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 Building a business on the bedrock of service

 

 It may seem strange that an entrepreneur would name his business after a parched desert farm that had succumbed to drought after years of hardship. But Dries Coetzee says his father's farm Honolulu in southern Namibia, where he "grew up hard", brought out the entrepreneur in him.

On a desert farm, you are forced to grab every opportunity you can just in order to survive. You learn thrift and how to make something out of nothing, he says. Today, Coetzee’s Honolulu Mica in Springbok, Northern Cape, honours this legacy as a thriving, growing business.

Try as he might, Coetzee’s father could not make the farm work, and started a construction business in Springbok. At the same time, he financed his son’s business studies at Stellenbosch University.

Wanting to repay his dad for all his sacrifices, Coetzee went to work for his construction company, essentially as a foreman, thereby laying another layer of the foundation of his business success.

Coetzee did site supervision, quotations, quantity surveying, wages, procurement and much more, and in this way gained an intimate knowledge of the construction industry and also of the local economy.

Coetzee’s key insight was this: Because of the huge distances involved, Springbok’s isolated economy had given rise to a business culture of “We’ll order it for you”, and the client would have to wait days for the item to arrive. He experienced it countless times when trying to buy material for his building projects.

Coetzee knew that if he could somehow cut the delay, he could beat the local competition, consisting at that stage of three or four established hardware suppliers.

“The size of a garage,” is how he described his first 45 square metre shop, Honolulu Hardware, which he opened in 1997. By this time he knew exactly which items local contractors and DIY clients constantly waited for to arrive in town. Through bootstrapping and organic growth, he slowly but surely built up stock so that whenever the established shops ran out of stock, clients came to him.

His emphasis on service meant that clients soon started coming straight to him, instead of seeing him as a last resort. It wasn’t long before he had to move to a 250 square metre building, which he bought from his father.

Constantly searching for growth opportunities, Coetzee studied the possibility of joining one of the hardware franchise groups, mainly for the bulk-buying advantages that a large entity can leverage. He was impressed by the service-focussed approach of the Mica group, and in 2005 his business became Honolulu Mica.

Two years later he embarked on another huge expansion, almost tripling his store space. This time, however, he needed outside finance. After scouting around, he found that Business Partners’ service was better than any of the banks, and took his first loan with the entrepreneurial finance house. Since then, he has always returned to Business Partners whenever he needed expansion finance. “For me, a half-a-percentage (difference in interest rate compared to the banks) here or there is not an issue. It is the level of service that is important,” says Coetzee.

It was inevitable that the great recession would reach Springbok, and Coetzee says in 2010 he had to count his cents. But through his thrifty habits, forward planning and emphasis on service he pulled through, and by 2011 he was onto his next expansion with a board-cutting facility in the industrial area of Springbok. In 2012 he opened up a branch in Port Nolloth.

Coetzee is fortunate that his wife of fourteen years, Celeste, agreed to join his business as financial manager, which freed him up to concentrate on the trade. Celeste, a financial accountant, at first worked half days in the business, but the growth soon required full-time financial management. She fulfils another important function, says Coetzee: She acts as a common-sense brake when his enthusiasm for new opportunities threatens to get the better of him.

While Coetzee’s business was growing from strength to strength, the Mica group went through a radical transition in which the existing franchisees bought the group, making it one of the few franchise groups that are largely owned by its franchisees.

Coetzee likes the balance in Mica between group support through bulk buying and collective marketing on the one hand, and local decision-making discretion for franchisees on the other. Through his co-ownership of Mica, he can also enjoy expansion on a different level as the group acquires promising businesses in the hardware industry.

Not least, being a Mica member slots him into a network with global links. Through collaboration between Mica and Ace Hardware, a US group that has managed to withstand the onslaught of the retail giant Walmart, Coetzee has confirmed that there is only one way in which small hardware traders can defend themselves against Walmart’s entry into South Africa – through good service. It is good to know that he has been ready for them all along.

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