Learn your business for success
This week, Mpho shares how his business journey is changing and how he’s found his purpose – and profit. Personal finance expert Maya Fisher-French shares his story
“Having focus has changed my life,” says township entrepreneur Mpho, who entered the Money Makeover Challenge to provide his two-year-old daughter with a better life.
He realised that he needed to take his small business ventures more seriously, and commit time and effort to his fledgling food business.
Mpho has several side hustles, including a T-shirt printing business and working as a personal trainer, but his main focus for the Money Makeover Challenge has been his food business – Babacazoo.
Only four months into the challenge and Mpho is a changed man.
“I’m a totally different person. My own mum doesn’t recognise me any more. I’m spending less time socialising and more time working. Work is giving me purpose.”
When Mpho was first paired with Absa financial adviser Gladnes Masia, she identified that his printing and gym businesses were providing some cash flow without any major financial requirements. The real challenge was in the food business.
“When Mpho sent us the information we required, it was clear that the food business was not making any money. He needed to start changing the way he was doing things, and this started with understanding his stock,” says Masia, who told Mpho that he had to know each stock item in his restaurant.
“If someone walks in and asks him what he has on hand, he should be able to recite it.”
Today, Mpho is fully in control of his stock.
“I am the one buying it. I know what I have, what is left and what I need,” he says.
He has introduced new products and is able to understand his weekly profits with the help of a daily sales spreadsheet provided by Masia.
“He now understands and knows how to plan for his production and to determine what he needs for his stock provision. He does that on Saturdays, when he plans for the week ahead, which has helped him to see the difference in his business.
“He now knows that he receives stock on Tuesdays, which sustains him for the whole week, unlike before, when he ran around buying different stock items because there was no proper planning in place,” explains Masia.
Understanding his stock needs and planning ahead has allowed Mpho to join a group of buyers. They club together, buy in bulk and the supplier delivers to them. This means he does not need to use his car and is saving hundreds of rands in fuel each week.
In understanding his costs and revenue, Mpho realised that he needed to increase his prices, as he had not done so since he started the business. Despite the price increase, customers are still happy, as he is also improving his offering with an updated menu.
This greater insight also helped him to identify that Wednesdays are a slow days in terms of turnover. Mpho has now started introducing specials on a Wednesday, and sales have improved significantly. He has also extended his trading hours, opening at 9am instead of 10am.
Just from making these simple changes and having a better handle on his business, Mpho is starting to see a profit from the food business.
He is now tasked with creating financial projections to determine where he is and to decide where he wants to be in the near future, and how he will achieve that target.
“After all the hard work Mpho has put in, he is ready to grow. I can’t wait for him to move forward and to see the real growth. Mpho knows what to do from here and I can’t wait to see the profits and to be part of his journey towards wealth,” concludes Masia.
ACTION LIST:
Masia put an action list together to help Mpho implement changes to his food business:
1: Take stock every day to determine what exactly is happening in the business.
2: Create a spreadsheet to show daily sales.
3: Establish a stock price list to determine which products are needed.
4: Based on an example of a cost overhead allocation, Mpho needs to determine the price allocation per meal. This will assist him to understand his costing and eventually determine if he is making a profit or a loss.
5: Identify other stock suppliers to determine if similar products can be found at a lower price.
6: Identify two dates in a month to introduce specials.
7: Improve the menu and introduce new items to it.
8: Train employees to ensure that they offer quality service even in the absence of management.
9: Upgrade the look and feel of the Babacazoo outlet. This has been done through adding creative art to the space and planting vegetables around the area.
10: Ensure that the outlet is kept clean inside and outside, and that utensils and appliances are kept clean at all times.
SIDEBAR: SIDE HUSTLES TO KEEP THE LIGHTS ON
When embarking on a major business venture, such as opening a restaurant, it can take time before you see a profit. By having side businesses that require little capital, Mpho has been able to meet his personal financial needs while growing his main business.
One change he has made is to move his personal training business into his home, which is adjacent to the restaurant. This means he can train his clients while keeping an eye on the restaurant.
While the T-shirt printing business does not require much attention, Masia has identified that there are opportunities for expansion.
However, Mpho first needs to get his food business running profitability and secure good management for it before he can focus on growing another business venture.
If you really want to get your finances in order, you have to start tracking your spending. If you cannot commit to that, it is unlikely you will be able to reach your goals.
Follow the journey – and join in – @CPMoneyMakeover on Facebook and Twitter
Absa Enterprise Development assists SMEs with access to business development support, markets access and access to funding based on certain criteria’s being met. For further information on Absa Enterprise Development you can email ed@absa.africa
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