Mike Eilertsen is only 31, but as CEO of LiveOutLoud – Southern Africa’s largest luxury lifestyle brand – he’s already being dubbed Africa’s version of Richard Branson.
He started his multi-million rand venture in 2007, with R300 (about $33) that he’d earned in waitering tips and has leveraged his networks into a sustainable, award-winning business empire.
Eilertsen is founding member of The Luxury Network in Africa, a brand building and luxury marketing agency. He’s also CEO of LiveOutLoud, an all-encompassing luxury lifestyle brand that includes LiveOutLoud magazine, an events company and travel agency, TravelOutLoud.
In the last six years, Eilertsen has learned shome hard-won lessons on doing business in Africa.
His advice to those doing business in Africa: Look at what your industry is doing on the continent and go out of your way to change the rules of engagement.
“An entrepreneur has to focus on differentiating the product and service, while creating a good rapport with the consumer. Combine this with meeting people face-to-face so they can see what you’re about, and feel your enthusiasm, and the money will follow,” he said.
“Doing business in Africa will challenge everything you’ve ever known about classic capitalism – the continent has its own version of the time it takes to do things, too much (or too little, in some cases) red tape, and a very apparent skills or ability shortfall in many sectors. You need to bear all these factors in mind before venturing into the market.”
Eilertsen talked about the five biggest mistakes he’s made in business in Africa:
1) Overemploying: “Dreams of having an empire and hiring hundreds of employees fill our heads from the day we first think of opening a business. As a result, each penny made is reinvested into staff, growing the company and doing what is believed to better for the company as a whole. I had 47 employees when the market changed and the recession took hold, and overnight turnover dropped. An organisation’s employees are its biggest asset, but they are an even bigger liability when things get tight. High overheads are what kill a business, and even if you survive, your morale and productivity is affected by retrenching.”
The lesson here is: “Rather employ fewer, but more skilled individuals. This will make your business strong and lean. Businesses operate for profit and by outsourcing skill sets outside of your immediate sphere, you and your business can become the ’empires of tomorrow.'”
2) Ineffective financial control: “Having ineffective financial control is like driving a car with a blindfold on. Yes, you might move forward for a while, but sooner or later you are going to crash. Initially I hired friends with accounting degrees or who were bookkeepers. They were not well-informed on how the South African Revenue Service worked, tax structures and effective financial control. This resulted in money being put into projects that were doomed to fail – we just didn’t have the paperwork to show us.”
The lesson here is: “Employ a highly-skilled, well-established financial controller. No matter how expensive they may seem for “playing” with numbers, they will give your business security and direction. After you have employed yourself, your accountant is next.”
3) Celebrating a deal prior to the paperwork being signed: “A verbal deal isn’t worth the paper it is written on. These words echo in my head as disappointments that follow you throughout your career. We all know the story – the meeting that finally results in your client saying ‘yes.’ You allocate resources, time and a good celebration to the new project only to find out your client didn’t have the jurisdiction or funds have run dry. Despite being an exceptionally optimistic person, life has taught me to celebrate the signed deals!”
The lesson here is: “Push for the signature or purchase order. Don’t settle for an email confirmation or the classic “please go ahead” as these are the pitfalls we in sales fall for over and over again. Have the contract ready so when the client says ‘yes,’ they sign something straight away to get you going.”
4) Being too involved: “Startups require you to be involved in all aspects of your business, but as your company grows you find yourself still doing the things your employees should be doing. By being too hands-on, you are no longer leading and you won’t have the time for vision, strategy and the bigger picture.”
The lesson here is: employ people who are leaders in their own right. This will allow you to rest assured knowing they are doing what is required. Two key meetings a week will ensure the attention to detail is there, and allow you to lead, as that’s the role of the business owner.
5) Employing your clones: “You don’t realize you’ve done it until someone points it out. As human beings, we are comfortable around those who are similar to us. Gregarious people enjoy the company of other enthusiastic individuals. Accountants like others with logical and analytical personalities. No matter who you are, you tend to be impressed when hiring those whose traits you relate to. In my case I am a hunter sales personality with weak administrate skills. Three months after opening we had a team of six others exactly like me, and not a contract, procedure or file in sight. Once the ‘clones’ were pointed out, I diversified completely, targeting those who were as different from me as possible.”
The lesson here is: “Choose your non-negotiable skill requirements. For me these were loyalty and big dreamers, and I only employ people who share these traits, but they have every other skill I don’t. This will ensure a strong, adaptable business team.”