Entrepreneurial businesses often have an edge over their corporate competitors because they’re flexible and agile. But corporates have insights into growth that many entrepreneurs lack. Shark Tank’s Romeo Kumalo shares what the corporate world taught him about building a high-impact entrepreneurial business.
- Player: Romeo Kumalo
- Company: Washirika Holdings
- Past positions: Executive Commercial Director, Chief Commercial Officer and CEO International Business at Vodacom
- Currently: Shark on M-Net’s Shark Tank SA
- Visit: washirika.co.za
As a late bloomer to entrepreneurship, what has stood out for you coming from a corporate background?
There are definitely some advantages to joining the entrepreneurial community after spending years in corporate exco positions. Asher Bohbot, the founder of EOH, spent 17 years at the same company; he was a corporate employee — and he used that experience to build his own business. Today EOH is a listed company with a market cap of over R21 billion.
I think there’s a huge advantage to having a competitive corporate background. It’s a university in entrepreneurship that no one can give you — I’ve been involved in big M&A deals, products and services, distribution and marketing, branding, customer value management — all big, revenue generating divisions.
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Where do you believe entrepreneurs who come from exco positions differ from business owners who don’t have a corporate background?
I think technology has changed everything. Some entrepreneurs understand this, but many don’t. There’s no better time to be an entrepreneur than today because affordable technology can give you insights into your customers in a way that was previously reserved for large corporates with much bigger budgets.
Analytics and data are par for the course in corporates, and so if you come from this background, you’re likely to invest in this kind of tech to better understand your customer. This, in turn, gives you the opportunity to provide a quality service that people are willing to pay for.
Unfortunately, many business owners don’t see the value in investing in tech, when in reality it allows you to scale your business quickly, efficiently and sustainably.
I’ll give you an example. A cape-based jewellery designer who was selling her pieces to friends and family decided to set up an e-commerce platform to grow her business. She invested in her website and particularly the payment platform. It’s a top class website that’s easy to navigate — and makes it very simple to pay. Within almost no time she’s turning over R1 million a month, and 60% of her business is international. She’s just set to grow, and it’s because she invested in the right tech upfront.
You also need to know who you are, what you do — and how this will create revenue, now and in the future. Twitter is a perfect example of an incredibly well-known brand that entrenched itself in the market and then got stuck. Its team doesn’t know who they are, or how to monetise the platform they’ve created. Facebook on the other hand has done this extremely well. You can clearly see from Twitter’s current position that if you don’t think about these things at the beginning, you’ll feel the impact later.
My experience on Shark Tank revealed how many entrepreneurs don’t know the inner workings of their businesses, or where their growth paths lie.
How does an investment mindset affect growth?
It’s a significant factor in the success of an enterprise. Today tech makes it easy for small entrepreneurs to become big entrepreneurs by just investing in the right tools. You need to invest in your own ideas. In Shark Tank, we saw people not prepared to put skin in the game. You need to put something in to get something out.
It’s all fine and well to expect an investor to do that — but often you can do it yourself. Invest in tech, systems and processes. The tipping point will come and your growth will far outstrip your initial investment. But don’t wait too long or you’ll miss the boat.
Related: Pitching to investors cheat sheet
What fundamentals are in place in a corporate environment that entrepreneurial businesses often lack?
The fundamentals of any business are systems, processes and governance. These should be in place when there are just five of you, let alone 25 or 50 or 500. You can’t experience sustainable growth unless you’ve covered your bases. If you think about these too late you’ll not only hamper your growth — you’ll damage the entire organisation down the line.
Where is money spent? Are your books in order? Do you take minutes at meetings? This might sound ridiculous, but it speaks to how organised, systematic and professional your business is — and if you want to grow, you need the fundamentals in place.
Creating structures, systems, processes, training your employees — these all take investment, but it’s an investment that must be done sooner rather than later. As you grow you can then add complexity.
How can business owners start small but think big?
Google and Facebook are excellent examples of this. When Google’s founders Sergey Brin and Larry Page received their first round of investment, it came with a condition — they needed to hire someone more experienced than themselves to run the organisation. They weren’t happy about it, but they understood. They ended up hiring Eric Schmidt who served as Google’s CEO for ten years.
When he stepped down in 2011, he posted, “Day-to-day adult supervision no longer needed!” on Twitter. Page and Brin were ready to take the reigns of their own company — but they had to grow into that role. That’s thinking long-term. It’s focusing on the big picture.
Facebook’s Mark Zuckerberg did something similar when he hired Sheryl Sandberg to be his COO. Sandberg held a VP position at Google, and had the business experience that Zuckerberg lacked.
You need the right support to achieve sustainable growth. This is something corporates are very good at, but which entrepreneurs don’t always understand.
How have your own experiences shaped this thinking?
I spent 20 years putting teams together; choosing the right talent and mix of personalities and competencies, investing in training and working together as a team. This is a big focus for corporates. It’s how you create growth. Entrepreneurs are often so busy working on their business, doing everything and being quick and agile, that they miss the vital element to scaling up, and that’s having the right teams in place.
You then need to manage the performance of those teams. Corporates do this naturally. Managers have KPIs, they monitor reams of numbers and they know exactly which products are generating revenues and good margins, and which aren’t.
Performance management is an essential component of any corporate managerial position. It should be integral to a company’s operations. It’s equally important for business owners to be performance managing themselves.
Related: The Shark Tank investors on what makes a start-up investable
Consider the following: What drives corporates to perform? Financials are managed strictly and there’s an obsession with performance. Corporates spend a lot of time and investment on what drives shares and performance. They understand that if you can’t measure something, you cant deliver on specific objectives.
Performance management contracts are incredibly important. Entrepreneurs often only worry about this when they want to get rid of a non-performer, but it’s actually essential to cultivate strong performers: Do they have targets, is it clear what they do, is it clear what your expectations are? This naturally helps with non-performers, but more importantly it supports performance.
You also can’t start putting these processes in place when your team reaches 50 or even 500 employees. It’s much easier to do when you’re smaller.
Top growth tips
- You can be obsessed with your business or your idea, but most entrepreneurs aren’t obsessed enough with the fundamentals of building a high-impact business. You can’t scale without these in place, so make sure they are.
- Get financial assistance sooner rather than later, as well as a financial software system. This can save you so much later on.
- You don’t need an HR manager immediately, but you should definitely hire consultants — this is such a critical growth area, and cannot be ignored.
- Prepare your business for scale up and investors from the beginning, or as soon as possible.
- Run your business by getting ready for the next stage of growth. Ask yourself, how do I grow 20%, then 15%? What’s my next stage? Lay the plan, plot it out.
Consider how much insight you have into your business’s processes, revenue streams and customer base. If you don’t have this essential data at your fingertips, your fundamentals might not be in place.
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