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How Calamitous Export Red Tape Spurred Unlimited Growth for Keedo

For a time, 70% of Keedo’s revenue was derived from exports to the US. When a customs debacle almost killed the business, Keedo’s Nelia Annandale and David Robertson realised they had to spread the risk.

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Vital stats

  • Players: Nelia Annandale and David Robertson
  • Company: Keedo
  • Established: 1994
  • Visit: www.keedo.co.za

Just 12 years after starting children’s clothing label Keedo from her home, Nelia Annandale was supplying over 100 boutique stores across the US. She’d created a strong business with a loyal customer base.

But a customs delay of two clothing shipments at a US port almost killed her business, and made her realise the risks involved in running a business so heavily dependent on exporting her product.

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Determined to mitigate those risks, Annandale and her business partner, David Robertson re-evaluated the way the business was operating, putting paid to the slogan of ‘local is lekker.’

The Early Years

The seeds of Keedo began when Annandale starting sewing clothes for her twins after struggling to source suitable baby wear. She was recovering from a serious skiing accident, and decided to put the time to good use.

Today the business employs more than 200 people, with a factory in Paarden Eiland, Cape Town, and has 20 retail branches across the country.

The clothes Annandale created showed clear influences of a childhood spent on a farm, inspired by her love of nature and brightly coloured African clothes. Her vision caught on, and within a few months she opened her first store in Cape Town’s Tyger Valley Shopping Centre.

The Growth Challenge

keedo-clothing-company

Having started the business in 1994, Robertson and Annandale were among a number of business owners who began taking advantage of South Africa’s restored trade relations with global markets.

They paid careful attention to local trade and export/import legislation as well, and when it came into effect in 2000, Annandale and Robertson positioned their business to benefit from the African Growth and Opportunity Act (AGOA) which allowed products made in Africa to enter the US duty free.

A cornerstone of AGOA was that for a product like a T-shirt to qualify for tariff-free access, it not only had to be made in Africa, but also had be produced using yarn sourced and grown on the continent.

This was done in an attempt to support African imports without opening a door to cheap Asian imports. However, in 2005 South Africa and a string of other countries removed quotas on clothing imports, resulting in a flood of cheap Asian imports into markets across the world.

US authorities were concerned that Asian exporters were unlawfully trying to make use of AGOA by shipping clothing via Africa to the US. This would ultimately impact the businesses that AGOA had originally been designed to promote.

US customs authorities tightened inspections on all textiles coming into the US from Africa. This is what led to two shipments of Keedo products being flagged for inspection, and held up in a US port.

A Customs Debacle

It was no small deal. At the time, about 70% of the company’s sales were generated by exports to the US, mostly to boutique stores. And it wasn’t a quick delay.

The customs delay, says Robertson, ‘effectively killed’ Keedo’s sales to the US by stretching out clearing times from a matter of weeks to months, and leaving eight Keedo boutique stores (run by independent operators) and numerous other outlets that were sourcing from the clothing company, red in the face. Many of the Keedo-branded stores had to close after the debacle.

“I aged 20 years in those eight months,” recalls Annandale. The worst part of the situation was that it was completely beyond the control of Annandale and Robertson.

Luckily the founders didn’t have to foot what would have been a hefty legal bill. Eight months after the initial delay, 100% clearance was granted at US customs after a New York law firm was commissioned by AGOA to inspect Keedo’s business and manufacturing plant to prove the origins of the product.

Adjusting the Business Model

But, the damage had been done and Annandale and Robertson were forced to downsize in South Africa following the customs incident. As a result of the seasonal nature of fashion, they were also left with stock that had lost its appeal in the US market because it was no longer suitable to clothing currently in stores.

“We had to bring all those garments back to South Africa and clear them in the local market at huge discounts,” Annandale recalls. “The upside was that they were right for our local season, and we inadvertently introduced a whole new market to the quality and designs of Keedo clothing.”

More importantly, the customs incident forced Annandale and Robertson to review their business model. “We came up with a strategy to never again allow any individual customer or market to account for such a large portion of our business,” says Robertson.

The Domestic Market

Keedo dress south africa

At that time they had only six local stores. Unlike the US set-up – where independent operators used the Keedo name on their stores under license – Robertson and Annandale opted to roll out company-owned stores.

At the same time, they set out to diversify the number of export destinations they served by contacting buyers in Europe who had expressed an interest in the product in the past and then calling on them with sample ranges.

In the domestic market, their plan was to open stores in main economic centres as a wholesaler to clothing stores in smaller towns. Last year the company opened six additional stores.

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Robertson says they looked at a franchising model, but decided against it given their operational limits at the time. “We would have just been bad franchisors, and that wouldn’t have been good for the growth of the brand, or our prospective franchisees. We were new to retail, and wanted to control our growth while we learnt the retail business.”

Branching Into Retail

In rolling out stores, Annandale says their two main challenges have been securing the right location and hiring suitable staff.

To ensure good customer service, they have invested in customer retail management (CRM) software which provides data on the performance of sales of each product at each store, helping to achieve the right product mix in stores. It also enables the company to keep track of each customer’s buying habits – such as their buying cycles and preferred price points.

“We focus on mining the data that is available to us and using it to guide our buying and stocking practices to ensure that we are meeting customer needs,” says Robertson. This, says Annandale, has helped to create a more personal experience for their customer.

The Export Market

Keedo red fox outfit

While these initiatives have supported the development of the local operation, the main focus of Robertson and Annandale, along with Peter Colombo, the company’s third director and chief executive, remains on export markets.

Annandale runs international buying conferences twice a year, usually in Amsterdam, as it’s a central location for the overseas markets she’s targeting. These are aimed at customers sourced through trade shows and company stores that have approached Keedo with the idea of selling its products overseas. Annandale believes that by conducting its own buying conferences, the company garners more buy-in from customers.

“When I go to our conferences, I don’t only showcase the clothing we make, I also show customers video clips and marketing material of what we do with our different charity projects,” says Annandale, who points out that many of her customers are mothers themselves who often take an interest in how the product is produced and by whom.

Annandale uses her various charity initiatives (such as Zippy Grow, a Stop Hunger project jointly conceived with former Miss South Africa Joanne Strauss which provides meals to needy children) to market her products and remain relevant in an increasingly competitive children’s clothing market.

“I think many people really want to do good, but they don’t necessarily know how,” she adds, “and becoming involved with a product that does facilitates this need.”

Seven years after the start of the global recession, the US economy is growing again, but this does not necessarily translate into instant growth opportunities for Keedo, as the US imposes onerous safety requirements, which increase the costs of exporting to the country.

“The standards themselves are not onerous, but the costs involved in testing and securing certifications can be. For example, each button on children’s clothing must be tested and you have to supply proof that it’s nickel free,” says Annandale.

Currency Volatility

The volatility of the South African currency is another risk factor, even more challenging than competition from cheap Chinese imports, says Robertson because it makes it difficult to project the cost of raw materials, such as yarn, that have to be sourced offshore.

In some ways the European Union is a less onerous export destination than the US. Clothing imports into the EU benefit from preferential duties and unlike the AGOA requirements, the yarn doesn’t necessarily have to be African, provided that the T-shirts are made in Africa.

Today, Keedo exports to 22 countries, most of these in Europe and Africa, and total exports account for only 10% of total sales, proof of how well the brand has done in the local market.

With their sights set on opening 15 more local stores in the near future, Annandale, Robertson and Colombo are aiming for solid future growth.

Lessons Learnt

3 Lessons I’ve Learned In Krav Maga That Have Changed My Approach To Business

This fighting style packs a big punch on and off the mat.

Kristina Libby

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I started taking Krav Maga lessons this year at the recommendation of both my personal trainer and my therapist. I was physically assaulted years before in a nice neighbourhood in Washington, D.C. at 7 p.m. on a Tuesday.

Not a time or place one would expect to be attacked, and it has had long-lasting impacts on my mental and physical health. My trainer and my therapist, for different reasons, thought that learning a fighting skill would help me address the assault and move forward. It turned out to do much more than that.

Krav Maga is a military fighting system developed for the Israel Defense Forces. It is derived from a number of other fighting systems like boxing, wrestling, judo, etc. Those fighting forms were combined together to create a system for effective self-defense that is not based on bulk, height or gender. It is based on winning.

My first day at Krav Maga was scary. I did not feel like I was winning. I pushed back tears as my instructor Mike took me through different fighting stances and beginner moves. As I was learning to balance on my feet, he looked over at me. I was scared.

The terror and fear of the attack I had experienced years ago came flooding back. I kept flinching away and cowering as he came closer toward me. He looked me in the face and very slowly spoke to me: “The moment you get attacked, you are not the victim. You become the attacker.”

The moment you get attacked, you are not the victim. You become the attacker

This is a fundamental phrase in Krav Maga. It’s the idea that you don’t allow yourself to become the victim. If you are attacked, you attack back – stronger and more aggressively – because your job is to protect yourself.

In business, you are always at some point or another going to be the victim of an attack. This could be small, such as someone who leaves a negative product review, or big, such as a company slandering you or trying to take over your accounts.

The question is: How do you respond? Prior to Krav Maga, I would have been a little bit more “nice.” I would have shrugged my shoulders, known I would rebound in the end, or receded into a position of victimhood.

Not anymore.

My job is to protect myself and my company. It’s to protect my employees and my customers. And, Krav Maga has taught me to do that not from a position of victimhood but from a position of preparation. The only way to ensure you can attack an attacker is to have the skills to fight. In business this means:

  • Aligning your A-team: Ensuring you have a lawyer, an accountant and a good PR firm at the ready.
  • Preparing yourself: Ensuring you understand where threats can arise, what those threats may be and developing a plan to respond to them.
  • Preparing your team: Ensuring your team knows that you don’t play the role of the victim and that when attacked you address the situation head-on from a position of educated authority. This is about mindset for both leaders and employees.

Related: The 5-Hour Rule Used By Bill Gates, Jack Ma And Elon Musk

You will get punched in the face. Understand what that feels like

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In my Krav Maga training, Mike will punch me in the stomach for a few minutes at varying levels of force. The intent is that I will get used to getting punched in the stomach.

He has me stand with my arms to my side, stomach muscles tightened and solar plexus alert. I can’t punch back. I can only wait and anticipate the blows, tighten my muscles and understand that practice punches in the stomach are the only way to prepare me for punches to my stomach (or anywhere) in a fight.

The first time he did this, I was terrified.

Now, I understand that the momentary pain makes me stronger, less afraid of the intentional punch or kick someone years down the road might throw at me. In business, this lesson is incredibly useful and has changed the way I think about planning and development.

Sometimes you need someone to punch you in the stomach.

The role of an advisor or a consultant for your business is the same role as Mike is playing when he punches me in the stomach. He knows what it’s like to get hit and he wants to ensure that if I do get hit, the shock of being hit won’t be debilitating.

Hopefully, those advising you are also seeing the future ways your business can get punched in the stomach. Their role is to help you avoid those punches by preparing you for the little bumps and bruises you’ll see along the way.

As a business owner, then, it is your role to:

  • Find advisors who have been punched in the stomach (metaphorically) and allow them to watch you along the way. They will know when you are careening too far in the direction of something dangerous and hopefully prepare you for the inevitable danger.
  • Allow the little punches to your stomach to be seen as training bumps. These small upsets should be dealt with as upsets, not massive failures. They are preparing you for bigger and more aggressive assaults down the road.

Related: Here’s What Jeff Bezos Prefers To Work-Life Balance And Why You Should Live By It

Even blindfolded, we can win

There is an exercise that Mike has me do, where I close my eyes and he attacks me. The intent is that I use the skills we have learned to ward off the attack. When I was attacked years ago, it was nighttime, and the attacker snuck up and surprised me. As such, Mike’s simulation is the hardest emotional thing I have to do all week. That is, until I actually do it.

Normally, I don’t do the counterattack move perfectly. I use an open-palm heel strike instead of a punch. Or, I use a knee rather than a kick because I know my knees to the groin are stronger. It doesn’t matter. I’m still able to disarm him (when he uses a knife), knock him away and clear enough space to get away. I still win.

I win not because I have perfect form, or a super-human strength but because I don’t give up. I don’t stop fighting until I win because I don’t have the luxury of losing. Losing means victimisation. I don’t want to be the victim.

When I was assaulted years ago, I didn’t give up either. I fought on the ground and then standing until the assailant ran away. I screamed and kicked and refused to let him win. I didn’t have any training then; I won only because I had grit and a desire to live through the attack.

Now, I have more training but at the end of the day, I won’t be an expert. Few of us ever will be. The thing that all of us can do though is refuse to give up. We can refuse to let the attack keep us down. We can refuse to let the attacker win.

This is the Krav Maga lesson that I think is the most impactful for women business leaders. We are going to get attacked – every day. Often, we will not see the attack coming. We will be blindfolded in some way by lack of time, lack of awareness or lack of funding, and the attack will come.

The only thing we can do, the thing we must do, is know that even blindfolded we can continue to fight. We can refuse to be the victim. We can continue to raise and punch back. Because if there is something I know about female entrepreneurs, is that we all have a lot of grit and a lot of heart.

In the end of the day, heart and grit win fights.

This article was originally posted here on Entrepreneur.com.

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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 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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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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