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3 Vital Steps That Gave Universal Paper & Plastics 10x Growth

Here’s how brothers Jonathan and David Sher, together with their father Barry, have taken a R100 million family business and will reach R950 million by the end of 2017 — by manufacturing toilet paper.

GG van Rooyen

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Universal Paper and Plastics

Vital stats

  • Players: Brothers David and Jonathan Sher, and father Barry Sher
  • Company: Universal Paper & Plastics
  • Established: 1950
  • Revenue: R600 million, expected to reach R950 million by the end of 2017.
  • Claim to fame: This decades-old family business has managed to reinvent itself and 10x its revenue over the last decade.
  • Visit: www.upap.co.za

Key learnings

  • Find a new product you can sell to existing customers.
  • Don’t be afraid to reinvent the company. Embrace change.
  • Even old and large companies can pivot successfully.
  • Own your own supply chain (as much as you can).
  • Find a niche. Every industry offers them.

Blogger and technology evangelist Robert Scoble famously said:

“Change is inevitable, and the disruption it causes often brings both inconvenience and opportunity.”

Related: Start Manufacturing Toilet Paper Today

All businesses need to keep up with the times and evolve — even those in very traditional industries. Take for example local manufacturing firm Universal Paper & Plastics (UPP). The company has a very long history, having been founded in 1950. It started off making things like envelopes and paper drinking straws.

By 1955, however, it had found its niche when it started producing paper napkins. Over the years, UPP dabbled in other areas. As its name suggests, it also made things like plastic bags, but napkins were its core product.

The business reached its maximum growth

By the mid-2000s, though, the market had shifted. “The company wasn’t in financial trouble, but it was clear that the napkin business had reached its limit. Business was slowing down, sales were declining, and there was clearly no room for growth,” says company director David Sher.

“We wanted to grow the business and not let it stagnate, and that clearly meant reinventing it.” Together with their father Barry, brothers David and Jonathan Sher, who had joined the company in 2008, took a careful look at the business to determine where and how it could evolve.

It was clear the business, which had already been run by the Sher family for three generations, had reached an inflection point. And therein lies the secret to growth. Businesses that span only a few years will reach inflection points, and need to adapt or die.

Many business do not survive decades, because they cannot navigate these points. UPP has not only stood for 67 years, but it’s entering an unprecedented period of growth because it’s owners understand the need to adapt to changing markets, and find solutions that cater to these market while bringing costs down and simultaneously improving quality. It’s something that is much easier said than done.

Adapt or die

But lets’ step back to Scoble and his assertion that disruption brings both inconvenience and opportunity, for it’s the businesses that spot the opportunity — and react accordingly — that benefit from real growth. Scoble (and his blog scobleizer.com) first rose to prominence when he was employed at Microsoft.

He was authentic and unpretentious in his writing, and accomplished the difficult task of making a gargantuan organisation like Microsoft seem, well, human.

Related: What steps do I need to take to start manufacturing toilet paper?

Scoble made his statement about disruption in his 2006 book Age of Context: Mobile, Sensors, Data and the Future of Privacy, just as his tenure at Microsoft was ending. His words would soon prove incredibly relevant to his old employer.

The very next year, Microsoft found its world upended. Until then, Microsoft had been a software company. The world was using desktop PCs, and the corporation’s software was dominating that market. But in 2007, the world was changing. People were switching from desktop to mobile. Clunky computers were out, laptops and tablets were in.

The big reason for this change? The introduction of the first-generation iPhone. Apple, a company that had been created to build and sell personal computers, was suddenly in the cellphone business. Soon it was selling iPads and paper-thin MacBooks.

React to disruption

The late-2000s saw an incredible amount of disruption in the tech sphere. Both Microsoft and Apple only survived because they succeeded in reacting to this disruption. Where would Microsoft be if it was still just focusing on software? What would Apple look like if it was still only selling desktop Macs?

Apple was the first to react — in many ways, it was a cause of the disruption — but Microsoft also responded before it was too late. It had some hits and some misses. It’s tablets, for instance, haven’t caught on like those of Apple and Samsung, but it has had great success with its Azure cloud service. It also purchased Skype for an astonishing $8,5 billion. Can Skype ever show Microsoft a decent ROI? Well, even if it doesn’t, it shows a willingness on Microsoft’s part to make bets on the future, instead of just depending on old strategies to keep paying off.

Death by attrition

universal-paper-and-plastics-toilet-paper-manufacturing

The point is this: When they realised that the world was changing, both Apple and Microsoft did something. They embraced change. When you’re an old and well-established company, this can be very hard to do. Many great companies have gone under simply because they were too slow to react to change.

In a sense, being disrupted can be a good thing, since it forces you to take action. Few things can focus your attention like an existential threat. But what happens when your market is slowly eroded, perhaps over a decade or two? If you’re lucky, the business will stagnate and you’ll hit a plateau.

If you’re unlucky, the business model will become so shaky that it eventually collapses.

The great disruptions and tragic failures are well documented, but for most companies, death by attrition is more likely. If you’re around long enough, you will eventually see your core product or service become obsolete. It’s inevitable. All companies are always being disrupted, but when it happens slowly, we simply call it ‘progress’. You either move with the times, or you get left behind.

Related: 3 Secrets To Business Success

Pivoting the business

Of course, the above is not only true for tech companies. UPP is an excellent case in point. “Our dad got the process started just before we joined the business,” says Jonathan.

“He wanted to shift the company’s product offering, but he didn’t want to venture into areas that the company knew nothing about. He wanted something that UPP could sell to existing customers, and that was still within the scope of the company.”

How to compete with strong international brands

An obvious answer was rolled paper products. The market for rolled paper was massive, but there was a problem: It was dominated by some very strong and entrenched competitors. As a new player in this particular field, how could Universal Paper & Plastics compete with strong international brand names?

It wasn’t easy, but the Sher family employed some smart strategies that eventually saw UPP grow exponentially over the next decade. In fact, the company’s revenue is set to grow almost tenfold by the end of 2017, going from around R100 million to closer to R1 billion. Rolled paper is now its biggest product by far.

Here’s what they’ve done to implement 10x scale in the business. 

1Sell to existing customers

It’s both more time consuming and costly to pitch to and win new customers. Selling to existing customers is far more cost efficient, and an excellent way to grow a business and increase revenues.

“We’d been around for a long time and we had established strong relationships with many of the large retail chains. Instead of trying to sell to new customers, we focused on the relationships we already had. You need to leverage your existing relationships first if you want to grow your business,” says David. In line with this strategy, UPP diversified its product range and increased its sales volumes with its existing customers.

2Own the supply chain

While existing customers might be willing to give your new product a try, one thing still remains very important: Price. When it comes to fast-moving consumer goods, margins are small, and customers — even loyal ones — are unlikely to sign a contract if you can’t offer them a great product at a competitive price.

Universal Paper & Plastics realised that it could only be competitive if it owned its entire supply chain. If it didn’t make its own raw materials, there was no way it could be competitive.

Related: How Maditsi Mphela Pushed Through Business Stagnation To Successfully Scale

“For a while, we got our paper from a supplier, but there were some issues. Firstly, buying paper from someone else ate into our margins. Secondly, when this new side of the business really took off, we suddenly couldn’t get hold of enough paper from the supplier. Finally, we weren’t terribly happy with the quality. We knew that we needed to provide a superior product, and we could only do that if we had complete control over it.”

So, the company invested in a paper plant. Taking control of the manufacture of two of its key raw materials, ink in 2002 and paper in 2008, meant that UPP could reduce its costs and improve its efficiencies.

“Making paper is difficult and expensive, so it was a risk,” says Jonathan. “Funding it wasn’t easy, but it was worth it. It gave us the competitive edge we needed.” 

3Find a niche

Don’t assume there’s no new niche to explore, even in commoditised products. Toilet paper is toilet paper, right? Well, no. Early on, Universal Paper & Plastics identified a surprising niche in the market. It decided to print on its rolled paper, something not a lot of companies could do.

“It added more complexity. We had the knowledge of flexographic printing but had to master the art of printing on such thin paper at high speeds. There was surprising demand for printed products. At first, it was purely decorative, then we moved towards design with a purpose — things that are interactive and educational. For example, we have an educational range of toilet paper for kids that provides information on topics like multiplication, biology, dinosaurs, planets and road signs,” says David.

When combined with the facts that its products are both high in quality and competitive in price, it’s clear that UPP has created an impressively defensible position for itself in a very competitive market. It’s a great example of how just about any company in any industry can rescue itself from irrelevance, as long as it’s willing to adapt and take some risks.

Lessons Learnt

7 Pieces Of Wise Advice For Start-Up Entrepreneurs From Successful Business Owners

Launching a business is tough, but with perseverance, a willingness to learn from mistakes and a focus on the future, you can turn your dream into a reality. Seven top South Africa entrepreneurs share their hard-won start-up lessons.

Nadine Todd

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“What seems like an expensive lesson is actually the best thing that could have happened to you.” 

So you want to start a business? Seven successful entrepreneurs share their words of wisdom for start-up entrepreneurs

1. 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. — Arnoux Mare, Innovative Solutions Group, turnover R780 million

2. Stop planning and start doing

We all tend to complicate business with planning and processes. These shouldn’t be ignored, but you need to also just start — start your business, start that project, start walking the path you want to be on. — Gareth Leck, co-founder, Joe Public, turnover R700 million

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

3. Play your heart out and the money will follow

I learnt this valuable lesson when I was a student and busked at Greenmarket Square. You don’t stand with your hat, waiting for cash and then play — you play your heart out and the bills pile up in your hat. It’s the same in business. You can’t look at the bottom line first; it’s the other way around. — Pepe Marais, co-founder, Joe Public, turnover R700 million

4. Love learning lessons

What seems like an expensive lesson is actually the best thing that could have happened to you. I wasn’t paying attention to my partner or my books in our early days, and I didn’t realise the debt he was putting us into. We ended up owing R1 million. In hindsight, it was a cheap lesson to learn. Imagine if that happened today? The fallout would be much greater. We have 19 stores and nearly 100 staff members. It would hurt everyone, not just me. — Rodney Norman, founder, Chrome Supplements, turnover R100 million

5. Landing an investor starts with your story

A great story and data are the two golden rules of attracting an investor. You need both if you really want to access growth funding that will take your business to the next level. — Grant Rushmere, founder, Bos Ice Tea

Related: Watch List: 15 SA eCommerce Entrepreneurs Who Have Built Successful Online Businesses

6. Offer solutions

If you’re not solving a problem and creating value, don’t ship it — throw it away. That’s cheaper than selling a bad product. — Nadir Khamissa, co-founder, Hello Group

7. Small, clever decisions lead to big profits

One of the most important lessons any business owner can learn is that success on profit is nothing more than the accumulative sum of rand decisions. Lots of small, clever money decisions lead to big profits, and without the disciplines of frugality, money gets lost. It’s that simple. Question every single line item on a quote. Do we need it? Can we get it cheaper? This is what it’s about. — Vusi Thembekwayo, founder, Watermark

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Lessons Learnt

Here’s How Bosses From Hell Helped 6 Entrepreneurs Grow

From control freaks to being unco-operative, founders share what they learned from their worst boss.

Entrepreneur

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In business, sometimes the most valuable lessons come from the worst teachers. We asked six entrepreneurs: What’s the greatest thing you learned from a bad boss?

1. Bring everyone in

“A former boss was very hierarchical and discouraged collaboration. Everyone reported directly to her, and interdepartmental meetings were practically prohibited. It meant that only our boss had the full picture – we missed a lot of opportunity for alignment and cooperation. Today at our company, it’s a priority to hold regular team meetings and foster a strong culture of collaboration. It’s crucial that our team members weave collective sharing into the fabric of their day-to-day interactions.” – Melissa Biggs Bradley, founder and CEO, Indagare

2. Be vulnerable

“Don’t be afraid to show your emotions! I worked for a partner at McKinsey who was an incredible person but an awful manager because he kept his feelings bottled up. After a client presentation went awry, our team didn’t know where we stood with our manager. It was tense, awkward and demotivating. Showing vulnerability and letting others know when you’re genuinely upset can help everyone externalise their emotions, build trust and reassure employees that they aren’t alone. It sends a clearer message than stone-faced silence.” – Leo Wang, founder and CEO, Buffy

Related: 5 Factors That Make A Great Boss

3. Lend a hand

“I worked for someone who would never help out the junior staff with their work, even if he was finished with his own – he’d simply pack up and leave early. I now make an extra effort to ask my staff if they can use a hand when my own workload is light. It’s created a culture that feels more like a tight-knit team and less like a hierarchy.” – Adam Tichauer, founder and CEO, Camp No Counselors

4. Move as a group

“When I was a nurse manager, I had a boss with no experience in healthcare. She wanted to change our process for keeping patients from getting blood clots. I knew it was a mistake, but she insisted. Ultimately, the change failed. It taught me the importance of empowering staff to speak up. At Extend Fertility, we collect feedback from customers via surveys. Results are shared with our staff, and together we develop action plans to address negative experiences. It’s the employees who interact with patients on a daily basis who have the best solutions.” – Ilaina Edison, CEO, Extend Fertility

5. Trust your team

“I once worked for a woman who joined our team after I had been working there for a while. Every time I stood up, she’d ask me where I was going, whether it was to the bathroom or to the printer. She had a fear of not having control over my time and work. As a young adult, this behaviour really demoralised me, especially since I had excelled at the job for years prior. My leadership style is less neurotic. Once my team members have my trust, I’m pretty hands-off.” – Denise Lee, founder and CEO, Alala

Related: 5 Leadership Questions Every Boss Should Ask

6. Respect others’ time

“Early in my career, I had a project manager who’d wait until the very last minute to review work, then convey lots of new information and requests. This happened at the end of the day or, worse, after hours, when I was home. It was demoralising, inefficient and disrespectful. In my career, I’m conscious about reviewing work in a timely and complete way so my team can successfully incorporate my feedback without generating a last-minute crisis – or lingering resentment.” – Kirsten R. Murray, principal architect and owner, Olson Kundig 

This article was originally posted here on Entrepreneur.com.

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Lessons Learnt

11 Things Very Successful People Do That 99% Of People Don’t

Consistency is a big part of succeeding. The top 1% of performers in the world know this is the secret to their success.

John Rampton

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successful-entrepreneurs

Becoming wealthy and leaving an impact on the world is not an easy feat. If it were, everyone would go around doing it. At that point, it would not be much of an accomplishment at all.

Rather, being extremely successful requires an extreme amount of work. Especially when there is nobody looking. The best people have developed habits that help them reach their goals. These routines are not necessarily challenging to form, but they take consistent effort over extended periods of time. Creating these tendencies in your own life will propel your success.

Here are 11 things, that 99% of people (myself included) do not do, but really should.

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