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Cornastone: Hamilton Ratshefola

From Infrastructure to Services, this IT firm achieves massive growth from annuity income

Monique Verduyn

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Hamilton Ratshefola realised that he had reached a peak in his career when he grew IBM’s public sector business from R30 million in 1995 to R300 million in 1999. At the time, he had spent 10 years with the technology giant, where he started out as a mainframe engineer, then moved onto sales and eventually general management.

A graduate of North West University, Ratshefola had a BCom in accounting and information systems, but a year as an accountant proved to be too dull for him so he switched to IT. “While I was at IBM I completed a great number of training and development programmes, here and in the US and Europe.

A decade later I knew it was time to apply the wide range of skills and competencies I had acquired to developing my own business.”

In 2000, he and business partner Lufuno Nevhutalu took out a second bond on their homes, which they had already paid off, and launched Cornastone. The first order – for R900 000 – came from SA Mint. Within a few months the two achieved R2 million gross profits.

The company started out as an infrastructure provider, selling hardware and software. Today, Ratshefola heads up Cornastone Consulting, while Nevhutalu runs Cornastone Enterprise Systems. Together, the companies turned over R200 million last year, R70 million of which was contributed by the consulting arm.

Clients include South Africa’s biggest telcos, and retailers, as well as several government departments and parastatals. The BMI-T Forge Ahead Black IT Forum named Ratshefola as one of the Top 20 Black IT Professionals in South Africa and he was one of the top five in IT Personality of the Year 2006.

“Starting out in infrastructure was a good move,” says Ratshefola. “When you are a reseller, you quote on a system, the client buys it from you and you drop it off. The services you have to provide are minimal, and it’s easy to break even. That was important when we launched the business as there were only three of us and we needed to get things moving quickly.”

But Ratshefola did not believe the reseller model was sustainable, so he moved into consulting in 2003. “As a reseller if you don’t sell, you don’t earn. If your hardware and software partners decide to change their margins, your business can take a huge knock.

That was why we split the business into two and launched a consulting arm that would bring in annuity income.”The move brought in several big ticket contracts from companies that were keen to outsource their IT application requirements.“This year the services business will amount to over R110 million, with R70 million of that already guaranteed because of signed contracts.

It’s a sustainable business model that complements the enterprise systems side. I am a great believer in selling in advance so that you do not have to start each year from scratch.”The one challenge Cornastone faces on an ongoing basis is that of funding company growth. Ratshefola and Nevhutalu have resisted offers to invest in the business because they believe they have the best growth plans and are not ready to hand over the reins to anyone else.Without private equity, however, says Ratshefola, you have to approach the banks and they are notoriously cautious about funding business growth.

He has overcome this by investing in several complementary businesses and using the business’s own capital to fund further expansion. “We had to use our own cash reserves to fund growth, but that decision has worked out well,” he says. Cornastone’s focus for the next 12 to 18 months is capitalising on its existing customers and expanding the business.

“The demand out there is enormous, but our growth is dependent on finding the skills that will enable us to meet market demands,” Ratshefola notes. He has developed a strong recruitment programme that brings in young graduates every year, training and developing them in line with the company’s high standards.“As direct sellers, we’ve traditionally done very little marketing,” says Ratshefola.

“In the services business is a combination of intellectual capital and the process you develop. We have marketed the company by ensuring that every project we complete becomes a reference site.” 

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

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25 Of The Most Successful Business Ideas In South Africa

Find out who’s making waves in numerous industries and how they managed to differentiate themselves in local and international industries.

Nicole Crampton

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“Disruption is all about risk-taking, trusting your intuition, and rejecting the way things are supposed to be. Disruption goes way beyond advertising, it forces you to think about where you want your brand to go and how to get there,” says Richard Branson.

South Africa has its fair share of innovative and disruptive businesses taking both local and international industries by storm. From cutting edge space technology to reimagined logistics, and innovative business models, here are 25 of the most successful business ideas in South Africa:

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Colin Timmis Says ‘Position Yourself For Success By Starting With The Numbers’

People pay first who they feel pressure from, so people will pay you when they feel pressure from you.

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Entrepreneur Colin Timmis founded South Africa’s first cloud accounting practice in 2011, Real Time Accounting. Then, a few years after being appointed as South Africa’s first Xero partner Colin became Xero Country Manager South Africa. Xero is the emerging global leader of online accounting software that connects small businesses to their advisors and other services.

Related: Pat Pillai On How He’s Helped Over 5000 Entrepreneurs Using 3 Key Steps

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Two 20 Year Olds Reshape Entrepreneur Landscape With New Social Investment Platform

The Merge vision is to become the ‘go to’, digital meeting place for entrepreneurs and investors, and to truly make a difference in the world.

Merge Connect

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It’s no secret that finding the right investor for your venture is a challenge that most entrepreneurs face. The current process of finding investment is one that is outdated, and limits entrepreneurs due to a lack of time, and network that is needed to find the right investor. But, this doesn’t have to be the case in today’s digital society, says Zander Matthee and Brandon Bate, co-founders of Merge.

“By making the Internet the middleman, we are able to connect with each other much simpler and faster than before” was Zander’s response. “We have taken advantage of this, and have created a digital meeting place for entrepreneurs and investors” added Brandon.

Merge is a social platform that connects entrepreneurs and investors. It aims to simplify, refine and accelerate the process of finding investment for entrepreneurs, and the process of finding investment opportunities for investors. From idea to developed, the platform allows entrepreneurs to present a brief outline of their venture to a network of all investor types. While doing this, entrepreneurs are able to browse through, and connect with investor profiles that suit their requirements.

Related: 8 Codes Of Success That Helped Priven Reddy of Kagiso Interactive Media Achieve A Networth Of Over R4 Billion

From Private Investors to Venture Capital, and everything in between, Merge allows all investor types to join. Investors have the opportunity to personalise their feed to suit their investment preferences, and will be able to connect with innovative businesses – that are looking for investment – at their fingertips. Only once there is a mutual interest in each other, are users able to enter a secure private chat where they can discuss further and share documents under the protection of a digital NDA.

The two boys became good friends during their time in high school at St Stithians Boys College. However, it was only in their last year, 2016, that they decided to pursue their dreams and create the platform. They didn’t know how to code, so rather ironically, they needed some form of investment to get the platform off the ground.

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“We knew we had a mountain to climb, but we believed in our vision and that we were really trying to make a difference, and if we could get others to see that, they would be onboard.” said Zander.

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

Chris Peters is one of these individuals that bought into their vision, and became Merge’s first investor. As a successful entrepreneur and part time investor , Chris saw how much value the platform could bring to all entrepreneurs and investors alike. His marketing and strategic background gave him insight into how Merge could play a vital role in a lucrative space, Brand involvement.

“Entrepreneurship and SME development are two key factors that drive economic growth in developing countries like South Africa. That is why brands are currently getting involved, and looking to support entrepreneurs through various means. We have built a platform that allows these brands to successfully market, and execute on the programmes they have created to assist entrepreneurs.” said Chris

Merge was created to assist all entrepreneurs and investors in finding exactly what they are looking for, regardless of age, race, sex, financial position or social status. That is why anybody can sign-up as an entrepreneur. As long as you are determined and willing to work for your dreams. For too long has the investor space been seen as an “elite club for the select few”, and Merge is here to change that. Whether you’ve gotten your bonus at the end of the year and looking for new investment opportunities, or are an active investor, you can sign-up. Whether you’re currently working, or a retired industry leader, you can join as a mentor.

Their vision is to become the ‘go to’, digital meeting place for entrepreneurs and investors, and to truly make a difference in the world.

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