Covid-19 forced the hard business conversations, says leading businessman
The Covid-19 pandemic forced businesses to have the hard conversations; reassess their strategies and negotiate better terms; and those that have adapted well will be positioned to grow the South African economy out of its slump.
This is according to leading businessman Isaac Mophatlane, co-founder, shareholder and a director of the Randvest Group, who was speaking during a webinar on IT entrepreneurship this week. The webinar, hosted by the Institute for Information Technology Professionals South Africa (IITPSA), assessed the challenges and opportunities for IT entrepreneurs in South Africa and shared advice on growing a successful business.
“What the pandemic allowed a lot of business to do is have tough conversations on the staff, office rentals, supplier payment terms, and what was really necessary. It made a lot of people rethink how they do business, who adds value, what their costs are, what is driving profitability. Businesses were saying ‘we didn’t need these fancy offices with cappuccino machines and air conditioning’ and now they are reassessing their needs and negotiating better commercial terms with all their stakeholders. We are all having to think out of the box now,” he said.
Lessons for IT entrepreneurs
Amid tough times and growing unemployment, Mophatlane said entrepreneurs and family businesses could prove to be what sustained the economy. With funding a challenge, many emerging entrepreneurs were securing funding from their families, he said. “There is nothing wrong with that – that is how old economies were built. But it is important to spend a lot of time getting the right people aboard when you start a business. You need to find people who share the same values as you.”
Mophatlane recounted the lessons he and his late brother Benjamin Mophatlane had learned in their early years building Business Connexion, which was later renamed BCX. He cited sound governance and a network of mentors as factors contributing to the business’s success. “You need the right corporate governance in place from the beginning. This allows people to invest in your business. We found that with the right governing structure and books in place, from an audit point of view, we were able to do more transactions and corporate activities that allowed us to grow the business.”
Ravick van der Merwe, a technology lawyer and Managing Director of Shimazu, noted that good governance should be ingrained from the start. “The first question potential investors ask is where are your MOI and your shareholders’ agreements; these are the foundations that make it a valuable business as you grow. You need the basics in place to build something that’s future ready and well governed, with solid values that are pushed through to the end, even if people come and go.”
However, he noted: “There’s an impression that corporate governance means huge board packs and stacks of paperwork. This is not the case. You need to define the process of how cash is removed from the business, and what the parameters should be for commercial processes, so everyone is on the same page. It doesn’t mean stacks of documents nobody reads. It’s about how we make decisions and do certain things and having a good corporate structure is an enabler to business.”
IITPSA Gauteng Chapter Chair Dickson Willie, founder of tech start-up Tsogolo Technologies, noted that partnerships with stakeholders could challenge new businesses.
Van der Merwe advised: “It can be worse than a divorce when business partners want to separate; there’s a lot of infighting and it really becomes ugly. These are people who spent hours with you working on the same ideas, so they know you and they can hurt you properly. You need the right partners from the beginning. I find some of my more successful clients have the ability to identify their own shortcomings and bring aboard shareholders who have something that fills the gap.”
Despite having great ideas and a passion for the field, businesses can fail. However, entrepreneurs should be prepared to fail and learn from their failures, said the speakers.
Mophatlane said: “You may fail because you have the wrong strategy or pricing model, your business model might be outdated, or you might not have adapted fast enough. But you can’t keep saying ‘it will get better next year’; if your model is under pressure, you need to reengage on your business model and change it fast.”