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OpenTenders And The Art Of The Pivot

How OpenTenders learned the art of the pivot and lean start-up basics, all while building their business-to-business social network and tender portal.

Nadine Todd

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Vital stats

  • Players: Mnive Nhlabathi, Sivu Maqungo and Madoda Khuzwayo
  • Company: OpenTenders
  • Est: 2013

How did the idea for OPENTENDERS come about?

Like most business ideas, it was the product of our own frustrations. Joburg is very competitive, especially for hosting companies and branding; you’re competing against major players and agencies.

We wanted to find markets where we would be the only company pursuing the business; areas where resources were scarce. The problem is that you never know what tenders are available. They get posted on notice boards at municipalities, so there’s a lot of driving involved. In 2006 we put 120 000kms on Madoda’s car, which completely messed up the motor plan. That’s how much we drove.

We-recommend-tickWe recommend: Paycorp Saw an Opportunity… and Took It

The whole time we kept thinking that there had to be a better way to access tender notifications, and that there were probably a lot of companies that would love access to those lists. And the idea for OPENTENDERS began to take shape.

What was the big idea?

National departments have to tender any jobs that are worth more than R500 000, municipalities R200 000, and state-owned entities like Transnet generally tender jobs above the R2 million mark.

Anything less than that and it’s a simple quotation system. That was the bulk of our business – smaller quotes, but more of them. You’d know within seven days if you got the job, and all of your eggs weren’t in one big job. The problem was finding out about the work.

We knew there had to be a better way. After years of driving around the country, we knew how the system worked, we’d built up great contacts across the country, we knew how to build websites and we understood branding and marketing. What did that amount to? There are 660 entities in South Africa all doing their own thing. What if they were all in one place, on one website? And that’s how OPENTENDERS started.

Did the idea immediately gain traction?

It took eight months to build the first platform, and as soon as it was live we realised that some of the key assumptions we’d made were wrong. Our first idea was to create the website, get all calls for tenders and quotes onto it, and charge SMEs R500 per month to access it. It didn’t work. Entrepreneurs don’t like spending money. It’s that simple.

So what was your response?

We needed to learn from our market and adjust our product accordingly. We pivoted, and our second iteration was a subscription model of R99 per month. Now we had a new problem – you wouldn’t believe how many debit orders bounced – and that cost us money.

We went back to the drawing board and evaluated what we had. There were SMEs on the site, and we knew from our own experiences that we looked for smaller opportunities as well as bigger ones. SMEs are other SMEs’ best opportunities. What about a business-to-business social network?

A place where smaller businesses could market to each other? Madoda created a social network platform where business owners could set up a profile, explain what they did, ‘friend’ each other, and potentially do business.

The site now has two layers: A tender portal and procurement opportunities, and a business social network. It’s also a freemium model. As a business owner you can sign up for free.

How do you make money?

We realised that the real value in the site was how many people we could get signed up and creating profiles. We’d learnt that the only way to build a large community was to make access to the site free. However, as it grows, it becomes an incredibly valuable database, and so our revenue model now focuses on advertising.

To create a profile you need to fill in exactly what you do and the industry you’re in. Our algorithms are targeted. So, for example, an insurance company can target construction companies only, if they so wish.

We also send out notices every time a tender comes up, and those have an advert on them as well – push notifications that are tailored to your industry sector. It’s targeted, niche and automated. We’ve also made the rates affordable enough for SMEs, and because they are so targeted, you can choose exactly who you spend your 1 000 or 10 000 impressions on.

We-recommend-tickWe recommend: How Innovo Networks is Landing Big Corporates

How have these pivots helped the business?

We’ve had between 80 and 100 new members per day since we switched to the freemium model. It’s been an incredible lesson in the lean start-up methodology. In start-ups it’s all about what works and what doesn’t work, and often you’ll only know the answers to those questions once you’re out in the market, testing your product.

You learn and unlearn things at pace in a start-up. You need to be shifting and pivoting all the time, learning from and responding to the market.

How else has the business offering grown?

We now have four key channels to the business. The first is our original core offering – a place to access all tender information; the second is funding – Sivu is involved in an investment house that funds between R70 000 and R2,5 million on a per-project basis.

The third is a B2B social network, and the fourth is training. We’ve developed a six-month online course that SME owners can complete in their own time. We noticed a big gap for many SMEs was a lack of business skills. We’ve created a ‘business in a box’, with training and all the templates SMEs need.

A meeting of minds

Madoda Khuzwayo was always good at maths. So good that it landed him an Eskom bursary to study electrical engineering.

“I was a rural boy, and so the first time I ever touched a computer was my first semester at varsity. It changed my world.”

From that moment he wanted to switch degrees, but Eskom didn’t need IT professionals, and Khuzwayo needed the bursary. As soon as he finished his degree, he packed his bags and headed for London. His plan was to work and save enough to study IT.

“I arrived willing to do anything, from picking potatoes to working at Tescos. I eventually found my way to Oxford, where I got a job as a dishwasher. This was the worst job I’d ever had, but my English wasn’t good enough to be a waiter, and I couldn’t understand British accents. It was me and a Serbian guy in the kitchens.”

And then he saw a sign for engineers wanted at the local BMW/Mini plant. “My engineering degree got my foot in the door to study IT. It’s funny how these things work out.” For the next few years, Khuzwayo worked weekends at the plant and studied during the week.

“By 2003 I had my IT degree and I was ready to come home. We’d won the bid for the 2010 FIFA World Cup, and I thought there’d be some great business opportunities around the event.”

Khuzwayo’s idea was simple: Tourists would need accommodation, and locals had rooms to rent. He designed a website that matched prospective rentors with rentees. “The idea won me the Gauteng SAB Kickstarter title, but by then FIFA had changed the rules, and all accommodation had to be accredited.”

Undeterred, Khuzwayo looked for a way to pivot his idea. “I’d been working on a free mail plugin for the site, and realised this was a business in itself. I called the business MyNextMail and began focusing exclusively on that.”

Mnive Nhlabathi has been an entrepreneur since age 22. “I’ve only worked for someone else for three years of my life,” he says. “My background is IT and brand development, and in 2006 I also entered the Kickstarter competition with my branding agency.”

That was to be the year Khuzwayo won, and although Nhlabathi didn’t walk away with the prize money, he’d made a new friend. “We worked from coffee shops together, and gradually the idea grew that we should be working together.”

Yet another pivot

Khuzwayo was working on MyNextMail — a hosted email solution — but he was hitting brick walls trying to secure funding. “We both believed that in the future, IT would move from the work place into the cloud, but MyNextMail was competing with Yahoo and Gmail.” Gradually, the idea developed that together they could offer website and hosting solutions, as well as branding solutions.

We-recommend-tickWe recommend: Yolanda Sing from Chloé Consultants on Leading by Example

Joining forces, they targeted municipalities — not in main centres, but off the beaten track.

Sivu Maqungo joined the team immediately upon being approached by Khuzwayo with his idea for OPENTENDERS. A lawyer who had closed his practice to join the Department of International Relations, Maqungo had wanted to travel the world from a young age. When the opportunity to do so presented itself, he grabbed it with both hands. By the time Khuzwayo and Nhlabathi met him, he was back in South Africa running the East Africa desk, which consisted of 14 ambassadors.

“There’s a high level of appreciation for South African products and talent across Africa. Few companies realise this, so I started running seminars. I’d invite ambassadors from various countries, and they would pitch to local companies about the opportunities available in their countries.”

Khuzwayo attended one such event, introduced himself to Maqungo and explained OPENTENDERS. Maqungo was the third partner they’d been looking for: He was involved in an investment company that funded SMEs, he had contacts across Africa, and he understood training and SME needs. For Maqungo, here was an opportunity to re-enter the entrepreneurial world. With his desire to travel sated, he was ready for the next chapter.

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

Scaleup Learnings From Our Top Clients – What The Most Successful Entrepreneurs Do Right

So, how do our successful clients move through these constraints to scaling up? We see four key drivers of success, and they are: people, strategy, flawless execution and finance.

Louw Barnardt

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You’re out of your start-up boots, staff is increasing, your client base is growing, revenue is up and you’ve proven your case to the market. Now it’s time to scale up. The challenges of this vital growth phase are different and it’s a time that demands different mindsets and different actions. In a world littered with small business failures, it helps to be well-prepared for scaling up using a proven methodology. At Outsourced CFO, we get an inside look at the success factors of our clients who are mastering the transition.

On the one hand, scaling up is a really exciting phase; this is what moves you into real job creation and making an impactful contribution to economic growth. On the other hand, it is really hard to scale up successfully. We see three major constraints that limit companies’ transition from start-up to scale-up:

Leadership

The business has to have the leadership that can take it to the next level. When you start scaling up, especially rapidly, the founders can no longer do everything themselves. The team must grow and include new leadership talent that can take charge and execute so that the founders are working on the business instead of in the business.

Infrastructure

The processes, procedures, networks, systems and workflows of the business all need to be scalable. This is imperative when it comes to your infrastructure for the financial management of your business. You’re only ready for growth when your infrastructure can seamlessly keep pace.

Market access

Scaling up demands more innovative marketing and storytelling so that you can more easily connect and engage with the new employees, clients, network partners, investors and mentors that need to come along with you on your scale-up journey.

Businesses that build a market conversation and a compelling brand narrative during their start-up phase are better positioned to have this kind of market access when they need to scale up.

People

It is critical to have the right people on your team. Our successful entrepreneurs have what it takes to attract, inspire and retain top talent. A strong team of smart, ambitious and purpose-driven people who love the company and want to see it succeed contribute greatly to a world class company culture. They are adept at communicating a compelling vision and establishing core values that people can take on. These entrepreneurs are tuned into the aspirations of their people and focus on developing leaders in their teams who can in turn develop more leaders.

Strategy

It is planning that ensures that the right things are happening at the right times. At successful scale-ups strategies and action plans are devised to ensure that the most important thing always remains the most important thing.

Strategy includes input from all team members and setting of good priorities for the short, medium and long term. Goals are clear and everyone always knows what they are working towards. The needle is continuously moved because 90-day action plans are implemented each quarter to achieve targets and goals that are over and above people doing their daily jobs.

Flawless execution

Top entrepreneurs are not just focused on what operations need to achieve, but how the business operates. They have the right procedures, processes and tools in place so that everyone can deliver along the line on the company’s brand promise. Frequent, quick successive meetings ensure the rapid flow of effective communication. Problems are solved without drama. There is no chaos in the office environment. Everyone is empowered to execute flawlessly to an array of consistently happy clients.

Finance

Everyone knows that growth burns cash. A rapidly scaling business faces the challenge of needing a scalable financial infrastructure to keep the company healthy. Our successful entrepreneurs pay close attention to finance as the heartbeat of the business, ensuring that everything else functions. They look at the tech they are using for financial management and for the ways that their financial systems can be automated so that they can be brought rapidly to scale. The capital to grow is another vital finance issue.

The best way to finance a business is through paying clients on the shortest possible cash flow cycle. However, when you are scaling up and making heavier investments in the resources you need for growth, it is likely that you will need a workable plan for raising capital. Our scale-up clients know the value of accessing innovative financial management that provides high level services to drive their business growth.

Navigating the scale-up journey of a growing private company is one of the hardest but most rewarding of careers to pursue. Having people in your corner who have been through this journey before helps take a lot of pain out of the process. No growth journey looks the same, but there are tried and tested methods that will – if applied diligently – lead to definite success. Happy scaling!

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Lessons Learnt

That Time Jeff Bezos Was The Stupidest Person In The Room

Everyone can benefit from simple advice, no matter who they are.

Gene Marks

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When you think of Jeff Bezos, a lot of things probably come to your mind.

You likely think of Amazon.com, a company he founded more than twenty years ago, that’s completely disrupted retail and online commerce as we know it. You probably also think of his entrepreneurial genius. Or the immense wealth that he’s built for himself and others. You may also think of drones, Alexa and same-day delivery. Bezos is a visionary, an entrepreneur, a cutthroat competitor and a game changer. He’s unquestionably a very, very smart man. But sometimes, he can be…well…stupid, too.

Like that time back in 1995.

That was when Amazon was just a startup operating from a 2,000 square foot basement in Seattle. During that period, Bezos and most of the handful of employees working for him had other day jobs. They gathered in the office after hours to print and pack up the orders that their fast-growing bookselling site was receiving each day from around the world. It was tough, grueling work.

The company at the time, according to a speech Bezos gave, had no real organisation or distribution. Worse yet, the process of filling orders was physically demanding.

“We were packing on our hands and knees on a hard concrete floor,” Bezos recalled. “I said to the person next to me ‘this packing is killing me! My back hurts, it’s killing my knees’ and the person said ‘yeah, I know what you mean.'”

Related: Jeff Bezos: 9 Remarkable Choices That Shaped The Richest Man In The World

Bezos, our hero, the entrepreneurial genius, the CEO of a now 600,000-employee company that’s worth around a trillion dollars and one of the richest men in the world today then came up with what he thought was a brilliant idea. “You know what we need,” he said to the employee as they packed boxes together. “What we need is…kneepads!”

The employee (Nicholas Lovejoy, who worked at Amazon for three years before founding his own philanthropic organisation financed by the millions he made from the company’s stock) looked at Bezos like he was — in Bezos’ words — the “stupidest guy in the room.”

“What we need, Jeff,” Lovejoy said, “are a few packing tables.” Duh.

So the next day Bezos – after acknowledging Lovejoy’s brilliance – bought a few inexpensive packing tables. The result? An almost immediate doubling in productivity. In his speech, Bezos said that the story is just one of many examples how Amazon built its customer-centered service culture from the company’s very early days. Perhaps that’s true. Then again, it could mean something else.

It could mean that sometimes, just sometimes, those successful, smart, wealthy and powerful people may not be as brilliant as you may think. Nor do they always have the right answers. Sometimes, just sometimes, they may actually be the stupidest guy in the room. So keep that in mind the next time you’re doing business with an intimidating customer, supplier or partner who appears to know it all. You might be the one with the brilliant idea.

This article was originally posted here on Entrepreneur.com.

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Lessons Learnt

How Sureswipe Built Its Identity By Building A Strong Company Culture

Culture is unique to a business, it’s the reason why companies win or lose.

Nadine Todd

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A company’s culture is its identity and personality. Since this is closely linked to its brand and how it wants to be viewed by its employees, customers, competitors and the outside world, culture is critical. The challenge is understanding that culture contains unwritten rules and that certain behaviours that align to the culture the company is nurturing should be valued and cherished more than others.

At Sureswipe, the core of our culture is that we value people and what they are capable of. We particularly value people who are engaged, get on with the job, take initiative, are happy to get stuck in beyond their formal job descriptions, and who sometimes have to suck up a bit of pain to get through a challenge.

We include culture in everything we do, so it’s a fundamental element in our recruitment process. In addition to a skills and experience interview, each candidate undergoes a culture fit in the form of a values interview. We look for top performers who echo our core values (collaboration, courage, taking initiative, fairness and personal responsibility) and have real conviction about making a difference in the lives of independent retailers. If we don’t believe a candidate will be a culture fit, we won’t hire them.

If we make a mistake in the recruitment process, we won’t retain culture killers, even if they are top performers. This is such a tough lesson to learn, but it liberates a company and often improves overall company performance.

Culture should be cultivated, constantly communicated and used when making decisions. At Sureswipe, we often talk about what it takes to win and have simplified winning into three key elements: A simple, yet inspirational vision; the right culture; and a clear and focused strategy. The first and third elements can be copied from organisation to organisation. Culture on the other hand is unique to every business and can be a great influencer in its success.

Catch phrases on the wall are not the definition of culture

A strong culture is purposeful and evolving. It’s what makes a company great, but also exposes its weakness. No company is perfect and it’s important to acknowledge the good and the bad. Without it, we cannot ensure that we are protecting and building on the good and reducing or eradicating the bad.

Mistakes happen. That’s okay. But we are very purposeful about how mistakes are handled. Culturally we’re allergic to things being covered up or deflected and have had great learning moments as individuals and as an organisation when bad news travels fast. It’s liberating to ‘tell it like it is’ and almost always, with a few more minds on the problem at hand, things can be rectified with minimal impact.

Related: Starbucks Coffee Is All About Culture… For A Reason

Culture should be built on values that resonate with you and that you want to excel at. In our case, some are lived daily and others are aspirational in that we’re still striving for them. In each case we genuinely believe in them and encourage each other to keep living them. This increases the level of trust within the team, as there is consistency in how people are treated and how we get things done.

We are always inspired when, after sitting in our reception area, nine out of ten visitors will comment on the friendliness of staff. We hear their remarks about how friendly the Sureswipe team is or a potential candidate will talk about the high level of energy and positivity they experience throughout the interview process.

These are indicators that our culture is alive and well. It’s these components of our culture — friendliness, helpfulness and positivity — that cascade into how we do business and how we treat our customers and people in general. Being able to describe your culture and support it with real life examples is a great way to communicate and promote the type of behaviour that is important and recognised within the organisation.

Culture doesn’t just happen

We are fortunate that culture has always been important to us, even if it wasn’t clearly defined in our early days. As we grew it became important to be more purposeful in the evolution of our culture. About four years ago, the senior leadership team and nominated cultural or values icons were mandated to relook all things cultural.

A facilitator said to us, “You really love it when people take the initiative, and get very frustrated when they don’t.” That accurate insight became core to our values. We love to see people proactively solve problems, take responsibility for their own growth, initiate spontaneous events, change their tactics or implement new ideas. It energises us and aligns to the way we do business.

We celebrate growth and love to see our staff getting promoted due to their hard work and perseverance. We recently had one of our earliest technicians get promoted to the Regional Manager of Limpopo. It was one of the best moments of 2018.

Be purposeful with culture, describe it, communicate it and use it in all aspects of business. Culture should change. Don’t allow phrases like ‘this is not how we do things,’ or, ‘the culture here is changing,’ to stifle the growth and development of your culture. When done correctly change is a good thing. Culture is driven from the top but at the end of the day it’s a company-wide initiative. Design it together with team members from different parts of the organisation to get the most from it. And then make sure everyone lives and breathes it.

Cost Cutting

The best ROI is achieved when you stop wasting money.

Peter Drucker once said that businesses have two main functions — marketing and innovation — that produce results. “All the rest are costs.”

If you agree, that means that the average business has a lot of fat to trim. Obviously you can go overboard trying to cut costs too. My philosophy has been to look at some of the general areas where you can add some efficiency but not at the expense of impairing your most valuable resource — your focus.

The following cost-cutting measures will do that. Think of these as adding value to your company, whether it’s time, creativity or a closer connection to your consumers.

Related: Wise Words From wiGroup On Building A “Wow” Company Culture

Uncover inefficiencies in your process

This is where I begin. In fact, it was analysing the inefficiencies of legal communication and knowledge sharing that led me to create Foxwordy, the digital collaboration platform for lawyers. I noticed that attorneys in our clients’ legal departments were drafting new documents from scratch when they could pool their knowledge and save time by using language that a trusted colleague had employed in a similar document. Business is all about process. When you create a new process, or enhance an existing process, you will drive cost efficiency.

Refine your process, then automate

If existing processes are lacking, it is time to create process. If you have processes, but they are not driving efficiency, it’s time to redefine your process. Either way, a key second step is refining processes that are needed in your business. Only then can you go to automation, since automating without a process will result in chaos — and won’t save time or money. Similarly, automating a poor process is not going to give you the cost-saving results you are looking for.

Thanks to the Cloud, there are very accessible means of automating manual processes. For instance, you can automate bookkeeping functions with FreshBooks and use chatbots to interface with clients — for very basic information. If you’re a retailer, a chatbot on your site can explain your return policy or address other frequently asked questions. Automating such processes allows you to spend more time focusing on clients and customers. Technology alone isn’t a panacea for all business functions, but if you find something you’re doing manually that can be automated, take a look and consider how much time and process definition automation would save you.

Rethink your outreach

Marketing and outreach are usually big and important challenges for an organisation. In my experience, there are two main components to successful marketing — knowing your customers and using the most effective media to spread your message. For the first part, I recommend polling. There are various online survey services that offer an instant read on what your customers are thinking. You may think business is humming along, but a survey could reveal that while consumers like your product, a few tweaks would make it even better.

For the second part — marketing messaging — once you have a firm idea of your marketing messaging, Facebook is a great vehicle for outreach. The ability to granularly target customers and create Lookalike audiences (from around 1 000 consumers) can help grow your business.

Related: Take Responsibility For Your Company’s Culture To Boost Productivity

Scrutinise your spend history

There are tools that can help you assess spend history and find cost-cutting opportunities. For example, you might be able to take advantage of rewards or loyalty programmes to reduce common business expenses, like travel, or consolidate vendors for a similar function. If you have a long-standing relationship with a vendor, negotiate better pricing.

The most important elements to keep in mind are resources that make your company special. Your company may be built on one person’s reputation and expertise. Guard against tarnishing that reputation with inappropriate messaging in advertising or social media. If your company’s special sauce is intellectual property, protect that too. But everything else — ranging from physical property to salary and benefits — are costs and should be considered negotiable. — Monica Zent

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