Entrepreneurship and managing companies is a practice thing. R100 million business owner Vusi Thembekwayo shows you how.
From managing people to making big decisions, as a business owner the buck stops with you.
Dragon’s Den dragon and R100-million business owner Vusi Thembekwayo says he learnt everything he needed to run a business while employed at FMCG-giant Metcash - a R17-billion corporate entity, and yet the structure applies to all business today.
“Entrepreneurship is a practice thing. You’ve got to practice the skills of management, and corporates teach you that,” Thembekwayo says, adding that his own experience has taught him that former managers of large corporates are often great entrepreneurs.
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Here are three lessons that the corporate world has taught him, and that he still applies to his own businesses today.
1. Money management is key
“Too many entrepreneurs don’t pay enough attention to the details of money. They want to transact; they want to sell, but invoicing and getting paid end up falling by the wayside. Metcash had a very strong treasury function.
"The business understood that cash is king, especially if you’re trading high volumes at low margins. If you’re not getting paid, it doesn’t matter what profit you’re posting. My worst nightmare was the MD of the treasury department.
"He was always asking me questions I hadn’t thought of. He saw the risks that we hadn’t spotted, and was the first person to tell us when we were not on track to bank the money we needed to bank.
"His attention to detail made me have to pay attention to those details, and thanks to that, I’ve learnt not only how to manage money, but more importantly, how to be frugal. If I don’t have to spend money, I won’t. It’s amazing how far a Rand can go if you’re clever.
“One of the most important lessons any business owner must learn is that making a profit is nothing more than the accumulative sum of rand decisions. Lots of small, smart money decisions lead to big profits. Also remember that without the disciplines of frugality, money gets lost, so question every line item on a quote. Do we need it? Can we get it cheaper?”
2. Understand how to manage people
“Whether you’re a manager, team leader or business owner, it’s your job to help your team see the future that you see. Business is a process, and it relies on the entire team working towards a common goal and investing in that process on a daily basis.”
Related: Vusi Thembekwayo on how he financed growth
“This is something that every business owner talks about, and most say they do, but the reality is that very few businesses really differentiate themselves. We were operating in a commoditised market. At the end of the day I sold baked beans and mealie meal.
"It’s particularly tough to differentiate in a market that’s all about price. Some of our competitors tried the BEE route, but that’s not where I wanted to be.
"First, because that was everyone’s differentiator, which by default meant it was no longer a differentiator.
"Second, did our customers really care if we were black empowered? I didn’t think so, and I needed to figure out what they did care about. What did they want? And what could I give them that wasn’t tied to price? The answer was lines of credit.
“All procurement officials have the same problem. They need stock to give to their end clients, but they need money to pay for that stock.
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"In this market, most businesses want cash upfront. We turned that around and said we were happy to take the risk. I had a R17 billion balance sheet that I could leverage to offer credit. And so we went to market offering credit.
"All of a sudden the sale went from, ‘Are you going to deliver Iwisa at R19,99?’ to ‘Hold on, what did you just say? You’ll give me credit? Can I give you the order tomorrow?’ The trick is to determine what it is that your customer really wants, and what will make their life easier – and then give it to them.”