Author: Webmaster

Creating opportunities in the face of adversity

Posted on by Webmaster

Winner of the Job Creator of the Year award 2011

Pierre Conradie

Pierre Conradie, founder and director of the Alpha Group, was the recipient of the prestigious 2011 Job Creator of the Year Award at the annual Entrepreneur of the Year® awards ceremony. Creating employment for 1 200 people in the rural area of Hluhluwe, KwaZulu-Natal, no one was more deserving of the title.

Pierre Conradie had a dream – he envisioned a multi-faceted company 25 years ago, the Alpha Group, which encompasses Alpha Security and Patrols as the group’s core, since this was his longest-standing business having been operational for more than 11 years. Alpha is the first letter of the alphabet and, according to Pierre, no other name signified a better beginning for the group.

But the Alpha Group is not where Pierre’s entrepreneurial skills set in. He was always business-minded with his first experience in entrepreneurship starting when he was just 8-years-old selling fruit at school. “Never give up!” Pierre emphasises. “Never lose sight of the fact that you are as good as the people that work for you, therefore surround yourself with people that are willing to go beyond the call.

“I have a diploma in Agriculture, completely unrelated to the security industry, but I will quote Sun Szu author of The Art of War when I say – leadership is a matter of intelligence.”

Servicing all clients

Many companies claim to be a one-stop shop but none rings more true than with Alpha Group. The company is a one-stop shop in its own right, servicing everyone in the security arena ranging from household security to business security concepts, security solutions, monitoring, response and installations, and nationwide offsite video monitoring tracking services. The organisation prides itself on also being an intelligence collection company that provides Intel to various stakeholders. And if that isn’t enough, the group has the following on offer under its umbrella:

  • Hluhluwe Arms & Ammo: a retail business
  • Wetlands Engineering: a vibrant business that provides various engineering solutions, mainly specialising in the sale of fleet and other vehicles
  • CIS Investigation and Security Services: providing security solutions and services including cash-in-transit Intrax Investments: property development in and around the Hluhluwe area
  • Hluhluwe Properties: deals solely with the sale and rental of properties in and around the Hluhluwe area

“Over and above everything, what makes us unique is that we source the right personnel, and we offer tailor-made solutions,” Pierre explains. “And we are able to do this because everything our clients’ need is housed under one group.”

Apart from been a successful businessman, Pierre is also successful in his personal life, especially to have his wife, Sanet, support him in his entrepreneurial venture from the get-go. “I sold my wife’s car and used the proceeds to start my first business,” he recalls. “What other wife would be that understanding?

“I try to spend as much time as possible with my wife and kids, Pierre Junior and Dawie. We support the kids in all aspects they undertake and always ensure that both of us or either one of us is present when they participate in any event.” Dad is also happy to mention that Pierre Junior made the family proud when he won the 2009 SA National Off-Road Motorcycle Senior 85cc Championship.

When asked how it felt to win the first-time ever Job Creator of Year Award, Pierre modestly replied: “It is humbling to see how many people’s lives are impacted by this group of companies. I think that is what entrepreneurship is all about – not just helping yourself but also helping other people.”

An epic success

Posted on by Webmaster

Winner of the 2011 Emerging Entrepreneur of the Year® and the Innovation Award

Founded in 2009 and already ranked the 7th largest public relations and communications company in South Africa, it’s comes as no surprise that founder and managing director of Epic Communications, Elian Wiener, walked off with two coveted titles at the 2011 Entrepreneur of the Year Awards: Emerging Emerging of the Year® and The Innovation Award. Here’s how it all began…

Elian WienarIn less than three years, Epic Communications went from a zero client base to currently more than 25 retainer clients – the vast majority of which are blue chip companies such as Old Mutual, Aon, DuPont, Nedgroup Investments, and WesBank. “When I started Epic Communications, I knew it was crucial to attract high quality staff if I was going to have any chance of securing any major clients; all of whom are traditionally reluctant to outsource to a one man show,” says Elian, who managed to grow the business to one that now employs more than 20 staff in both Johannesburg and Cape Town. “The vast majority of public relations agencies in South Africa focus on the consumer sector i.e. restaurants, celebrities, FMCG, etc, while very few have the technical ability to be able to provide communications services to companies looking to showcase their intellectual capital and position themselves as thought leaders to their respective target audiences.”

But Elian, who had all the skills and experience necessary to fill this gap – thanks to his position as head of external communications at Old Mutual – approached the market with a well-constructed business case and plenty of belief. A man on a mission, he then went on to seek out a few key personnel – all of whom are still with the company and have benefited in many ways, including financially.

The difference?

Apart from offering its clients strategic communications and public relations services, Epic Communications is also involved in a number of other initiatives, including a joint venture to produce INVESTA, one of South Africa’s leading publications for the investment industry, as well as the launch of its investment seminars – attracting over 150 investment professionals and featuring some of the leading figures in the industry. And if that’s not impressive enough, the company also runs Epic Journalism Training Seminars that are aimed at improving the technical skills of local business journalists.

“From a public relations perspective, our key advantage is that we ensure we have an in-depth understanding of our clients businesses and the industries in which they operate,” explains Elian. This, he reiterates, is crucial to being able to identify opportunities to communicate their key messages and engage with their target audiences. “In most cases, we are generating virtually all the content on behalf of our clients, from press releases to newsletters to social media posts and responses. We are also extremely focused on delivering communications that are geared towards assisting our clients achieve their business objectives and put measurables in place to gauge our performance on these criteria.” And, of course, the company’s strong media relationships and journalists also play in its favour.

But Epic Communications is unlike the average company that operates on a specific set of guidelines and rules. It is constantly evolving to adapt to the ever-changing times, and one of these changes includes the addition of the Epic Social Media Division in late 2010, which currently runs a number of social media and online reputation management campaigns for clients. “I set myself a target of consistently generating four to five new innovations and ideas per month. Of these, I target 75% to be implemented successfully within a three month time period. Some may be small operational ideas, such as better ways of reporting to clients, while others may be extremely big picture ideas such as new business units,” Elian explains. It is clear why the EOY judges saw him deserving of the Innovation Award.

Being married to an entrepreneur

“Owning your own business requires a huge amount of focus and commitment, so my wife (who recently launched her own business) and I, accept that there is not a lot of room for socialising or partying, although we do try to get out from time to time.” Elian, who has a degree in marketing and finance as well as an Honours degree in Corporate Finance and Investments from WITS University, is married to – as he describes her – “a very energetic wife” and they share an equally energetic two-year-old daughter. Despite the sacrifices that the couple has to make for their respective businesses, they also realise the importance of taking regular breaks. “We try to go on holiday at least twice a year. This year we spent a week in northern Italy in June, which was really fantastic,” he adds.

Before taking the leap toward entrepreneurship, Elian believes that it’s important to ask oneself three very important questions:

  • Is there a gap in the market for the product or service I want to provide?
  • Do I have the necessary skills or ability to build or attract the skills that are required to deliver my service or product?
  • Am I passionate about the industry I want to operate in.

If you can answer yes to all these questions, he concludes, then the rest of the challenges can be overcome.

 

Property mogul shines at 2011 EOY

Posted on by Webmaster

Lennin Marule

Tshidiso Lennin Marule, director of Marule Property Developement Holdings, describes himself as “relentless”. With a hand in the property, construction and mining industries, people might say that he’s biting off more than he can chew. But Lennin doesn’t agree, and winning the 2011 Entrepreneur of the Year® Small Business Category Award is testimony to his success.

The old adage ‘behind every successful man is a woman’ is not entirely correct. In the case of Lennin Marule, his wife was anything but pleased when he announced that he was quitting his well-paid job to start up a business. “She was nervous and rightfully so but she is happy now and supports me fully,” he says.

When Lennin started out in the entrepreneurial world, he proceeded to buy up accommodation in Witbank, monopolising the area and even securing a deal with Eskom. “The money I received, I used to venture into other businesses. For example, people had mining rights but did not have the finances to operate in the mining sector, so I invested in this industry.” Lennin has experience in both the property and construction industries but his vast knowledge was not spread across mining; and he currently has experienced people working for him on this aspect of the business. All his businesses operate under the Marule Family Trust.

The property game

According to Lennin, the driving force behind Marule Property Development Holdings’ ongoing success is the exceptionally stable core team of dedicated professionals, most of whom have more than 20 years’ experience in their respective disciplines. Each employee is well-trained and has a passion for quality. Catering for a wide range of property owners, both local and provincial, the company specialises in the design and building of multi-story residential properties. Situated in Witbank, the company is renowned for its commitment to deliver signature developments of high quality that deliver above-average investment returns.

In addition to construction, the company is involved in the sale and purchase of development property. Where appropriate, specialised development teams have been set up to assist with the ongoing marketing and sales of development opportunities. Marule is also venturing into the building of hotels, guest houses, flat, commercial buildings and offices. “We are looking at expanding our accommodation base to Pretoria. With regard to the mining sector, it is a new investment and I will have to analyse the turnover. But I have a good team that will help me to expand. For now, there is a dire need for accommodation in Pretoria, Johannesburg and Polokwane, and I will be focusing my energies there.” Lennin has people employed to monitor the accommodation sites every day, especially buildings that house students. He has regular meetings with the approximate 42 staff members in order to remain hands-on. During those meetings, says Lennin, decisions are made and the staff then goes back and implements these decisions.

Apart from concentrating solely on the bottom line, Lennin and his team are constantly involved in social responsibility initiatives and strive to make a valuable impact in the community by donating funds to the local churches and welfare groups; availing the Villa Shalom Hall to residents for church services; making the guest house available at no cost for church-related seminars and meetings; and donating toward school fees and funeral services for Marule company employees.

Accolades and accreditations

Marule has been a client of Business Partners for the past six years. Apart from winning the small category in this year’s Entrepreneur of the Year® awards, Lennin was also nominated by Business Partners as Entrepreneur of the Year® back in 2007. As winner of the KZN/Mpumalanga region, he participated as one of the three finalists and was named runner-up. In the same year, Lennin was also the recipient of the Old Mutual/Rapport Small Business of the Year Award.

The company is registered with the Estate Agent Affairs Board, the National Home Builders Registration Council (NHBRC) and the Construction Industry Development Board (cidb).

When opportunity knocks, answer it

Posted on by Webmaster

Winner of the 2011 Medium Entrepreneur of the Year® award

Being results-driven, setting achievable goals and loving what you do is, according to Troy Carelse, CEO of Foaming Concepts, the secret to running a successful business.

Troy CarelseFoaming Concepts is a manufacturing company that converts a product called flexible polyurethane, which is used as a raw material to produce premium bedding, lounge suites and office furniture. Started by CEO Troy Carelse in 2006, the company is situated in Wadeville, Johannesburg, and prides itself on quality workmanship, competitive pricing and lead time. ‘Foaming’ is attributed to the core of the business’s manufacturing activity and ‘Concepts’ refers to the business’s innovative way of producing flexible polyurethane foam and the manner in which it services its clientele.

Carelse studied towards a diploma in mechanical engineering and holds a business management diploma from the Henley Business School (UK). A qualified fitter and turner, he has been in the industry for approximately 13 years, and was previously employed as managing director at Loungefoam – a subsidiary of Steinhoff Holdings International. “I had seen an opportunity in the market that had not been targeted i.e. supply of flexible urethane to the independent manufacturers of bedding and lounge suites, as I felt they were being held ransom by existing suppliers due to the controlling market,” he explains. “This meant that certain buyers of flexible urethane such as Restonic, Serta, Simmons, etc. previously had to purchase this product from Vitafoam (a subsidiary of Steinhoff), and they also had to compete with companies such as Edblo and Sealy – also owned by Steinhoff. During my time at Steinhoff, I had felt that this arrangement was unfair and, when I saw an opportunity to set up a foam manufacturing company to service these independents, I grabbed it.”

According to Carelse, what makes Foaming Concepts unique in this industry is based on four important factors, namely:

Price – Because of our low overhead structure, we believe we can offer the most competitive price.

Lead time – Even with this lean team, we still have the ability to service customers within one to two day periods.

Quality – Our quality of the product is on par with the latest in Europe as our manufacturing equipment has been sourced abroad.

Innovation – We are actively involved with our customers by assisting them with re-engineering of their products and processes in order to achieve better efficiencies and costs in their businesses. “I firmly believe that in any successful company, your key asset is the stakeholders that support you and the relationships that you have with them. This includes employees, clients, suppliers and shareholders,” he reiterates.

Staying motivated

Carelse is happily married to his wife of 25 years, Ursula, and they have two sons: Dane and Grant. He creates a balance between his career and personal life by always setting aside time for his family when returning home from work. “My bonding time includes activities such as playing golf with my sons and socialising with friends and family. The strength that I draw from my family support system is what motivates and drives me.”

“Looking at myself,” he continues, “my advice to other business owners and entrepreneurs is the following: I think one has to be results driven and therefore setting realistic and achievable goals is important. A good business plan is key to any successful business.” He goes on to mention that developing the skill of problem-solving and decision-making will certainly lead to some success, as will the ability to communicate effectively. “Measuring and quantifying is vital – you cannot manage what you cannot measure – and good leadership qualities are also a necessity. One has to lead by example,” explains Carelse. “But over and above, I believe that a good value system such as honesty, accountability, commitment, loyalty and a positive attitude, also contributes toward success.”

Massage on the beach: yes please!

Posted on by Webmaster

Mark Vella, MASSAGE ON THE BEACH, 2011 finalist

A simple but effective menu of massage on the beach: 20, 40 and 60 minutes – back neck and shoulders, and 20 minute legs. Dr Mark Vella, owner and founder of MASSAGE ON THE BEACH (MOTB), situated in Camps Bay, will give you one more reason besides the mountain to visit Cape Town.

Mark VellaAlso contracted for corporate, destination management and home-based massages, MOTB has been operational since 2002, and was started by Mark who has a health and fitness professional background before becoming a registered Doctor of Natural Medicine with the Allied Health Practitioners Council of South Africa. He also has his Honours in Business Management from the UCT Graduate School of Business and is currently completely a programme in Functional Medicine.

“I have been involved in smaller business ventures prior to MOTB but this is the first of its kind,” he says.

“You could say that MOTB became my ‘MBA’ in social entrepreneurship. The name was chosen to simply reflect the core service and our unique selling point (USP).”

MOTB was bought out of a combination of critical circumstance and opportunity.

“We had a five year delay in our registrations with the AHPCSA and I needed to earn income just to survive and keep my property. It was tough times,” Mark explains.

“A friend –a beach trader – recommended me to an opportunity through the Cape Town city council to trade massage on the beach. Honestly, at first I thought it was below me, but this was just a temporary stop gap.”

Within a couple of years, the business model completely shifted his paradigm and became a vehicle of personal transformation. “I began to see the vision for something much greater than myself. Now, I am grateful for the events that led me on this path.”

Unique business model

MOTB is internationally-renowned, having served over 8 000 clients from over 72 countries. In turn, the company supports the Hand-up Hands-on Apprenticeship Opportunity (HuHo) – a unique, free skills development programme that affords students working at MOTB the opportunity to earn while learning, through a 4-module training programme. One might assume that the company’s USP is simply that they are based on a beach. But MOTB has taken that one step further.

“First,” explains Mark, “our massage is often said to be the best you will get in South Africa. People often think that a beach massage cannot be as good as a luxury spa one. And we use that exception to our advantage. Our house protocols are trained weekly with a focus on the client-centered experience and needs. This leads to a massage brand style that is different and unique. Spas offer a luxury we cannot. But we offer a massage that you will not forget.”

But what really makes MOTB particularly special is the business model it uses. The joint venture between MOTB and HuHo is a symbiotic relationship – HuHo facilitates the apprenticeship and formal lessons at no charge to successful applicants.

This year the programme runs from roughly September 2011 to May 2012, commencing with a two month training orientation, followed by modules in self-development, business acumen and personal strategy. The programme includes in-service training, reading lists, weekly lessons, assignments, and small business projects. In turn, students gain practical work experience at MOTB – earning as they work. The revenue generated by the students allows MOTB to fund and facilitate their apprenticeships.

“It is a one-of-a-kind, rare, sometimes crazy and beautiful opportunity that will change their lives,” says Mark.

“We don’t contribute to Corporate Social Responsibility (CSR). Rather CSR is at the heart of our business model. And yet we don’t trade on it. Instead we focus on the quality and value we offer through MOTB. Visit us and we challenge you to find a better beach massage experience – anywhere in the world.”

Mark believes that his business model can be a socially innovative one, adopted by all companies in South Africa. This means that South African business can contribute to developing young South Africans who are responsible, critical thinkers, compassionate, emotionally intelligent, and effective – going far beyond the traditional SETA apprenticeships.

“We are a boot-strapped business. With virtually no assets, we generate over R250 000 in just 150 days. Additionally, we give ten people free education and skills transfer; creating value for more than ten stakeholders – all at no cost to the city or government,” Mark explains.

“If the business could go national, in five years, we could have 30 installations nationwide, graduating over 400 apprentices.”

Coping with the stresses

But running any business, even if it is based on a beautiful beach in Cape Town, is always a challenge. MOTB and the HuHo programme operate in a dynamic, physical environment, and the business is still in its developmental stages. Despite the pressures that trying to kick-start a business in a recession can bring to the home-front, Mark still holds family and personal health on his list of top three priorities.

“I have a fiancé and a 5-month old daughter who mean the world to me. Spending time with them, letting them know how important they are, is essential. Their love and support makes all the difference to me. Living within your means and appreciating what you have rather than bemoaning what I don’t, has helped me tremendously. I always keep the communication lines open with fellow business mentors, colleagues, friends and loved ones.

“So many people have been down the path you want to go,” he says, “so meet with them, speak to them, and ask their input or advice. Apart from the fact they could save you much time and money, you may find opportunities arising.”

Forget the ‘lone ranger’ notions about entrepreneurship, Mark says, as no entrepreneur is self-made – it’s an illusion.

“You achieve success by leveraging the skills and resources of other people. At the same time, there’s no substitute for basic business acumen. Get some!”

Only real entrepreneurs need apply

Posted on by Webmaster

Making it in the tourism industry

New tourism statistics paint quite a rosy picture of an industry that is under sever strain.

The recession was bad news for most sectors, but the tourism industry was particularly hard hit as it depends on consumers spending what little money they have left.

Fortunately for many, the industry has had quite some time to reposition itself, including a stronger focus on the corporate market.

Nevertheless, the 15% increase in international tourist arrivals recorded last year did not necessarily produce the expected results.

Business Partners Limited Executive Director Gerrie van Biljon explains many small operators either entered the market or expanded their operations to cash in on the event.

“The net effect on bed nights from the Fifa Soccer World Cup was disappointing. I think people who entered the industry specifically for the tournament were disappointed,” he says.

Business Partners Limited is the founder and owner of the prestigious Sanlam / Business Partners Entrepreneur of the Year® competition and Van Biljon urges tourism operators to throw their hat into the award’s ring.

Where we stand

From an international and macro perspective, South Africa did exceptionally well and it significantly outperformed the international average growth in tourist arrivals of 6.7%.

At the same time the South African Tourism “20 Experiences in 10 Days” campaign is continuing to build on the momentum generated last year.

Tourism has also been earmarked as a major potential job creator so government focus on the sector and related spending should remain a priority.

For example, a new National Tourism Sector Strategy (NTSS) was launched at the end of March to help grow the industry.

“The vision of the NTSS is to position South Africa as one of the top 20 tourism destinations globally by 2020, and I believe our concerted and focused efforts as a sector will enable us to reach this goal,” Minister Marthinus van Schalkwyk said in a media statement.

“We all know that the tourism sector in South Africa, and its contribution to our gross domestic product, has grown tremendously in the last two decades. As a national department, and an industry, we believe we have not yet reached our full potential and the NTSS is intended to provide clear guidance on how to grow tourism’s absolute contribution to the economy.

The NTSS wants to double foreign arrivals to 15 million in the next nine years while increasing GDP contribution from R189 billion to R499 billion.

The strategy includes a number of incentives to reach it goals, including a strong focus on domestic tourism.

However, the current reality for smaller operators is somewhat different on the ground.

New domestic tourism statistics for 2010 show a fairly significant decrease in the amount of money spent by domestic tourists: R21.1 billion, down from R22.4 billion in 2009.

The good news is that the percentage of money spent on holiday as opposed to business travel or visiting friends and relatives increased to 31% of the total spend. This figure stood at 22% in 2009.

Nevertheless, the total amount of domestic tourism trips did not increase last year, meaning that it is unclear if the industry has turned the corner in the long term.

At the same time, consumers are still under considerable strain and the FNB / BER consumer confidence index showed its first noticeable decline in a year. The report says that consumers are increasingly worried about their personal financial positions.

Once again, this is a red light for the domestic tourism industry and SMEs operating in the sector.

“Occupancy rates among our clients are still under pressure. This has been the case to a large extent for the last 18 months,” Van Biljon says.

“Consumers are still reluctant to spend and operators are not expanding at the moment. There is a sense of scepticism in the industry and everyone is waiting for the status quo to change,” he explains.

“The available number of beds in South Africa tells us there is an oversupply in general. Obviously some operators will do better than others but competition is fierce.”

An entrepreneurial view

Van Biljon is quick to add that the sector is not a completely lame horse and that astute entrepreneurs will always be able to make money in tough times.

“We see that some operators are using their facilities in a different way to generate business. This includes hosting smaller corporate conferences for example.

“The corporate market still exists whereas the domestic tourism market is under severe strain…

We know that the industry will recover. The onus lies on you to still be in business when this happens.

“Before you enter the industry you have to ensure that your product is unique and that there is a market for it.”

Van Biljon adds that entrepreneurs should remember that tourism is a capital intensive industry and that detailed business plans are needed to succeed.

“If you want to sell beds you need to decide if want to do it as a hobby or as a business.

“If it is a business you need to look at economies of scale. In our experience the threshold is usually six or more rooms,” he says.

“One of the biggest challenges entrants usually face is the huge capital outlay needed. Then, you can only earn so much each month because there are a set number of beds that can be sold. As a result the return on investment is a relatively low percentage of the capital spent.”

He adds that the amount of money that can be borrowed has a ceiling if the business owner wants the business to be profitable: “The moment you are geared more than 50% you are doomed to failure. This is because all your income is used to service debt.”

Payday however, comes when that property is sold on. He explains that once the property has been paid off, it will only grow in value over time. Similarly, a going concern demands a premium, especially if it has been looked after.

“It is not a glamorous industry and it is tough with long and demanding hours. But, if you are the right entrepreneur there is money to be made,” Van Biljon says.

Another showcase of entrepreneurial excellence

Posted on by Webmaster

2011 EOY competition entries open

South Africa’s most prestigious entrepreneurial awards are once again open for entries.

The 2011 Sanlam / Business Partners Entrepreneur of the Year® awards recognise and celebrate the innovation, drive and commitment of small and medium enterprise (SME) decision makers – the men and women that feed, clothe and grow our country.

Now in its 22nd year, the awards will also introduce a number of new initiatives to further the SME cause.

This includes an SME Conference in May where industry representatives, civil society and senior government decision makers debate the future of the sector.

In addition, the hugely successful workshop series has been expanded and 11 regional centres will play host to SME experts in the coming months.

The cream of South Africa’s entrepreneurs will be celebrated in September during the Gala awards ceremony.

In addition to the current categories – overall Entrepreneur of the Year, Emerging Entrepreneur (business younger than three years old), Small Business Entrepreneur (turnover up to R20 million) and Medium Business Entrepreneur (turnover greater than R20 million) – the 2011 Sanlam / Business Partners Entrepreneur of the Year® awards will also honour the essence of entrepreneurship through the Innovation Award.

“There were a number of very apt categories to add to this prestigious award but we feel that the concept and talent to innovate is a vital component for entrepreneurs to stay ahead of the pack,” says Entrepreneur of the Year® Manager, Vicky Nish.

Innovators will forever be the leaders as they will always be one step ahead. True innovators apply this characteristic in every part of their business and not just in product development.

Each winner will receive R20 000 in cash and the overall winner walks away with R100 000 and the opportunity to visit a tradeshow anywhere in the world.

Martin Beyers, the 2010 winner and co-owner of CERadvance Engineering Ceramics, says the competition’s value should not be underestimated:

“Entrepreneurs need this kind of recognition much more often than one tends to think… To have such a competent and well-versed adjudicating team look over your shoulders, probe your business plan, look at your balance sheet, question your sustainability and future strategies and to then give you the nod of approval is a source of great satisfaction.

“It was also a great inspiration to continue with renewed effort, since after nearly 20 years in any industry, one can be forgiven for becoming a bit lethargic at times.

“I am a great believer in benchmarking exercises and personal improvement exercises.”

Business Partners Limited Executive Director Christo Botes says the workshops will also add value to the greater SME sector through practical, easy to understand entrepreneurial advice.

“Through the annual international conference, we will furthermore be able to become the Voice of SMEs. This is all exciting stuff and we can indeed say that these initiatives can collectively enhance an inspirational culture of entrepreneurship.”

Jan Steenkamp, the Executive Head, Cobalt Solutions, Sanlam, believes that at least 400 entrepreneurs will step forward to be judged.

He adds that the objective for the competition remains unchanged, namely to celebrate the successful entrepreneur.

At the same time the SME sector will receive more exposure, helping new entrepreneurs to realise their business dreams.

“The SME sector has been one the most important segments for Sanlam over the years and by supporting this initiative, we believe we are giving something back to our business owner clients. In the process we are also demonstrating Sanlam’s commitment to a tailor made, segment based approach to serving our clients.”

Family bonds bind businesses

Posted on by Webmaster

Family businesses weather recession

Family owned businesses are made of strong stuff according to a new survey.

The PwC Family Business Survey 2010/11 found that the vast majority of these businesses survived the recession because of their ownership structure.

The global survey interviewed businesses on a number of operational and financial elements and the results are in some cases quite remarkable. The vast majority of the local respondents were SMEs who were polled between 2009 and 2010.

During this time, 55% of these businesses showed growth with 23% noting “significant” increase in the demand for their product or service.

Another notable finding is that the vast majority of respondents also believe that being a family owned business helped them cope with the economic slump.

According to PwC Private Company Services National Leader, Andries Brink, this is because these businesses operate with a different mindset to public companies or SMEs with investors to please.

He explains that a family owned business can take a longer term view in terms of profits and dividends and so make decisions during a crisis that serve the business’ sustainability better.

Brink adds that respondents believe that the business is an extension of the family name and its reputation. This is not only a significant competitive edge, but also an important decision making factor.

Longevity

Sustainability seems to be a key focus area for many family owned businesses: 14% of the respondents were third generation decision makers within the business. A further 7% were fourth generation and the biggest proportion – 44% – were second generation.

It is also encouraging to note that 32% were first generation owner managers, indicating a growth in the SME space.

When it comes to succession planning the survey has found that the older a business is, the more likely it is to remain within the family.

In contrast to this, nearly half of the businesses do not have a formal succession plan – the owners want to leave their shares to their family members but the details on this are sketchy.

This does not mean that the businesses are badly managed however from an operational or financial point of view. These businesses are actually growing if one considers that 47% increased their capital expenditure during the period under review. A further 33% kept their capital expenditure on par with previous years and only 20% decreased expenditure (probably due to tough economic conditions).

According to family business expert André Diederichs from André Diederichs & Associates, succession planning remains a huge challenge for family owned businesses. He quotes statistics which indicate that only 30% of family owned businesses successfully move from being a first generation to a second generation business. In addition, only 14% of second generation businesses successfully move to become third generation businesses.

“Succession is not planned and is seen as an event somewhere in the future. This is wrong. Succession is a process not an event. You have to identify and prepare successors who are willing and able to succeed,” Diederichs explains.

“Succession is also dealt with as a process which is separate from the business and this is wrong. Succession is part of long-term business strategy and vital for the survival of the business.”

Family feuds

Because of the specific ownership structures within family businesses, managing family relationships within the operation becomes a key focus area.

There are a number of different strategies to deal with family conflict and the most popular in South Africa are either shareholder agreements or the use of a third-part mediator.

Family council meetings are used by 41% of respondents. Brink points out that this strategy was the most popular in their 2007 survey. He believes that the recent recession lead a shift towards independent advisors,

“It is easy to agree when things are going well than when difficult and strategic decisions need to be made,” Brink explains.

On average, international family owned businesses are older than their South African counter parts and this usually means more formalised conflict resolution practices.

Diederichs says that managing family relationships within a business essentially becomes an extra level of governance.

Decision makers need to “find a sound balance between the interests of the family and the interests of the business.

“Furthermore they must ensure that emotions do not impact on business decisions. It is therefore vital to create governance structures to safeguard the business from emotional decision-making. The best practice is to appoint directors, with good business acumen from outside the family, to the board of directors or to create an advisory board to ensure sound business decisions are made,” he says.

Disagreements can stem from a number of issues. Some of the more troublesome highlighted in the survey include the performance of key family members, reporting to the wider family on key issues in the business and the role of in-laws in a business.

On the positive side, family owned businesses have an ace up their sleeve when it comes to dispensing entrepreneurial knowledge.

Brink explains that it is highly unlikely that a key decision maker will make a clean cut when leaving a business. Usually, the owner will groom an heir and phase in the ownership change.

Afterwards, they will also be on hand to dispense advice, meaning that a new leader has significantly more support than the average SME decision maker.

“In our experience, if you can deal with family relations, having someone around for advice makes a difference,” Brink adds.

Going forward

Brink says their surveys have found that family owned business decision makers are generally more optimistic than their counterparts.

But, being optimistic does not mean that the business will automatically do better. To this end, the survey shows that at least 56% of respondents have reviewed their business plans in the last six months. A further 30% have done so in the last year.

This does not however mean that the decision makers are radically overhauling the businesses and very few are actually changing business models. The majority of businesses have tweaked their business models and expect to do so going forward as well.

It is interesting to note that the local statistics are almost exactly on par with the international trends.

Diederichs says that it is crucial to keep the entrepreneurial flair alive in a family business if it is to succeed over time: “The entrepreneur is normally found in the first generation. If this generation does not expose the second to entrepreneurial thinking then they might not be able to adapt to a changing marketplace.

“But, the structures created in the first generation (the entrepreneurial phase) are not necessarily suitable for business demands later generations will face.”

Photos: 2010 EOY winners

Posted on by Webmaster

We would like to congratulate those heroes of 2010 who overcame even the challenges of the recession to come out tops and show that nothing is impossible.

Efficient entrepreneurial education

Posted on by Webmaster

“Entrepreneurs need to take their rightful place as role models in South Africa so that when young people leave school or university, they consider it as a viable career option.” – Nazeem Martin, Business Partners Managing Director.

The canon of entrepreneurial research clearly shows a direct correlation between the level of education of an individual and his or her ability to found a sustainable business.

There is also a definite link between the level of education of a business owner and the number of jobs the operation can potentially create.

But, experts say that there is a real and dangerous lack of entrepreneurial education in South Africa.

The Global Entrepreneurship Monitor (GEM) for example, has cited education a major inhibitor for nearly a decade.

Entrepreneurial education is a complex subject and the problem is two-fold: educated individuals often do not see the entrepreneurial arena as a viable income-generating option; and individuals engaged in entrepreneurial activities do not always have the requisite skills to run their businesses.

The introduction of the Broad Based Black Economic Empowerment Codes of Good Practise has lead to a greater focus on the latter inhibitor as businesses receive points towards Enterprise Development when providing non-financial support and training to SMEs.

However, this does not mean that the pool of educated, high-growth entrepreneurs entering the economy has increased.

Young guns

Academics seem to agree that successful entrepreneurs share a range of common attributes.

Presenting a research paper at the Wits Business School Centre for Entrepreneurship’s annual entrepreneurship conference, Dr Shelley Farrington pointed out that to promote entrepreneurial activity, a population needs to possess a particular set of attributes that promotes entrepreneurial behaviour.

The study Dr Farrington participated in looked at the entrepreneurial attributes of undergraduate business students at different universities in South Africa.

Several different attributes were investigated including risk taking, self-confidence, the ability to overcome failure and commitment.

The study found low levels of risk taking, knowledge seeking, initiative and continuous learning amongst students – all key entrepreneurial drivers. It also found very little improvement in the development of these attributes when compared to a 2001 study.

The conclusion was that while a number of entrepreneurial attributes are present in the students (and that it helps them to succeed at university), the individuals do not really see themselves becoming SME operators.

The paper recommends that educational institutions need to create an environment that fosters entrepreneurial attributes. More importantly however, is the proposal that students with the potential to become entrepreneurs need to be identified and mentored during their entire educational process.

Entrepreneurial education, the researchers say, need to be incorporated into as many different learning experiences as possible, as often as possible.

Teach the teacher

The way in which entrepreneurial education takes place should not be underestimated, according to Prashanth Naidoo. He looked at how business simulation techniques could help entrepreneurial education.

The premise is that simulations help students to gain practical experience.

“There is a lack of entrepreneurs in South Africa. We need to look at ways to get young people excited about entrepreneurship,” he said, adding that the skills needed to start and run a business can be taught.

But, the environment in which this takes place, needs to reflect the business reality. It should also be creative and multi-disciplinary.

However, Naidoo’s research points out that the facilitator of the simulation plays an exceedingly important role as it is their job to make the experience relevant and effective.

So, significant attention must be given to training the trainers to ensure entrepreneurial development amongst students.

This is something that the Euveta project in Tanzania has done exceptionally well.

Hook, line and sinker

Run by the Triodos Facet consultancy, the project sought to train graduates from a number privately owned vocational training centres in practical business skills.

Southern Africa representative, Anouk Verheijen, explained that many students struggle to find formal employment after graduating. They revert to self-employment in the informal sector.

Through entrepreneurial training however, it was hoped that these individuals would start small, sustainable businesses with growth potential.

Initially, action learning, role playing and practical exercises are used to evoke the idea of owning and running a business. Over time, training becomes more formalised. More than 3 000 students were trained in the project’s pilot phase.

But, the project found that one of the key differentiators was the trainers themselves and the teachers had to undergo a significant mindset change.

Going forward, the initiative will be rolled out to 120 schools where a mere 360 teachers will attempt to train nearly 14 500 students.

The private Covenant University in Ota, Nigeria, follows a similar mantra and introduced a mandatory entrepreneurship course for all its students.

The course is customised to 15 different fields and vertical industries because this provides the students with the practical knowledge to pursue entrepreneurial activities.

Local soil

While a number of private institutions are increasingly looking at the importance of entrepreneurial education, there is still much work to be done on local soil.

The GEM report recommends that the starting point is basic education where skills such as numeracy and literacy need to be improved.

From there, effective, countrywide entrepreneurial training and business skills must be rolled out at secondary school level.

In general, educational support should address the needs of individual entrepreneurs and the challenges faced at a particular point in time in order to lower start-up failure rates.