In 1999 South African Lorimer Gowar noticed a gap in the market for customised animal health solutions for meat producing farmers, and started Larrem. Today the company manufactures nutritional supplements and feed additives for animals.[hidepost=9][/hidepost]
Gowar realised that by diversifying his business offering, he can protect his company from fluctuating agricultural markets. For example, he has developed nutritional products, such as an instant porridge, to assist with school feeding programmes. He has also launched a non-chemical, biodegradable product for human waste.
In addition, the company has expanded into new markets in the rest of Southern Africa and currently supplies clients in Botswana, Namibia, Angola, Zambia, Zimbabwe and Mozambique.
Gowar is one of the finalists for the 2014 Sanlam/Business Partners Entrepreneur of the Year award. How we made it in Africa asks him about some of the business lessons he has learnt.
You’ve grown your business beyond South Africa’s borders; describe the potential you see in these markets as well as some of the challenges you are facing.
African markets are very close to my heart; I believe the future bread basket of the world is in Africa and needs to be developed properly and efficiently. There are so many animals in Africa that are being held as commodities instead of being used in the production of the meat sector. For example, rural villages in Africa often have animals for subsistence farming and are not being informed or educated on the financial [benefits] of how ‘a calf a year’ will bring income into the area. Similarly, with the indigenous chickens around the houses, there is no access to affordable quality products that promote egg production, chick production or chick growth of these birds. Hence my business offers villages access to these promoters to get returns/meat from their chickens around the houses.
Most African countries are supplied medications via the East or European countries. This leaves a huge market open and Larrem has extremely competitive products in innovation, quality and price.
The current drawback is advertising to the right market into Africa or the time constraints to attend agricultural shows and expos as they happen without a lot of publicity. I have to become more involved with either a marketing agency or promotional company that can advertise and advise when and where to promote my products more efficiently. Time in front of clients needs to be achieved and by aligning myself with certain players in certain markets I will have a financial benefit to that country and their clients.
Is there a secret to your success in these countries?
There is a secret to my success of doing business in Africa: treat people with absolute dignity, train them properly in the use of the products (always be available for training and information days), supply quality products and spend time with the client ensuring that every client feels special. There are so many friendly and caring people in Africa and by treating them as equals in my business and adopting the principle of ‘partners in production’ my sales have increased mainly due to word of mouth.
Involvement with local government in countries is an absolute critical measure in African markets. If these departments are aware of what you are trying to achieve the marketing becomes so much easier.
My biggest lesson I have had in dealing with African clients is the financial management in the sale of products: extremely important to a small business. I have tried through the years to sell on a guaranteed ‘cash up front’ basis, rather than a credit relationship. Larger orders are procured on a letter of credit.
‘Don’t put your eggs in one basket’ – as cliché as it may sound – has been my key to survival and ultimately success: I diversify between markets and between seasons. In the agricultural sector it is especially difficult to reach an economic equilibrium because it is so unpredictable… I have realised that with my extensive range of products for different agricultural sectors my business has been able to cushion the worst effects of hard economic times.
What’s the strangest thing you’ve ever done as an entrepreneur?
Funny you should ask; I have an amusing tale to tell. One of the chief selling points of my product for pit-latrine digesting, Microba, is its focus on safety to the environment and to children. It is not a chemical, as most are used to. To get this point across to a rural community was quite a challenge, so I took the bottle with the product, opened it and took a huge swig from it. My, did that create gasps of disbelief, shock, amusement and it ended with a spontaneous roar of laughter. I suppose the point was taken as I supply plenty of rural villages now.
Is there anything you wish you knew about entrepreneurship before you started?
I think in hindsight everything that I had accomplished and experienced in corporate situations and farming, before starting my company over fifteen years ago, had prepared me for developing, manufacturing, packaging and selling my products; my shortfalls were mainly due to unscrupulous persons in the business world… I always naively considered a handshake as good enough to do business but after a few bad business dealings I had to follow the route of contractual dealings with my clients.