It took Chris Wilkins just over ten years to build his software company, DVT, into a R100 million business. Less than two years later, he has more than doubled that turnover, with R250 million in revenue expected in 2013. Entrepreneur chats to him about how he has focused on growth, increased his profits, and built an industry-leading business.
South African software company DVT, founded by conceptual thinker Chris Wilkins in 1999 and now one of the largest independent software specialists in the country, is set to exceed R250 million in revenues this year, for the first time in the company’s history.
With offices in Cape Town, Johannesburg and India, DVT’s range of medium and large clients have one thing in common — their demand for reliable and predictable delivery, an expectation that Wilkins’ team has met consistently.
Describe the climate when you started the business?
I was fed up with the arrogance of software developers and the prices they were charging. My business partner and I financed the launch of DVT by extending our bonds and making significant salary sacrifices.
For a number of years, we invested the small profits we made back into the business and started getting small returns. The business grew incrementally and today we are a top provider of software and services.
What was your strategy when you started DVT and how has that changed over time?
What we do has not changed but how we do it has. You have to grow a business for it to survive, and despite what MBA students might think, you have to make a lot of it up as you go along. It’s an ‘if needs must’ approach. The needs of a growing business change all the time, and you have to accommodate that growth by making adjustments as you go along.
The most important element for us has been hiring more people, and more senior people. As an entrepreneur, you have to know when it’s time to bring in employees who do what you used to do so that you can occupy your time with developing and evolving the business.
Have your customers changed?
Because we are in the business of professional skills, we do not focus on any particular market sector. We have a potential customer base of 2 500 institutional companies in South Africa, all of which have a fair amount of cash to invest in software and services development. That’s what has enabled us to become experts in a variety of domains, rather than in any vertical sector.
What impact has the economy had on DVT?
We have always managed to sidestep the negative effects of the economy. That is probably because of the serious lack of ICT skills in the country. There is a strong demand for the right level of talent in the software sector because the education system simply is not producing enough of what South Africa needs in this market. That is why finding the right people has always been such a key part of our business.
How has your business model evolved if at all?
There’s nothing magical about a business model. It’s simply the nuts and bolts of how a business plans to generate revenue and profits. It details your long-term strategy and day-to-day operations. DVT has essentially been doing the same thing we have always done — writing software for clients.
But how we do it is changing. There are more people involved. There is a big team of support staff, and an in-house recruitment team that knows how and where to find them. We are now employing around 100 people a year, which means we have to scour South Africa for the right talent.
The key point is that functions in the business have not changed, but the way we do things has changed dramatically. That, I believe, is the difference between an average business and a great business. Our growth is not about systems and process, but about the ability to scale what works.
How are you addressing the skills shortage in the ICT industry?
As part of the company’s long-term drive to grow ICT skills in the country, DVT has a well established internship programme through which interns are managed, mentored and exposed to the right variety of projects. We have made a substantial commitment to this programme because we believe that the return on investment will be significant, given the impact of ICT on the economy and the shortage of local skills in this sector.
DVT is currently providing internships to more than 60 graduates and entry-level professionals, and will continue to increase this number each year. The internship programme is focused on previously disadvantaged individuals and a large proportion of all DVT staff is also drawn from these communities.
We have a level 4 B-BBEE status, and our aggressive internal training and development programme rivals that of corporate organisations many times bigger than ours.
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Describe your organisational structure?
When we started the business I looked after the profit and made sure clients were as happy as possible. Those are the two main elements of any successful company. I did that for the first five years of the company’s existence, after which we employed our first business unit head.
Over time, we have simply replicated that model. It’s completely scalable, allowing us to keep on hiring as the need arises and the business expands. Now we have a federal system where business unit managers head their own profit line. We have invested heavily in growing the number of business unit heads.
At this point, we are focusing on intensively building our account management to make sure that clients are taken care of.
Looking back, what would you do differently in the early days?
I would have been more cognisant of building an intelligent organisation. It’s not that we have not done that, but I would have placed more emphasis on it — of course, in the beginning, you are mainly fighting to survive.
As you move forward, from day to day and month to month, it’s critical to accumulate all the knowledge that contributes to a company’s intellectual property for the good of the business as a whole. In South Africa, we tend to be driven by the psychology of the individual — we can do better by focusing on collective effort that leverages all the knowledge in the business.
Today, we are becoming increasingly efficient because we are always learning from what others have done before. We are able to take advantage of all that collective knowledge. That saves time, money and resources because everyone becomes a little more productive.
That’s important for a business as it gets bigger, because more people are being more productive, increasing the linear benefit exponentially.
How do you continue to differentiate the company from other software developers?
There really is no silver bullet. We’ve basically highlighted the 20 activities that need to be executed to perfection and focused intensely on those. Each year, the company gets better at doing something, allowing us to shift our focus slightly onto the next ability that we have to excel at.
How do you ensure profits?
We break responsibility down into smaller parcels. We have 14 profit centres, each headed up by business unit heads. As the leader of the business, I can’t oversee 400 people, but delegating responsibility to other managers makes it easier for me to lead according to our vision. Each team leader manages their own team and focuses all efforts on generating a profit.
How has your management style contributed to DVT’s success?
I’m a big picture person. I see the world in terms of opportunities rather than risks. I will always hand over ownership and responsibility to those who are able to take the business forward, and make it worthwhile for people to give it their all.
I believe in giving people some leeway and always taking into account their personal circumstances because no one works in a vacuum. Having said that, strong leadership is vital. I’m open to change and hearing opinions, but you cannot spend years making decisions.
Our culture is one strongly driven by profit incentives. Each year, a percentage of profit goes back to the staff. The structure of the incentive programme is simple and easy to understand and there are no ambiguities. We never shift the goal posts, nor do we make it increasingly difficult for people to achieve their targets.
How have you exceeded the quarter of a billion mark?
We have experienced record growth for the past two years. Our focus on an ownership-based model, coupled with hiring the right staff has been instrumental in this success.
Margins have been under pressure in the industry as a whole, but we have slowly improved the circumstances within which we operate, negating some of the negative effects of these external market forces. Persistence and perseverance got us here. You have to believe that you can do what you say you do.
- Name: Chris Wilkins
- Company: DVT
- Launched: 1999
- Core business: Net, Java and Mendix constitute the core software development platforms at DVT. Agile development, business analysis, project management and quality assurance and testing complete the additional service offerings.
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1. Nick D’Aloisio Wrote a Million Dollar App At Age 15
At the age of 15, Nick D’Aloisio wrote an app while sitting in his parent’s bedroom in the UK. At the age of 17, D’Aloisio sold his app Summly – a mobile news summarisation app to Yahoo for a staggering USD 30 million.
As one of the youngest millionaires, D’Aloisio is also the world’s youngest entrepreneur to be backed by venture capitalists – having secured seed funding from Sir Li Ka-Shing, Hong Kong’s billionaire, as well as raising USD 1.23 million from celebrity investors, including Yoko Ono and Ashton Kutcher.
“The number one thing I did that I think was wise was to get, through some of my advisers, was a Chairman; basically someone who was a very experienced business person, an industry veteran — Bart Swanson, who had been at Amazon and then Badoo. Then, myself and Bart really started finding people and growing the team.”
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“I was really sceptical of medical cannabis,” he says. “It took a year of having conversations with patients and physicians and hearing the same story, repackaged but essentially the same, over and over and over again, where my scepticism eroded and I became a believer.”
In 2013, Kennedy and his partners applied for a licence from Health Canada and launched Lafitte Ventures, which was later renamed Tilray. Today, the company is a global leader in medical cannabis research, cultivation, processing and distribution.
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.
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:
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.
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.
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.
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.
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.
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.
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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