SIKI MGABADELI: We are talking entrepreneurship this Friday – what it takes to succeed and some of the lessons learned along that journey. We are going to be looking at the book I’m In – Essential Advice for Entrepreneurs. They tell us it’s not a “how to build your business” book – so if that’s what you are looking for, that’s not the conversation we are having.
Rather we are talking about insights into the thinking and experiences of people who have built businesses, who have seen them fail and have seen them do really well. So what is that formula, and how do they deal with the failures and how do they manage the successes?
One of them is Polo Leteka Radebe, who is an entrepreneur & co-founder of many businesses, including Identity Partners and IDF Managers. She is our guest this evening.
Polo, thanks so much for making the time to talk to us today.
POLO LETEKA RADEBE: Thank you Siki, for having me tonight.
SIKI MGABADELI: I have an admiration for anybody who starts something out of nothing, and makes it into this living, breathing thing that just multiplies itself and re-creates and employs people and creates and entire economy. That starts from somewhere, getting yourself off the ground. I was reading somewhere that you started off by selling sweets and snacks to supplement your pocket money. Tell us about that.
POLO LETEKA RADEBE: Actually I was brought up by a mother who didn’t believe that children should go to school with money. And of course I had a different view altogether about that. So I thought, well, there are ways that I can sort out this problem – and that’s really how it started.
Of course, at the time I wasn’t thinking of myself as an entrepreneur, I was really just thinking, well, there’s a market for sweets and I can supply that demand. So that’s really how it’s started. I think over time I always remained quite keen to be self-sufficient, I suppose, so I’ve always found ways over and above whatever income I was earning, trying to earn extra income. Again, at the time I wasn’t thinking I’m an entrepreneur. It was really more what else can I do on the side.
SIKI MGABADELI: You said “sort out a problem”. And that’s really what identifies entrepreneurs – there’s a problem here. There is a gap that needs to be filled and let me find a way to fill it.
POLO LETEKA RADEBE: Correct. It really boils down to that. It’s as simple as that. We sometimes want to complicate it, and what it really is about is: is there is a challenge or a problem in the market, and is there a way of finding a solution to that challenge? Are you then able to convert that opportunity into a commercially viable opportunity for yourself? If you can tick those boxes, you are well on your way to a successful business.
And of course there is always the challenge that once you have picked up on the opportunity, other people always follow and you have to then constantly re-invent yourself, redefine the problem or find more creative or more efficient ways of solving the same problem, just so that you remain a step ahead of your competition, because competition always catches up.
SIKI MGABADELI: What are some of the things that were really difficult for you at the beginning?
POLO LETEKA RADEBE: When you think of a business idea, it’s clear in your mind. You think it’s clear in your mind until you actually firstly have to go and articulate it to people that you want to support you, whether they are financiers, whether people that you want to recruit to come and join you, whether people you want to get into partnership with so that they can help deliver on whatever solution you’ve come up with. So I think finding a way of properly articulating that in a manner to convince people that indeed this was a viable business opportunity was not an easy thing.
But what I found, Siki, and this is something that I find a lot of entrepreneurs don’t do, is I talked to a lot of people. So I tested the idea with a lot of people and of course a lot of people would tell me how crazy it is, it’s not going to work, it’s not going to be commercially viable. But in the criticism they were actually highlighting the risks that I needed to think about as an entrepreneur. So sometimes people become disheartened when people say no, it’s not going to work, as opposed to them thinking, okay, this person is saying it’s not going to work for this and that reason. Then you go and apply your mind to how you can then address those risks that are being raised. That’s really how you build a very solid business model that will become sustainable in the long term.
So I would want to encourage a lot of entrepreneurs to actually test their ideas with people – because what I find is people keep their ideas to themselves.
SIKI MGABADELI: I think it’s because of that worry that someone’s going to steal it. But the thing is, it’s not stolen if you haven’t implemented it.
POLO LETEKA RADEBE: Correct, exactly. And also I think when you come up with an idea, because it’s your original idea, you are probably most likely to do it better than the person who might want to steal it.
And the reality is that if you’ve thought about something, probably a hundred other people have also thought about it as well. So I think we should also not be too presumptuous and think that my idea is unique, nobody else has ever thought about it. I’ve come to appreciate that every idea has been thought of. Other people might have tried to execute it and they were not successful in executing it. And perhaps what is unique about you is how you are going to do it, which also includes your determination, because with these things when you start a business you’ve got a particular model that you are going to use. I always say that the market is the best tester of whether you’ve got a good business or not.
And when you get to market you might find that the market rejects some of the models that you come up with, and then of course the challenge is how you respond to it. Do you then say, oh well, I’m going to close shop because the market is not responding appropriately, or do you then go to the market and ask what exactly is wrong with this thing that I’ve introduced – and how do I change it?
SIKI MGABADELI: And you learnt that with your sweets business. You liked certain sweets but, when you put them out to the market, you had to understand what they wanted.
POLO LETEKA RADEBE: Precisely. The market always gives you feedback. When you sell sweets, they will say well, why don’t you sell the pink ones, why are you only selling the orange ones, or why don’t you sell the chewy ones, why are you only selling the hard ones? It’s the same thing in business. I know I’m making it simple but I think that’s…
SIKI MGABADELI: What the book is about.
POLO LETEKA RADEBE: We are saying that this is really about everyday things that you do. If you think about it, even when you are in a work environment you get assigned a task and you try and do it in a particular way, and you keep checking with your bosses – is it okay, am I on track? The boss will say yes, you are on track, or no, this is what you are getting it wrong, go and change it. It’s the same thing, really with entrepreneurship – testing and refining and improving as you go along.
SIKI MGABADELI: The book referred to is called I’m in – Essential Advice for Entrepreneurs, and it’s a really good one. In fact, all of you who are in the book were Dragons on Dragons’ Den on the SABC. I want to talk a little bit about that, about the experience of having people pitch to you. I want to get some advice from entrepreneurs when they are approaching a funder, a potential backer or anybody like that. What are the things that you learnt from that experience that you think they should try or think about?
POLO LETEKA RADEBE: I think the experience is not just confined to the show. I will talk about the fact that, in our ideas business, IDF Managers, we invest in SMEs in particular.
And I’ve found that the challenges that we experience with entrepreneurs that come through our doors applying for funding is very similar to what we found in the Den. It’s really around people not being very clear about what their value proposition is, people not being very clear about how they are going to make a profit.
Firstly, even before we get to profit, how are you going to convince Siki to buy this thing? And it’s really thinking it through step by step to say okay, there is this market that I have identified, I think these are the characteristics of the market, this is where I will find them, this is what helps them to makes purchasing decisions, and this is how I am going to try and grab a part of that purchasing power and convert it to my business, and really thinking about it practically. Are you going to advertise on radio, because Siki listens to radio all the time, or are you going to attend entrepreneur events, because Siki attends all entrepreneur events? So people don’t spend enough time doing that. They will give a very macro-view around this is the size of the market, this is the value of the market, and therefore I’m going to take 5% or 10% of that. But then they don’t take it a step further to say how exactly you are going to convert that. And I think that’s very important.
Number two, I think it’s thinking about the actual business process itself – and this is something that you do when you write a business plan. I know that a lot of people think a business plan is a swearword, but it really is important because it forces you to think, if I’m going to be selling sweets, am I going to be producing the sweets or am I going to be buying the sweets? Where am I going to be buying them from, at what price am I going to be buying them?
SIKI MGABADELI: How does that compare to the next time…
POLO LETEKA RADEBE: Yes, and what are the labour costs, are there other costs associated with that, what kind of mark-up can I put on it, and also what is the price point that the market will accept? It’s things like that that people really need to think through, and they themselves have to be convinced that the business is going to make money. Because, once you are convinced, having down all that work, all that research, it’s easy for you to then articulate it to somebody to whom you are saying please invest in my business.
And also I think with pitches, in particular, people forget a lot of the time that you’ve got limited time – and investors, to be honest with you, lose interest very quickly. You need to really try and maximise within the first five minutes of your pitch. Just highlight the key points that you know, because investors are looking at a number of opportunities to invest in.
SIKI MGABADELI: Absolutely. So grab the person’s [interest] quite quickly.
POLO LETEKA RADEBE: And show them that it’s best for you to invest your money in my business, as opposed to the next business, because I’m going to give you these types of returns. If you say to me I’m going to give you a 30% share I am already interested and say okay, tell me more. So you start off and you just emphasise those areas that will be of interest to any investor. And then once you’ve got the attention within the first five, ten minutes, then you can go into the detail. But you need to make sure you understand what is going to grab the attention of this investor.
And that’s another thing that I think entrepreneurs need to do. Entrepreneurs a lot of the time forget that they also choose who they want to get financing from. So they a lot of times think oh, entrepreneurs don’t have a choice, they have to go to everybody and hope for the best.
But you also need to think if I come to Polo or to IDF Managers for funding, what kind of investors are they? Are they long-term investors, are they short-term investors?
SIKI MGABADELI: Marry yourself to the right one.
POLO LETEKA RADEBE: Precisely. Some businesses just require that funding and they really just have to go to the bank, especially if they’ve got enough of a track record that the banks are looking for.
But if you are looking for patient capital, but you are also looking for an investor who is really going to be a partner in your business, help you think through certain strategic things, then you come to IDF Managers or similar institutions, because that’s how we work.
SIKI MGABADELI: So do some research on the potential funders and marry that to your business.
POLO LETEKA RADEBE: Precisely.
SIKI MGABADELI: I mentioned in my introduction that one of the big difficulties – and we’ve seen stats around this – is that you can start. The difficulty is staying the course. What happens along the road? Why do businesses fail?
POLO LETEKA RADEBE: Life happens. The market tells you we don’t really quite like what you are selling, or they take much, much longer than you expected. It always takes much longer than you anticipated to get off the ground.
I think it is so important for one to build the right type of support system, to be honest with you, Siki. And the support system can be both within your business or it can be within your social environment, your home environment. It can be very lonely. But I also think that South Africa is in the midst right now of trying to create a very strong entrepreneurial ecosystem.
I think it is so, so critical for us to get that right, because again, even if you’ve got friends that are supportive, people who have not gone through the entrepreneurial journey a lot of the time cannot really relate to some of the challenges that entrepreneurs go through. So if you find groupings of – whether they want to be entrepreneurs, or they are already established entrepreneurs, or they are people who have started and are almost at the same level in their own business journey – I find that you get a lot of sympathy but support and good advice from those networks.
So I think building the right kind of network, building the right kind of support structure is really very important, because a lot of the time when you say I went to market with this product and I think it’s brilliant and I did prototype testing and things like that, and everything came out well, but the market is not quite adapting to it or rather taking it up, somebody will say I had a similar challenge, but this is how we got around it.
SIKI MGABADELI: Find those networks.
POLO LETEKA RADEBE: Precisely.
SIKI MGABADELI: The book is called I’m In – Essential Advice for Entrepreneurs. It’s available at all good bookstores.
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