The path to serial entrepreneurship

From scratch

“There have been three key phases in my business life.  The genesis was my time at university and just after university. I started a business with a school friend of mine, Mark Levy. We had high ideals, no experience and no money. We learned amazing lessons about cash flow, people, sales and operations and eventually ended up selling that business to management. Starting from scratch is incredibly difficult but also so incredibly informative about how the world works and how business works. Whether it was figuring out how a balance sheet works (I’m an engineer not an accountant!) or negotiating for credit with absolutely no money to back you up, this is where the hard yards were earned.

Big ambitions 

I think it’s natural after the first business to have heightened expectation and ambitions for your next business. I’d learnt so many lessons and I now had a good practical knowledge. Mark and I started an internet venture called Digital Planet. Part of our education in this business was raising capital and dealing with external shareholders. This part of my career was about learning and running a larger business. We had a grand plan, and like all grand plans, the reality never follows. For the first three years of the business, we lost money and struggled to get the business model right. From my experience with other start-ups, it always takes a long time to get things working. When we opened a retail store, it got up to speed quicker as the business model is defined, but opening a new-concept business is slow-going and risky.

One of the advantages of struggling to make it work is that the business evolved and spawned other businesses out of the original company.  A business is like an animal. It is constantly evolving to the environment, sometimes by chance, sometimes by design.  As each business grew, I saw my role change from that of Managing Director, the man in the details, to one of strategic thinker, guiding the overall vision.

Facilitator

Strategic Ventures is the current part of my journey.  Each business now has its own management and runs independently.  My role has shifted from being detail driven, focussed on a single strategy, to helping define different strategies for different businesses, keeping the management disciplined, being a sounding board and trying to feed the businesses new opportunities.  When I was still running a company, one of my main challenges was that many decisions were based on being in the detail. Some decisions were made that were not objectively the best decisions because I was too close to the detail or because of the history of the situation.  An example could be that when money was tight, we would adjust our purchasing and hiring decisions in tandem with the reality of the situation.  But once there was more money available, it was often difficult to shift gear and take on more risks and invest.  As an external party to the business, I now find it much easier to look at the bigger picture.

Tips for Starters

- I think the key to any business is adaptability. If something isn’t working, work out how to make it work or stop doing it.  

- Don’t chase everything.  Some good opportunities are worth giving up so that you can focus on your bigger opportunities.

- People really are everything.   Hire people who are better than you.  That way you can leverage your best asset: yourself.  Don’t accept mediocrity—it will consume your business.

- Cash flow, cash flow, cash flow—manage it hard.  Someone who owes you money is running their business on your cash and vice versa.

- Be patient.  It takes MUCH longer to earn your first million than your second. The beginning is very slow, but it accumulates. 

- How many hours you work doesn’t count, it’s the results that do. 

South Africa

I think a good place to do business has at least three characteristics.  It must be easy to start a business; there must be access to capital or credit; and there must be an appetite for risk.   In South Africa it is certainly easy to start a business but we come short a bit on the other two factors.  There isn’t much appetite for risk and no real venture capital to speak of.  A small business will struggle to secure capital or credit.  Once you are bigger and successful, money is readily available.  Most of the other environmental factors in South Africa (e.g. Black Economic Empowerment, taxation, regulation, competition, etc.) are just part of the framework.  A good entrepreneur works the system to maximum effect and adapts. We’re sometimes good at it and sometimes bad, but in my experience, adversity usually leads to a better result if you’re willing to face up to the challenge.