- Participant: Paul Kent
- Firm: Sureswipe
- What they do: Sureswipe is considered one of South Africa’s first card Fee Service Suppliers (PSPs), established to make card fee acceptance straightforward and accessible to all impartial retailers and repair suppliers.
- Est: 2008
- Turnover: R251 million
- Go to: sureswipe.co.za
4 years in the past, Paul Kent acquired a Request for Proposal (RFP) from a tier one retailer. He ran across the workplace high-fiving everybody. Sureswipe had made it. They have been formally on the map.
Two days later, Paul and his COO, Richard Flack, turned the RFP down, selecting to not pitch for the enterprise, though it might have been an enormous deal in the event that they’d secured it. It took two brutal days to make the choice, however finally, Paul and Richard understood that generally you must say no to enterprise, significantly if it doesn’t align together with your imaginative and prescient.
“I used to be so excited, however Richard instantly stated, ‘let’s consider carefully about this earlier than making any choices,’ and so we did. We went again to our imaginative and prescient to make card acceptance straightforward and accessible for all impartial retailers. The extra we thought in regards to the RFP, the extra we realised that we’re not geared to service tier one retailers. Our group has a deep reference to independents. That’s who we wish to help and the place our experience lies. Our enterprise mannequin is geared to help that market sector. Extending our focus to tier one retailers would require a change in our enterprise and a brand new division to service them. It wasn’t the suitable transfer for us.”
Paul learnt what many profitable entrepreneurs earlier than him have found: In enterprise, what you say no to is as necessary as what you tackle. The extra targeted you’re and the higher you perceive your core clients, the extra efficiently you’ll service them. That’s the muse of a sustainable, high-growth firm.
It took Paul and his group 5 years to get three 000 Sureswipe card fee machines into the market. They have been rising quickly by the point they acquired the RFP. As we speak they’ve 10 000 gadgets available in the market, and count on to hit 30 000 inside three years. The enterprise has grown 30% within the final yr alone.
Listed here are the teachings Paul has learnt since launching Sureswipe in 2008, from the leanest method to begin (and run) a enterprise, to minimising buyer churn and maximising market loyalty.
1. Launch an answer, not only a firm
The thought for Sureswipe was born inside Healthbridge, an organization that processed claims between docs and medical insurers. It was the mid-2000s and medical aids have been altering. The place beforehand docs submitted on to medical aids, co-payments and restricted annual advantages compelled medical practices to start out accepting money and card funds.
Sureswipe was launched as a division that provided card fee machines to help this shift. Paul, who was heading up the enterprise growth key account group at Healthbridge, realised that there was a a lot larger market that wanted a value-for-money, excessive service degree card fee resolution, and that was impartial retailers.
“Rising up within the UK, I spent lots of time in my grandfather’s fruit and florist retailer and in highschool I labored weekends at a neighborhood clothes retailer. Consequently I understood the challenges of retail, significantly the time-bound administrative burdens,” he says.
Paul researched the market and developed a worth proposition primarily based on two key elements. First, though paying for funds is a grudge buy, significantly for small, impartial retailers, cash-based companies that undertake card funds usually expertise a 50% improve in month-to-month turnover. Second, impartial retailers with level of sale (POS) machines have been paying a 5% transaction charge, whereas people who hadn’t adopted POS programs weren’t the core focus of banks. Paul discovered a annoyed buyer base longing for another service supplier.
“Most retailers both thought that card funds have been too costly, or that they may solely entry POS machines by way of their banks. They’d usually wait as much as 30 days for a machine, and if it broke, it might be one other week earlier than a technician got here to repair it. At the moment, the big banks weren’t geared to service that market.”
With a transparent worth proposition in thoughts, Paul satisfied Healthbridge to ring-fence Sureswipe and launch it as a separate enterprise. In October 2008, Sureswipe opened its doorways with Heathbridge as the bulk shareholder. The enterprise mannequin had two core focuses: Changing cash-based companies and switching impartial retailers who already had POS programs however have been dissatisfied with their present service suppliers.
“We have been strategic in choosing the right market, however luck additionally performed an element,” says Paul. “After we entered this area, the same firm was launched to give attention to tier one and two retailers. However, the banks have been extremely aggressive in that market section and new entrants discovered it tough to compete. We focused a market that was largely ignored and right now, 70% of our enterprise is from single-store homeowners.”
Whereas they have been fine-tuning their providing, Paul and his group discovered that their clients have been so grateful for another resolution that they tended to forgive start-up wobbles as Sureswipe discovered its groove.
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Stress-testing your small business
Within the early days, the Sureswipe group leveraged its relationship with Capitec Financial institution to safe conferences and make gross sales. “We’re not a financial institution, so we want a banking sponsor to assist us meet laws and function inside this market,” explains Paul. “When Capitec secured its licence to do service provider buying, they’d no clients and have been creating their product in-house. They have been additionally on the lookout for a distribution companion. We aligned Sureswipe with Capitec as our sponsor and supplied them with a distribution companion and a strong footprint within the medical market — it was an ideal resolution.”
Once you’re coping with folks’s cash, you want a robust degree of belief, so the connection with Capitec was important whereas Sureswipe constructed its personal model. “It wasn’t at all times straightforward,” says Paul. “We had six individuals who went from retailer to retailer explaining who we have been and what we did. At one restaurant, two off-duty cops heard considered one of our reps and determined it was a con. They arrested him and he referred to as me from the again of the police van. I needed to persuade them that we have been a legit enterprise earlier than they’d let him go.”
After 5 years, Sureswipe and Capitec discovered that they have been competing with one another. When the contract got here to an finish, each events determined to not renew it. However Sureswipe had three 000 gadgets available in the market, all of which have been on Capitec’s know-how platform. By not renewing the settlement with Capitec, Sureswipe wanted to recontract all three 000 of their clients. It was an enormous mission.
“It was additionally an enormous lesson for us, and I’m glad it occurred once we solely had three 000 machines available in the market. We realised the danger in working with one financial institution, significantly as a result of the know-how that processed our clients’ funds wasn’t our personal. We wanted to licence our personal know-how and develop a twin sponsor system to mitigate this threat.”
The whole mission took greater than six months to finish. “Individuals within the business have been sceptical — a mission of this scope had by no means been executed earlier than,” says Paul. “We began with a small, ring-fenced group. By the tip of the six months each worker was engaged on the migration of consumers onto the brand new platform.”
The lesson: There’ll at all times be challenges, significantly throughout development phases. Stress-test your small business as a lot as attainable. The sooner you see a possible threat or drawback, the earlier you may handle it and implement an answer, even when it means adjusting your small business mannequin.
To emphasize-test your small business, ask your self these 4 questions frequently: What occurs if every part goes proper (ie, we develop too quick)? If I take away one piece that’s central to the performance of my enterprise (that is what Sureswipe confronted), what occurs? Is my enterprise valued (ie, are you aware in case your consumers love you and why)? What’s the worst that might occur?
2.Variable value fashions hold companies lean
One in every of Sureswipe’s success elements is that its product isn’t leading edge — what the enterprise does just isn’t distinctive, and the know-how is out there to be licensed. Nothing needed to be constructed from scratch.
This allowed Paul and his group to launch the enterprise with a variable value mannequin, outsourcing gross sales, the decision centre and even their know-how.
“The most important outlay was the preliminary funding into the product, funded by Healthbridge, however inside a yr we have been cashflow optimistic,” says Paul. “We’ve been funding ourselves organically ever since.”
On the time, launching the enterprise wasn’t a giant threat as a result of it didn’t contain an enormous upfront funding. Healthbridge was blissful to see the place it went. Paul and his group of eight stored prices down and slowly constructed up the enterprise to the purpose the place it grew to become larger than its preliminary shareholder.
“It was the perfect enterprise mannequin to start out with. Don’t attempt to construct the most important — do the minimal required and don’t use lots of capital. If you happen to use lots of capital upfront shareholders will put you beneath immense stress. We have been beneath no stress. We weren’t drawing something; we have been just a bit aspect factor that will or could not work.
“We have been the primary mover on this area in South Africa, however every part we do has been executed some other place. The machines are sourced from a number of corporations on this planet that manufacture them. The mPOS machine is licensed from an organization in Iceland. Software program is licensed. The whole lot Sureswipe wants exists — it’s only a case of sourcing it and constructing a strong service-delivery enterprise across the tech.”
With out the burden of heavy analysis and growth and different start-up prices, Sureswipe channels all internally-generated money into discovering methods to do issues higher and sooner for his or her clients.
“As we speak fintech is a buzzword. Disruption inside the monetary companies sector is predicted. Ten years in the past, fintech wasn’t even a phrase. Everybody thought you may solely take care of banks.
“What we had going for us once we launched was our card machines. Individuals understood them so we didn’t want to coach our market on what we did. We simply wanted to make them conscious that there was a substitute for banks, and since we targeted on an untapped market, there weren’t actually rivals within the area. We weren’t attempting to usher in new know-how like cellular funds. The market wasn’t prepared for that in 2008.”
Sureswipe launched with conventional stand-alone card machines, adopted by Built-in funds for bigger retail franchise shops, cellular MOVE card readers for companies on the go, and Sureswipe POS LITE, an app-based point-of-sale software program for start-ups and smaller retailers.
“When it got here to mPOS, we have been blissful to be followers. We had a product able to launch, however we made the choice to attend for the banks to launch their choices and educate the market first. We have been then in an ideal place to be quick followers — with no need to coach the market ourselves.
“It was a strategic play and it labored for us. We’ve additionally had good development in our MOVE product and we’re doing the identical with QR code funds. There have been trailblazers available in the market who’ve executed phenomenally nicely, however they function on separate platforms. We will now supply a QR code that accepts virtually any QR Pockets.
“Alternatively, a peer-to-peer cellular pockets was developed inside Healthbridge that by no means gained the traction wanted for achievement. It was too early for the market and deep pockets have been wanted to fund the enterprise. The enterprise had an amazing group that labored on the mission and Sureswipe benefited from accessing them.”
As we speak, Sureswipe has built-in many features that have been beforehand outsourced. “Our variable cost-model allowed us to enter the market with out enormous monetary backing, however the place it’s made monetary sense, or it gives us a robust aggressive benefit, we’ve got introduced companies or merchandise in-house.”
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three. Perceive — and leverage — your aggressive benefit
Since getting into the market ten years in the past, transaction charges have greater than halved. That is good for retailers, however it makes the area extra aggressive for service suppliers who should keep high quality merchandise and repair as revenue margins slim.
Sureswipe’s worth proposition is captured in a single sentence: They arrive for value, they keep for service. “The whole lot we do wants to stick to that,” says Paul. “We have to convey know-how to market at a lower cost level than incumbents are providing, after which safe buyer loyalty with our superior service providing.”
Inside an more and more aggressive area, Sureswipe just isn’t at all times probably the most cost-effective resolution available in the market, however a give attention to service and comfort implies that retailers are keen to pay a premium if the providing is nice for his or her enterprise.
“Our focus is worth for cash, not value. Retailers need to have the ability to settle for any authorized forex from their clients. As a service supplier, we wanted to determine a manner to try this in probably the most cost-effective manner attainable, with out growing our administrative burden because the enterprise grew. With its low margins, this enterprise solely works at scale. If our inner prices escalate with every new person, that’s not a scalable enterprise.”
So, what’s Sureswipe’s aggressive edge? “We’ve at all times understood retailers,” says Paul. “Their greatest burden is time — they by no means have sufficient of it. You probably have an unreliable product, or an administrative burden, you’re primarily dropping time and income.”
This was the enterprise’s entry into the market, however development has been the results of constantly fine-tuning Sureswipe’s providing primarily based on its information of buyer wants. “The extra time we spend understanding our goal market, the extra we’re in a position to recognise their ache factors. The whole lot we do is targeted on simplifying the lives of shops and serving to them to develop their companies.”
In a extremely aggressive area, you might want to create an edge for your self. Some companies create a moat across the enterprise with tech, however usually there’s a competitor who can do issues sooner and cheaper.
Profitable corporations discover a totally different aggressive edge, one which focuses on delivering worth to the shopper past the product.
Sureswipe has a two-pronged method. First, comfort and ease are a should — if Sureswipe isn’t making the lives of its purchasers simpler (and extra handy for his or her clients in flip), then the enterprise isn’t dwelling as much as its core values. The second is maintaining prices as little as attainable. Sureswipe wants to have the ability to supply its services to the market at extremely aggressive costs. That is solely attainable if the enterprise has lean operations and is scalable.
So, how have Paul and his group managed to supply distinctive service whereas maintaining prices low? “It’s good to sweat the main points,” he says. “This panorama has turn into more and more aggressive. Banks have caught as much as us. An impartial retailer can choose up the telephone and the financial institution will ship somebody the next day to talk to them.”
To counter competitors, Sureswipe focuses on service and price to serve. It’s one factor buying a buyer, it’s one other maintaining them, and this has been the place Sureswipe’s group focuses their ardour and vitality.
“We’ve discovered that complicated constructions hinder service ranges and so we’ve stored our construction flat. Our inner tradition is extraordinarily necessary for customer support. Hiring the suitable people who find themselves enthusiastic about retail and enterprise means we’re in a position to service our purchasers higher. We care about their companies. 86% of calls get resolved by our name centres. If they will’t clear up the issue, a technician is shipped to the shop to repair or swap a defective machine.”
From a price perspective, Sureswipe must constantly get to market cheaper than earlier than, whereas concurrently providing merchandise which might be higher, extra seamless and extra built-in into the enterprise.
“There may be at all times an preliminary value when introducing a brand new product, whether or not it’s a tool or an app. Nevertheless, every new providing will increase our purchasers’ income, which in flip will increase our income. Scale is essential — we’re within the crimson till we obtain scale.
“We’ve needed to be ruthless about reaching nice service ranges at low prices. We don’t imagine in both low value or good service — we have to ship each. If one thing is simply too costly for us or our purchasers, we both don’t do it, or we discover a more cost effective method to convey it to market.”
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four. Guarantee you might have a ‘stickiness’ issue
One of many risks of a extremely aggressive market is that it’s easy for patrons to change service suppliers if they’re solely taking a look at value. If a retailer solely has a POS machine with Sureswipe for instance, it may be swopped out for one more system. With this in thoughts, Paul began taking a look at value-added companies that improve model loyalty and scale back churn.
“We name it preventable churn,” says Paul. “If enterprise homeowners have a POS system and take only one extra product from us, the stickiness issue is exponential. This may embody a money advance product, or creating a present and loyalty programme by way of our platform, or each. As a enterprise proprietor you may nonetheless change to a different service supplier, however it’s extra difficult and also you’re receiving a bundle of companies that each one add worth to your small business.”
To attain this, Sureswipe has partnered with Retail Capital to supply its clients money advance merchandise, whereas a loyalty programme permits shoppers to swipe their loyalty playing cards and reward playing cards in any respect Sureswipe terminals, accumulating factors.
“We’ve seen a small improve in income since we added these choices, however extra importantly, our clients’ revenues have elevated. For instance, if somebody has a present card, they’ll usually spend a bit additional in-store as nicely. Our service provider low cost charge means we provide these merchandise to our clients at a low value, however our churn price has lowered by 70%.”
The whole lot Sureswipe introduces to the market relies on a long-term view. “We provide a commoditised product and so our success depends on scale and quantity. So long as you are able to do that on the proper value, with the suitable returns, you might have a sustainable enterprise. These additional merchandise scale back churn, clear up ache factors for our clients and in the long run will improve our income.”
Paul’s long-term focus is consolidation. “We’ve been on this area for ten years, we’ve got an amazing buyer base, and we imagine that we are able to consolidate our market. Our long-term view informs any determination we make about acquisitions or mergers.”
In 2016, Sureswipe acquired Harmony, an organization working software program that built-in banks with retailers’ until programs.
The acquisition enabled Sureswipe to cut back prices by providing clients one level of contact for his or her POS system, tills and the processing between the 2. “It removes complexities from the worth chain, reduces prices and reduces retailer admin.”
With new era mPOS choices encroaching on Sureswipe’s standalone gadgets on the one aspect, and Built-in funds on the opposite, Sureswipe is successfully cannibalising its personal market, however as Paul is fast to level out — that’s the concept.
5. At all times look to the long run
Sureswipe’s potential is big. With 10 000 gadgets available in the market, the enterprise will facilitate R10 billion in transactions this yr alone, which accounts for under 6% of its goal sector, 2% total, and 1% if you happen to think about that the most important competitor to digital funds isn’t different service suppliers or banks, however money.
“Markets change and adapt, significantly on this area the place there was unimaginable innovation and development over the previous few years. We all know that in the long term, if we wish to maintain development, we might want to cannibalise the stand-alone gadgets, which we’re already doing. Finally although, what we actually wish to convey to market are merchandise that may compete with money.”
Based on Paul, every part comes down to 2 issues: Comfort and price. mPOS is a decrease value choice; contactless funds are all about comfort. Sureswipe wants each — and to maintain waiting for see what’s subsequent for his or her market.
“Within the UK this yr, for the primary time, there have been extra digital funds than money, because of the comfort of contactless purchases for small ticket objects. This can be a large driver for us.”
To remain forward of the sport, Paul focuses on the enterprise’s capabilities, and his personal. “I would like to concentrate to what’s occurring internationally and the way we are able to adapt our product choices primarily based on worldwide improvements, however I additionally must constantly give attention to private development.
“One in every of my greatest fears is that the enterprise will outgrow me. It’s a typical founder’s worry, and for good cause. Many founders are nice at launching companies, however they don’t possess the talents the enterprise must develop.”
To keep away from this pitfall, Paul has consciously developed his enterprise acumen over the previous 15 years, starting with Wits Enterprise College’s Administration Development Programme in 2003, and finishing his MBA in 2015 by way of IE Enterprise College in Madrid.
“I believe it’s important for all entrepreneurs and enterprise homeowners to maintain the pencil sharp and study as a lot as attainable. If I reached a stage the place I didn’t suppose I used to be the suitable particular person for this place, I’d step again. We’ve constructed a group to enhance one another; I’m not a particulars man, however somebody who’s can fill that position. A part of my journey has been working my manner out of a job by bringing in somebody who can do what I’m doing, and sometimes they do it higher than me.
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Grow to be an professional in a distinct segment
Our give attention to the impartial retailer area has given us a deep understanding of our clients and their wants. We’ve had worldwide corporations which might be all for buying us state that corporations in different markets don’t have our degree of understanding for every component of the enterprise.
Take a look at issues with recent eyes
We have been naive about banking and monetary companies; we’re extra retailers than bankers. This meant we didn’t have legacy programs once we launched, which allowed us to have a look at the impartial retail sector with out preconceived concepts and ask: What does this market want and the way can we service it?
At all times search to take away ache factors out of your clients, regardless of how small
In our sector, as companies develop, their homeowners return to the financial institution every year to renegotiate their charges. We eliminated this administrative burden by signing them up on a sliding scale, and as they develop, they robotically transfer into new segments and their charges drop — each new entrants and incumbent banks have copied this pricing mannequin.
Perceive the place you’re innovating and why
We knew we didn’t must innovate on the tech aspect. The whole lot we wanted existed, and it was far more cost effective to licence merchandise than construct from scratch. As a substitute, we innovated round our enterprise mannequin and repair providing.
The whole lot begins together with your folks
Our staff are pleasant and useful, though we now have a workers complement of 139 folks. We foster a ardour for studying, promote from inside, the place attainable, and champion a can-do angle. We’re a service-based organisation, which suggests everybody’s visions must align with our service purpose.
Concentrate domestically and internationally
Learn loads, discover out what’s trending, be nicely networked and have associations abroad. For instance, Mastercard and Visa tell us what’s occurring in different markets. We’re not on the forefront of know-how, however we have to know what’s occurring with know-how to have the ability to comply with it.