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 Business built from scratch on trust and determination

 

 The stylish, timeless furniture in the Classic Work Life showroom in Houghton, Johannesburg, conveys such a sense of luxurious durability that you’d think the business behind it must be a corporate itself.

In fact, Classic Work Life is staffed by a team of fourteen, led by determined entrepreneur Gregory Gomes, 53, who built the business from scratch over the past six years.

The business sells high-end furniture, including chairs, desks, and reception furniture to the corporate sector, sourced mainly from Europe, and, as the holder of the exclusive distribution rights in South Africa, mostly of the top quality German Wilkhahn brand.

The story of Gregory Gomes and Classic Work Life is one of survival and growth in tough economic conditions, an increasingly difficult exchange-rate environment, and major upheaval in the South African manufacturing sector.

Gregory cut his teeth in the Johannesburg-centred office furniture industry, starting off as an accounts clerk and working his way up to marketing manager for large furniture maker Grant Andrews Office Furniture which later became Emergent Office Solutions.

The companies were not immune to the changes in the South African manufacturing sector as it became increasingly difficult to sustain large traditional factories, and in 2011 Gregory decided to start his own business as Emergent shut its doors.

Gregory was determined to avoid the large overheads of a production facility and decided to rather focus on the local assembly of imported Wilkhahn furniture rather than manufacturing from scratch.

There was another pitfall that he was keen to avoid. A large part of his last employer’s demise, Gregory believes, was because they tried to sell furniture to the whole range of income levels, from cheap to exclusive. Gregory decided to focus on the high end of the range and to stick to it.

When he started out, Gregory did not have much in the way of start-up finance, but his deep connections in the industry built up over years gave him substantial trust capital. First, he secured the exclusive distribution license for Wilkhahn products in South Africa.

“Some of the bigger office furniture companies were after it, but because I had experience with Wilkhahn, and I had already set up a showroom in Houghton with Wilkhahn products, they decided to stick with me,” he says.

Second, he set up a partnership with a local office moving company with the idea that he would concentrate of bringing orders in and they would take care of the assembly and installation of the furniture.

The partnership, called Boss Office Furniture, lasted for two years before Gregory was able to set up his own small assembly facility in Industria, under the name Classic Work Life, partly financed by the proceeds of a big order that they had won.

Even though Gregory had worked on a profit-sharing basis at his last employer, or, as he describes it, “running my own business within that business”, stepping out on his own was a big challenge. Issues that he previously took for granted, such as understanding and vetting licence agreements with his suppliers, and the logistics of assembly and delivery on every order now became his direct responsibility. 

But the biggest challenge was finance. The business of supplying furniture to the corporate sector works on large projects of millions of rands, and when Classic Work Life wins a contract it needs substantial finance to import the furniture, assemble and install it and take care of  the overheads until the client pays, which is several months later.

As a new business, Classic Work Life qualified only for a very small account with its European suppliers, so the only way to finance a deal is to convince the corporate client to pay a 50% deposit at the start of each contract. This they would usually only do against a bank guarantee, which is in turn very difficult to obtain without security.

In the early years, every contract that Gregory won was a double-edged sword - it was another victory for Classic Work Life, but it set off another desperate scramble for bridging finance.

Gregory says his approach was simply to sign each contract and to hope for the best. “You just have faith that it will be okay. You can’t not go for the deal (because you don’t have the finance), so you just go for it. Once you’ve got the deal in your hand it becomes a little bit easier to go to somebody and say can you help me with finance.”

One of the many doors that Gregory knocked on was that of Business Partners Limited (BUSINESS/PARTNERS), who two and a half years ago extended much needed working capital to Classic Work Life.

“The banks are not prepared to take the risk - I tried, whereas BUSINESS/PARTNERS was prepared to look at the business model, to look at me and say ‘there is potential here’,” Gregory says. 

Six years since the start of Classic Work Life, Gregory says it is becoming easier to raise finance for each successive contract. Despite the slow economy the business is looking forward to a good year, especially now that the company has received a Level 2 BEE rating by setting up a workers trust which holds 49% of the company.

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