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Johann Rupert’s 5 steps to business success

Candid insights from one of the wealthiest men in Africa.

Business giant Johann Rupert recently provided a glimpse into his enigmatic personality through a rare live interview and public question session lasting about two hours.

A charming and relaxed Rupert, talking on local radio station Power 98.7, displayed his highly developed entrepreneurial acumen and razor-sharp mind that does not take anything for granted, like a deceptively timid leopard ready to pounce at any moment.

He candidly shared his thoughts on a wide range of topics including politics, his family background, land reformation and business.

The prospect of a smug multi-billionaire Afrikaner at the pinnacle of international business success, operating in a racially segregated society with the highest economic inequalities in the world, must have exposed him as a juicy political target on the screens of the strategists at Bell Pottinger, the disgraced global PR firm retained by the Guptas to assist the family in its state capture goals.

Read: What monopoly? Johann Rupert defends white wealth

Notwithstanding the politically focused narratives, Rupert’s practical advice on business was insightful and succinct. In a few matter-of-fact bullet points he covered what many spend fortunes hoping to learn in business schools. Who knew that South Africa had its own sage of Somerset West.

Rupert-controlled public companies valued in excess of R600 billion ($40 billion-plus) – including luxury goods holding company Richemont and diversified holding company Remgro – have been patiently built over decades, and have made a wide range of stakeholders very wealthy over the years. These include government employees and the fiscus.

Rupert founded Rand Merchant Bank, consolidated a global multi-billion dollar luxury goods business, redirected tobacco interests, and has invested in and managed numerous other commercial and social endeavours over the last four decades.

Read: South Africa’s richest man buys Vumatel to expand fibre business

This bears testament to a businessman par excellence. Fortunately, he outlined his business approach in the interview which would have certainly formed the cornerstone of the above successes.

The following steps formed the basis of his method:

1. Identify the market – Skeleton

Is there a market for the product or service you wish to offer? Most people do not reflect carefully enough on this crucial point. This does not mean you need to be the only one doing it or the first to do so but determine whether enough people are willing to pay you for your product or service. It is a cardinal point often confused through amalgamation of other aspects of the business but a central theme that must be able to withstand scrutiny on its own.

2. Develop a strategy to meet this market need – Bones

Once the market for the product or service has been clearly identified, develop a strategy to fulfil this objective. What is the business model to service this market?

3. Detailed plan to execute the strategy – Meat

“The plan is on paper, but the game is played on the grass,” said Rupert. Attention to detail is now required in the execution of the strategy by competent executors.

Read: Richemont and Alibaba in strategic deal 

Each of the above often require individuals with a different nature. For example, executors have a different inherent nature to strategists or the entrepreneurs generating the ideas. Match the appropriate individual to the role for optimal results.

4. Don’t be afraid to make mistakes

Identify and correct mistakes as soon as possible but never be afraid to make a mistake. In our age of social media this requires a mindset change.

5. Have a level of paranoia

There should be a keen awareness of competitor activity to keep you moving. Inaction is death. When complacency sets in, even great business houses have gone into terminal decline.

The above summarises both theoretical and practical aspects that all business schools and strategy workshops attempt to convey. Often most of them are unable to adequately differentiate these three distinct phases or unpack them succinctly, resulting either in information overload or a generous use of vague jargon. This simple yet effective framework can be used from a small business idea all the way to a very large investment. Test it in the cases you are familiar with.

In a country that has many developing entrepreneurs this wisdom from a seasoned business master with an illustrious list of accolades will prove invaluable to anyone who uses it.

* Riaz Gardee is a mergers and acquisitions specialist and financial writer.

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Hello Riaz Hardee,
Thank you for a great article. My only concern is that, to many of us South Africans, Mr JP’s business lecture is like giving us a very expensive Bentley gift with NO ENGINE. We learn about this everyday as aspiring entrepreneurs. What he did not cover, and you ignored is one most crucial point, i. e, “despite inheritance, how do we access funding”. Without this crucial information, this article only helps those very few who have been lucky enough to inherit billions of Rands from their parents.

Did he inherit billions of rands? He had a fall back trust fund which is obviously great for an entrepreneur but doesn’t guarantee success by any stretch of the imagination.

If you talking about funding for the business then there are many a family fortune that have been blown investing in new ventures.

I think his points here refer to the conceptual stage, funding comes across that is set up and then you have to convince capital that it is a good idea.

To use your very apt analogy:

It’s YOU that has to supply the engine!

Entrepreneural passion, grit, and determination in the face of everyday obstacles is what separates the winners from the whiners.

If you are having a problem with funding either your business idea is not so good! Or you are!

Face up to that answer honestly, and move on quickly to improve either (or both!).

Don’t accept your own excuses or you will remain where you are.

You should try to access finance through BusinessPartners, a company that was known as the Small Business Development Corporation, and started by Dr Anton Rupert in the 1980’s.
Johann Rupert’s father, Dr Anton Rupert, did not inherit a single cent; he had two businesses that crashed when he set out as a young entrepreneur. He then started making cigarettes in a garage – a small beginning that eventually became a global company.

There are no “billions of rands” of inheritance in this family – please check your facts!

Yes I agree with Gee, he forgot step 1, that is, have Dr. Anton Rupert as a father. That way, even when you drop out of Stellenbosch university, he will organise an internship for you at a New York bank. And then you can even become the Chancellor of that same university one day..

Gee and rebel, how do you know that Johann Rupert is successful BECAUSE of his father’s success, and not IN SPITE of it?

The lack of funding is identified as the final obstacle whenever there is a discussion about entrepreneurship. The lack of readily available funding is not an obstacle though, it is a sieve that sorts ideas that have potential from those that do not. Who should provide the funding by the way? The bank? Whose money does the bank lend out? The bank’s source of funds are you parents’ savings, the deposit made by your cousin, the pension savings of your aunt and your last salary. If these people, in their personal capacity, are unwilling to fund your idea, will it be prudent for the bank to fund your idea on their behalf, with their money?

Dr. Anton Rupert and his wife Huberte were true entrepreneurs. After starting their business in their garage, Dr. Rupert went from farm to farm in the Western Cape to raise shareholder capital. The value of their investment in the Ruperts is worth more than the farm for those initial investors.

A bank wants to grow its business. The bank is constantly looking for new clients to lend to. Prove yourself by starting small, put some skin in the game, build a track-record, offer some collateral, and the banks will fight for your business. The problems with young entrepreneurs is that they all want to be a Jeff Bezos overnight. Start in your garage and you may become a Rupert after a few generations. It all begins with the value you can add for consumers. If the customer believes in you, the banks will follow.

MJ from Stellenbosch sounds like you are Johann Rupert’s son..? If so, just do your own thing mate but maybe you could donate the proceeds of you trust fund to charity..? Just to (almost) level the playing field..

Rebel – what utter nonsense your response is. Will you give your inheritance or trust fund to charity. What do we want in this country a nation of beggars or a nation of entrepreneurs. There is such a syndrome of entitlement and avarice in this country from a large portion of the population whom can only be classified as downright lazy and want a free lunch – go out and make your mark in society for the betterment of all peoples. Also please have a look at how involved Rupert is in social upliftment and project to improve nationals lives in this country

writing comments online(any site), won’t make an iota’s worth of difference. complete waste of time.

grahamcr no inheritence or trust fund to give to charity. Yet I support many charities and have for years. Johann Rupert is not a true entrepreneur. His father was. He did not have a trust fund and billions behind him when he started Rembrandt..

Dr Anton Rupert was indeed a true entrepreneur in every respect. Not only that, he had VISION, knowing that the “sea of poverty” – including our neighbours – white SA found itself in under Apartheid was not sustainable.
He did no business with the white government (unlike English and some Afrikaans businesses), actively promoted skills development among all races within the boundaries that Apartheid laws placed on business at the time, and generally was way ahead of his time in thinking and approach.

Rebel, sorry, no, not family.

I am actually a NOBODY.

Doing my own thing for decades, but no trust fund.

So you got 50% … … …

MJ not only did I get no inheritence, but I got nothing from you I’m afraid. Should I check my account..?

Entrepreneurship is an attitude, a way of thinking. The entrepreneurial spirit, the attitude that breeds success, is picked up at home, around the dinner table.

The quality of the discussions around the dinner table determines whether our children become masters or slaves. Successful people have been taught as children to respect and appreciate successful people. Successful people do not attach their own identity to their own inferior material circumstances but rather associate themselves with the position of the successful person.

Successful South Africans were raised in homes where the discussions were about the value that Dr. Rupert and his wife added to society. They take pride in the success of Dr. Rupert and his family. They are proud of Mr. Johann Rupert. His material wealth is a beautiful thing, a wonderful success of hard work and determination and high moral values. Successful people are not envious or jealous, only proud. They do not look for excuses in other peoples success.

The entrepreneurial spirit, the healthy positive attitude is built over generations. Governments cannot create or stimulate it, only parents can. Likewise, the slave mentality also runs in families. The slave mentality is the envy, greed and sense of entitlement, handed over within the family, from one generation to the next.

My view is different from the other commentators. In 1986 I started a business buying, refurbishing and selling used industrial machines. I had no money so I drew cash from ATMs and repaid it when I sold the machine. Every cent spent was profit lost so I modified a trailer, picked up casual workers at the roadside and transported the machines myself. To cut a book of stories short I could not get any assistance financially from anywhere. However I knew that the day would come when my bank would phone me and offer me funds. It did. I turned them down. I decided that if I could get past the hard part without them then I did not need them now. 33 years on and the business now operates internationally with its own branded machines and still without a cent of anyone else’s money. Essentially we have a secondary business because being self funded we make the savings/profit that we would otherwise be paying the banks and we earn interest on excess cash flow. If a business is dependent on outside funding to succeed it is on risky ground. If it is doing well then it should not need funding. A good nights sleep is worth a lot of money, owing nothing is a good way to achieve that. Self funding is an excellent way to stay 100% focused, control growth and expenses. It increases gratitude and deminishes greed and ego. (Steinhoff?) Shakespeare’s Hamlet: “Neither a borrower nor a lender be; For loan oft loses both itself and friend, and borrowing dulls the edge of husbandry.”

Most people do not know the background of the Ruperts. Mr Johan Rupoert’s grand father was a lawyer in Graaff Reinet. During the depression years (early 1930’s)their financial situation was so dire that Mr Rupert put his car on blocks – to save paying m/v license fees.

Mr Anton and his wife, Huberte experienced the depression and WW11 first hand – they learned to live frugally and save whatever they could. Mr Johan Rupert emphasized that point in his Chairman’s interview. In our current consumer society those attributes are not really appreciated.

Sensei is correct – Mr Anton Rupert, in the 1940/50’s toured the W/Cape platteland selling shares to farmers and towns people – raising capital for his then small, but growing business. In the process he has made many Afrikaners millionaires through their shareholding in various Rupert companies. The original Rembrandt company started out small but by putting bones and meat to the skeleton he created a sustainable and flourishing business. It was not instant gratification – their accumulated wealth was created over years of diligent effort.

Mr A & Mrs Rupert contributed substantially to the general welfare of society – Rupert Art Museum, Historical Houses – preserving heritage houses and character of Stbosch, contributed towards rebuilding of Church Street, Tulbagh after the 1969(?)earthquake, sponsored medical services to Lesotho. Likewise, they financially helped many poor but deserving students – but with two provisos: the student must provide the first 50% of the funds required and they will match it Rand for Rand. Second proviso: every student must, when successfully qualified, also assist another deserving student on the same basis – a multiple effect. The did not believe in handouts.

The above sounds old school but it is tried and tested principles for an enduring life.

That being said and all that, for a country to succeed in this world it has to organically generate,give birth to millionaires and those millionaires will expand the economy and grow the country.Just my view.

Funding is a problem in South Africa. We just need funding,government funding specifically.

But that’s not gonna happen in Suid-Afrika,yet.

Nonsense! If you’re going to wait for a handout you will die penniless.

Anton Rupert said that you should never rely on government to be successful

Johan’s wealth was propped up massively by PIC and other state institutions. The same institutions that helped them, they don’t want them to help others.

@DeonK – this statement of Anton Rupert could be a bit of a generalization, especially in the current South Africa!
@Zinger – please will you substantiate your two statements, I would like to know the facts behind your thinking.

The ability/inability to raise funding is what separates the wheat from the chaff. Entrepreneurship and your views about money is a mindset.

If anyone uses lack of funding as an excuse, you don’t deserve to be in business for yourself. I started a business with zero capital in the midst of the financial crisis. When funding presents itself as an obstacle it should move you to think creatively and out of the box on how to overcome it. It will teach you real skills and reveal how determined you are and your ability to create opportunities. It may take you longer/along a different path initially but if you are patient and determined enough you will get there.

Unfortunately, these days most people wants instant solutions/gratification/success and not get their hands dirty and do whatever it takes

100% true.

Poor Wooggooddly obviously thinks that an entrepreneur who has not become a billionaire is a failed entrepreneur.

Some sad comments in this lot. Seems to be divided into achievers and dreamers / losers.

I’m not necessarily begrudging Rupert’s success and no doubt very high salary but on reading that on the third day of the new year
“Top Canada CEOs have already earned more than average worker’s 2017 salary” https://www.theguardian.com/world/2017/jan/03/canada-ceo-pay-2017-earnings-average-worker has given me pause for thought.

40 years ago when I was an average sale rep I could afford to eat out often, used Eau Savage aftershave and bought a new silk business shirt and ties every few months. The cost of living was far more manageable than today and most people could easily afford a bond and car.

Inflation has decimated the middle-class and is getting worse with most people a salary cheque or two away from the street. My point being that without these huge salaries, staff could be paid more or/and cost of goods/services could be reduced.

The EFF has actually some validity in this respect and that the “1%’ has become a common term indicates just how much this phenomenon is destroying global economies.

Agreed.

It’s a fundamental – and dangerous – distortion of society when just a few firms or individuals or polical parties corner the market.

Sooner or later this enormous concentration of power starts being used in malevolent ways. The first one usually being to entrench the asymmetric privilege.

Sound familiar?

What to do a out this, is no easy matter.

So who bailed out RMB when they made loans to entities that was at high risk of not paying back the money, daddy Anton? Go listen to the interview. Johann wasn’t bailed out by his dad, who refused to bail take on his son’s risks, he had to go ask Gordon. So much for the view that he had big daddy behind him.

I have always been in awe of the Rperts. I am no entrepreneur, my forte being stocks and shares,but I do very carefully read up on and keep up to date with enrepeneurs.
The first real money I made on the JSE was in the 1980’s when my Rembrandt shares were split into REMGRO AND rembrandt Beherend.
I have founded my investment philosophy on following honorable gifted men,and Rupert. Jannie Mouton, Wiese ( sorry about BRAIT, but PEP and Shoprite made up for it)amongst others like Dippenaar and cLAASSEN OF cAPITEC,and Motsepe of ARM, have enabled me to live a very comfortable retirement at age 50. my present age being 76, and still very comfortable, thank you.

At the end of the day a lot depends on the nature of the startup – whether it is capital intensive or not.

My comment from the angel/venture capital side would be that it is a lot easier starting any business when there is a full recourse surety standing behind the loans. But after that, all the old rules count. Jockey being the PRIMARY determinant of success.

Try and get normal financing, as a highly experienced technician, on a R15m capex panel beater outfit. Whether you are pink or black or blue or green by skin color : the answer will be no, without a surety or 200% cash security cover. We have through Basel rules tied our banks into only funding those that actually just want funding as a tax shelter.

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