Suc­cess is cash man­aged wisely

Know­ing when to bor­row money, how and when to save it, and what to spend it on are just some of the top­ics cov­ered in the fi­nan­cial man­age­ment lec­tures cur­rently be­ing held for en­trepreneurs who are at­tend­ing the Na­tional Home Builders’ Reg­is­tra­tion Counc

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‘For a suc­cess­ful en­tre­pre­neur, money can mean ex­treme wealth. But with ex­treme wealth comes ex­treme re­spon­si­bil­ity. And the re­spon­si­bil­ity for me is to in­vest in cre­at­ing new busi­nesses, cre­ate jobs, em­ploy peo­ple and put money aside to tackle is­sues where we can make a dif­fer­ence,” said Richard Bran­son, founder of the Vir­gin Group.

He suc­cinctly sum­marises what many women who own con­struc­tion busi­nesses feel about manag­ing money.

“Ev­ery busi­ness ex­ists to make money, but it needs money to start it off and this goes to the heart of fi­nan­cial plan­ning,” says Thomas Kgokolo, a part-time lec­turer at the Gor­don In­sti­tute of Busi­ness Sci­ence on the Na­tional Home Builders’ Reg­is­tra­tion Coun­cil (NHBRC) course.

He has been talk­ing on the topic for many years, and has a com­pany that fo­cuses on strate­gic wealth cre­ation for busi­nesses.

A lot of teach­ing re­volves around “where to get money. We need to ex­plain where to in­vest money to make it work hard for you,” ex­plains Kgokolo.

He’s aware that con­struc­tion projects, es­pe­cially govern­ment con­tracts, are sea­sonal, and that big sums can be made, but then there can be months with no work and there­fore no in­come.

“So, for ev­ery profit you make, save money to fund fu­ture projects. You’ll need work­ing cap­i­tal to get ma­te­ri­als and to hire ma­chin­ery.

“If you have saved money from pre­vi­ous con­tracts, you won’t have to waste time when you land a new one by run­ning around to find cap­i­tal for it,” he ad­vises.

He says that a cou­ple of del­e­gates on the NHBRC cour­ses have been close to tears as they ex­plain how they have wasted their money.

“Some buy ex­pen­sive cars or go on costly hol­i­days. Cars are not an as­set and they don’t look good in your fi­nan­cials.”

Faith Mach­aba, CEO of Mach­aba Tau Con­struc­tion in Polok­wane, says that “rush­ing off to buy cars is one of the big­gest mis­takes that we make. We learn the hard way that we should rather in­vest in a con­struc­tion plant and prop­erty.”

One del­e­gate told Kgokolo: “If I had known about bet­ter places to in­vest my money and make it grow, I would be much fur­ther down the track in my busi­ness right now.”

Kgokolo ex­plains the ad­van­tages of in­vest­ing money. “If you save, it il­lus­trates to po­ten­tial clients that you have fi­nan­cial dis­ci­pline and can look af­ter money re­spon­si­bly.”

You can also use it as col­lat­eral if you need a loan. “Ad­di­tion­ally, if one of your sup­pli­ers needs cap­i­tal for ma­te­ri­als, you might lend him some. You’ll have cre­ated a good con­tact for the fu­ture.”

Kgokolo ad­vises del­e­gates on in­vest­ment strate­gies and in­vest­ment man­age­ment, and feels strongly that these top­ics should be in­cluded in gen­eral busi­ness cour­ses.

Mach­aba says that her fam­ily helped her fi­nan­cially when she started her civil and gen­eral build­ing ser­vices, “un­til my cash flow was good enough for the bank to start fi­nanc­ing my projects”.

Do­ing fi­nan­cial stud­ies at school and al­ways be­ing pas­sion­ate about proper fi­nan­cial plan­ning has been a big boost for Maboko Mok­wena, CEO of Lungi and Basie Con­struc­tors in Polok­wane.

She makes a point of steer­ing clear of debt “by rais­ing enough work­ing cap­i­tal so that I don’t have to bor­row un­less it is ab­so­lutely nec­es­sary. And then I pay it back as quickly as pos­si­ble to save on in­ter­est charges.”

She was once black­listed for “some mi­nor debts and it made me aware of how a bad record can slow the growth of your busi­ness. I have had to make sure this does not hap­pen again.”

Mok­wena learnt early on to keep some of the money she made “in dif­fer­ent in­vest­ment funds. I have both short-term and long-term in­vest­ments, so I can ac­cess some of the money should I need to do so.”

Kgokolo points out that some­times it’s not a good idea to pay cred­i­tors im­me­di­ately. “Col­lect first from your debtors and then pay your cred­i­tors. This will en­sure good cash flow.”

El­iz­a­beth Ma­chethe of Maite­mo­latelo Busi­ness En­ter­prise in Polok­wane be­lieves that get­ting into debt to fi­nance growth is some­times a good idea.

Her busi­ness con­cen­trates on elec­tri­cal and build­ing con­tracts, and she says: “You take a risk in or­der to grow, but it needs to be a care­fully cal­cu­lated risk.”

She also hired an accountant “to as­sist me with ne­go­ti­at­ing with cred­i­tors”.

She in­vested in ma­chin­ery and prop­erty when she had the money to do so.

She’s up­front about why she went into con­struc­tion: “I did this to make money and to grow, and I am also pas­sion­ate about the in­dus­try.”

Dikeledi Dlamini is the founder of Did­in­tle Sup­ply and Projects in Pha­l­aborwa, which spe­cialises in build­ing and min­ing con­struc­tion.

She bravely says that she was once in debt and got out of it by con­sol­i­dat­ing it into one ac­count.

“I was given two years in which to pay it off and I achieved that,” she says with sat­is­fac­tion.

Her busi­ness got off the ground when Pal­ab­ora Cop­per, which was orig­i­nally owned and man­aged by Rio Tinto, fi­nanced her.

“They were look­ing for ex­cel­lent ideas to fund and, for­tu­nately, I was one of the suc­cess­ful can­di­dates.”

Dlamini has now been in busi­ness for seven years and her com­pany fo­cuses on build­ing low-cost hous­ing, man­u­fac­tur­ing re­in­forced con­crete, min­ing and steel works.

Dlamini stud­ied busi­ness man­age­ment be­fore go­ing on the NHBRC pro­gramme, so learn­ing about fi­nanc­ing is not new to her.

“I can­not em­pha­sise enough how im­por­tant it [sound fi­nan­cial plan­ning] is to the suc­cess of your busi­ness.”

Ma­pula Maupye of Hlahlane Devel­op­ers in Polok­wane does main­te­nance, ren­o­va­tions and con­struc­tion of RDP houses and schools.

She ven­tured into con­struc­tion “to ben­e­fit, as a woman, in this pre­vi­ously male-dom­i­nated in­dus­try”.

“I par­tic­u­larly wanted to con­trib­ute to the de­vel­op­ment of our coun­try.”

In so do­ing, she is fol­low­ing in the foot­steps of that ex­tra­or­di­nary en­tre­pre­neur, Sir Richard Bran­son.

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