Reg Rumney reports on a small business initiative that works
AN innovative method of distributing products in the townships is paying off for the mini-entrepreneurs it is designed to help.
It is the brainchild of Sam Alexander, ex of Liberty Life, who set up the Strive Foundation some years ago to train such entrepreneurs and provide them with goods to sell.
It is now providing a channel for products as different as pharmaceuticals and textiles — though the focus remains on selling basic goods such as paraffin, soaps and meat.
The original idea was to establish community groups of 100 traders to distribute basic lines of goods into black areas, so that the people living in those communities benefited from the sale of those goods.
Sitting down with the members of the groups to find out what they should trade in was instructive. Alexander asked, given only R2, what a poor black township dweller would buy first. The answer was not as Alexander had expected, maize meal or bread, but paraffin for heating and lighting, the next matches, and the next soap. Only then came food. By determining needs, the 32 lines were defined for the basic goods that sell well in poor communities.
Alexander, seated in his mid-town office amid piles of duvets, colourful African cloth and other bric a brac, has sunk his own money into the project, the golden handshake he received from Liberty Life when he left to set up the project. He worked at Liberty Life for 21 years and was divisional manager of manpower and development.
He conceived the Strive concept after a mission to the US in 1988 to advance black business met with only rhetoric. Liberty liked the idea and encouraged him to register Strive as a separate company, after launching it in 1989. Alexander singles out Donny Gordon for his generosity in helping the company get off its feet.
The idea was to address several problems of black micro- business. One was the lack of market research and training in black business, another the lack of appropriate funding.
The intention was to create disposable income, to buy well to sell well, says Alexander.
Strive set up eight community groups of 10 consortiums. Each consortium consists of 10 traders living within a radius of one to 3km, and those traders promote their own goods and the other goods of the consortium. Each consortium gets a loan of R5 000, or R500 for each trader, from the Small Business Development Corporation. The loan is paid back in a year.
R500 is not much to buy stock with, so after three months the traders’ performances are reviewed. A trader can qualify for another R500 within four to six months, and 10 particularly good performers in the group get R5 000 or more. After a year, Strive looks for people who can accept up to R20 000 in capital.
Moreover, in some areas the R500 turns over three times a week. So a salary of R200 to R300 a week is not unfeasible.
“We are giving people an income equal to a matriculant’s starting salary,” says Alexander. But, he adds, it is not easy money. Traders are selling from their homes and have to be available 24 hours a day.