Building a business from less than nothing
Some successful entrepreneurs start multi-million rand businesses with nothing but their ingenuity and determination. Hermanus van Niekerk started his with way less than nothing – almost R1 million of debt that he had no hope of paying off.
Today the owner of Alberton-based Security Experts South Africa, one of the biggest independent gate and canopy installers in Gauteng, looks back on his start-up days in 2006 at the age of 46 as “no doubt the most difficult in my life”. Hermanus had lost everything in a venture which he declines to describe, except to say that he trusted some people too much.
He lost millions and was left with 86 unpaid loans and accounts totalling R814 000. His urgent efforts to find a job to save his family from destitution came to naught. Ironically, his eclectic mixture of qualifications – one in mechanical engineering, a PhD in pastoral care and an MBA – counted against him as potential employers saw him as overqualified, and his ruined credit record disqualified him from working as a business consultant.
His sense of honour made him reject sequestration as an option, and he embarked on what then seemed almost impossible – a business that would not only help his wife Erna and their two teenage children survive, but would help him settle the debts. It was a leap of faith in more than one way.
For Hermanus, there is a similarity between his deeply felt religion, which informs every step of his life, and his entrepreneurship: an ability to believe so strongly that he “can see the invisible”.
Week after week the Van Niekerks worked on making hundreds of signs out of discarded cardboard boxes to advertise the installation of gate motors. On Fridays they would put them up on stop signs all over Alberton. By Monday all the signs would be removed by the municipality, but not before they had at least a few calls in response.
The advertising turned out to be the easy part. Upon receiving a call, Hermanus faced the virtually impossible challenge to convince the potential client to put down a deposit equal to the value of the motor and materials – the only way he could hope to finance the job.
He would drive out to the prospective client in a clapped-out car and park a discreet distance from the house. Hermanus remembers the look of dismay on the face of many clients when they saw him drive away with their deposit in a haze of diesel smoke, convinced that they would never see their money again. The hidden advantage, jokes Van Niekerk, was that the clients were so happy when he returned to install the motor that it made for instant, double client satisfaction.
The Van Niekerks lived on “bread and beans” for three years while Hermanus built a client base and a reputation for good service. Painstakingly, he paid off his debt. He says his strategy was to pay off the smallest of the 86 accounts first so that he would gain a much-needed sense of progress as dark thoughts constantly threatened to overwhelm him.
Soon Hermanus started making custom gates using a small arc welder at home. One day a regular client insisted that he build him a canopy. Initially reluctant and prone to “melancholy and self-criticism”, Hermanus obsessed over the job which took him three days. “I didn’t make anything on that job, except for a pack of biltong that the grateful client threw into the deal,” he said.
But today, canopies and car ports account for no less than 60% of the company’s business.
Within three and a half years, Hermanus had cleared his credit record and got finance for a bakkie. As the business took off, the problem of work space arose. At first, Hermanus did his welding from the family’s small rented premises between nine in the morning and three in the afternoon so that the neighbours wouldn’t complain. But it became too much, and the Van Niekerk’s had to move. Soon their new yard looked like an industrial site and no amount of freebies could pacify the neighbours. When the municipality issued him a warning, he knew it was time to find a proper workshop.
It was seven years since the start of his business, and with his record cleared and some money in the bank, Hermanus was optimistic that he would easily get bank finance for an ideal premises he spotted in Alrode South, Alberton. But the bank insisted on a 50% deposit, which he had no hope of raising within the 30 days deadline to clinch the deal.
Someone recommended Business Partners Limited (BUSINESS/PARTNERS), who gave him 100% finance for the building in the form of a term loan, with a turnover-based royalty in lieu of a deposit. Since then, BUSINESS/PARTNERS has financed the purchase of a plot next door to the building for Security Expert’s expansion.
When he started, Hermanus scarcely reached a turnover of R100 000 for the year. “Today, I’m unhappy if we don’t do R100 000 in a day,” says Hermanus, whose entrepreneurial spirit is as lively as ever.
Security Experts constantly try out new products services that complement their existing lines, but keep only those with a strong potential for profitability. Currently the company has 17 lines, roughly divided into steelworks and security-related electronics.
With a staff of 70, his daughter Angeline as general manager and his son Jaco head of sales, Hermanus is determined that the Van Niekerk family business can reach what he calls the “goose bump” figure of R50m per month.