It is rare to find a family business story that vividly demonstrates how the actions of a financier can either save a business or lead to its downfall.
Jermaine Dennison was happily working in the water infrastructure supplies business of his father, Ronnie Dennison, when calamity struck. In 2015, an order to supply irrigation equipment to Zambia had gone wrong and a farmer sued the Dennisons for the loss of his harvest. A court case followed and the business, based in Olifantsfontein, was placed in business rescue.
Just as they were trading themselves out of trouble according to the well-prepared rescue plan, their bank abruptly decided to pull the plug. “On the Friday afternoon there was a substantial amount of money in their bank account and on the Monday morning less than a third of the amount was left. The bank just waited for the money to flow back into the business before cancelling all our lines of credit,” says Jermaine. The result was liquidation.
Instead of seeking a new job, Jermaine chose to rebuild from the remnants of his father’s company. Teaming up with his father, Ronnie, and a dedicated coworker, Cerbert Selowa, they launched Sekunjalo Piping Projects. With Ronnie’s seed capital, they purchased the remaining stock from the liquidator, setting the stage for a remarkable comeback.
The key to the success of their new venture, however, was to find a way to buy the warehouse from the liquidator. It would allow the new venture to trade almost seamlessly with the same clientele who would scarcely notice the change of ownership. The problem, though, was that no bank would touch them.
Fortunately, Business Partners Limited has a different approach to financing entrepreneurs. Where the banks would give any business vaguely associated with liquidation a wide berth, Business Partners Limited looks for the potential in the entrepreneur and the viability of the entrepreneur’s plan.
“We managed to win them over with a detailed business plan, even though the process requires a lot of paperwork,” Jermaine recalls. “Business Partners Limited showed real vision by deciding to back us and David Morobe Executive General Manager for Impact Investing played a huge role and showed us immense support.” Business Partners Limited took a minority stake in the building, giving the Dennisons an option to buy it back in future.
With stock, the building and even the staff secured, Sekunjalo hit the ground running, achieving a turnover of 8 figures in its first year. Although it was a far cry from the previous business’s 9 figure turnover, it was a promising start.
Over the past eight years, Sekunjalo has managed to build its turnover to 9 figures. Based on the hard lessons learned, the three entrepreneurs place a lot of emphasis on quality control and having systems in place. After their liquidation experience, they make sure that every order is checked for quality, and they regularly send samples of their stock for lab testing.
About 70% of Sekunjalo’s business is the supply of pipes, valves and other water-related materials to contractors who build and repair water infrastructure to municipalities and provincial water agencies.
Ronnie and Cerbert generally focus on sales and client relationships, while Jermaine takes care of management at Sekunjalo’s Olifantsfontein head office. Jermaine says the past eight years of building Sekunjalo have been no easy ride. “Until only about a year ago I’ve had to put my personal life on hold as we worked tirelessly to get the business to come into its own.”
The hardest part of it, says Jermaine, is forecasting future sales. With various state entities as their biggest clients, their sales are very sensitive to the political shifts. “Just when we think we’ve mastered the model, something changes. For an example, the Government of National Unity came with its own changes,” he explains.
However, growth is on the horizon. Sekunjalo plans to open branches in Mpumalanga and KwaZulu-Natal, adding to their existing locations in Polokwane and North Riding. They also aim to expand their product range to include indoor plumbing supplies and general building material.
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