Learning at the Tshimologong Bootcamp

Last weekend I attended the the Tshimologong Bootcamp. The bootcamp aimed to get us entrepreneurs to take the next steps in our business, starting with a solid foundation on linking value proposition to customers. There is so much to process, but here are some lessons:

South African’s have some seriously good ideas

I have long argued that the problem with entrepreneurship in South Africa is a “supply issue”, in the sense that we do not have enough people starting up. Over the weekend I met lots of really impressive entrepreneurs with impressive ideas, and many already had customers. But, many were in that awkward stage were they (and me) are a little tentative.

Networks

I found a couple of developments in the broader startup ecosystem really interesting. These include:

  • GroundFlr –  Ground Flr is a game changer in the startup space. We improve the chance of startup funding by broadening the search for capital. Its now free to search for funding anywhere in the world. Our freemium service also gives startups the option of requesting a warm intro to an investor of their choice.
  • Venture Network – They hosts pitch nights and themed startup talks. Membership to our community is FREE. 
  • Lots of venture capitalist. Over the two days, there were many venture capitalists in attendance as mentors and advisers. I found this incredibly interesting.

In short, an ecosystem is developing that might make it easier for entrepreneurs to startup and eventually scaleup.

Acceptance

I decided to sit while the rest of the group collectively read out an entrepreneurial manifesto. I was not being difficult, but I honestly could not bring myself to participate. The nice bit was that no one was really phased by it. Live continued. Imagine doing that in a political party or a trade union – I can tell you the consequences are harsher.

Doing Stuff

I sate myself a goal for the end of the weekend to test if companies were interested in running promotions on ZApreneur. Over the weekend I emailed 15 people, got two coupon codes (exclusive to ZApreneur) and a commitment from three more companies. If you interested, just send me an email using this form.

Complex Business Models Need Visuals

Some of the business models were incredibly complex. The facilitator used the Business Model Canvas and things got a lot clearer, a lot more quickly. I had tried this process before, and I found the exercises extremely interesting.

Rules (are meant to be broken)

One of the mentors (Anthony Nathan from Tmara) gave us a talk on rules and how important it is to break them. I am not certain if I followed all of it, but what I learned was this:

  • Innovation removes a limitation
  • Market must adopt a new rules

Which I summarised as: Create value if it solves something, but only matters if people use it. If people value it, it might be disruptive. But, to make people adopt the new rules, you need to provide a minimal value guarantee. That is a however a very inadequate summary of the ideas.  You can check out the full idea here on YouTube.

 
 

Tiny Little Ideas

At the end of the two days, we had a presentation by Ken Beck.Let me admit this I had no clue who this guy was, and why he was given celebrity treatment. But, the talk was incredibly useful and inspiring. It validated what I have been learning- test ideas and see what happens.  The central message was that you needed to test (he said) kill your ideas in the shortage time possible. After the input I had a greater appreciation for this dude, called Ken Beck. Here is a link to his previous presentation at Tshimologong. It is long but very worthwhile presentation.
 

 
 

Next Steps…

The most important learning for me was to reinforce the idea is that as long as you learning you are making progress. The trick is to do that learning systematically and quickly (and without going broke!). If you can do that you and your business might actually have a value proposition that solve a real problem. That is a fancy way to say, it is time to test the next aspect of the business. For me that means making some decisions on ZApreneur, based not on theory but on learning from what my customers tell me.
(Huge thanks to the Tshimologing team).

uAfrica – an easy way to setup an online store in South Africa

ZApreneur spoke to Jenn Hattingh from uAfrica about their ecommerce offering. This is the start of a series of interviews on eCommerce in South Africa. What spark our interest was an initiative to assist new businesses to set up online stores, and a promise of support from uAfrica and bidorbuy.
Key Takeaway:  If you interested in setting up an online store in South Africa, uAfrica is running a competition. What I like about the competition is that every entrant gets a good value set of freebies including assistance in setting up a store, promotional credit on bidorbuy, and ability to test out their multichannel app for six months, free. And that is what the losers in the competition get!  View the competition details and enter now!

1. Hi. Please tell us a little about uAfrica.

uAfrica.com is a reseller for the Shopify eCommerce platform in  Africa. We have localised Shopify for the South African online business market by bringing South African payment gateways and shipping  functionality into the ring to help make Shopify even more accessible to local merchants.

2.Who runs the place? How long have you been around?

Andy Higgins is our MD, he founded bidorbuy back in 1999 and after  leaving bidorbuy started uAfrica.com.

3. Awesome! Why would a company use a service like uAfrica rather than say run a store yourself, using for example WooCommerce?

A shopping platform is a matter of personal preference but, being cloud based, we think that Shopify is a great solution for many South African merchants simply because they don’t need to worry about managing  things like servers, backups or upgrades. They can focus on their core business leaving the technical aspects up to the experts. uAfrica.com has > also built tools to localise Shopify in South Africa and we have negotiated special terms that allow us to charge our clients in ZAR for their monthly Shopify subscription fee instead of USD, so the monthly cost ends up saving  merchants a bit of money at the end of the day.

4. How does uAfrica work with Shopify?

We’re a strategic partner of Shopify and help spread the word around Africa about the benefits of having a Shopify store. Besides other marketing initiates we also run monthly workshop sessions, called MeetUps, to help merchants set up and manage their stores.

5. How does uAfrica work with Bidorbuy?

Andy, our MD, founded bidorbuy back in 1999 and the relationship has remained a close one ever since. We have built an integration into bidorbuy.co.za that makes it easy for merchants to sell across multiple channels.

6. I see you have a Multichannel app. What does it do?

uAfrica’s Multichannel service allows an online merchant to sell on multiple channels while only needing to manage inventory and orders on one ‘source’. For example, when a merchant places an order on their bidorbuy  channel, the inventory is updated on the Shopify source store, so you never > sell anything you don’t have. At the moment we integrate into Shopify and  bidorbuy but we are looking to broaden the offering as Multichannel grows.
The app also offers uAfrica Shipping which allows merchants to obtain > quotes from multiple couriers and then generate waybills, handle courier collection requests and track shipments with status notification updates to buyers.

7. As someone providing online stores, what reflections do you have of > the online commerce in South Africa?

South Africa is still behind the rest of the developed world with regards to adoption of eCommerce, however the sector is growing at around 30% per annum, albeit off a relatively low base. This compares to flat or low single digit growth of traditional retail so it is an exciting sector to be involved in.
With the advancements in technology such as hand held devices and better internet provision, the infrastructure available to shop online with ease is now available to South Africans and online businesses are starting to make the move online to reap the benefits.

8. What advice would you offer to a business owner wanting to start an online store?

The best advice we can offer is to just jump in! The best way to learn about how a platform ticks is to give it a try. Shopify offers a free 14 day trial where you really get to test the platform out and what it can offer. There are no limitations on the free trial either, so you can > really get into the gritty details and additional functionality that is available. A lot of new online merchants are nervous to launch because the site isn’t ‘perfect’, but if they’re not live, nobody is looking at their product offering and they’re wasting time and money. Think progress, not perfection.
uAfrica is running a New Business Competition for the duration of 2016 to help merchants get set up selling online. View the competition details and enter now!
Note: ZApreneur Media does NOT earn a referral commission from this article.

How to find out what funds are available to raise business finance

 
Research continues to show that one of the main reasons entrepreneurs fail to grow their businesses is due to their inability to obtain business funding. Yet, there are more than 350 different funds available to small businesses and many of the lenders are struggling to find businesses to fund. This disconnect between the availability of business funding and the ability of SMMEs to obtain funding is the problem that an innovative solution called finfind addresses.
Finfind is a unique, cloud-based Access to Finance portal sponsored by the Department of Small Business Development through its implementing agency SEDA. It provides a wealth of easy-to-understand information about small business finance and has a comprehensive database of active lenders that spans both government and private sector funds.
Small businesses can access this online solution 24/7 at no cost and are able to learn about the different types of finance and how they work and can be linked to a list of lenders that match their specific finance profile. Finfind has a team that continuously updates the lender database to ensure that the fund details are kept current at all times. Finfind has four main sections, this is how it works:
 

  1. Learn about Access to Finance  has a host of useful and easy-to-understand articles that explain how small business finance works. This is especially useful to entrepreneurs who are not familiar with financial investment terms such as equity and collateral or who aren’t sure how Term Loans or Invoice Discounting options work. Click here to learn about access to finance. 
  1.  “Find Lenders” section enables small businesses to see a list of all the lenders that can fund their businesses. Finfind has a comprehensive database of lenders (both public and private) and has mapped these to the eligibility criteria that applicants need to comply with. So this section asks the entrepreneur to register and then answer questions about the business owners, the business itself and the availability of the documents. If the SMME is finance ready (this means they have the necessary documents), then their answers are used to filter the database of funds, according to their eligibility criteria and find the ones that match their stated needs. When a user clicks on one of the loans in the list, a summary of the loan is displayed, details of the submissions and application process are available and full contact information is given. This makes it easy for small businesses to understand what finance options are available to them and what they need to do in order to apply for the money. Do you want to take out a loan? (See editors note below)
  1.  “Get Advice” section  helps link SMMEs to consultants who can assist them if they are battling to become finance ready or need help with their funding application. Finfind has partnered with SEDA (Small Enterprise Development Agency), SAIPA (South African Institute of Professional Accountants) and IBASA (Institute of Business Advisors South Africa) – all of whom have a comprehensive database of accredited consultants who can assist. SEDA branches provide subsidised support for small businesses, but SAIPA and IBASA consultants will charge for these services. The entrepreneur selects whether they want to use a subsidised or paying service and then selects their province and closest town. Finfind then displays the closest SEDA branch addresses and contact details or a short list of SAIPA or IBASA consultants in their area. Click here for advice. 

 

  1.  “Get Tools”  provides access to useful tools that can help SMMEs become finance ready. These include free online training videos to manage financial recordkeeping for startups and small businesses, as well as access to an online, easy-to-use accounting solution for entrepreneurs who don’t understand accounting. It provides quotes, invoices, payroll and complete small business money management including financial statement generation. Go to the toolbox

 
Finfind is easy to navigate and there is the additional benefit that SMMEs are able to repeat the finance readiness quiz and select different reasons why they need finance. This gives a new set of results and can be a useful means of identifying the most suitable business finance. For example, if a small business needs funding to commercialise technology, they will only see seven funding options.  However, if they were to select the funding option “To grow my business”, there are more than 50 funding options to choose from.
Small business funds vary considerably and it helps to understand that the reason why you need the funding, the amount, your industry sector and whether the business is profitable all impact on the number of funding options you’ll see.
Article written by
Robynne Erwin, Project Management, Finfind 
Contact Details  
Office: 086 176 3279
www.finfindeasy.co.za  |  Facebook |  Twitter
 
Editors Note: Small businesses should never enter into interest based loans with banks. I say this for religious reasons, but also because interest based financing makes a business less likely to succeed.  Finfind is an incredibly helpful tool, and we encourage readers to use the tool, and one of the reasons we are linking to the site is because it assists you to make informed decisions. 
 

Fintech has arrived and it’s changing the economy

Fintech has arrived and it’s changing the economy

The unemployment rate in South Africa is at an 11-year high, with 5.7 million people finding themselves without a job. The technological boom in the financial sector is not only making waves in innovation, but it’s also creating jobs and redefining employment roles within existing, traditional businesses.

Technology can create employment opportunities

Confidence in South Africa from a financial and investor point of view, is the lowest it has been in 5 years, according to Rand Merchant Bank’s Bureau for Economic Research. Because of the somber outlook on the South African economy, investment from the private sector has been limited, hindering job creation. The need for startups to emerge has never been more pressing. “Startups and small businesses contribute significantly to the economic and social development of South Africa by not only birthing innovation and change, but also by helping to alleviate poverty by means of job creation”, says Glen Jordan, director of startup fintech firm, IMB, based in Cape Town.
With the current digital disruption in the financial sector, more and more fintech startups are coming to the fore. Financial technology companies are springing up in tech hubs like Cape Town and Johannesburg especially, and according to Bradley Mehl from Kurtosys, a seed funder called Techstars will invest in 10 fintech startups, with with the first funding being allocated in March 2016.
South Africa is a big growth market where fintech is concerned. With this growth will not only come innovation and clever business solutions that will change the financial sector landscape, but growth means more and more startups emerging, which means more and more jobs are being created. With the changing face of technology, we will also find a redefinition of existing roles into more digital-oriented ones, with the skill set of many expanding.
Fintech startups are one up on traditional banking
We see it everywhere: new and innovative ideas and technologies are disrupting the financial sector. Many of these revolutionary technologies are shamelessly invading the spaces that are predominantly owned by banks or other financial services providers – changing the face of finance as we know it.
In this fast paced, highly connected, digital era that we live in, we find that there is a constant demand for financial service products to actually add-value in people’s lives. This is where fintech is proving to be so invaluable, as it completely reimagines and remodels traditional banking products. New fintech players are able to innovate and bring completely new systems to the party as they have no legacy systems and revenue to protect. Glen believes that traditional finance options are a slow way of doing things and are busy dying out, and soon digitally advanced methods will be at the forefront of the financial sector. Next generation banking is taking over.

FinTech is changing the face of finance.

We hear about fintech startups providing invaluable services to customers, like alerting them when banks and credit card issuers charge hidden fees. We hear about companies offering financial planning tools and services – often zoning in on a niche, making the service all the more bespoke. We hear about companies like IMB that are reimagining financial services from the ground up in order to offer a system that creates wealth for their clients and using an innovative route to market, and are able to create employment at the same time.
The financial digital revolution has arrived, and it’s here to stay. According to KPMG, “global investment in fintech companies totalled US$19.1 billion in 2015, with US$13.8 billion invested into VC-backed fintech companies.” The boom has just begun. Agility, constant evolution, reinvention and innovation is key to keeping this sector booming and thriving – changing the face of finance.
Article by Danielle from http://www.lumico.co.za
Photo by HLundgaard downloaded from https://commons.wikimedia.org/wiki/File:Mobile_payment_02.JPG
 

Proudly South Africa – Telling an entrepreneurial story?

Proudly South African Entrepreneurs

Chatting to business owners exhibiting at the Buy Local Summit was inspiring. So inspiring that I almost entirely missed the official programme. Dragging myself away from the businesses exhibiting I attended the sessions after lunch. Over three sessions I was left with a distinct sense that the Proudly South Africa lacked a strategy and an identity. The panelists all emphasised useful points on the need for leadership in South Africa, social dialogue and raised a couple of interesting experiments in supply chain and franchising. Nothing wrong with these statements, but there was little or no attention on how this related to increasing the demands for South African products by South Africans. It is typical of all conferences in South Africa, general calls for leadership without what conference goers call ‘actionable insights’. As I listened to the interviews on radio and TV on the event, my sense of a directionless campaign grew, despite me nodding to the fact that buying local was good for economy.
The Buy Local Summit is the premier event for Proudly South Africa, an organisation aimed at promoting South Africans to buy local goods and services. The official message from leaders inside and outside of government was that buying locally was patriotic, was supportive of job creation and contributed to the economy of South Africa. Outside in the exhibition space, business owners emphasised not the link between my wallet and my patriotism, but rather the link between their product or service and how it could help me. For example, businesses focussed on designing products, focused on the innovativeness or uniqueness of the product. Next, they emphasised international quality of their products, and that they were fairly priced. I quizzed them on whether they thought South African were not patriotic by not buying more South African products, and they argued that the real problem was customers knowing about the product. Those in manufacturing and construction always added that they found it difficult to compete with the ‘big boys’. Most importantly, they understood Proudly South Africa not as patriotic buying, but rather that the country has lots going on and that they could compete internationally. Herein, may lie a future direction for Proudly South Africa campaign. A campaign that emphasises the uniqueness, quality and price points of local products.

Learning from Shot ‘Left

The Shot ‘Left campaign offers a way to illustrate what is possible. The campaign emphasises memories, fun and family all within South Africa. The Shot ‘left campaign asked the nation to change our perception, offering memories, fun and quality time. They were not arguing that the intrinsic value of the South African tourism offering was one of patriotism, but rather than great and affordable holidays are possible in South Africa. In a way it transforms what it means to be South Africans, especially for families who have never had a holiday before. It opened markets and created a new segments. This is important, because the process sees government and social partners working together to create new markets, through an exceptionally targeted campaign. In short, it is an effective and positive marketing campaign with none of the policy babble, although its motivations are to reach a policy objective of growing tourism by South Africans in South Africa. Proudly South Africa needs to do something similar. It is a marketing organisation, and needs to devise a marketing strategy that emphasises the intrinsic value of South African experience. What would such a marketing campaign focus on? First, it would deal with questions of quality of South African products, erroneously regarded as inferior to imported goods Second, it will reposition South African goods as being ‘cool’ and well designed, emphasising the intrinsic value of South African brands. Third, it would have a very specific target audience for its marketing campaign, not a broad appeal to conscious of South Africans.

Creating local demand

Now, one might be wondering what this tells us about human nature. Should an appeal to patriotism not be enough?
The problem with the current message is that it is not actionable, even for patriotic ethical consumers who are seeking local products. The problem is magnified for consumers not already convinced to buy local products. A marketing campaign linked to easy ways to find and purchase South African goods would make Proudly South Africa relevant. It would offer an important platform for South African companies, especially those that produce manufactured goods, a way to reach a wider audience. In so doing, the benefits of having many smaller businesses and more employment would be more realisable. The clarion call to patriotic shopping needs to be replaced with a message that South African products are cool and quality products. This change in the marketing strategy in itself is an important starting point, but will require complimentary initiatives to help growing businesses operate and succeed in the South African economy. Much of the wider economic strategy is outside the ambit of Proudly South Africa, but it can play a crucial role in creating demand for locally produced products and services.

Automattic Buys WooThemes: Can you replicate the success?

Automattic vs Woo
 
Automattic, an American company that runs WordPress.com bought South African company called WooThemes for a reported $30 million.  Some statistics speak about the scale of business that WooThemes have built in eight years. Its ecommerce solution, called WooCommerce is estimated to power 24% of all ecommerce websites. This free plugin has been downloaded over 7,5 million times.  Automattic the buyer of the company is amongst the tech elites referred to as “unicorns” – which are companies with a valuation of over 1 billion dollars. The transaction is thus huge in possible impact, and all the more interesting as WordPress is open source software, and what it may mean for economic policy.

WordPress in South Africa

The deal shines a spotlight on WordPress in South Africa. The purchase of WooThemes by Automattic is a confirmation that South African companies are serious players in the WordPress space. The next most prominent South African WordPress company is called Obox are attempting to create a platform for non-technical users to easily make changes to their websites, which could be a game changer.  Smaller plugin companies and theme developers, such as Tiny Giant Studios, Site Origin and Promola, offer niche solutions and compete on the international stage. In the hosting space, smaller companies offer WordPress specific hosting, outcompetes on price, features and services many of the larger hosting providers. There are probably a couple hundred companies – mostly smaller ones – in South Africa selling services and products related to WordPress.
 

Open Source and Jobs

In our search to create more small businesses in South Africa, it is worth exploring what it would take to go from say 100 companies selling WordPress services or products to say 1 000 businesses. Assuming that each person would employ about 2 people, and that 50% of businesses succeed it could yield 500 new companies and around 1 000 jobs. All without the need for government to run expensive incentive programmes. To be clear, the government would need to play a role in supporting rapid skills acquisition and fostering a venture capital sector for smaller investors. To be successful, the market will require some support.
It may also sound as wishful thinking, given the skills challenges that we face in South Africa. Work opportunities in WordPress ecosystem are however not just about coding, with a range of employment opportunities being available. Skills needed in this ecosystem include skills of building communities, graphic design, warehousing and a range of other opportunities. Simply stated, expanding the South African ecosystem for technologies like WordPress could provide a way to stimulate jobs for people, with a short training period.
But, an ecosystem like WordPress requires world class coders. An interesting feature of both Automattic and WooThemes is that they have what are called distributed teams. Basically, employees in these companies work from wherever they want, and have no need to be physically present at an office. World class coders could thus be sourced from anywhere in the world. Moreover, South African already has a small number of world class coders, and with changes in our education system, a wide pool of coders could be developed over a 10 year period.
The foundation for expanding business ownership in South Africa are already there as companies like Automattic exist in other spaces, and allow for integrations with their core offering.  South Africa needs to quickly understand these opportunities, for in them lie potential areas for significant growth in the number of new firms being established, and for a radical revamp of education a nation of coders. It holds the promise of using the Internet to equalise our society, and with an expanded unemployment rate approaching 40% even the most doubtful should consider the prospects for service based jobs and businesses based on the Internet.

Strategy

Now, let us get a little more excited. If we widen the lens to include other open source companies and those allowing integrations to the core offering. Think about large Internet companies like Salesforce or Slack, and the many smaller ones. Our estimates would become much larger for new businesses, established businesses and employment. These businesses and jobs will be created in the services industry, but in a sector that is growing and international. In some respects, it resemble outsourced call centres. But, with one crucial difference: the cost of owning a business are much lower.
The deal reached between Automattic and WooThemes is an incredible deal, that places South Africa on the map. WooThemes is obviously an exceptional success story, but there are opportunities for smaller players. The signal however is not merely that WordPress is changing, but that as the Internet takes hold, it will not merely destroy jobs but will create opportunities to create new types of businesses.  If you an entrepreneur, what are you still doing reading this?
WPossible.com is another Zapreneur site, that will be officially launching soon. Please signup to the newsletter.)

Making pizzas isn't chemical engineering

What do a pizza maker and a chemical engineer starting businesses have in common? They both recognise an opportunity, and they will both assemble the resources they need to run their businesses.

They are entrepreneurs, but they have major differences. The chemical engineer who is commercialising a new process to create solar panels is described as an innovation-driven enterprise; the pizza maker is described as a traditional small or medium business.
This distinction is the basis for an interesting paper titled “A Tale of Two Entrepreneurs: Understanding Differences in the Types of Entrepreneurship in the Economy”, available from the Kauffman Foundation.
The distinction is palpable in our discussions on economic transformation, and the role of small business and start-ups in South Africa. On the one hand, there are those arguing for “gazelles” – innovators – to be the centre of policy, as they have the potential to be large employers and wealth creators, but we never identify who these potential gazelles are and what would lead to their proliferation.
On the other hand, the mantra of creating “one million small businesses” refers only to government policies that hinder small business, and not to actual market conditions.
We simply have not moved beyond high-level policy statements to developing the strategies that we need as a nation. We are expert cheerleaders for the Little Guy in the economy, but we have not moved to tangible products and services on a scale that will have an impact. In this environment, neither the pizza maker nor the chemical engineer is likely to benefit.
Bill Aulet, one of the co-authors of the paper, provides important advice on understanding the different challenges entrepreneurs face in terms of funding, growth potential, risk levels and other needs.
This is an incredibly useful starting point in South Africa, where generalisations about red tape compete with generalisations about oligopolies. In fact, it might be truer to state that we should be tackling both red tape and highly concentrated markets. But, again, these are such high-level policy statements (often with credible evidence) that they miss the fact that entrepreneurs in South Africa have different needs.
The pizza maker will have to navigate the municipal regulations on the preparation of food, a complicated system of human resources legislation and an opaque system of government funding. But, she will also have to purchase flour in a market that is dominated by large companies, and where small millers are unable to readily ship product to market.
One option for the business would be to go the artisanal route, but it would be difficult to do brisk business given the demand for artisanal foods.
The chemical engineer with the new processes for developing solar panels has similar challenges. Government regulations on inventions in universities seem too state-centric and the cost of prototyping is extremely expensive, and the venture capital system in South Africa underdeveloped. Moreover, there are the challenges of selling the process, and patents to bigger companies might be limited due to an investment stance that does not value early-stage development, or selling the product to construction companies may not be immediately open due to difficulty in marketing an unknown product.
There are pizza makers and chemical engineers who will have the nous and tenacity to navigate each of these challenges. However, not nearly enough of either type makes it through this demanding process. South Africa has one of the lowest rates of established businesses in the world.
A starting point to improving the prospects of success is recognising the different steps required to support more traditional small businesses and innovation-driven businesses.
This article  first appeared in the Sunday Times: Business Time on the 22 March 2015. 

iKhokha – Payment processing in South Africa

Payment processing in South Africa is a huge issue for many readers of Zapreneur. As readers of Zapreneur will know, I hardly ever provide space for financial products because I believe that our financial institutions are one of the biggest constraints on small business development. Beyond offering critique, Zapreneur will profile alternatives that offer “something” that begins to put the power back in the hands of entrepreneurs.
Today we chat to founders of iKhokha, Ramsay Daly and Matt Putman. A product like iKhokha offers an alternative to the big banks, and offers a way to process both debit and credit cards. This is huge as it allows businesses not wanting to run on credit cards to process debit cards, at reasonable payment processing rates. In sum, iKhokha offers a competitive pricing structure and allows small businesses to begin using new and innovative ways of charging customers. We asked the founders a couple of questions about the product and what it offers.
 
iKhokha looks like an excellent product. Our readers might not know about what iKhokha does. Please give us your elevator pitch? 
iKhokha enables any business formal or informal to be able to process card payments through their smartphone, by inserting our Edge adapter into your phone and downloading the iKhokha app, SME’s can turn their phone into a Smart Speedpoint device. Businesses follow the straight forward online sign up process at www.ikhokha.com, and once approved entrepreneurs and businesses alike will be able to benefit from the additional services embedded in our mobile app. We cater for both Android and Apple devices. The Edge device also has the highest level of international accreditation.
 
(Editor’s Note: The video of Piet the Plumber is worth watching as it provides a cool story of iKhokha in action). 
https://www.youtube.com/watch?v=lCXc-QGBYuk
How does this benefit businesses in South Africa?
It allows them to take a secure card payment anywhere, anytime driving additional sales and removing the risk that comes with carrying cash. It also gives them a real time view of all their sales, card and cash.
 
How is it different from products being offered by large banks? 
Pricing is considerably more competitive that the large bank led offerings, i.e 2.75% commission with no monthly fees.  We charge the same rates irrespective of who the merchant banks with and have a dedicated support team focusing on our merchant base. We are a bank agnostic brand that is looking to constantly innovate, bringing real value to our merchant base.
 
APP: 
The intuitive design of the app makes it easy to understand for the end-user and easier for a merchant to process a payment. The business analytics feature allows the business owner to track all their sales very easily, meaning that the SME is empowered with more information at their fingertips that they have ever had before. This is an area that we will continue to focus on in order to provide powerful data to each one of our merchants.
 
VAS
We have enabled all of our merchants to sell value added services through the app to any of their clientele for a rebate, the first phase of this strategy is Airtime sales which will be followed by other digital products. We are creating a product suite which will become attractive to the more informal sector as in essence they will be able to download an app and a suite of products which will earn them a living.
 
Do you have any plans of partnering with larger financial institutions? 
ABSA is the acquiring bank whose license we are leveraging, however we can sign up merchants from all banks irrespective of the provider.
 
What would the ideal business look like to benefit from iKhokha?

  1. Any business that currently has a Speedpoint machine, but is paying costly monthly fees or high transaction commission
  2. Mobile businesses that want to be able to accept payment on-the go i.e. tradesmen, graphic designers, website designers, personal trainers, independent consultants, door to door salesmen, musicians, performers, private metered taxis, informal taxis and take-away deliveries
  3. Businesses that want to move away from cash transactions for safety & convenience i.e. as boutique retail outlets, jewellers, medical practices, physiotherapists, chiropractors, optometrists, beauty salons, independent DVD rental outlets, bakeries, deli’s, take away food outlets, hairdressing salons, bars, bookmakers, independent bottle stores, butcheries, pet shops, dry cleaners, and dog grooming parlours

Let’s talk money. What does it cost to get started with iKhokha? How is payment processing charged?
R989.00 once off fee for the Edge card reader (including delivery) OR monthly rental option of R69 a month (plus R160 delivery fee)
2.75% per transaction
 
Is it possible to customise where the headphone connector on the Android iKhokha sits to accommodate some Android phones which have jacks on the bottom left, bottom right and on top?
The Android unit will still technically work with the different orientation on some Smart devices, best to refer to our safe list of tested devices provided on the website. We are also bringing in a cable to assist with Android Smartphone devices with different orientation of the Audio Jack.
 
If possible, could you provide us with a couple of companies that are using iKhokha?
There is quite a spread of companies to name a few, Victor Design, My Renaissance, Courtney Shaw Skin Care and Body Therapy.
 

One large business vs. 1000 little ones

Possibly, the most important question in public policy is “who benefits”.
In answering this question, not only can distributional outcomes be assessed, but often the underlying power structures. The recent reporting on the Public Investment Commission investing R1.5 billion of government employee pension funds in CAMAC Energy raises just this question: “Who benefits”.
Three features of CAMAC Energy are important. First, the company has several investments across the African continent, mostly in oil and mining. Second, it is regarded as a high risk penny stock in New York. In fact, reports show that the first tranche of PIC investment staved off its liquidation. Third, the owner of CAMAC Energy is described as well-connected to political leaders, including those in South Africa.
Now, imagine if the PIC decided to spend this money on businesses in South Africa. For arguments sake, let‘s remove the question of patronage from the equation. The exercise is to explore the possibilities of spending R1.5 billion on venture capital for smaller businesses.
The simplest option would be to divide the total into equal stakes of R 1.5 million each given to one thousand small businesses in South Africa. Assuming that each of these businesses employ the founder and create an additional two jobs, this would yield 3000 jobs. However, we know that business failure is high, so something in the region of 1500 jobs could have been created. More to the point, even in a pessimistic scenario 500 new businesses would be created, with substantial impact on the asset holdings of the owner and her family. The broader social good would be served not only with broadening ownership, but also with small impacts on economic growth.
Another option would be to limit the selection of companies for venture capital to those working with successful franchises or incubators. The investments decision are more cautious aiming to scale currently successful experiments. The number of jobs could easily reach between 5000 and 10000 new jobs, assuming that small successful franchises runs two shifts a day.
The possibilities are however even wider. In one of the tech incubators, a company is conjuring up an open source solution to a problem facing businesses, and in so doing establishes in addition to the software cloud services. This company supports the businesses of 200 South African companies, who provide extensions and maintenance around the software that has been created. The impact on direct and indirect jobs would multiply quickly, and a guess of around 10 000 jobs would be plausible. This is not as farfetched as it seems, as research suggests that South Africa could create 145 000 jobs from cloud computing.
A more adventurous option of matching funding would expand the funds available and test the plans of entrepreneurs. Entrepreneurs would be required to receive matching funding to access government funds. This is common today in American cities. Entrepreneurs would proposition venture capitalists, banks and invest their own cash to access government funding. The total available funds would now be R 3 billion, and the potential gains for economic growth and employment much greater. More importantly, the small number of angel investors could grow rapidly, thus supporting an ecosystem for entrepreneurs seeking smaller sums of equity investment.
The mind could run wild with possible options. For instance, imagine investing R 500 million into manufacturing companies in the “East Rand”, to support the Ekhurhuleni initiative to create a aerotropolis. Or investing R 200 million into the burgeoning tech sectors in Johannesburg and Cape Town. Or, investing in logistics to support smallholder farmers to bring goods to market.
The possibilities are in fact endless, and in each of these policy options the distributional impacts on opportunities, jobs and economic growth would be greater than investing in CAMAC Energy.
These proposals should not be construed as suggesting that all pension funds start investing in risky startup activity, or that the success of any of the ideas mentioned here is guaranteed. Rather these ideas are meant to show in the world of investment opportunities, spending R 1.5 billion on a single company raises substantive questions. This is especially true given that the investment in Camac is comparable in size to investments in agencies like the Jobs Fund and the National Empowerment Fund, which have larger mandates.
In answering the question “who benefits”, it is certainly not small business. The ANC has in its explanation of the term “radical economic transformation” argued that it means amongst other things, an expansion of economic opportunity and equal ownership of assets. It is a certainty that this agenda is not aligned with an investment of R1.5 billion in CAMAC Energy.
The investment in Camac begins to shed light on the underlying power structures that guide investment decisions. However, the important conclusion is that we have prioritised one opportunity with limited gains for our society, over possibly starting one thousand small businesses.
An edited version of this article first appeared in the Sunday Times : Business Times 
 

10 Myths of Entrepreneurship

Amongst the many myths of entrepreneurship, the most jarring is the existential question:

Am I really an entrepreneur? 

This is the self-doubt that almost every entrepreneur faces at some point. The reasons for this self-doubt are many, and include the hero status that some entrepreneurs have. In the face of outstanding success by these entrepreneurs we wonder whether we have the insight, determination, product and skills to build what we dream. The narrative is intended to empower, but may have the opposite result.
The video below dispels several of the myths associated with entrepreneurship, including understand who and what entrepreneurs are. The video draws on the excellent work of Saras Sarasvathy, who has introduced the concept of “effectuation” to the entrepreneurial world. The video starts with super entrepreneurs, and helps us to learn lessons. Most importantly, through understanding the myths, it helps us deal with self-doubt and get started.

 Myths Of Entrepreneurship


The important learning for me from this video are:

Entrepreneurship is Not Extraordinary

At one point for all of us, riding a bike was extraordinary. After a few stumbles and bruised knees we learned to ride a bike. In doing that riding a bike became both enjoyable and ordinary. In the video the same point is argued, entrepreneurship should not be viewed as extraordinary, but that each of us have this capacity.

Start with available means

I have seen business plans that need such huge investment that no bank or investor are likely to finance it. The ideas underlying the business plan are often sound and sometimes inspiring. The problem is that it is just a plan, the company has literally no customers, and they have not taken the time to test their idea. Starting at a different point would help these entrepreneurs. They should instead start with what their available means. Tapping into networks, using money to build a prototype or even getting commitments from potential clients are all within our available means. It may even help getting finance for your business, but more importantly it may allow you to bootstrap your business or in the worst case realise that your idea is not that good.

Multiple Goals

Personally I have many, many ideas. This creates a huge problem of focus for me, and everyone tells me that I need to focus on one idea. Effectuation looks at ideas and actions differently. It encourages having various possible goals and to develop solutions to these specific problems. Importantly, it asks you to reassemble your available means in creative ways to reach a goal. A word of warning though, managing multiple ideas, goals, action plans and customer service is extremely difficult, and not what I am suggesting.

The learning point is rather not to  fixate on one outcome, but rather be open to various endpoints.

This is a lesson we learned at Zapreneur. I started this looking to develop an online publication focussed on economic inclusion and small businesses. My intention was to run this as a paid subscription model. In the process we learned that South African entrepreneurs have a very different set of problems, and that we could develop small and useful online applications that could solve real problems. Proposal Desk is our first attempt.

Affordable Loss

Dreaming of making a million bucks in a year or even a month? Dreaming of buying an island? Stop!
Rather than focus on the upside, focus on the downside potential. Knowing how much you can afford to lose is vitally important. It provides a constraint to your ideas, and as a result brings discipline, effectiveness and reduces financial stress. In fact, go so far as to have a very specific number in mind. You need to know for instance that, I am willing to lose R 10 000-00, and willing to invest six months of time into starting this business. Knowing that allows you to plan your expenses, pay the kids school fees, design a realistic marketing plan and know your breakeven point.  That is an incredibly empowering position to find yourself in.

Create The Future, Do Not Predict It

The exciting part of entrepreneurship is that we have the opportunity to create products and services that make the world a better place. Through using principles like affordable loss and using available means, creating the future becomes more action orientated .  See you at the start line !
(Over the next few weeks, I hope to discuss effectuation in greater detail and with examples. )