How BRAW Recovered From a Soured Partnership
Three young entrepreneurs, Nathi Khumalo, Alex Tshabalala, and William Sekgobela have turned their empowerment business around thanks to sheer determination and a belief in what they do.
Players: Nathi Khumalo, Alex Tshabalala, and William Sekgobela
Contact: +27 (0)11 339 1004
Young, trendy, energetic – Alex Tshabalala, William Sekgobela and Nathi Khumalo are well suited to Braamfontein, which is where they relocated their offices after a partnership went belly-up.
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The up-and-coming city neighbourhood has turned out to be the perfect backdrop to the rebirth of their business, BRAW Transformation Outsourcing, a company that helps organisations to prepare for and maintain B-BBEE verification. Tshabalala says they have answered some tough questions.
1. Do you have a partnership agreement or governing document?
We discovered too late how important this is. A partnership agreement defines the business relationship you have with your partners, and enables you to ensure that all needs are met.
It spells out how profits will be divided, the rights and responsibilities of the partners, the procedures to take when a partner leaves the business, and many other important rules and guidelines.
In our situation, in the second year of operation, before Nathi joined us, William and I had a major fallout with two of the partners. What followed was a serious internal dispute. They opened a case against us with the police, and at one point security locked us out of our own offices.
2. Had you agreed on salaries?
This seems obvious, but our partners felt they were being robbed of what was rightfully theirs. It turns out they were on a self-enrichment crusade and were using BRAW as a cash withdrawal machine.
They wanted whoever brought in a client to receive 70% of the value of the deal, with only the remaining 30% going back into the business. That was not at all sustainable. You cannot pay yourself more than the business can afford.
3. Did you have the law on your side?
We had to dig deep into our own pockets, but we followed the proper legal route and got an interdict against our former partners. We had to fight for our name, but we succeeded in bringing the business back to what it was, and within a year, it was profitable once again.
4. Is your business model workable?
We were being overwhelmed by large numbers of small clients, who sometimes paid us, and sometimes did not. We called them the 15-threes, because our fee was R15 000.
The problem was that small clients would contract us on a once-off basis, and then they were gone. They were generally also the most difficult and demanding. When Nathi joined the business, he brought in a huge contract, and that changed everything.
It was only when we targeted big corporates that we started making our mark in the industry.
Working with larger clients enabled us to do far more meaningful work. We believe that broad-based BEE is about changing lives and redressing imbalances, and we are helping our clients to do that in ways that are significant.
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5. Is customer service given top priority?
Many businesses fail not because of the lack of sales capacity, but because too many people concentrate on the money aspect and neglect to see their customers, who are looking for delivery and fulfillment. It’s critical to have specific departmental responsibilities, and to think like the customer you are trying to keep.
If you focus on customer satisfaction first, money will take care of itself. We were R740 000 in the red when the original partnership came to an end and we were forced to work from home for a year – yes our service levels were such that not one of our clients ever knew we did not have an office.
6. What are you prepared to give your customers?
We like to give our customers a complimentary sample of what the whole meal tastes like before we ask them to sign contracts. That’s how much we believe in the value of our services.
Aug 19, 2015
By Monique Verduyn – Entrepreneur Magazine