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How to start a business that investors will love

Article provided by Discovery Business Insurance.

Investor extraordinaire, Nolo Masite, is all about big ideas. But what makes a business idea unique enough that investors are willing to put money behind it?

Helping small businesses in their quest to succeed and grow is Nolo Masite’s passion. A chartered accountant who moved into corporate finance and investments, Masite says ‘it is a marketable business that first attracts him’.

“The most critical thing in any sustainable business is the market. What is your unique offering? Is there a market for that product? You can have the greatest idea, but if no one’s consuming whatever it is that you’re offering, there’s actually no business there,” he says in a podcast interview with Discovery Business Insurance.

Masite’s first business stemmed out of a gap in the market for cleaning products at schools. “I had a friend whose parents were in the hygiene space and they used to sell cleaning detergent… and toilet paper. And there was a certain market which they didn’t see, which was in township schools.”

“I come from a family with a lot of educators. Two of my aunts are principals in two of the biggest schools, one in Alexandra and the other one in Soweto. So, I started asking where they procured toilet paper and hygiene material? They said they were buying from big retailers, at great cost. I decided to create that market, to start a business in supplying township schools with low-priced products. That is literally how I got into business and paid for my second degree.” 

Today, Masita is one of the country’s foremost agri-investors.

“When I look at a business and I see that it is not plugged into whatever segment that it is playing in, then I’m worried.  It shows me that you’re actually not following relevant market data and what’s happening around you. It’s critical to always be aware of the moving parts around you as a business or as an entrepreneur,” he says.

Staying power

“Resilience is also important in starting a business. Keep your eye on the prize, all the time. Each day be very, very clear about what you want to achieve. Focus. And ask questions,” he says.

Guidance is also key. “Get a mentor, if you’re starting up, get a coach. This will help you understand the risk that other entrepreneurs have taken and have learned from. It’s a critical part of that,” he says.

“Then, the hunger. The fire in the eye. You can’t buy that, and you can’t teach it. So, the person must have the hunger for whatever it is they’re trying to pursue. And finally, have fun. Choose something that you like. There’s no point in chasing money. Money comes with good effort, but for me it’s a combination of all of these aspects together that makes a business succeed,” says Masite.

Identifying investments – and running with them

So what does he look for in an investable business.

“For me, it’s people. As I engage with you, I can see that you have got very good vision and direction and where you want to go. It might not be very clear at the start, but you do have the hunger, you actually want this. You are your best investment, if I can put it that way.”

And despite data that might reflect otherwise, it is a good time to invest in South Africa. ”From a South African point of view, we’ve got enough capital floating in private equity, and growth through the mid-market segment. It’s amazing what we have managed to do in this country at the moment. I had a friend, an entrepreneur in Nigeria visit, and she’s says we have it all here. For them, there’s no electricity more often than there is, and starting a business or registering a business will take up to four months.”

However, Masite says it is often chance, and not an organic process that can help uncover good business ideas. “I think there is no set formula or one golden rule. I think it’s a combination of bringing many disciplines into one.”

The 15-episode Healthy Business Show is brought to you by Discovery Business Insurance. Listen to the full podcast episode, ‘What makes a good idea?’ with Nolo Masite below.

Discovery Business Insurance is a proud Partner of the NSBC