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 Stark choices on the road of business growth

 

 Early on in his career, Melvin Watkins was starkly confronted by a dilemma faced by so many young entrepreneurs: should he venture straight into his own business, or should he cut his teeth first in the corporate world before starting his own enterprise?

Some entrepreneurs start off by working for someone else simply because they have no financial or social capital in the beginning, but Watkins actually had a difficult choice to make.

His father, a pioneering businessman himself, offered to help him buy a well-known chicken franchise once he finished with his matric. His father had become the first black Chicken Licken franchisee in South Africa, and was quite able to launch his son into business, but Watkins felt that he had his own pioneering to do. It was the mid-eighties. South Africa was changing, and the world of big business, which was denied to black entrepreneurs up to that point, was starting to open up.

He declined his father’s offer, and straight after finishing his business degree at the University of the Western Cape, joined a graduate training programme of a major South African bank.

Looking back on that decision, Watkins believes that had he accepted his father’s offer of a franchise store, he “probably would have been more street smart now”. But the corporate route that he chose gave him the experience, knowledge and capital to build up a one-man consultancy into a group of companies employing 110 staff members with multi-million rand contracts from telecommunications giants.

Watkins’s New Generation group of companies provides management consulting, project management, quality assurance, recruitment, telecommunications infrastructure build, telecommunications product design and skills training. His group of companies mainly focusses on the telecommunication industry and thus finds itself on the forefront of the rapidly changing and expanding telecommunications industry.

Eighty percent into his executive trainee programme, he was appointed as credit analyst in the banking sector (FNB). Watkins was head hunted by the mining giant De Beers, where he worked his way up on the financial management side of the mines. Later he joined an American company in the fast-moving consumer goods industry before joining one of Africa’s well known cellular telecoms provider’s expansion into Nigeria. This is where his appetite for business was further fuelled. His almost 3 years spent in Nigeria brought home to him the importance of business and more specifically small business to ensure a sustainable economy.

Watkins was raised on the maxim that the basis of one’s advancement lay in education, and he used his corporate experience to learn as much as he could not only about formal management systems and boardroom strategy, but also about the cogs and wheels of different industries.

Nigeria was a seminal experience. It introduced him into the booming world of cellular telecoms, but more importantly, he found the make-do culture of the Nigerians entrepreneurially inspiring. “They really know how to make something out of nothing,” he says.

This is exactly what Watkins did when he returned to South Africa. Although he had a five-year contract with one of Africa’s giant cellular telecom providers, he felt compelled to return after three years because his wife and two children needed him. They had stayed home because they found expat life not ideal for the children.

It didn’t take long for the local telecoms industry to seek out Watkins’s substantial experience, and soon he had way too much work for the one-man consultancy which he ran from home for a while. He saw that the cellphone giants were increasingly outsourcing whole chunks of their expansion and realised that if he chose to remain a limited one-man consultancy, he ran the risk of being marginalised. Or he could build a business that could offer one-stop solutions to the cellular giants – not only building the physical towers, but also providing supporting services to the networks.

For the past eight years, Watkins has been building a group of companies diverse and flexible enough to take on such projects. Fortunately, he had some savings which he could use as capital to recruit his first staff members, but his rapid growth was, and still is, a constant struggle of finding finance to match the huge opportunities available.

It is still a huge battle for emerging entrepreneurs to get finance, he says. For example, no bank would give him the finance he needed to buy his new company headquarters in Rivonia, Johannesburg, without a 30% upfront deposit – an amount which his growing company could ill afford.

Business Partners Limited (BUSINESS/PARTNERS), however, made the acquisition possible through a co-ownership deal in which New Generation owns 65%, with the option of buying out BUSINESS/PARTNERS’ 35% stake over time.

Today, Watkins is still as keen to grow his business as always, and is determined to list his company in the coming years. The current choice facing him is whether to raise outside finance for his expansion, or continue with the slower, incremental growth that he has managed to achieve up till now, despite the challenges faced by black entrepreneurs.

“I find myself at the crossroads once again in terms of growth funding,” says Watkins. It is not the most comfortable place to be, but if his track record is anything to go by, Watkins will face it down and move forward on the road of growth.

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