How To Launch A Business With R2 000
When Alicen Naicker quit her job she had no idea what she was going to do next. But she had R2 000 left after paying her bills, and so she sat down and thought about something that everyone needed. The answer? Chairs.
- Player: Alicen Naicker
- Companies: Quality Solutions and Rent-A-Tainment
- Launched: 2015 and 2017
- Visit: qualitysolution.co.za
Why entrepreneurship: Working in the chemical engineering industry, Alicen travelled extensively in her position. When her daughter fell ill and she was unable to get back to Joburg in time, she realised a change was needed. Her employer was unwilling to change her travel schedule, and so Alicen resigned. Family had to come first. Starting a business wasn't planned though. After paying her bills she had R2 000 left — and had to make it work.
It doesn't sound sexy. It's certainly not a high-tech business. But Alicen Naicker has tapped into an underserviced niche with a huge clientele. Her clients include churches, funeral parlours, schools, crèches, corporate clients and SMEs. She has 1 200 repeat customers on her books, including the Free State Department of Education. She services clients in Swaziland, Namibia and Zimbabwe. And it all started with 50 chairs and a steel table — which was all she could afford with her R2 000.
These are the eight lessons Alicen has learnt from bootstrapping her business.
1. Start with a need
"I had limited funds, and I needed to put what I had to work in such a way that it could generate continuous income. That meant I didn't want to sell something — I wanted to rent it out. What does everyone need, and yet never have enough of? The answer seemed obvious: Chairs. Functions are happening all the time, and people have to hire what they need for them."
Alicen had a colleague who had a friend in the chair manufacturing business. She reached out to him, and purchased 50 chairs and a steel table. "While the stock was en route I posted an advert on gumtree and OLX. Before the chairs had even arrived I had my first customer — a man whose wife was having a baby shower, and they needed chairs."
Alicen rented the equipment out for R800, and by Sunday, as it was returned it was hired out again, this time for a Sunday evening function. Just like that, her investment was working for her, making money.
2. Reinvest your profits
When you're bootstrapping you're starting off a small base that you need to grow. The only way to do this is to consistently reinvest your profits into the business. Alicen worked from home, ensuring she had no overheads. All she needed was a laptop and a cell phone.
"I purchased additional stock as soon as I made enough to do so, and put it to work," she explains.
3. Pay attention to opportunities and pivot where necessary
Rentals were the best way for Alicen to get into business, but she soon realised that's not where the market was. "A church from Springs contacted me. They wanted to know if they could purchase 50 chairs for R2 600.
"They couldn't afford to rent each weekend. I had good contacts, and could supply them quality chairs at a very small mark-up. I realised this was a business opportunity, and I'd built up enough cash flow to get started — I could purchase stock and sell it to specific sectors that needed a constant supply of chairs."
And just like that, Alicen became a stockist and seller of chairs, tables, chair covers, table covers and other related items — for adults and children. "My stock turnover time is two days. I pay careful attention to the market so that I purchase the right stock — I don't want to be left sitting with stock that doesn't sell, as this kills cash flow."
4. Keep your overheads low
Alicen works from home and doesn't have a warehouse. She ensures a quick turnaround of stock to make this work, which means she needs to pay careful attention to what sells and what doesn't. She has a laptop and a cellphone, and she invites clients into her home.
"It builds trust. I'm happy to do business from home; it's personal. My clients travel from all over South Africa, and the nature of their businesses is also personal, whether it's a church or an entrepreneur starting their own business. I'm a start-up — fancy offices and warehouses are completely unnecessary — my focus needs to be on building the business."
5. Find alternate streams of revenue
The market for chairs and tables is large, but Alicen had been in the rentals game, and she knew there was a need there as well — and that she could assist business owners with a "business in a box' concept.
"I offer combos: Chairs, tables, jumping castles and so on. You can purchase the entire kit from me, and all you need to do is market and start renting out. I've created an additional client base in this way — and as their businesses grow, my business grows. It's also a great way to supplement income. For example, I work with corporate employees who rent out chairs and tables on the side."
6. Understand your market
"I'm not a manufacturer, I'm essentially a middle man competing with well-known retail brands, and so I've needed to create a competitive niche for myself. First, my mark-ups are extremely low. This only works if I have high volumes though, so I've needed to concentrate on building those volumes up.
"You create loyal and repeat customers by building trust, and that's done by really understanding your products, your market and what your competitors are offering. I know exactly what's available, and what I'm offering in comparison.
"I can give good advice, because I understand my products, the different chair weightings and qualities, and what they can carry. Schools, churches and funerals — these are all places where you do not want chairs to break. Quality is important. I also always deliver what I say I will. My business is primarily built on repeat business and referrals, so this is important."
7. Ask your customers what else they need
Your biggest opportunities lie with your existing customers. Alicen recognised that the party rental industry is a big customer base for her, but they don't always want to invest in high-end products — or they aren't able to.
"I've launched a second business, Rent-A-Tainment, based on this concept. I've invested in four Zoballs, which I rent out to my customers who supply party equipment. Zoballs cost R25 000 each to purchase, and they're expensive to maintain.
"This is an additional revenue stream for me, and I have a pre-existing client base who want them. Before I even launched, my calendar was full. I'm also not one rental company with its clients — I service an industry of rental companies, so the costs will be recouped quickly. The challenge was purchasing them in the first place.
"I was head hunted a number of times in 2016. In November I decided to take an offer that was local, with no travelling. I'm using that salary to grow my start-up and invest in high-end equipment, instead of using my profits and hurting my cash flow."
8. Don't quit
"My family laughed at me when I said I was selling chairs, but I knew that it was something everyone needed, and I was right. This doesn't mean it's always been easy. There have been times when I haven't had a cent in my hand, and others when I have more money than I know what to do with.
"Start-ups are all about highs and lows. The important thing is to not give up, keep pushing on, and reinvest your cash into the business during flush times. It will pay off."