In all of his storied career in the photography, fuel, property, auctioneering, retailing and funeral industries, Ratau Mphahlele has not worked a single day for someone else. In fact, he wouldn’t employ himself if he had a choice. “I only hire people who are better than me,” says Ratau, who in less than ten years has built a funeral services business with a turnover of R75m a year.
Ratau’s approach to hiring talent only partially explains his success in building Baroka Funerals from scratch to the point where it today boasts 10 branches, a fleet of 52 vehicles and a funeral insurance scheme with 15 000 members. By the time he first got the idea of turning his small shop in Mabopane into a funeral parlour he had already amassed a vast amount of experience in starting businesses in all sorts of industries – some successful and others, well, “at least they’ve given me stories that I can tell,” laughs Ratau.
Remarkably, this serial entrepreneur never set out to be a businessman like his father, who ran a distribution company and later went into construction. At school in the 1980s in Mabopane, Pretoria, he wanted to become a doctor. He went on to study pharmacology at the then University of the North, but the political turmoil of the time ended his studies prematurely.
Yet his entrepreneurial streak was evident early on. He made enough money through photography on campus that he could buy a stake in a friend’s filling-station business when he was forced to give up his studies. The filling station was lucrative, but the business did not survive the personal upheaval caused by a divorce his friend was going through.
Next, Ratau became an estate agent, and through that started an auctioneering company. It was a difficult, cliquey industry to break into, and he became distracted by another gap that he spotted in the market for offal. Soon Ratau was processing more than 100 sheep per day, and he established a butchery in Soshanguve.
Two and a half years later he was approached by a group of traders who wanted to buy his butchery. He refused, but they urged him to name a price. As a joke, he wrote R5 million on a piece of paper, and to his utter surprise they accepted.
Ratau used the capital to set himself up as a distributor for Coca Cola in what he thought was a sure move into the corporate big league. It turned out to be a brutal industry with razor-thin margins and huge risks of theft and shrinkage. One armed robbery alone cost him R1,2m and within 18 months he closed the business owing Coca Cola R2m.
All he had left was a couple of vehicles and a small shop in Mabopane with cold storage facilities that he had acquired during his days in the meat trade. On a hunch, he decided to turn it into a funeral parlour. The learning curve was so steep that even Ratau, who was practised in starting off in new industries, found it daunting. But at the time it felt as if he had no choice but to push through to provide for his young family.
At first, he partnered with an old school friend. She came with money, he says, but not with the right attitude for the industry which requires lots of empathy and a relentless commitment to service. The partnership soured and within two years Ratau was running the growing business on his own.
As an example of how steep his learning curve was, Ratau tells how he set the monthly premiums of his funeral policy that he set up as part of Baroka Funerals’ service. Instead of doing the intricate actuarial calculations needed to determine the price of a policy based on the demographics of the clients, Ratau simply studied the market and pitched his premiums more or less at the level of other funeral homes.
It all came to a head during the Covid-19 pandemic when Ratau had to undertake increasing numbers of funerals for clients whose overall premium payments had not yet covered the costs. Since then, Ratau has appointed experienced and qualified insurance industry staff to make sure that Baroka’s policies are priced correctly.
Despite the setbacks, Baroka Funerals has kept on growing to no fewer than 10 branches centred around Gauteng, five of which are housed in buildings that the business owns. Apart from his focus on good service, an important part of his success Ratau ascribes to “going corporate”. Every branch is carefully manicured in Baroka’s stylish corporate colours, as are its pristine fleet of 52 vehicles. The corporate ethos of the business is also reflected in the structure of the business, with a board chaired by Ratau’s wife. She is a hard taskmaster, says Ratau, who credits her for much of the firm’s success.
With such emphasis on a corporate image and structures, it was important for Baroka to establish a formal presence in the centre of Tshwane. Once Ratau identified a building in Stanza Bopape Street to house his head office and the business’s call centre, he set about finding finance to buy it.
He found the banks bureaucratic and stuck on arcane paperwork requirements. Business Partners Limited, on the other hand, proved truly interested in what he had built. “I could see them getting excited when they came out to visit my business,” says Ratau.
Last year Business Partners Ltd approved the 100% finance for the building, in return for a minority stake which Ratau can buy back once the ten-year loan is paid back.
Looking forward, Ratau is set on continuing Baroka’s growth in Gauteng, with nation-wide expansion as the longer-term goal. And of course, Ratau has never stopped looking for other opportunities. He is already planning Baroka Events to cater for weddings and parties, which is the ideal complement to his existing infrastructure – and vast experience.
Tags: Baroka Funeral, 100% commercial property finance, capital, business loan, growing a business, setting up a funeral parlour
About the Author: Fatima Baloyi
