Connect with us

Lessons Learnt

Why Seitebatso Rakgokong Reined It All In And Made More Money

Sounds counter-intuitive to do less to earn more, but that’s exactly what Seitebatso Rakgokong of Masedi Electric-Serve had to do to save his business from hyper-growth.

Tracy Lee Nicol

Published

on

Seitebatso-Rakgokong

[box style=”gray,info” ]

Vital stats

  • Company: Masedi Electric-Serve
  • Player: Seitebatso Rakgokong
  • Established: Officially 2004
  • Contact: info@masedielectric.co.za

[/box]

What’s wrong with this picture: In 2010 a Rustenburg-based electrical installation and maintenance business turns over R3 million, in 2011 R4 million, and in 2012 R14 million. In the space of a year revenue has quadrupled. But then in 2013, revenue drops to R9 million. It must be a disaster, right? Well, no actually.

Related: What the Power of 10% Rule Can Do For Your Profits

Here’s the twist in the story you’re probably not expecting. Dig below the surface and what you discover is that the business was actually three times more profitable at R9 million turnover than it was at R14 million.

Seitebatso Rakgokong is the entrepreneur behind the recalibration of Masedi Electric-Serve, and he tells us the lessons he’s learnt about hyper-growth.

Learning curve #1: Reining in the pitches

“In 2004 the bulk of our clients were government departments but we needed private clients to balance out the often late payments from public sector that impacted cash flow.

By focusing on high quality work, we started getting contracts from mines in Rustenburg, landed Royal Bafokeng Administration as an anchor tenant, and grew from there.

Foreseeing the impact of the 2008 recession and concerned for future business, Rakgokong started pitching to anyone and everyone.

“We aggressively submitted tenders. Typically a 30% or 40% conversion is doing well, so we used that conversion ratio for further bids.” It backfired.

“By the time 2012 started, we had 34 projects running at the same time with some being over 300km away. As a small business we were thrilled, but by the second quarter we felt the effects of such growth – cash flow and profitability were the biggest casualties. Ironically, the government’s continued spending during the recession helped the business a lot, but a late payment would put us into crisis mode.”

The lesson: “We had to make a tactical decision about how many contracts we could handle at a time and the size of those contracts. We had to put a cap on distance and refine who we pitched to – it wasn’t revenue at all costs anymore, but aligning clients to our strengths, whether they were good payers, and the potential to get long-term maintenance contracts with them. This means we turn away some business, but it’s for the good of the company.”

Learning curve #2: Bringing in systems to improve profits

Masedi-Electric-Serve

“In the busyness of so many projects, we were losing track of profitability as we didn’t have specific financial monitoring to track individual project profitability, just gross and operating profit. Before hyper-growth, we enjoyed a healthy profit margin, but come 2012 that had dropped to 4% and some projects even incurred a loss.”

The lesson: “Keeping track of cost of sales is essential. We went from using spreadsheets to needing a more sophisticated financial management package to provide detail on project-specific costing. In construction, one project tends to subsidise another, but it seriously ate into our profitability. Individual monitoring helped stop that, but it also saw us implementing a project pricing review before starting each project. This was important because in the 90 day interim between a bid being accepted and a project starting, prices might have increased.”

Related: Paying Attention To This Will Generate You More Profit

There was another important find in project-specific financial monitoring: “We found supplier pricing wasn’t consistent simply through dealing with different people at the same supplier, so we implemented systems to streamline procurement. On the fleet management side, through fuel and maintenance expenses tracking, we started identifying instances of abuse. By the end of 2012 and into 2013 we really started seeing the results of optimising expenditure.”

The value of mentorship

Seitebatso Rakgokong entered into the 2012 class of Property Point, a Growthpoint enterprise development initiative. Through mentorship, workshops and being supplied with tools for success, he was able to guide his business back to profitability.

He even took his book-keeper along to some of the workshops for immediate system implementation.

“Entrepreneurship is a lonely road. The team at Property Point were very supportive and the overall experience was highly beneficial.” In fact, Masedi-Electric-Serve won first prize for the class of 2012.

Related: Find Smart Ways to Lift Profit Margins Effortlessly

[box style=”gray,info” ]

Top tips

  • Don’t take on clients simply because it’s work. Manage your capacity to avoid compromising your other projects.
  • Refine your bidding process. Look at the quality of the client in terms of longevity, project size, and project requirements aligning with your strengths.
  • Monitor project-specific costing. This will prevent too much subsidising that eats into profitability.
  • Review your pricing when there’s a long interim period. Have prices between being awarded and commencing a project increased?
  • Chase profit, not revenue. Rather go for a R10m project with R2m profit, than a R20m project for R1m profit.

[/box]

Tracy-Lee Nicol is an experienced business writer and magazine editor. She was awarded a Masters degree with distinction from Rhodes university in 2010, and in the time since has honed her business acumen and writing skills profiling some of South Africa's most successful entrepreneurs, CEOs, franchisees and franchisors.Find her on Google+.

Lessons Learnt

11 Things Very Successful People Do That 99% Of People Don’t

Consistency is a big part of succeeding. The top 1% of performers in the world know this is the secret to their success.

John Rampton

Published

on

Prev1 of 12

successful-entrepreneurs

Becoming wealthy and leaving an impact on the world is not an easy feat. If it were, everyone would go around doing it. At that point, it would not be much of an accomplishment at all.

Rather, being extremely successful requires an extreme amount of work. Especially when there is nobody looking. The best people have developed habits that help them reach their goals. These routines are not necessarily challenging to form, but they take consistent effort over extended periods of time. Creating these tendencies in your own life will propel your success.

Here are 11 things, that 99% of people (myself included) do not do, but really should.

Prev1 of 12

Continue Reading

Lessons Learnt

Brian Tan Of FutureLab.my – Bridging The Knowledge Gap Through Social Learning

Brian Tan a young Malaysian Entrepreneur whom has built the largest social learning platform in South-East Asia.

Dirk Coetsee

Published

on

futurelab

“The meaning of life is to find your gift. The purpose of life is to give it away” – Pablo Picasso

As a keen observer of the behaviour of successful entrepreneurs I have learnt that:

“You do not attract what you want but you attract what you are”

Brian Tan truly believes in what FutureLab stands for and therefore has attracted the belief of key partners such as Cradle whom has invested in his ground-breaking project.

Brians’ gift is to solve big problems. In unison with his two other co-founders he is giving this gift away in the Form of FutureLab, a company obsessed with learning and more specifically bridging the gap between education and careers.

Brian wants to play a role in making humanity better by applying his knack for solving unique problems and firmly believes that quality and ongoing education is a powerful catalyst for positive change. FutureLab is a social learning platform featuring diverse applications that not only connects mentees to mentors but also empowers several companies to track their employees utilising Futurelabs’ technology as they navigate through development and talent development programs.

Slowly but surely FutureLab is becoming much needed feedback loop between university and industry and brings exposure to people who have not had it before. Brian believes that a lot of people have not fullfiled their potential due to low standards of education in general.

Related: Channeling The Fire Of Authenticity: Asia’s’ Top ‘YouTuber’, Joanna Soh

I fully realised that I was engaging a modern entrepreneur as he described his company culture as:

‘Geeky, awesome & badass.’

He elaborated on that by explaining that his team do not follow trends, that they authentically like what they like, and do what they love in their unique way. When you act according to the Leadership principle of Authenticity you avoid having regrets as you did not apply unnecessary energy to attempt to become someone that you are simply not.

This unique company is founded upon three core values which flows through all the activities that they engage in:

  • Giving back to society
  • Continuous Learning
  • Creating your own reality.

The FutureLab team does not only pay lip service to these values but instead actualise them as a matter of regular practice. Brian gives his team ‘homework’ in terms of things that they need to learn and the CEO of FutureLab himself is engaged in a lifetime commitment to learning. Regular ‘Stand up meetings’ are held were team members give feedback and hold each other accountable.

Brian is a Biochemist by trade whom constantly seeks opportunity to learn more about business and has completed several business programs to learn how to build a company which included spending 3 weeks at Stanford University studying entrepreneurship and meeting teams from Google, Apple, Facebook and Pinterest as part of a government initiative for the top 25 Malaysian start-ups. This young entrepreneur believes that his passion for teamwork has helped him a great deal to transform from being a biochemist to being an entrepreneur. He finds joy in ‘pushing a team forward’, as he puts it and loves seeing his team members grow in self-confidence and belief in the vision of the company that he co-founded. He has a keen knack for finding potential and then helping his team members to unleash their inherent talents.

What follows is Brians’ clear description of how Futerelab obtained cradle funding and how they managed to secure the top universities in Malaysia as clients, in his own words:

“We wanted to prove that FutureLab was solving an actual problem before applying for Cradle funding so what we did was to invite mentors from specific industries (at this early ideation stage of FutureLab it was our own personal networks).

“We started with mentors from Management consulting and posted a google form up on Low Yat and Facebook to see whether anyone wanted to speak to them. Within a couple of days, we had 20 people signup to meet our mentors. At this point, we decided to close the google form since we didnt know what kind of people would show up. We set the meet up at a local coffee shop and only spent RM 50 on buying coffee for the 5 mentors from Accenture, BCG, PWC, Ethos Consulting and Deliotte. We split the mentees into mini groups and they cycled from one mentor to the next, the last stop for each mentee group was with me telling them what we are trying to build, how much we are thinking of charging and how would the system work. We got really good feedback from the participants and the mentors.

Related: Meet Jan Grobler: Serial entrepreneur, Advocate, And Job Creator

Me being a scientist by training, I like to see whether results are repeatable so we organised 6 of these meet-ups over the whole year inviting mentors from different industries, lawyers, accountants, entrepreneurs, doctors and we even tested on online mentoring session using google hangouts. At this point, we were convinced that FutureLab should exist. This is when we applied to Cradle for Funding along with all the evidence we collected on why FutureLab should exist.

When FutureLab was first launched, we already had 40 mentors and 60 mentees that were waiting to use the platform that we were building. Mentees really enjoyed speaking to our mentors and vice versa for mentors, our growth has been mostly from word of mouth from mentors and mentees eventually universities started being aware of our mentoring community and started asking us to get more involved with their students. Our mentors are big advocates for our platform and they are based in large companies around the world. So they play a big role in opening doors for us.

Yet another key business learning he has acquired is to always guard against complacency and this knowledge is encapsulated by the following quote that he shared:

“What got you here cannot get you there”

Meaning that the same behaviours and habits that got you to this point will not be enough to move you forward, you have to keep on evolving to remain relevant and successful.

Brian is passionate about FutureLab and business in general and reminds us that:“When you are passionate work is the fun part of the day”. His advice to other entrepreneurs is to truly find a project that you are passionate about and truly believe in. He is most certainly passionate about the future of his projects and wants to build an eco-system that generates high volumes of cash that will empower his company to invest in start-up projects.

In general he wants to invest in entrepreneurs that are solving ‘big problems’ and wants FutureLab to become an innovation company. He poses this challenging question to those thinking on starting their entrepreneurial journey:

‘Are you merely attempting to do what others are already doing or are you really solving a problem?”

He finds that many entrepreneurs overthink and then do little. The more you do and if done at a rapid pace the more you learn to become adaptable and will find that there are many ways to solve a problem.

Continue Reading

Lessons Learnt

6 Of The Most Profitable Small Businesses In South Africa

Zero to 100 million in only a few years, we take a look at South Africa’s start-ups that have grown from fledglings to million rand businesses.

Entrepreneur

Published

on

Prev1 of 6

The Business of Iced Tea

bos-tea

Vital Stats

  • Player: Grant Rushmere
  • Brand: Bos Brands
  • Established: 2009
  • Visit: www.bosicetea.com

When Grant Rushmere first envisioned Bos Ice Tea, he did it through the lens of creating a global brand. This wasn’t going to be a small local brand that would grow organically, and maybe enter international markets in the distant future. No. This was a brand engineered for stratospheric growth, which required a ballsy optimism and willingness to go big or go home.

“From the beginning we jumped in with both feet. We approached retailers and secured contracts that we knew we wouldn’t be able to sustain down the line if we didn’t get funders on board, but it was a calculated risk that we were willing to take.”

“I had developed the idea, brand and product, but I didn’t want to be a lone ranger,” says Rushmere. “I was looking for a partner who would co-invest in the business and bring skills to the company. Richard was ideal. He loved rooibos and actually produced it, and he is excellent with contracts and HR matters. Where I think a handshake will suffice, he puts a contract in place that protects everyone’s interests. Together we had the skills this business needed.”

The Top Lesson

Gutsy moves and calculated risks aside, the success of Bos Brands is a lesson in the power of marketing. In their first year, Rushmere and Bowsher spent as much on marketing as their turnover. As their revenue has increased, they haven’t pulled back on marketing spend — they’ve grown it. Rushmere is a firm believer that you get what you pay for, and what he’s been aiming for since the inception of the brand is no-holds-barred growth.

Today Iced Tea has grown from zero to R100 million in under ten years

To read the full Bos Tea story click here.

Next Up > 720% growth in 5 years

Prev1 of 6

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending