The pandemic has intensified South Africa’s economic challenges, but these entrepreneurial CAs(SA) have found the secret sauce.
AUTHOR | Monique Verduyn
When President Cyril Ramaphosa addressed entrepreneurs in July, he applauded South Africans who are ‘searching for the silver lining’ amid the COVID-19 pandemic, a time of global crisis. The spread of the coronavirus has left few people unaffected, but does anyone out there recall a time when we have not had crises in our world?
Right now, entrepreneurship is being viewed as the main engine to drive economic growth. Global Entrepreneurship Monitor (GEM) states that many of the world’s governments, think tanks, non-governmental and international organisations now look towards entrepreneurship as a key part of the solution to ending poverty and social inequity, promoting women’s empowerment, and implementing business solutions to the world’s environmental challenges, including climate change.
In South Africa, the picture of how entrepreneurs and their systems have been affected in the long term is yet to be fully revealed, but understanding it is important.
The GEM South Africa (GEM SA) 2019/2020 report states that the economic and social upheaval caused by the COVID-19 pandemic underlines the need for a collective and robust national strategy to unlock entrepreneurship in South Africa.
Moving from start-up to scale requires the right support from the government and the private sector alike. The report calls for improved government policies and initiatives, market openness, entrepreneurship education and training, and the availability of and access to finance to foster entrepreneurship. In an entrepreneurial ecosystem that was rated one of the most challenging in the sample of participating economies in 2019 and has exhibited little sign of improvement over the past few years, survival and success do not come easy. We spoke to five entrepreneurs who are proving to be the exception to the rule.
Farming for the community
Babalwa Gova started Nalithemba Farming in Matatiela in the Eastern Cape in 2019 because she wanted to grow the community that had a hand in making her the person she is today. The farming business employs local farmers and general staff and includes a piggery as well as arable land for the growing of crops.
‘Our business model is simple, and based on environment with little economic activity,’ Gova says. ‘We identify and empower people in the community who will breed pigs and grow crops at home. This increases the harvest we produce in each planting cycle and enables us to take advantage of economies of scale. We harvest, package and sell the produce, ensuring a constant supply of fresh vegetables and pork for the community throughout the year, without people having to incur the cost of travelling to town for basic foods. At the same time, we are introducing people to commercial farming.’
Gova realised the need for community education when she visited a local household that was breeding pigs. They were overfed because of the misconception that having bigger pigs means more meat. ‘Showing them the bigger picture is helping people to understand farming for economic and community growth.’
Seeing what the farm has brought to the community has been the biggest success indicator, as is fostering a mindset that encourages generating wealth for communities at large. ‘We have been able to bring hope in difficult times, especially during the pandemic when many people have lost their jobs and have had to rely on their skills and the resources immediately available,’ she says. ‘We have given people jobs and helped them provide for themselves and their families.’
Her advice to entrepreneurs in these trying times is to be brave and to trust in themselves. ‘Put in the time and conduct proper research to prepare yourself to face the “new normal” and stay a step ahead,’ she adds. ‘Entrepreneurship is about recognising a problem and solving it. But problems change and people need different solutions. As entrepreneurs, we need to accept that we cannot use yesterday’s solutions to solve today’s challenges. We need to be agile and constantly find new ways to stay relevant and be flexible enough to adapt the way we do business during the pandemic. A crisis is the birthplace of new business opportunities.’
Embracing technology in tough times
In 2015 Lyle Malander left the corporate world and started an advisory business called the Malander Group. It provides services in three areas: finance and accounting, human capital and digital marketing.
‘The most elements of any business are its finances, its people, and its ability to reach its customers and stakeholders,’ says Malander. ‘We consider ourselves to be solutions driven to assist our clients in these areas and ensure that their business support functions are running optimally.’
When a client’s finance function is not operating optimally, the main contributing factors are either a lack of capacity or a lack of the right skills in the right functions. Malander’s team finds the right human capital, skills and systems to implement sustainable solutions for clients in the large and listed entity environment. The group has more recently expanded its offering to small and medium-sized businesses and provides digital marketing solutions to help these clients grow their brand.
‘The main driver behind the business was simple: I wanted to create an environment that provided a different type of opportunity,’ he says.
‘I asked myself one question, and that was: “What is the worst thing that can happen if it fails?” and I was willing to take that risk.’
The risk has paid off. Malander’s advisory team was named best accounting and financial advisory firm in Johannesburg in the 2020 Worldwide Finance Awards hosted by Acquisition International, and it opened an office in the United Kingdom.
The national lockdown made trading conditions incredibly tough, however, and Malander Group has to quickly adjust. ‘We have embraced technology within all our businesses across the group to ensure that we remain effective,’ he says. ‘Many companies have been forced to retrench staff, however, which has negatively impacted our recruitment business. To help create employment, we developed a platform called Freelance Magnet. It’s a South African online freelancer marketplace which gives companies the opportunity to find people for projects and gives individuals the opportunity to find projects that match their skills.’
Malander says the pandemic has created an opportunity for entrepreneurs to reimagine the way business is done and has also opened the door to different opportunities. The tricky part is to identify these opportunities.
‘Entrepreneurs need to be controllably bold. We need to do things and provide products and services in ways which have never been done before. When we make decisions to ‘pivot’ or change business strategy, we need to do it in a manner that does not counter all the work you have done to get there,’ he says. ‘Tough times don’t last, but tough entrepreneurs do.
Ready for a whole new world
Being a small-business owner has its share of challenges, one of them being compliance. Kaytee Professional Services is a compliance partner that helps clients ensure they are always prepared for opportunities that may come their way.
‘We are like a grocery store for compliance,’ says founder Nkateko Mathebula. ‘We have basic packages that cover the bare minimum for small companies, from SARS compliance, including annual returns and financial statements, to the add-ons that business need as they expand, such as payroll, BEE certificates, monthly meetings, and more. The skeleton pricing helps businesses while they are growing.
When they are ready, they can appoint an internal finance person.’
In 2011, Mathebula started a business in the automotive industry. When turnover reached R10 000 a month, she decided it was time to find someone to handle the books. One of the cheapest accounting firms she found wanted to charge a monthly fee of R4 000 for management accounts. ‘I couldn’t believe it,’ she says. ‘No wonder so many small businesses are a mess when it comes to compliance. That’s when I thought as soon as I am able, I want to help the little guy grow.’
She is clear about her target market. Kaytee Professional Services partners with people who are starting out, giving them the chance to take their shot and helping them grow. ‘We have had three clients leave full-time employment and transition to full-time entrepreneurship.
We have had clients who have built a 10-person company. Every time we have a client whose funding is approved, we celebrate together because seeing them grow is a success for us.’
COVID-19 saw a spike in her client base as many people were looking to apply for funding to help subsidise the running costs of their business during the lockdown. The company took the proactive route and regularly share critical information with clients. ‘We sift through the information that is pushed into public spaces and use WhatsApp and SMS to share what is relevant. As a result, our clients have been more targeted in their approach to funding and structures.’
She sees the pandemic as an opportunity to change everything that wasn’t working in your business before it hit. ‘As the world starts opening up again, take the leap, trust yourself and approach the new season as a start-up. Do not be afraid to let go and embrace what is on the horizon. To borrow from Aladdin, it’s “a whole new world, a new fantastic point of view, no one to tell us no, or where to go, or say we’re only dreaming”.’
The benefits of the cloud
Just like cloud technology has revolutionised our day-to-day lives, cloud accounting is transforming small businesses as they gain access to the benefits of fully outsourced financial management solutions at a reasonable price.
That is what inspired brothers Peter and Simon Magner to launch Iridium, a team of financial professionals who provide affordable accounting and tax services for small companies.
‘We hire talented graduates from universities across South Africa who are interested in pursuing a CIMA/SAIPA qualification and train them in how to become strong financial managers in the cloud,’ Peter Magner says. ‘We provide our services at a fixed monthly fee, based on the volume and complexity of each client. We love to partner with our clients to help them grow their businesses by providing them with a strong foundation in financial management. This includes setting them up with the best cloud solutions in the market for their industry and sound advice relevant to their industry.’
Iridium has been recognised as one of the top cloud accounting businesses in the country and one of only a handful of cloud integration specialists. Through the pandemic, the team have spent significant time building client relationships and improving internal and external communications. As a result of their knowledge and experience, and a strong marketing campaign during COVID-19, Iridium grew by more than 10% in monthly recurring revenue since the start of lockdown.
‘It’s vital to stay at the top of the minds of your customers by understanding their needs and situation and providing support for them,’ says Magner. ‘Be open and honest with your team about the situation and ask for their input to solve the challenges you are facing. Talk to people in your industry about how they are coping as we are all in it together. Be decisive in your actions. Keep nimble in your approach as things are changing rapidly. Also, be kind to yourself. It’s OK to not be OK.’
Co-creating for the future
Long before the adverse effects of the COVID-19 pandemic, it was commonly accepted that nearly 50% of new businesses do not survive passed year two, a sobering reality that extends far beyond the borders of South Africa. That’s because entrepreneurs typically have to navigate a series of obstacles like access to funding, access to markets, a lack of business knowledge and an even more frustrating lack of insight into the right tools, services and systems to implement at the right time in their business journey. In addition, there is legislation and red tape.
That’s where getlion comes in. Founded by Mathew Marsden, the business solves common problems for entrepreneurs and increases their likelihood of long-term success. The all-new getlion mobile app is designed to support SMEs in managing and growing their businesses. It is a one-stop platform for business solutions, and Marsden and his team are partnering with other businesses to aggregate the best small business products, services and support in one place.
‘Our business is all about creating value for entrepreneurs,’ he says. ‘Getlion’s value stems from the ability to build and distribute data-driven products and solutions. The more that our users use the app, the better our understanding of their business needs, and the more effectively we can create solutions to support them. In time, we will launch many of these services to complement our partners’ offerings, but our goal for the first year is to create “stickiness” − to build a proposition that our users engage with consistently and find repeated value in. The app is free to download and use on Apple and Android and we are striving to offer it “data-free” in the future.’
He is determined to ensure that the app becomes more than an information directory by taking a fresh, practical approach through a combination of innovative features, strong collaborations and a mobile platform that will engage entrepreneurs on an ongoing basis.
‘We launched getlion in the heart of the national lockdown,’ Marsden says. ‘One of the unique propositions of the platform is our effort to build the first rewards programme for entrepreneurs. In the same way that wellness programmes reward customers for staying healthy, we believe that we can incentivise entrepreneurs to adopt best business practices for long-term growth.’
Getlion’s initial proposition, for example, evaluates whether a user has a credible public profile (think website and professional email), their basic compliance is in order, their B-BBEE compliance and their credit score. These factors are typically key in winning customers’ trust and improving the chance of funding. By completing their in-app profile, users then unlock monthly rewards from partners like Superbalist, Net Florist, SweepSouth and more. As time progresses, the program will become more ‘active’, regularly rewarding users for running their businesses effectively.
Currently, users have access to many learning tools and resources, a dynamic events calendar, an e-business card, cloud storage for their most important company documents, and a news and currency feed.
‘It’s never been more important to nurture your customer relationships, but don’t stop there,’ Marsden says. ‘Use the opportunity to seek feedback and fresh ideas and adapt your product or service to make your offering more competitive. Like the 2008 recession, this crisis will produce some of the most innovative companies that the world has ever seen. Your busines ought to be a part of it, so don’t settle for doing things the way that they’ve always been done.’
He believes this is a great time for entrepreneurs to upskill themselves. With the extra hour gained from a lack of daily commute, it is tempting to replace this time with more work. But longer hours do not necessarily equate to higher productivity. Acquiring a new skill or knowledge will make you more effective. Marsden recommends starting with any of the free, online courses available through platforms like global Coursera and EDX.
‘It’s a pity that it takes a global pandemic to truly align entrepreneurs, but every business in South Africa has been affected by COVID-19.
This common enemy makes now the best time to leverage your network, build new relationships and co-create for the future.’