Ongoing innovation the driving force behind entrepreneur's success
This is according to Siphethe Dumeko, chief financial officer of Business Partners Limited (BUSINESS/PARTNERS), who points to the recently released 2017/2018 Global Entrepreneurship Monitor report which reveals that South Africa ranks 13 out of 54 countries in terms of innovation. “Low-key, incremental innovation that happens every day in thousands of small businesses in the country are often under looked for their contribution to South Africa’s economic development.”
Illustrating how incorporating incremental, local-level innovation, in a business at the right time, can lead to a company’s success, and contribute to the local economy is entrepreneur, Yogan Munusamy, whose business, Formit Palisade Fencing in East London, has become a major player in its local market within ten short years.
“My family couldn’t send me to university after school, so for three years I worked in a struggling family supermarket in King William’s Town before I enrolled as a trainee toolmaker in the East-London car-making industry in the late nineties,” Munusamy starts.
The skills he gained during his apprenticeship and later as a quality manager of an automotive-parts factory played a crucial role in his later business success. During his twelve years at the company Munusamy also studied mechanical engineering and production management on a part-time basis.“I was becoming increasingly frustrated with the lack of career development opportunities at the company. That’s when I, together with three of my friends, purchased a machine that a local entrepreneur had built to make metal palisade fencing, but had struggled to integrate into a sustainable business.”
While he knew that there was a need for locally produced quality palisade fencing, and the new machine technology gave him a competitive edge, Munusamy says that it was still incredibly difficult to win the trust of the local steel merchants who supply fencing contractors. “I remember being rejected by quite a few merchants initially.”
When the global recession hit the motor industry in South Africa, Munusamy, who had been operating Formit Palisade Fencing as a moonlighting business up to that point, saw it as an opportunity to take his business to the next level. “I, and many of my peers in the motor industry, was offered a voluntary retrenchment package. I took it and decided to put everything I had into the company.”
The recession also led to the closure of one of the most prominent local competitors. “The company had the machinery to produce a different type of metal palisade fencing, so I went to the liquidation auction with a plan to acquire some of the equipment. Not only did I buy two metal presses, but I also discovered that the property was available to rent – which was ideal for us.”
The landlord was Business Partners Limited, the leading risk financier of small and medium-sized enterprises in South Africa, and who also supports many local entrepreneurs in rental units throughout the country.
By moving his operation into the premises of his former competitor, Munusamy was not only closer to his market, but could also take advantage of the market’s perception that it was only the name of the manufacturer operating on the site that had changed.
Munusamy tells that growth was slow and difficult, with many hard lessons learned. Making use of 50% grant funding from the Department of Trade and Industry, Munusamy was also able to acquire another palisade machine that significantly increased the company’s production capacity. This allowed Munusamy to supply palisade fencing at the specifications required by much larger clients like Eskom and Metrorail.
Today, having taken Formit Palisade Fencing from strength to strength, Munusamy says that the secret to the success of his business is the constant innovation that allowed him to improve the range, quality and quantity of his products. Also important, was his ability to keep the business debt-free. This helped to keep his prices low at a time when we did not have the economy of scale to break into the market.
True to his entrepreneurial style, Munusamy is again working on what he calls “the next thing”. This time, it is a move into mesh fencing, which will, no doubt, lead to more growth, and many more accomplishments.