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‘I Started Avoiding Calls From Creditors’

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On the day FORBES AFRICA meets Gavin Mkhabela, the sun is shining as bright as he had hoped his future in business would be when he resigned from the banking sector. He thought he would be the person that would clean every working space across Africa, but little did he know that it would be his bank account that would be cleaned out.

At a business park in Midrand, 30kms north of Johannesburg, Mkhabela is energetic and full of life, unlike six years ago when he was broke and depressed.

“All I did was to wake up, eat and sleep again,” he says.

It started in the basement of his work place, where he had spent four hours in his car contemplating his hasty resignation.

“I like to believe that I am a very creative person and the corporate industry tends to be stagnant at times. There are certain ideas which you may not implement because they are just not ready for them. My lifestyle was also inflated but not in accordance with my income at the time,” he says.

Soon after his resignation in 2011, Mkhabela received his pension payout which he used to start his cleaning company GavCare.

“I was excited; it was my first business. I used my provident fund to start the business,” he says.

Mkhabela  used his credit cards to finance the new business.

“My fiancé and I bought everything new. We even bought a new carpet machine that was being phased out. We were just spending,” he says.

READ MORE: Slaves To Debt: Oh, What We Owe!

Things started well for the young entrepreneur after he received contracts with corporate giants, such as Standard Bank and Nampak, and a few local law firms.

In 2012, he sold 40% of his business. Then, in 2013, he was chosen for a business mentorship program in Germany, which was in partnership with the government’s National Youth Development Agency (NYDA).

“When I came back from the month-long mentorship program in Germany, everyone was celebrating me. They would say ‘you have made it in life’,” he says.

But his worst days were lurking around the corner.

“Out of excitement, I called my business partner to tell her that my mentor had decided to inject R2 million ($169,000) into our business, and he would donate equipment for our business.”

Soon after, his elation turned to despair.

On a cold Friday morning his business partner pulled out.

“We were at our detergent store in Tembisa when she proposed that she would like to pull out of the business… I still ran everything via my credit card and had overdrafts,” he says.

To make matters worse, GavCare was in a cash flow crisis.

“Our company’s financial controls were a mess, there was money coming into the business but more money went out. We also had more people working for us than we actually needed. Our operational costs far outweighed our income,” says Mkhabela.

He was also living beyond his means.

“My biggest mistake was to continue living a lifestyle that I lived when I was working in the corporate world. Most of my provident fund payout went to buying the company’s equipment and keeping the business afloat. I started skipping my monthly repayments, but even worse started avoiding calls from creditors,” he says.

“I got a lot of judgements under my name and was eventually blacklisted by creditors. We took business loans and I extended my credit facilities on my personal capacity in an effort to keep the business going for two years. I also went to loan sharks, an even more [costly] mistake that almost put my life at risk. It was all in an effort to survive and help my financial situation every month the loan amounts from the loan sharks will increase as I couldn’t settle them.”

He then fell into depression.

“One by one, I kept losing things and getting more in the red. I got depressed… My relationship with my fiancé also started to suffer, because I had no financial contribution to the relationship. You know when the man loses the ability and the power to provide, you drive your woman away,” he says.

Mkhabela then got the dreaded call.

“All I did for months was to sleep, wake, eat and sleep again. Then the repossessor called me,” he says. “They took my [VW Golf] GTI, my furniture and every other thing I had worked so hard for. Luckily my house was paid up,” he says.

“It was at that point that I realized that I needed to get up and do something,” he says.

READ MORE: South African Billionaire’s Fortune Plunges More Than $2 Billion In A Day Amid Accounting Scandal

Even though he was down, he was not out of ideas.

“I bounced back in 2014, when I decided to become a financial advisor so that I could save others from being in the same situation as me,” he says.

Mkhabela says he now has over a thousand clients. In 2016, he published his book, Financial Planning 4 What? The book addresses the problems experienced by many regarding personal finance.

“I wrote the book on financial planning and started developing an interest in educating people about financial management from a personal and business finance point of view. It stems from my whole experience because all that was needed was proper financial controls and proper planning,” says Mkhabela.

Looking back, he wishes he did things differently with his business and his business partner.

“I did a lot of introspection in the manner in which I ran things, because I studied a business course,” says Mkhabela.

Mkhabela’s worst day was a lesson that can’t be taught in lecture halls. It is also a lesson he’ll never forget.

Entrepreneurs

Leaving Airplane Middle Seats Empty Could Cut Coronavirus Risk Almost In Half, A Study Says

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A new research paper from the Massachusetts Institute of Technology estimates that blocking out the middle seat on airplanes could cause the likelihood of passengers being infected with coronavirus to drop by nearly half, just as some airlines are starting to book flights to capacity again.

KEY FACTS

  • According to the MIT paper (which has not been peer reviewed) the chances of catching coronavirus from a nearby passenger on a full airplane when all coach seats are filled is about 1 in 4,300.
  • However, those odds drop to 1 in 7,700 when all the middle seats on board are left empty, the paper states.
  • Taking into account a 1% mortality rate according to the statistical model, the likelihood of dying from a coronavirus case contracted on a plane is far more likely than dying in a plane crash, which has odds of about 1 in 34 million, the paper stated. 
  • In “Covid-19 Risk Among Airline Passengers: Should the Middle Seat Stay Empty?” the author of the study, Arnold Barnett, wrote that his analysis aims to be “a rough approximation” of the risks involved in flying during the coronavirus pandemic.
  • “The airlines are setting their own policies but the airlines and the public should know about the risk implications of their choices,” Barnett told ZDNet this week.
  • The paper comes just as more flight carriers, like American Airlines, begin booking flights to full capacity despite surges of the virus across the country. 

KEY BACKGROUND

The coronavirus pandemic has been disastrous for the travel industry, and has especially hurt airlines. Major American carriers including American, Delta and United have asked employees to take buyouts and early retirement, Forbes reported, in a bid to cut costs as the pandemic causes them to bleed cash. United Airlines warned this week that it could be forced to furlough 36,000 jobs, or nearly half of its American workers, starting in October if travel doesn’t pick up. In April, the airline estimated that in the first quarter it lost $2.1 billion pre-tax, Forbes reported, and was losing $100 million a day in the last half of March. Boeing CEO Dave Calhoun said in May he expects a major airline to go out of business in 2020 as a result of pandemic pressure.

NEWS PEG

American Airlines announced two weeks ago it would begin booking middle seats again starting in July, although the carrier will allow passengers to switch from a full flight without any extra cost, Forbes reported. United is also selling tickets for middle seats. American Airlines took flak earlier this month when Sen. Jeff Merkley (D-Ore.) tweeted a picture of his crowded flight

WHAT TO WATCH

If airlines continue to extend their policy of keeping middle seats blocked off or if they’ll be forced to book to capacity to turn a profit. Southwest and Delta have both committed to keeping their middle seats blocked off until at least the end of September, while JetBlue will do the same through July, according to the Washington Post.

Carlie Porterfield, Forbes Staff, Business

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Entrepreneurs

From The Arab World To Africa

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Sheikha Hend Faisal Al Qassimi; image supplied

In this exclusive interview with FORBES AFRICA, successful Dubai-based Emirati businesswoman, author and artist, Sheikha Hend Faisal Al Qassimi, shares some interesting insights on fashion, the future, and feminism in a shared world.

Sheikha Hend Faisal Al Qassimi wears many hats, as an artist, architect, author, entrepreneur and philanthropist based in the United Arab Emirates (UAE). She currently serves as the CEO of Paris London New York Events & Publishing (PLNY), that includes a magazine and a fashion house.

She runs Velvet Magazine, a luxury lifestyle publication in the Gulf founded in 2010 that showcases the diversity of the region home to several nationalities from around the world.

In this recent FORBES AFRICA interview, Hend, as she would want us to call her, speaks about the future of publishing, investing in intelligent content, and learning to be a part of the disruption around you.

As an entrepreneur too and the designer behind House of Hend, a luxury ready-to-wear line that showcases exquisite abayas, evening gowns and contemporary wear, her designs have been showcased in fashion shows across the world.

The Middle East is known for retail, but not typically, as a fashion hub in the same league as Paris, New York or Milan. Yet, she has changed the narrative of fashion in the region. “I have approached the world of fashion with what the customer wants,” says Hend. In this interview, she also extols African fashion talent and dwells on her own sartorial plans for the African continent.

In September, in Downtown Dubai, she is scheduled to open The Flower Café. Also an artist using creative expression meaningfully, she says it’s important to be “a role model of realism”.

She is also the author of The Black Book of Arabia, described as a collection of true stories from the Arab community offering a real glimpse into the lives of men and women across the Gulf Cooperation Council region.

In this interview, she also expounds on her home, Sharjah, one of the seven emirates in the UAE and the region’s educational hub. “A number of successful entrepreneurs have started in this culturally-rich emirate that’s home to 30 museums,” she concludes. 

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Kim Kardashian West Is Worth $900 Million After Agreeing To Sell A Stake In Her Cosmetics Firm To Coty

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In what will be the second major Kardashian cashout in a year, Kim Kardashian West is selling a 20% stake in her cosmetics company KKW Beauty to beauty giant Coty COTY for $200 million. The deal—announced today—values KKW Beauty at $1 billion, making Kardashian West worth about $900 million, according to Forbes’estimates.

The acquisition, which is set to close in early 2021, will leave Kardashian West the majority owner of KKW Beauty, with an estimated 72% stake in the company, which is known for its color cosmetics like contouring creams and highlighters. Forbes estimates that her mother, Kris Jenner, owns 8% of the business. (Neither Kardashian West nor Kris Jenner have responded to a request for comment about their stakes.) According to Coty, she’ll remain responsible for creative efforts while Coty will focus on expanding product development outside the realm of color cosmetics.

Earlier this year, Kardashian West’s half-sister, Kylie Jenner, also inked a big deal with Coty, when she sold it 51% of her Kylie Cosmetics at a valuation of $1.2 billion. The deal left Jenner with a net worth of just under $900 million. Both Kylie Cosmetics and KKW Beauty are among a number of brands, including Anastasia Beverly Hills, Huda Beauty and Glossier, that have received sky-high valuations thanks to their social-media-friendly marketing. 

“Kim is a true modern-day global icon,” said Coty chairman and CEO Peter Harf in a statement. “This influence, combined with Coty’s leadership and deep expertise in prestige beauty will allow us to achieve the full potential of her brands.”

The deal comes just days after Seed Beauty, which develops, manufactures and ships both KKW Beauty and Kylie Cosmetics, won a temporary injunction against KKW Beauty, hoping to prevent it from sharing trade secrets with Coty, which also owns brands like CoverGirl, Sally Hansen and Rimmel. On June 19, Seed filed a lawsuit against KKW Beauty seeking protection of its trade secrets ahead of an expected deal between Coty and KKW Beauty. The temporary order, granted on June 26, lasts until August 21 and forbids KKW Beauty from disclosing details related to the Seed-KKW relationship, including “the terms of those agreements, information about license use, marketing obligations, product launch and distribution, revenue sharing, intellectual property ownership, specifications, ingredients, formulas, plans and other information about Seed products.”

Coty has struggled in recent years, with Wall Street insisting it routinely overpays for acquisitions and has failed to keep up with contemporary beauty trends. The coronavirus pandemic has also hit the 116-year-old company hard. Since the beginning of the year, Coty’s stock price has fallen nearly 60%. The company, which had $8.6 billion in revenues in the year through June 2019, now sports a $3.3 billion market capitalization. By striking deals with companies like KKW Beauty and Kylie Cosmetics, Coty is hoping to refresh its image and appeal to younger consumers.

Kardashian West founded KKW Beauty in 2017, after successfully collaborating with Kylie Cosmetics on a set of lip kits. Like her half-sister, Kardashian West first launched online only, but later moved into Ulta stores in October 2019, helping her generate estimated revenues of $100 million last year. KKW Beauty is one of several business ventures for Kardashian West: She continues to appear on her family’s reality show, Keeping Up with the Kardashians, sells her own line of shapewear called Skims and promotes her mobile game, Kim Kardashian Hollywood. Her husband, Kanye West, recently announced a deal to sell a line of his Yeezy apparel in Gap stores.

“This is fun for me. Now I’m coming up with Kimojis and the app and all these other ideas,” Kardashian West told Forbesof her various business ventures in 2016. “I don’t see myself stopping.”

Madeline Berg, Forbes Staff, Hollywood & Entertainment

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