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 Building a lasting family legacy

 

 Abednico Makina, an entrepreneur in deep-rural Limpopo, can see his grandfather's formative influence in the chain of four pharmacies that he has built up over the last six years.

It was from him that he learned how businesses can grow where none had ever been before. His grandfather was uneducated, but with “lots of business wisdom” he managed to build a thriving supermarket in the rural village near what is today the fast-growing mining town of Burgersfort.

Abednico grew up in the family trade, spending his weekends working in the shop of his parent, who had also taken up retailing, but on a smaller scale. By the time he finished school, he felt the family’s retailing blood coursing through his veins. But he was also the first member of his family with the opportunity to gain a professional qualification, so he chose pharmacy because of its close links to retail.

He never so wished for his grandfather to be alive as when he resigned from his well-paying job as a pharmacist at Pick n Pay in Pretoria to run his own pharmacy in his hometown of Burgersfort. He planned to buy a struggling pharmacy in the town, but the family finance he was hoping for never came through. Haunted by the prospects of having to fend for his wife and children and keep his car on the road without a job, he went from bank to bank to find finance.

Predictably, everyone said “no”. He had no collateral and, based on the accounting records, the viability of the pharmacy he planned to buy was questionable. Business Partners also turned him down at first, but with one important difference: if he could prove that he could turn the shop around, Business Partners would relook at his application.

Abednico says he “threw himself into it” and for three months surfed the scariest cash-flow wave imaginable. His deal with the owner of the pharmacy was to run the shop for three months, carry all the expenses, and pay the owner R12 000 “rental” per month. Then, in order to prove the projections that he presented to the financiers, he had to double the turnover, meaning that he had to find thousands of rands from somewhere to increase the stock. The wholesalers refused to give him credit without a track record.

Abednico says at 2pm every day he took all the cash in the till to place the order at the wholesaler, thus financing his stock growth incrementally through the daily growth of his sales.

But how did he double the sales of a shop without changing its location, its niche or its staff members? There is only one way, says Abednico, and that is a complete devotion to customer service. “I made sure that whoever walked in got the whole package, the best service ever,” he says. “I told the staff that customer service is the only thing that works in retail, and we all went for it.”

Abednico exceeded all his projections, and Business Partners financed his acquisition of the shop.

He credits Pick n Pay founder Raymond Ackerman’s book The Four Legs of the Table, as well as his stint as pharmacist at the retail chain for showing him the importance not only of customer service, but also community involvement. Shortly after the start of his Phelo Pele pharmacy (which means “health first”), he started the Phelo Pele Foundation to undertake community upliftment projects.

One of the other legs of Ackerman’s table is the administrative health of the business. As much as Abednico was aware of Ackerman’s philosophy, he learned the hard way through expanding his Phelo Pele brand to three more pharmacies started from scratch in neighbouring towns.

A business owner can get away with certain gaps in his accounting system with one shop, provided he is there constantly to check that everything is running smoothly, but the moment the business expands to more than one branch, an accurate reporting system is the only way that the business owner can remote-control the operations.

Through trail and error, and a combination of using technology and appointing family members as managers in his branches, Abednico is busy building a robust administration system.

His other big challenge is recruiting and keeping a pharmacist to work in each of the four Phelo Pele outlets. Pharmacists are in short supply in South Africa, and persuading them work in a rural pharmacy requires large remuneration packages, and co-ownership.

But offering shares in a branch to the pharmacist is no simple affair, as Abednico learned. In one bad experience, one of his pharmacists-turned-co-owners constantly demanded dividend pay-outs, and tried to portray the branch as more profitable than it really was.

Future share deals will be done properly, says Abednico, with pharmacists who are willing to buy the shares instead of simply getting them for free.

When Abednico thinks about the future growth of Phelo Pele, which he sees developing into a significant chain of pharmacies, his grandfather remains in his thoughts. But this time, it is for what his forebear did not do. Thinking back, he remembers how everything in his grandfather’s business revolved around his presence. He ran what Abednico calls a “closed” business, wanting to control every aspect of it, and when he died, his business died with him.

Abednico is determined to avoid the same mistake. He wants to “open” Phelo Pele to talented managers and pharmacists who can share in its success and help build a business that is a fitting tribute to the legacy of his pioneering grandfather.

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