It’s Not How You Start…
When Mishack Kgapane and his wife started selling packaged ice cubes from their home, they did it to augment their family income. “It all started with a single icemaker that was producing enough to sell around 20 or 30 packets of ice a day. It was so that we could earn some extra money because my wife was unemployed,” says the mid-level civil servant from West View, west of Pretoria.
Back then he was staying in Saulsville township. Ice is big business in the township where residents are into outdoor life during summer days when it’s sweltering. It was only when local drinking holes, spaza shops, and other smaller businesses started ordering from his business, Millenium Ice, that Kgapane realised there was an opportunity to grow the business.
He took a personal loan and invested in two industrial-size ice machines and cool storage, which he installed in his backyard. He bought a small bakkie, employed an assistant and started making regular deliveries of packaged ice cubes at R10 a packet to a growing number of clients. On a good day, he could deliver up to 400 ice cubes. “Ice is a seasonal business, so what was good about securing drinking spots as clients was that they have demand for ice throughout the year. That meant my business could still make money even in winter,” says Kgapane.
With a growing clientele beyond the township, Kgapane was told that the National Empowerment Fund (NEF) existed to fund start-ups such as his. He approached the NEF and was told he could qualify. So, he drafted a business plan, filled in all the forms and provided all the requirements.
After months of waiting, the NEF approved a loan of R700 000. The money has allowed Kgapane’s business to grow immensely. He was able to move his business to an industrial site in the township, purchase additional ice machines and hire extra help. He also bought another bakkie customised to fit a cold storage component at the back. The NEF also provides him with regular support, from how to manage his books, advice on growing the business, in human resource matters, accounting and tax services as well as structured repayment terms.
His business is set to more than double its sales in a year’s time, and Kgapane is almost ready to quit his job and run it on a full-time basis. His long-term plan is to grow his business to the scale where he can supply packaged ice to large retailers such as Pick n Pay, Shoprite and Spar. He is in the process of complying with their requirements and looks set achieve this vision.
Training and advisory services
Andrew Bam of the Small Enterprise Development Agency (SEDA), an entity of the Department of Small Business Development, said his organisation was created to assist start-ups and small to medium enterprises, but not with funding.
SEDA has the largest entrepreneurial support and development network across the country, with 56 branches and 46 co-location points within municipalities. This extends its presence into townships and rural areas. The agency provides non-financial support, which includes training for prospective entrepreneurs and in-depth diagnosis of a small enterprise or co-operative. Its network boasts 74 incubators and accelerators across the country, supporting over 3 000 entrepreneurs in technology-based sectors such as the ICT sector, biotechnology, agriculture and agro-processing and engineering.
According to SEDA’s statistics, there are 2.5 million small and medium enterprises in South Africa, employing 10.1 million people. Bam believes that with the right focus, the SMME sector can be a massive contributor to employment creation. With figures showing that most start-ups fold in the first year of business, he advises entrepreneurs to put in the hard work, show extra commitment instead of waiting for opportunities to come to them. “Access to market is perseverance. You need to go out there and knock on a million doors, and get the right product,” he says. On the part of government, Bam hopes for policy direction that will encourage deregulation and make it easier for entrepreneurs to get into business. “The key for us is to look at deregulation and the challenges of getting into business: improved safety and security, making it easier to register a business, assisting entrepreneurs with making a business case, not just a business plan. There’s also a big gap on start-up funds, we must find a way of closing that gap.”