Lulu Letswele and her children, Cliff and Patience registered their Close Corporation in 2001. With five permanent employees, and their products primarily aimed at the healthcare sector, the business made gradual inroads into the market. The fact that the business has a high BBEEE compliance rating had given it a competitive advantage over other small suppliers operating in the clothing and textiles sector.
By 2009, the business owners realised that the business needed to grow. It was unclear how they should go about this and they approached Seda for assistance. An initial assessment revealed a number of challenges. Payment cycles were long, which put pressure on working capital. Production capacity was limited which meant that delivery was not always on time. Quality management systems and procedures were insufficient, which meant that products were not always according to client specification. And finally, insufficient marketing activities limited their access to new markets and clients.
Business and financial management skills training was provide to assist owners with understanding cash flow management, compliance, business growth, and sustainability, among other things;
Quality awareness training was conducted;
A Seda consultant was appointed to assist the business with the implementation of a formal quality management system in line with ISO 9001:2008;
Marketing material was developed
- Business and quality management systems were implemented; The acquisition of additional machinery and equipment led to improved productivity and the fix asset base grew from R 659, 719 in 2009 to R846, 207 in 2013;
- Aggressive marketing activities, good marketing practices and entrenched quality standards allowed the business to increase its client base;
- Seven more permanent positions were created bringing the number of permanent employees to 12, including the owners;
- Revenue improved from R1, 407,897 in 2012 to R1, 811,802 in 2013;
- Improved business and quality management practices, increased productivity, and better inventory controls resulted in Lulu’s Supplies and Distributors experiencing a 42% growth in net profit margin since 2012.
Advice to other SMMEs
“In order to start and successfully fund a business, one must have a passion for that particular field and be prepared to put in the necessary finance and time to grow your business and make it a success”, says Lulu.