Gavin Mkhabela’s success quickly turned to failure as his business was financed on debt he couldn’t repay.
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.
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.
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.