Leader.co.za - Management, Training and Career Advice for Business Leaders







06 JUNE 2011
Eric Njuguna: Thinking out of the box
by Hendri Pelser
The best business concepts are so simple, most people think they will never be a success. It takes a passionate and driven entrepreneur to convince the market otherwise.

Eric Njuguna is such a business owner, and his Rentabox concept is slowly gaining ground.

The former IT specialist explains that the concept is anything but rocket science: instead of buying and then discarding dozens of cardboard boxes, home owners or businesses that are moving premises can simply rent his plastic boxes.

While studying towards his master's degree in the UK, Njuguna moved around a lot and came across the plastic box rental concept.

Back in SA, he pursued his IT career but when his family moved house in 2009 he realised that there was an opportunity in the local market.

"My wife Elizabeth and I did some research and could not find anything similar in SA.

"On a whim I bought some plastic boxes for our move and it worked perfectly."

At the same time, several of their friends were also in the process of moving and they kept borrowing Njuguna's boxes.

He adds that it would have been cheaper to buy cardboard boxes but that he wanted to test the concept locally. The couple researched different business models being used overseas and Rentabox was created at the end of 2009.

As a professional in the corporate sector it was difficult for Njuguna to immediately make the leap to the small business world.

Instead, he decided to manage the business on the side: "I set up a website and gained a client in the first month!"

Njuguna bought some more boxes and decided to team up with a courier company to manage the distribution process. This way, he could focus on his core business of renting out boxes and leave the logistics to an expert.

Unfortunately, this model did not pan out as the courier company did not have the capacity to clean the boxes or to respond to last-minute orders.

"We decided to move the distribution in-house to provide customers with a seamless experience."

Njuguna bought a trailer, put a tow-bar on the family's extra vehicle and hired a family member as a driver.

The business ticked over but it needed economies of scale to become a truly profitable venture, so Njuguna quit his job at the end of last year.

"I didn't want to be employed anymore. I've always been an entrepreneur looking for new ideas. I had other businesses while I was working - with varying success," he says.

Njuguna has done significant research and says about two million people move house in SA each year.

The recession has not really affected the market as there are still first-time buyers, as well as families scaling down.

Initially his core target market was young professionals looking for unique solutions to everyday problems online. As the business grew, this expanded to include larger, middle-class families as well as the corporate sector.

At the moment, the business serves about 30 customers a month and Njuguna believes that 200 is within reach now that he has time on his side.

He says that turnover is expected to triple in the next six months alone.

"I lost a good number of deals (while working), especially corporate clients, because I couldn't make meetings and because I didn't have the capital to buy and store more boxes."

Unfortunately the capital conundrum is still an issue and he has been looking for expansion capital for over a year. He would like to expand the business to Cape Town and Durban.

"There have been positive signs (from the banks) but this means nothing without a contract," he says.

He adds that the idea has been well received: "I believe there is a window of opportunity at the moment. There are no barriers to entry (for potential competitors), but we can entrench the brand and deliver the service (to corner the market). The moving industry will change fundamentally in the next five years."

Nevertheless, Njuguna is extremely optimistic about Rentabox's prospects and believes giving it his full attention will help the operation grow exponentially.

He says that part-time entrepreneurs should not be afraid to make the move from the corporate world.

Rather than waiting for the business to mature before committing full time, they should test the concept, find a contract and then follow their dream.

From his experience, he adds that it is crucial to set clear targets from the beginning, as well as an entry strategy.

Nevertheless, the angst of giving up a salary will always be there: "Don't make decisions about tomorrow based on today's circumstances."

He believes full-time employees and business owners are very different: they make radically different decisions, and an employee cannot always understand the reality a full-time business owner faces.
Useful resources:

Sunday Times
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