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Business Strategy Entrepreneur

Fulton Ramaphakela doesn’t stop at nothing. He sets himself goals and stick to them. Like the 30 days he granted himself to find out whether he had what it took to start his own business.

In 1997, with only the R2 500 from his last salary, he resigned from International Computers Limited (ICL) where he had been a technician repairing retail system machines since 1994. “I did have an offer from the then QData as a back-up plan should things not work out”, says Ramaphakela, who has since established Moloko Group Holdings and this year is one of the finalists in the emerging category of the SA chapter of the World Entrepreneur of the Year, organized by Ernst & Young in association with Rand Merchant Bank.

The son of an electrician who, even in the dark restrictive apartheid years stopped at nothing to run his own electrical company in Tembisa, Ramaphakela grew up not only fascinated by anything electronic and technical, but also with an innate entrepreneurial spirit. “I was a real Macgyver, forever taking apart, fixing and building things, even remote-controlled cars.” Little wonder then that he went on to obtain an ITC Diploma.

“Although anything electronic had always been my passion, while at ICL I became aware that the sales teams were being taught how to sell hardware using the technique of selling the client a solution, not just a product. I was convinced that I could make this work and nagged the relevant manager to allow me to join the sales programme.”

When he took the leap to start something on his own he applied that sales knowledge and started selling hardware. “I had no money to buy stock, no credit facilities, not even a bank account. But I knew the account manager from Pinnacle Micro and tried to convince the her that I would sell the goods to a client, who will pay Pinnacle, who in turn would pay me. At first she thought this a crazy idea, but I would not let up until she eventually agreed to take this huge risk with me. The second week after I had started, the first money came in at margins of between 15 and 25%.” Over time he built up a relationship with clients and consequent trust with Pinnacle, who opened an account for him after three months.

“But to get to that stage took a lot of suffering. The bank threatened to repossess my car, which I needed to do deliveries. But even with them I developed a relationship of trust and although at some stage my installments were three months in arrears I managed to keep the car.”

Ramaphakela says to get over the first six months, with no business skills was a huge learning curve. But it paid off and since 2000 he had a sustainable business, although quite seasonal. “I realised I had to diversify to conquer this and stumbled across an opportunity when a client mentioned that he needed his assets to be managed. This resulted in the development of an asset management programme that we use in our asset management division, Asset Care, that now has various parastetals government departments and private sector as clients. We also have Post Office & Spoornet, with a real mixed masala of assets from locomotives, containers, chairs, computer, you name it, to keep track of. The beauty of asset management is that it involves recurring business – clients need constantly to be aware of their assets that keep changing.”

In 2002 Ramaphakela developed iSource, a school administrative software program. “I realised how many forms schools have to complete and that most of them are done by and. Our iSource software package, that is already installed at 1 620 of the 32 000 schools in the country, is supplied to them free of charge, but we service it for each of the schools a monthly fee: once again recurring income.”

Presented with an opportunity to tender for the Gauteng On-Line project in 2003. Moloko decided instead to subcontract its services to the competing ICT service providers. While the big names focused on providing hardware solutions, Moloko offered to do the dirty work for them – and take over the small jobs that did not form part of their core business.

“We realized we wouldn’t stand a chance if we had to compete with the big established companies on a one-on-one basis. We decided instead to focus on areas they didn’t like – to supply things they didn’t want to supply.”

This innovative approach led to the company providing the tender winners with the armed reaction, the guarding, security brackets, multimedia unit, infrastructure, alarm systems, as well as asset marking services.

The Gauteng On-line roll-out, which involved installing computer laboratories in all of the province’s 1174 schools, started in 2004, and Ramaphakela says the company has not looked back since. The work led to it becoming one of MTN’s preferred suppliers. When the cell giant undertook to fund and install computer labs in rural areas as part of government’s requirements for the renewal of its operating licence, Moloko was appointed to carry out the work. The company is currently in the process of providing a turnkey service and is fitting out 600 information technology labs in schools across the country. This flexible approach has underlined Moloko’s evolution.

With my passion for anything technical, I knew we could install and service alarm systems and supply and fit brackets to secure the computers to work stations. I was happy for the big guys to get the tenders for supplying the hardware, looking after the security would again bring with it recurring business.”

Ramaphakela set up yet another division, iClass, that would not only fit the brackets for the computers but would set up the entire labs, including painting, supply and install tables, chairs, burglar bars and security gates. “When the tenders were narrowed down to a short list of eight, seven included our security solution in their proposal, and in the end we supply all six who got the tender.”

While preparing his security proposal, Ramaphakela stumbled across the necessity of providing guards for the premises. Calculations showed that 3 200 were needed. “We had no guards, what a mess! So I subcontracted all the SMMEs in the guarding industry, which led to the formation of a guarding division, initially called Aco Security. Later, when Master Guard had to retrench people after a takeover he hired all their retrenched technicians knowing clearly that with no technicians MasterGuard service will be compromised and they may subcontract the work out. when companies restructure client service .

While preparing his security proposal, Ramaphakela stumbled across the necessity of providing guards for the premises. Calculations showed that 3 200 were needed. “We had no guards, what a mess! So I subcontracted all the SMMEs in the guarding industry, which led to the formation of a guarding division, initially called Aco Security. Later, when MasterGuard had to retrench people after a takeover he hired all their retrenched technicians knowing clearly that with no technicians MasterGuard service will be compromised and they may subcontract the work out. “Things workout to plan”

Security services are one of the latest additions to Moloko’s portfolio. In 2003, the company secured a contract with the Gauteng Department of Education to provide security in the province’s schools. Early last year it extended its focus to the private market with the launch of a Vimba Armed Reaction division. A Vimba franchise offers a comprehensive list of services including armed response, alarms and electronics, guarding and soon cash in transit.

Ramaphakela believes the best way to provide excellent countrywide service is by franchising. “You cannot maintain quality standard unless you have owner-run operations,” he says.

The Vimba model, which already comprises 44 zones, also offers significant empowerment opportunities. New franchisees are provided with a vehicle, uniforms, and branding at no cost, and are paid a stipend for each client that is serviced. The company is extending its current fleet from 56-90 vehicles, in response to demand.

The security model is currently being extended to include a pre-paid vehicle tracker service. Coming in at less than R60 per month, the pre-paid service will offer an affordable alternative to existing vehicle tracker system.

Ramaphakela believes this approach will further allow the company to tap into the massive township market. “Being a one-stop shop, you tend to serve a client better and this allows us to maximize the relationships with clients”

“The business boom in the townships, involving the erection of huge shopping malls, also brought with it s property boom, with a growing demand to provide security for private homes.

“I wanted to create a business with a name that will become as synonymous with armed reaction as Colgate is for any tooth paste, Coke for any fizzy drink or a Checkers for any plastic bag. That was the reasoning behind Vimba (catch), the name chosen for the security company that already has 2 000 businesses and private homes as clients. So, I’m back with my passion, because these alarms systems are tailor-made to the needs of different households.”

Ramaphakela is on the verge of introducing the cheapest alarm system available and is also testing an alarm system for private homes that, in addition to a panic button, includes medical, rape & fire alerts. Once pressed, a message is relayed via SMS to three people whom you nominate, to the control room at VIMBA’s head office in Braamfontein or a satellite office in Centurion and the SAPS within three milliseconds. Because of volumes in a massive market the service would probably be available a around R114/month.

“We’re also testing a tracking device that will cost around R59/month. It will not be as sophisticated as the other tracking devices, but would be able to pinpoint a vehicle within a radius of 500m, and sometimes even 50m, depending on signal availability. This service is aimed at the growing second-hand market, the guy who drives a 20-year old skedonk that isn’t even insured.”

Ramaphakela admits to having burnt his fingers a few times. “I get excited about ideas, but luckily I know when to walk away from something if it doesn’t work.”

Moloko Holdings is named after his dad, “to whom I owe my entrepreneurial spirit.”

And a supportive wife, Colleen Ramaphakela who has been my backbone from the beginning.

As a whole, he adopts a philosophical approach. “We have had failures, but I don’t see it as failure. My thinking has always been that you never fail in business – you just learn what not to do again.