It’s an oft-repeated maxim that small businesses should be the backbone of the South African economy. Small businesses should contribute to about 60% of our country’s economic output, and are generally regarded as the point of hope for future employment in the country, being more capital intensive than large companies are.
But small businesses in South Africa have several hurdles to overcome. Apart from anything else, the odds are stacked against them: about 60% of businesses are said to fail in their first year. And then there’s red tape, the difficulties around accessing finance, and the matter of breaking into well-established markets and trying to provide better goods and services than their older, wealthier competitors.
To overcome these difficulties and stay the course, every entrepreneur needs an exemplar, someone who started their own business, overcame the odds and enjoyed great success. Of these, there is none more inspiring than Herman Mashaba. Now hailed as one of South Africa’s top entrepreneurs, the story of the founder of Black Like Me is one of creativity, moxy and determination. I chatted to him on the CliffCentral Leadership Platform show recently, and learned more about how one of the country’s many small businesses grew to become a distinguished success.
Mashaba decision to go into business was borne of a desire for financial independence, and to rise from the poverty of his domestic worker widow-headed household.
“The National Party at the time said no, I could not do it, as black people could not really go into business,” said Mashaba. “But I decided not to really cooperate.” He became a sales rep for SuperKurl, and while there he found a future business partner in white Afrikaner pharmacist Johan Kriel. Kriel came up with a perm lotion that was more effective than SuperKurl’s own, and could be produced in a factory twenty times smaller. Despite the fact that it was “unheard of” for a black man to engage a white man as a business partner in the eighties in South Africa, Mashaba did just that. His first lesson for those who own small businesses is to make things happen for yourself, rather than to rely on your regulatory or economic environment. “I found a way to navigate and manipulate the environment,” he says. “It bothers me that what is being created in South Africa today is an entitlement culture, which is dangerous and unsustainable.”
Just like almost all small businesses, Black Like Me faced cash flow difficulties upfront. It was only with the help of the R30 000 from Mashaba’s friend, Walter Dube, that the product was able to first hit the shelves on Valentine’s Day of 1985.
The company proved to have reached an untapped market, and, as a born sales person, Mashaba was in his element. Within seven months, the loan was repaid to Dube and Mashaba and Kriel were earning well. They allowed themselves a few luxuries, but kept their expenses moderate. Herein lies another lesson for small businesses: get the cash you need to fuel your dream, work hard, pay off your debts quickly, and keep your expenses in check.
Twelve years later, Black Like Me formed a partnership with Colgate-Palmolive, which saw Mashaba retaining only 25% ownership of the business. Ultimately, the partnership didn’t work out, and Mashaba bought back his shares and took up the helm of the business once more. He learned all he could from the experience, though. “Through the Colgate partnership I got exposed to the corporate environment, and I’m grateful for that,” he said in an interview with africanbreakfast.com.
Even though many would have seen the deal with Colgate-Palmolive to be a sensible one, Mashaba went with his gut – even if it meant flying in the face of popular opinion. And that, perhaps, is his greatest lesson for small businesses. Think outside of the ordinary, venture into places others are not willing, and prize your uniqueness.
“I decided to challenge the laws and that is how I succeeded,” Mashaba told me. “We have had this collective mentality in South Africa over the past twenty years, but I refuse to be part of the collective.”
If your small business is looking for financial leadership to help grow it to the next level, The Finance Team can help. We have a network of highly qualified, experienced finance executives who can partner with your leadership to help you achieve your vision.
Image credit: http://www.blacklikeme.co.za