Lorraine Goodman didn’t launch Lavenderlane with the goal of becoming an exporter. In fact, she wanted to become a household name in South Africa as a top-quality brand in the natural healing products space. She thought exporting was expensive and therefore unreachable.
This perception changed when she was introduced to the Cosmetics Export Council for South Africa (CECOSA) in 2016. “I discovered that the Department of Trade and Industry (dti) assists small cosmetic manufacturers to exhibit at international beauty expos, to look for distributors, buyers — everything you need to get started. On top of that, CECOSA helps with all the documentation you need,” Lorraine explains. And just like that, exporting Lavenderlane’s products became a real possibility.
Accessing international markets
On the one hand, Lorraine still can’t understand why South Africans don’t support local products. “I know 35 other small cosmetics brands that will tell you the same story,” she says. “If you do manage to get into a big retailer, you often wait 90 days for payment, which many small businesses can’t afford.”
After ten years of being in business, exporting opened a whole new world of opportunities for Lavenderlane. “I’ve been blown away by the opportunity that the dti has created. I’d rejected the idea of exporting because I didn’t think I could afford to exhibit internationally. Instead, it’s a simple process, with a lot of support. I spent so many years wanting to throw in the towel. On my first trip to Australia I almost couldn’t believe what was happening.”
Since that trip, Lorraine has travelled to India, Dubai, Kenya and Saudi Arabia. “I’ve discovered that other countries love South African products because we’re known for our quality. As a rule of thumb, it takes three trips to the same country to secure a distributor. You’ll also find countries where your product just clicks. For us, that’s Dubai and Kenya.”
Focus on exporting
In early 2018, Lorraine received a key piece of advice from the owner of a well-known local brand: Put every cent you have into exporting your products.
“She’s been operating for more than twenty years and has almost lost her business three times, and this is the lesson she’s learnt. In her experience, South African consumers shop on price, which means Chinese products will beat our local offerings. It’s extremely difficult for local manufacturers to rely on South African sales as a result.”
Lorraine understands the reality of South Africa’s financial situation. As a business owner, she’s adjusting her model accordingly.
If you’re interested in exporting your product, Lorraine has some key advice. First, ensure your potential buyer or distributor is legitimate. “You’ll often be asked for sole distribution rights, but there is fine print involved,” she says.
“Do all of your paperwork properly. There are a lot of people who will guide you through the process but there are also no shortcuts. In the beauty and cosmetics industry, you will always find CECOSA at beauty expos, but there are many export councils. Find the one in your industry. The dti is also always at industry expos and will guide you in finding different countries that suit your product.”
In addition, Lorraine advises that you ensure your product is far superior to anything that your potential clients already have access to.
Succeeding as an exporter
Most markets suffer from the same problem: Everyone is inclined to do the same thing, which floods a market. Add to that a tight economy that often purchases on price alone and doesn’t always support local manufacturers, and exporting your product might be a viable growth strategy — provided you understand the landscape. There’s also a wide range of funding available for businesses that want to explore this route.
Theresa Möller, executive director of CECOSA, unpacks what you need to get started.
1. Choosing the right market for your product
There are two key secrets to choosing the right market for your product. First, is there product acceptability, and second, does the country import more in your category than it exports?
“The first thing we ask our members is why they want to target that country,” says Theresa. “What’s the benefit to them? Have they done their research or are they just aiming for the biggest market? Big isn’t necessarily better if the product/market fit isn’t right.”
According to Theresa, too many business owners focus on the size of the market and exchange rates instead of their products and where they will be well-received. “There are also higher requirements when you’re targeting the US or Europe, and meeting those requirements comes at a cost.
“Within Africa, the requirements for product listing are much lower than international markets, and if you comply with South African requirements, you already comply with most of Africa. The barriers to entry are therefore lower than Europe and US, where you need CE and FDA markings respectively. The costs and time involved are huge.
“You might be earning euros, pounds or dollars, but the return on investment might still not be worth it unless you’re a higher-end product.”
One area that manufacturers must consider is the ingredients they use. “We have members who use goat’s milk, yoghurt and even crocodile oil in their products. You can’t send crocodile oil to Europe and Australia. They’re both very vegetarian and vegan-dominated markets and animal-based products don’t perform well. Saudi Arabia and Dubai on the other hand are perfect for those types of products.”
Theresa’s advice is to look at the stats. “It’s a pointless, costly exercise to go into a market that is exporting more than it’s importing of your line of product. We, like all industry councils, do a lot of market research through our foreign offices. Research firms also exist. The data is out there — you just need to tap into it.”
What you’re looking for in particular is import parity: Every product has a tariff number. Find your tariff number on Stats SA and IT Trade Map’s database — and the local equivalent in the country you’re researching — and then see how much of your product is imported from South Africa to that country, and how much is exported from that country into South Africa.
“If they’re exporting more than they’re importing, it’s not a great product/market fit. They’ve flooded their own market and need to get rid of excess product. If it’s the reverse of that, but they’re only importing 10% from South Africa, then you need to look at world statistics and extrapolate from there.
“You’re trying to determine if it’s a good market for you. If, for example, you’re looking at the UK as a potential market, and the UK exports 10% to South Africa, but 80% to Europe, then this is not a market that they see. They do however see potential in Europe. Why? Start researching that market.”
Before you look across the ocean, however, Theresa advises looking a bit closer to home. “From a logistics point of view, the closer the market is to you, the lower the freight and logistics costs you’re incurring.”
2. Be as cost-effective as possible (without sacrificing quality)
At the end of the day, all manufacturers are competing with Chinese imports, so cost is an issue. “You can be cost-effective and still offer quality products,” says Theresa. One way many manufacturers — particularly start-ups — achieve this is through joint ventures with bigger manufacturers and by outsourcing to contract manufacturers.
“There are high start-up costs to manufacturing, particularly in our industry, which requires pharmaceutical evaluations and specialised equipment and ingredients,” says Theresa. “Smaller businesses that are linked to larger manufacturers can start producing and trading while they build up their cash reserves, until eventually they are large enough to manufacture on their own, if they choose to do so. Many companies continue to outsource production to contract manufacturers.”
The good news for business owners who choose to start manufacturing themselves is that there’s a lot of funding available to assist them in their initial set-up costs.
“Once you’ve built up cash reserves and you’re ready to start manufacturing, you can join a buyer park, like Riversands Incubation Hub or the Innovation Hub. Funding then helps with rentals and equipment, although there is a time limit — business owners are expected to ween themselves off the funding.”
3. Get assistance
With government funding and assistance comes paperwork and bureaucracy. It’s a time-consuming activity and you must understand the process. “This is a big barrier, and one we encounter all the time. So many business owners don’t understand the documentation — and why would they? This isn’t their area of expertise.
“The reality is that you can’t just ask for money. You need a growth plan, a development plan, a business plan, and a marketing plan. You need to understand the industry and why you need funding. You need to be able to demonstrate what you want to achieve, what growth you expect and your long-term view. You need to answer every ‘why’ and ‘how’ the funder might have. What is your intention with this business and why? What do you want to achieve? How many jobs are you wanting to grow? You need to provide a one-year plan, three-year plan and five-year plan. Bear in mind, most government funding doesn’t require equity and either doesn’t need to be paid back at all or is interest-free. That’s why the process is so thorough and often arduous.”
Fortunately, this is one of the reasons export councils exist — they are the experts in the processes and paperwork that government funders require.
“Too often, paperwork goes backwards and forwards for six months because it’s not done correctly, until eventually the business owner just gives up. It’s not necessary to do this alone. We have service level agreements with provinces, reserves and resources of provinces to assist our members in that area. For example, if Western Cape growers, farmers or manufacturers need assistance in logistics, funding for a show or expo or training, we send them to our partner in that province. There’s a lot of assistance available if you know how to tap into it.”
This assistance includes money for advertising, banners, promotional material and even a business or marketing plan. It’s all there — you just need to do the legwork and fill in the paperwork.
“We also host weekly training sessions for start-ups. They’re free and any member can come and spend the day with us to learn how to do market research, complete documents, what incoterms are (this is the set of rules that define the responsibilities of sellers and buyers for the delivery of goods under sales contracts), contracts of sale, export licences, and basically what all these terms mean. You’ll lose your business if you don’t understand them — particularly if you’re planning to export your goods.”
4. Find a buyer or a distributor
Just as you need an export licence, which you receive through the SARS customs office, your customer needs an import licence, or your goods won’t be allowed off the ship.
“You can find a distributor through expos and market research. Sole agents are expensive and a lot rests on you, from market research to supply advertising material and managing them on a day-to-day basis. Distributors on the other hand should already be plugged into the industry with retail contacts. They do business based on a distribution fee that is usually between 10% and 30% based on product volume and pricing.
“A distributor also has a warehouse and distributes your product as part of their overall offering. To choose the right distributor, look at their product mix. You want to choose someone who has the right connections and who you can train on your product, but who isn’t also distributing a competitor product. You want a deal in place that promotes volume — the more they sell, the higher their margins, for example. You can also give extra product as an incentive if you can’t discount on your margin. Make sure you know exactly what you need to make from each sale so that you can give clear pricing and discounting directives. There’s a balance between incentivising your distributors and ensuring you make the margins you need.”
According to Theresa, if someone offshore wants to do business with you, you need to start with a credit check. “Do some research on them. Are they a legitimate company? You want proof of banking details, company documentation and registration documents.”
You need a fool-proof contract that details your distribution agreement and includes your landed price, your selling price, your three discounted prices and any other selling criteria.
“Pricing is critical and will be based on your market research. What pricing will your target market tolerate? Can you make the margins you need or does it make more sense to walk away? If you have a higher-end product that can ask for more, can you afford the level of advertising you’ll need to do? Can you justify your price? These are all points to consider.
“And if you’re wrong, withdraw from that market and look for other markets as quickly as you can. As soon as you discount, you become a commodity.”
If you find you’re priced incorrectly for your market of choice, you can try to find a way to cut costs, possibly through slight adjustments to your ingredients. “Perhaps you don’t use the ingredients or components you wanted, which allows you to come in at a slightly less expensive option that the market still wants. You can offer leather uppers in shoes for example, instead of 100% leather. There are a lot of ways to adjust costs.
“If you can’t adjust your costs, you need to market or promote your products heavily. The dti offers primary market research funding, based on approval, at an 80/20 ratio — they give you 80% and you cover 20% of the costs. They want you to have skin in the game.”
5. Market your product
There are many ways to market your product internationally. If you’ve gone the distributor route a lot of this will rest on them, but you can also get involved through social media channels.
Theresa’s advice is to always ride on the back of the success of high-end multi-nationals. “If the likes of a L’Oréal or Proctor and Gamble have just done a whole promotion into Kenya, opened a new company and sold some great new products, go onto your social media and give them accolades. You’re sharing the good news: ‘L’Oréal has just opened in Kenya, shouldn’t South African products be focusing on this great market? Maybe our product should be in Kenya too’… by using a multinational, you’ve just promoted your product and company.
“Too many brands do the exact opposite. By giving recognition you’re actually placing your brand and Brand South Africa on an almost equal footing with multinationals.”
Theresa’s advice is to always ride on the success of the world’s biggest brands. “When we do research for our members, one of the first things we look at is where the multi-nationals are, how long they’ve been there, and whether they’ve opened their own factories or are only supplying into another entity there. This gives us a benchmark because they’ve already done the homework.”
Exporting is not a quick fix for growth or poor local sales. It requires a strategic intention to implement, and dedicated efforts in assessing the potential in export markets. It’s therefore important to commit to the process.
That said, there is a lot of assistance available to businesses interested in exporting their products. If you do want to tap into these options, however, you need to ensure you have all the detailed information at hand that will be asked of you, and this means you need to have covered all of your bases.
Nadia Rawjee, director of strategy and finance at Uzenzele Holdings unpacks the seven key steps to becoming export ready.
Select and research countries and potential export markets
- Desktop research: Understand different countries and how the markets work by reading industry news and papers, trade data and other material online.
- Field research: Given the ability to connect with global buyers through digital and electronic means, a fair amount of research can be done from the office with email, video-conferencing and other tools to connect and communicate with prospective buyers before even setting foot on a plane.
- If you’re already exporting to a specific country, ask yourself, “how can I strengthen the market?” Can you look into the wider region?
Export readiness assessment
- Are you in a position to finance your export endeavours for a period of 12 to 24 months without necessarily generating any immediate income?
- Do you have any prior experience in exporting, or do you have experts that are able to assist you?
- Is your firm established and successful locally?
- Are you competing well with imported products?
Obtaining finance for your exports and managing FOREX risks
- You’ll need to budget time and money to research, promote and become export ready and then you’ll need to be ready to finance the export orders and manage exchange rate risks.
- Make use of the dti’s export marketing incentive EMIA to assist you exhibit and promote at up to six tradeshows per year
- Promoting your products in foreign markets
- Make a hitlist of ten or more prospective buyers, agents or distributors of your product.
- Advertise and promote to potential buyers before leaving the country and make use of tradeshows to seal the deal.
- Promoting your products in a country should be well planned, and exhibiting at trade shows in foreign markets allows for your product to be on display.
Selling in foreign markets
- Sell through local distributors or agents who have access to the buyers of your products.
- Pricing must take tariffs, marketing and distribution costs into account.
Handling, export logistics and paperwork
- Deciding between air, rail, road or sea is dependent on various factors, including the weight of your product, the infrastructure available both in South Africa and in the destination country which will affect cost, distribution lead times, the value of your product and the life of the product.
- With all these options, and more, it’s best to have a freight forwarder that has experience in transporting your type of product to the destination country to ensure the best logistics solution and that all paperwork is in place.
Collections and international receipts
- Remember that there are different monetary regulations in various countries, including tax considerations.
- There is also a significant amount of paperwork attached to the process of receiving payment from foreign countries.
- When researching countries, assess whether there is liquidity or if getting money out is a challenge — this is particularly important when exporting into developing markets.
For those already exporting, being more focused and deliberate about expanding your markets, making use of financial support — such as EMIA — and exposing your business networks to exports will show growth in your business and is a crucial element to the growth and re-industrialisation of the South African economy.
- You must be an export registered company
- You must have traded for 12 months in South Africa
- Your products must be acceptable, conforming to the requirements of your industry
- You must be a local manufacturer or a trader of locally manufactured products
The dti’s Support includes:
- Cost of the exhibition stand
- Freight of samples to the expo
- Plane tickets
For a full list of South Africa’s export councils, visit www.thedti.gov.za/trade_investment/export_organisations_contacts.jsp
Designing Her Destiny
Oh Yay! owner, Emmerentia van den Hoven does business her way.
In 2011, Emmerentia van den Hoven took a leap of faith when she decided to leave her graphic design job at an agency and pursue her real passion – and it has paid off tenfold. Here’s her story.
“When I started planning my own wedding eight years ago, I fell in love with wedding design and wanted to do that for the rest of my life. Designing for brands had become a set of rules rather than being creative, and I’d always wanted to work for myself. So, in September 2011, I turned my seven-month-old side gig into a fully-fledged business and launched Oh Yay!
I have to hustle every month to get new clients because every client will use my services maximum twice – first for the wedding invitations and then for the stationery on the day – so I don’t normally have returning clients.
Because my main business is seasonal and usually once-off per customer, I have branched out into branding for small businesses in the beauty and lifestyle industry. I also earn a passive income through the Oh Yay! online shop where I sell wedding décor items. Oh Yay Kids – my other online store – is my passion project. I launched it just before my second child was born, adding items to the store that I made for my two boys when I saw a need for it. I then expanded into prints for nurseries and kids’ party stationery.
I work for myself and have no employees, so the fact that QuickBooks lets me load all my services, products and prices in one place makes running my business so much easier. Being an entrepreneur is difficult because you don’t know if you’ll be successful or not. But if you believe in and love what you’re doing, it reflects in your work and the service you give.”
Less admin, more of what you love
When Oh Yay! was launched, along with her dream of being an entrepreneur, came the nightmare of other administrative tasks. But that changed in 2018 when Emmerentia started using QuickBooks.
“When I was using spreadsheets to balance my books, I was spending 80% of my time on admin, which left very little time to tend to customers’ orders. I now spend no more than 25% of my time on admin, which is important, especially when it comes to the speed at which I send quotes. You don’t get any work if you don’t send out quotes and it’s tough to juggle the admin with your actual job of running the business.
Numbers were never really my strong point, so having a professional quote done in record time not only projects professionalism, but the format also changes the way new clients see me. In my industry, the quicker you can send a quote out, the likelier you’ll get the clients’ business. It gives legitimacy to my business. The QuickBooks system operates so seamlessly that clients communicate with me differently, like I have my own accounting department, when in fact, I’m a one-woman-show.
I used to dread doing admin, but now it’s so easy and quick. I’m not just saying this – QuickBooks changed my life.”
Watch List: 50 Black African Women Entrepreneurs To Watch
These female entrepreneurs are breaking barriers, transforming industries and inspiring change on the continent.
From creatives, to tech gurus and medical scientists, here’s how these African women have revolutionised their communities through their innovative and sustainable businesses:
- Portia Mngomezulu
- Nandi Dlepu
- Nthabiseng Ramaboa
- Ntombenhle Khathwane
- Sunshine Shibambo
- Mogau Seshoene
- Nontando Molefe
- Thato Kgathlanye
- Nothando Moleketi
- Allegro Dinkwanyane
- Sandra Mwiihangele
- Shakeela Tolasade Williams
- Reabetswe Ngwane
- Mabel Suglo
- Lucy Agwunobi
- Patience Maame Mensah
- Rachel Sibande
- Nneile Nkholise
- Nelisiwe Masango
- Sheila Afari
- Samke Mhlongo
- Kelebogile Mabunda
- Aisha Pandor
- Karabo Mathang-Tshabuse
- Zanele Matome
- Shingai Nyagweta
- Funke Bucknor-Obruthe
- Vere Shaba
- Khanya Mzongwana
- Portia Masimula
- Monalisa Molefe
- Nozipho Dube
- Rapelang Rabana
- Botlhale Tshetlo
- Lebo Mphela
- Sarinah Matema-Morgans
- Tsholo Wesi
- Theo Mothoa-Frendo
- Palesa Sibeko
- Mokgadi Mabela
- Sibongile Sambo
- Tam de Vries
- Constance Mapule Bhebhe
- Phendu Kuta
- Linda Mabhena-Olagunju
- Nobesuthu Ndlovu
- Regina Luki Kgatle
- Hlengiwe Vilakati
- Lilian Muhammed
- Bonolo Mataboge
Starting a business is not for the faint of heart, but that didn’t stop these 50 women from doing it. Across the continent, women have pursued entrepreneurship, some for the very first time at 50 years old, while others have never even been formally employed.
Owner Of Nouwens Carpets Shares Success Lessons From Running A 50 Year Old Family Business
Embrace technology every chance you get.
A company that’s been active for more than five decades in an industry that’s hundreds of years old doesn’t sound like a recipe for innovation — and yet that’s exactly what Luci Nouwens, owner of Nouwens Carpets, is focused on.
The modern carpet has a history that goes back thousands of years. And despite the hipster trend of reclaimed and hard wood flooring, the carpet still remains a popular choice for consumers.
In South Africa, a name that’s synonymous with quality carpeting is Nouwens. When Cornelis Nouwens arrived in the country in the 1950s, bringing the skills of a trade which he had mastered alongside his father in Tilburg, the hub of the Netherlands’ wool textile industry, he passed on the skills and the love of the craft to his family and to workers in the Harrismith region in KwaZulu Natal.
More than 50 years after her father started it in 1962, the company remains family owned, and is headed by Luci Nouwens, who has been with the business for 48 years.
“We have maintained our reputation for premium quality all this time by paying meticulous attention to crafting standards and selecting only the finest raw materials,” says Luci. “Equally important is that we have innovated at every opportunity, embracing technology without ever compromising the traditional craftsman’s spirit.”
Innovation drives growth
Businesses that innovate are able to grow and hire more employees. As a result, they grab a bigger share of the market. That’s true regardless of the size of your business: If you innovate, you can scale up.
In 1968 Nouwens launched a pure karakul wool carpet that was extremely hard wearing and took the company into the commercial carpet market. Luci recalls the manufacturing of the carpet as “a major feat of unique textile engineering.” Another innovation in 2005 was the introduction of a totally new style of flat weave wool carpet, a very clean, minimalist and natural look requiring much less wool without compromising on wearability.
“These innovations are just two of many that have allowed the business to boost its market share over the years,” says Luci. “But beyond that, innovation has enabled Nouwens Carpets to form the backbone of economic activity and upliftment in the local community around Harrismith. This has allowed us to make substantial investment in providing education and skills development for the local population, to ensure that the craft is preserved for generations to come.”
Innovation enables sustainability
Innovation in technologies and how they are applied is key to enabling a manufacturer like Nouwens to create new business value, while also protecting the planet.
“We have used technology to enable sustainable manufacturing, for the benefit of the business, the community, and our customers.”
Nouwens selects equipment, materials and manufacturing methods based on their degree of sustainability and protection of the environment. The company is also a member of the Green Building Council of South Africa and submits its products for VOC testing to ensure that harmful emissions are significantly reduced.
“Ultimately, we are driven by a passion for textiles and the ability to constantly find better ways to produce beautiful products. After the downturn in the economy, we started to produce more cost-effective commercial nylon yarns, and in 2017, we became the new kid on the block for synthetic grass. The bottom line is that a true entrepreneur does what has to be done when the time comes.” — Monique Verduyn
The role of disruption in creating value
A disruptive business is a business that challenges and potentially changes the status quo. From a mindset point of view, a culture that questions ‘why’ can help foster organisational and market disruption. But disruption for the sake of disruption is self-defeating, it needs to be on the back of making things better and based on commercial principles, i.e. people or market players actually wanting to be disrupted.
The starting point is this: Does someone, or a market, value what you’re producing? If the answer is yes, you have a commercially viable disruption. Disruption that is valued by its target market has the best chance of resulting in success.
Get that right and you’ll have a customer base, you’ll gain traction and you’ll attract investors, provided you’re also making a meaningful and sustainable difference to your target market or community. — Ian Lessem, CEO, HAVAIC Investment and Advisory Firm
Team up with customers and competitors.
There’s more power in collaboration than competition. We’re stronger together than when we’re apart. When it comes to working with competitors, consider this: They may have something that you don’t, or vice versa, and 50% of something is always more than 100% of nothing. You’re then positioned to add value before you add an invoice, so your clients benefit from your relationships, and the market wins. From there, you become your client’s go-to-person, because you’re putting them first.
Customers are also a great source of knowledge: They might just have the answers you’re looking for, but are you asking them the right questions? They often know more about an entrepreneur’s business than they know themselves, because they’re on the receiving end of your offering. One way to collaborate with customers is to ask them more questions about yourselves, themselves and their clients. Harness their perspective and develop yourself to give them what they want, not what you think they want. — Wes Boshoff, founder, Imagine Thinking
Know what your audiences are interested in
As a brand, there are many ways to ensure your audience is paying attention to you, but you can’t expect them to find you unless you’re sharing content that captures their interest. If you send out press releases, don’t be too rigid or plain. Audiences want to be engaged, and not to have to deal with long, cumbersome information. An infographic, along with a video or pictures will make your release easier to ingest and more memorable. People don’t want boring figures, they want relatable stories.
One way to be relatable is by tapping into influencer marketing. This doesn’t mean you need celebrities with the highest followings to endorse you. Micro-influencers are proving to have just as much clout as those with larger followings. Evidence shows that micro-influencers have a more established and deeper connection with their audience, which translates to loyalty and a readiness to follow their advice. The trick is to find the micro-influencers who are speaking to the audience you want to reach.
Big data plays a key role in painting a picture of who is ‘out there’. With the right information, you can tailor your content to a specific audience. Big data can show you what topics and problems are trending in your industry, so that you can get the jump on them. Use big data to deliver your own insights on current topics, shaping and leading the conversation, converting your audience’s attention into action. — Madelain Roscher, founder and managing director, PR Worx and Status Reputation Management