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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

Taking It To The Malaysian Market – Karl van Zyl Of Antipodean Café

Karl van Zyl approach has always been logical and simplified and he highlights three principles that he believes to be critical in the food and beverage industry.

Dirk Coetsee

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karl-van-zyl-interview

Karl van Zyl has a 17 year history in the food and beverage industry in South-Africa and now applies his skills and knowledge in the extremely vibrant and competitive Malaysian market. I had a very interesting conversation with him to explore both similarities and differences of both markets and to share his accumulative learning of this industry to those entrepreneurs considering to open a restaurant or café.

He has a history working for the Mikes’ kitchen and Fishmonger groups in South-Africa fulfilling a range of roles from being a General Manager to Operational Manager. Currently he both manages an well-known Café called Antipodean and facilitates the opening of new cafes’ in Klang Valley, Malaysia.

Karl shared that his approach has always been logical and that applying sound basics has always served him well. Would you eat the food served at your restaurant and really enjoy it? Posing questions such as the aforementioned to yourself as a restaurant owner or manager helps you to be aware of the quality of your operation and to always keep the customer in mind when making decisions.

One of the key learnings that he shared was to get a very good and experienced team of waiters together that has previous restaurant or hospitality industry experience. He strongly advises quality over quantity when it comes to waiters and fondly remembers one of the waiters that he managed whom could take orders from a group of twenty people and remember each order from the top of his head.

It is not only about quality of service to the customer but also when there is a small but quality team of waiters operating then their earnings are much higher and they will feel valued and happy as opposed to a large group of waiters competing for relatively small rewards.

Related: What Comfort Zones? Get Comfortable With Being Uncomfortable Says Co-Founder Of Curlec: Zac Liew

Karls’ approach has always been logical and simplified and he highlights three principles that he believes to be critical in the food and beverage industry:

  1. Quality of food
  2. Quality of service
  3. Pricing.

He adds that in addition to the above principles your location should of course be in area with very good ‘foot traffic’.

When the entrepreneur venturing into the food and beverage market considers the right suppliers it is a critical factor to go and visit their facilities, thoroughly check their quality and enquire which other quality brands they are supplying in addition to buying at good prices.

In his view comparing the Malaysian food and beverage market to the South African market there are a lot more Malaysians eating at restaurants than in South Africa. One of the reasons for this is that there are a lot of ‘street café/restaurant’ options with quality food at a very low price due to the restaurant not being air-conditioned and making use of for example plastic chairs and tables.

Personally the author has found much more twenty four hour food options and countless varieties of food compared to the South African market. If you are awake and hungry at 3 am in the morning in Kuala Lumpur, no problem! You also will not be limited to only 24 hour fast food options, almost any type of food that you desire will be available that is if you know where to go off-course.

Related: Don’t Be ‘Outside Standing’ On Your Own Exponential Growth Says Serial Investor, Jimmy Phoon

As a matter of interest Karl regards the prices of restaurants in general in Kuala Lumpur to be better than in South Africa and holds the service levels in KL in higher esteem due to it being more ‘personal’ and customer orientated. He believes that South African food matches the quality of Malaysian food but that there is however much more variety of food available in Malaysia.

Karl pointed out that it is possible to have people from all five continents represented in one night at a restaurant as the food culture in Malaysia is very diverse and so is the cultural phenomenon in general in Kuala Lumpur.

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Lessons Learnt

What Comfort Zones? Get Comfortable With Being Uncomfortable Says Co-Founder Of Curlec: Zac Liew

Zac Liew was offered to be CEO and Co-founder of Curlec at the age of twenty six and took up the offer knowing that he would be engaged in a steep learning curve. Curlec is a FinTech company that is redefining the customer experience for Direct Debit.

Dirk Coetsee

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zac-liew

Botanica Deli, Bangsar South, Malaysia a vibrant environment where a number of entrepreneurs and office workers go to meet and have great food and coffee. I walked into the Deli to meet a man that might just possess the ‘entrepreneurial gene’ if indeed that gene exists.

Zac Liew always wanted to venture onto the exciting yet challenging playing field of entrepreneurial ventures having his dad and mother as examples. His father a lawyer, whom ventured into property development and his mother whom started the first chain of liquor stores in Malaysia.

His parents’ ventures interested him from a very young age and helped to ignite the entrepreneurial fire in this very young CEO and co-founder of Curlec. Zac is a qualified lawyer whom also did a stint in the banking industry but at all times he had a burning desire to do something entrepreneurial and always had an interest in tech.

To him tech was always logical and simply made sense within this ever changing business environment within which we as entrepreneurs launch our start-up ventures. He also enjoys the challenging demands that the tech environment places upon his problem solving skills.

Related: Brian Tan Of FutureLab.my – Bridging The Knowledge Gap Through Social Learning

The Creation of Curlec

curlec-malaysia-mobile-appZac Liew was offered to be CEO and Co-founder of Curlec at the age of twenty six and took up the offer knowing that he would be engaged in a steep learning curve. Curlec is a FinTech company that is redefining the customer experience for Direct Debit. They are the first Malaysian software company to enable online Direct Debit payments in Malaysia. One of the core principles that Curlec was founded upon is to Build great tech that solves a basic need.

Zac together with his co-founders Steve Kucia and Raj Lorenz found a simplified and effective solution to collecting money on a recurring basis. Normally recurring billing and collections is a big issue for SMEs’ and other options were exceptionally costly and timeous.

Zac pointed out that the size of the issue of recurring collections exceeded all expectations and that is one of the reasons that their start-up phase has been successful and gained very good traction in the market.

Curlec has a razor sharp focus on only two products which enables them to focus on giving a great service and customer experience. Curlec cuts through the normal levels of bureaucracy of big companies and has a laser focus on their customers.

How does this apply to start-up entrepreneurs?

Create a product or a system that is simplified, very user friendly, cost and time effective, and more importantly that solves a very challenging issue within the market place that adds great value to customers. Underpin this by being customer centric.

I asked Zac to enlighten me on the key learnings of his journey thus far and also share success principles that has served him well in business and in his life in general. He pointed out that he believes that every entrepreneur should get comfortable with being uncomfortable and venture outside the boundaries of their own comfort zones.

‘Be comfortable with making mistakes’ he says. Get feedback learn from it and integrate the useful feedback in your thinking and in practically applying solutions.’

As business and life has a natural and general ebb and flow to it persistence is a key factor to your success. Accept challenges as they occur and realise that the mind of the entrepreneur should always have a problem solving focus. As a fan of combat sports, Zac shared the following quotes that resonates with him:

“The more you seek the uncomfortable the more you will become comfortable” – Conor McGregor

And

“I have been training under the dark lights so that I can shine in the bright lights’ – Anthony Joshua

Related:  Zac Liew Channeling The Fire Of Authenticity: Asia’s’ Top ‘YouTuber’, Joanna Soh

As a writer I have always been fascinated by the wisdom imparted by philosophers and masters of their respective fields. I am even more excited and hopeful for our future when I hear wisdom ‘rolling of the tongue’ of a twenty six year old entrepreneur:

‘Be idealistic in your ideas but be pragmatic in actualising them. If things are not working out do not be stuck in that. Take what you can learn from your experiences and move on.’

Tech has the inherent power to reach the far ends of the world seamlessly and when we have more and more tech entrepreneurs solving big consumer issues and thereby making this world a better place we can be more and more hopeful of a better future.

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Lessons Learnt

Don’t Be ‘Outside Standing’ On Your Own Exponential Growth Says Serial Investor, Jimmy Phoon

Serial investor Jimmy Phoon is proud of his and his team at Alps Global holdings in achieving a $300 million valuation.

Dirk Coetsee

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jimmy-phoon

It was a usually warm and humid afternoon in Malaysia as I walked into the foodbar at Fashion library in Kota Damansara, to meet a man who has a deep understanding of leveraging capital mechanisms in order to achieve exponential business growth.

Serial investor Jimmy Phoon is proud of his and his team at Alps Global holdings in achieving a $300 million valuation. He doesn’t speak to the ‘wrongs and rights’ of investments as he believes there are many ways in approaching an investment opportunity. He does however, firmly believe in the MOC (Miracles of Capital) organisations’ (of which he is a senior alumni member) approach to exponentially grow a company and having a clear exit strategy such as selling at a desired price or publically listing the company.

Jimmy enthusiastically highlighted the difference between them, as he names it a ‘feasible’ and a ‘bankable’ business investment. In offering a simple differentiation between the two terms he explained that ‘feasibility’ simply means that the business is making money, whilst ‘bankable’ means that the business is not only making money but that there is a clear succession plan and exit strategy in place.

As an experienced international entrepreneur and investor he recognises that a vast number of entrepreneurs are very well versed in the market mechanisms of their respective industries yet not equally adept at the capital mechanisms that underpins the exponential growth of companies. He points out that when a company has very good management in place, has a clear and attractive dividend policy to its shareholders, and in addition a well-defined and practical exit strategy it will increase the appetite of investors in general.

Related: Business Leadership – Learn How To Embrace Change

He describes the MOC to be an international platform to teach the mechanisms of Capital to entrepreneurs and investors. The MOC is the trifecta of business incubation, acceleration, and investment. One of the core principles of business investment that the MOC teaches and which Jimmy firmly believes in is collaboration between companies and entrepreneurs.

This means the willingness and openness to merge your unique skills as an entrepreneur, the unique offering of your company, profit and loss, with the skills, products and offerings of other companies with the end goal of exponential growth of a newly formed company. This approach can create a big win for all involved.

But what is ‘Outside Standing’?

The aforementioned discussion led to Jimmy sharing one of his favourite sayings:

“Be outstanding or outside standing” – a tongue in the cheek way of saying that by truly understanding and applying both the mechanisms of the market and capital you can experience the exponential growth of your company or alternatively by not fully applying both mechanisms it is then highly likely that you will be a witness from the ‘outside’ to the exponential growth of other companies and unfortunately not your own.

Jimmy’s’ accumulated learnings allows him to assist his team in building an ‘IPO’ compliant company that is formed with a collaborative approach towards a planned and well executed exit. That is part of his mind-set which is to do ‘big things’ and keep a distance from ‘small things’ for as an investor this man is always after exponential growth. He fosters a creation mind-set which is to create a bigger picture through leveraging and combining market and capital mechanisms.

One of the key ‘take always’ for me as an entrepreneur is to be much more open to collaboration in order to add value to others and in turn receive value such as exponential growth. Understanding the market mechanisms within your industry is not enough to multiply business performance, taking a keen interest in the capital mechanisms at play will take major strides towards actualising your bigger picture.

Read next: Entrepreneurship: How To Develop Your ‘Great Idea’

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