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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




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Vital stats

  • Company: Masedi Electric-Serve
  • Player: Seitebatso Rakgokong
  • Established: Officially 2004
  • Contact:


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


“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

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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.


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

How Robert Brown Achieved Next Level Growth And Long-Term Success

It’s not often that an individual manages to bootstrap a business, substantially grow it over two decades, and then successfully negotiate an acquisition by an overseas company. DRS CEO Robert Brown managed exactly this — so successfully, in fact, that he is now also the CEO of Nasdaq-listed company, Cognosec.

Nadine Todd




Vital Stats

  • Player: Robert Brown
  • Position: CEO and founder
  • Company: DRS (Dynamic Recovery Services)
  • Est: 1997
  • About: DRS is an ICT company that specialises in information security, IT risk management and IT governance services and solutions. The company was launched more than two decades ago with just R2 000, but today counts many listed companies amongst its clients. It was acquired a few years ago by Swedish company Cognosec AB. In January 2016, Robert Brown was appointed as CEO of Cognosec.
  • Visit:

When it comes to bootstrapping a business how important is cashflow? What role does it play?

Cashflow is everything. If you want to be successful, you need to know exactly what’s going on in your business’s bank account.

  • How much is coming in?
  • How much is going out?
  • Who owes you money?
  • Who do you owe?
  • When will they pay?
  • When do you need to pay?

These questions are all crucial. Many people see money coming into a bank account and assume that the business is profitable. Of course, this is not the case. Only when more is coming in than is going out is the business actually profitable. Unfortunately, if you want to know what is really going on in your business, you need to pay attention to the paperwork. Many entrepreneurs hate paperwork and are pretty bad at it, but it can’t be ignored.

You have to sweat the details. You can bring on a bookkeeper or accountant, but that doesn’t absolve you from all financial responsibility. As the founder or CEO, you should have detailed knowledge of the company’s financial situation at all times.

Related: 8 Valuable And Inspirational Web Series You Should Check Out

Where does budgeting feature in this?

Budgeting is very important. You need to create a detailed budget. However, the budget is useless if it doesn’t reflect reality. Don’t exaggerate income and minimise expenses. Entrepreneurs are naturally optimistic people, but this is one instance in which a serious dose of reality is very useful. In fact, don’t just be realistic — assume that a disaster will hit. Create a ‘worst case’ scenario.

As the saying goes: Hope for the best, but prepare for the worst.

What would you identify as one of the DRS’ key inflection points?

Probably when the company passed that 50-employee threshold. In my experience, once a business grows beyond 50 people, things change fundamentally. Systems and processes that worked well until then, suddenly start breaking down.

So, once your business reaches that size, I think you need to be willing to reevaluate the basic structure of the organisation. Chances are, some big things will need to change. When the business is growing quickly, it’s easy to blow past this point without giving it much thought, but you’ll end up paying for it down the line. Once again, sweat the details. The earlier you start implementing the necessary systems and processes, the less painful the experience will be.

How did you manage the growth of DRS? How did you know that the time was right to enter that next cycle of growth?

In my opinion, you should find the work, and then find the people needed to do that work. In other words, you don’t want to be over capacity. If you do this, you run the risk of spending more than you’re making. Instead, go out there, find work, and then expand.

Don’t expand and then hope that you’ll be able to find work to keep everyone busy. Also, landing a couple of good long-term contracts can give you the breathing room needed to grow.

If you know that some steady money will be coming in over the next couple of years, you have more freedom to grow.

Related: Which Of These 7 Personality Traits Do You Share With The World’s Richest People?

How do you minimise risk when growing a company? How do you set it up for long-term success?

Never have one product and never have one customer. Too many companies become over reliant on a single product or a single large client. That’s incredibly risky. Instead, you want multiple revenue streams. You want to sell multiple products to lots of clients.

There are plenty of examples in history of companies that built an empire on a single piece of technology, and when that technology became obsolete, these companies disappeared. Similarly, young companies sometimes land a huge contract that becomes the engine for massive growth. When that contract suddenly disappears, the company folds. If you want to create a company that thrives in the long term, don’t put all your eggs in one basket.

DRS became a Cognosec AB subsidiary a few years ago. What made you decide to sell?

If you want your company to grow and prosper beyond you, the founder, you need to be willing to accept change. The last thing you want is to remain central to the success of the company decades after the launch. You need to think about your exit, even if you don’t plan on leaving the company in the near future.

Even if you don’t intend to exit at all, you still don’t want to be responsible for every decision.

That’s not how you create a large and healthy organisation. Start putting the people and structures in place that will allow you to exit as soon as you can. For me, Cognosec AB made a lot of sense. It was a company that I believed would increase the options available to DRS and its people. By joining an international organisation, we really went to the next level.

Related: 15 Great TED Talks For Sparking Creativity (Infographic)

What is the key to long-term success?

It’s the people. A lot of business leaders say this, of course, but that just proves how true it is. Without great people, you cannot build a great business. You might enjoy some short-term success, but the business won’t last for decades. When your business grows, especially if it’s growing quickly, it’s all too easy to hire the wrong people or to lose control of the culture. When you do this, the business suffers.

One of our greatest achievements as a company, and what I believe has been key to our success, has been our ability to help individuals grow and prosper. We have many long-time employees who have worked themselves up from incredibly junior positions into leadership roles. That’s given us a depth of knowledge and a feeling of family that have been instrumental in our success.

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Lessons Learnt

5 Lessons From The Legal Legends On Pivoting

Sometimes an innovative idea can get everyone excited, but it still fails to monetise. When that happens, you can choose to keep plugging away at your business, or you can pivot. When their first business model wasn’t delivering, Kyle Torrington and Andrew Taylor chose to find a different solution to achieve the same goal. Here’s how they did it, and why they’ve seen 50% month-on-month growth ever since.

Nadine Todd




Andrew Taylor and Kyle Torrington are the first to admit that it took them too long to pivot their business. “We believe in the lean start-up methodology,” says Andrew. “And if you believe in it, you need to live it.”

In fact, it took just six months for the co-founders to change their business model and rebrand the company from LexNove to Legal Legends. In the world of lean start-ups though, six months is too long.

Implementing lean start-up methods

“When we first launched, we completed the Ignitor Accelerator Programme,” says Kyle. “It was an invaluable experience, and it introduced us to lean start-up methodology and how to implement lean start-up principles in your business. It’s not just about the launch, it’s about the years that follow. It’s a set of principles that keep your business relevant and sustainable, but it also requires you to fail fast and adjust your model continuously in a ‘build-measure-learn’ feedback loop. The problem was that even though we understood and believed in the theory, executing pivots in a business is easier said than done.”

“We’d even recognised friction points and underlying assumptions we had around our business and target market that were proving incorrect,” agrees Andrew, “and it still took us a few months to act.”

Why? What prevented two smart entrepreneurs who understood their business, target market and what they needed to do, from acting immediately? It’s a dilemma that business owners will find all too familiar, and it starts with the original idea, and is compounded by industry experts falling in love with your innovative solutions — even though you’re struggling to monetise the business. Here’s how they pivoted their business and achieved 50% month on month growth as a result.

1. Recognise The gap between vision and reality

“The idea behind LexNove was to make legal services more accessible and affordable for SMEs,” explains Kyle. As lawyers, they were exposed to the reasons why legal services were daunting, and often unaffordable for start-ups and SMEs, and they believed there was a way to address those gaps.

Related: Why You Should Scrap Writing That Business Plan And Become a Lean Start-Up

They started by researching what was available globally, and discovered that in the US and UK, similar online reverse bidding sites existed that connected SMEs in need of legal services with law firms who bid for the business. In theory, this would create a more competitive environment and more affordable prices for SMEs. It would also take the uncertainty out of legal billings, which traditionally charged by the hour, and give a project a flat rate.

“There was nothing like it in South Africa, but the idea had already been tested and proven in other markets,” says Andrew. The co-founders contracted outside developers, resigned in late 2014, and launched LexNove in June 2015.

Be innovative, on-point and address a real market need

Experts and the media lauded it as the future of legal services. But it was proving very difficult to monetise.

“Our beachhead market was SMEs. We’d identified a disconnect between entrepreneurs and traditional legal services, but what we’d failed to really consider was the fact that start-ups and SMEs are very careful with their cash. If the choice is between legal services and survival, understandably they’ll choose survival,” says Kyle.

“Ask almost any established business owner what they wish they’d done differently in their start-up days though, and they almost always say they wish they’d had the right contracts, agreements and intellectual property protection in place. It’s far more expensive to fix later. But when you’re in that space, other costs take precedence.”

Developing a strong user base

Nevertheless, Kyle and Andrew managed to build a strong user base on the site — they’d contacted firms via LinkedIn and their networks to get the law firms on their site, and used Facebook and online advertising to bring users to the site. They categorised and collated bids and chased the legal firms to ensure they bid on contracts. But, getting users to convert was difficult, and it was only at this stage that LexNove received its percentage of the business. Up until that point, everything they did was free.

It was turning out to be a lot of effort for very small rewards. “Another problem was that deals that did convert introduced a business to a legal firm, and they did future business directly with each other — there was big platform leakage as the SME didn’t come back to the site. The legal world is a high-touch, high-trust environment — people want to know and trust their lawyers, and so even though we had provided a ‘matching’ service, once the match was made we were no longer the ‘go to’ legal provider for the SME,” explains Kyle.

“We thought people would keep coming back to the site. The reality was quite different.”

Most importantly, the site was failing to do what Andrew and Kyle had intended in the first place — it wasn’t bringing down legal fees. Because the site used outside legal practitioners and couldn’t control or even influence their fee setting, the price point remained aligned with more traditional firms instead of reducing to levels start-ups could afford.

2. Choose a new direction


It’s not always easy to let go of an idea that you’ve nurtured and worked on for so long, particularly when you’re lauded for it. But if you can’t monetise your idea, then it’s not a viable business. Andrew and Kyle could have continued to plug away. Perhaps if they’d waited long enough, the local market would have caught up to US and European standards, where the business model did work.

Instead, they took a step back, critically reviewed the business, and started implementing the methods they’d learnt around the principles of the lean start-up methodology.

First, they needed to understand why their target market wasn’t responding to the service they were offering. They were addressing a real need, so what was the problem?

Related: The 7 Culture Pillars That Will Skyrocket Your Start-up To Success

“The idea of online legal services in South Africa was new, but ecommerce isn’t,” says Kyle. “The problem is that users were expecting instant gratification. Instead, it took 48 hours to process bids. SME owners arrived on the site, and there were no prices, so you were still unsure what you’d get quoted. We realised that uncertainty around prices is a problem for a target market that isn’t well versed in legal services.”

“Even if the uncertainty had been cleared up, there was a secondary problem,” adds Andrew. “What an SME owner is willing to pay for certain legal services versus what law firms charge is miles apart. Services were just seen as too expensive.”

“Our key driver was still to make the law affordable for SMEs,” says Kyle. “We want to capture the 90% of the SME market that can’t afford traditional legal services by revolutionising the way law is done, while still offering quality legal services. LexNove wasn’t achieving this goal. We needed a new solution.”

This understanding, coupled with the challenges they were facing, led to one key question: What did they need from their target market? The answer was clear — they needed to capture and hold the full value of each client using their service, and they needed to offer that service at a price point SMEs could afford.

3. Shift the business model

The co-founders started by addressing their name. “We’d read somewhere that two syllable names were easier to remember, which was where LexNove (based on LexNova, which means new law), came from. But we’d fallen into an old trap. We chose a Latin name for a business that was supposed to be democratising legal services,” says Andrew.

“We needed a new name that was memorable, made sense, and told our customers exactly what we do.”

Legal Legends was born from a skunkworks project inside LexNove. Andrew and Kyle kept LexNove operational, and let existing customers and partners know they were trying out a new product on the side. A skunkworks project is developed primarily for the sake of radical innovation, so it allowed the co-founders to test their theories and the lessons they had learnt with LexNove without immediately shifting their business model.

Today, the tagline on the site reads, ‘Fixed priced legendary legal services for entrepreneurs’, immediately followed by a ‘shop now’ button that takes you to a fixed-price menu.

How to achieve your start-up goals

So, how did Andrew and Kyle achieve their goal? True to lean start-up principles, they did it with a lot of hard work, testing, measuring, adjusting and implementing. Working with outside developers meant long lead times, so Kyle learnt to code. They also paid careful attention to how their customers responded to their offerings. Once the business had pivoted as a result of lessons learnt from LexNove, it began to experience 50% monthly growth.

“Our goal was to achieve the creation of intelligent automated contracts, which are automatically curated based on user preferences,” says Kyle. “Our biggest challenge was how to bring our prices down and find an annuity income model.” The answer was automation and instalment payment plans.

In its new format, Legal Legends is actually a far more unique offering than LexNove was, but it’s also a familiar ecommerce platform that South Africans are more familiar with, and therefore more comfortable using. “We realised we were asking people to spend R10 000 on a reverse bidding site, with no credibility or track record,” explains Andrew.

Related: Game-Changing Lessons From Lean Start-Up Founder Steve Blank

“The new site has a menu with prices. There are no hidden costs or surprises. We started with 50 of our most common services, and listed them as products, the way you would see books listed on Amazon, or products on Takealot. We then advertised our products through online and other means. A user can purchase a product in under one minute, and then they fill out a digitised questionnaire. This information gives us the details we need to customise the agreement they have bought.”

Once Andrew and Kyle had a clear understanding of their value proposition, the rest fell into place. In the legal world, costs are directly related to time. Lawyers charge by the hour, so to reduce costs, you need to reduce the time you spend on a service or contract. “We also understood that we needed to communicate a price point and what you get for it upfront — this was essential,” says Andrew.

4. Find a model that scales


To then deliver a quality product, the co-founders used the 8020 principle. “We determined 80% of a contract or agreement can be automated, and only 20% needs to be customised,” says Kyle. “We then designed questionnaires that would give us the information we needed to create the contracts, and developed customised software to automate the process.”

Legal Legends now uses in-house lawyers, contracting out to other lawyers when necessary. Through the questionnaires and automated process, the time taken to deliver a fully customised contract is made dramatically more efficient, and pricing is much lower. In many cases, customers are paying less than a third of traditional legal costs.

“We keep iterating by adhering to the ‘build-measure-learn’ feedback loop. Automation and the questionnaires take a lot of time upfront, but once they’re up, 90% of the work is done for each client who follows. It allows us to do the work in-house, charge less, and to earn annuity income, while maintaining the standard of service and expertise we’ve become known for.”

The result is far more repeat business, and a much higher level of comfort for first-time users arriving on the site.

Make it easier for businesses to work with you

A ‘build-measure-learn’ feedback loop has also meant that Kyle and Andrew are continuously looking for additional ways to make it even easier for SMEs to do business with them. One such solution is the introduction of interest-free instalment debits.

“The first instalment significantly de-risks our exposure and reduces our risk, but giving our clients the opportunity to pay for the service in regular debit orders also helps them carry a cost that they might otherwise forgo. We are now capturing the market we wanted in the first place,” says Kyle.

“We remain accessible, but we’ve automated as much as possible without sacrificing on quality, and offer skype meetings over meetings in person. We’re now the custodians of the relationships we build with users of the site, but have found ways to significantly reduce the amount of unnecessary time spent with each client, which has resulted in a completely new cost structure,” says Andrew.

“We wanted to be an Airbnb or Uber that connected the market with service providers. The high-touch, high-trust nature of law was an issue, and our solution didn’t reduce the price point of these services, which was the main focus of the business. To do that we needed to capture the full value of each client, and radically adjust how we do law. An automated free legal health check we’ve designed is a great tool to convert clients, and if we do convert them, we start with information in hand that reduces the time taken to develop the contracts or agreements they need.

“Plus, we can scale the business without increasing overheads — we’ve increased our own capacity and decreased time taken per transaction. That’s the definition of scale.”

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Lessons Learnt

Entrepreneur Magazine Interviews Matt Brown For His 100th Podcast Show

For the 100th edition of The Matt Brown Show, Entrepreneur magazine’s editor, Nadine Todd, sat down with Matt Brown to discuss his journey and lessons learnt along the way.





Welcome to the 100th edition of the Matt Brown Show. If you’ve been listening since the beginning, that’s 100 episodes of incredible entrepreneurs, deeply personal lessons and epic failures and success… and today you get to learn about Matt. He’s in the hot seat for his 100th episode.

I’m Nadine Todd, the editor of Entrepreneur Magazine, and I got to pick his brains, find out about his own failures, find out about the lessons he’s learnt and take a good hard look at the Matt Brown Show and everything he’s learnt, with you, across the last two years.

Let’s talk about entrepreneurs – entrepreneurship sounds glamorous


A few years ago, the most famous names in the world were Hollywood stars. Today they’re Jeff Bezos, Steve Jobs, Elon Musk and Mark Zuckerberg.

The most valuable companies in the world are founder-led. Entrepreneurs are the new rock stars. The problem is that building a company is hard work. It’s lonely.

The road to success is achieved by failing and failing a lot, and too often, we don’t want to talk about those failures.

We know that ourselves in the magazine – It’s hard to get people to discuss the really terrible parts of their journey. It’s hard to get them to look down the abyss and remember that they had to get through that to be where they are today.

Lessons, insights and secrets uncovered along the way

Matt’s show is phenomenal at getting those insights out. I know that I’ve loved listening to his episodes and knowing that, even though I’ve interviewed a lot of those entrepreneurs myself, he’s getting different angle from them, he’s getting them to remember some incredible nugget that they’ve buried deep.

These stories are personal, business is personal, and everything we do and can learn from each other helps push us forward to greater heights.

Related: Insights Of A Highly Successful Venture Coinist

This realisation was at the heart of Matt’s decision to launch a podcast in early 2016. He wanted to focus on entrepreneurs, millionaires, billionaires, and industry experts. He wanted to know what lessons and insights they could share with other entrepreneurs in South Africa.

What secrets had they learnt along their journeys that they were willing to give to you so that you could also take them and make something incredible of your businesses?

I first heard about Matt from one of the entrepreneurs he interviewed, which is pretty much exactly how his profile and the show have grown – through fans spreading the world about this great new podcast that focuses on giving entrepreneurs the information they need, when they need it, through a medium that’s accessible and relevant.

Listen to Nadine Todd, Editor of Entrepreneur Magazine, grill Matt about his podcast, how it all happened and where to next:

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