The Builder

Starting a business is easy. You need a white board, a cool idea, and a small amount of cash to get you started. That’s Karl Westvig’s view of entrepreneurship. The real challenge comes down the line, when you’re trying to scale your business, stay true to your vision, and answer to investors who aren’t in your business and don’t share the same appetite for risk.

Here’s how Karl has negotiated the many challenges of building a highimpact growth organisation that currently has a turnover of R150 million, which expects to double within the next three years.

- Nadine Todd

ANYONE WHO has successfully navigated a business from a R5 million turnover to R30 million, then to R100 million, and heading towards the billion rand mark knows that growth might be the goal, but it’s also where businesses stumble and fall.

When you’re on a growth trajectory, there will always be some areas of your business outpacing others. The trick is to hang on, and bring your customers, employees, investors and directors on your journey with you, improving the business each step of the way.

Here’s what Karl Westvig, co-founder of Retail Capital, has learnt along his journey, and why he’s continuing to enjoy year-on-year double digit growth.

DIFFERENTIATORS DETERMINE MARKET PENETRATION

Retail Capital’s core product is a merchant cash advance. When the company launched in 2011, there was limited competition in South Africa, but Karl knew that would change. “South Africa is a high card-usage market, which is what you need for merchant cash advance products to work. You need to be able to track the monthly income of an SME to determine the size of cash advance they qualify for, and collect the loan repayments through POS (or point of sale) card machines. My founding partner, Dave Lewis saw the product in the UK, and believed it would work here, thanks to our high card penetration. That meant other competitors would soon join the field. The product itself wasn’t our differentiator, but that didn’t mean it wasn’t a business worth pursuing.” In any industry, you need to evaluate competitors and whether the market is big enough for you. Karl and Dave believed it was, and that SME finance was under-served, but they also knew they needed a differentiator. “We brought the concept to South Africa and built our own back-end. The way to differentiate is through channels and distribution, as terms and pricing structures are the same.