How Euphoria Telecom is Achieving 50% Year-On-Year Growth The foundation of any great business is solving a need. That's step one. How you put your solution in place and support it in the market is what will ensure top and bottom line growth.

Vital Stats

• Players: George Golding and Conrad de Wet
• Company: Euphoria Telecom Est: 2010
• Turnover: R45 million in 2016; projected R65 million for 2017
• What they do: Cloud-based business telephone systems
• Visit: www.euphoria.co.za

Euphoria Telecoms was launched from a living room. It was bootstrapped by founders George Golding and Conrad de Wet who promptly spent all of their start-up cash on a bad PABX software system from the US and had to start over. It took them six years to build a R45 million business, and one year to take that to R65 million. Here are their rules for laying the right foundations and following the best strategies for high-level growth.

Rule 1: Solve a need

This sounds obvious, and yet it's the cornerstone of successful businesses, and lacking in so many businesses that don't make it past start-up phase.

Euphoria Telecom is actually George and Conrad's second business together. Their first was a merging of both their previous businesses. Having met while delivering pizzas as students, George and Conrad ran into each other a few years later, and realised the start-ups they had launched independently of each other would work well together; George was often asked if he did web development by his clients, and Conrad's clients frequently requested visual production and photography.

Together they could offer all three, and they soon worked with a number of large clients, including FNB, SABC Women of the Year Awards and Home Choice.

The business didn't work out, as a third partner tried to move in a different direction, but the experience gave George and Conrad a valuable gift: They had worked within the South African market as an SME, which offered insight into the biggest pain points SMEs suffered. This in turn gave them an idea for a different business; one that would solve a real need.

"In 2004, VOIP didn't exist. Companies were trying to push it into the market, but it wasn't working," says George.

"We knew this because it had been a big problem for us. We wanted to buy a PABX system, but we couldn't find one that didn't come with a three to five-year contract. On top of that were maintenance costs, and if you wanted to scale there were additional costs, you were capped at lines and problems were expensive to fix. As an SME we didn't want to commit to any of it. The risk was too high."

They didn't get a PABX system, but they recognised an opportunity to offer the right solution for SMEs.

"When we started discussing the possibility of launching a new business together, this was the solution we focused on," says Conrad. "It didn't just draw on our skills, as our previous businesses had — it was solving a real need in a way that no other companies were."

But they needed to move quickly. "The buzz word was the Cloud. South Africa was still a few years away from wide-scale adoption, but we knew it would eventually become the status quo, and we needed to have the right product when it did."

A Cloud-based solution would be more affordable for SMEs because it didn't require a PABX system in the office; everything would run off a software solution with a VOIP switch. This made it scalable, cost efficient and easy to manage. The only problem was finding the solution.

"We identified solutions in the US where you could choose three or 100 users at the click of a button. You could set it up online, switch your package on and off — there was nothing like it available here," says Conrad.

"We decided to take the US model, work on it, and create something of a similar standard. We felt inspired; we were doing something that solved a significant problem."

To get started, George and Conrad invested everything in an off-the-shelf product from the US. "The decision had been whether to build it or buy it, and we decided to buy it — and then we discovered it was a bad product. We realised we needed to develop a platform through open source technology, and build it from the ground up."

Conrad and George still needed to educate their target market on how Cloud worked and the benefits of a Cloud-based VOIP system, but they had a product they knew the market needed — and that was a start.

The rule in action: If you aren't solving a problem, your business might remain operational for a number of years, but you'll find it difficult to scale. Whether you're a start-up or operational, keep thinking about your market: Do they need your solution, and does it significantly improve their circumstances?

Rule 2: Have the right partnership in place

"Partnerships are essential," says Conrad. "No one person can do it all. You need to work together with complementary skill sets. We both have strengths and weaknesses, but they're different, and so we don't clash."

Conrad's strengths are tech product building, engineering and development architecture. George is excited by what he can do with that technology commercially. In other words, the business has a tech guy and a sales guy, which according to most venture capitalists is all a business needs: Someone to make the product, and someone to sell it.

Success lies in how well those partners operate together, and whether they respect each other, because two people will never be in agreement 100% of the time.

"Tech guys are excited by their technology. When they figure out something new, or add a new feature, they want to give it to everybody," says George. "As the sales guy, I have to hold him back. We're running a business. That means we sell our products; we don't give them away for free."

On the other side of the coin, George is in the market, learning about customers needs, and he'll often go to Conrad with ideas, that if implemented immediately, could be highly profitable. But, as the tech guy, Conrad has to say no, keeping the team focused.

"We understand and respect our different roles, and know that we both work in the best interest of the business," says Conrad.

The rule in action: It's impossible to always be in agreement with your partner. For many business owners, the solution is to be a solo entrepreneur, but as investors point out, partnerships are much stronger, because you can develop a balance of skills. To make a partnership work, you need to respect each other's opinions and decisions, and have clear demarcations of areas in the business where one partner's decisions are final.

Rule 3: Stay focused, no matter what

The reason Conrad says no to some customer requests is to keep the business true to the vision. "We can generally deliver what customers want but if we go straight there, we're ultimately hobbling ourselves, he explains."

"Our long-term vision requires a number of steps to happen first. We will get there, but on a much better platform if we don't rush the process. It's easy to give in to market demand, and have your development team constantly making quick fixes, but these create walls that make the product unscalable and uniterative down the line, and that's the opposite of our vision. Our solutions are developed with 100 000 customers in mind, not 100."

For Euphoria, focus has worked. The partners also resisted selling fibre. "PABX systems are complicated. To offer good service, you need training and support staff. We didn't want to dilute this focus."

Instead, the business partners with connectivity companies that offer Euphoria's voice solution when they instal fibre, and vice versa.

"We work in parallel," says George. "They know their network, and we know ours. Plus, they were doing it. Why staff up and do it ourselves, when this isn't our focus? We have a niche solution that we don't want to dilute."

The rule in action: This is one of the hardest business rules to follow. It's tempting to say yes to customer requests if customer centricity is built into your business model. But if you know your niche, stick to it and stay focused. No businesses are equally good at everything. Great businesses are very good at only a handful of things because they know how to stay focused and build excellent products and solutions.

Rule 4: Empower your clients

Customers gravitate towards solutions that offer one or more of these four key things: They empower them, they simplify their lives, or they make or save them money.

Euphoria's solution is designed to offer at least three of these decision factors, but empowering customers and simplifying their lives is at its centre.

"The first decision we made was to take contracts out of the equation," says George. "If we need contracts to keep our clients, we aren't delivering the right solution. We want to keep customers because we have the best solution, not because we've locked them in."

This decision has empowered customers in their decision-making, but Euphoria has taken it a step further.

"The solution is designed as a dashboard on your desktop, in real time, so that a business owner or manager can monitor their phone lines and how much they're spending. They can also change on-hold music and messages at the click of a mouse. They have control over the entire system and their spend," says Conrad.

"The Internet empowers you," adds George. "You can action anything immediately. Once people have that experience, they can't go back. Imagine you were told to delete your banking app or online banking and do all transactions from an ATM. Would you do it? We've done that for the PABX. It took some time, because our solutions were ready before South Africa's high-speed Internet infrastructure was in place, but we knew widespread Cloud adoption was coming, and we were ready for it when I did."

The rule in action: Old school business thinking dictates that a customer should be utterly reliant on your solution to ensure customer loyalty. In truth, this level of reliance on another brand makes people uncomfortable and trapped. Instead, focus on providing solutions that give your customers complete control. Ensure there are no hidden costs, that customers feel empowered, and that their lives are simplified, and you'll foster customer loyalty.

Rule 5: The right people can make a business

"We've learnt that a large part of how you treat your employees starts with your own vision and goals. If you're only driven by profits, this will be transferred to your employees," says George.

"But if you have a greater purpose, and you want to solve a problem, that becomes the centre of the culture shaping the business.

"The people we hired aligned with our mission. We're ethical, honest and transparent — we always tell our customers the truth. We've found that as long as we are completely clear about who we are, and what our goals are, money becomes a reward instead of a goal, and we attract like-minded people."

Placement is another key focus. George and Conrad understand how their own passions and abilities define the commitment they make to their roles, and they promote this philosophy with employees. "When someone is inspired, they go for it — get them in the right role and they'll fly. It's how we treat ourselves, and how we hire," says George.

Today Euphoria has offices in Cape Town and Johannesburg, and a lean focus has remained essential. "We would rather improve efficiencies and keep our staff compliment low so that everyone has a bigger share of the rewards," says George. "We're constantly improving our back-end, and this opens a lot of capacity for us."

The rule in action: Businesses are not built in isolation. They're the culmination of the vision and energy of founders, and the ability of employees to execute that vision. Get the right people on board, and retain their loyalty, and you have the foundations of a great business.

Rule 6: Cash is king

George has two key rules when it comes to cash flow. First, if the market doesn't accept your price point, it's not a sustainable business and you need to rework your model. However, make sure you know your value and your worth, and then price accordingly — without offering massive discounts. If your price is right, target customers who value what you're offering.

"Customers have left us before for price," admits George. "But they come back for service. They even ask us why we didn't stop them from leaving."

The second rule involves cash flow and billing. "Growth can damage a business if you aren't paying attention to your cash flow," says George.

"You make sales, but suppliers need to be paid, and before your cash is in the bank, you're paying other people, and end up in negative cash flow. The more you sell, the more it costs you."

George and Conrad have followed a few simple principles. They always negotiate the best terms possible with their suppliers, and they have fixed payment terms with their customers. All accounts must be prepaid, or settled within two weeks of receiving an invoice.

"We say no to customers who don't agree to a debit order or won't do upfront payments," says George. "We'd rather turn away business than break this rule. It's the foundation of our business and how we've been able to fund our own growth."

In return, customers get full transparency into their accounts and the ability to manage expenses on their dashboards. There are no hidden costs or surprises, and Euphoria to Euphoria calls are free.

The rule in action: Focus on getting your income into the bank before you pay your suppliers. Always have more cash than what you're selling — sales have a cost. Get next month's income in before making payments. To achieve this, you need good terms with your suppliers, and an efficient billing system. Put the right system in place to ensure all invoices are sent timeously and that they're correct. This is the foundation of your business's health and ability to grow.