TUMISANG NDLOVU: In this week’s SME Corner we speak to Zinhle and Nomhle Mncube, directors and co-founders of Leap Partners. Zinhle, tell us about Leap Partners, what do you guys do?
ZINHLE MNCUBE: Where we want to start off is why we’re doing what we’re doing…. We founded Leap Partners under the premise that every entrepreneur deserves an opportunity to successfully realise their businesses. So because of that, as much as the ideas are great and the concepts are wonderful, there needs to be that detailed, nitty-gritty work that goes behind the process. So what Leap Partners does on a day-to-day basis is assist entrepreneurs with their capital raising, commercial advisory, financial modelling, due diligence, company valuations, project management, where necessary, and in some instances as well, financial planning.
…we come from a banking background: Nomhle has almost ten years’ experience in banking, doing financial planning; I have about four years’ experience in corporate and investment banking. Nomhle also has an entrepreneurial background and she was in the printing side, where she had a magazine that really touched on stories of the entrepreneur and small black businesses in particular. Our thought process was, instead of recording these stories, let’s now stand in the gap of creating and assisting these entrepreneurs for being newsworthy, successful and sustainable businesses. In a nutshell that is what Leap Partners is all about.
TUMISANG NDLOVU: Nomhle, take us through why you guys started this business? Zinhle touched on that a little bit. Take us further into what is the core meaning behind why you do what you do?
NOMHLE MNCUBE: …[with] the Black Business Journal, which is still in existence, we were trying to go into a digital magazine…. we identified a couple of businesses that were struggling in terms of financial resources and others we would find that were struggling in terms of structuring their businesses. You would find there would always be that gap. We were interviewing these businesses and then just leaving them there, so we felt like we needed to at least do something for them because, [we had companies that we knew of], such as your Zico type of companies, companies that are into acquisitions, people who are there and are able to give these resources to these lacking small entrepreneurs.
So we’d always be in the gap, where we would try to link them, bring through your mentorship programmes and such. So we felt that it’s important to bring the two together and try to have real success stories of what we have originated ourselves. So I think that’s why we began everything: because black people or black businesses are obviously struggling with resources. This is why we are in this space – trying to bring everything, praticalising everything.
TUMISANG NDLOVU: With what Nomhle has said, Zinhle, how has the market received the business so far? How well are you doing out there in terms of making a difference?
ZINHLE MNCUBE: In terms of our clientele, we are relatively well received. Obviously in our first year of starting it was quite difficult because at the same time you want to prove yourselves to the market and when you do that sometimes an entrepreneur forces themselves to almost compromise their value or how they price themselves, for example. Through those learnings we’ve realised that …just because we want business doesn’t mean we have to sell ourselves short.
Obviously through those learnings we came into a nice business model and how we actually work and we’ve realised …the more we value ourselves, the more our clients see the value that we bring. In the first few months it was quite difficult. But now in terms of how we are structuring ourselves as a business model – in not selling ourselves short and knowing the value that we bring to the business – our clients see that. And there’s been some quite positive uptake, not only on an individual basis but in terms of civil organisations that want to work with us in assisting their members with their businesses. So it’s been very, very positive.
NOMHLE MNCUBE: It has been difficult though because you find a lot of times…there is a lack of financial resources and you come in because you want to offer a service but at the same time you need money to offer that service because nothing is for free. If we were an NGO, done … but you need to position yourself in the market as an NGO, you have to have financial backing to do it as a free service. So it has been very difficult because a lot of times you have to cut your prices, so that you can at least establish a name, get your brand out there.
It has been difficult and I think that’s also one of the reasons why we have recently partnered with … the youth chamber of NAFCOC (National African Federated Chamber of Commerce and Industry) – there you’ll find a lot of entrepreneurs. NAFCOC is basically a facilitator: they do what we are doing but they also have a gap, or at some point they also receive funding, but it comes from other sources. So they need people like us to assess those applications for them to be able to distribute that funding. It makes it a little bit easier because once you’ve become a member you now don’t have to pay so much to get your business in order, to get your documentation in order. It becomes easier, instead of paying the, say, R15 000 you would have paid initially, you can now pay R400 or R500 to get your [business] going.
We are with NAFCOC because the numbers make more sense. If we are assisting a lot of entrepreneurs it’s not just R500 that you get, [there are] a lot of them, it’s about mass numbers and just the flow of things. It’s been difficult but I think, like Zinhle is saying, it’s important to partner with people that you share the same vision with, so that you get a lot of things done and you get value from what you’re doing.
TUMISANG NDLOVU: With what Nomhle has said, Zinhle, what are your views on the current SME space in South Africa? Are entrepreneurs getting enough support?
ZINHLE MNCUBE: On paper, yes, there are a lot of institutions that are out there both on the governmental side and the private side. But with some of these institutions the problem is – I think this just talks to South Africa in general in a funding perspective – they are quite risk averse.
Also what we’ve found is the definitions, what is ‘early stage’ and ‘seed stage’ in South Africa might not necessarily be the case elsewhere. Our thinking, for example, with seed stage is idea and concept – that’s all you have and with early stage you are just about to develop that product – there’s not even market uptake yet. But you find that when you come to early stage, institutions in South Africa want you to have that market already.
…at the same time when they reject the entrepreneur – and we’re just basing that on the clients we’ve seen who have been rejected – they give you the rejection but in terms of [explaining] why they rejected them so that they can take what was said and better the business, [institutions aren’t] really as forthcoming as we would have liked. So yes, institutionally the guys are there but in terms of how they run and how they function I just feel that is a bit of a gap.
TUMISANG NDLOVU: With that said, Nomhle, what advice would you have for anyone who’s looking to start a business out there?
NOMHLE MNCUBE: It’s a tricky one because I’m also still…
TUMISANG NDLOVU: You are in that journey yourself.
NOMHLE MNCUBE: …in that myself but I would say with what we’ve seen from the clients and from our side you need to know your product. It’s easy for everyone to say that, ‘know your product’; it’s not as easy as it sounds because you obviously need to know the strengths of your business, do a proper SWOT analysis, know your strengths as an entrepreneur, know your weaknesses, know the opportunities that you are pitching to your funder.
A lot of times you find an entrepreneur will pitch an idea to a funder but they are [too] money-focused [thinking] ‘I’m trying to get funding; I need to get out of this room with something in my hand’. So with that in mind they are always pitching a problem instead of an opportunity.
So you need to always, as an entrepreneur, know your product, know where the opportunities lie within a product. You need to make sure that a funder realises ‘I cannot miss this bus, I need to be part of this project’. So you need to know the opportunities of your business.
Know your threats, the barriers to entry, know your competition and you must know what your competitive edge is. If everyone is selling potatoes I must know why am I selling potatoes, how different are my potatoes, maybe there’s something that I put in there or I give my customers, a different package and so on. Basically just know your product.
I would say the most important thing is SWOT analysis, you need to know your strengths, weaknesses, opportunities and threats.
Other things such as where we are, our economic times, you can’t control some factors; but you need to at least know what they are so that you are able to adjust yourself.
Also be flexible as a business because especially with start-ups there’s a point where you get into survival mode, you knew your product before you came into the industry, you did your SWOT analysis but there are things that no one can really, really teach you, so you need to be flexible: you need to keep changing what you are doing but you keep your vision.
You must have a proper vision: have your short-term goals, mid-term goals, long-term goals; keep your SWOT analysis, keep your vision because there are things that you need to do to attain your long-term goal. You can’t just sit and say I’m applying for funding, so I’m waiting for my money to come. ….for you to get [to your long-term goal] you need to have your mid-term, your short-term goals. So that’s why I’m saying you need to be flexible, change here and there until you find that niche. Redefine yourself and so on.
I think Zinhle will also come in here, I think as an entrepreneur when you start your business it depends, sometimes people have resources, others don’t, sometimes you are just thrown into the [deep end]. So it depends how you start. But the most important thing, at least from what I have seen, is that a lot of people start businesses and they don’t have enough financial resources. You can still get around that issue in that … if you are an entrepreneur you are able to negotiate.
So you need to make sure that you form partnerships with people who actually have the same vision as you because as you do that … [you can hide your weakness]. For example, I want to open Chesanyama or something, this is my vision but I can’t yet pay someone to be in the kitchen …. or to clean the floors and so on. But I can own the idea, own the vision but partner with people who share in the same vision as me and not really yet have to pay. So we share in the same vision, this is what we’re doing, we exchange the resources we have.
ZINHLE MNCUBE: Another thing I can add is that in terms of where we are in the ecosystem with entrepreneurs, obviously some things aren’t happening the way that we would like them to in terms of regulations and red tape, but that doesn’t mean we must just give up.
Know the game, play the game while things change. The more numbers you get in terms of people who are playing and are still getting kicked out by it, the more advocacy we will have in terms of strength in numbers and going back to the people that own regulation and saying, guys, we’ve done everything that you said we should do by the book and still, our cases are market-worthy according to your definition. But still play that game and sooner or later when the numbers are enough there’s going to be a strong enough advocacy. So whether you win by playing the game or not, it’s still a win for the ecosystem as a whole.
TUMISANG NDLOVU: A great revolution that, thank you so much guys. That was Zinhle and Nomhle Mncube, the directors and co-founders of Leap Partners in this week’s SME Corner.
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