When South African childhood friends and later entrepreneurs Thato Kgatlhanye and Rea Ngwane finished high school, they knew they wanted to start something that impacted young people and underprivileged communities.
Related: How to Crack Social Entrepreneurship
At age 18, they founded Rethaka, a social enterprise they hoped would do just that, although it would be two years before they figured out how.
“Yes, it is a bit funny that you would register a business without a business idea,” notes Kgatlhanye. “But at the heart of it we actually wanted to do great things. And when the idea of the Repurpose Schoolbags came to us, we worked on it tirelessly.”
Repurpose Schoolbags is an environmentally-friendly innovation made from ‘upcycled’ plastic shopping bags with built-in solar technology that charges up during the day and transforms into a light at night. The initiative targets school children in underprivileged communities and looks at addressing a number of problems.
Firstly, the bags allow them to study after dark in homes without electricity. Secondly, the bags are designed with reflective material, so that children are visible to traffic during their walk to and from school.
The production of Repurpose Schoolbags also involves the collection and recycling of plastic bags that typically litter the South African landscape.
Introducing a sustainable solution
The first eight months of last year were spent piloting the schoolbags, followed by producing 1,000 bags from August to December.
The company currently has eight full-time employees in their factory in Rustenburg, but Kgatlhanye says they will employ an additional 12 people this year in order to meet their production target of 10,000 bags for 2015.
One of the ways the initiative gets its schoolbags to these children is through targeting corporate social investment budgets where companies can sponsor the production of bags. Each bag costs R250 (US$20), and covers the cost of employee wages and production, so the initiative can remain sustainable and continue to grow.
Another model is to produce bags for delegate packs at corporate events where delegates can then choose to give the bag to underprivileged children after events. The company has already gained some major clients, including the likes of Standard Bank and PwC.
According to Kgatlhanye, there is room to develop additional products along the same idea, such as raincoats. However, she added this is something the team will think about at a later stage, as they are still trying to ramp-up production of the schoolbags and expand to other communities.
More ‘social’ than ‘entrepreneur’
While the co-founders (now both 22) have to think like entrepreneurs to ensure the business remains sustainable, Kgatlhanye says becoming an entrepreneur was almost a by-product of Repurpose Schoolbags. She admits that as a kid she never dreamed of owning her own business. “That is not my story.”
However, from a young age she did realise she wanted to have a positive impact on the society that surrounded her, a trait she owes to her upbringing and particularly her mother.
“My mom cares about people like you wouldn’t imagine… so I grew up in an environment where I was always conscious of actually caring for other people and having a sense of empathy,” she says.
“And thank God I had that upbringing – where I could understand there are people out there that don’t have as much as I do. And that if I find creative ideas on how to give them what it is they need, then we could both be fine… and brave the world [together].”
Alternative sources of funding
Kgatlhanye describes her business journey as “instinctive” and has learnt some great tips that can help young entrepreneurs grow their business without capital.
For starters, she believes there are alternatives for funding that don’t require involving investors, with the trade off of giving away equity in the business. For example, Kgatlhanye has benefited from a number of mentorship and entrepreneurship programmes.
She was selected for an internship in New York with marketing guru and American best-selling author Seth Godin, and was picked as one of 18 South African social entrepreneurs to attend the 10-day Red Bull Amaphiko Academy last year. Furthermore, she was also selected as the 2014 first runner-up of the Anzisha Prize, where she won $15,000.
“My advice is simple: Bootstrap and find competitions to enter your business idea into,” she highlighted during an online Q&A session on the Anzisha Prize’s Facebook page earlier this year.
“Firstly, it is a great way to get free business support and advice. Secondly it’s a great networking opportunity to meet high-profile business people – who usually judge these competitions – and potentially get mentorship from them. Finally, if you end up a winner, you will not only get a cash prize but also get some PR out of it.”
However, most importantly, Kgatlhanye advises young entrepreneurs to trust their gut and admits that she has decided to lose mentors in the past simply because they shared different visions.
Separating business and friendship
“One thing that’s key is when you form a business partnership with your friend, act as though you met that person that day,” noted Kgatlhanye.
“So you can’t say because you’ve known your friend since grade 4, you’ll work well together in business. No – you have known them since you decided to start a company together. So get to know your business partner as a business partner, not as a friend, because business and friendship is a different ball game.”
Another trick that proved beneficial for the co-founders was to get a business coach to help them get comfortable in their business relationship.
“And I think that’s the best advice. Get a business coach, be honest, leave the ego at the door and hustle.”
AlphaCode Awards R16 Million To Fintech Start-ups In One Of SA’s Richest Start-up Initiatives
This R2 million scale up accelerator offers mentorship, expert guidance and support services to help these more established businesses to scale and create jobs.
Last night, Rand Merchant Investment Holding (RMI), through AlphaCode, awarded entrepreneurial packages valued at R16 million to eight of South Africa’s most promising financial services start-ups. The entrepreneurial packages consist of R1 million in grant funding and R1 million in support, which includes mentorship, monthly expert-led sessions, exclusive office space in Sandton, marketing, legal and other business support services as well as access to the broader RMI network.
The AlphaCode Incubate initiative, in partnership with Merrill Lynch South Africa and Royal Bafokeng Holdings, identifies South African financial services entrepreneurs with extraordinary ideas and businesses that could impact the financial services industry. More than 200 start-ups applied to participate. Of these, sixteen made it to final pitch evening and eight recipients were selected.
The eight winning businesses are:
|Akiba Digital||A gamified mobile app making it easier and more rewarding to set, manage and meet savings goals.||Tebogo Mokwena and Kamogelo Kekana||https://bit.ly/2yOjYoX
|ISpani Group||Provides access for insurers into traditionally under insured communities through prepaid vouchers and USSD sold by a network of spaza shop vendors.||Prince Nwadeyi, Khathazile Moroe, Patrick Machekera and Louis Buys||https://bit.ly/2CrgbkE
|Jamii||De-risks tenant rent default through offering tenants incentive-based discounts on food and transport and bolt-on retrenchment cover.||Adrian Taylor, Marc Maasdorp and Bartek Dutkowski||https://bit.ly/2ytdc8F
|Nisa Finance||An invoice financing platform that enables financiers to issue invoice-backed loans to SMEs quickly and affordably by fully-automating the application and invoice verification through ERP system integration.||Thando Hlongwane, Tekane Ledimo and Sinqobile Mashalaba||https://bit.ly/2yptcIW
|Pago||A low cost mobile micro payments platform for the informal sector to enable an inclusive economy by digitising remittances through the use of blockchain technology.||Philip Mngadi and Noel Lynch||https://bit.ly/2S1QKvn
|Prospa||A mobile savings wallet for low-income earning South Africans that makes it easy to save small amounts infrequently using prepaid vouchers.||Dhanyal Davidson and Carl Ngwenya||https://bit.ly/2JbwbJf
|SELFsure||Enables millennials to significantly reduce car insurance premiums by self-insuring part of the risk via peer to peer lending.||Proud Chitumba, Amos Mugova and Tshepiso Shamane||https://bit.ly/2J6HVfV
|Yalu||A self-service credit life insurance platform which replaces a customer’s current policy with a more affordable, simpler and rewarding policy.||Nkazi Sokhulu, Tlalane Ntuli, Steve Goeieman and Life Mhlanga||https://bit.ly/2PH87QF
The programme has disbursed R13 million in funding to 15 black-owned financial services businesses since it began three years ago. “Some have experienced exponential growth and we have been amazed at the level of traction they have received locally and internationally. The intention behind AlphaCode’s Explore, Incubate and Accelerate programmes is for RMI to discover the next OUTsurance or Discovery; we want to identify, partner and grow the future of financial services in South Africa,” says Dominique Collett, head of AlphaCode and a RMI senior investments executive.
During the event, contestants had just three minutes to pitch their businesses, with a couple of minutes set aside for questions from a formidable panel of judges. These included Phuti Mahanyele, CEO of Sigma Capital; Raymond Ndlovu, investment executive, Remgro; Nakedi Ramaphakela, finance director, Royal Bafokeng Holdings; Anthony Knox, MD Investment Banking of Merrill Lynch South Africa and Dominique Collett.
Julie Benadie, regional executive of Operations and Corporate Affairs at Merrill Lynch explained: “We believe in supporting disruptive ideas so that creative fintech solutions will emerge to address the challenges that South Africa faces. We want South Africa to become a fintech centre of excellence with its already advanced financial services infrastructure.”
The AlphaCode Incubate programme deals with common challenges that financial services startups face. All participants are early stage businesses, under two years old and at least 51% owned by black South Africans.
“AlphaCode is also now also seeking additional fintech entrepreneurs for our Explore programme. This offers a 12-month data science and business skills programme for 20 aspirant South African fintech entrepreneurs in conjunction with The Explore Data Science Academy,” Collett added.
Candidates will go through an intensive six-month data science-training programme, where they will learn how to design a 10X business along with the core digital skills needed to build a fintech organisation. This will be followed by three-months of business skills training. Interested fintech entrepreneurs should apply at www.alphacode-explore10x.club by 30 October 2018.”
In addition, AlphaCode recently selected four more established fintech businesses for its Accelerate programme: Entersekt, Livestock Wealth, Click2Sure and Invoice Worx. This R2 million scale up accelerator offers mentorship, expert guidance and support services to help these more established businesses to scale and create jobs.
The Sky Is The Limit For South Africa’s Top Women Achievers
High-powered women achievers from across the private and public sectors, academia and diplomatic spheres gathered for a charged two-day conference in Johannesburg this week to share experiences about empowerment, achievement and the role that women are destined to play in a competitive global environment.
Several hundred women attended the 15th Annual Standard Bank Top Women Conference which, with the Top Women Awards, has become one of the premier events for women on the national calendar. The objective of the gathering at the Maslow Hotel on the 17th and 18th of October, was to showcase the achievements of South African women and reignite their passion as they have major roles to play in all arenas of endeavour, says Ethel Nyembe, head of Card Issuing at Standard Bank.
“The delegates to the Top Women Conference were inspired by speakers such as Yvonne Chaka Chaka, singer, songwriter and an entrepreneur in her own right; Phuti Mahanyele, executive chair of Sigma Capital, a black-owned investment group, and political and academic stalwart Geraldine Fraser-Moleketi, now Chancellor of Nelson Mandela University and other women who are playing leading roles in many of the nation’s listed blue-chip corporations.”
“The overall message is that women are playing a central role in growing all facets of our economy and are helping to build a future from which other women can benefit and, in turn, inspire others. Women, regardless of whether they are entertainment icons, professionals engaged in helping shape the minds of future generations, businesswomen or scientists are part of building a new global reality.”
To inspire delegates about the breadth and depth of the future for women, the conference examined all facets of economic life from the impact that IT and scientific research is having on building businesses, through to the development of entrepreneurs and leadership skills. Insights were offered through the contributions of speakers and roundtable panel discussions in which leading women offered observations and advice gathered from their vast experience.
“Standard Bank is proud of the role it has played in enabling women achievers to reach their full potential within its ranks. The bank also recognises that women across society have a broad role to play in the future of South Africa. It is through support for events like the Top Women Awards and the Top Women Conference that this approach is made visible and tangible.”
“We expect this year’s conference deliberations to deliver insights and inspiration that will not only spur established women to new heights of achievement, but also stimulate young women starting new careers,” says Ms Nyembe.
The Ins And Outs Of A Good Exit Strategy
The thought of parting with a business you’ve grown from the ground up may be unsettling, but Gugu Mjadu, spokesperson for the 2018 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, says that it is better for both your business and yourself to plan for this as early as possible.
“The challenge that business owners often face in this respect is comparable to the difficulty that many new parents have with imagining their children grown up and leaving for university. Imagine, however, if parents did not plan ahead for the cost of their education – that would be detrimental to the future of their children. The same could be the case for your business.”
Mjadu says that a good exit strategy is about sustainability and being able to measure your business performance against the goals you have set for it. “It’s really about being able to say, ‘this is when the work is done and I can exit the business or take on a different role – this is what success looks like in terms of monetary return on investment and other business growth indicators’.
“The lack of an exit strategy could be telling of a fundamental lack of measurable business goals and this needs to be addressed,” she says.
From immediate liquidation to liquidation over time; family succession; selling to staff or external investors; the open market or another business; or the gruelling but profitable exercise of taking your company public – there are many different ways in which an entrepreneur can exit their business, but Mjadu says that whatever the process, a strong and solid strategy is essential.
She shares five key points of a good exit strategy:
1. It tells you when you are done
Mjadu says that a good exit strategy should reflect a core understanding of all the intricacies of your business and should be able to tell you when the lifecycle of your business (or of your involvement in the business) should come to an end. This is usually done by including a set of tangible measurables or objectives so that it is easy to ascertain when these have been achieved.
2. It sets out the right environment within which to exit
A good exit strategy considers the economic, social and political environment at the time of your exit. Mjadu says that this is important in order to plan for a secure financial future.
“Failure to think about this could result in short-changing yourself by exiting during a tough economic climate when the risk to buyers reduces the value of your business.”
She references the case of Victoria’s Secret when founder, Roy Raymond, sold the failing business for $1m unknowing that it would later grow into the multi-billion dollar empire it is now. “While Raymond’s exit was ultimately necessary for Victoria’s Secret’s growth, he sold it in 1982 during the global recession of the early eighties – one of the world’s biggest financial crises and this influenced the selling price at his exit”.
3. It compensates those who have contributed to the life of your business
It is important to consider the impact your exit could have on investors and staff, says Mjadu. “Closing shop for example, means that your staff no longer have employment at your business. Selling could mean the same.” She adds that it is important to consider ways in which your exit could also benefit these stakeholders – for example, selling to a bigger business could mean more career opportunities for your staff, as well as continued job security.
4. It compensates you
Mjadu says that entrepreneurs often struggle to recognise their own true worth, especially when this involves attaching a monetary value to what has been achieved. “The time of exiting a business is no place to short-change yourself. You need to get out the full worth of what you put in,” she says, explaining that this means ensuring that you are financially secure before and while you go into your next venture.
“Your needs for retirement and medical insurance, as well as the maintenance of your living standard, should be met at your exit.”
5. It sustains your entrepreneurial drive
Mjadu says that while you may be nearing the end of one journey, your exit should enable and encourage you to continue to be an entrepreneur – and to look forward to the next journey. “Your entrepreneurial skills and capacity do not end when you exit your business and whatever your strategy, it should egg you on to more entrepreneurial activity including becoming a mentor to aspiring entrepreneurs.”
Mjadu says that exiting your business should allow you a good retrospective look at what you have done over the years – and so planning the strategy early on in your business lifecycle will set you up in regards to what you hope to achieve. “Upon exit, you should be able to say that you have done what you set out to do, financially and socially, and you have some energy left to do more elsewhere.”
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