Tumi Phake has built Zenzele Fitness into a serious business relatively quickly, but it hasn’t been easy. The company’s quick growth has been the result of some very clever tactics.
Tumi Phake always liked going to the gym. It was a place where he could relax and unwind. One day, while still working for a prominent South African bank, he started wondering about the small gym that the bank had on the premises.
Where had this equipment come from? Who was responsible for it? What if you could offer the same sort of experience you’d find at a large commercial gym to corporate employees? Turning this dream into reality has been the focus of Phake’s life for the last few years.
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Here are the lessons he’s learnt along the way.
1. Do your research
Phake had spotted an interesting opportunity to offer in-house gyms to companies, but he took his time pursuing it. Instead of rushing in, he first did his research.
“The company was officially launched in 2013, but I was working on the business way before then. In fact, it took a few years from conceiving the idea to starting the business. I made sure that I would be ready when I eventually launched,” says Phake.
Business strategy doesn’t start the day you open the doors to your business. If done correctly, it should start well in advance. Some careful research and development done ahead of launch can often save you a lot of time, money and hassle later on.
Sure, it’s tough to stay calm and bide your time when you’ve stumbled upon a great business idea, but it’s important to sometimes take a step back and critically assess if your idea is really viable. Be sure to speak to experts in the field and prospective customers.
2. Find the right partner
Early on in the creation of Zenzele Fitness, Phake realised that he needed a partner. Many entrepreneurs refuse to acknowledge this reality, even long after their businesses are up and running.
Phake was not under any illusions — he needed a partner who knew the industry well. As an outsider to the fitness industry, he wasn’t equipped to launch a fitness business on his own.
Phake approached someone he knew through his position at the bank — someone who was well established in the industry. Not only could this person provide valuable insight — but he could also leverage his contacts in the industry to smooth the way for Zenzele Fitness.
Great founders often come in pairs. Very few individuals have all the skills and knowledge needed to launch a business, which is why finding the right partner can often mean the difference between failure and success.
3. Funding begets funding
Phake needed money to launch Zenzele Fitness. He needed to purchase expensive training equipment, which meant bootstrapping wasn’t an option. He was lucky enough to secure R5 million in funding from the Awethu Project, but this wasn’t enough.
The good news is that funding often begets funding. With each person who shows a willingness to invest in you, it becomes easier to get more funding.
After receiving the funding from the Awethu Project, Phake managed to get another R7 million in debt funding, thanks to that initial investment.
Accessing debt funding can be hard, especially if you don’t have many assets to be put up as collateral. Because of this, it’s a good idea to try to get some outside equity funding — even if it’s not the whole amount needed. This funding could be enough to secure a loan, which would help you avoid having to give away any extra equity.
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4. Proving ROI through data
In many ways, Zenzele Fitness enters a partnership with the corporates where its gyms are located. Most companies pay a portion of employees’ membership fees, and don’t charge Zenzele rent.
This is obviously a great position to be in, but it also means that clients will expect some sort of ROI. So how does one show that?
“It’s all about data,” says Phake. “Too often, South African companies go to clients with overseas data. This is not the way to do it. You can’t assume that overseas data is just as relevant here.”
Because of this, Phake is actively generating data that shows unequivocally that this sort of fitness initiative has a positive impact on business.
“Companies are definitely becoming aware of the fact that health and wellness in the workplace is important, but you still need to show some sort of ROI,” says Phake.
“For instance, we recently took 100 high-risk people and put them on a 12-week programme. By the end of it, we had managed to reduce serious risks by 30%. This is the sort of significant impact that companies are willing to invest in.”
‘Selling’ your offering is not enough. Your slick pitch needs to be backed up by some proper data. Don’t ask prospective clients to simply believe that you can improve their businesses — show them.
5. Reduce your risk
As with most businesses that are capital intensive, there is some risk in spending loads of money on equipment that might never be utilised. What if the gym didn’t attract workers? Or what if workers were slow to sign on?
“We reduce our risk in two ways,” says Phake. “Firstly, we try and sign on as many people as possible early on. We typically try to sign on enough people before the doors even open, to break even on a month-to-month basis. We also negotiate with clients and ask them to guarantee a certain level of monthly membership fees, especially during the early months.”
As the adage goes: Everything is negotiable. Enter into a real partnership with clients where risk is shared and mitigated.
If you have a B2B business — especially one that aims to attract corporate clients — it’s incredibly important to be able to prove the ROI on offer. Solid data can play a huge role in signing up new customers.
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