Study business before you start, advises experienced entrepreneur

One of Enver’s strengths is that his company is family run, with a strong management team, he says he is fortunate that his daughter manages the administration and his son the overall operations at the Tomco factory, a 3000 square metre automated plant with 70 workers.

Enver Munshi
Tomco

Enver-Munshi-June-2014You would think that a businessman who had cut his teeth as a young entrepreneur in the harsh 70s when South Africa’s economy was strangled by racial laws and restrictive permit systems would describe today’s business world as easier.

But Enver Munshi, owner of a fast-growing vegetable canning factory and well-known brand in Tongaat on the KwaZulu-Natal’s coast, says competition and macro-economic forces make the business environment so hostile that he urges young people to study as far as they possibly can before they venture into business.

On top of that, says the 62-year-old owner of the growing Tomco canned-food brand, survival in today’s vicious business world requires that young entrepreneurs will have to have at least some work experience in their chosen industry. Don’t think about starting if you don’t have a well-prepared business plan and finance in place, he says.

Enver himself has no formal business qualification apart from an accounting diploma which he got after he finished school in the early 1970s in Johannesburg. He then joined IBM as a computer operator for two years.

In the late 1970’s he started a transport company with his father, an accountant by profession, business was difficult in a different way. They had to struggle to gain a foothold in the white-controlled transport industry. There was no BEE advantage then. Quite the opposite – the family business had to rely on relationships with white operators for the necessary permissions to trade in an economy ruled by intricate permit systems. It is a measure of the strength of his and his father’s entrepreneurial talent that they managed to grow a fleet of trucks that transported coal from Witbank to the then Western Transvaal.

And when Enver decided to branch off and start his own independent transport company after he got married at the age of 25, his reputation was such that he had little difficulty in arranging fleet finance for his small start-up.

In the late 1980’s Enver had decided to try something completely different and took on a 2nd venture. In the eighties there were only two toilet-paper converters in Cape Town (today there are at least 17). One of the first independent tissue paper mills in South Africa manufacturing tissue paper from recycled waste opened up in Tongaat, and was able to undercut the established manufacturers.

Seeing this opportunity, Enver began supplying the toilet paper from Durban to Cape Town. He didn’t know Cape Town at all, but started knocking on the doors of independent supermarkets. In the early 1990’s, he set up his own toilet paper converting plant in Cape Town. The business thrived until 2002, when he decided to take it to the next level.

The tissue paper mill in Durban which supplied his trade initially was put up for sale. Enver, in conjunction with two other partners decided to buy the toilet paper mill, and its subsidiary companies, of which the vegetable canning factory was one. The deal went bad, costing Enver and his partners a lot of money.

But in true entrepreneurial style, Enver turned the setback into an opportunity and bought over the food canning factory which came with a 20-year-old local canned-food brand namely, Tomco. The factory was not operational at the time Enver took it over.

The banks were way too risk-averse for financing a defunct factory, and Enver approached Business Partners, who agreed to come in as an equity partner, taking ownership of 35% of the new company. Not only were they willing to take the risk, says Enver, but Business Partners’ thorough market research helped to confirm his own estimations of the market opportunity.

It is interesting that Enver identifies sourcing raw material as his biggest challenge with reviving the Tomco factory. Usually the main problem for a start-up is penetrating the highly competitive food market. But in Enver’s case his years of knocking on supermarket doors proved invaluable experience, and he and his marketing team set about getting the Tomco canned products range onto independent supermarket shelves.

Over the past ten years, Tomco has seen massive growth, spurred by breakthroughs with listings in various chain stores and independent buying groups, namely, independent Spar’s, Massmart and most recently Pick n Pay. Enver was able to buy back the 35% shareholding from Business Partners, making him sole shareholder since 2011.

Building a brand takes a lot of perseverance and investment, says Enver. He attributes the success of the company and brand to dedicated staff as well as loyal suppliers and customers. Enver is striving to increase the Tomco brand presence in new markets continuously.

Despite difficult trading conditions, such as the weakening rand which pushes up the prices of raw material and worldwide shortages of grain stocks , Enver is optimistic about the future. One of Enver’s strengths is that his company is family run, with a strong management team, he says he is fortunate that his daughter manages the administration and his son the overall operations at the Tomco factory, a 3000 square metre automated plant with 70 workers. Both have accounting and management qualifications, without which a business simply wouldn’t survive in today’s environment.