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How Renay & Russell Tandy Have Survived 2 Recessions And Built A Successful Agency

In a tough market, Renay and Russell Tandy have weathered two recessions and continued to grow by focusing on being a niche agency.

Nadine Todd

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Vital stats

  • Players: Renay Tandy and Russell Tandy
  • Company: Ngage
  • Launched: 2006
  • Visit: ngage.co.za

As a niche marketing communications agency, Ngage’s founders Russell and Renay Tandy have had to think out the box to find and retain talented staff, win large clients and accounts, and compete against their much larger counterparts.

Here are their top five tactical lessons in building a business that has weathered two recessions while continuing to grow and prosper.

Related: How Flick Visual Foundry Found High Rewards By Taking A Narrow View

1. Leverage awards to build your reputation

Most industries have some form of industry award programme. Russell and Renay encourage all SME owners to enter every award programme available to them. “It’s a time consuming process, but it’s well worth the effort,” says Renay.

“We won Best Small PR Agency at the Prism Awards in 2013, and it made a huge difference to the business. It got our foot in the door with Afrox, which led to securing them as a client. Corporates like working with award-winning agencies.” They also want to see that you have a track record with large corporate clients, which means one large account usually leads to more.

In addition, Renay’s personal win as Best PR Professional in the same year, as well as a special mention for a project, meant that the company was able to attract a higher calibre of staff.

“An employee value proposition is incredibly important,” explains Russell. “The PR industry is very competitive, and it’s tough for smaller agencies, particularly one like ours, which works with industrial clients and not glamorous consumer brands, to compete on an equal footing with much larger agencies. The awards put us on the map as far as our industry is concerned. People suddenly knew who we were, and young PR professionals wanted to work with Renay, who they saw as a mentor. Best PR Professional is a coveted award that all PR execs should be aiming for, and so the chance to work with someone who has won it is a big draw.”

There’s another important reason to be involved in awards programmes though — they allow you to benchmark yourself against the industry standard. “Being involved in the Prism Awards gave us an unmatched opportunity to see how the industry as a whole is performing,” says Russell.

“We’ve also had years where we’ve won nothing, and that has shown us that we’ve needed to up our game.”

This drive to do better has led to results as well, as the team’s 2014 Gold Award for a Client Campaign can attest to. “This is such a tough category or us. Our clients are B2B, and in this particular case the campaign was a Hyundai Excavator, going up against consumer brands — and we won,” says Renay.

“That wouldn’t have been possible if we weren’t constantly benchmarking ourselves and pushing to improve everything we do.”

Related: Turnover Doubling Every 10 Months – Honeybee Has Set Its Sights To Scale Speedily

2. Find a niche

ngage-commitment-to-customers

“We’ve become known as the agency for industry,” says Russell. “It’s been tempting to diversify over the years, and we did fall into the trap of adding products and services that the market didn’t want or need. We needed to learn that lesson and close a few things down. Ultimately though, we’ve learnt that the biggest power a business can have in terms of growth is a niche focus. We’re extremely good at helping industry clients grow brand awareness. We’ve added verticals like social media and multimedia to help our clients do this, but we’ve stuck to our core.

“There are so many industries that are new to PR, and multiple sub-sections in each. In many ways it’s an untapped market. Our patience in growing a niche brand is paying off though; we’re the go-to agency in this sector.”

3. Grow existing business

It’s a well-established business truth that it’s more cost effective to grow existing accounts than to find new clients. Ngage has done this by expanding its product offering and educating clients on the benefits of new media avenues.

“Social media started out as quite a hard sell for us,” says Renay. “South African industry didn’t see how it was relevant to them.” And so Renay and her team started researching what international companies were doing.

“We wanted to stay within our niche but expand our offering, particularly for existing clients. Social media and multi-media solutions were the obvious choice, but only if they were relevant and provided our clients with real return on investment,” explains Russell.

The research paid off. According to a Jonathan Wichmann case study, Maersk Line, one of the biggest shipping companies in the world, had at the time one of the largest social media presences, with over one million Facebook followers. “Your first response would be, ‘why does a commercial shipping company need a social media presence?’” says Renay.

“And yet they have this incredible content to share. Their ship captains are very involved, and people are interested in great, informative content that’s well curated.”

As Ngage saw it, South Africa’s industrial sector also has incredible content that no-one is hearing about. “We do so much R&D locally. There is a great deal of innovation happening in our industrial sector that no-one knows about.”

Even armed with this knowledge, Renay and Russell still had to offer it to their clients for free to get the ball rolling. “Instead of a hard sell, we decided to let the channel prove itself. The power of social media isn’t in sales. It’s in building brand awareness and creating connections. Prospective employees are finding out about the companies they want to work for online. Social media is an excellent way to show who you are, and what your brand stands for,” says Russell.

“The biggest challenge we faced was our clients saying that their clients aren’t on social media,” adds Renay. “But that’s not true. Companies might not be on social media, particularly in the South African B2B space, but people are. The CEO of your top account — or your top prospect’s account — is probably on Facebook or Twitter at night. This is the perfect way to engage their interest outside the ‘busyness’ of the office.

“This has been a powerful gap for us. Social media agencies aren’t PR agencies. We’re all about content, so we just needed to educate our clients and prove it worked, and it’s opened a whole new channel for us.”

Multimedia has worked in a similar way. Short videos say much more than pages of dry documents heavy in ‘industry-speak’ can do. “We’ve upskilled ourselves and keep everything in house, and again, we’ve built the division up slowly,” says Russell.

“We’re taking our clients on a journey, and we want everything we do to have strong foundations and be sustainable.”

Related: 3 Become 1: The Story Of How IS SME Business, MWEB Business and IS Ignite Merged

4. Create a working environment that others can’t match

Despite becoming an agency ‘on the map’, staff churn remains an industry-norm. “Getting noticed and attracting top talent just meant that now we had staff for other agencies to poach,” says Renay. Over the years, the entrepreneurs have tried a number of staff retention tactics.

“We even separated the business into divisions, and placed someone in charge of each division,” says Russell.

“They had part ownership, and we thought that would keep them motivated and loyal.” Unfortunately, it soon became apparent that you can’t force someone to think entrepreneurially. “When things were good it worked really well,” says Renay. “But when things got tough, it stopped working. No one was willing to take the hit with the wins.” Back to the drawing board then.

“We eventually realised that we needed to create an environment that other companies weren’t willing to do. We can’t compete on benefits, but we can offer something even more valuable: time and flexibility.”

Ngage’s core work day for senior staff is from 10am to 2pm. Employees are expected to work after hours as well, but they never sit in traffic, and they’re able to go to crossfit at 3pm or spend more time with their kids. “We’ve had to be completely transparent to make it work,” says Renay.

“If someone isn’t pulling their weight, they lose the privilege of flexi-time. Most will do anything to maintain it, and so you actually get better performing employees.” Junior and admin staff get one admin day off a month.

There is a caveat though: Don’t employ someone whose benefits were better than you can offer. “We interviewed someone who was a perfect candidate, except she was coming from a large corporate that offered an on-site masseuse for free, among other things. As much as we loved her, we knew we wouldn’t hold on to her. She was used to an office environment that we could never offer. To secure loyal employees, you need to be hiring individuals who are stepping up; not the other way around. We always dig into what their current office environment is like.”

5. Make it easy for clients to fire you

This is perhaps the most important tactic that Russell and Renay have used throughout their ten years in operation. “We don’t lock clients into their contracts. Agencies typically have long cancellation periods,” says Russell.

Related: ReWare Did One Crucial Thing That Most Entrepreneurs Are Too Afraid To Do

“You have teams working on an account, and if it’s a large account then those resources are 100% dedicated to that client. The problem is that these terms leave a bad taste in a client’s mouth, particularly if they need to cancel to save costs. No one likes admitting that they’re trimming their budgets, or that times are tough. The result is uncomfortable and often unpleasant conversations and bad breaks within the client/agency relationship.

“We’ve always approached it completely differently. Our smaller accounts have a 30-day notice period, and our large accounts three months, although if we can redirect those resources we will let them out of their contracts as soon as possible. We always say no problem if someone needs to cancel, we give them all their data, and we stay in touch. Our aim is to be as easy as possible to work with, and to maintain a good relationship so that it’s easy for them to come back to us, which they often do. We never burn bridges. It’s a short-sighted way to do business.”

Take note

People do business with people, not companies. The easier you make it for clients to work with you, the more they’ll want to give you their business — even if they’ve had to cancel a contract in the past.

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

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Lessons Learnt

(Slideshow) Top Advice From Local Entrepreneurs That Will Change Your Business In 2019

Here’s my collection of game-changing words of wisdom from top local entrepreneurs.

CEOwise

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If I had to summarise my own learnings since starting CEOwise, it would be these ten points:

  1. I need to know the critical numbers in my business.
  2. The magic number is two co-founders. Teams build entities, individuals might start them, but teams build them.
  3. Don’t be scared of failure, that’s how we learn.
  4. It’s better to earn 10% of a bigger pie than 100% of a smaller one.
  5. Businesses in the service industry should create products out of their services, or sell value and not hours.
  6. Stick to your core competencies and outsource the rest.
  7. Make small incremental changes everyday.
  8. Your team is your biggest asset.
  9. It’s cheaper to retain clients than attain new ones.
  10. If you’re worrying about paying too much tax, you’re not earning enough.

After each interview, there is generally one main word of advice that sticks in my mind, and which I ponder on for days afterwards. The following advice from local entrepreneurs may stay with you too:

  • Benji Coetzee, Empty Trips
  • Allon Raiz, Raizcorp
  • Joel Stransky, Pivotal Group
  • Gideon Galloway, King Price Insurance
  • Adriaan Rootman, Luxury Time
  • Brian Mills, New Concept Projects
  • Byron Clatterbuck, SEACOM
  • John Sanei, Global speaker and trend specialist
  • Ryan Kahan, CallCabinet
  • Regine Le Roux, Reputation Matters
  • Miles Kubheka, Vuyo’s brand
  • Eben Uys, Mad Giant
  • Mark van Diggelen, GameZBoost
  • Erik Kruger, Mental Performance Lab
  • Musa Kalenga, Public speaker
  • Marnus Broodryk, SME Africa
  • Rich Mulholland, Missing Link
  • Mike Sharman, Retroviral
  • Cairo Howarth, EFC Worldwide
  • Dinesh Patel, OrderIn
  • Andrew McLean, Cycle Lab
  • Albé Geldenhuys, USN
  • Ran Neu-Ner, The Creative Council
  • Nic Haralambous, NicHarry
  • Mark Sham, Suits & Sneakers
  • William Wertheim Aymes, Artemis Brands
  • Matt Brown, Matt Brown Media
  • Pat Pillai, Lifeco Unltd
  • Vuyo Tofile, EntBanc
  • Ian Fuhr, Sorbet
  • Colin Timmis, Xero
  • Felix Martin-Aguilar, ReWare
  • Fritz Pienaar, Advendurance
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Lessons Learnt

How Yoco Successfully Secured Capital And The Importance Of A Pitch

Yoco entered the market in 2015. In 2018, the founders raised R248 million in Series B Funding. Here’s how they’ve built a business that funders will back.

Nadine Todd

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Vital Stats

  • Players: Bradley Wattrus (chief financial officer), Katlego Maphai (CEO), Carl Wazen (chief business officer) and Lungisa Matshoba (chief technology officer).
  • Company: Yoco
  • What they do: Yoco is an African technology company that builds tools and services to help small businesses get paid, run their businesses better and grow.
  • Visit: www.yoco.com

From scrappy start-up to professional contender

Yoco launched in 2015 as a Silicon Valley-type fintech start-up (above). Today, the brand is an established business that wants to change the way SMEs are supported in the payment, funding and financial management space.

When Yoco went live with its card machines in 2015, it wasn’t just a late entry to market, it was a full nine months behind many other entries. The founders weren’t worried. They had a very specific business model and weren’t going to let a noisy market distract them from their vision.

In fact, instead of rushing, they spent the next year growing the business to 500 happy merchants. They were late to market, but getting the model right was more important than being fast.

Since late 2016, the team has closed Series A and Series B rounds of funding, totalling close to R300 million. Slow and steady has worked. That doesn’t mean raising capital was easy, just ultimately successful. Here’s how Yoco did it.

Starting with Angels

“In a strange way, we were lucky that we didn’t receive venture capital funds early on,” says Katlego Maphai, founder and CEO. “We had a funder pull out at the last minute, which was scary, but also a blessing in disguise. It meant we had only angel investors and family offices invested in the business, which gave us the capacity to think long term and not take shortcuts. We’ve since realised the importance of only taking on VC investment at the last possible moment. It’s imperative to have product/market fit before you chat to VCs, and we only really achieved that at the end of 2016.”

The team learnt this lesson in hindsight though, and like so many start-ups, did approach VCs too early. “We tried to raise VC in early 2015 when we started our beta programme,” recalls Katlego.

“In our minds, we’d been running the company for two years. We thought we had two years’ worth of traction. When we started talking to investors though, the conversations didn’t go as expected. As far as they were concerned, we’d only been operating for two months, and the valuation we were asking for just didn’t make sense.”

Related: Fitbit And Adidas Know Something That Venture Capital Doesn’t

Two years later, Yoco was in a completely different position. “From the beginning, we recognised that although tech is important, our business model would differentiate us. We needed to be fast, cheap, use digital channels to onboard clients and aggregate our merchants so that our banking partner has only one point of contact — us. This was what we were quietly investing into, removing friction for merchants who were onboarding themselves onto our platform.

“This was our big focus — to make the entire process as simple, efficient and low cost as possible. Merchants need to be able to onboard themselves, with no hand-holding. The problem in this market has always been one of distribution. How do you get to market in the cheapest, most efficient way possible, when the traditional people-intensive distribution model doesn’t work because it’s just not economically viable? Once we achieved that, the ability to manage merchants at scale became a reality, and that’s when we were ready for VC funds.”

In reality, Yoco only achieved product market fit and growth at the end of 2016. “By then, we’d grown ten times our size over the space of 12 months to 5 000 merchants, we had traction, incredible unit economics, and we’d built up infrastructure that allowed us to be efficient. We could really concentrate on growth. In particular, we weren’t worried about anything breaking or the system toppling over.”

It’s an important point for any start-up to consider. Often, the unit economics of businesses experiencing growth are out of kilter, as the business’s efficiencies struggle with the increased pressures of growth. By the end of 2016, Yoco was growing while remaining efficient, which was a big advantage when they started approaching investors again.

Teams and ecosystems

In the two years preceding Yoco’s official launch, the founding team, Katlego Maphai, Carl Wazen, Bradley Wattrus and Lungisa Matshoba, didn’t just research the technology to make card payments possible for merchants in the informal, rural and SME sectors, but were working on a business model that could achieve their business vision at scale.

“We were a multi-disciplinary team that had come together wanting to make a real entrepreneurial play,” says Katlego, who brought the team together. Having grown up with Lungisa, Katlego met Carl while working for a telecoms advisory and investment firm in Dubai, and Bradley at an incubator for online businesses in Cape Town that hired ex-management consultants to assist 
start-ups.

By 2012, all four partners were living in Cape Town and had savings they could live off while they planned their entrepreneurial play. “We kept coming back to the payment space. I’d seen Square, a mobile point of sale system, in action in San Francisco in early 2011, and experienced a small restaurant business that would have been cash-based accepting cards. We knew how under-serviced SMEs were in South Africa, and that card payments presented opportunities to support them. We also knew we could build a suite of services to help our micro and SME clients run and grow their businesses once they were on our platform.”

The team didn’t focus on the tech — it existed elsewhere and could be outsourced. Instead, they focused on their business model. “We focused on why banks hadn’t traditionally serviced this sector,” explains Katlego. “Our business model needed to address those challenges and the pain points of our target market, and it needed to do so in a way that allowed the business to scale efficiently and cost-effectively.”

Yoco’s team came from the mobile space. “You walk into a mobile store, fill in forms, have a credit check, get approved, sign the agreement, receive your phone and sim card and walk out the store. You’re now a customer, and hopefully you grow in value and don’t leave the network. That’s what we wanted to do for the card payment space. We wanted to take a process that takes weeks and strip it down to minutes by applying mobile thinking and using ecommerce as 
a channel.”

Until that point, merchants would source card payment tech from providers, but sign the bank’s merchant agreement, and this was where many small and micro merchants struggled to access services: Banks were just not set up to validate small businesses. It wasn’t economically viable, mainly because it tended to be a high-touch process. It was also a lengthy process.

“We knew that for us to reach smaller businesses, we needed to be able to sign up, vet and onboard applicants digitally, limiting people in the process, as this adds time and costs. This was probably our single most important insight. Once we understood this, we knew we needed to aggregate merchants, so that the partner bank we signed with would treat us like a ‘super-merchant’ — they manage the risk with us, vet us, take us through a rigorous process, and then allow us to aggregate sub-merchants under our umbrella.”

There was just one catch — for any of this to work, Yoco needed a partner bank that would agree to them aggregating merchants. “We moved to Joburg, moved back in with our parents and spent a year lobbying our partner bank,” says Katlego.

Consider what that took — ex-management consultants who had been earning impressive salaries had to return to their childhood homes so that they could focus on building their business and securing the trust of a partner bank.

“Our backgrounds had taught us how to gather information, package it and present it in such a way that we could build credibility quickly and effectively,” says Katlego. “We also knew what we didn’t know, which in this case was the payments space.”

To fill that gap, the team built an advisory board and approached the ex-head of Visa Sub-Saharan Africa to join their board for an equity stake in the business. “LinkedIn gives anyone access to the experts in every field, and networking plays a part as well. We were asking the right questions, and ended up with a few introductions to the same person.

“From there, you just need a strong value proposition. This was a vital component for us. Not only did he coach and advise us on the payments space, but he had a strong network, and it helped convince the banks that if we could convince him that we knew what we were talking about, we were worth meeting. The same was true of funders. You need a strong team, and that includes domain expertise, which at the time we didn’t have.”

There was a challenge though: In order for Yoco to secure a licence from a partner bank, they needed to show they were capitalised, but to secure funding, they needed a licence from a partner bank, as this was core to their business model.

“It was a bit of a conundrum,” says Katlego. “We solved it by approaching investors and getting firm commitments based on the licence. With that, we could secure the agreement with our partner bank, which in turn enabled us to trigger the draw-downs with our investors.”

The entire process taught the team how to de-risk the business at every stage of the journey. “We learnt to always think in milestones, and each milestone increases the value of the business. For example, securing the licence was a stage of value. By the end of 2014 we had moved back to Cape Town and were certified by Visa and Mastercard. We launched our first early beta with 20 merchants. The next milestone was our first transaction.

Related: Is Venture Capital Right For You?

Securing funding

yoco-funding

The fact that Yoco’s founding team had four members with varied and successful backgrounds dramatically increased the business’s chances of securing funding, but they still needed to learn some lessons.

“In mid-2016 we went on our Series A road show, and it was a choppy start. First, we realised that we were thinking globally, and those were the conversations we were having, which didn’t match up with the conversations local VCs were having with us. You need to all be on the same page, and 
we weren’t.”

Once the team realised this key point, they started looking at international investors, but things still weren’t going smoothly.

“We started recognising that part of the problem was the way we were approaching the whole funding process,” says Katlego. “We’d just had an investor meeting that didn’t go well, and we weren’t feeling good. We knew we needed funding — our runway was almost out and our current funding model wasn’t sustainable.

“Instead of focusing on investors, we looked at ourselves. What were our objectives? What were we looking for? We ended up with six key objectives.”

These were:

  1. Completing an investment round that gives us at least 12 to 18 months runway
  2. Working with an investment partner who has experience growing a fintech business
  3. Working with an investment partner that backs the team, and understands that one of our core strengths is our ability to operate autonomously
  4. Taking on investors who have respect for our existing stakeholders, who had walked a long path with us when very few believed in what we were doing
  5. Arriving at a fair deal, with terms negotiated in the right spirit
  6. Having the Yoco founder group, organisation, and stakeholders coming out feeling energised and ready for the next phase after the round. The wrong terms and conditions can have the opposite effect, crippling our sense of self-belief and achievements to date. Something not to be trivialised for an organisation that is looking to win.

It was a powerful exercise. From that moment onwards, the team walked into meetings knowing what they wanted, which in many ways levelled the playing field. “We had more confidence and we asked more questions, which lead to richer discussions with potential investors. We could also walk away if we saw a key objective wouldn’t be met, which saved everyone time.”

Through this process, Yoco secured Series A funding from Velocity Capital in the Netherlands and US-based Quona Capital 
for $3 million in new capital and a further $1 million in secondary buyouts, allowing some early angel investors to exit.

Since launch, Yoco was run based on formal governance and structures, which also played a big role in securing investment. “When a business is run pristinely and the due diligence is based on well-organised numbers and data, investors have comfort that their money will be managed properly. Our advice is to run your business clean from day zero. Keep good books and don’t put any other expenses through the business. We learnt this lesson from a real estate developer who told us to always be ready for the exit. She didn’t mean selling the business, but rather that if someone took a look, within moments you could produce whatever they want to see. I can’t stress enough how this has helped us.”

Related: Venture Capital 101: The Ultimate Guide To The Term Sheet

Understanding your pitch

Yoco raised $16 million in its Series B fund, which closed in 2018, and although it was the same process, the focus of the pitch was very different. “Series A is often about survival. Series B is about how big this thing can become.

“During our Series A roadshow, a big part of our pitch was proving that there’s a market for people who want to accept cards, and that there was a new way to reach this market that is not people intensive.

“In the Series B round, we could show that we’d been able to grow our base to three times its size with continued good economics and a healthy, good payback. We also showed that the market is ready to be taken with the right type of capital.

“The message was simple: We’ve figured it out and we think we can win with additional capital. There’s a huge opportunity to build an entire SME operating system, bringing payments, software and capital into one home that can essentially look after a small business and build an ecosystem around them. This in turn allows third parties access to our distribution network.

“There’s an overarching need that we’re plugging into. SMEs lack access to tools, capital and payment acceptance. It’s a big gap that we want to solve, and we’re open to partnering with anyone who wants to help solve it. It’s an open commerce ecosystem.

“Our next step of growth was to democratise access to software, because software is where the magic happens. Our app allows small businesses to manage their business finances through what is essentially a mini ERP for micro enterprises and SMEs. We are making a deep investment into building this out, because we believe it’s where the stickiness and value of our product lies.

“Customers came to us for a card reader, but they’ll stay for a much wider service offering, including access to capital and a platform that they can run their businesses from. Up until this point Yoco has signed up innovators and early adopters. Now we’re taking the brand to the mass market.”

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Lessons Learnt

Danie Venter Saw A Gap In The Informal Segment And Grew Within Just A Few Months

Stoffelberg Biltong is a FMCG start-up that attracted the interest of Secha Capital. Here’s why.

Nadine Todd

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In 2014, Danie Venter lost his business. He owned a Spar supermarket, but the business wasn’t doing well, and he knew his only option was to sell it back to the franchisor. While his wife, Nikki, continued to run the store as the sale was finalised, Danie turned his attention to something else: Sourcing and selling fresh chickens to the informal segment in Mamelodi and surrounds.

“I needed to find a way to pay the bills, and I recognised how under-serviced the informal sector was,” he explains. “Only frozen chickens were available to a community that didn’t have microwaves to defrost them. I knew there would be a market for fresh chickens.”

Danie was right. Within a few months the business had grown so big he was supplying chickens to other retailers in the area, and he approached Oom Stoffel, the owner of JC’s Meat Traders, to expand his product offering.

Over the next 18 months a friendship developed, which led to inevitable discussions around an industry they both knew well, and eventually settled on the idea of packaged biltong.

“It’s a fragmented market and none of us could think of a single brand of packaged biltong that we loved. Instead, we had local butcheries or suppliers that we bought from. We recognised there was a gap for a quality packaged biltong brand, and started working on it.”

From planning and designing the product and packaging to market took three months. Before the business launched though, Danie’s life changed forever. He was declared legally blind as a result of a condition called Optic Neuritis, and approached his business partner to say he could no longer participate in the venture.

“Oom Stoffel refused to accept the fact that I couldn’t participate in the business. His area of expertise was the product — the abattoir and ingredients — but mine was the trading side of the business. Together we could really make this brand work, and he didn’t believe my eyesight (or lack thereof) would get in our way.”

Oom Stoffel was right. Danie’s wife reads him his emails at night, but most of his business is done the old-fashioned way — over the phone or in person. Despite challenges, Stoffelberg Biltong launched and soon started securing a footprint.

Related: The House That Moladi Built – How Challenging Traditional Building Empowers Local Entrepreneurs

Leading a market

The business has a number of verticals and strategies to ensure cash flow and build cash reserves, but the primary vision and mission is a market-leading packaged biltong brand.

For example, Stoffelberg supplies other biltong outlets. While this may seem like Danie and Oom Stoffel are supplying their competitors, the reality is that in many respects, biltong is price sensitive and most retail stores will change suppliers from week to week. This results in a level of inconsistency when it comes to quality, the exact opposite of what Stoffelberg stands for through its branded products.

“We’re consistent, while most of our competitors are not. It’s a big, fragmented market. The current market leader only holds 6% of the market. We believe it’s important to build our brand, but we’re comfortable supplying others at the same time. It adds to our revenue stream, and more importantly, our positive cash flow.”

Going forward, the team at Stoffelberg also plans to open retail outlets and already has a kiosk. The company is also investing in continuous research and development.

“When everyone is offering the same products, you need to differentiate yourself. We want to think outside the normal verticals. When you own the entire value chain you can be innovative. If we want to try something, like chilli packets in biltong bags for example, we can do it and get immediate feedback. We’ve also launched a natural range with no preservatives or sugar for consumers with allergies, diabetes, or who just want a more natural product.”

Stoffelberg is a premium product, from its packaging to the product itself, but because of the vertical integration and the fact that the business holds the entire value chain, the brand remains competitively priced.

“Our goal is to reinvigorate a fragmented market,” says Danie. “That takes focus, brand building, a premium product and constant research and development.” It’s also taken an investment equity partner in the form of Secha Capital.

Equity deals

Within a year of launching, Danie received a call from Brendan Mullen from Secha Capital. “We weren’t too keen to discuss investments at that stage, primarily because we didn’t want to give away equity in the business,” says Danie. “We were supplying some Spar stores and we’d already begun chatting to Shoprite Checkers.

Related: Two 20 Year Olds Reshape Entrepreneur Landscape With New Social Investment Platform

Brendan continued to reach out and we realised that if we wanted to grow the business, there could be value in accessing capital to fund the growth we were experiencing.”

The initial meeting with Brendan revealed that although both Oom Stoffel and Danie are subject matter experts, there was a clear marketing gap that Secha Capital could help fill. In addition, as an FMCG and Agri-focused funder, Brendan and his partner, Rushil Vallabh, came with a network and connections that would be beneficial to the business as well.

“We had one of three game-certified abattoirs in the country, and we were Halaal, HACCP and export certified, but we needed to invest in a drying room and other facilities necessary for large-scale biltong production. Once we understood our needs and the value Brendan and his team could bring to the business from a growth perspective, the deal made sense. Giving away equity if it results in growth is worth it. But you need to make sure you’re selling to the right partners who add value beyond a capital contribution. It’s not just about the money.”

“Look for opportunities in fragmented value chains, where there are no clear brands in that specific section of the market. Find that, and you can find a slice of that value.”

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