Page 42 - IDC

CITY PRESS, 9 JULY, 2017 7
business

Ticking boxes

for future

business

Finding future industrialists from the hopeful
who apply is a task for the IDC’s Pre-Investment

Business Centre, writes Caiphus Kgosana
A GROWTH INDUSTRY Nompumelelo Madubedube’s business is growing faster than her selection of weaves PHOTO: EUGENE GODDARD
ach new and existing business that seeks funding
from the Industrial Development Corporation (IDC)
WEAVING HER WAY TO THE TOP Efor the first time has to prove that it qualifies for
funding and has the capacity to repay the loan once it
starts its operation.
This means that all applications have to go through the
IDC’s Pre-Investment Business Centre, headed by Naomi
CHIMWEMWE MWANZA urbanised and working population. In addition, the lenders or other funding institutions prefer to provide funding Mtshali. The centre was established in 2011 and has a
business@citypress.co.za emergence of a black middle class that has sufficient support to existing business as opposed to risking their capital walk-in centre based at the IDC headquarters in Sandton
disposable income is encouraging to those looking for a break in by funding an inexperienced young person,” she says. where trained consultants help candidates. It also has
air is big business and a smart start-up, San Hair, is this industry,” says Madubedube. While securing funding can be a frustrating time for an regional offices to screen business plans from those
taking its cut of the black hair business in South As a lover of weaves, she was concerned with the quality of entrepreneur, Madubedube urges other aspiring entrepreneurs whose operations are located outside Gauteng.
HAfrica. the products that she had been buying in local shops. This is to be patient and pedantic about getting their strategy right. Mtshali says once a business plan is received, it is
Nompumelelo Madubedube (26) is the sole shareholder of why she started importing weave products from India. “It took about a year for the IDC to approve and disburse the checked to determine if it meets the IDC’s manufacturing-
San Trading (Pty) Ltd – a 100% black-, female- and youth- “During one of my trips to India, where I had gone to visit a money required to kick-start our operations. Although the IDC focused mandate. A business plan that doesn’t is rejected
owned company – which owns a human hair manufacturing supplier in 2014, I came across the sale of bulk unprocessed kept me abreast of the gaps that I needed to close in order to on the spot. Those that meet the mandate are then taken
plant in Midrand. hair. This is what prompted me to conduct research into the secure funding, it was a frustrating period. through a basic assessment stage.
South Africa has an ever-increasing demand for hair care production of weaves. It was then that the idea of “Once the application was approved, I used the money to “We will read the business plan, determine what is
products, significantly in weaves and other hair products made manufacturing unprocessed hair in South Africa to minimise secure the machinery required to start the business, but, most contained therein and establish what is needed to do a
from natural human hair. The most sought-after of these are import costs was conceptualised.” importantly, the IDC also allocated a mentor to help me through basic assessment. This is a desktop assessment of the
usually imported from Asia and South America. She compiled a business plan and submitted it to the the initial teething phase.” client’s business, or what they want to enter into,”
“Without a doubt, black consumers are driving this growth,” Industrial Development Corporation (IDC) for processing. After The business currently has six full-time employees, but that she said.
says entrepreneur Madubedube, whose company now produces the IDC approved her request for funding, Madubedube quit her figure could soon swell to double digits – especially as the Using the hypothetical example of a start-up business
a range of authentic 100% human hair weaves, wigs and hair accounting job to focus solely on her business. It’s been three business is registering a consistent 30% month-on-month that applies for funding to set up a factory that
accessories at her factory. years since she launched San Hair and prospects are looking growth. manufactures gearboxes for motor vehicles, Mtshali says
Madubedube says a big driver of the growth is consumers good. “The irony about the hair care industry is that the Chinese such an application would undergo rigorous examination
having access to social-media platforms such as Instagram and “Getting into business was a risk because I had to quit my and Indians, among others, have mastered the art of producing during the basic assessment process.
Facebook, which means they can get the latest trends and styles job. As a young person, it was hard to start a business in products that they don’t even use. I’ve yet to see an Indian or If the applicants are asking for around R10 million to set
from fashionistas around the globe. Then they want to mimic manufacturing. The perception out there is that young people Chinese person who wears a weave. up this plant, the IDC would want to know what the basis
that style at home. are not mature enough to start and run a business. Some “The fact that we at San Hair not only use these products, for such a projection is and whether the aspiring
Unsurprisingly, multinational companies such as Johnson & but produce them too, gives us a competitive edge and insight industrialists have letters of intent, which are pre-contracts
Johnson, Unilever and L’Oréal are firmly entrenched in this into how we can best grow our product range.” with potential clients.
market. So, despite the growth in demand, competition for CONTACT THE IDC As part of its growth plans, the company plans to branch into “If there are letters of intent, we ask which market are
market dominance is stiff. Call the IDC on 0860 693 888, email them at the production of synthetic hair, accessories and cosmetics that they servicing? Who are the products intended for? What
However, despite multinational heavyweights squeezing callcentre@idc.co.za, or apply online: www.idc.co.za she hopes will be distributed in retail stores. are their technical requirements?
margins and creating unnatural barriers for aspiring The pre-investment business centre walk-in centre is “The beauty about our products is that they aren’t seasonal. “Where will they be operating from? Are the premises
entrepreneurs, Madubedube quit her salaried job to follow her at the IDC head office at 19 Fredman Drive, Sandton Every woman, regardless of race or income group, wants to suitable? Do they have sufficient electricity? Do they have
business dream. or visit one of the regional offices look good every day and we want to be the preferred supplier sufficient labour? What skills do they
“The local market is home to a young and increasingly of quality hair products that enhance beauty.” need?”
If the client meets these
Unearthed their distribution plans are
requirements, their financial
and marketing plans are
then interrogated.
The assessor investigates
if they will make enough
money to cover
operational costs, what

marketing plan is for
MINING ENTREPRENEURS and what their
the products and the
cost of such a
campaign. The
shareholders are also
investigated to
determine their
Two young South African scientists decided to mine their experience levels of skill and
qualifications to run
such an operation.
and start their own business, writes Lucas Ledwaba Naomi Mtshali, who is responsible for technical ability?
“Do they have the
pre-investment monitoring
“If they don’t have
PHOTO: ELIZABETH SEJAKE technical capability, we
T scourge of retrenchments in the mining sector has been in the industry, who is going to take them
he constant threat of falling victim to the
ask whether they have a technical partner – someone who
inspired two enterprising youngsters to work
through perhaps the first two or three years of the
operation and help them through the process.”
towards becoming their own bosses in the
Once all these questions have been answered to the
industry.
Sharon Musiiwa Mugubi (28) and
Munei Raphalalani (31) are now the owners of IDC’s satisfaction, Mtshali signs off on the assessment and
the application is taken through to the relevant business
Ronewa Analytical Laboratory, which provides unit.
coal testing and analysis. A This unit, after assessing the application, will conduct a
As a start-up in 2013, with no capital or deeper due diligence process that includes physical visits to
a clientele history, the odds were heavily project in the premises where the operations will take place, and a
stacked against them. partnership more intense scrutiny of the books to determine that what
“Access to funding was a major is contained in the business plan corresponds with reality.
challenge for us as most funding with the Mtshali advises entrepreneurs to keep their business plan
institutions were not prepared to take a focused on what the business is all about, what it intends
risk to fund a start-up entity,” said Mugubi. IDC to do and who the potential clients are. It must also be
Raphalalani said that, as a start-up realistic about the business’ financial prospects.
business, building a clientele base was not “There’s a misconception by entrepreneurs that funders
easy “because mining companies were not want to see a rosy picture all the time. Realistic means you
willing to give us a chance”. are saying I have five letters of intent, but out of these five
But they were determined to succeed, and turned I think maybe two will pan out.
adversity into an opportunity. “Also, [you should have] a business plan focused on
They applied for a loan from the Industrial Development what you want to do. This is what I want to manufacture,
Corporation (IDC) to help them fund the purchase of this is my target market, this is why my customers are
equipment and vehicles required to set up their operations in going to walk through the door and buy my product. What
Limpopo’s capital, Polokwane. makes you stand out?”
“The experience was quite challenging, but it was worth it. She also advises those seeking funding for the first time
The application process was vigorous and the IDC expected a MINING SUCCESS Sharon Mugubi and Munei Raphalalani run the Ronewa Analytical Laboratory, which was to be truthful about the short-term profitability of the
lot from us, but, in the end, we lived up to the expectations set up in 2013. The business services coal mines in the Limpopo and Mpumalanga areas operation. The IDC does not expect a start-up operation to
and standards,” said Raphalalani. PHOTO: LUCAS LEDWABA / MUKURUKURU MEDIA make profits in the first year, and will not reject a business
Mugubi said: “The IDC has not only assisted us with that has a promising future simply because it cannot
funding, it has also provided guidance and business support “This is where I gained experience in the analysis of a wide pair a long and hard four years to get it to where it is now. generate short-term profits.
programmes, which we desperately needed as start-up range of minerals, including coal, metallurgical coal [coking They identify the IDC loan as a breakthrough. “There are entrepreneurs who think if they show losses
entrepreneurs.” coal], chrome, limestone and dolomite,” he said. Ronewa is now in the process of being accredited by the SA in the first two to three years, the IDC is going to say no.
Ronewa has since secured a two-year contract from Mugubi graduated with a national diploma and a B-Tech in National Accreditation System, which is the only accreditation We actually want to budget for that.
Universal Coal to carry out laboratory coal testing services at analytical chemistry. She also holds a postgraduate diploma in body that certifies South African laboratories to international “What we want to determine is, if you don’t make those
the company’s coal projects in Limpopo and Mpumalanga. operations management and a masters of business standards. profits in year one, is your business still fundable?”
They are expected to analyse the samples and communicate administration from North-West University. They work in a tough, competitive and strict industry that In the case where a business cannot generate enough
to Universal within two working days of receiving the coal. She started as a trainee student and worked her way up requires high standards as their work entails analysing coal for profits to repay the capital amount immediately, it receives
They are also expected to deliver services that follow until she became the youngest quality assurance manager at physical and chemical properties. a capital moratorium, which is a payment reprieve for up
standards of practice recognised by first-class laboratories that AfriSam cement group. “Analytical laboratories are used for this purpose to to six months, while it builds up enough cash reserves to
perform similar work under similar circumstances. “Being passionate about what we do influenced us to start determine the rank of coal along with its intrinsic be in a position to start serving its primary debt.
Universal said it had taken Ronewa on board as part of its Ronewa Analytical Laboratory. We also wanted to play a characteristics,” said Raphalalani. Ideally, the Pre-Investment Business Centre would take
enterprise development initiative, and that Ronewa would also meaningful role in our country by curbing the high The company’s workforce has gradually grown from two around seven days to completely assess a business plan
service its mines in Mpumalanga, 250km from Polokwane. unemployment rate that South Africa faces,” said Mugubi. employees to five full-time workers. They are anticipating and move it to the next stage, but this process is often
Looking back, the two believe they made the right decision But they warn that being your own boss is not for further growth to more than 40 staff this year. delayed because more information is requested from
by becoming entrepreneurs instead of employees. everyone. But this is not the end of it – they are aiming even higher. applicants.
“We chose to be in charge of our destiny to have stability “If entrepreneurship was so easy, everyone – or most “We believe the future is surely bright for us. Ronewa plans Mtshali says given the size of the amounts requested
and comfort,” said Raphalalani. people – would be doing it. For us to succeed, we had to to expand to many regions in South Africa and beyond, which from the IDC, it makes business sense to wait for all the
Raphalalani has more than seven years of experience in the stand out and be different. We took daily steps towards our is a strategy that we have already began to initiate. We would relevant information before a final decision can be taken.
mining sector with a B-Tech qualification in metallurgical dream. Through prayer, dedication, hard work and like to play a meaningful role in our country, which has a “We are making serious decisions about whether to fund
engineering. His training in the industry varies from persistence, we prospered.” high youth unemployment rate. Our plan is to employ and serious amounts. We need to take into account all risks
laboratory operation to plant supervision. Although the business was established in 2013, it took the train graduates who are in dire need of jobs.” and mitigate them.”