Having embarked on this entrepreneurial journey, I have come to realise that one could liken the conception of a business to pregnancy. When you announce the great news (of either a new business or a pregnancy), you receive congratulatory messages from far and wide. Everyone is excited for you as you bask in great anticipation of the road ahead of you.
Similar to pregnancy, the first trimester is the most fragile period of a start-up. All of the major operations and systems are coming into place and if not done right, can easily derail the whole business off of its tracks. However, what I have found is that the South African market is extremely risk-averse, and thus, albeit the business being at its most vulnerable stage, this is where one will receive the least support. Bootstrapping the business will have to be the order of the day until a lifeline comes along. And to endure this, one has to burn their boats simply because, failure is not an option.
Money, Money, Money
Logistics requires large sums of money. This could either be in the form of working capital or financing assets to scale the business. Most private equity funders or financial institutions do not want to hear from you unless you have had 6, 12, or even 36 months into your operations. So, what do you do to keep running when the working capital is dwindling faster than a bottle of gin at a new year’s party? (Some ideas – I read somewhere that the liver is capable of full regeneration from as little as 30% of its original size and one can live an active healthy life with just one kidney…I joke!).
Going back to working capital, as a pregnant woman might experience constipation in her first trimester, so will you if your working capital is not in order – you will experience a high level of constraint and simply restricted from operating. A friend once said to me that a truck that is parked, is akin to picking up R100 notes, tearing them in half, and throwing them into the fire – you will be losing money. Furthermore, whoever came up with the concept of 30 days payment on statement, with invoice cut-off dates as early as the 5th of month, will not see heaven! Many SMMEs, regardless of the sector, have collapsed under the weight of ridiculously lengthy time lags between receipt of payments from debtors and payments to creditors.
Connectors and Mavens
I’ve once referred to the adage If you want to go fast, go alone, if you want to go far, go together. In one of Malcolm Gladwell’s best-selling books, The Tipping Point, the author talks about different archetypes, two of which stood out for me, connectors and mavens. A connector’s strength lies in their ability to keep in touch with other people and having rich networks to tap into. A maven, on the other hand, is what I would call a human encyclopaedia. These are the people who are always in the know and you can go to, to ask about anything – the distributors of knowledge.
It is through old and new mavens and connectors that I have found myself being able to get out of a jar of pickles that I would have probably choked in. Through these archetypes, I came to know of ABSA’s Enterprise Development Program. As I have been on the drive to scale the business, I have come to realise that there is quite a disconnect between funders and entrepreneurs. Most VCs and equity funders want you to come up with the next best supercalifragilisticexpialidocious idea (please don’t ask me to say this out loud..I had to google that word!), however, there can only be so many Elon Musks in this world.
This is where ABSA shines. True to their purpose – Africanacity, the institution understands that our continent is unique, the way we do things is unique, but as a people, we strive to meet every challenge with tenacity, ingenuity, positivity, and creativity. We might not be building the next Space X, but we can add value to industry simply by affording a different calibre of determined people (who may or may have not been excluded before) who bring in value through a different lens and a different perspective of doing things without having to reinvent the wheel.
As an entrepreneur, one tends to be a Jack of all trades for the business. But if the goal is to birth a legacy, then you have to set up the right systems from the onset. Tacama Consulting was introduced to me by an industry colleague and has been a phenomenal strategic partner that is vested in the growth of my business. One of their values, “nurturing relationships in a way that is mutually beneficial from both a business and personal level” stood out for me. Tacama is a consulting business that operates on the same frequency that I do and understands that we are on the path of creating generational wealth. As a bonus for SMMEs like myself, over and above the full suite of financial services I receive, I also have access to a CFO who keeps me accountable and on my toes (and at times keeps me awake at night!)
I alluded earlier to the possibility of a business grinding down to a halt if there is a strain on working capital – fear not, your livers and kidneys are safe thanks to businesses like Structured Capital Solutions. One of the most frustrating circumstances to encounter as an SMME is having a bloated debtors’ book with no cash in the bank. Amongst their solutions, Structured Capital offers purchase order financing and invoice discounting at an expediated rate that meets the needs of an SMME. I think they qualify to be called PDQ’s knight-in-shining-armour; a knight brought to my attention through mavens and connectors.
It’s not all doom and gloom
As a pregnant woman will experience heartburn, so will you, as an entrepreneur (metaphorically or otherwise), as hearing the word “No” soon becomes as common as day. As one soldiers on, it is important to have the right support structures in place; whether from seeking finance or funding to as much as having the right circle of people around you who can be there for you (emotionally or otherwise).
If you are considering establishing a business in the logistics space, fellow brethren, do not be deterred. Gavin Kelly, CEO of the Road Freight Association (RFA) refers to the “chicken-egg and omelette” conundrum. Loosely translated, it is the contract vs. assets vs. experience causality dilemma. The truth of the matter is that either one of these states can be a launching pad of a start-up in logistics. The important thing is to start, but start right, by doing things the right way from the beginning. There will be good days and bad days, you will feel like you’ve got bipolar at times as you will go through episodes of maniac highs and depressive lows, but do not be discouraged. You will have chosen to create, to build a legacy – this will be nothing but growing pains.