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Innovent: DJ Kumbula and Zakhe Khuzwayo

Two CAs do it differently when they start an innovative asset management and rental business.

Juliet Pitman

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Entrepreneurial innovation is often not so much about inventing a mousetrap as it is about improving the existing one. ‘Seeing a gap’ doesn’t need to be about coming up with an entirely new idea. Indeed, it is often those businesses that see an opportunity to ‘do it better’ that are really the game-changers, paving the way for others to follow. Just ask Zakhe Khuzwayo and DJ Kumbula, co-founders of InnoVent Rental and Asset Management Solutions.

Seeing the gap

While working together in an IT asset rental company the pair realised there was space in the market for a business that offered something better. As Khuzwayo explains, “At the time many players in the asset leasing market were offering an instalment model, whereby the client ‘leases’ the asset over time, with interest, and essentially owns it at the end of the period – much as people do today when they purchase a car.”

But that wasn’t really leasing at all. “The whole point of leasing is that clients don’t want to own the asset – particularly in the IT market when the rapid changes in technology make products redundant very quickly,” says Khuzwayo. Even those companies that were offering true leasing services were falling short of the mark, and the entire leasing market developed a poor reputation as a result.
Onerous terms and conditions deliberately made it difficult for clients to return leased assets at the end of the contract period, while large ‘damages bills’ hidden in the fine print obviated any potential saving a company might have made by leasing instead of buying the asset. As Kumbula points out, “It was unsurprising that many clients never wanted to renew their contracts after their first experience with a leasing company.”

Rewriting the rules

InnoVent was established to address all of these issues. “Our vision was to provide customers with a better business model, better terms and conditions and a totally transparent and ethical service,” he adds. So began a business journey that started in a single rented room with two desks and a shared telephone. Today InnoVent has a staff complement of 35, owns its own corporate premises, lists the likes of Discovery Health, PwC and Woolworths among its blue-chip customers and has enjoyed a 100% client retention rate in the six-and-a-half years since inception.

It’s this last achievement that gives Khuzwayo and Kumbula the greatest sense of pride. “We needed to work hard to change the market’s perceptions about asset leasing and management in general, and we believe our client retention rate is testament to how well we’ve achieved our initial goal of providing customers with something better,” Kumbula says. The business model offers true off-balance sheet finance for leased assets, along with the security of warranties, replacements and upgrades, and upfront guaranteed buy-back of old assets. The company has placed particular emphasis on making its terms and conditions attractive and client friendly, something that Khuzwayo believes has been a key differentiator. “We’ve built the business on an ethical foundation and because of this, we’ve been able to win clients’ confidence in spite of their initial scepticism,” he says.

Overcoming challenges

That’s not to say that there haven’t been hurdles to overcome. Khuzwayo explains that the sales cycle is a long one – it can take anything from six months to two years to land a significant client. Landing their first client took seven months, a long time for any start-up.

But Khuzwayo and Kumbula aren’t chartered accountants for nothing. What they describe as a “clear, comprehensive and laser-focused business plan with solid numbers” landed them a 34% equity financing deal from Sasfin Bank. “We targeted Sasfin because it’s an entrepreneurial bank, involved in office automation rental, so it understood the value of the business we were proposing,” Kumbula says.  

More recently the credit crisis made it tougher to get financing for assets, but the fact that InnoVent has large blue-chip clients softened this blow to some extent. And the company has diversified. IT hardware accounts for the bulk of its assets, but it also leases motor vehicles as well as yellow metal, telecoms and medical equipment to spread its market footprint. Khuzwayo and Kumbula established Qrent, a fully fledged division of InnoVent, to refurbish previously-rented ICT equipment and sell or rent it on a short-term basis to a secondary market. “This side of the business picked up during the recession as clients sought to save money on equipment,” says Khuzwayo. Looking ahead to the future, he and Kumbula have their sights set on further diversity and growth. “Our goal is to make this a global business – we’re looking at expansion into Africa and beyond.”

InnoVent
Players: DJ Kumbula and
Zakhe Khuzwayo
Est: 2003
Contact: +27 11 884 8274
www.innovent.co.za

Juliet Pitman is a features writer at Entrepreneur Magazine.

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Watch List: 50 Top SA Black Entrepreneurs To Watch

South Africa needs more entrepreneurs to build businesses that can make a positive impact on the economy. These up-and-coming black entrepreneurs are showing how it can be done.

Nicole Crampton

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Early-stage South African entrepreneurial activity is at an all-time high of 11%, according to Global Entrepreneurship Monitor, and entrepreneurial intentions have also increased to 11.7%. With both activity and intentions growing significantly year-on-year, there are more businesses opening up around South Africa than ever before.

The increase in entrepreneurship has seen the rise of more black entrepreneurs across numerous sectors. From beauty brands to legal services and even tech start-ups, these are 50 top black entrepreneurs to watch:

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Watch List: 50 Top SA Small Businesses To Watch

Keep your finger on the pulse of the start-up space by using our comprehensive list of SA small business to watch.

Nicole Crampton

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Entrepreneurship in South Africa is at an all-time high. According to Global Entrepreneurship Monitor (GEM), total early-stage entrepreneurial activity has increased by 4.1% to 11% in 2017/2018. This means numerous new, exciting and promising small businesses are launching and growing.

To ensure you know who the innovative trailblazers are in the start-up and small business space, here are 50 of South Africa’s top establishing companies to watch, in no particular order:

  1. Livestock Wealth
  2. The Lazy Makoti
  3. Aerobuddies
  4. Mimi Women
  5. i-Pay
  6. AfriTorch Digital
  7. Akili Labs
  8. Native Décor
  9. Aerobotics
  10. Quality Solutions
  11. EM Guidance
  12. Kahvé Road
  13. HSE Matters
  14. VA Virtual Assistant
  15. Famram Solutions and Famram Foundation
  16. BioTech Africa
  17. Brand LAIKI
  18. Plus Fab
  19. LifeQ
  20. Organico
  21. 10dot
  22. Lenoma Legal
  23. Nkukhu-Box
  24. Benji + Moon
  25. Beonics
  26. Brett Naicker Wines
  27. Khalala
  28. Legal Legends
  29. The Power Woman Project
  30. Aviro Health
  31. AnaStellar Brands
  32. Data Innovator
  33. Fo-Sho
  34. Oolala Collection Club
  35. Recomed
  36. VoiceMap
  37. ClockWork
  38. Empty Trips
  39. Vula Mobile
  40. SwiitchBeauty
  41. Pineapple
  42. The Katy Valentine Collection
  43. OfferZen
  44. KHULA
  45. Incitech
  46. Pimp my Book
  47. ART Technologies and ART Call Management
  48. Prosperiprop
  49. WAXIT
  50. The Sun Exchange
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How 28-Year Old Entrepreneur Adam Fine Is Leveraging The Global Phenomenon Of Five-A-Side Football

Adam Fine of Fives Futbol discusses how he leverage a global phenomenon and the value of strategic partnerships in business.

Monique Verduyn

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Vital Stats

Nothing about Adam Fine is by-the-book. The 28-year-old entrepreneur describes himself as a slightly big child. He’s the CEO of one of the most exciting start-ups in South Africa, having leveraged the global phenomenon of five-a-side football to start a business that has grown almost as fast as the game itself. Not bad for a venture that was launched with the princely sum of R85 000 — Fine’s life savings at the time.

He started it in 2011, with a strong focus on corporate social investment and making a positive social impact. It was by forming strategic partnerships that Adam really managed to grow Fives Futbol. He’s opened pitches in prime locations that serve both the school and corporate markets, while still being accessible for social impact interventions in local communities.

Related: 3 Local Entrepreneurs Share Their Business Challenges And How They Overcame Them

Pivoting at the right time is key to growth

The challenge:

In the last 18 months, Fives Futbol has trebled in size, and achieved some amazing milestones — it now employs 50 full-time staff, and 80 part-timers. It’s one of the factors that drives Adam, as many of his employees support up to eight family members. It’s now also represented in four provinces and 15 locations around the country. By September, there will be 18.

Quick growth means you have to be able to pivot quickly when things do not go according to plan, and mostly they don’t, Adam says. “If things are not working you should be able to ‘pivot’, to shift your focus. And do it fast. It’s not a sign that things have gone wrong by any means, on the contrary, it means you have the insight to recognise that there is a problem with the assumptions on which you have built your business model. The decision to pivot is a big one, and not something to be taken lightly. It requires you to take a hard look at your reallocation of resources, and to do it with an open mind.”

The solution:

In Adam’s case, construction delays, councils taking their time to approve, or having to put money into rolling out sites as opposed to marketing, means the promotion of a new site will slow down, for example, because the business does not yet have a large marketing budget.

“When we run behind on the construction of a new site, R40 000 can suddenly become R100 000 — but here’s the thing: If a deal comes along that will probably harm your business in the short-term but enable significant long-term growth, sometimes you have to juggle what you have so you can make it work.”

The Lesson: Choose your investors carefully

Fine says he’s lucky to have a solid group of investors that he has cultivated over six years. “Their input is invaluable. They’ll say, ‘slow down’ or ‘have you thought of this?’, ‘have you factored in that?’ The ability to develop a good relationship with our investors has had a significant impact on the success of the company. Over and above money, they provide wisdom, guidance and connections.”

His relationship with his investors is key. While many entrepreneurs make it just about the money, Adam understood something else — he has a pretty cool brand with a great cause behind it. So, while investors are asked for money all the time, he was able to offer something more than just a business idea — alignment. He generated enthusiasm for the ‘why,’ behind the business. Like most of us, it makes investors happy to know that they are helping to make a positive difference.

And while it’s easy to bandy about the word ‘partnership’, Adam has worked hard to make that a reality. He set out to find like-minded people who are passionate about the business and the cause, which is why they are able to serve as great resources for advice and insight.

Related: Richard Branson’s ABCs Of Business

“The best way to ensure that you and your investors have a valuable and lengthy partnership is to make sure that everyone is aligned on the vision.”

This includes Adam’s team. The internal culture of an organisation is vital to its strength and growth. “Without our team we don’t have a business for investors to support — our people are critical to our success. They’re the executors of the vision at the end of the day.”


The Lesson:  The value of strategic partnerships

Much of the growth of Fives Futbol has been fuelled by finding the right sponsorship partners in key industries. To overcome the challenge of a limited marketing budget, Adam has secured sponsorships with big brands like Adidas, Total Sports, Debonairs, and Klipdrift, allowing Fives Futbol to use their access to communities as a marketing platform to derive income as well as scale. And it works both ways.

“Because we have a national footprint and a team of people, we run activations for our partners, which also provides us with an ancillary revenue stream,” he says. “Knowing how to join forces with other businesses has been a key factor in making the business successful. Our strategic partners have enabled the business to leverage their brand to give us more exposure. When it works well, a strategic partnership can be just what you need to speed up the growth of your business.”

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