This entrepreneur bought the company that retrenched him and saved it from making $465,000 losses to turning over $18.6 million a year.
When multi-award winning US star, Drake, sang “started from the bottom now we’re here”, he must have had General Thembinkosi Mthembu in mind. He is the definition of starting from the bottom.
As we meet, he holds an Africa shaped trophy in hand. Just moments before, he gave a moving speech to a room full of Africa’s business leaders, receiving loud claps and adoration. He has just been named Industrialist of the Year at the the All Africa Business Leaders Awards (AABLA).
It is a long way from Umlazi, a township in KwaZulu-Natal (KZN), the province on the east coast of South Africa, where he was born. Growing up, life was tough. His father was an underpaid truck driver and his mother sold everything she could to supplement the income. It ushered in his first experience as an entrepreneur.
“I remember when I was going to school my mother would give me a packet of biscuits to sell during break time. I had no choice because my mother would say if you don’t sell there will be no money to buy your school uniform,” he says.
On weekends, he would sell fruit at the local railway station. Tough times at home meant after graduating high school, he went straight to work as a packer in a production line at Nampak Tissue where his father worked.
One day, while working the nightshift carrying heavy boxes of tissue, Mthembu broke down.
“The boxes of toilet rolls were very heavy. One of the managers found me crying. He asked me why, I then said to him for ‘how long am I going to do this?’ He said to me ‘if you want to stop doing this type of work, you need to go to university, then have office work’.”
It is advice he took seriously. Although there was no money to go to university, it changed his life.
He noticed that he was always home at 3PM when working the dayshift. He says he wondered what he was doing with his time from then until bedtime at about 9PM.
It ushered in out-of-the-box thinking.
He noticed the clinic next to his home had no food truck.
“I started doing research to know what people would like to eat when visiting the clinic. I went there Monday to Friday asking questions and compiling a list. From there, I had a business plan written by hand,” says Mthembu.
The next week, on his way to work, he went to a bank to apply for a loan to buy a caravan. It worked. Business boomed and he had an employee to help while he was working at Nampak Tissue.
When time came for him to evolve, he bought a pickup truck, installed seats and used it as a taxi. In just two years, he had saved enough to buy a minibus which he operated as a taxi.
He didn’t stop there. In 1995, while still working at Nampak, Mthembu bought a petrol station.
“I would count money in the morning before going to work, take stock from the tanks [and] if I have to place orders I will order the supervisor to phone Shell to deliver petrol and diesel. I remember it was very difficult because I never had an account with Shell. Every time I needed stock I had to pay cash before they delivered,” he says.
At the time, his dedication had earned him a promotion to plant manager at the Durban Nampak plant. But it didn’t last. The plant was running at a loss. Everybody was retrenched and Mthembu was asked to move and manage the Pretoria plant.
“I could not see myself living in Gauteng. I was born in KZN and I don’t believe if you want to succeed you must move to Gauteng because you can progress anywhere as long you work towards your goals.”
It meant he was also retrenched along with about 70 other employees.
“After two weeks, Nampak came back to me and said ‘what about you buying these machines, converting the same product and selling back to them?’”
It was a good opportunity but a hard decision to make.
Mthembu knew the business had been running at a loss of R6 million ($465,000) per year. He also knew that he understood the operations side of the business, which could yield better profits. Before making a decision, he got help from a finance person to make sense of the opportunity.
It took them two months of punching the numbers before he signed on the dotted line. It was the moment, 12 years ago, Mthembu Tissue Converting was born.
After 24 years, he was now an owner and not an employee. It wasn’t easy.
“I tried to recruit people I worked with from Nampak. Most people did not want to join me. They were saying working for a black person will mean they will not get paid. Eventually though I managed to get 36 people,” he says.
It wasn’t the end of the battle. Suppliers Nampak had used for years also didn’t want to work with Mthembu.
“They did not want to do anything with me when I took over the business. They said to me I must make upfront payments before they deliver raw materials, which was so difficult. I was worried that the business might collapse and how I would pay staff in that event.”
Mthembu says he had to be very strict. For three years he worked with no salary.
The worst period came in 2006 when the products they sent to Nampak in Cape Town failed the compliance test. He lost R280,000 ($21,700) as the tissues had to be sold as rejects.
“This was the worst period. To correct this, I had to implement [a standards] system in the plant to prevent it from happening again… The biggest lesson in my entire journey was to be focused and have systems in the business that work well and to always follow business goals.”
In 12 years, Mthembu Tissue Converting, once the Durban Nampak branch, has grown from employing 37 people to 104 people, from making 400 tons of tissue to 750 tons, and operating at a loss of $465,000 to turning over $18.6 million.
Mthembu, like Drake, sure knows how to start from the bottom.