Local advertising gurus claim top entrepreneurial award

Local advertising gurus, Pepe Marais and Gareth Leck of Joe Public United, were named the Medium Business Entrepreneurs of the Year® at the award ceremony for the 2018 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS held in Johannesburg this morning.

After having entered the competition in 2017 and making it through to the finalist stage, Marais and Leck remained eager to work on their business and re-enter this year with the hopes of winning a category. Their perseverance paid off as their hard work earned them the 2018 Medium Business category title.

Founded 20 years ago with zero capital, Marais and Leck managed to disrupt the local advertising industry by offering haute-cuisine advertising services for print, TV and radio at takeaway prices with various services displayed on a menu. Since then, the business has seen its fair share of ups and downs, but the entrepreneurs’ dedication to building a better business has seen them build a successful business, which is today ranked highly among the country’s top advertising agencies.

The business’ challenges have included selling the business, expanding into an offshore market, retracting back into the local market, losing half of their client base, buying the business back, and starting again from scratch. They have since rebuilt Joe Public into the largest independent, South African-owned advertising group in the country, offering full services in advertising and communications through five integrated specialist companies.

Marais and Leck’s dedicated approach has seen the agency grow from strength to strength, winning numerous awards for their business and clients – the most recent of which was the coveted Agency of the Year award at the 2018 Loeries Awards.

The team prides themselves on their “purposeful approach” to an industry that is often compared to the likes of used car salesmen. They pride themselves on keeping the bottom line at the bottom – and prioritising the purpose, growth, development and well-being of their people (both staff and clients).  

In light of this, Joe Public started their own non-profit organisation in 2008 called One School at A Time and have recently launched their own SETA-accredited academy, Joe Public School of Growth. “Over the past decade, we have systematically been making inroads with our two partnership schools in Soweto and Diepsloot. We are most proud of Forte High in Dobsonville, Soweto – a struggling high school that has become one of the top three township schools in Gauteng.

“Pepe and Gareth are determined individuals who embody the tenacious attitude typical of successful entrepreneurs. After missing out on the prize last year, they went back and worked on aspects of their business that they identified as needing attention. Their win is evidence of this hard work and passion,” said the competition judges.

For more information on their business, please visit the Joe Public website: joepublic.co.za.

Entrepreneur of the Year® competition honours Dr Richard Maponya

The Lifetime Achiever Award is the highest accolade in the Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS and it is never up for competition. The deeds and achievements of the person who receives the award speak for themselves.

The Lifetime Achiever Award is conferred on an established entrepreneur who has made great strides in business over many years. In our 30 year history, we have only ever given this award once in 2015 to Ms Margaret Hirsch, co-founder of Hirsch’s.

Our 2018 Lifetime Achiever Awardee is Ntate Dr Richard JP Maponya, Chairman of Maponya Holdings. Dr Maponya is a living legend and his family name is synonymous with entrepreneurship in South Africa. He is an outstanding role model for entrepreneurs across all genders and races and an excellent mentor.

He was awarded the South African National Order, the Grand Counsellor of the Baobab (GCOB), in April 2007 and his contributions to the South African economy cannot be overstated. As the Entrepreneur of the Year® committee, we are honoured that he granted us permission to celebrate him.

Dr Maponya is an epitome of an entrepreneur.

  • Born in Thlabine, a small village near Lenyenye, Tzaneen, in what we now know as Limpopo, Dr Maponya was trained as a teacher which is not surprising that he mentors other entrepreneurs.
  • He became an entrepreneur around the age of 24 in an era when black entrepreneurs faced many obstacles that prevented them from being successful.
  • From clothing to milk delivery service to cars, retail and property development, he persevered and made a success of business.
  • Dr Maponya is a visionary. In 1979 he secured land in Soweto, first on a 100-year lease and then, in 1994, after several attempts, he acquired it outright. This is the land on which Maponya Mall, one of the largest shopping centres in the country, was built and opened in 2007.
  • He was part of South Africa’s power couple and part of his success is attributable to the beautiful partnership with his late wife, Marina Maponya. Together they raised entrepreneurial children, successful in their own right.
  • Dr Maponya is an activist and was the Founder and President of NAFCOC (the National African Federated Chamber of Commerce and Industry) in 1965.
  • Dr Maponya is a community builder and since SA is celebrating 100 years of Nelson Mandela, it is worth noting that Dr Maponya is Founder and Trustee of Nelson Mandela Children’s Fund. He is also the man who drove President Mandela on the day he was released from jail and he also provided the fleet of vehicles used on that special day.
  • Dr Maponya has built a formidable business empire in the democratic South Africa, which should remain for generations to come.

Nine tips for entrepreneurs to attract investors and secure funding

The Global Entrepreneurship Monitor South Africa 2016/2017 reports that two-thirds (67%) of small businesses closed in 2016 either because they were not profitable, or because they encountered problems in accessing financing. Access to finance is not only a significant constraint for early-stage entrepreneurs in South Africa, but also problematic for established businesses. However, contrary to what many entrepreneurs believe, there are various financiers and investors with funding available who are eager to invest in South African entrepreneurs which too often is not effectively accessed or tapped into.

Many excellent business ideas never get past the ‘spreadsheet stage’ because entrepreneurs cannot find the right investor for their specific business model, or do not manage to convince investors because the true potential of their business idea is not effectively conveyed.

Business owners who are seeking finance should conduct thorough research on different financiers before approaching them. Understanding the specific criteria of the investor or financier and matching their investment preferences to the entrepreneurs’ business saves not only time and effort, but can improve the success rate and result in a funding proposal that is aligned to both the needs of the financier and the entrepreneur.

It is also important for entrepreneurs to realize that investors often invest more than just money into a business, they are often prepared to invest time by advising and supporting the entrepreneur behind the business –and this can only happen if the partnership between the two parties is a good match.

Finding the correct investor and successfully pitching your idea is a valuable business skill that can be continually enhanced. Entrepreneurs should consider the following suggestions to improve their success rate in raising finance:

1. Get connected and network. Investors are out there, and they are usually only one or two people away from those with whom you regularly do business. For example, accountants or suppliers can often recommend potential investors that may be a suitable fit. Emphasise the “work” in “network” by investigating your options and asking for referrals.

  1. Prepare a sharp and concise story outlining the purpose of the funding you are applying for (to start, expand, restructure, etc.). Investors need a clear and well quantified idea of what the money will be used for, as well as realistic financial projections that support the business’ ability to repay the debt or provide a return on investment.
  2. Know all the aspects of your business and incorporate the key points in your business plan especially your industry analysis and market segment identification. The more concise and crisp the business plan is the better. A compelling description of the core product or service being offered by the business is vital, how unique is it compared to other suppliers in the market and is there a demonstrated and proven need for the product or service; and is there sufficient market potential to make the investment worthwhile?
  3. Always have a detailed business plan ready. Not only will it help to solidify the knowledge mentioned in the previous point, but you will be able to send or present the plan quickly if a potential investor wants to have a closer look. This will help to convince them that the business owner is prepared.
  4. Understand the current state of the business. Investors want to know where in the life cycle of the business you find yourself and whether the business owner and the support team understand the industry in which the business operates or will operate. Knowing the background and business experience of both the entrepreneur and the support team, and the current state of the business can provide a level of comfort to the investor regarding their investment decision.
  5. Have an online presence. It is almost guaranteed nowadays that an investor who is interested in a business idea will do a background search on the internet. Therefore, it helps to have a good website and a strong presence on social media in which the entrepreneur’s successes are highlighted – not only in the current business, but in previous ventures and jobs. Most astute investors interrogate both the strengths of the business idea and the prowess of the entrepreneur.
  6. Be prepared to pitch in person, often investors will request a follow up meeting which includes a detailed presentation of the business plan, profit projections and industry insights. Be prepared for this request and have a more detailed presentation available in advance.
  7. Once contact has been made with a potential investor, stay in touch, even if it is just to ask for advice, such as how a proposed investment can best be restructured. The entrepreneur should also be open to feedback from potential investors. It is important to show investors that you are open-minded and adaptable. Chances are that the investors you are pitching to can enhance your idea with their advice, whether they decide to invest in your business or not.
  8. Have a realistic exit strategy for the investor. The investor’s thinking is likely to be around whether they can make the best return possible on the investment, so this point should be included in the exit plan. The time frames that most investors work with are between three and seven years.

Five common mistakes to avoid when buying a property

When things go wrong in commercial property investment they can really go badly wrong, because the consequences are often counted in millions or rands. Owen Holland, Business Partners Limited (BUSINESS/PARTNERS) national asset manager: properties, lists five common mistakes made in commercial property investments.

Before you venture into your next commercial property deal, says Holland, it pays to be aware of the following common mistakes so that you steer well clear of them.

Common mistake 1: Shoddy due diligence

Fundamental flaws in a commercial building can be completely hidden from sight, says Holland. A perfectly sound structure might be built half a metre over the boundary line – a mistake that puts you at the mercy of your neighbours and one that may cost you millions to fix.

The only way to avoid these pitfalls is to perform a due diligence investigation in which every aspect of the building is checked: not only the condition of the physical structure, but its plans and approvals, the facilities such as water and electricity, and the state of the leases if the property is being bought with existing tenants.

Holland says it is crucial to hire professionals to perform a due diligence investigation. They can cost up to R30 000 depending on the size and complexity of the property, but their costs are negligible compared to the money they can save you.

When you are keen on buying a commercial property, Holland’s advice is to sign an offer to buy the building subject to the outcome of a professional inspection, including the structure, facilities and leases. If the investigation exposes any defects, you can either walk away or renegotiate the sale with seller. Either way, the cost of hiring professionals is money well spent.

Holland says even vacant land should be subject to due diligence in the form of soil inspection. Again, this is expensive, but your building plans may be scuppered by the existence of, an unexpected geological structure, a hidden rubbish dump, or even toxic waste buried in the soil.

Common mistake 2: Not calculating upgrades and future maintenance costs

A thorough due diligence must not only look at the current health of the structure and facilities but must include a careful consideration of upgrades and maintenance that may be required in future. These can pounce on the buyer quite unexpectedly, says Holland. An anchor tenant might only agree to renew their lease if certain upgrades are made. The rise in electricity costs may force the new owner to upgrade the property to become more energy efficient in order to remain attractive to tenants. An asbestos roof may have to be replaced.

“The buyer must be aware of the fact that the seller will always know more about the property,” says Holland. It is up to the buyer to discover the hidden costs before buying. The seller won’t volunteer the patent information.

Common mistake 3: Not considering the bigger picture

Even if the property itself is in a pristine condition, the area in which it is situated may have reached its peak and is in a downward spiral. If you buy property in a devaluing node, the value of the property will decrease, says Holland. It is therefore just as important for the buyer to look into what is happening to the area as it is to investigate the condition of the building itself.

Well-known examples are the CBDs of Durban and Johannesburg which devalued dramatically as Umhlanga and Sandton became the focus of development. Holland warns that properties in the high streets of many towns and regional centres can be significantly affected by the establishment of a mall on the outskirts.

Nothing beats driving through the streets of the node in which you intend to buy. Signs of refurbishment, development and rejuvenation are good. A lack of upgrade activity could signal the fact that the node may have reached its sell-by date.

Holland also recommends speaking to municipal town planners and local developers to find out about any plans that may affect the area.

Common mistake 4: Being too fussy about price

Not every property that you buy as an investment has to be a bargain. If you set your mind on only buying properties that can give you more than, say, a 10% return on investment, you run the very real risk of not buying anything, and missing opportunities to build up a substantial portfolio.

A well-engineered, prime property situated in a low-risk area is most probably not going to be priced at a bargain level, but as long as it is not overpriced, it will give a fair return on investment and can help form the backbone of a solid property portfolio, says Holland.

The bargain hunter will miss excellent buying opportunities of prime properties at fair market prices and run the risk of building a portfolio very slowly if at all. There are many investors in this hot market chasing prime properties for the yield so the bargain hunter or over pedantic buyer may be left with cash in the bank at low returns for a significant time period.

Common mistake 5: Gearing too high

Cash is king in any business, says Holland, and property investment is a business like any other. Buying a building with too much borrowed money exposes the investor to grave risk. The bond of the property has to be serviced by the operating income earned from the property. If this is too high, the failure of one tenant to pay his rent could jeopardise the whole investment.

Holland says there is no single rule of thumb to guide investors about how much money is prudent to borrow for a property investment; it depends on the reliability of the tenants and the vitality of the node. If the tenants include the branches of established, nation-wide companies, the buyer could borrow more, but if the tenant mix is made up entirely of small mom-and-pop stores, it is better to have a loan to value of 50% or less. The cash flow forecast, including bond repayments and tax, must allow for a realistic vacancy and arrear factor as well as for any short term increase in interest rates.

Holland urges prospective property investors to consider joining up with an established joint venture partner as a good way to start a commercial property portfolio. BUSINESS/PARTNERS, for example, are always keen to consider joint-venture proposals for property investments from entrepreneurs. The advantages go beyond the availability of finance, and include expert knowledge on due diligence investigation and assessing commercial nodes.

Most importantly, a joint venture partnership with an established property expert can teach you how to avoid the common mistakes without paying painfully high school fees.

Office interior entrepreneur sells creativity and imagination

The saying – ‘If at first you don’t succeed – try, try again! – is definitely true for 2015 Sanlam / Business Partners Entrepreneur of the Year ® entrant, Gary da Silva, who has embarked on three entrepreneurial ventures over the past 20 years, and is testament that persistence pays off. As a result of his entrepreneurial endeavours Gary truly believes that mistakes made along the way can only aid future development and growth.

Gary started his entrepreneurial career in 1995 when he started a company which built solid wood log cabins. In his second attempt at entrepreneurship, Gary entered into a partnership with a friend in 2007 to form a second hand office furniture business, but due to the recession in 2009 the business experienced a dip in annual turnover, and it was mutually agreed that the partners go their separate ways.

With only a laptop and a cell phone in hand, Gary then started IYC Commercial Interiors, an office and restaurant furniture supplier, in April 2009 when the South African economy was at the height of the global downturn.

When asked about some of the entrepreneurial challenges he has faced, Gary says that consistent turnover has been one of his biggest obstacles. “We traditionally only have nine full months of the year to trade, and during the remaining three months we only trade at a limited capacity, if at all due to holiday periods. Without a consistent income throughout the year, it has been difficult to counteract swings in the market.”

To overcome one of an entrepreneur’s biggest hurdles, cash flow management, as well develop his business further, he implemented various organisational changes in his business two years ago.

“I began attending as many part time management courses as possible to broaden my business knowledge, as well found two successful individuals from similar industries to act as mentors to myself and the business.

“I also hired a driver in August 2014 as I was spending six to eight hours on the road each day, and less time managing my business. An office manager was also hired to free up my time and allow me to work on sales and develop my business further. This in turn has enabled me to broaden my service offering, and develop my business further,” says Gary.

To counter the slow periods of the year and to provide additional income, Gary decided to start a home furniture company after much due diligence and market research, which will go live in May 2015. “As most consumers make their home furniture purchases in December, when they go on holiday, this will counteract the slow periods that we experience in the office and restaurant furniture business.”

An improved marketing strategy was also implemented to drive sales. “An e-commerce platform, which is supported by a Customer Management System Google AdWords to drive traffic, has been implemented along with various social media platforms, which will drive sales during quieter months.”

As a result of his years of experience, Gary has noted that entrepreneurs need to be kind to themselves and offers the following advice to aspiring entrepreneurs: “Set a working week and working hours, as working an 18 to 20 work day means that you are not managing your time properly, and certainly not being productive.”

He adds that it is also very important to take holidays. “Take at least four long weekends per year and one long holiday, and leave your cell phone and laptop behind. If your staff cannot manage the business for a few days, they haven’t been trained effectively, or they haven’t been empowered enough.

“Most importantly believe in yourself, and stay calm under pressure. As an entrepreneur, you are already a super hero – you don’t need to prove it.”

2015 Budget encouraging for SMEs

Unemployment remains the country’s greatest economic and social challenge
Finance Minister Nhlanhla Nene, 2015 Budget Speech

The 2015 State of the Nation address, presented by President Jacob Zuma on 12 February 2015, referenced unlocking the potential of small enterprises, and identified small business as one of Government’s nine strategic priorities to be pursued this year. It was therefore positive to note that the 2015 Budget Speech echoed this sentiment, as the development of small business can drastically reduce the high unemployment rate South Africa currently faces.

Gugu Mjadu, spokesperson for the 2015 Sanlam / Business Partners Entrepreneur of the Year®, says that Government’s commitment to prioritising measures aimed at generating employment is also a positive step for boosting the level of entrepreneurship in South Africa.

She says that the proposed measures in this year’s budget speech, such as tax incentives for employment and investment, support for enterprise development, skills and development and employment programmes, will provide much needed support to local entrepreneurs.

R3.5 billion was allocated towards the new Ministry of Small Business Development for mentoring and training support of small business. “While very rewarding, entrepreneurship is also a tough journey, and entrepreneurs need to be supported in order to grow their businesses to levels at which they can positively contribute to job creation and economic growth, and we believe with the correct mentorship and training, local business can thrive.”

Gugu adds that the mention of the Jobs Fund’s allocation of R4 billion in partnership with the private sector for projects that create employment is encouraging, and hopes that a portion of this will be spent on entrepreneurial ventures with potential for growth. “Access to finance is an issue for many entrepreneurs, and we hope a portion of the allocated funds will continue to be used to support up and coming entrepreneurs and business concepts that have the potential to sustain job creation.”

Further support for entrepreneurs was also provided in the form of SARS establishing a small business desk in its revenue offices to assist small businesses to comply with tax requirements. “We hope that this additional support will lessen the amount of time small businesses spend complying with the various processes and enable entrepreneurs to exercise more effort in developing their business instead.

“Overall, the budget was entrepreneur and small business-friendly, and we hope that Government’s commitment to small business will drive entrepreneurial development with the country,” concludes Gugu.

Pharmaceutical company named Innovator of the Year in national entrepreneurial competition


Due to their passion to focus on disease prevention rather than cure, Dr. Conrad Smith and pharmacist, Mariaan du Plessis, founders and owners of Medical Nutritional Institute (Pty) Ltd, have been recognised for their ground-breaking research and development within the pharmaceutical industry. The medical professional duo have been awarded the Innovator of the Year award in the 2013 Sanlam / Business Partners Entrepreneur of the Year® Competition, which was held in Johannesburg on Wednesday, 4 September 2013.

Established in 2002, the company specialises in the development of non-prescription medication made from organic molecules. All products are manufactured to the specifications of local and international medicine regulatory boards, including the Medical Control Council (MCC) and Food and Drug Administration (FDA).

According to Ferose Oaten, a judge of the 2013 Sanlam / Business Partners Entrepreneur of the Year® awards, Medical Nutritional Institute’s wide product range and consistent product development contributed towards the company being recognised as Innovator of the Year.

“The company has successfully developed new products in an environment the pharmaceutical industry has become sceptical about, and are persistent in their research and development of new and innovative products. The business has been successful in making their products credible in this sometimes cynical environment,” says Oaten.

Du Plessis, who is currently the chief executive officer at Medical Nutritional Institute, says that although the reputation of complementary medicine has been under continued scrutiny due to a lack of regulated quality products, Medical Nutritional Institute has continued to prosper. “For the past decade our company has developed top-quality products that are scientifically sound and able to withstand the scrutiny and scepticism of the mainstream pharmaceutical and medical world.”

She adds that the success of the business was as a result of a very compatible partnership, and the company has now set its sights on specific international markets. “When entering into a business partnership, budding entrepreneurs need to properly scrutinise their partner and be certain of their competencies. In addition to a strong entrepreneurial flair, the success of our business in the medical industry was complemented by a good mindset for business strategy and system development.”

Du Plessis firmly believes that this award will play a key role in the expansion of the company. “An award such as this has the ability to add tremendous value to any business. There is no doubt that this accolade will open the doors to many new business ventures.” concludes du Plessis.

Visit www.mnilifestyle.co.za for more information on Medical Nutritional Institute (Pty) Ltd.

Successful local entrepreneur tells his secrets

“Set goals and never give up.”

This is what Duncan Paul, a highly successful entrepreneur with eight thriving businesses, says are the most important keys to success as an entrepreneur, when he recently spoke of the lessons he’s learnt in business, at a seminar hosted by Sanlam / Business Partners Entrepreneur of the Year® (EOY 2013) in Pietermaritzburg.

Entrepreneurs are essential for our country, said Nimo Naidoo, Business Partners’ assistant general manager and the project manager of the EOY 2013 competition. “An estimated 45% to 50% of South Africa’s GDP [gross domestic product] is contributed by SMEs [small and medium-sized enterprises]”. She said EOY 2013 aims to unlock entrepreneurial talent, and acknowledge entrepreneurs as heroes and role models in our economy.

Paul fits this description of an entrepreneur well. Not only has he achieved impressive business success in less than 20 years, but he has also found time to ski the last degree to the South Pole, has climbed Kilimanjaro three times, scaled in the Himalayas up to 6 200 metres, competed in many Duzi canoe marathons, and became — along with his partner — the first South African to finish the 750-kilometre Yukon Quest canoe race in the Canadian Rockies. He regularly leads safari expeditions to remote corners of Africa as part of his hunting safari company. He says that without the belief and support shown by Business Partners at the beginning of his “great adventure”, he would likely never have made it out the starting gate.

“I had a big vision, which scared the formal banking sector, and I couldn’t raise money anywhere,” he said. “Business Partners have always been in the right place at the right time for me.”

Paul acknowledges he was a “late starter”, who only became an entrepreneur at the age of 38. He first worked as a policeman in the Rhodesian Police Force (and was decorated for gallantry), then worked for the Natal Parks Board and the Natal Sharks Board, after which he went into farming and then game ranching in Zululand (picking up conservation awards along the way) and Bophuthatswana national parks.

While working to commercialise wildlife utilization within Bophuthatswana national parks, he saw how systems and disciplines in a business could pay off, and decided to make a go of it on his own by founding Hunters and Guides with eight other partners. He says that the involvement of Business Partners has brought the same benefits to his businesses today.

“I have learned from them,” he said. “Byron Jacobs [Business Partners’ regional general manager for KwaZulu-Natal] is a mentor to me and has guided and advised me through troubled times.”

Paul admitted that he went through some rough patches though: first with Hunters and Guides, when political issues in central Africa and problems with partners threatened his business, and then with his chain of Spur franchises, when he expanded too quickly and had again ran into partnership problems.

“I’ve earned my professorship in partnerships over the years,” he joked.

One of the crucial things he learnt with Business Partners is the importance of attention to detail.

“We hold monthly meetings that focus on every aspect of business. We go through everything: every expense and income, right down to the annual sick leave for each staff member – for each business.”

He lists this, and setting goals and not deviating from them, as the most important keys to success.

Paul says there are other hard-won lessons he’s learned over the years:

• Follow your passion. “Know what drives you,” he says.

• Be tenacious.

• Believe in yourself and your team.

• Surround yourself with quality staff and mentors.

• Select you partners “very, very carefully. They must share your morals, goals and passion,” he advises.

• Big is not always better.

• Stick to your core business and what you know. “Be careful of going off your beaten path,” he cautions.

• Build bridges and networks. “Don’t be a breaker,” Paul says.

• Live a life of integrity. “Do the right things in everything you do, and doors will open,” he promises.

• But he warns: “Never take anything for granted – things can change.”



At one stage, Duncan Paul was running six Spur franchises, and his Hunters and Guides safari company — a time he describes as characterized by “buffaloes and burgers”.

In 2002, it all began to unravel: first when political problems in the African countries he operated in threatened the Hunters and Guides business, and then when partnership problems in his Spur franchises threatened his very survival in the market.

Paul dealt with the problem decisively: he fired his general manager, sent all his Spur managers on back-to-basics training, and introduced incentives. Within three months, with the help of Business Partners, they had turned it around. Two years later, at the annual Spur Convention, “we swept the board in all award categories,” says Paul.

He subsequently sold four of the Spurs and today has Boulder Creek Spur in Pietermaritzburg’s Liberty Midlands Mall, Kansas Spur at the Pavilion in Westville, two John Dory franchises (at Liberty Midlands Mall and the Golden Horse Casino), Rockafellas restaurant and White Horse function room at the Golden Horse Casino, Dun Adventures safari company, a bed and breakfast establishment, and a property portfolio.

He currently employs over 400 people, and even during the current economic downturn has not made any staff redundant and still pays staff bonuses and increases. He has used the present economic situation to perfect his business model and enhance training for all levels of staff. “We are actually doing better,” he said. “We are operationally more efficient.”

Duncan Paul lives in Pietermaritzburg.

Contain the clash

How to close deals and deal with conflict

In any business, partnership or joint venture, there will be conflict.

Mostly, SME decision makers will enter the fray thinking of the outcome in terms of winners and losers.

Similarly, when these decision makers enter into negotiations with a potential partner, client or supplier, the battle lines are often drawn around who will win and who will lose.

Negotiation and conflict resolution are arts of the business world and one needs to know how to play the game.

How to haggle

When SME decision makers enter into negotiations on a deal, they accept that it is a give and take situation. Usually, everyone wants to be the taker but this is simply not the reality.

Big business will always try to negotiate from a position of strength and Business Partners Executive Director, Christo Botes, says you cannot negotiate as an SME if your back is against the wall.

“If you back off continually and constantly cut your margins, you will lose the other party’s respect. Your reputation in the industry can also be adversely affected,” he explains.

“You need to stand your ground on matters of principle and never allow your integrity to be questioned.”

Jan Steenkamp, the Executive Head of Sanlam Cobalt, echoes this: “Before you enter into a deal you have to be sure of its purpose… It is natural for people to try win at all costs and get all the benefits stemming from a deal. When you try to get too much, it almost always leads to conflict.”

It is also important to be transparent and honest and you need to balance your needs and the other party’s expectations.

“Never bluff – if you create a perception that is not accurate, you will be caught out and you will lose your credibility.

“When you go into a deal you need to ensure that the deliverables are well defined for both parties… you need to define the end goal upfront and take the emotion out of the deal,” Steenkamp says.

It is called batna

Gibs’ Associate Professor Albert Wöcke, says whenever you enter into negotiations, you need to set a BATNA: the Best Alternative To a Negotiated Agreement.

“People think they need to compromise, compromise and compromise until everyone is happy. Or, they try to win at all cost,” he says.

Wöcke explains that once you have set your limits – your BATNA – you enter a negotiation with a sense of power. In addition, if you have set and defined limits, you will know when it is time to walk away.

He adds that not all negotiations are about possessions and that you need to identify quickly what the other party’s motives are.

In a win-win scenario, the conversation revolves around different, and congruent interests.

In a win-lose scenario, one of the players has a positional bargaining ace-card.

“Typically, you need to look at their sources of influence and your own. If it is a large company you need to look at what makes you attractive,” he explains

The deal goes south

Deals with customers, suppliers or joint venture partners will come undone from time to time and it is important to handle the situation professionally.

To Wöcke, conflict is not always a negative word and he says that it is essential to promote innovation and change – it can be a driving force in a business.

When it does move into a negative space, he says that conflict management comes down to the way you want to see the situation play out.

Wöcke explains these intentions are either competing, avoiding, compromising, accommodating, or collaborating.

In other words, you need to decide what outcome you seek through managing the conflict. You also need to decide how important the issue is versus continuing the relationship: “If you have this in the back of your mind, you can generally manage the outcome because the other party will probably respond to your approach.”

Steenkamp adds to this, saying that if the conflict is between business partners, or joint venture partners, one needs to quickly identify the true cause of the disagreement. This is because conflict often manifests itself in issues different from the true cause.

“Most business owners want to be in control and when someone starts stepping on their toes it leads to conflict. The different roles need to be defined clearly and for the benefit of the greater good of the company…

“In some cases the best answer may be to walk away but you need to be mature enough to do this in a way that ensures both parties are not negatively affected,” Steenkamp says.

When the conflict is internal, the rules do not change: “Quite often, conflict stems from emotion and personal management styles or backgrounds. If this happens, you need to improve your communication lines and try to understand the other person’s way of thinking – here an outside person can help you to remove the emotion and facilitate an open an honest conversation…

“You need top be able to listen and understand the other person’s perspective. It does not help communication if you defend your position all the time,” Steenkamp says.

Glass houses

Botes says that when shareholders and directors start to work against each other, it usually signals the beginning of the end.

Shares and voting rights are almost always a source of contention, as SME decision makers want as much control as possible.

Rather, he believes that a business needs a clear leader who has the casting vote in a partnership. Capital, he adds, does not automatically define knowledge or ability.

“If conflict starts to snowball, it can often be too late to save the business. You need to work at your relationship with your business partners every day.”

He adds that silent partners also often become involved in a business when things go wrong. While they did front capital, silent partners are usually not operationally involved in a business for a reason.

“It is always best to set out the relationship from the start… A good way to deal with potential conflict is to have regular meetings to update silent partners. But, do not let these meetings adversely affect the business.”

Botes adds that reverting to a shareholders agreement is only a last resort. Rather, the spirit of the agreement should guide the relationship.