The historic Vilakazi Street in South Africa is now eerily quiet. With the lockdown, small entrepreneurs here like Sifiso Moyo are pondering new ways to resuscitate life into the precinct.
Sifiso Moyo is the co-founder of The Box Shop in one of South Africa’s most historic tourist hubs.
The lifestyle and retail outlet he founded with his business partner, Bernard Msimango, is on Vilakazi Street, known for being the only street that has famously housed two Nobel Peace Prize winners, Nelson Mandela and Archbishop Desmond Tutu, in South Africa’s township of Soweto in Johannesburg.
Even before South Africa’s president Cyril Ramaphosa announced the national lockdown from March 27, Moyo says he had been seeing dwindling visitors to the street and The Box Shop.
South Africa had confirmed its first Covid-19 case on March 5.
“The street is literally on lockdown. All businesses, especially formal establishments, have ceased operations, however, businesses that will survive on Vilakazi Street post the pandemic are those that didn’t invest [much] in attracting and appealing to international tourists,” says Moyo.
The Box Shop will need to start dropping prices, he adds, to attract more locals to the outlet.
“We need to position the street as a destination that is futuristic, cutting-edge and tourism-friendly, especially to the locals. So we are strategizing, decreasing our prices, marketing ourselves aggressively to the locals and addressing ourselves as a destination of choice.”
Moyo predicts it will take four months for global tourism to return to normal, but will South Africa be one of the preferred destinations?
“We at The Box Shop and some operations on Vilakazi have positioned ourselves so well that we appeal to the locals too, but looking at the economic impact of the virus, we have less cash circulating in the market and that affects all of us. So as a precinct, we have to start thinking differently,” he says.
The Box Shop has taken the lead in integrating technology into its operations, developing an app for the upcoming Youth Day; a South African public holiday in June. The app shares the Vilakazi Street experience and allows people to book tables and make advance payments for the event.
All this, only if the coronavirus has been brought under control by then.
For the period of the lockdown, the shop is not trading, and Moyo says they too are applying for a relief fund from the government.
“We are feeling the effects, we really need subsidy from government, otherwise there is a threat that the entire precinct might shut down and it will need to be resuscitated and re-established which will mean all the 20 years of effort that has been put in to develop the street will go down the drain,” he laments.
For now, responding to the situation using technology and some clever marketing seems to be the only way forward for most small businesses like The Box Shop.
How Three Small Businesses Are Pivoting To Stay Afloat Amid The Coronavirus Pandemic
In late February, Jeff Davidson, cofounder and co-CEO of fitness company Camp Gladiator, was on an annual boys fishing trip on Lake El Salto, at the foot of the Sierra Madre Mountains in western Mexico, when he was struck by an overwhelming sense of dread and déjà vu. After a long day of bass fishing, he logged onto his laptop for his daily browse of investment forums, an old habit from his days as a senior vice president at AXA Advisors. Hedge fund managers and Wall Street analysts were following the development of a novel coronavirus out of Wuhan, China, scouring the region for under-the-radar money plays. The more he read, the more he found himself feeling as he did at the start of the Great Recession.
“I just remember the way it felt when we saw Bear Stearns go bankrupt and the panic of the stock market crash. All of that just burned really harsh memories into my mind,” Davidson says. “I immediately went back to our headquarters and told my team, ‘I think we need to be prepared for a major event.’” From Camp Gladiator’s offices in Austin, Texas, they hatched a plan, “Project Mars,” to pivot their fitness bootcamp business in real time.
Founded in 2008 by Davidson and his wife, Ally, who used the $100,000 she won after being crowned champion of NBC’s American Gladiator (which she had auditioned for on their wedding day) to launch the now $60 million company, Camp Gladiator’s training sessions were always meant to run outdoors, in public spaces like parks and schoolyards where people could come together and support one another on their fitness journeys. In recent months, Ally had been conducting a competitive analysis of the virtual workout landscape, with plans to roll out their own remote offerings in 2022.
As state-wide shutdowns and shelter-in-place mandates have forced gyms to close indefinitely, casting the $94 billion fitness industry into financial freefall, Camp Gladiator has emerged uniquely poised to profit. While chains like Gold’s Gym filed for bankruptcy and billion-dollar startups like ClassPass have seen 95% of their profits evaporate overnight, Camp Gladiator’s lack of physical locations and trainer income model (the company’s 1,000 instructors collect 75% of the revenue from their classes) have served as advantages. “Camp Gladiator is like 1,000 small businesses rolled up into one medium business, because each of our trainers are local owner operators that collect the profits of their own locations,” Davidson says.
This alignment they have with their workforce helped accelerate the launch of their virtual offerings to March 16, well ahead of competitors like Orangetheory Fitness. After a week of free #HustleAtHome classes streaming on Facebook Live, they released a 6-week virtual workout challenge for $39 (in-person memberships usually cost between $59 and $79 a month). The quick pivot paid off: Since launching two months ago, Camp Gladiator has gone from 4,000 outdoor workouts a week to nearly 10,000 Zoom workouts a week. It has retained 97% of its customer base of nearly 80,000 and has acquired an additional 20,000 customers and $700,000. The adoption rate has been so high that the Davidsons plan to maintain their virtual offering long term and have been hiring new trainers, many of which were recently laid off from other fitness companies.
“Six weeks ago, we thought we were making a Band-Aid. Four weeks ago, we thought we were making a supplemental product offering that might be worth keeping,” Davidson says. “And now we think we’re making the way forward. There’s a chance that in a year virtual will be our primary product offering.”
Needless to say, fitness isn’t the only industry that’s been affected by the pandemic. The coronavirus crisis has taken a significant toll on the majority of America’s more than 30 million small businesses, many of which are still hoping to receive financial relief from the government. According to a recent survey by Goldman Sachs, 71% of Paycheck Protection Program applicants are still waiting for loans and 64% don’t have enough cash to last the next three months. As of April 19, more than 175,000 businesses have shut down—temporarily or permanently—with closure rates rising 200% or more in hard-hit metropolitan cities like Los Angeles, New York and Chicago, according to Yelp’s Q1 Economic Average report.
The restaurant industry has been especially crushed. A recent survey conducted by the Independent Restaurant Coalition and James Beard Foundation found that the food services industry only received 9% of PPP dollars, despite accounting for 60% of job losses in March. The National Restaurant Association estimates the restaurant industry lost $80 billion through April and is on track to lose $240 billion by the end of the year.
La Monarca Bakery and Café, a $15 million Los Angeles-based chain described by cofounder Ricardo Cervantes as “if a Mexican bakery and Starbucks had a baby,” expects revenues to drop as much as 40% across his 12 locations this year. “Being that we purposely positioned ourselves in working class Hispanic neighborhoods, we are in areas where the employer and employee basis have been hit the hardest,” Cervantes says. “We have not stopped,” he adds, referring to the work he and cofounder Alfredo Livas have been doing to adapt to the new normal. They’ve kept all of their locations open for pick-up and take-out and reduced all costs and management salaries in an effort to keep the majority of their team intact (about 10% were laid off) and expand their business to include more prepackaged items and family meal options. In response to the needs of their local communities, they started carrying essential items like milk, butter, flour, paper towels, toilet paper and bleach. “Some of our neighborhoods do not have access to large supermarkets or Costco, and if they do, many individuals don’t usually have the resources to stockpile two months of toilet paper,” Cervantes explains. “They need daily goods but in smaller quantities and that’s what we’ve been providing.”
When the duo met as MBA students at Stanford Business School in 2001, they had no idea they would someday be putting their finance degrees to work like this. “We are busier today than we have ever been—and that is not to say that business is great. As the analogy goes, we’re building this new airplane while we are in the air,” he says.
But while the need for social distancing has forced business closures around the world, taking a toll on every sector, some like the wine industry have found somewhat of a silver lining. According to data from Nielsen, wine sales for off-premise consumption during the period from March 1 to April 18 were up 29% as compared to the same period year-over-year, with total alcohol sales for off-premise consumption up 24%.
Kingston Family Vineyards is banking on this trend. Founded in 1998 by Courtney Kingston, the $3 million family-run business is headquartered in Portola Valley, California, with a 100-year-old farm and 350-acre vineyard in Chile’s Casablanca Valley that doubles as a premier tourist destination, one that’s been awarded TripAdvisor’s Certificate of Excellence for the past six years. It produces just 3,500 cases of Pinot Noir, Chardonnay, Syrah and Sauvignon Blanc annually (they sell 90% of their grapes to other winemakers), so when Chilean President Sebastián Piñera declared a state of catastrophe on March 19, Kingston lost a significant amount of revenue during what’s been their most profitable season of the year.
With Kingston’s 20th wine-grape harvest of the year well underway, the vineyard shifted to offering virtual wine tastings, shipping bottles to customers in advance. Revenue in the U.S. for the month of April was down just 10% year-over-year.
“Based on these virtual tastings, we’ve made up a lot of revenue with a totally new business,” Kingston says. “Before the coronavirus, hosting guests in an intimate setting was key to how we shared our small corner of the world with others. They’d often become customers for a lifetime. Right now, and for the foreseeable future, we can’t do that. The bright light in the darkness is what we can do.”
The $600 That Sparked A Telecom Trade: This Entrepreneur Represents Everything The Digital Age Stands For
Tech entrepreneur Mandla Ngcobo dabbled in everything from poultry farming to selling airtime and electricity, until he found his niche in telecom – and his connections are growing.
Mandla Ngcobo represents everything the digital age stands for.
He’s young, happening and ubiquitous, with hopes and ambitions in every sector: from the poultry business to IT and everything in between.
Born in Newcastle, in South Africa’s KwaZulu-Natal province, Ngcobo is the founder of Accelerit Technologies that’s heading forth in the Information and Communications Technology (ICT) sector.
“Entrepreneurship is something that has always been around me,” he says resolutely, taking a sip of his drink, when we meet him at an upscale restaurant in Sandton, Johannesburg.
“My father was a taxi owner. My mother was unemployed but used to sell clothes and plait people’s hair from home. She was a firm believer that one must have multiple streams of revenue. My mother used to do whatever it took to put food on the table.”
This attribute made him resourceful too, as he saw it work. He was employed but was inspired to start his own business.
His job for six years at a global technology and consulting firm in Johannesburg exposed him to the inner workings of the ICT business.
The computer had been a loyal companion since high school.
In the mid-1990s, his brother bought him his first TV game console, then gave him his old Pentium One computer with 133 megabytes of data.
“I was fascinated by the fact that you could program a computer to do certain things,” says Ngcobo.
Graduating from the University of Cape Town in South Africa with a BSc in 2005, he wasn’t particularly passionate about theory, but was driven by formulae.
“I also did business as an elective because I was thinking about the trade. So, varsity was mostly about computers and business and that’s where it all began.”
Two years later, he ventured into the chicken feed business as his mother had started a chicken farm.
He ran the business for five years with a fair turnover and employing three.
“That money was able to pay for my car; I saw it had legs. I tried so many businesses; I even sold prepaid airtime and electricity around where I grew up.”
The chicken business didn’t take off but at least he was now lured into the art of making money.
In 2011, the 36-year-old serial entrepreneur registered Accelerit Technologies, a small and medium enterprise providing turnkey ICT solutions. He needed to have licences to run a telecom business to do business with other companies and consumers.
He was still an employee with the company he worked for, but time had come to go on his own.
“I had to be billable as a consultant, so I had to work. There was a project I worked on that absolutely almost broke me; I didn’t enjoy it at all, so I was in a space knowing I didn’t have to do what I was doing. If I could dedicate a little bit of my time to pursue my own venture, I could make it work and that was it, I was done, and I resigned in 2013,” he says.
Having tasted entrepreneurship, he knew he could do it, but this time, he had to be fully present and committed.
“I sold my fancy white Audi TT car, and moved out of my lavish apartment in Sandton. I had to downgrade my life, I needed to bring it back to a level where I could manage my month’s expenditure and align with the fact that I was no longer an employee,” he says.
He shared office space but had a business address; it was time to get his first customer.
He set up a Wi-Fi base station at his sister’s house and sold vouchers; expanded to Greyhound Lines, an intercity bus carrier; then a student commune around the Johannesburg CBD, and within months, Ngcobo was turning over R10,000 ($617) a month.
“That made me feel chuffed,” he says. His sister was his first employee and two other friends soon were on his payroll.
“I was coming from a job that paid me R60,000 ($3,700) a month, and the R10,000 ($617) had me super excited. I knew I never had to work [for someone else] a day in my life. If I put in 10 times the effort, then I would be making R100,000 ($6,168) a month and that is how the journey started.”
Business was growing and within 24 months, Ngcobo set up Wi-Fi base stations in estates around Midrand still using the voucher system; at the time, it was massive.
In early 2017, Accelerit Technologies moved to fiber optic technology delivering high-speed data.
“That made us very competitive; we went from north Johannesburg to providing services nationwide, turning over R900,000 ($55,512) at the end of the 2018 financial year.”
Currently, Ngcobo is projecting R30 million ($1.85 million) for the financial year 2020 and employs 20 full-time staff.
It’s big numbers and wired ambitions, but as always, he is sure he can make it work.
Hands-On Approach: Small Business Is Coming To The Aid With Innovative Sanitizing Solutions
The hygiene industry has received a shot in the arm with the recent pandemic. With emptying retail shelves, small business is also coming to the aid with innovative sanitizing ideas.
Retail stores in Johannesburg, as in most urban centers in the world currently, have run out of wet wipes and hand-sanitizers – the widely-recommended weapons to keep the coronavirus at bay.
With the first confirmed case of Covid-19 in South Africa’s KwaZulu-Natal province on March 5, the pandemic has brought the country to high alert and a state of national disaster proclaimed by President Cyril Ramaphosa merely two weeks later, with 116 confirmed cases and counting (at the time of going to press).
Where there was plenty before news of the outbreak, exasperated customers are seeing ‘Out Of Stock or ‘Sold Out’’ signs in bold red letters on hand-sanitizer shelves at retail outlets and pharmacies. There is a long waiting list at dispensaries such as Clicks in Johannesburg.
At a store at The Marc, a fairly new retail mall in Sandton, Africa’s richest square mile, the manager echoes the sentiments of his counterparts in other malls in the area: “Three weeks ago, we were fully stocked, now, we are out of stock. This happened the week of the first coronavirus report in KwaZulu-Natal, when we had foreign nationals who bought hand-sanitizers more than the [locals] because of the [five-star] hotels in the area.”
About 21kms from Sandton in Roodepoort, another city in Johannesburg, Khensani Moleko, a 27-year-old account manager in the advertising industry, says she mall-hopped a whole weekend in search of hand-sanitizers.
“We went to multiple shops in the Roodepoort area and found nothing. However, we had sanitizers before the outbreak so we still have some left but it’s running out. I’ll be looking online,” says Moleko.
This is what consumers like Mufhenyi Mashamba, a Johannesburg-based interior designer, are doing too.
“On the websites, all sanitizers were out of stock, and they are usually priced between R20 and R30. When I checked the next day, people were auctioning hand-sanitizers [at ridiculous prices]. So now, I’m sitting here with no wipes and no sanitizers. I’m relying on personal hygiene and making sure I’m aware of my surroundings and that people have their hygiene in check,” says Mashaba.
This is also an opportunity for private business and small entrepreneurs such as Ludwick Marishane, founder of Headbody Industries and inventor of DryBath Gel, an innovative gel that can be used as a water-less body wash.
“We are making an antiseptic version of the product and the idea is to provide it to businesses because facilities are no longer safe. We have also been approached by a few retailers interested in listing our product.”
The gel is currently sold online, and should find its way on to retail shelves by June next year, says Marishane.
He is not the only entrepreneur making money off the hygiene industry.
Whitey Chemicals, founded by Joanna Stewart in Johannesburg, is a chemical cleaning service and supplier. The company started with cleaning petrol stations; one of their products is used to remove oil from concrete and restore it to its original form. The company also supplies disinfectants and cleaning solutions for schools, businesses and homes. “When I started the business two months ago, we fully got into hand-sanitizers because of the increase in the chaos going on in the country. Sanitizers are in high demand and business has picked up rapidly, it’s the main focus currently,” says Stewart, who has been in the pharmaceutical industry for the last 15 years. She has a full-time staff of six but has had to employ another 15 as freelancers to keep up with the demand.
With emptying retail shelves, small business is coming to the rescue, whilst also cashing in on the timely opportunity.
Download issues of Forbes Africa
- Single Digital Issue: Forbes Africa April 2020 - 30 Under 30 R50.00
- Single Digital Issue: Forbes Africa March 2020 R50.00
- Single Digital Issue: Forbes Africa February 2020 R50.00
- Single Digital Issue: Forbes Africa December 2019/ January 2020 R50.00
- Single Digital Issue: Forbes Africa November 2019 R50.00
Subscribe to Forbes Africa
The Sale Of Alcohol Will Be Allowed In South Africa As Country Moved To Level 3 Of Lockdown On 1st June, Cigarettes Still Prohibited
[IN NUMBERS] Coronavirus Update: COVID-19 In Africa
Inside America’s Food Supply Chain Under Covid-19 | Forbes
A Day In The Life Of A Taxi Driver In Lockdown
Florida Defied Covid-19 Predictions. Is It A Model For Reopening? – Steve Forbes | Forbes
- Health2 days ago
[IN NUMBERS] Coronavirus Update: COVID-19 In Africa
- Billionaires4 weeks ago
Kanye West Is Now Officially A Billionaire—And He Really Wants The World To Know
- Billionaires4 weeks ago
Jack Dorsey, Bill Gates And At Least 75 Other Billionaires Donating To Pandemic Relief
- Brand Voice4 weeks ago
Premium Cigars Made The Moroccan Way
- Billionaires4 weeks ago
Elon Musk May Bank The Biggest Payday Of His Life During Global Pandemic
- Heroes & Survivors3 weeks ago
‘Confused At First, Then Proud To Be In This Country’
- Current Affairs2 weeks ago
WITHOUT UNIVERSAL HEALTH COVERAGE WE ARE SITTING DUCKS WHEN THE NEXT PANDEMIC STRIKES
- Arts3 weeks ago
‘Our Home Became The Film Set, Blankets Became Props, Windows Became Locations’