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Derek Thomas from Letsema Holdings on Learning from your Mistakes

How applying actionable strategies learnt the hard way from one business to the next can accelerate your successful growth.

Catherine Bristow

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Vital Stats:

  • Player: Derek Thomas
  • Company: Letsema Holdings
  • What they do: Business starters, transformation consultancy and private equity.
  • Est: 1995
  • Visit: letsema.co.za

Running multiple businesses under an investment holding company hasn’t always been an easy ride for privately-owned Letsema Holdings, and CEO Derek Thomas is the first to admit that growing Letsema’s private equity portfolio has been a challenge at the best of times.

Despite these trials Thomas and his partner, chairman Isaac Shongwe, have grown and developed several successful businesses from the manufacturing of wax microspheres for the global cosmetics industry to base chemicals trading and industrial welding.

We-recommend-tickWe recommend: Anatomy of… Derek Thomas

What’s the secret to multiple business growth?

An unconventional but effective strategy that involves conquering devils and hunting rock rabbits while avoiding the Frankensteins on the road to business success.

Face your devils

While growing and investing in multiple businesses it is inevitable that some will fail while others flourish along the way, and business failure is followed by consequences that business owners are often not prepared to face.

Ten years back Letsema Holdings invested in a greenfield investment when the market suddenly turned, leaving the business in a precarious financial state that could have led to bankruptcy. Instead of avoiding the inevitable, Thomas proactively set up a meeting with his company’s bank to discuss the situation.

“I had to say to the financial institution, ‘here I am, we owe you this money, and we can’t repay it.’” They were impressed, as tracing bad debt often took them up to three years to recover, and they would rack up expensive costs along the way. Some debtors would duck and dive instead of coming clean. Thomas and the bank discussed what they would be able to pay and the company was eventually able to make a settlement.

“You have to stare the devil in the face. Business is a collection of these inflection points and if you run away once from a difficult situation, you will always run away.”

Over-invest in your back office

When he joined his business partner, Isaac Shongwe in 1996, Thomas was given the task of managing the business’s administration. He registered it, ordered the accounting package and handed out the first laptop, but as the business grew he had to hand the function over, with dire consequences.

“A year or two later we owed tax when we thought we were doing well simply because we did not take the time to sort out the back office. This took many years to rectify and gave us invaluable insight – these days we over-invest in our back office and it’s now so effective that we use it as a shared service centre across all our businesses.”

Tiki Taka to build your team

One business under the umbrella of Letsema Holdings has successfully cracked the code for retaining staff without having to pay salary market premiums. The magic formula? Build confidence while developing competence.

“We developed a system that is similar to a soccer technique called ‘tiki taka’. Basically it’s a strategy of receiving the ball, and passing the ball so you can make yourself available to receive it again. Translated into business terms this is a process of receiving responsibility for a role in the business for one year, taking another year to master the role and a third year to hand it over to the next person.”

In a business that hires more graduates than professionals this has allowed for faster upskilling of employees. “It’s a system that allows us to build the confidence of our younger staff while increasing their competence. The output that we generate is incredible given the general inexperience within this team.

Respect the rock rabbit hunter

Your business growth is based on bringing in larger contracts and bigger client accounts, and businesses often celebrate the established staff that bring in the bigger deals. But Thomas has witnessed that this company culture can lead to an alienation of younger employees in the business who might not yet have established their networks or mastered the art of bringing in bigger clients.

Thomas recognises that it is important to respect the younger staff who he refers to as the ‘rock rabbit hunters.’ “If your culture is one of only celebrating the mammoth hunters in your tribe then you will have an unbalanced company. Your business will never succeed because the youngsters will feel alienated,” Thomas cautions.

“Today’s rock rabbit hunter is tomorrow’s woolly mammoth hunter. No employee starts out as a woolly mammoth hunter; rather you begin by bringing in the smaller accounts – hunting rock rabbits – slowly building up to the bigger prey.”

Don’t outsource your salvation

As Letsema Holdings continued to grow, a decision was made to bring in executive leaders with expertise to help take the business to the next level. It was a decision that they eventually regretted.

“We brought in a succession of people who were going to grow us into a much bigger company. One executive turned out to be a crook who defrauded us; another was all talk and no action.

“If you are going to outsource your salvation, and hire the great saviour while compromising on your values and ethics in pursuit of growth, you may end up creating a Frankenstein-type environment.”

We-recommend-tickWe recommend: Before You Decide to Jump Into Entrepreneurship, Do These 4 Steps

The company found that its culture had substantially shifted, creating a divide between the non-performing executives and employees on the ground who were adding actual value to the business.

“We made decisions that we weren’t ready to make. Instead we should have continued to grow our company while building quality relationships instead of chasing after what we thought would be our business saviours.”

Catherine Bristow is the online editor and content marketing manager for Entrepreneur Magazine. She brings to the mix a BJourn from Rhodes University, Honours in Psychology as well as a certificate in Accounting and Commercial Law.

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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.

CEOwise

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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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Vital Stats

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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