During 2000, the IT space was not an easy one to operate in. Companies had just experienced the vagaries and expense of Y2K and dot.coms were turning into dot.bombs faster than you could say ‘megabyte’. And yet, Nkosinathi Khumalo, co-founder of Mthombo IT Services (M-IT), his brother Lucky and friend Eben Clynsmith, chose that period to start what is arguably the top BEE IT company in the country.
Launched in Johannesburg with just seven people, today M-IT has a nationwide presence, employs over 280 people and lists SARS, AngloGold, Telkom, HP, the CCMA (Commission for Conciliation, Mediation and Arbitration) and some of the major casinos as its clients.
It’s an Impumelelo Top 300 Company and in 2004 it was voted the Top Black IT Company. Riding the wave of its success, M-IT last year merged with EOH, one of South Africa’s largest consulting, technology and outsourcing companies listed on the JSE’s software and computer services sector.
The company is proof that, as Nkosinathi Khumalo puts it, “Where there is crisis there is also opportunity.” Making the most of the opportunities that existed meant strategic targeting of services and potential customers. An in-depth analysis of the IT space in 2000 led the founders to focus on meeting the day-to-day servicing needs of clients as a multi-vendor service provider.
“We went for the ‘boring’ services, the ones we knew everyone would need. And we also knew that out of the 250 IT companies registered with the DTI at the time, there were only three black-owned ones in services,” says Khumalo.
“It wasn’t a unique start-up recipe but it was about being in the right place at the right time and understanding what customers had just gone through with Y2K. They’d spent a lot of money on it and wanted someone who could maintain and support the systems they had bought.”
Khumalo says that once M-IT was set up, careful targeting of specific prospects played an important role in getting the right clients; the team knew exactly who they wanted to sell to and went for quality instead of quantity.
“We targeted people who had mission-critical systems and who thus wouldn’t mind paying slightly more for excellent service. Businesses with 1 000 or more users would give us the right size clients and we also wanted those with a national presence as we had developed a nationwide footprint that could offer standardised and centralised servicing in different geographical areas,” explains Khumalo.
As CEO, Khumalo also headed up sales. “Sales is a probability game,” he says. “You need to get out there and talk to people.” Fortunately the people he targeted were experiencing problems with their IT systems and welcomed anyone who could solve their problem.
But where most salespeople do all the talking in meetings, Khumalo sat and listened. “When you’re selling services, the best thing you can do is ask one question about what problems the prospect is experiencing and then keep quiet, listen and take notes.
In the first two meetings, you might not say very much at all about your company but all the while you are gathering information pertinent to that particular client so you can formulate a solution that fixes their problem,” he says.
Targeting these clients was one thing. Signing contracts with them was another. “One of our biggest challenges initially was that we didn’t have a track record,” says Khumalo. But in spite of the challenges, the members managed to get clients to give them a chance.
More than that, they convinced clients to pay them upfront. “Cash is king when you’re small and this was one thing we didn’t budge on. When you’re in services, you need cash to pay salaries and we had to be paid upfront in order to survive,” he says.
It meant that they had to turn away some business, but in the long run the strategy paid off. “We kept good company by affiliating ourselves with credible multi-nationals like HP and Dimension Data and we never, ever compromised on quality,” he adds. “We also stayed focused. Throughout our years of growth, we’ve stuck to what we do best.” Following its recent merger, M-IT looks set for even greater successes.
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.
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:
- Livestock Wealth
- The Lazy Makoti
- Mimi Women
- AfriTorch Digital
- Akili Labs
- Native Décor
- Quality Solutions
- EM Guidance
- Kahvé Road
- HSE Matters
- VA Virtual Assistant
- Famram Solutions and Famram Foundation
- BioTech Africa
- Brand LAIKI
- Plus Fab
- Lenoma Legal
- Benji + Moon
- Brett Naicker Wines
- Legal Legends
- The Power Woman Project
- Aviro Health
- AnaStellar Brands
- Data Innovator
- Oolala Collection Club
- Empty Trips
- Vula Mobile
- The Katy Valentine Collection
- Pimp my Book
- ART Technologies and ART Call Management
- The Sun Exchange
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.
- Player: Adam Fine
- Company: Fives Futbol
- Est: 2011
- Visit: www.fivesfutbol.co.za
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.
Pivoting at the right time is key to growth
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.”
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.”
Watch List: 15 SA eCommerce Entrepreneurs Who Have Built Successful Online Businesses
The advent and advancement of the online marketplace has led these entrepreneurs to successfully build and grow their ecommerce empires.
South Africa’s ecommerce market is worth R10 billion per year. By 2021, the number of online shoppers is expected to have reached 24.79 million.
“Our recent research on SA shows people are browsing three hours or more on their mobile phones and 25% shop online. They trust local brands,” says Geraldine Mitchley, Visa senior director for digital solutions in sub-Sahara Africa.
These entrepreneurs have cashed in on ecommerce and launched successful online stores that have either established their dominance in the market, or are taking the e-tailing world by storm.
Here’s how these 15 ecommerce capitalists are making money using the Internet:
Start-up Industry Specific2 months ago
How Do I Start A Transport Or Logistics Business?
Snapshots9 years ago
Habari Media: Adrian Hewlett
Snapshots2 months ago
27 Of The Richest People In South Africa
Types of Businesses to Start2 months ago
11 Uniquely South African Business Ideas
Support for Women Entrepreneurs2 months ago
10 Successful SA Women Entrepreneurs’ Top Advice On Balancing Work And Family
Entrepreneur Profiles2 months ago
10 SA Entrepreneurs Who Built Their Businesses From Nothing
Types of Businesses to Start2 months ago
10 Business Ideas Ready To Launch!
Lessons Learnt2 months ago
6 Of The Most Profitable Small Businesses In South Africa