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 Destined for entrepreneurship

 

 Many people saw little Lebo Mbethe, scarcely ten years old in the late eighties, working behind the counter of her father's shop in Witbank, but few of them would have thought that she would grow up to own her own multi-million rand fuel company.

Mbethe herself, on the other hand, always knew she would be a business owner. So steeped was her childhood in the businesses of her entrepreneurial parents that she was destined to follow both her two older siblings and her parents into the world of entrepreneurship.

 

Mbethe’s memories of her childhood Christmases are not about presents and family dinners, but about stocktaking. The busiest day of the year for her dad’s bottle store was Christmas eve, and on the following day the whole family got stuck in and took advantage of the day off to get things ready for the build-up to New Year.

That shop taught her all aspects of business life, including arithmetic as she manned the “till” – a collection of empty cigarette cartons in which she sorted notes of different denominations. It also put her and her siblings through top schools and universities.

Knowing her destiny, Mbethe spent her university training and early years in the corporate world in a kind of laid-back open-mindedness and left the direction of her business life open to fate, which took her through a BCom at the University of Cape Town into brand management, first at Unilever in Durban and later at Smirnoff in Cape Town.

She enjoyed it, she said, but it left her ultimately unsatisfied. She found she wasn’t good at taking orders and not being in control of a project. Restlessly, she returned to Johannesburg, determined to be her own boss.

Mbethe was still unsure of exactly what kind of business she would start, but her plan was to take advantage of the fact that she had an amazing business mentor in the form of her father, who would be able to point out many business opportunities that he came across in his substantial business network.

She first tried a transport venture with some fellow entrepreneurs, but pulled out due to differences with the partners. Then her father pointed out an opportunity that opened up when the government wanted to seed black entrepreneurs in the fuel industry which they were busy reforming to stabilise South Africa’s fuel supply.

She jumped at the opportunity for a licence to import refined fuel into South Africa as wholesaler. Her experience was typical of so many black economic empowerment opportunities: it seems straight forward enough on paper, but is fiendishly difficult to realise in practice.

The nature of the fuel business simply does not lend itself to starting small and scaling up, says Mbethe. Fuel is an expensive commodity with a thin, regulated margin, which makes the fuel trade a volume game. As a shaky start-up, Mbethe’s Advent Oil struggled to raise finance to survive the stormy ocean of exchange rates and fuel price volatility.

Mbethe explains the dreadful odds she faced: “My cash flow gets impacted every single month by whichever direction the fuel price moves. For example, if I’m selling a million litres and the fuel price goes up by one rand, I need to find an extra R1m the following month to sell the same amount and make the same amount of profit.

“To grow my business by a million litres I need to find R11m, and I only make 1% on that,” she says. In a world where investors and financiers seek much higher returns, a tiny importer like Advent Oil is therefore almost solely reliant on supplier credit which is simply not reliable enough for organic growth.

Yet the license gave her a foothold, however precariously, in the oil industry. She has managed to build her own depot in Witbank, and another in Kuruman, as well as a fleet of eight of her own trucks, which is supplemented with contracted trucks. Her husband happens to run a logistics company that neatly complements her business.

Both companies, Advent Oil and her husband’s Phakamole Logistics, are head-quartered today in an upmarket office block in Centurion which Mbethe managed to buy with finance from BUSINESS/PARTNERS, which holds 35% of the property. In the fuel game, where every cent is needed to bolster cash flow, it would have been impossible for Mbethe to put down a deposit required for a bank mortgage on the building.

BUSINESS/PARTNERS, on the other hand, required no such deposit, making it possible for Mbethe to start building a solid asset base for Advent Oil.

Perhaps even more important than an asset base, Advent Oil has been able to build a knowledge base of fuel and lubricants, as well as a network of associates and suppliers. With her deep-rooted entrepreneurial instincts, she has shifted her company over the last couple of years away from a general fuel wholesaler to more specialised niche markets offering some form of fuel management as well.

Advent Oil, says Mbethe, now sees itself as a service business and no longer simply a wholesaler, and as such is able to beat the giants of the oil industry hands-down. In fact, the big players prefer to avoid such custom service in order to focus on their strength, which is high-volume trade. This has allowed Advent Oil to strike up a strong relationship with Shell Company as its main supplier, not only of fuel, but knowledge and advice as well.

In its latest breakthrough, Advent has landed a contract for the entire fuel management of a mine, which includes not only the supply of fuel, but fuel management as well as consulting and aspects of fleet management.

Today, anyone seeing Mbethe at her smart headquarters in Centurion may find it difficult to imagine a little girl behind the counter of a shop in Witbank, but for Mbethe she is still busy with the same thing, doing what she was always destined for.

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