Some of the most successful entrepreneurs took major risks to get to where they are today, and they paid off in a big way. This article discusses four key qualities that real South African entrepreneurs possess that allowed them to establish successful businesses.
Successful Entrepreneurs Are Not Afraid to Take Risks
George Sombonos, the founder and franchisor of fast food chain Chicken Licken, is an excellent example of a South African entrepreneur who is a risk taker.
As a child, he assisted his father in the running of their family restaurant, The Dairy Den. After visiting America to learn more about the industry, Sombonos went around tasting burgers and chicken from all the restaurants that he could find. He tasted some amazing fried chicken in Waco, Texas, and decided that he had to have the recipe. He then asked the owner if he could have it and that he was taking it back to South Africa so that there was no chance of him being a threat to him. Initially the owner said he could have the recipe for $5000 but after some bargaining he managed to get the recipe for $1000 which was all the funds he had. His father was unaware of this purchase, he secretly took the recipe back to South Africa. Upon returning to South Africa, he mixed the chicken recipe and hid it under his bed before secretly introducing it to the Dairy Den menu without his father’s knowledge. The recipe was a hit and sales sky rocketed.
“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.”
Somobons had no guarantee that the recipe he purchased with all his money was even genuine; he took a risk and it paid off! Read more on George Somobon’s story.
Successful Entrepreneurs Are Ambitious
Fats Lazarides launched the successful seafood restaurant franchise, Ocean Basket with nothing more than R800 and a dream. From a young age, he was very business minded and after school he and his friends would discuss business extensively and how they would run the take-away place down the road differently if they owned it.
Whilst working at a Spar owned by his brother-in-law, Lazarides’ wife spotted a ‘for lease’ sign for a small shop in Menlyn Shopping Centre. Lazarides had been looking for a place to start up a great seafood restaurant and upon hearing about the vacant shop resigned from his job and went in search of the shopping centre’s manager.
It didn’t occur to Lazarides that there would be restrictions on what could and couldn’t happen with the space, or even if the centre was interested in his idea. With no formal business plan he managed to convince the manager to meet with him. Thanks to Lazarides’ confidence and vision he managed to secure the shop.
“They could only serve five proteins and two starches. They weren’t allowed to serve salads, desserts or coffee, but they could offer Coke, Tab and one fruit juice, and one red and one white wine by the glass. And they weren’t allowed to compete with the dinner trade. Doors were closed by 7pm. No exceptions.”
The space had many restrictions and instead of letting them get in the way, for every restriction Lazarides found an advantage. He also had very limited capital and instead of focusing on what he couldn’t do, he focused on what he could do.
“The restrictions placed on us actually let us focus on what really mattered, without distractions. Without wine, desserts, a large menu and a big store, we needed to make sure our seafood was really, really great. It narrowed our focus and gave us a recipe we have maintained 150 stores later.”
Successful Entrepreneurs Differentiate Themselves
Big Blue is one of the country’s largest T-Shirt retailers and possibility South Africa’s most unique and distinctive retailer.
James Robertson and Philip Cronje started in a small local flea market. After having success running the flea market store they set up a pilot store in Rosebank called “Kitsch and Kool”. The overwhelming success of “Kitsch and Kool” motivated the duo to take it further. There are hundreds of other boutique retailers nationwide so Robertson and Cronje’s main challenge was to find a way to differentiate themselves. They achieved this through experimentation.
Many successful entrepreneurs use technique of experimentation and are sceptical of predictive information. Instead of deciding upfront if an idea will be a success or not, they run small experiments which do not risk too much. These small experiments give them initial data to then decide whether to invest fully or to change strategy. Robertson and Cronje tested their ideas in the market place and after a positive response decided that they would proceed.
Robertson and Cronje differentiated themselves by selling goods inspired by South African consumer goods from 1910 to the present day, which they had found in an old warehouse of old stock that previously did not sell.
The duo did two things which many successful innovators and entrepreneurs do extremely well: first they actively searched for new ideas from a variety of sources and to connect the dots by taking ideas from one field and applying them to a different domain.
Successful Entrepreneurs Understand Their Product and Their Market
Albe Geldenhuys established USN in 1999 when he spotted a gap in the market. Geldenhuys was a salesman for the Health & Racquet Club and was the top performing salesman by a long stretch. Initially he purchased two products from a wholesaler, Muscle Science and EAS, and began selling them to health shops. He started to have problems and receive complaints because EAS was an expensive product from the US and Muscle Science wasn’t a particularly good product. Geldenhuys spotted a gap in the small but saturated market as sport supplement products were either poor quality or too expensive.
At the time, there was a perception that US brands were the best and Geldenhuys wanted to capitalise on that. He chose the name USN (Ultimate Sports Nutrition) to subtly suggest an international product. After researching formulations in magazines and from supplement reviews, he purchased Creatine (which at the time was a big deal) and began to mix and bottle his own formulations. His strategy was to sell to anyone and everyone (including some of the Blue Bulls rugby players that trained at his gym). Supplement shops started contacting Geldenhuys directly and word spread that if you wanted to buy good quality sports supplements at an affordable price then Geldenhuys was the man to talk to. Geldenhuys understood his product and his market. He saw a problem and a need and established the product as a solution to the need.
“The demand was there, but most people weren’t actually sure how to use sports supplements properly. That was our in. We started educating the market, adding meal plans to our packaging, and focusing on telling people how to use what, and what the results would be if our various products were used correctly.”
The next step was to expand the business and Geldenhuys approached ChemPure to assist him and the business moved from his kitchen to the ChemPure premises where they incubated the then small USN.
In early 2003, Dis-Chem bought a 50% stake in Evox, one of USN’s biggest competitors. Dis-Chem was USN’s biggest customer, so Geldenhuys had to formulate a strategy to ensure Evox did not steal his market. He needed to send buyers into stores looking for the product, and once there ensure that USN was the brand they actually bought. His plan was to train the employees in store so that they would know more about USN than Evox, which was a huge success.