Finance: Strong Financial Discipline and Vision
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From coal merchant to rubble removal, Salathiel Makhudu has overcome many obstacles along the way, but through hard work, commitment, an all consuming drive to succeed and the right financing at the right time, he is starting to see the fruits of his labour.
Makhudu says he entered the rubble removal business by “default”, having worked in the coal supply business for many years after taking over the family business from his father. Following a failed partnership and finding it difficult to enter a new market - the West Rand - as he was not a local, Makhudu started utilising his trucks for rubble removal.
In December 2005, together with a new partner, Patrick Modau as operational manager - who had worked for him for many years as a driver and with whom he had built up a relationship based on trust - he formed a close corporation. Makhudu SR Transport CC was born, but this was only the start of a long and difficult road with many bumps along the way.
The company is sub-contracted by developers and construction companies to clean up and demolish sites and remove the rubble. It operates within a 70 km radius of its base of operations in Orlando East.
One of the main challenges Makhudu faced was with his trucks, which were old and often broke down. This did not inspire confidence in clients and resulted in costly repairs.
When two of his truck engines ceased he approached Standard Bank, with whom he had been banking in his personal capacity since 1991, for a R90 000 loan which he was granted.
“Financing was always a problem as we had little assets and collateral. I pumped all my money into the business, including surrendering policies, and we depended on an overdraft. Cash flow was also a problem with late payments,” says Makhudu who, until August this year, never drew a salary, only taking from the business the absolute minimum for living expenses.
“We believed we had a viable business and took our business seriously, but we needed to build our fleet. The problem with buying old trucks is that 60 percent of our money was going into repairs.”
“The breakthrough came when we got a R90 000 loan from Standard Bank which helped us win a Pickitup tender. This gave us back our dignity and this is what got us to where we are today.”
Makhudu Transport is now a fully-fledged business with a fleet of seven trucks, three of which are almost brand new and a TLB (tractor loader backhoe). Two of the trucks are financed through Standard Bank vehicle and asset finance. The company employs 15 people and is contracted to a number of successful companies.
“I would not say we have arrived yet,” says a humble Makhudu.” We now need to concentrate on marketing and securing jobs. We must keep our trucks on the road at all times.”
Makhudu is a cautious man who does not like debt. He paid off his personal home loan from Standard Bank in about three years and has paid cash for two bakkies for the business. However, as his trucks are his income generators, he realised the importance of building a fleet and the necessity for financing to achieve this.
His advice to other entrepreneurs out there: “You must have vision and trust in your vision. Success also depends on financial discipline and you must ensure that every cent is accounted for. You must also remain focused on your core business and not be tempted to diversify into other non-related business ventures,” says Makhudu.
He enjoys a good relationship with Standard Bank and stresses the need for financial institutions to have insight into their clients’ businesses and how they can assist small businesses grow.
“Banks must provide sound financial and financial planning advice, such as how to save on banking charges, how to grow the business and also skills transfer. After all, providing the right solutions and helping us grow is mutually beneficial.”
In his spare time, this hardworking man likes to spend time with his family and extended family. He has three children, two of whom are studying at university for a B Comm logistics and psychology degree respectively and a younger daughter in Grade 7.
Business News Sector Tags: Finance|