In a last-ditch attempt to save their business, the couple threw everything they had into converting their student-accommodation business into a guest house. The amazing thing was that they did this knowing that at any moment the building could be sold even as they were painstakingly renovating and converting each of the 14 en-suite rooms with the passion that only a business owner can muster.
All the while they had to show several prospective buyers the property, three of whom were very interested in buying it. At that stage any price that Mark and Liza would have received from the sale of the property would have simply gone into paying off debt, and their business would be gone. “We came very close to losing everything,” says Mark.
But today, Shekinah Lodge’s metamorphosis into a beautiful guest house in Sea Point, Cape Town, is complete, the business is thriving, and the building is off the market.
The story of Shekinah Lodge started when Mark and Liza provided accommodation in their home to two Korean students who were doing a short study stint in Cape Town. It was a spur-of-the-moment decision based on a conversation with a friend, but it opened their eyes to an exciting market opportunity.
Cape Town is a popular destination for students from all over the world, many of whom are interested in the opportunity to learn English while doing one of the many world-class courses available in the beautiful city.
Mark, who was running a public-speaking and presentation-skills training company at the time, jumped at the opportunity and was soon hosting many students in rental premises dotted around Sea Point.
The business proved lucrative, especially with students from Angola. The country was going through an oil boom at the time. Many Angolan students came to Cape Town for a highly rated local maritime studies course and by word of mouth ended up staying in one of Mark and Liza’s rooms.
The business grew to the point where it made sense to buy a property of their own, and Mark approached Business Partners Limited (BUSINESS/PARTNERS) for finance.
Years back, BUSINESS/PARTNERS had financed Mark’s first business, a King Pie franchise outlet in Port Elizabeth. Even though that business did not succeed because of the location, BUSINESS/PARTNERS saw the potential in the student accommodation market and also believed in Mark’s tenacity and potential as an entrepreneur.
The company agreed to finance 100% of the price for the purchase of the Shekinah Lodge building in Milner Road, Sea Point, in return for a minority share in the building and a ten-year term loan.
At first the business flourished, but then the market turned. The department of home affairs’ tightening of the visa requirements for travel to South Africa decreased the number of overseas students coming to Cape Town language schools, and, even more serious for Shekinah Lodge, the oil price slump caused the stream of Angolan maritime studies students to Cape Town to dry up completely.
Suddenly Mark and Liza found their business running at a loss. Seeing their clients falling behind with their loan repayments, BUSINESS/PARTNERS jumped in with some patient advice, urging Mark to streamline the business by shedding some of the other rental properties that they were running as student lodges in Sea Point, and to focus on Shekinah Lodge alone.
“I should have listened,” says Mark, but they were emotionally resistant to the idea of shrinking their business. Despite the fact that BUSINESS/PARTNERS allowed them to service the interest on their loan while granting them a moratorium on the repayments of the capital amount, their losses piled up.
When BUSINESS/PARTNERS finally decided to place the property on the market, it was the wake-up call that Mark and Liza needed.
Lesser entrepreneurs would have stepped away from the business, hoping that the proceeds of the fire-sale of the building might just cancel out the debt.
But Mark and Liza decided to throw everything they had at trying to make the business work. Together with their daughter, they gave up their spacious family home in Goodwood and moved into the tiny apartment attached to the lodge. Not only did the move save on their home bond repayments, but it brought them as close as they possibly could be to the business while they set about converting the student lodge into a guest house.
Household expenses were slashed to a minimum as every cent of surplus business revenue went into the upgrade which they funded entirely on their own.
Despite the fact that their transition from students to tourists and business guests was abrupt, the plan worked right from the start. Mark says they made sure that Shekinah had a strong presence on all the major online booking platforms.
But one of the greatest factor in their recovery, says Mark, was BUSINESS/PARTNERS. As soon as the financier saw that Shekinah was back in the black and was able to afford the loan repayments again, the building was taken off the market, and the loan restructured.
“I have no doubt that any other financier would have simply pulled the plug, but BUSINESS/PARTNERS gave us another chance, and was always there with advice and support. They truly are what their name says - they are our business partners,” says Mark.