02 AUGUST 2015
10 SA entrepreneurs who built their businesses from nothing
by Nadine Todd
Remarkable stories about local entrepreneurs who built big businesses and well known brands up from humble beginnings.
NetFlorist, SA’s largest online gifting company, was launched by accident
“Our plan was to run the site for one day to prove that we could do it. And then we got R30 000 worth of orders. That was the equivalent of a whole month’s revenue at a flower shop.”
Ryan Bacher, Lawrence Brick and Jonathan Hackner launched NetFlorist on Valentine’s day in 1999.
The founders of NetFlorist had no intention of starting an online floral and gifting company – they just wanted to prove to Makro that they could design and run an e-commerce site. But Valentine’s day came and went, and the ‘test’ site did unbelievably well, so they didn’t shut it off.
“What’s really crazy is that people were paying for us to provide a service. We had no stock and knew nothing about flowers. We just sent the orders to a flower shop in Sandton,” says Ryan Bacher.
How did they make it work? “We knew our best bet was to get the website out, hack it, and keep changing it. We would learn more from the site being out there in the market than we could ever learn in-house, trying to develop a perfect product. It was basically always a work in progress.”
USN: Zero to R1 billion in 15 years
“At first, I wasn’t even thinking about launching a product line or even a business. I just wanted to be out there, selling product and making a profit.”
Albe Geldenhuys, launched USN sports supplements in 1999.
Even though it sounds like an America product, USN was launched from a small flat in Pretoria, where Albe Geldenhuys’ girlfriend mixed creatin formulations with a hand-cracked washing machine (the Sputnik). A born salesman, Geldenhuys didn’t concentrate on business plans or marketing strategies – he focused on selling. “I targeted anyone, I had no strategy beyond just sell, sell, sell.” The ‘non’ strategy paid off and word began to spread around Health & Racquet clubs in particular – if you wanted good quality sports supplements at an affordable price, Albe was your guy. The entrepreneur kept things lean – all revenue went back into product, allowing the business to ramp up sales until it was able to support offices and product development at the CSIR.
Big Blue’s R100 million success: From concept store to national retailer success
“Try stuff and if it works, keep on doing it; if it doesn’t, stop.”
James Robertson and Philip Cronje launched Big Blue from a flea market stall. Today the company has a turnover of R100 million.
Like Robertson and Cronje, many successful entrepreneurs are sceptical of predictive information, which means they don’t decide upfront if an idea will work or not. Instead, they run small experiments, not risking too much, but getting some initial data to decide whether to invest more fully in a strategy or not. One of those experiments was the original Big Blue store in Rosebank, then called Kitsch and Kool. It was based on the Danzigers warehouse, which had collected old stock since 1910, and had become a museum of consumer goods over the decades. The concept was a hit. It generated a flood of magazine and television publicity as well as a healthy increase in sales. This store also became one of the first in the country to combine gifting with clothing, a concept that is now commonly known in the retail industry as a ‘lifestyle store’.
Lebo Gunguluza: From dirt poor to self-made millionaire
“Notice the difference between what happens when a man says to himself, I have failed three times, and what happens when he says, I am a failure.”
Lebo Gunguluza is the founder and group chairman at GEM Group, a turnaround strategist, motivational speaker and Dragon on SA’s Dragon’s Den.
When Lebo Gunguluza arrived in Durban in 1990, he had R60 to his name. At 26 he bootstrapped his first company, Gunguluza Entertainment. “I spent my first million in one year. By the end of 1999, I was flat broke. My car was repossessed and I was blacklisted.” But Gunguluza isn’t one to turn away from a goal. Down and out, he would walk to the CNA and stand in a corner reading business books that he couldn’t afford to buy. If the staff chased him away, he’d go home, change his clothes and come back.
“I made up my mind that whatever I went into next, it would be in a space that pays well and has structure. I would also continuously reinvest in the business, watch my cash flow, and do business only with scrupulous clients who paid on time.”
Ocean Basket was launched with R800 and a dream
“We convinced all of our suppliers to let us pay them with post-dated cheques, and then we worked like hell to make enough money that month to ensure they didn’t bounce.”
Fats Lazarides founded Ocean Basket in 1995 with R800. Today the nation-wide brand has system-wide sales of over R1 billion.
Ocean Basket was launched from a 118 m2 store in Menlyn Park with some crazy restrictions, because the centre management had assured their current clients there would be no more restaurants in the centre. They could only serve five proteins and two starches. They weren’t allowed to serve salads, desserts or coffee, and only one red and one white wine by the glass. Doors had to be closed by 7pm.
For every restriction, Fats Lazarides found an advantage. “We focused on the lunch-time trade. Meals were cooked and served quickly. Bar stools set up against the wall saved space and let single shoppers eat without feeling lonely.” Soon, families would deliberately eat an early dinner before the store closed. “An entire family of four could eat for R60 because we let them bring their own salads, wine and even desserts.”
Turning everything they touch to gold
“Focus on what you know best. You don’t need to be a master of everything, you just need to know a lot about one thing.”
Irfan Pardesi and Hina Kassam launched ACM Gold in 2005. The company has a current valuation of R3 billion.
On his journey to launching ACM gold, a specialist forex and gold trading platform, Irfan Pardesi had no option but to bootstrap the business. He and his sister, Hina Kassam, convinced a South African platform operating in the UK to let them get new clients on the platform without paying the monthly premiums. “We couldn’t afford the fees, so this negotiation was essential to the success of our start-up,” says Pardesi. It was the foot in the door they needed. The duo have since built their own platform, and learnt to localise according to markets, and focus on what they do really well, without diluting the business and their expertise. “We’ve created many dollar millionaires over the past few years, and we’re proud of that. We don’t charge a minimum, because we got our start that way, and we share a percentage of the commission.”
Anat: When you’re small, it takes chutzpah to get noticed
“There was a long queue of people trying to get a stall at Bruma flea market and I was at the back of it. So I stood on my toes and yelled, ‘Excuse me, do you want me to sell falafel here?’ The man in the booth waved me to the front of the queue.”
Anat Apter, founder of falafel and schwarma franchise, Anat.
Starting out, Apter bought a food trailer for R600 that she paid off over six months. At first she only sold falafel because it’s what she knew how to make best, and she wouldn’t settle for anything less than the best quality. The strategy worked. The food was delicious and she slowly introduced schwarmas for meat-loving South Africans once they’d been perfected. The schwarma was such a money spinner that two years later, Apter opened her own shop at the market. As the market started to wane, she moved to Sandton City to win over a new customer-base. That feat took two years, but the gamble paid off: She franchised the business two years later, using franchisees’ capital to help her grow the brand to 26 stores around the country today. All because of a focus on starting small, serving the absolute best and keeping things at their most affordable and value for money.
Fry’s: You don’t become something big by winging it
“There’s a process for how you walk into my factory – and if you walk in the wrong way, I’m going to [figuratively] klap you for it, because that system is there for a reason. It has its foundation in the mistakes that we’ve made and the solutions we’ve found to challenges.” – Wally Fry
Fry's founders Wally and DebWally & Debbie Fry, founders of vegetarian food company Fry’s Family, that went from missing meat and a home kitchen to shipping over 6 000 tonnes (or 27 vegan products) to 20 countries every year.
Wally Fry never intended on becoming an entrepreneur. He’d given up meat and missed it, so he tinkered in his kitchen to create a convincing meat alternative for him and his family. Having started the company running absolutely every function from manufacturing, to finance, to marketing himself, he knew that systems and processes were the only way the business would be able to scale and free up his time to focus on strategy and growing the business. He gave up control of each function incrementally, and only once he was happy he’d put in the right person with the right skills and training to run things the way he believed they should be run. It’s being this kind of stickler for detail, system and process that has seen the brand gain all the right food health and safety stamps, and accreditations as it’s grown that has allowed the products to find their way into the fridges of major South African retailers, and international markets.
Quirk: Sometimes you’ve just got to wing it (and wait a long time) before your ship comes in
“I’d love to be able to tell you it all happened according to some grand vision, some master plan – but frankly it didn’t. I quit my job as a waiter, six weeks later I ran out of money, and it took the market seven years to catch on to what we were offering.”
Rob Stokes founder of QuirkRob Stokes is the founder of Quirk Digital agency, an idea born on a couch at 3am, and grown to the point that in 2014 its consolidated revenues tipped R140 million and it was sold to international giant WPP.
Rob Stokes is very candid about how accidental some of his successes have seemed. He describes the beginning of his marketing company as a time where, “we bought and sold software, did some network stuff and made really bad websites.” They then ditched the hardware, slowly ditch the networking thing, and got better at the website thing. The slightly longer cliff notes is that Quirk digital agency was learning to execute digital marketing campaigns long before businesses understood the value of appearing at the top of a Google Search. When you’re on the leading edge of a new market you’re the pioneer and there aren’t tried and tested businesses to emulate. This means a strong stomach for learning lessons, pivoting quickly, and learning to be the best so that when the market is ready, you’re the obvious choice.
Chicken Licken: Finding your secret sauce
“Without my father’s knowledge, I swapped the existing chicken coating for an untested recipe I bought in the US for $1 000. Sales increased and turnover shot up to over R200 000 a month. That was a big deal in the 1980s.”
George Sombonos is the founder and franchisor of fast food chain, Chicken Licken, that has grown to 240 stores around the country and turned over R1,3 billion in 2013.
In the early 70s, George Sombono assisted his father in managing his roadhouse restaurant, the Dairy Den, in the south of Johannesburg. Sombono was sent to the US in 1972 with a mission to learn more about the industry and would eat chicken and hamburgers from every restaurant and chain he could find. In Waco, Texas, he happened upon amazing chicken, but the recipe would cost $5 000. With his last $1 000 in travellers cheques he haggled for a different, untested recipe. Ultimately, the proof is always in the tasting because once the new recipe was sneakily introduced, sales rocketed. He secured consistent supply from Rainbow Chicken, and at times demand is so great that he needs to import wings from Brazil. The moral of the story: In the quick service industry, great taste and good value for money is everything. Get that right and you’ll strike gold.
Source: Entrepreneur is South Africa’s no.1 read business title. Each issue of the magazine delivers relevant, incisive, high-quality content that not only inspires entrepreneurs to achieve their own business success, but delivers a ‘call to action’ as well. Visit our web-site at: http://www.entrepreneurmag.co.za.