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Nestlife: Vusi Sithole

In 1996 Vusi Sithole was the chairman of a subsidiary of Hollard. He had worked his way up the ranks of the insurance industry and was earning an executive’s salary, with further advancement on the horizon.

Nadine Todd

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Vusi Sithole

The story of Nestlife Assurance’s founder, Vusi Sithole, is one of perseverance, determination and the willingness of one man to create a legacy not only for himself, but also future generations of South Africans. Vusi Sithole is not shy about his opinion on the value of working hard. His company was not built on the back of BEE funding, it was not an opportunistic move and he first learnt his industry from the inside out. He firmly believes that nothing in life comes easily, and that learning to roll up your sleeves and get dirty is vital for the development of individuals and the nation as a whole.

“Affirmative action means that young black graduates are snapped up by large corporates at big salaries as they leave university. They start their working life already successful, without really walking the path to success. It’s creating a generation of South Africans who don’t have to work for their dreams, which I find worrying. I want to leave a legacy that shows what you can achieve if you want something badly enough, and you are willing to work for it, without a hand-up from the system. That will be Nestlife’s legacy,” says Sithole.

Having painstakingly built his company from the ground up, he knows what he’s talking about. Nestlife began as Life and Pension Insurance Corporation (LPC), an insolvent insurance company about to be liquidated. Not even its holding company wanted to take the risk of keeping it open.

But achieving dreams comes at a price, and for Sithole, that was giving up his cushy executive’s salary, with the second home, boat and overseas holidays just over the horizon, to build his vision.

Today he sits at his executive boardroom table, immaculate in a pressed suit, the head of a company that underwrites R150 million in premium incomes. It’s a long way off from a decade ago, when he filled the role of admin staff, salesman and GM all in one.

He had to, he had a staff of one: himself. “My journey to this point has been a rollercoaster of highs and lows. I have never been afraid to take a step backwards in the present if it meant future growth, but that has also meant sacrifices, for myself and my family.” It’s this commitment to a long-term goal that has really paid off.

Looking back to where Nestlife started takes us to 1996. Sithole had just used everything he owned as collateral to buy LPC, which was based in Mafikeng. His wife had already supported him through numerous changes in his life, and now he was asking her to support his decision to spend each week, Monday to Friday, in Mafikeng, away from his home in Johannesburg and his family. He didn’t give her all the details, particularly the fact that the house had been used as surety to buy the business, because he didn’t want her to shoulder the stress of the risk he was taking; and, he quips, he wanted to stay married.

Not only would her husband be away each week, but she had to accept that he’d given up his safe executive position, comfortable salary and future promotions to do so. His ultimate goal was to bring the business to Johannesburg, but he had no idea how long that would take. LPC was an insurance underwriting business with a limited licence to operate in the North West province. Before he could begin operating in Joburg he needed to raise R10 million to buy a national licence from the Financial Services Board (FSB). He had no idea how long that would take.

Why did he do all this you ask? Because he had a gut feeling that a business that no one wanted and was about to be liquidated was his ticket to achieving his ultimate dream of owning his own insurance business and building a legacy.

It takes a lot of faith in yourself to make that kind of commitment, but Sithole has self-belief in spades, and by 1996 he had also worked his way slowly and consistently through every position in the insurance industry, knowing that he would need to know the sector inside out before he launched his own company. He knew his market and he was determined to follow his instincts.

“I’ll take it”

Sithole’s introduction to LPC was almost accidental. By 1996 he had been in the insurance industry for over fifteen years. He had worked his way up the corporate ladder and he was the chairman of a subsidiary of Hollard. Life was good. And then he was approached by Capital Alliance, a local company that had its eye on him.

“It was the mid-1990s and Capital Alliance was rebuilding its reputation. Its short-term insurance business had suffered setbacks and although its life insurance side was still strong it was focusing on damage control. That meant restructuring and getting rid of dead weight, particularly subsidiaries that were not performing, or were not in line with the group’s new strategy.” LPC was both. While wooing Sithole, the group’s CEO, Ben Geldenhuis, invited him to visit the floundering subsidiary in Mafikeng. The group wanted to liquidate the company and if Sithole joined them it would be one of his first tasks.

“When we arrived in Mafikeng it took less than ten minutes to assess the company, including its five employees. There wasn’t much to see.” Which Geldenhuis of course knew. 1994 had seen a major change in South Africa’s political structure. The homeland governments were disbanded, replaced by new provincial governments. LPC had been formed to cater for the Bophuthatswana government’s insurance and pension policies. With the dismantling of that government, LPC lost the bulk of its client list. By 1996 it was underwriting an annual premium income of R5 million.

From this revenue, claims and other business expenses had to be paid, and in terms of the Insurance Act, insurance companies had to maintain a stipulated capital adequacy requirement, or they would be declared insolvent. LPC was dangerously close to this mark and the FSB wanted to revoke its limited licence, which meant it wouldn’t be able to trade at all, and Capital Alliance had no real interest in trying to secure new clients in the struggling North West province, which had taken the place of Bophuthatswana. Liquidating the company was a no-brainer.

But not for Sithole. “I can’t explain what happened. Here was this struggling company and instead of agreeing with Ben, I suddenly had this irrational but burning fire in me that this was it. Here was an opportunity for me to get into the industry on my own. I had been prepared to start a business from scratch — I was planning for it even — but this was a way in now, and I was ready.

I literally walked in and thought ‘I’ll take it’. Ben couldn’t believe it. In fact, he put a lot of effort into trying to convince me not to do it. He told me I was crazy, highlighting that I’d need to raise R10 million before I could move the business to Joburg, and Mafikeng did not offer that many potential clients. Maybe I was crazy.

I certainly didn’t know where I would get the money to buy the company, let alone how I would make the R10 million to buy a national licence, but I wanted to buy it anyway. One of the things that I believe is that at the core of all successful entrepreneurs is the ability to see the moment of truth when you are facing it. I knew what I was capable of, and I needed to trust in myself that I could get it done.”

Despite all the hurdles Sithole faced, he and Geldenhuis agreed on the terms of sale. Sithole raised just under the required money by putting his house and everything he owned up as collateral, for which he would own 74% of LPC. Capital Alliance would retain 26%. “I remember the day we signed the papers. Ben turned to me and said, Vusi, now you own an insurance company. Don’t f*** it up.”

Building foundations

Leaving his position as chairman of an insurance company to go it alone was not the first time Sithole had started from scratch. His entire career is marked by decisions to take the difficult road, rather than be satisfied with his current situation.

“I was a black varsity student at Fore Hare during the early 80s, when activism was rife in South Africa, and that influenced me. I wasn’t going to accept a life of mediocrity because of South Africa’s political system. I had big dreams for myself, and the will to achieve them.”

That activism got Sithole kicked out of Fort Hare early, and he arrived back in Johannesburg without a degree or a job. “It was the early 80s and work was not easy to find. Black people were carrying pass books, which the government used to keep track of employment status and work permits.

After months of looking for work, my father managed to get his boss at Anglo American Shipping to organise me a clerk’s position. My first day arrived, and as a young, idealistic young man, I looked at the office job I now had and rebelled against it. I arrived late, I took an extra long lunch hour and I left early.

I didn’t like the office space or the work. I didn’t appreciate the necessity of a job. The next day I was fired and while I wasn’t really sad to see the job go, I didn’t realise the problems the ‘unemployed’ stamp one day after the ‘employed’ stamp in my pass book would have on future job prospects. I was unemployed for months after that. Finally, I was put in contact through a family member with Sam Moseu, who sold insurance policies to the working class in Joburg. He needed someone to do admin for him, and so I was introduced to the insurance industry.”

It was the mid-80s and Sithole was back in an office, doing clerical work, which was exactly what he didn’t want to do, but months of looking for work had taught him the value of a job, any job. That didn’t mean he was giving up on his ambitions though. “I had my eye on hitting the streets with Sam. It took some convincing, but within a few months he let me join him in selling policies. Sam ended up being the man who taught me my first lessons in sales, and the ins and outs of the insurance industry.”

Once there, Sithole soon proved his flair for selling policies. Under Moseu’s guidance he gained enough of an understanding of the insurance industry to become a partner in the business, an arrangement that would last for almost five years. By the late 1980s, the business was doing well, but Sithole knew it would never reach the heights he was ultimately aiming for. And then an opportunity presented itself: local insurance company African Life opened a ‘black’ branch to target the burgeoning working class in the city of Johannesburg. “African Life needed black consultants to sell the policies, and I was approached to join them.”

It was an interesting choice for Sithole. He had now been running his own business with Moseu for almost five years. African Life was not offering him a managerial role. He would be a sales consultant earning commission only and working with Khehla Mthembu.

Many people would have seen this as a step backwards. Not Sithole. “I saw an opportunity to increase my skills base and learn from the best. I would be working in a large corporate firm, and if I worked hard I would move up through the ranks.

“I started at the bottom. I thought I understood my industry, but it didn’t take long to realise how little I knew. I hadn’t been formally trained as a salesman either, so I needed massive growth in that area as well. But I also knew why I had made the move. The whole point was to learn where my shortfalls were and to fix them.”

It wasn’t an easy process. “I was on commission only. I had just gotten married and I actually took a pay cheque home one month worth zero Rands. Policies had lapsed or been cancelled and the returned
commission meant I earned nothing that month. It was an important lesson: don’t sell something to someone who doesn’t want it, or can’t afford it. Their cancelled policies meant I took no money home that month.”

Sithole’s perseverance paid off though. Over the course of nine years he worked his way up the ranks, learning from each position. “I was a consultant, field manager, branch manager and finally area manager for Johannesburg before the BEE insurer Afgen approached me to join them.

It seemed like a good next move.” After a few years at Afgen the opportunity to join Hollard through a subsidiary presented itself. It was the early 90s and Sithole was a hot commodity. He was an experienced black man in the insurance industry at a time when political change was paramount. His future in the industry seemed assured. But still the dream of owning his own company persisted. He was simply biding his time, waiting for the right moment to present itself.

One of Sithole’s strengths is the discipline and patience to lay excellent foundations. By the early 1990s he had come a long way from the youth who was fired on his first day for being a lazy employee. He is a firm believer that the best things in life are earned, and his business success is a prime example of this philosophy.

“By the time I bought LPC I knew my industry inside out, mainly because I had held virtually every position the industry offers. I knew what it took to sell insurance policies, and conversely the administration behind receiving and honouring policies. I knew where things went wrong, and how successful underwriters operated. I had learnt the business from the ground up, and I didn’t make my move until I knew I was ready.”

Creating NestLife

After so many years of preparation, one would think that finally owning his own company would be the end of Sithole’s journey. In fact it was only the beginning. The decision to buy LPC once again took Sithole backwards before he went forwards.

The first challenge was buying the company.  Once he managed to pull the money together though, he still needed to take the company from insolvency to making enough money so that he could raise R10 million in cash to buy the national licence. “I planned to take the company from Mafikeng to Johannesburg from the beginning. I knew there were no real growth possibilities in Mafikeng. As a life insurance underwriter my clients would be big companies, and those were all in Johannesburg. But, unlike Capital Alliance, I didn’t need huge clients in the North West to make LPC viable.”

In order to make LPC a sustainable company, Sithole needed to secure new clients and grow his existing client base. He also needed to run a tight ship, because although he would save money from his own salary, he needed to make the business profitable. “At that stage LPC was a tiny underwriter.

We couldn’t compete with large players in the industry on price, so we needed to differentiate ourselves in another way.” That way was superior service. Sithole shared his vision of growth with his employees and how they were going to get there.

Everyone was invested in his vision. He trained them in the art of customer service, and together they started growing the business, pulling it out of insolvency step by painful step. It took Sithole four long years to secure the national licence, which he achieved through the business’s profits, and by raising capital on the back of his own assets.

Four years of driving from Joburg to Mafikeng each week. Four years of wondering not only if and when he would reach his goal, but whether there would even be enough money to pay the company’s bills at the beginning of each month.

Sithole’s determination, intimate understanding of the insurance industry and support of his staff won out though. The company became ready to secure a national licence, which did not mean Sithole could rest on the success of achieving his goal; more work was ahead.

“When I bought the national licence from the FSB in 2000, I bought out Capital Alliance, changed the company’s name to Nestlife and moved the main office to Johannesburg, but I kept the office in Mafikeng. That was where our clients were, and we needed that business. But moving to Joburg presented its own challenges. After working as hard as I did for four years to achieve my first goal, I was now quite literally a one-man band again. I was making contact with the people I knew in the industry to pitch my business to them. I don’t think I slept for months.”

And then the tipping point came. Sithole had risked everything on being able to secure big clients if he managed to get a national licence, allowing him to sell insurance policies to companies across the country, and not just in the North West province.

His faith in himself and his reputation in the insurance industry were well founded. “I carried the differentiator we had used in Mafikeng through to Johannesburg with me. Even today, as a R150 million company, our differentiator remains service. Never underestimate the power of looking after your clients.”

His strategy was simple. He would use his reputation to secure a meeting, investigate what areas his potential clients were dissatisfied with in terms of their current providers, and find a solution for them. Success lay in following through on any promises he made to deliver those solutions. While doors opened slowly, they did open, and Sithole used every inch to gain a mile. “I approached insurance companies that I knew held big accounts, like Eskom, and I pitched our business as their underwriter.

I didn’t try to get everything at once. Instead, I convinced them to give me a small percentage of their business so that I could prove myself. Here my reputation in the industry definitely played a role. They knew me, and they were willing to give me a chance.

I wasn’t an unknown.” 5% of a company’s business soon grew into 10%, then 20%, until in many cases Nestlife now holds 100% of its clients’ business, all through an unwavering focus on service.

In 2006, Nestlife closed the year with R30 million in premium income, and has experienced exponential growth ever since. In March 2011 the company closed on R150 million, and Sithole aims to grow the business to R1 billion by 2015.

“One of the most interesting things I have learnt on this journey is that you never stop learning. Running a R30 million company is different from running a R10 million company, or a R150 million company. Each time the business has grown, I have had to grow with it, and expand my own horizons.”

Sithole recently completed an MBA degree, which took him four years to achieve on a part-time basis. “If I don’t keep my eye on the ball at all times, I won’t achieve my 2015 vision, or the goals I have set after that. I need to stay on top of everything happening in my company and the insurance industry.”

The human factor

Sithole does not attribute Nestlife’s growth to himself alone. “One of the biggest mistakes I have made is letting excellent employees leave the business without fighting for them. Without skilled staff there is no business, and if there is one piece of advice I can offer other business owners, it’s hold on to the people who make your business great.”

Nestlife employs 100 people across its four offices in Johannesburg, Bloemfontein, Durban and the Eastern Cape. The Mafikeng office was closed in 2006 and its employees relocated. 2011 will see further expansion with offices opening in Cape Town, Nelspruit and Limpopo province.

“Excellent service starts in-house. If employees understand and buy into a company’s vision, they can support that vision and the business’s overall values. We call it our 2015 vision, and it’s something that everyone, from the cleaning staff to our top brokers, lives and breathes from the moment they walk through the doors each morning.” Interestingly, this is one area that any business can achieve at no cost. Clients appreciate good service and follow-up support. Every business owner can foster this attitude in their staff.

Sithole has worked hard to earn the respect and dedication of his employees. He is particularly focused on helping each individual under the Nestlife banner grow. “We have data capturers and clerks that started as cleaning or gardening staff. If we recognise potential we will open every door we can for that individual to achieve what they are capable of.”

This isn’t ‘bleeding heart’ altruism on Sithole’s part. Netslife’s growth is testament to what employees can achieve if they believe in where a company is headed. “People are not productivity tools. They have personal and career aspirations. As a business owner I have worked hard to never stifle those aspirations, but encourage them instead.”

Future vision

The discipline needed to take an insolvent company and turn it into a major player in an historically competitive industry cannot be downplayed. Sithole lives his life according to three strict pillars: physical, mental and spiritual. He is a firm believer that both the mind and body need to be maintained and worked out for overall health and success, and that spiritual awareness completes a healthy balance.

His passion gave him the drive to not only create a dream, but doggedly pursue it, even when he thought he couldn’t go any further. His discipline has allowed him to realise his vision.

“I want to create a legacy for myself, my family and even South Africa. I’m proud to say that Nestlife isn’t the product of a BEE deal, and I think it’s important for South Africa that companies like mine exist. I want to show our youth that if you put your mind to it, you can achieve anything.”

Growing businesses

One of Nestlife’s goals is supporting people, particularly the historically disadvantaged. Sithole has watched people start their companies from scratch, and if he has believed in them, he has used Nestlife as a tool to give them business and support them, through mentoring and resources. One such story is a man who started a small local insurance broking firm. Nestlife supported him, and his insurance company has grown from strength to strength.

Four years since Sithole started supporting him, he has grown to the point of being able to place R11 million worth of business with Nestlife. “At our broker awards earlier this year, he came up to me and said, ‘Mr Sithole, I owe my company’s growth to you. A quarter of that R1 billion company that you are planning for 2015 will come from my business.’ That’s the commitment and the passion we share with the people we have walked our journey with,” says Sithole.

Naming Nestlife

When Vusi Sithole bought a national licence in 2000, he had the perfect opportunity to rebrand the company. The name Life and Pensions Insurance Corporation (LPC) did not actually reflect what the underwriting firm did, as the company no longer sold pension policies. “I got the whole company involved. We had a staff competition to see who could come up with the most appropriate name.”

As it turned out, Sithole himself came up with Nestlife. “I was in the bush watching birds build nests. They were building their homes so patiently and deliberately, piece by piece. I started musing about what we did, helping people build their futures and support their families. The symmetry was perfect. Nests for eggs and protecting baby birds, Nestlife for security for people.”

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

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2 Comments

2 Comments

  1. Mangaliso

    May 5, 2013 at 19:16

    One of the successful entrepreneurs I know.He gives me motivation on being sucessful in life

  2. Moe

    Aug 23, 2013 at 09:28

    Great piece, worth every read. Well done bra Vusi, adding more fuel to my business journey.

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Going The Extra Mile With Neil Robinson Of Relate Bracelets

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

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

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

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

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

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

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

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

Building a relationship

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

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

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

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

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

Protecting a brand

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

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

Supporting growth

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

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

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

The business

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

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

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Entrepreneur Profiles

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

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

Nadine Todd

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

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

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

Related: 10 SA Entrepreneurs Who Built Their Businesses From Nothing

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

Start small, but dream big

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

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

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

Keep dreaming big, no matter what

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

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

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

Work hard, be determined and believe in yourself

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

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

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

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

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

Find people to inspire you to reach success

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

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

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

Build your success, one step at a time

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

Be your own biggest cheerleader

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

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

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

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

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

Drive a movement with your business

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

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

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

Pivoting to further growth

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

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

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

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

Take a step back, and rediscover your purpose

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

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

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

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

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

Reveal opportunities and create aspirations with your message

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

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

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

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


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

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Entrepreneur Profiles

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

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

GG van Rooyen

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edward-moshole

Vital Stats

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

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

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

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

1. Find the right clients

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

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

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

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

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

2. Own the manufacturing process

chem-fresh-products

PC: risingafrica.org

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

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

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

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

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

3. Be willing to diversify

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

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

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

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

4. Build a strong foundation

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

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

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


Key Insights

There’s no substitute for perseverance

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

Own the process

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

Strategically increase revenue streams

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


TAKE NOTE

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


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

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