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You’re Mad. You Can’t Be Selling Secondhand Computers

Published 8 years ago
By Forbes Africa

It all started from the boot of a car. Luvuyo Rani sold secondhand computers to teachers, whom he realized did not know how to use the technology and this would make his business. It took a few years for this teacher turned entrepreneur’s company, Silulo Ulutho Technologies, to make money and it is now turning over around $1.8 million a year.

In 2004, the South African government was introducing the new outcome based curriculum while Rani was a teacher at Kwamfundo Secondary School in the township of Khayelitsha in the Western Cape province. This curriculum was aimed at teaching learners computer skills that many of the teachers did not have. He quit his teaching job and began selling computers from the back of a little Corsa Lite to schools in the township.

“Nobody took me seriously when I asked to do presentations and others were saying, ‘You’re not okay, you’re mad, you can’t be selling secondhand computers.’”

But that did not deter him. He soon realized the power of stokvels, an informal savings pool or syndicate, in which money is contributed in lump sums on a rotational basis for family needs. Rani clustered the teachers in groups of six where they contributed $35 every month. Within six months of starting the scheme, each teacher had their own computer.

His brother, Lonwabo, had helped him take out a $900 loan to start the business which was flourishing. The following year, the brothers were selling around 35 computers a month. But soon their customers were returning the computers for repairs and maintenance, which the brothers took to their supplier because they didn’t know how to fix them. Luvuyo had a background in teaching while his brother was trained as an engineer.

“We realized that we needed to have someone and we didn’t have money to pay someone to work for us. So, we decided to get someone to become a partner, in terms of a shareholder, because he had the expertise,” Rani says.

This is when they hired Sigqibo Pangabantu.

With Pangabantu now fixing the computers, Rani realized that the teachers couldn’t use them. The next step was to establish a computer center where they would train the teachers on how to use the computers, which created another revenue stream. His sister-in-law, Nandipha Mtshoba, joined the team to help in marketing this new venture, while the brothers began looking for space to host this computer centre they wanted. They saw an opportunity where a mall was being built. This was the perfect site, near a main road in the township. But their dream soon came crushing down on them. They were blacklisted and they did not have enough cash to open an internet café.

“They didn’t give us the space. We were disappointed. We met one of the tenants in the mall who was selling electricity and Vodacom phones and he had about 30 square meters of space and we asked this guy if we could use it to open the internet café. He said we must come back in two weeks,” says Rani.

When they returned, the man wanted to charge them $375 to rent the space. It was a steep amount for a business that used the boot of a car as an office. They were deep in debt and even the bank was on the verge of repossessing the car and Luvuyo’s house.

Eventually, their computer supplier saved them and the brothers were able to set up their first business center in February, 2006. Things seemed to be getting on the right track.

“So, the turnover we made that month was R350 ($30) and the expenses were R12,000 ($1,100),” he remembers.

For six months it felt like time stood still. They were receiving threats of eviction and they were behind with payments for suppliers.

They were no longer selling computers to schools because people in the townships didn’t know how to use computers. Rani set up short computer courses on the basics of Microsoft office, the internet and email but they sat in the business center, waiting for customers who were just not coming.

A year later, they won $8,900 in a provisional round of a competition and they opened two business centers. In 2008, they won the national round of the competition and Rani was able to open another three stores. Business started to look up, now selling around 100 computers a month.

Through their enterprise development program, the internet service provider, MWEB, sponsored around $45,000 a year which was used to open seven new business centers.

Today, Silulo Ulutho Technologies boasts 18 centers in the Western Cape and eight in the Eastern Cape province, where Rani was born. He says they are looking to raise funds so their staff can buy franchises.

Another company recently approved a $450,000 loan for Silulo to begin the franchising model and 10 stores will be handed to current employees in the next three years. The staff will own 50% of the business centers until they are able to stand on their own feet, at which point they will be able to buy-out the rest of the franchise from the founders.

“Most of these guys were students of ours and started working as consultants, brand managers and others regional managers. Now they will become owners of these businesses. It’s not only just the four of us becoming the next billionaires, we’re creating other entrepreneurs,” he says.

“We really want to make an impact in the township, in the sense that, people in the rural areas need to have key role models they can learn from [and realize] that it’s possible to start from nothing and build something.”

Silulo wants to be in every township in South Africa and even venturing into the rest of the continent in the next 10 years. Rani says they also want to list on the Johannesburg Stock Exchange by 2024.

He is a man on a mission; taking on challenges in his stride and learning in the industry as he goes along.

“I didn’t get training in IT. I just surrounded myself with my brother who is an engineer and Sigqibo who is in IT. This taught me that you don’t have to be in IT to run a business in IT,” he says.

Rani grew up working in his mother’s shebeen, a drinking hall in townships, where he learned the trade of dealing with customers, selling and managing a business that has helped him run his own business.

He says you need to understand your business’ unique challenges to become a successful entrepreneur.

“We’re trading in Khayelitsha, where the employment rate is 60% and there’s no money. You need to be very smart in terms of how we get money and get people to pay. Some of the people coming for our services are dependent on social grants from government. They save that money for themselves to get a computer and better employment,” he says.

After 10 years of running Silulo, Rani says it’s time to shift his focus to starting a family which he and his wife had put on hold.

“I want to be a daddy now, because this year I’m 40, so it would be a great birthday present,” he says while laughing.

A new venture with new challenges, but Rani has proven that he can be successful in anything he puts his mind to.

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Related Topics: #Computers, #Luvuyo Rani, #March 2014, #Silulo Ulutho Technologies.