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Joe Public United Shareholders On The Art Of Zigging When Others Zag

Pepe Marais and Gareth Leck’s paths first crossed when Gareth saved Pepe’s life. A few years later they were introduced by a friend who thought they’d make excellent business partners. Today they’re South Africa’s largest independent agency, with a turnover of R700 million, and gross profits in excess of R200 million.

Nadine Todd

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Vital Stats

  • Players: Gareth Leck and Pepe Marais
  • Main shareholders: Pepe Marais, Gareth Leck, Laurent Marty and Xolisa Dyeshana
  • Company: Joe Public United, an integrated brand and communications agency
  • Launched: 1998
  • Turnover: R700 million
  • Gross Profit: R218 million
  • Visit: joepublic.co.za 

It was a July morning like any other. Little did Pepe Marais and Gareth Leck know they were about to get a call that would shake the company to its foundations, and result in 35 people being retrenched overnight.

In 2006, eight years after launching their business, and five years after selling it, Pepe and Gareth’s biggest client fired them. The account brought in 40% of their revenue, and the company needed to retrench 50% of its employees as a result.

It was the single worst day of Pepe and Gareth’s careers. They no longer owned Joe Public, but it was theirs in name and brand.

Three years later, the business almost went bankrupt — but it was theirs again. How were these two drastic events related, and why did losing their biggest client allow Gareth and Pepe to not only buy back their business, but find their purpose and change the course of the company as well?

The art of zigging when others zag

To understand how losing their biggest client could actually be the best thing that happened to Joe Public, we need to rewind to 2001, when three business partners at the cusp of their thirties decided to sell their start-up to a multinational.

Joe Public was launched in 1998 as a rebellious, young agency that wanted to do things differently from the rest of the advertising world. Pepe and Noel Cottrell were creatives, and Gareth was a young hotshot account manager. Together, they believed they covered all the angles to run a new, disruptive business.

Related: 10 Books Tim Ferriss Thinks Every Entrepreneur Should Read

“I’d had this idea for a business, which I wanted to call Fresh Advertising, after a night of red wine and brainstorming,” recalls Pepe. “My dad had a café, and I liked the idea of doing ‘fresh’ ideas and an office with a fridge door as the front door. Our third partner at the time, Noel, took the idea further, and we developed the concept into a café-style menu. We were the creatives, and we needed a business guy to make it work. Noel knew Gareth, and so we approached him to join us.”

Gareth loved the idea — he was in his mid-20s, and didn’t have anything to lose. There was another power at play as well. During their initial meeting, Gareth learnt Pepe was a boat man, and recounted a story of how he’d rescued a drowning paddleskier and placed him on a raft of piping until the NSRI could pick him up. A chill came over Pepe as he realised Gareth was talking about him. He’d been knocked unconscious paddleskiing during the first storm of the season in April 1995, and to that day hadn’t known how he’d come to be lying on the piping. They saw the business and the partnership as fate and dived in, head first.

The sleepless nights of starting a business

It was nothing like they’d imagined — particularly for Gareth. “It’s a massive jump from account management to running a business,” he says. “VAT, PAYE, salaries, traffic control, production. Suddenly these were all my problem. I was getting up at 3am so that I could get to the office and do cost estimates before going to see clients. I didn’t sleep for a year. When I did manage to get into bed, I woke up in the middle of the night wanting to throw up because we didn’t have cash in the bank and I had no idea how we were going to pay salaries.”

The partners had hit on something special though: They were selling Rare, Medium and Well-Done ideas, not time, and because they were delivering quality work ‘done well’, they were turning a decent profit. The first few months were extremely tight while they built up a client base, but by their second year they’d netted R1,5 million in profit.

“We were a small, dynamic team. We could take a concept to market within two weeks, so we were fast, and we were also very good. In 2000 we won five Loeries with a staff of five people,” says Pepe.

“We offered quality,” agrees Gareth. “We were quick and slick, and well-priced by the time you reached the end product. The menu concept also offered clients real transparency in an industry known for smoke and mirrors.”

The idea was based on the fact that as youngsters who hadn’t yet made a name for themselves, they needed to be disruptive and innovative out the gate, with a solid business model that would make great returns. “We wanted to zig while others zagged,” says Pepe.

When a buyer comes knocking

All that zigging and zagging had the desired effect, and business soon picked up, but it also had another, unintended consequence — a potential buyer came knocking. “We’d already realised there was a scalability issue with our business model,” says Gareth. “How could we replicate it without people as creative and driven as ourselves? You hit a ceiling when growth requires people of the same calibre as yourself. Anyone in our business will tell you that you can’t have a company full of creative directors. It doesn’t work.”

But there was a second option. A multi-national was offering to buy the business, and part of the deal was that they would roll out the menu option to their subsidiaries and offices around the world.

“Noel was spearheading the deal — he really wanted to move to the US, and the deal gave him the opportunity to join the international network’s New York office,” says Gareth. “From our side, the idea of spreading our model, having an international office, and of course making money from the business all sounded great.”

Why selling was the worst decision they ever made

In a nutshell, they were young, the offer was appealing — and it was the worst decision they ever made.

“We sold completely prematurely and got shafted,” says Pepe. “But more than that, we ended up in a corporate environment that was the exact opposite of everything we’d built our business on.”

The local multinational sold to a larger US-based holding company, and before they knew it, they were just another subsidiary of an international giant. Everything became about the bottom line, and Pepe and Gareth soon found they were compromising great work in the pursuit of greater margins.

And then the worst — and as it turned out, best — thing happened. Their single biggest client fired them.

pepe-marais-and-gareth-leck-joe-public

A blessing in disguise

Pepe had made the decision to fire a senior executive. “We couldn’t work with him. He was toxic to our business. We fired him on good intention, with a full view of how his attitude was harming our business and staff morale,” he explains.

The problem was that the executive in question was very close to the company’s biggest client. So close in fact that once he was fired he was offered the position of marketing director at their company. His first order of business? To fire Joe Public.

“We were devastated. We hadn’t fully comprehended the danger that such a big client posed — and how drastically our business would be affected if we lost them,” says Gareth.

But there was another unexpected consequence of the loss — the value of the business depreciated. “We realised that for the first time in five years, we had an opportunity to buy our business back. We immediately started negotiating with the holding company. The problem was that they wanted an astronominical amount for the business, which was nowhere near what we’d been paid for it. We didn’t have that kind of money. We fought for three years, and eventually resigned. We just said to them, ‘Take it all. We don’t want this.’ That’s when they came back with a reasonable number that we could manage.”

Buying the business back

On the 26th of January 2009, the business partners bought their company back. The day is memorialised in their offices by a plaque that reads ‘Never, ever sell your soul, Joe Public Independence’.

Related: To Be Successful Stay Far Away From These 7 Types of Toxic People

On their way back to the office, they received a call: A media mistake had been made that would cost the company R800 000. Gareth and Pepe had put all of their eggs in one basket. They’d leveraged themselves to the hilt to be able to buy back their business. They’d also kept profits and cash flow low since 2006.

“We didn’t have R1 million in our bank account. We’d basically been breaking even for the last three years,” says Gareth. “Our revenue was R13 million, but that left very little positive cash flow after salaries and expenses were paid each month, and we had no cash reserves. It had been part of our strategy to keep our PE ratio low so that we would be able to buy back the business. We were doing well, winning Loeries and keeping momentum behind the brand, but we weren’t chasing profits. We’d never envisioned such a disaster was possible.”

Failure is not an option, even in the face of bankruptcy

By March, the business was on the brink of bankruptcy. To add to Joe Public’s precarious position, a client who had been spending R380 000 per month put a halt on all marketing spend — also overnight.

“I remember thinking to myself, if this all went pear-shaped, my family and I wouldn’t even have a roof over our heads,” says Gareth. Although more careful than Pepe by nature, the business partners realised they needed to find a solution. Failure was not an option. “We went out and got business,” says Pepe.

“We brought in six new accounts that year. One of those accounts was Anglo American. It was a small job that no one wanted because of its size. We went all out to get it. We understood the value that having a blue-chip client on our books would bring to the business. We also continued doing work for free for the client who had halted all spending. They were in the process of listing, and we believed they’d come back to us once they had, and we were right. We just needed to show them value and loyalty.”

Step by step, Pepe and Gareth brought their business back from the brink. From 2009 to 2010 the company’s revenue grew from R13 million to R20 million, and the partners started building a solid cash reserve. Today, their reserves can carry the business for six months.

Finding a purpose

In 2007, Pepe began a journey of self-discovery. His focus was not only on the business and its needs, but on himself as an entrepreneur and leader. Gareth began his own personal journey two years later.

“We haven’t only worked on the business but ourselves,” says Gareth. “All business owners need coaching, mentorship and counselling,” agrees Pepe. “We’ve both done a lot of personal work and we still do. We hit blocks and work through them. Personal development and self-reflection are incredibly important to the business’s overall success.”

Through this journey of self-reflection and development, Pepe and Gareth found their purpose, both for themselves and the business. By the time they were able to buy the company back in 2009, they had a clear vision of where they wanted the company to go, and how they wanted to change course, and it all started with not putting the bottom line first.

Creating a good formula

“When we started, our whole focus was on the quality of the product,” says Gareth. “We had a good business model and we were creative and driven. A good product led to a good brand, which resulted in revenue. It was a good formula.”

“The year we made our first million, we weren’t focused on the bottom line,” adds Pepe. “We were focused on delivering the best product and service possible, and the natural result was a big, fat bottom line.”

After they sold, the partners soon found themselves in a very different situation. “When you become too focused on the bottom line, you reach a point where you start compromising your product in order to save on costs,” explains Pepe.

“The problem is that you can’t put bottom line at the top. Revenue is a lag factor. If you become too focused on it, you lose sight of the rest of the business. You can’t measure the health of a business on the bottom line.”

Pepe and Gareth are the first to admit that they’d completely lost their way. Losing their biggest client, gaining the opportunity to buy their business back — only to almost lose it again — and finding a way to power through the setbacks gave them a chance to do things differently. They grabbed that chance with both hands.

Making mistakes to create a better business

“You need to make mistakes to get the lesson,” says Pepe. “We needed to re-forge the business based on the right culture.

“We needed to bring the power of purpose into the business. We feel it on a deep level, and it’s now the framework of everything we do. We exist to exponentially grow our clients, our people, and our country — in that order. If we focus on clients, we will grow our people, and we will have a good organisation that can positively impact and help the people of South Africa. We call it growth to the power of ‘n.’”

Revenue growth has naturally followed, but the deeper sense of purpose is helping Pepe and Gareth make a much more meaningful impact. Joe Public registered One School at a Time, a non-profit organisation in 2008. Through the organisation, they have taken their chosen school in Soweto from one of the poorest performing township schools in Gauteng to in the top three. They raise R1,2 million a year for the project, of which R250 000 comes directly from Joe Public.

Related: What You Put In Is What You Get Out – Create Your Own Success

This same drive and dedication is given to clients. “Purpose is just strategy. We do strategy for businesses,” says Pepe. In 2005, Laurent Marty and Xolisa Dyeshana joined the business as shareholders. Today, Xolisa is Joe Public’s chief creative officer and Laurent its chief strategist.

Pepe, who is technically a creative, now also does purpose workshops with the executive teams of their clients. “We bring a creative edge to board-level strategies. Our purpose is to help our clients grow, and that starts at the top. McKinsey has released a report stating that high calibre work in the marketing space will give you a seven times higher return than other work. In other words, high calibre creative counts, and should be part of your strategy. And nothing inspires better work than purpose. It’s our role to help our clients achieve just that.”

Over time, Joe Public has found its mission, which aligns with the business’s purpose. “We now need to develop the metrics that prove the purpose. Every business should be able to quantify the ROI it gives to its clients.”

The ability to course-correct

From 2009, Joe Public refocused on product over the bottom line. Meteoric growth followed. The problem with growth is that you need people to manage teams and business units — and those people were coming from traditional corporate environments, and they were bringing pre-conditioned ‘bottom line’ focus with them.

“Within three years we were back where we’d been, struggling with the wrong culture,” says Pepe. The trouble is that you don’t always spot a problem until it’s too late — particularly when your numbers are good. “The business results were excellent,” says Gareth. “We had found a way to win pitches, the company was growing, revenues and profits were great — but the culture was getting lost. We learnt that you can lose your way culturally and not financially.”

Except that culture feeds the bottom line. Lose it, and the business will eventually start to plummet. “We needed to radically adjust what we were doing,” says Pepe. “We hadn’t hit a problem yet, and our numbers were great, but we realised we were heading towards the top of our bell curve.

Changes for success, starting with culture

“We had already determined that the business must succeed if we want to do more — for our clients, our staff, and in education. Success is fundamental to achieving our purpose. If we didn’t want to go the way of so many companies that reach great heights, only to miss all the warning signs and plummet, we needed to make some serious changes, starting with culture.”

For Pepe and Gareth, a beautiful creative space filled with happy people is the foundation of a company that can do great things. “It’s all about triple profits,” explains Pepe. “Serve your clients and keep them happy, keep your staff happy, and your profits will be happy. A healthy business lets you do all these things. It’s the oxygen to deliver on all the rest. With strong revenue streams you can achieve so much more.”

There are industry jokes that Joe Public is like a cult. Pepe and Gareth are happy to agree. “We’ve built the ‘cult’ into culture,” says Pepe. To achieve a strong, client-focused culture, the partners needed to make some tough choices, and even exit some people who were not aligned to their purpose of serving clients through great work.

Remove toxic employees as fast as you can

“It’s never a nice part of business,” says Gareth. “We’re nice people, and in some cases we took far too long to act. We moved in on people in the organisation who weren’t a good cultural fit. It was damaging to our team and to them to remain here. A happy, healthy workplace is a team effort. You’re not doing anyone favours by keeping toxic individuals in your workspace. It’s been a tough lesson to learn, but we’re much faster to act when we realise we have the wrong people in the business now than we were before.”

Today, Pepe and Gareth follow a simple formula. “One of our clients once told us that all they wanted to do was serve the best possible product to customers, with the best service, at the right price to give value,” says Gareth. “It really resonated with us, reaffirming everything we believe as well. We all have a tendency to complicate business, when what we should be doing is serving our clients — and the best way to do that, is to do great work.”

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

Lessons Learnt

5 Key Areas Pratley Are Using For Current And Future Growth

The aim of most family-run businesses is to stand the test of time, a goal that influences strategy and tends to take the long-term view over short-term gains. Entrepreneur spoke to Kim Pratley and his sons, Andrew and Charles, about growing a business without compromising on quality or price.

Nadine Todd

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Vital Stats

  • Players: Andrew Pratley, Kim Pratley, Charles Pratley
  • Company: Pratley
  • Founder: George ‘Monty’ Pratley
  • Est: 1948
  • Divisions: Electrical division, adhesives division, mining and minerals division; Select Hairdressing Supplies
  • Visit: www.pratley.co.za 

In both B2B and B2C circles, Pratley is a household name. Pratley Putty and Pratley Steel can be found in most home workshops and garages, while cable junction boxes tend to be called ‘Pratley Boxes’ in the electrical world — even if they aren’t Pratley-made.

Building a brand that has cornered the market in many respects is a good foundation for future success, but it does not guarantee it. Sustainable growth takes an ingrained value system that the entire organisation believes and follows, strong cash flow, continuous innovation, an unwavering focus on quality and sacrificing short-term gains for long-term aims.

Pratley has been on a steady growth trajectory over the past 70 years. Many companies reach maturity and stagnate. Pratley has done the opposite. All growth periods are followed by consolidation, but despite numerous challenges and tough market conditions, the line continues to move up.

Here are five key areas that Kim, Andrew and Charles are focusing on to maintain that growth, now and for the future.

1. R&D: As the core – not a small side division

pratley-research-and-development

“Research and development has always been our core, and as a result of that, diversification,” explains Kim Pratley, CEO of the business. “We launched with our electrical division in 1948, followed by the adhesives division.” Before their first product of that division, Pratley Putty, was used by NASA on the moon, it was originally developed to stick electrical terminals into an electrical junction box and insulate them.

“Once it was developed though, we realised that we could productise it outside the electrical sector for the consumer market, and our adhesives division was born.”

Developing new products is in Pratley’s DNA. The company aims to release at least three or four new products into the market each year and is continually looking for new and better ways to do things. “We have to grow somewhere,” says Andrew Pratley, Pratley Group IT Manager and General Manager of Select Hairdressing Supplies. “We need to be simultaneously growing our markets and our product ranges, and that means we need to find better and more cost-effective ways of doing things.”

There is a school of thought that says a smaller, tighter product range keeps costs down and the business focused. In many ways Pratley has done the opposite, with its electrical division offering more than 3 000 products, many of which are patented and based on proprietary technology.

“Like most things in business, our product range follows the 80/20 principle,” agrees Kim. “20% of our product range is responsible for 80% of our revenue. Logic would say why have the rest then? Unfortunately, because of the way the market operates, customers expect us to also provide the niche products that don’t sell well but are occasionally needed. If we chopped off the 80%, we would lose a lot of the customers who make up the 20%, but are responsible for 80% of our revenue.

“It’s a perception — a customer who buys all their products from Pratley expects to be able to get everything from us. If they need to go to a competitor to get a special fitting, they might move all their business.”

That said, there are cost and complexity implications when carrying such a large product range, which means the management team needs to be hyper-focused on the details. “We’re currently looking at rationalising our product range. Products become obsolete and if you’re too focused on new products without paying attention to the entire range you can end up carrying old stock or manufacturing unnecessary items,” says Charles, Engineering Manager: Group Technical Services.

“Our customer base appreciates that we’ve become a problem solver in the market — they come to us with a need, for example, a stainless-steel cable gland for the food industry, and we will design and manufacture it. It must be viable for us as well, but on the whole, because we do everything in-house, we can add value as real problem solvers and as a one-stop shop,” adds Andrew.

Customers want quality, their lives simplified, and good service — exactly what Pratley aims to offer.

R&D’s role in creating diversification for the business has also mitigated Pratley’s risks. “Rubber brushes inside a flame-proof cable gland is what keeps people alive — if they fail, people die. If there’s an explosion inside the apparatus and it gets out and ignites the atmosphere, people die. The technology that goes behind that rubber is polymer technology; adhesives are also based on polymer science. We can bring the same expertise from the one side of our business into the others,” explains Kim.

Related: Kid Entrepreneurs Who Have Already Built Successful Businesses (And How You Can Too)

A sister company of Pratley, Select Hairdressing Supplies, was first bought from Kim’s father-in-law when he retired, but the business has since been expanded to bring manufacturing in-house and to develop proprietary products. “We asked our R&D team what they knew about hair products,” says Kim. “They went away, did some research and came back and said we could definitely do this. We also import some products. It’s a profitable business in its own right that diversifies our risk.”

“It’s a high-end product,” adds Andrew. “Our market is professional hairdressing salons, and they cater to clients who demand quality, high-end hair products. We don’t compete with cheap imports at the lower end of the market. The focus is on quality at a reasonable price.”

On the whole, Pratley’s R&D follows a two-pronged approach. Charles, Andrew and Kim all love R&D. If they find something cool, they want to mess with it until they find a real-life application for it.

A strong R&D mindset means the team is always open to finding solutions to problems.

Pratliperl, a lightweight, thermally insulating cement aggregate that was originally developed for low-cost housing, is now used as a fire-proof plaster that doubles the thermal insulation of a building. It’s very lightweight and is ideal as a screed where additional floors to buildings are required. Pratliperl has been used at Loftus Versfeld Stadium and the Sandton City parking lot.

2. Finding market fit

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A strong R&D component works hand in hand with the ability to shelve products that aren’t working in the market, and Pratley has had a few of those. Sometimes even the best products don’t find product-market fit — in one memorable case it was because the product worked too well.

“We launched a product called Wham a few years ago because customers kept requesting an ultra-quick super-glue,” says Andrew. “We wanted to design the fastest adhesive in the world — and we did — but it ended up being practically unusable. It was just too quick for the end user.”

It was an interesting lesson for the team on giving customers what they need, and not necessarily what they ask for.

“We also brought out a palm cleaner that I love, but which the market hated,” says Kim. “We wanted a solution for dirty palms after you’ve changed a tyre, for example. Palm Cleaner was essentially a glue that stuck to the dirt and then rolled off the hands in little balls. It was extremely effective.”

Consumers didn’t read the instructions and thought it was a hand cleaner. The result was Palm Cleaner getting stuck in the hairs on the back of people’s hands.

Related: 30 Top Influential SA Business Leaders

“We try to stay away from ‘me too’ type products. We look for problems that haven’t been solved or where we can do it better. That involves a lot of trial and error, and we won’t always get it right,” says Charles. “That’s the cost of R&D. You can’t let your ego or personal feelings get in the way of what your market research is telling you.

“We have a department that tests everything in every way the market could use it. Interestingly, we often find that we test a product for one thing, and end up finding a whole host of other applications for it. Sometimes the larger market is the one we didn’t originally develop the product for.”

It’s an interesting process. You can’t make assumptions about any market, even one you know well, and if you aren’t looking at solutions from every angle, you could miss a huge opportunity. This thinking has become ingrained at Pratley.

3. Quality first

successful-south-african-companies

In a world where one industry after the next is becoming commoditised and businesses are competing on price (particularly against low-cost imports), Pratley’s strategy has remained the same, with a strong focus on quality, in-house manufacturing and R&D.

How do they maintain this from a cost perspective, particularly when so many companies are turning to outsourcing to keep costs as low as possible?

“We have two main drivers,” says Kim. “Every pack of Pratley carries a statement signed by me that our products must outperform any other on the world market. It’s a big statement, and we mean it. It’s so big that we’ve found in some cases people actually don’t take it seriously because of its magnitude.”

Over the years Kim has performed a number of stunts proving his confidence in Pratley’s products, including filming a TV commercial standing below a 13 tonne bulldozer suspended by a joint bonded together with Pratley Wondafix.

“We don’t believe the statement itself necessarily leads to sales, but it does have a big impact internally,” he says. “Inherent in our core values is the ideal that we need to be producing the best — it’s expected from every person in the organisation, at all times.

“From an external customer point of view, the fact that the product works is important. How we ensure that quality is a result of what we do internally.” A product that consistently works fosters trust and brand loyalty, which results in repeat customers.

Because the company’s focus is on quality, this is a non-negotiable, but there is a cost to quality as well. From a sales perspective, this means Pratley’s sales force needs to concentrate on educating the market about purchasing a slightly higher priced product for the long-term gains that are achieved from peace of mind and the risk mitigation of operating in a safer environment.

“We manufacture cable junction boxes, cable glands and the rubber shrouds that protect those glands for hazardous locations. If something goes wrong and there’s a fire or an explosion because a cheap inferior product was chosen and used, people can lose their lives,” says Charles.

“In some cases, it’s relatively easy to convince the customer as they have either had a  costly experience with a cheaper product or have seen UV-damaged rubber shrouds from a cheaper brand. It’s up to our team to educate our customers. There is also always a segment of the market that will buy cheap, no matter what, and we accept that and don’t waste resources trying to convert them. There is also a segment that recognises and always chooses quality, and that’s our ideal market.”

To mitigate higher costs associated with quality, R&D and local manufacturing, Kim and his directors work tirelessly to control costs. Every line item is scrutinised, but never at the expense of quality.

“Our sales arm plays a key role in the business for this reason and we emphasise training to ensure the team is equipped to engage with customers and understand their needs and the risks they face, balancing those risks with the costs of investing in quality.”

In line with a strong quality proposition are high exstore service levels that ensure Pratley can offer high-quality customer service. “We measure this according to the value that comes in versus the value executed. If 100 orders come in, we must execute 99% of them exstore immediately,” says Kim.

“This requires a large amount of inventory on hand, so we need to pay attention to which stock moves and how quickly, but ultimately we understand the frustrations and costs of downtime, and we aim to minimise both for our customers.”

From a cost perspective, the father and sons team understand that they need to be aware of the market and competition in order for their manufacturing methods and pricing to be internationally competitive, and the way to achieve that is through the right machinery, controls and management.

“We have a very flat management structure,” says Kim. “We aren’t top heavy. We have directors who are in charge of specific departments, middle managers and foremen. Each department is run as clean and lean as possible. The numbers are monitored by each foreman and reviewed at board level. Nothing slips through the cracks, and each number is scrutinised.”

4. The power of (the right) people

pratley-logo

One of the biggest hinderances to growth that Pratley has faced is human resource issues. Based on the West Rand of Johannesburg, the business doesn’t have access to as large a labour pool as it would if it was based on the East Rand or closer to the city centre.

That said, Kim, Andrew and Charles love the lifestyle on the West Rand, and they operate from a large property developed specifically for their needs. 185 employees work from that site, with satellite offices in Durban, Port Elizabeth, Cape Town and Bloemfontein.

“We employ multi-disciplined people who have skills in their primary activities, but who can also play a secondary role,” says Andrew.

“If you employ a person for their underlying work ethic, willingness and general attributes, you’ll employ a good person who can do anything,” agrees Kim. “Attitude and a willingness to learn means you can upskill someone and they will be eager to take on more responsibility and perform their defined roles. This is true across the organisation and not just in middle management positions.”

Related: Inspiring Entrepreneur Siyanda Dlamini Believes You Need To Back Yourself To Build Your Dreams

As a result of this people-focused strategy, Kim, Andrew and Charles remain involved in the business’s hiring process.  “It’s not something you can delegate,” says Kim.

5. Cash is king

pratley-company-founder

Pratley is in the enviable position of never having financed the business. As a result, the company has grown more slowly than it could have, with each new acquisition or investment into machinery or R&D funded internally through cash flow, but it has never had to service debt.

“We’ve been comfortable delaying growth, where necessary, to be able to make investments from our own cash reserves,” says Kim.

“We have very strict but fair payment policies in place. Credit control is a non-negotiable. Our rules are set in stone and there’s never an exception; it doesn’t matter who the client is.”

The terms are straightforward: Payment is in the month after the date of invoice. If you place your order on the first of the month (and it’s dispatched immediately, thanks to the company’s 99% exstore service levels), you can essentially have 60 days to pay, as the payment is only due at the end of the following month. Pratley also offers good settlement discounts.

But there are never, ever any exceptions to the rules. When their biggest adhesives client took a R2 000 settlement discount that they weren’t entitled to, supply was immediately stopped.

“The Adhesives sales manager resigned over that decision,” says Kim. “He handed over his letter of resignation and said we were mad. It was a small amount and they were a big customer, but I knew that we’re not in business despite that decision; we’re in business because of that decision.

“If we had buckled, it would have set a precedent. Instead, I called them up and said, ‘You know the rules, I know the rules, I know what you’re doing, you know what I’m doing, let’s carry on.’ They’re still a very good customer today — but it was important to stick to our guns. It’s important to have people in the business who understand this, which is why I accepted that sales manager’s resignation. More companies flounder on the rocks of cash flow than anything else.

“Our growth strategy has been to build up cash reserves. That takes rules that you stick to above all else. One of my favourite business mantras is that profit is the very small difference between two very large numbers. All you need is one small percentage change on one of those numbers and your profit disappears. If you’re not taking risk with one of those numbers, well, I see that as security and survival.

“That doesn’t mean we don’t spend money — we’ve just invested in some very expensive machinery that will increase our output, productivity and efficiency down the line. It’s a large upfront expense for future growth and sustainability. But it’s a mitigated risk because we’ve built up the reserves to take that next step.”


KEY INSIGHTS

Cash is King               

Profit is the very small difference between two very large numbers. One small percentage change on one of those numbers and your profit disappears. How are you mitigating that risk?

Skills differentiate                 

In a competitive business landscape where skills are in high demand, employing multi-disciplined people who have skills in their primary activities but can play strong secondary roles is crucial.

The cost of quality                 

When you’re competing against commoditised products that differentiate in price, it’s not enough to know you offer quality. You have to prove the value of that quality by educating your market.

Read next: This Is What Bevan Ducasse Did When He Realised wiGroup’s Revenue Model Wasn’t Working

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Lessons Learnt

The Law Of Attracting Your Success

Once you discover your who, you automatically discover your why, which in turn allows you to lead with your heart rather than your head. Discover that energy source, and the world is your oyster.

John Sanei

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magnet

From the teachings of Buddha to the concept of karma, the Law of Attraction has been expressed in many ways by both ancient and contemporary thinkers. In its most simplistic interpretation, the Law of Attraction states that ‘like attracts like’.

Your ability to Magnetiize exists whether you are aware of it or not, whether you are positive or negative. You make daily decisions to choose whether you want to attract success or failure (however you define them), whether you want to live a more conscious, elegant and curious life or whether you want to keep your head down and stick to the old rules.

We are constantly Magnetiizing in every aspect of our lives, whether we’re running a business, interacting with friends or simply walking into a room. Changing how you do it can be a scary prospect, but it will move you from a stagnant space to one in which you can develop with meaning.

When you are in a space of positive magnetism, the momentum builds and your access to energy is incredible — it feels like electricity running through your body, with your ideas in focus and creativity flowing.

Magnetiize in 3 Steps

To Magnetiize is to take control of your own future and, in so doing, transform from a state of panic to a state of calm; from chasing ambition to seeking meaning.

  • The first step is a process I call Micro Inspection: How to confront the obstacles in your mind and start making decisions that are led by your heart.
  • Then comes Mega Exploration: Examining the qualities of future-forward and conscious businesses.
  • Finally, you need to bring it all together into your own reality, with the Macro Perspective: Understanding new technology and trends, and embracing the future.

Related: Global Speaker John Sanei On ‘What’s Your Moonshot?’

This holistic approach allows you to Magnetiize into your life the right type of people, appropriate access to opportunities, and the money and power you need for sustainable success. To truly achieve, you must combine Micro Inspection, Mega Exploration and Macro Perspective.

When you learn how to Magnetiize, you attract a tribe of people who you can work (and socialise) with in harmony. Your tribe should consist of elders, advisers and friends who complement your skills and personality and bring out the best version of you — the best ‘I’ behind your ‘I’. You’ll find that the tribe changes, for the better, the type of decisions you make and the discussions you have.

And as a result, your ability to Magnetiize will rub off on those around you, encouraging them also to step out of their comfort zone and to participate in shaping the future.

GET IT

Magnetize is circulated through all good book sellers and at www.johnsanei.com

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Lessons Learnt

Lessons From The Rich And Famous: Manage Your Money Like Oprah To Avoid Going Into Debt Like Nicholas Cage

Have a plan in place for your money, no matter how much you earn.

Christopher Tracy

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nicholas-cage

Seven-figure pay cheques are enough to buy a lifetime of financial security, right? Well, not exactly. Despite making millions, seemingly wealthy celebrities often have a tough time keeping their heads above the financial waters.

Johnny Depp spending $3 million to fire Hunter S. Thompson’s ashes out of a cannon, or Nicholas Cage shelling out $150,000 for a pet octopus, are both prime examples of how lavish lifestyles can quickly lead to debt. The two A-listers are part of a long list of actors, musicians, athletes, etc. – including Floyd Mayweather, 50 Cent and Curt Schilling – who have all experienced financial troubles.

While there’s nothing wrong with celebrities enjoying their earnings, a little budgeting can go a long way. Just take a look at Tori Spelling. After failing to pay a balance of more than $35,000, the actress was taken to court by American Express. Another example is 80s movie star Corey Haim. He became so desperate for cash after filing for bankruptcy he tried to sell his own tooth on eBay for $150, which didn’t get any buyers.

Avoid falling into any of these situations by keeping a close eye on your spending. Regardless of how much you make, the following few budgeting tips promise to help you practice safe and responsible money management.

Put a plan in place

mike-tyson-tigers

Nearly everyone lose sleep over their finances. Get a good night’s rest by figuring out where your money should be going long before it’s in your bank account. Spending without a plan, even if it’s only splurging on a one-time event, can have unintended consequences.

Related: 6 Money Management Tips For First-Time Entrepreneurs

One example of this is former NFL star Vince Young – after dropping $300,000 on his own birthday party he was forced to file for Chapter 11 bankruptcy. Another example is Mike Tyson, who went into debt after overspending on Bengal tigers, 110 cars and a $2-million bathtub.

That doesn’t mean you can never treat yourself, but make sure you’re not spending money faster than you can earn it. Set up a series of “fun funds” each month to splurge on nonessentials. Depending on what else you have going on that month, each fund should be adjusted accordingly.

If, for example, you’re heading out to a friend’s wedding, there may be a little less left over for eating out. Stay up to date on your spending by downloading a budgeting app. The easier it is to see where you are for that month, the better chance you have of staying under budget.

Carry around some cash

Credit cards are becoming the most common payment method among consumers. The average American currently carries around three credit cards at any given time. While they may be more convenient, credit cards can easily lure consumers into a false sense of security.

After all, a simple swipe or tap is often all it takes to complete a purchase. However, it’s important to take time to research any costly items thoroughly and ensure you won’t regret them like Nicholas Cage. He learned this lesson the hard way when he blew $276,000 on a dinosaur skull that he was forced to return after it was discovered to be an illegal import.

Curb some of your impulse spending during a night out by bringing enough cash for the occasion. In addition to avoiding spending money you don’t have, you’ll also sidestep costly ATM fees at establishments that only accept cash.

Whether it means stopping by your bank on the first of every month or getting cash back at the grocery store, do whatever it takes to have a little bit of cash on hand. As you cut back on credit card purchases, your chances of falling into debt should begin to dwindle.

Lean on an expert

hugh-jackman

When it comes to your finances, take a lesson from the likes of OprahTyga and Hugh Jackman, who invest in financial and life coaches. Many celebrities, including Oprah, attribute their success to their coaches helping put them on the right path. Even celebrities are human and can find it difficult to stick to budgeting goals.

Personalised features of a comprehensive coaching programme, such as daily check-in texts and bi-weekly budget reviews, promise to provide you with the encouragement needed to remain accountable even as the going gets tough.

Better yet, a financial coach can take your individual goals into account. Say you decide to start a family or need to make a cross-country move. Instead of wondering what that might mean for your budget, you can work with a financial coach to modify your spending habits and investments long before a change comes to fruition.

Related: 15 Wise Money Quotes From Millionaires And Billionaires

Budgeting goes beyond class. No matter how much you make, responsible money management has shown itself to be a necessity. Avoid following in the footsteps of celebrities who face serious financial trouble by keeping a close eye on where your money is going.

As we’ve seen all too often, failing to do so can mean losing millions. Simple steps – including creating a spending plan, occasionally relying on cash and reaching out to an expert – can help you achieve financial security sooner rather than later.

And if you plan carefully enough, you might just end up with the funds you need for that pet octopus.

This article was originally posted here on Entrepreneur.com.

Related: 6 Habits Long-Time Millionaires Rely On To Stay Rich

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