The 5 Rules That Took Shameem Kumandan From Small Business To High-Growth Company
Shameem Kumandan has gone from a small-business owner to a high-growth entrepreneur by shifting her mindset and following five simple rules for growth.
- Player: Shameem Kumandan
- Company: Washtub Industrial Laundry Service
- Employees: 87
- Est: 1995
- Visit: www.washtub.co.za
1. You need a clearly defined market
When Shameem Kumandan launched Washtub Industrial Laundry Service in 1995, it was a small operation run from her backyard in Cape Town. She needed R1 000 monthly for her five-year-old son’s ADHD therapy and so she started a laundry service for Stellenbosch students.
Her backyard operation started growing, and as it grew she found bigger premises. Within two years she’d moved into the industrial market, not because of any strategic planning, but simply because business in that sector had come her way.
“We had no long- term vision,” she says. “Each time we grew it cost us cash until we found additional clients to balance the costs. It was organic.”
Washtub was growing, but by 2008 Shameem was learning a valuable lesson. Organic growth can only take you so far. The lack of a clearly defined market expansion plan and strategy was actually becoming the business’s biggest barrier to growth.
“We would drive to Sea Point, make a list of hotels, and market to all of them,” says Shameem. “We had no knowledge of business needs, and we therefore weren’t profiling our prospective clients and finding businesses that suited our specific offering. We just took anyone who came our way.”
This had two consequences. First, Shameem and her team were wasting a lot of time and effort on unqualified leads, when they could have been targeting the right customers. Second, they were contracting with clients whose needs and expectations were a mismatch to Washtub’s offering. This, in turn, damaged the company’s reputation and brand. Altogether, the cost of new client acquisition was high.
“Our shift came when I contracted the services of an experienced marketing director. She taught us the value of pre-qualifying leads and customer profiling. Previously, we were scrambling for any client we could sign a contract with, fighting other laundry services.” Known as ‘red oceans’, this common sales tactic just leads to blood in the water.
Instead, Shameem and her team started focusing on the top ten customers they wanted. “We studied the needs of those clients, created a customer-centric solution for them, and then pitched our business to them. We were no longer just knocking on doors, but actively targeting the right clients whose needs matched our solutions.
“We knew we could offer them an exceptional service, and because we were focused, we could unpack and prove this solution to them.” Through this new sales methodology, Shameem and her team signed The Westin Cape Town. “The Westin was one of our pre-selected top ten clients. It’s the cream of the crop in the Cape.”
Shameem still services a number of clients, both large and small, but the company as a whole has a much deeper understanding of which clients are best supported by their service offerings.
2. Invest in growth
Organic growth is often necessary to begin with. It’s difficult to source funding — either debt or equity funding — without a track record or assets to use as surety for a loan. For this reason, many businesses are bootstrapped in their early years.
However, there comes a time when you do need to start investing in your growth, while also protecting your cash flow. For many years, Shameem poured everything she had into repayments, instead of protecting her cash flow.
Knowing what she knows now, if she could go back, she’d protect her cash flow instead of repaying loans used to purchase state-of-the-art equipment she’s invested in over the years as quickly as possible. “In 2011 I travelled to Europe to see the processes and technology available in our industry.
“I came back with a new understanding of what was possible, and we started saving for new technologies that would not only set us apart in the industry but also help us better serve our customers, particularly in the healthcare market.
“We invested in machinery that is 100% automated; at no point in the wash cycle is linen touched by human hands, thereby eliminating any possibility of recontamination. The machinery also uses recycled water, halving the required water usage of conventional machines.”
From a competitive perspective, the machinery would differentiate Washtub from its competitors, but the way in which Shameem financed her purchases limited her growth. “We would finance new machines, and then focus on repaying the loans as quickly as possible, pouring all our cash into repayments. I didn’t understand I was actually limiting my growth,” she admits.
“Our growth was slow because we didn’t have enough cash — I was too focused on repaying our equipment finance.”
Shameem has since learnt that managing finance doesn’t just mean having little to no debt. “Once we stopped trying to repay our loans as quickly as possible, we were able to free up cash for other things, particularly investing in marketing spend. This has made a huge difference to the business and our
3. Focus on your numbers
In every business, there are areas where money can be saved without damaging the integrity of the brand or quality of your service. In fact, in some cases those savings can enhance the overall capabilities of the business. Most importantly though, savings free up valuable cash flow that can be used to fund further growth.
“We started our eco-smart journey in 2008 when South Africa had its first energy crisis. We were looking for ways to reduce our electricity usage. As a business that ran 24 hours a day and was powered by electricity, we knew there was a serious threat to our business continuity, and that we needed to find ways to reduce our consumption.
“We started with what we could change quickly and have maximum impact, and once you’re on the journey, paying attention to your numbers, it’s incredible what you can find to reduce consumption.
“For example, we invested in a coal-fired boiler, changed the motors on our machines to variable speed motors, which use half the energy, created natural light in our warehouses, taught staff to switch off lights and conserve energy in even the smallest of ways, including boiling smaller kettles. It’s all added up to significant savings.”
The lesson is simple: Once you know your numbers and dig into the details, there are many areas where you can save in your business — which, in turn, frees up cash for growth.
4. Automate your processes
When an entrepreneur starts out they are by necessity jacks of all trades. Shameem was no different. She was financier, office liaison, admin assistant, HR and sales all rolled into one. However, as the business grows, it’s essential to hire the right people and delegate these tasks so that you can start focusing on the business and strategy, instead of working in the business and performing operational tasks.
“When I applied for government funding, my network facilitator introduced me to a consultant who explained the concept of capacity building to me. It was a big shift in my mindset. Instead of thinking I had to do everything, I started thinking about how to develop policies and procedures.
“It was all in my head, and I’d been wanting to document everything, but I didn’t know where to start. She got me on the journey. Today there is a document and procedure for everything, from answering the phone and giving directions to our premises, to washing and sanitising our linen.”
It’s been an integral part of Shameem’s growth strategy. “You can’t separate yourself from the day-to-day operations of your business and focus on growth until all your processes are documented and ingrained,” she explains.
“Working on your business means recruiting people to execute those tasks, training them exceptionally well, while you go to work on planning, executing and achieving the business’s long-term growth strategy. It also means knowing your business; knowing your numbers and which areas can be improved upon and developed.
“Finally, in order to maintain control, policies and procedures need to be monitored carefully. Checklists are created that are ticked off daily. I insist on absolute discipline in this regard. An unyielding, relentless drive to maintain excellence in every action and choice we make has had a noticeable impact on the business, the integrity of our solutions and our growth path.
5. Invest in your people and yourself
Shameem’s introduction to an external consultant opened her mind, and from then on she embarked on a self-learning journey.
“I went from a small business owner to having a much bigger vision. I started working on the business and not in it, and that required a dedication to personal growth, but also helping my people to grow.
“On a personal level, I think there’s enormous value in getting help from an external source. Often a fresh set of eyes helps place our objectives in a better perspective. I’ve learnt that the input from a suitably qualified professional is invaluable.
“In addition, a SWOT analysis conducted at different stages of a business cycle will yield different insights. An external professional is completely objective about what products and services work or don’t work.
“As business owners, we can be emotional in our decision- making; external consultants help you to remove emotion from the equation and focus on the facts and figures.” In addition to consultants, Shameen continues to increase her business acumen through courses like EY Entrepreneurial Winning Women, an executive leadership programme for established women business owners.
Shameem hasn’t only focused on her own development though. “I’ve always been passionate about people and empowering and training them, but we’ve now taken this to the next level. Every Monday we hold training across a wide range of topics, from finances to health and safety.
“As a business owner, the health, comfort and stress levels of your employees all impact their happiness, overall efficiency and productivity; over and above this, I believe we have a commitment to support our employees where we can.”
Because the business is focused on automation and innovation, a lot of processes that were previously performed manually now have a technical element, and this also takes training and educating staff, as well as managing their fears.
“We’re a manual labour intensive industry. As you automate, there are fears that people will lose jobs. Instead, the opposite is true. When we automated in 2013 we increased our staff complement by 43%. We still need people; people need to watch the machines and look out for snags. Pillowcases still need to be counted, but now they can be scanned instead of manually counted. There is less room for error, and our employees are being upskilled.”