash a south African innovation, is the kind of enterprise that Lebo Gunguluza, should partner with. richard@intercellcash.com or ralswarts@gmail.com or 0761230260

You must be logged in to post a comment Login

Leave a Reply

Entrepreneur Profiles

How To Adapt And Thrive Like Arnoux Maré of Innovative Solutions Group

Arnoux Maré is a quintessential entrepreneur. Not only is he wildly competitive (if his business doesn’t triple its own annual projections and targets he’ll review the company top to bottom), but he’s also re-engineered the art of ‘adapt or die’ to, ‘adapt and thrive’.

Nadine Todd

Published

on

arnoux-mare

Vital Stats

  • Player: Arnoux Maré
  • Company: Innovative Solutions Group
  • Launched: 2011
  • Turnover: R780 million
  • Growth: From R32 million to R780 million in four years
  • Accolades:
    • Winner of Best Outsourcing Service Provider in Africa, Africa Leadership Awards 2017. Arnoux Maré: Winner of CEO of the Year, Africa Leadership Awards 2017
  • Visit: innovative-group.co.za

In 2011 Arnoux launched a labour consultancy with R500 that grew into a staff outsourcing company. By 2013, recognising the inherent issues in his industry, he completely reworked his business model to create a solution that employers, employees and trade unions alike could benefit from and support.

Not only did this move allow the business to survive — it’s thrived. Within one year he grew his turnover from R20 million to R32 million. Four years later and Innovative Solutions Group has hit the R780 million turnover mark. Here’s how he did it.

The start-up

Be brave, believe in your idea and sell your vision

Imagine waking up at 6am and spending the next 12 hours on the road between Pretoria, Johannesburg and Middelburg in Mpumalanga, knocking on doors and trying to sell your services. At 6pm you return home (aka your office), spend time with your infant daughter, and then sit down to study by 9pm. By 3am you’re able to crawl into bed, catch a quick three hours of sleep, and by 6am the alarm is going off and you’re up, out the house and doing it all over again.

Related: Managing Your Schedule Like A Boss: Tips The Experts Never Tell You

This was Arnoux Maré’s life for nine months. In 2011 he started his business with R500, which was all he had left of his salary after paying his bills. It was a big move. He was leaving the safety of corporate employment, but he knew he wanted more, and that the only way he would achieve his goals was to do it for himself.

“I had a list of SMEs I wanted to target. Corporates have HR and payroll divisions filled with human capital specialists. SMEs do not. After five years in corporate I’d seen the common HR problems we faced. I particularly believed SMEs needed this solution. Human capital is a specialist field, and yet any available manager tends to be assigned the role. This is such an important part of an SME’s business; I thought there was room for an expert.”

The reality was far more complicated. “Having a list wasn’t enough. Business doesn’t work like that. You need to prove yourself in the market before people will trust you. I had to go from company to company. I’d been a sales rep earlier in my career, and I was back to doing what I’d done then: I was knocking on doors, explaining what I did. I heard ‘no’ 15 times for every yes, but I didn’t let that deter me. I stayed focused. The most important step is to get started.

“You need to be brave. You have to find the courage to go out and sell yourself as the brand you’re planning to be, not what you are at the moment. You can’t be dishonest, but you do need to sell your vision. I had a plan and everything worked around that plan. It was painstakingly slow in the beginning, but I kept plugging away and knocking on doors until slowly I built up a client base.”

The benefits of client referals

Arnoux signed his first client, Yankee Diners for a retainer of R780 per month. For that princely sum, Arnoux gave his client the full benefit of a vast experience in labour relations that a full-time employee would provide at a cost-to-company of R50 000 to R60 000 per month.

The owner of Yankees had a friend who ran a butchery. His referral secured Arnoux his second client. He was essentially the in-house HR manager for two businesses while he focused on selling and completing his labour law studies at night.

“I was determined to become the expert in this field. South African labour law is complex, but if you’re prepared and understand procedures and legislation, you will always be on the right side of the Commission for Conciliation, Mediation and Arbitration (CCMA). This was the function I performed for my clients”.

Arnoux was soon consulting for clients and dealing with human resources cases that had been taken to the CCMA. After a year he was providing consulting services to companies in the areas of fair labour practices, labour legislation and industrial relations.

“I knew that to build a name for myself in this industry I needed to take a big risk. In the early days of a start-up you’re in make-or-break territory, so I went big and put everything on the line. I guaranteed clients that we would pay the settlements if we lost a case – provided we were involved in the process from start to finish.”

Going all in when you’re starting out

Arnoux admits that although he still takes risks today, he doesn’t bet the business on them — not with 7 500 full-time employees relying on his company. But those start-up days were different. He needed to go all in, and the result was that he never lost a case. He made sure he was prepared and up-to-date with all labour legislation.

“There are two things you need to prove in every labour dispute: Was the case procedurally correct and was the sanction substantively fair? If you can prove these two things, you’ll win. If you can’t, you either haven’t followed procedures correctly, or you’re in contravention of South Africa’s labour legislation.”

It was 2011. Labour broking and outsourcing were big business in Europe and the US, and Arnoux’s own experiences showed him the benefits of the industry. However, it was at this point that he realised he needed to go back to the drawing board. In no way should he be considered a labour broker or temporary employment service. In South Africa, labour brokers weren’t yet persona non grata, but the writing was on the wall.

Arnoux firmly believed in the concept that companies should not employ their own employees though. “It’s such a specialist field — managing a workforce involves recruitment, HR, processes, management and so on — these are all highly specialised, and yet managers who are specialists in other fields are tasked with them.”

Time to pivot

Arnoux had another problem as well. There was a loophole in labour legislation that all consultants at the time exploited. The law said that a company employee had to represent the company at a CCMA hearing, so that outside consultants couldn’t. The loophole? Accept temporary employment and handle the hearing anyway.

By 2012 this loophole was closing. Arnoux’s entire business model was built on the fact that he would personally be at each hearing, handling the full process. Add to this the fact that Namibia had outlawed labour brokers, even going so far as to jail some directors, and South Africa was heading in a similar direction, and he knew it was time to radically change his model. The question was, to what?

Ultimately, this question and the sheer volume of mediation and CCMA cases Arnoux was handling for clients would lead to the start-up’s first subsidiary, Innovative Staffing Solutions, in 2013. Assuming the responsibility and accountability for each clients’ labour needs, ISS was not a labour broker, however, it did grow from a labour law consultancy into a full-scale outsourcing company, boosting turnover growth thanks to the pivot.

innovative-solutions-group


Start-up Lessons

  • Offer advice and share your expertise freely. The more your clients are educated, the more empowered they will feel, and the more they will view you as a trusted advisor. I gave my clients material to help them develop the best labour policies and procedures. It didn’t make my service redundant — it built trust between us.
  • Don’t hold back when you’re a start-up. You’ll need to change this down the line, but in the early days, you’re building a brand and relationships. You need to give as much of yourself as possible to achieve this. Later you can find ways to build what you do into systems and processes others can follow.
  • Don’t be emotional about your business. Entrepreneurs tend to be very emotional, and this leads to subjective decisions that aren’t always best for the business. Treat employees well, understand their side, but make a business decision and move on. Always ask the question, is this the best decision for what the business needs? Remember, it’s also your duty to support the majority of your employees who rely on the business doing well. Sometimes that requires tough choices.
  • Never stop learning. This is important throughout your business journey, but particularly as a start-up. The more you’re able to build your expertise, the more gravitas you will have with clients and prospects.

Related: 20 Quotes On Coping With Change From Successful Entrepreneurs And Leaders

The pivot

Business is managing your risk – even if that means changing the business

Many large successful businesses have failed because they didn’t see the landscape changing. Technology, legislation and community pressures have all played hugely disruptive roles across various industries over the years, resulting in the now standard business phrase that businesses need to ‘adapt or die’.

Unlike many other businesses, Arnoux did just that. He took his business apart and re-engineered it before he became a casualty of the times.

“I pulled a big white board into my office and started mapping two things. First, how do we ensure that we are truly a staff outsourcing company, and second, what challenges were we facing as a business? Where did these intersect, and how could we develop solutions that addressed both areas?”

The exercise revealed a number of key points that would ultimately help Arnoux develop the business model Innovative Solutions Group has today. Within a year his turnover went from R20 million to R32 million based on the new model, and four years later this has grown exponentially to R780 million.

Re-evaluating your business

The lesson? Never take anything for granted. Arnoux was forced to evaluate his business and industry, which led to real solutions. Too often, businesses do what they’ve always done — or an industry has always done — simply because that’s the way it’s always been done. If you want to grow, you need to start challenging those assumptions.

In Arnoux’s case, the exercise revealed the following key points, some were strengths, and some were weaknesses:

  • CCMA commissioners were becoming stricter about consultants representing companies at the CCMA. The loophole his company relied upon was closing.
  • Arnoux was making large, sweeping promises to protect clients. As the business grew, the risk associated with these promises was no longer acceptable.
  • As an extremely competitive individual, Arnoux wanted to achieve higher growth than the company was currently delivering — he knew he’d need a different model if he wanted to exceed his current results.
  • On the positive side, labour legislation is an ever-growing field of inter-connected laws. Only an expert dedicated to staying up-to-date can understand them all.

Understand your business and your industry

Arnoux didn’t just analyse his own business — key to the exercise was understanding the difference between staff outsourcing and labour broking as a whole.

“I started by researching labour broking internationally. What were the roots of the bad sentiments around labour broking in South Africa, and why had Namibia criminalised an entire industry?

“I realised two main things: Locally, a labour broker is actually recognised as a temporary employment agency. This brings with it a host of problems. First, temporary employers can do what they want. Limited duration contracts don’t need to give you notice. There’s no protection for employees, and this was at the heart of the problem for trade unions.

“I then reviewed what we did — we focused on payroll outsourcing and admin, labour law, and contractor pack outsourcing, which included recruitment. These are specialised, intense functions. I looked at everything relevant to the function, including invoicing and a cost analysis for us and our clients. How could we get employees off the books of employers without the labour broker function, in such a way that employees are protected, companies are protected and we offer a sustainable solution to both parties?”

Ask around to find out all the answers

To answer these questions, Arnoux went out into the field. “I approached one of our engineering clients and played open cards. I knew I needed to understand the problem from all sides. I let him know this was an idea that was still in development phase, and then I asked him if he’d be willing to be our guinea pig. We called it ‘staff management’, and developed a system that ensured we were the employer of a pool of employees rather than our clients. This starts with who an individual takes instruction from, and who they believe they report to.

“In our test case, we took over the full employment of 63 employees. I personally negotiated with their union, so that everyone was on board. We were not temporary employers, but full-time employers — everyone had a permanent contract with all the benefits and legal protections that come with full-time employment.”

Take the time to get the strategy right the first time

This signalled the birth of Innovative Staffing Solutions, and within two months Arnoux’s client referred him to another business. Although the owner was sceptical, he agreed that Arnoux could take over the employment of 103 of his 160 employees.

The third company Innovative Staffing Solutions secured was in Middleburg, and had close to 300 employees in the hospitality and agricultural sectors. Today, Innovative Solutions Group employs 7 500 people based on this model.

“Every site we manage has a contract manager, and in-house IR and HR functions are their responsibility. They also have administrative support based on the size of the site. The contract manager is completely responsible for our employees on the site. The client goes to them. For example, if the client plans to plant 500Ha, they do the ops planning, but the manager gets the employees inducted, ready and briefed on the ops planning.”

Today, the holding company, Innovative Solutions Group, operates in transport, engineering, manufacturing, agriculture, hospitality, retail, admin and labour.

Related: Leadership: Total Commitment To The Purpose Of The Business

arnoux-mare-entrepreneur


Lessons in Pivoting

  • Is it riskier to stay the same or to change? All business is a risk, and we tend to resist change as a result. Often however, it’s even riskier to stay the same. Only 40% of our initial clients moved over to Innovative Staffing Solutions’ model, but the word-of-mouth referrals we received from that 40% based on the new offering skyrocketed our growth.
  • Market your offering in a way that customers understand what you do. It’s easy to come up with fancy terms and names. If your customers don’t understand exactly what you do though, it’s meaningless. We called our solution Staff Management because it let everyone know exactly what we did. We could have used a sexier name, and no-one would have understood what Innovative Staffing Solutions was.
  • Business is all about managing risk. I believe you need to take risks to grow, but you also need to mitigate them as much as possible. You can’t foresee all problems and plan for all eventualities, but you can evaluate all the risk factors within your operations. Based on this, develop a solution to nullify risk functions and implement methods to minimise risk as much as possible.
  • Focus on cash reserves. We’ve always banked a percentage of income to save up for retrenchments. This is a legislative requirement, and it’s essential for all businesses. You never know what’s headed your way, and how cash reserves will protect you.
  • Communication is key, but results are more important. I often hear business owners talking about how important it is to be transparent with clients. I agree. But I also think results are more important. If you make a promise, stick to it. Make it a non-negotiable, instead of thinking that as long as you’re transparent it will all be okay. Your promise influences the operations of your client. Rather plot and plan properly to ensure delivery, and then you won’t need to be transparent about problems.
  • Don’t sell services; sell a solution. When you sell a solution, you’re talking about your client’s needs, instead of what your business does.
  • Operations are the bedrock of any business. We are operationally strong. 60% of what I do today is operationally focused. We plan extensively, which means we are always prepared. I train the contract managers, and I wrote the procedures and training manuals they use.

Scale-up for growth

What do our clients need? What do we need? What do our employees need?

Shortly after the birth of Innovative Staffing Solutions, Arnoux recognised that if he wanted to aggressively scale the business, he would need to offer his clients solutions across the labour spectrum. He didn’t want to do this through Innovative Staffing Solutions alone, but rather through specialist divisions that could work together and share client bases.

“We needed strong foundations in place before we could aggressively start scaling the business, but by 2013 I was confident that we had the right systems in place and the company was running smoothly. It was time to spread our wings.”

At that stage, Innovative Staffing Solutions outsourced its accounting function to a small entrepreneurial accounting firm. “I already knew that I wanted to start a group of companies, of which Innovative Staffing Solutions would be one division. The vision was to offer all labour and human capital related solutions under a roof. However, I recognised that it’s easy to be seen as a jack of all trades and master of none, and wanted to avoid that perception.”

Employee experts to head each division

The solution was to ensure subject matter experts ran each division, and the best way to do that was to purchase existing companies and bring them into the fold, rather than starting from scratch. “In this case our accounting firm already had all the necessary registrations in place as well as an existing client base.”

The firm joined Innovative Staffing Solutions, and Arnoux created a holding company, Innovative Solutions Group, with two divisions: Innovative Staffing Solutions and Innovative Accounting Solutions. Both operated as independent companies with their own client bases, and as entities within a group. By bringing the accounting function in-house, Innovative Solutions Group was also saving on costs — a saving that would increase, thanks to economies of scale.

The next company to join the fold was a small BEE consultancy, and the subsidiary Innovative BEE Solutions was formed.

Ask the questions that keep your business growing

Today there are 17 subsidiaries in the group as a whole. Some offer services to a Innovative Solutions Group client base, others primarily service Innovative Solutions Group. For example, Innovative PPE Solutions was created because it made more financial sense for Innovative Solutions Group to source personal protective equipment for its 7 500 employees itself than to outsource this essential function to another company.

“Our focus has always been three-fold: What do our clients need? What do we need? What do our employees need? That’s how you grow; you need to keep asking these questions.”

Growth does not come without its challenges, and Arnoux’s acceptance of a certain level of risk to scale the company has led to some extremely challenging situations that Innovative Solutions Group has needed to weather. One of the first clients signed to ISS in 2012 ended up costing the business R3,6 million one year later. At the time, the loss was the equivalent of 10% of the business’s annual turnover.

“Our process was simple: We paid our payroll, invoiced clients, and they paid us. One year into the contract, and the client in question cancelled our service — without paying us the final month’s salary bill. We carried the entire R3,6 million payroll ourselves.”

The dangers of one big client

This hit the company hard, but it also raised a very real problem for Arnoux and his general manager, Liza Trollip. “We realised that 40% of our sales came from contracts and subcontracts of our biggest client who insisted everyone he worked with used us. On the one hand this was great and had fuelled our growth. On the other, it was dangerous. We had a lot of eggs in one basket and needed to diversify our client base.”

There was a more immediate problem at hand though: Innovative Staffing Solutions was faced with a cancelled contract, and the employees who were, for all intents and purposes, Innovative Staffing Solutions employees.

“We immediately looped in the trade union. Some staff members wanted to go back to the client. They saw their current jobs as safe. We were happy to agree to that without implementing restraints of trade. We promote job security, and you need to live by that, even if it means losing good employees — the ethos comes first.

Keep everyone in the loop

“We then let the union know that we had some positions we could redeploy people into at other sites, but we didn’t have positions for everyone. The union was clear that they had agreed to our business model in the first place because we promised job security. We knew we had to make this work. That trust is the foundation of our business. You don’t mess around with bargaining councils, and for us, that relationship is sacrosanct. We couldn’t break our word simply because we’d run into an obstacle, even if it was a big one.

“We ended up with 10% of the workforce whom we couldn’t immediately place, and we carried their salaries until we could. That’s 32 employees who we had on our books without positions.”

As it turned out, having 32 staff members who could start immediately worked in Innovative Staffing Solutions’ favour, and today the company always has a few extra people on its books.

Look for solutions to ensure growth

The lesson? If you’re serious about business growth, look for solutions, don’t dwell on the problems — and learn from every challenge you face, it might just provide an unexpected opportunity.

In the case of Innovative Staffing Solutions, this incident cemented trust between the company and the trade unions it works with. It also allowed Arnoux to approach his clients, explain their situation, play open cards that he would be having cash flow issues while the company recovered, but also showed the lengths the business would go to protect its employees and retain good relations with the trade unions. Word of mouth referrals were boosted as a result.

“We started receiving calls from companies we’d never heard of because of the efficiency and professional way we dealt with this. We got smacked to the tune of R4 million, and instead of liquidating, we kept employees on our books and labour relations good; everyone was happy.

“The result was that business owners knew we would protect them, and that we were fighters. We even had to say no to contracts because they were coming in faster than we could open offices around the country to support them. Everything happens for a reason, provided you know how to capitalise on the opportunity.”

Related: 8 Lessons Rugby Can Teach Us On Achieving Peak Performance In Business And Life

successful-entrepreneur


Scaling Lessons

  • When you’re challenged, don’t mope. Look to the future instead. It’s easy to get swept away by emotions and rush to solve problems. We took a completely different stance when we had to cover R3,6 million in lost revenue. We focused on the business problem first, instead of rushing to litigation with our ex-client. Focus on the problem, and most importantly, find a solution. If you can do that, you’ll always continue to grow and open new opportunities.
  • With big negatives come big lessons. When we get thrown in the deep end, we look for solutions. We always have, and it’s allowed us to expand beyond our operational depth.
  • Never give up. The uphill battle I faced during my start-up years taught me to never give up, which has been critical in building this business. We suffered three months of hardship, wondering if we were going to make it. But we had worked so hard to build this business, and wouldn’t quit. That tenacity saw us through.
  • What you put in is what you get out. As an employer, we’re strict, but we give back as well. If you’re willing to work hard, you’ll be rewarded. For example, we run a regional competition where the best drivers on our books win a Chevrolet Utility vehicle.

Continue Reading

Entrepreneur Profiles

4 Lessons From The Pivotal Group Founders On Growing And Disrupting All At Once

Here’s how they’ve built what they believe to be the foundations of a successful group of businesses in five years.

Nadine Todd

Published

on

paul-hutton-joel-stransky-and-bruce-arnold-of-pivotal-group

Vital stats

  • Company: Pivotal Group
  • Players: Paul Hutton, Joel Stransky and Bruce Arnold
  • What they do:  Pivotal pioneered voice biometrics in the financial and telecommunications market. Over time, the company has grown to include nine divisions across multiple sectors.
  • Launched: 2012
  • Visit: pivotalgroup.co.za

How do you build a disruptive business while also focusing on growth? Disruptive ideas are by definition new and unknown to the market. They defy traditional and established solutions and ways of doing business, and they require the market to be educated before you can really onboard clients or even sell your product or service.

The answer is to build parallel solutions: Business units that bring in revenue while the more disruptive ideas are being developed and introduced to the market. Here are the four top lessons the founders of the Pivotal Group have learnt while building their business and pursuing disruptive opportunities simultaneously.

1. Know who your competitors (and potential competitors) are

Great ideas that are economically viable and solve a need that consumers are willing to pay for are few and far between. Great ideas alone are a dime a dozen, but if you’ve spotted a need, chances are someone else has as well. You then need to step back and critically evaluate why someone else hasn’t done this before; if they have done it and they’ve failed; or if you’re entering shark-infested waters riddled with competitors.

Once you’ve determined there is a gap in the market, you need to evaluate who your potential competitors are, and the impact if they suddenly started offering a similar solution to the market.

For Paul Hutton, Bruce Arnold and Joel Stransky, the founders of OneVault, competition was always a factor, particularly as a start-up, and given that potential competitors included Bytes and Dimension Data, this was a very real factor to consider. After careful analysis, however, the founders decided to go for it. Their differentiator was their business model. They wouldn’t be selling OneVault as a software solution, but as a service.

Related: Which Of These 7 Personality Traits Do You Share With The World’s Richest People?

The idea had taken root while Paul was still CEO of TransUnion Credit Bureau. “I came across voice biometrics in Canada. There’s been a surge in identity fraud around the world, and I really understood the value of voice recognition as a verification tool,” he explains. “It can’t be faked, and it’s the only remote biometrics solution available, because you don’t physically need to be there to verify yourself.”

Paul had presented the idea to Transunion’s global board, and while they were intrigued, nothing came of it. “TransUnion’s model is to buy companies that are experts in their specific fields, not launch a new disruptive division from scratch.”

But this meant there was an opportunity for Paul to pursue the idea independently. Joel (former MD of Altech Netstar and CEO of Hertz SA) and Bruce (formerly Group CFO of TransUnion Africa and CFO at Unitrans Freight) were immediately interested in partnering with Paul. Both wanted to pursue entrepreneurship, although neither could do so immediately. The commitment was enough for Paul to get directly involved and start working on the business while he waited for his partners to join him.

In January 2011, Paul and Joel travelled to the UK and started investigating voice biometric solutions. “Voice biometrics was fairly new, but good technology was available, and there were global leaders in the sector,” says Joel.

It was important to choose the right product for the South African market, as this would form the basis of their offering. A contact at Dimension Data (one of whom became an investor in the business) offered this simple and straightforward advice:

When you’re choosing a technology partner, go with the company whose tech you’re confident in, and whose leadership is stable. You’re basing so much on this company and their longevity, so don’t disregard this criteria.

For Paul, Joel and Bruce, a US-based company, Nuance, ticked those boxes. But, from a competitive perspective, OneVault wasn’t the only potential player in the market. “Neither Bytes nor Dimension Data had gone into voice, but they had the potential to do so,” says Bruce. “The products were available to them through their partners.”

To mitigate this very clear risk, the founders made two critical decisions. “Our intention was to sell voice biometrics as a service, instead of a software solution that customers bought and owned, with the necessary infrastructure to go with it. The idea for OneVault was that there would be one place where your voice print lived, and different businesses could plug into our solution.”

The business model of large technology players in South Africa is to sell integrated software solutions, so OneVault’s business model was a differentiator. The next differentiator Paul, Bruce and Joel focused on was becoming specialists in their field.

“This is Paul’s baby,” says Bruce. “We’ve needed to build up a niche, expert team that specialises in voice biometrics. Because we aren’t generalists, 100% of our focus goes into this, instead of 5% or 10%.”

To attract the best in their fields, the founders needed a very appealing culture and a strong recruitment strategy. “We focused on what we wanted from our work environment, and then applied the same rules across the business,” says Joel. “Our goals were to drink good coffee, have no leave forms — ever; be able to take the time to ride our bikes and watch our kids play sports. If someone can’t make it work, or takes advantage without putting in the work, they come and go, but on the whole, we’ve had extremely low churn, and we’ve attracted — and kept — incredible talent.”

This differentiator would prove to be important for two reasons. First, two and a half years into the business, with investors on board and having pumped a significant amount of their own capital into the business, the team hit a major stumbling block. For a few weeks, they didn’t even know if they had a business.

“We had been operating on one major, and as it turned out, faulty, assumption,” says Paul. “We thought South African companies had the right telephony structure to implement our solution. We’d been building our solution on top of Nuance’s software, and were ready to start piloting the entire system with a few key customers, and we found out that in order to meet global voice biometric standards, the telephone technology had to be G711 compliant. South Africa was operating on G729.”

This was OneVault’s make or break moment. The team had six weeks to come up with a solution that ensured it met the necessary levels of accuracy. Without a highly skilled team this would have been impossible.

Even as a start-up, the strategy had been to only bring the best of the best on board. “We didn’t interview,” says Bruce. “We approached people whom we knew. We approached the best in the industry, and convinced them to take a chance with us. There was risk, but there were also rewards.” One of those people was Bradley Scott, a brilliant engineer whom both Paul and Bruce had worked with at Transunion.

Today, OneVault is one of the most specialist companies in the world, and often asked to speak at events in the US.

Being the niche specialists paid off, and OneVault achieved the almost impossible. But this had its downside.

Once you’ve shown something can be done, the bar of what’s impossible moves. Competitors enter your space.

This was the second reason why being such focused, niche experts paid off. “We demo’d the solution for a large local corporate, they loved it, and then went to a ‘then’ competitor  to implement it,” says Paul.

“We always knew this was a real danger. Players like Bytes and Dimension Data have solid, existing client relationships with the same companies we’re targeting.”

18 months later the project still wasn’t working. “This is deep specialist knowledge,” says Paul. “Knowledge we built while we created our offering.” OneVault won the contract, and developed a partnership with Bytes at the same time. Today, OneVault works with all the major software integrators in the market. “We’re a specialist service they can offer their clients, without needing to put the same time and energy we needed to put in to become the specialists.”

Through a focused strategy, OneVault has become a partner, rather than a competitor, of some of the largest players in the industry.

2. Understand the nature of disruption so that you can prepare for it

pivotal-group

In today’s ever-changing and fast-paced business world, most business experts are in agreement that as a company, you’re either the disruptor, or you’re being disrupted. The problem is that disruption comes with its own set of challenges.

“Our entire business model was built around a subscription service. Instead of a company buying a software solution, installing it and running it internally, we would do all of that. We would carry the infrastructure burden, and the high upfront cost,” says Joel.

In theory, this sounded like a clear win for businesses that would benefit from a voice biometrics solution. The reality is never so simple, particularly when you’re a disruptor.

“The software is expensive, and so we thought this would be seen as an excellent solution,” says Paul. “Instead, we faced a lot of reticence over the cloud. Businesses didn’t trust it yet.”

On top of that, first movers are often faced with a lag in corporate governance guidelines. As technology becomes more sophisticated, so governance guidelines change — but it’s a slow process, and the lag can impede disruptors.

“You also can’t give proper reference cases, because it’s all brand new to your market,” says Paul. “The best we had was a case study of how well it had worked in Turkey.”

To compound matters, proof of revenue is essential for businesses wanting to trade with large corporates, but non-existent in the start-up phase.

So, what’s the solution? According to Joel, Bruce and Paul, it’s all about being patient, never giving up, building gravitas and getting a few clients on board, even if it’s free of charge to build up your reputation and prove your concept. Finally, you need to bring in revenue from more traditional channels to support your disruptive products and solutions.

“Disruptive solutions are by their nature new and different, which means change management for your customers. This makes the sales cycle long and complex, and you have to be prepared for that,” says Bruce.

Don’t stop laying your groundwork. While disruptors are ahead of the curve, you need to be ready for the uptake when it arrives. “We’ve now concluded a partnership with South Africa Fraud Prevention Services,” says Paul. “When an imposter calls we won’t only  terminate the transaction but we will alert the identity being compromised in the attempt and we will actively prevent fraud by contacting Fraud Prevention. The ultimate vision is for every South African’s voice biometric signature to live in our vault, and we are already receiving imposter information.”

3. Cultivate additional revenue streams

So, what do you do while you are living through the extremely long sales turnaround time of your disruptive, game-changing solution? Bills still have to be paid and investment is needed to develop truly disruptive ideas.

First, the team realised that while an annuity subscription service was their ultimate goal and where the industry was heading, initially they needed to be able to sell and implement the software.

It’s worth noting that one of OneVault’s earliest customers who bought the software has since launched a new business, which is on OneVault’s annuity service model. The shift has just taken time. “The change is happening, but it’s been slower than we anticipated,” says Bruce. “We needed to accept that fact and sell the software to bring revenue into the business while we were waiting for the market to catch up.”

It’s an important lesson. You don’t want to get distracted from your vision, but you need to be bringing in revenue, even if that means your short-term strategy differs from your long-term goals.

“It took three years before we really started seeing a move towards hosted solutions,” he adds. “Outsourced and offsite solutions are opex environments, not capex. They are more cost-effective for customers, but they require a shift in thinking. It’s a move away from how things have always been done, and that takes time.”

But, while Paul, Bruce and Joel were learning the art of patience, they also needed to start bringing revenue into the business.

Related: 8 Inspirational Quotes From Movie Mogul Steven Spielberg

“It was clear that we needed to find other opportunities,” says Joel. The result is the Pivotal Group, a diversified holding company with different businesses that are interlinked and complementary.

The group’s first business outside of OneVault, Pivotal Data, was based on a large call centre contract Joel, Paul and Bruce secured. “You can’t be an expert in everything – when you specialise you will always be more successful. The trick is to partner with other experts,” says Joel. In this case, three entrepreneurs were opening a call centre — this was their area of expertise; they were absolute subject matter experts. What they weren’t experts in was technology or facilities management. Instead of doing it themselves, they were looking for partners.

“We manage everything aside from the people element,” explains Joel. “We found and leased a building, built the bespoke workspace, put in the technology, and managed the facility and IT on an opex basis back to them.”

The business immediately had a good anchor client, and Pivotal Data has built on that. The annuity income has supported further growth.

“This was a base for us, but we’ve acquired a few businesses on the back of this success, and created our own cloud contact centre solution — which also feeds into what we’re doing with OneVault,” says Bruce. “Our vision is to create a technology stack that’s world-class and provides a range of services that no other businesses provide as a single solution.”

Because of this pivot into call centre management, a new opportunity has presented itself, and Pivotal’s ambition has grown to include a solution that calls, authenticates, and then analyses all the data that is collected during those calls.

“Through partnerships, my team has developed a predictive analytics system that gives contact centres deep diagnostic tools. We can predict why agents are having the conversations they have, and what to tweak to improve them. We see the agent’s problem before they do. This isn’t just value add, it’s a revenue generating tool if it improves lead conversion rates and customer service. It’s also all geared to lowering call volumes.

“We know we need to keep looking forward. OneVault is starting to gain real traction, but we need to be working on the next disruptive solution and model. We can’t sit back and relax,” says Bruce.

“Three years ago we said that’s it; no more start-ups or investing in pre-adoption phase businesses. From now on, everything we do will be revenue generating,” says Paul. “We’d stretched three years of runway to five years in OneVault, and we didn’t want to keep doing that. We wanted instant revenue businesses. And the very next thing we did was invest in a start-up. It’s a crazy space, but it’s also very rewarding.”

To sustain it, the group continues to grow, focusing on investing in businesses and entrepreneurs who are subject matter experts and therefore already know and understand the market, and then positioning each new business or service to plug into the current offering.

“Data is our golden thread — technology and the disruptive space,” says Joel.

4. Be open to new ideas and opportunities

pivotal-group-south-africa-founders

Integral to the Pivotal Group’s positioning is Paul, Bruce and Joel’s focus on supporting other business owners whose offerings align with the group’s own growth goals, and who would benefit from joining a group.

“If your goal is to be disruptive, you need to be open to all kinds of new ideas,” says Joel. Some will be better than others, and the co-founders have made the decision to focus on the ‘jockey’ rather than the business as a result. Business offerings and ideas need to pivot. If you have the right partners, finding a solution is all part of the challenge.

Pivotal’s move into the world of artificial intelligence is due to one such partnership. “One of our clients approached us with a concept. But he needed a partner to develop it into a proper AI solution,” says Joel.

It’s an augmented intelligence solution that focuses on recruitment, talent management and career guidance. The solution screens, ranks and matches candidates against a job profile, or a number of profiles. It’s a multidisciplinary platform that predicts the performance of the individual in a role.

“Our partner is a former Accenture consultant and a leader in this field. His focus is on the IP and science of the product, ours is on the business component.”

The challenge is how to commercialise and scale the business in as short a time frame as possible. Like many disruptive products, the adoption process is a stumbling block. “We invest at the pre-adoptive curve — not at the revenue generating stage, which means a big focus is always on how we can take an idea and build it into a revenue generating business,” says Bruce.

The business uses capital selectively. “We want to invest in and drive our own agenda,” says Paul. “We’re in charge of our own destiny, but it’s not comfortable or simple. We came from corporate. Big machines that you need to direct and keep on course. This is an entirely different challenge and we are still learning.”

Related: Listen And Learn: Why Podcasts Aren’t Just For Start-up Founders


Listen to the podcast

Matt BrownMatt Brown interviews Paul, Joel and Bruce and discusses what it’s like to invest in pre-adoptive start-ups and staying ahead of the curve.

To listen to the podcast, go to mattbrownmedia.co.za/matt-brown-show or find the Matt Brown Show on iTunes or Stitcher.

The Matt Brown Show is a podcast with a listenership in over 100 countries and is designed to empower entrepreneurs around the world through information sharing.

Continue Reading

Entrepreneur Profiles

Afritorch Digital An Overnight Success That Was Years In The Making

By any standard, local start-up AfriTorch Digital has seen phenomenal growth and traction. But, while the company’s success might seem quick and effortless, there is a lot of hard work behind it.

GG van Rooyen

Published

on

michel-m-katuta-and-thabo-mphate-of-afritorch-digital

Vital stats

  • Players: Michel M. Katuta and Thabo Mphate
  • Company: Afritorch Digital
  • Established: 2017
  • Visit: afritorchdigital.com
  • About: Afritorch Digital assists research agencies in conducting market research through its in-depth knowledge of the African continent and its use of the latest digital technologies.

There is a saying that goes: It takes years to become an overnight success. While a company or individual might seem to enjoy sudden (and seemingly effortless) success, there is often more to the story. The results are usually public and well-publicised, but the years of hard work that came before go unnoticed.

Local start-up AfriTorch Digital is a great example of this. Since launching in May 2017, the business has seen excellent growth. “To be honest, we were very surprised by the level of success. Things progressed a lot quicker than we anticipated,” says co-founder Thabo Mphate.

 “All the goals we had hoped to reach in four or sixth months, we managed to hit in the first month. It was just amazing.”

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

Preparing to launch

While AfriTorch Digital has certainly seen quick growth and success, it would be a mistake to assume that the same is true of the two founders. For them, the creation of AfriTorch was years in the making.

“The goal was always to start our own business,” says Thabo. “I think we’re both entrepreneurs at heart, and we saw an opportunity to create a unique kind of business that offered an innovative solution to clients, but we also realised the value of getting some experience first. Without the knowledge, experience, network and intimate understanding of the industry landscape, getting AfriTorch off the ground would have been incredibly difficult.”

Entrepreneurs tend to dislike working for other people. They want to forge their own path. However, as AfriTorch Digital’s case illustrates, spending time in the industry that you’d like to launch your business in is tremendously useful.

“Finding clients when we launched AfriTorch was relatively easy,” says company co-founder and CEO Michel Katuta. “One reason for this, I think, was that we were offering potential clients a great solution, but the other was that we had established a name for ourselves in the industry. People knew us. We had worked for respected companies, and we had done work for large clients. So, when we launched, we were able to provide a new start-up with credibility in the industry.”

The Lesson: Becoming an entrepreneur doesn’t always start with the launch of a company. Spending time in an established business, gaining experience and making contacts, can be invaluable. Very often, it’s the relationships you build during this time and the knowledge you accumulate that will help make your company a success.

Solving a problem

Everyone knows that launching a successful business means solving a burning problem, but what does that mean in practice? Aren’t all the burning problems already being addressed? And how do you attempt this without any money?

Thabo and Michel identified a small group of potential clients with a burning problem. Crucially, it was a problem that no one outside of the research field could have identified. Having spent years in the trenches, they saw a massive gap waiting to be filled.

Related: AutoTrader South Africa’s George Mienie Knows Disruptive Innovation Is More Than Shifting Gears

“A decade ago, researchers were still debating whether the future of the field was in the digital space. That debate is now over. Everyone agrees that online is the way to go. What once took months now takes days or hours, and the cost of research can be reduced by a factor of five,” says Michel.

“But researchers are not technology specialists. If made available, they are eager to adopt digital tools, but they aren’t eager to develop these tools themselves. That’s not their area of expertise.”

AfriTorch Digital stepped up to provide these tools. Katuta has a background in software engineering, so he could approach research problems with the eye of a tech specialist. Very soon, research agencies were lining up to make use of AfriTorch Digital’s services.

“We work with research agencies that conduct research on behalf of their clients. We provide the digital tools needed to conduct research online, and we provide the online communities. A big reason for our success is that we understand Africa. A lot of companies want to conduct research in Africa, but traditionally, this has been very hard. There was a lack of access and a lack of infrastructure that made research very hit-and-miss. Thanks to the continent’s adoption of mobile technology, it’s now much easier. If you have the technological know-how and an understanding of the environment, you can do amazing things,” says Michel.

The Lesson: Find a niche and own it. Research agencies might not have seemed like an obvious and lucrative market, but having spent time in the industry, the AfriTorch founders were able to identify clients who would be desperate for their offering. Spending time in an industry will help you see where the opportunities lie.


Take note

Before launching a business, get to know an industry from the inside out. This will give you an unparalleled view into gaps you can service.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending

FREE E-BOOK: How to Build an Entrepreneurial Mindset

Sign up now for Entrepreneur's Daily Newsletters to Download​​