Answer by Tiisetso Maloma:
Im only becoming a success is business now. I have failed a lot. Part of the failure was because i marketed to everyone and that is expensive, it let me to closing my clothing business (gabble heights). I had exhausted all the money i had on marketing.
What seems to be working now is, in all my businesses, the model is: identify who is likely to buy my product, i then give them a priority based on who is likely to buy the quickest.
The ones with high priority are those i approach first. That is where cash flow comes from. This leads to my businesses being sustainable and with repeat customers. Im able to grow with cash flow coming in.
I was giving a talk a few weekends ago at an Inspiring Women event. I spoke of the ‘importance of starting small in business. One of the examples I related was on what can be learned from how township businesses are started.
There are a number of reasons someone in the township starts a business. The exemplary world view is a mother starting a business out of the need or desperation to feed one’s family. Be it as it may, ‘passion to enterprise’ is fast overweighing the desperation to make ends meet. People are being exposed on how to offer great value even when in a dire situation.
Township business is sometimes looked down on, but it practices brilliant concepts which anyone can use to start and grow their business. However they the township businesses forget to grow and progress further on the very principles.
After the talk, 2 groups of people came to me asking further on the teachings of township business. They found the concept very enlightening and helpful.
Normally when township businesses are started, the startup products are either strategic or ‘passion products’.
What I mean by strategic is, the business owner realises there is a gap in his surrounding market. It could be he/she believes he can sell colder soft drinks than the nearest shop or that his neighbours travel far to get soft drinks.
By neighbours, I mean it in an African sense, LOL, not neighbour in the proximity sense.
A passion product is, for example: the lady starting the business could be good in making artchar or baking – so she decides to enterprise on the skill. Normally when people are passionate about something, they make sure it’s good. They have an advantageous edge on regular competition.
Ok, how they would start is, they would start with smaller quanties of stock, then add more with the proceeds to grow the business. In modern entrepreneurship definitions, this is called bootstrapping. The business is grown by funding its own growth. Isn’t this awesome, it is less risk on own funds.
Ever asked the new spaza shop down your street to sell airtime or anything you need which they don’t stock? This is it, customers will then advise the shop owner/keeper who only sells soft drinks or artchar to add something that would of convenience to them. This is called validation.
It is an easy transaction, customers are advising what to stock and they will buy.
- If you start small, you learn more with minimal investment. Of course we know of a timer who got their pension money and invested it all into something he calls a hotel but things don’t quiet work out. So they lost out big as they went in big.
- The experience which you gather informs you of where to re-invest your proceeds and invest your savings – WISELY.
So, there is hope for even businesses which are started out of desperation to feed one’s self or family. Validation and bootstrapping are important to grow any business.
Whenever the economy is not going so well, I often observe the blame being laid on consumers. To the contrary, I believe we South African consumers do save. I understand the reserve bank has to curb things or encourage them, by stepping in now and then.
To farce a bit, my cousin is still waiting for my response on an invitation to join their ‘wedding fund’ stokvel. You see, South Africans save. I speak for my black community, I don’t totally know of white folks. Definitely Indians save.
Below are some reasons I say South Africans save, some are a bit outlandish, but I will interject with reasons as to why.
1. We pay high taxes
Personal tax in SA is to the maximum of 40%, which is a lot. If we don’t regard these taxes as savings, then our conscience towards the value of money and saving is flawed. And other various forms of taxes: VAT and stupid ones like etolls.
Actually, how many cents in every R1 taxed is lost to corruption and inefficiency?
The government is a like a collective kitty, a communal wallet. These are savings in that the money is supposed to go to our overall benefit, like free education and health. Us paying these taxes means we are saving towards the services.
I wish our minister of health Dr Aron Motswaledi all the speedy best in implementing the National Health Insurance.
We pay for various forms of insurance such as for education, life and funeral.
3. Buy property
The other South African dream is the owning of a house. People are buying houses. It is a saving.
You pay rent, someone receives the rent. The house is saving for them, it is insurance. They invested/saved in an asset which ensures they can receive an income from.
They then use the rental income to get by, i.e buy other insurance forms like life, education, shares in companies etc.
This is a saving of course, no doubt.
5. Buy shares in companies
Not just BEE shares, South African do actually buy shares. It is a saving as well, a risky one but still a saving. The rise of forex training companies cements this.
These savings we are encouraged to make or sometimes lambasted for not making, to where are they supposed to get us to? They make it seem like consumers are some radical spenders (ohh maybe yes). Given the savings I listed above, what are South African consumers supposed to do after saving in the above ways? Of course they finna spend – on Christmas trees, chicken and Edgars.
Speaking of Edgars, have you seen the many premium brands they have added, economists are going to hate Edgars even more for making us spend even steeper. Maybe this explains why Edgars has announced it will lay off more of its staff. I guess it doesn’t expect men and women over 40 to sell premium products.
Given the stokvel savings, what are the savings supposed to do? Isn’t just saving enough? So what if I am going to spend my stokvel savings on buying tin of beans in bulk at Makro? I don’t see how it improves the economy, besides that I would save on bulk buys. Is it what savings are spent on that is more important than the act of saving?
For contextual clarity, let me add foreign investors in the picture
When a foreign firm announces that it will invest $X billions in South Africa, we jump with joy. The important detail is: is the firm investing in extending their product reach to South Africans? If so, it means, (context) they are hoping to make 10 times billion from South Africans, this is money out of South Africa. I have no gripe with this form of investment, ok. It provides South Africans with jobs, to make money for the foreign company (it is a corny statement I know, but it is what it is, it is a good thing still – job creation is important).
But now, say a particular firm (say a venture capitalist firm) comes to invest $X hundred thousand in a South African owned startup, this is better than the above. It is better because, the practicality of the transaction is a South African owned firm is boosted to maybe increase its reach to more South Africans and hopefully the world. when the startup grows from the investment, the profits will be split between the owners who reside here and the investing firm’s country. It is favourable because all the money is not taken out of South Africa, we get to keep some, and if the startup negotiated well, we keep the majority.
The 2 types of investment yes create jobs, but the latter is favourable as it makes sure our home held equity reserves (profits) stay in the country. Jobs are created and with the profits, more money remains home, which can be used for local consumption (boosting other industries) or for investment. Even if the investment is made in foreign lands, their profits will come back to South Africa.
Back to us and saving
We are a saving nation, as I have self fulfillingly established.
The understanding is, jobs are created when resources (money being one of the resources, and we have it in savings) are placed on entrepreneurial opportunities.
We have the savings to place on these entrepreneurial opportunities, but we are not doing so. Again venture capitalists are not in their plenty placing money on our start-ups/businesses/entities/companies.
Maybe we do not have start-ups which compel even our own money (savings) or foreign VC money. As an entrepreneur myself, I have to say yes there are a few compelling start-ups, I work with some of them.
Do our labour union investment wings invest in local startups? I’m just asking.
The savings we make through stokvels generally fund our consumption activities, not investments.
We need as a country, to create a foundation for young entrepreneurs to start businesses of compelling value. When I say compelling value I mean, businesses which are not compelling because they are proudly made in SA by a South African, but because they honestly intrigue interest in consumers to own them and/or use their value – here and beyond South Africa.
For instance, when a South African loves All Star sneakers, it is out of pure fascination he/she finds in the shoes. Also, when an American loves All Star, it is out of a similar fascination as the South African. It is not because they are proudly American shoes. Yes to an extent the geography of ownership of the brand counts, but the overriding fascination is the intrigue of the shoes and/or how the shoes look on them.
When the foundation is laid, trust me, stokvels and insurers will be investing in such businesses. Again, as a South African entrepreneur who is exposed to the entrepreneurship streets, the foundation exists, it is building up. It needs some form of exposure. Maybe someone has to lobby for the connection of these start-ups and our country’s savings. Lobbying is a tough job. But who?
I’m just not a good networker. I envy those guys who have the skill to speak to just anyone, like my good friend Paseka Kalaku. I suck at introducing myself to lots of people at one event. What is to follow is how a mediocre networker like me manages to more than just mange at networking.
The other night I was in Robebank, I bumped into a good guy by the name Suede. This dude is a great connector. After greeting him I wondered why I felt gratitude towards him. I remembered that he once referred my then clothing label ‘gabble heights’ to participate in an African Fashion International event, without him knowing me personally then. The mileage from that event was awesome.
I guess Maya Angelou was right when she said: “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
He added value to me and I’m forever grateful, and I’m sure in the future I can add value to him too.
With having the concept of adding value in mind, let’s go to the next part…
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I’m sure you are going to attend a lot of networking events this year, with the aim of attracting good contacts. And I’m sure in the past or still now you collect a lot of business cards there – 7 to 10 or more, right?
When you get home you do email these folks, just to say hi or whatever. How many do reply? Not a lot a right? All that effort! It hurts.
A mentor of mine keeps saying you know you have made it when you don’t reply to all emails. I guess he is talking about mails from guys like me.