Very important Stats
- Participant: Paul Kent
- Firm: Sureswipe
- What they do: Sureswipe is one among South Africa’s first card Cost Service Suppliers (PSPs), established to make card cost acceptance simple and accessible to all unbiased retailers and repair suppliers.
- Est: 2008
- Turnover: R251 million
- Go to: sureswipe.co.za
4 years in the past, Paul Kent obtained 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, although it will have been an enormous deal in the event that they’d secured it. It took two brutal days to make the choice, however in the end, Paul and Richard understood that generally it’s important to 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 simple and accessible for all unbiased 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 crew has a deep reference to independents. That’s who we wish to assist and the place our experience lies. Our enterprise mannequin is geared to assist 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 correct transfer for us.”
Paul learnt what many profitable entrepreneurs earlier than him have found: In enterprise, what you say no to is as vital as what you tackle. The extra centered you’re and the higher you perceive your core prospects, the extra efficiently you’ll service them. That’s the inspiration of a sustainable, high-growth firm.
It took Paul and his crew 5 years to get three 000 Sureswipe card cost machines into the market. They have been rising quickly by the point they obtained the RFP. At present they’ve 10 000 gadgets out there, and anticipate 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 strategy 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 medical doctors and medical insurers. It was the mid-2000s and medical aids have been altering. The place beforehand medical doctors submitted on to medical aids, co-payments and restricted annual advantages compelled medical practices to begin accepting money and card funds.
Sureswipe was launched as a division that provided card cost machines to assist this shift. Paul, who was heading up the enterprise improvement key account crew at Healthbridge, realised that there was a a lot larger market that wanted a value-for-money, excessive service stage card cost answer, and that was unbiased retailers.
“Rising up within the UK, I spent a whole lot of time in my grandfather’s fruit and florist retailer and in highschool I labored weekends at a neighborhood clothes retailer. Because of this 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 components. First, though paying for funds is a grudge buy, significantly for small, unbiased retailers, cash-based companies that undertake card funds sometimes expertise a 50% improve in month-to-month turnover. Second, unbiased retailers with level of sale (POS) machines have been paying a 5% transaction price, whereas people who hadn’t adopted POS methods weren’t the core focus of banks. Paul discovered a pissed off buyer base anticipating another service supplier.
“Most retailers both thought that card funds have been too costly, or that they may solely entry POS machines by means of their banks. They’d usually wait as much as 30 days for a machine, and if it broke, it will be one other week earlier than a technician got here to repair it. At the moment, the massive 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 unbiased retailers who already had POS methods 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. “Once we entered this area, an identical firm was launched to concentrate on tier one and two retailers. However, the banks have been extremely aggressive in that market phase and new entrants discovered it tough to compete. We focused a market that was largely ignored and in the present day, 70% of our enterprise is from single-store house owners.”
Whereas they have been fine-tuning their providing, Paul and his crew discovered that their prospects have been so grateful for another answer that they tended to forgive start-up wobbles as Sureswipe discovered its groove.
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Stress-testing what you are promoting
Within the early days, the Sureswipe crew leveraged its relationship with Capitec Financial institution to safe conferences and make gross sales. “We’re not a financial institution, so we’d like a banking sponsor to assist us meet rules and function inside this market,” explains Paul. “When Capitec secured its licence to do service provider buying, that they had no prospects and have been growing their product in-house. They have been additionally searching for a distribution associate. We aligned Sureswipe with Capitec as our sponsor and supplied them with a distribution associate and a stable footprint within the medical market — it was an ideal answer.”
Whenever you’re coping with individuals’s cash, you want a robust stage of belief, so the connection with Capitec was important whereas Sureswipe constructed its personal model. “It wasn’t all the time simple,” 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 one among 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 authentic 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 out there, 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 prospects. It was an enormous venture.
“It was additionally an enormous lesson for us, and I’m glad it occurred after we solely had three 000 machines out there. We realised the chance in working with one financial institution, significantly as a result of the know-how that processed our prospects’ funds wasn’t our personal. We wanted to licence our personal know-how and develop a twin sponsor system to mitigate this threat.”
Your entire venture took greater than six months to finish. “Individuals within the trade have been sceptical — a venture of this scope had by no means been executed earlier than,” says Paul. “We began with a small, ring-fenced crew. By the top of the six months each worker was engaged on the migration of shoppers onto the brand new platform.”
The lesson: There’ll all the time be challenges, significantly throughout progress phases. Stress-test what you are promoting as a lot as potential. The sooner you notice a possible threat or drawback, the earlier you possibly can deal with it and implement an answer, even when it means adjusting what you are promoting mannequin.
To emphasize-test what you are promoting, ask your self these 4 questions often: 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 would occur?
2.Variable price fashions hold companies lean
Certainly one of Sureswipe’s success components is that its product isn’t innovative — what the enterprise does shouldn’t be distinctive, and the know-how is offered to be licensed. Nothing needed to be constructed from scratch.
This allowed Paul and his crew to launch the enterprise with a variable price 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 constructive,” 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 completely happy to see the place it went. Paul and his crew of eight saved 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 best enterprise mannequin to begin with. Don’t attempt to construct the most important — do the minimal required and don’t use a whole lot of capital. Should you use a whole lot of capital upfront shareholders will put you beneath immense strain. We have been beneath no strain. We weren’t drawing something; we have been just a bit aspect factor which 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 someplace else. The machines are sourced from a couple of firms on the earth that manufacture them. The mPOS machine is licensed from an organization in Iceland. Software program is licensed. Every thing Sureswipe wants exists — it’s only a case of sourcing it and constructing a stable service-delivery enterprise across the tech.”
With out the burden of heavy analysis and improvement and different start-up prices, Sureswipe channels all internally-generated money into discovering methods to do issues higher and quicker for his or her prospects.
“At present fintech is a buzzword. Disruption inside the monetary providers sector is anticipated. Ten years in the past, fintech wasn’t even a phrase. Everybody thought you possibly can solely take care of banks.
“What we had going for us after 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 centered on an untapped market, there weren’t actually opponents within the area. We weren’t attempting to herald new know-how like cell 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, cell 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 completely happy 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 — without having to coach the market ourselves.
“It was a strategic play and it labored for us. We’ve additionally had good progress in our MOVE product and we’re doing the identical with QR code funds. There have been trailblazers out there who’ve executed phenomenally nicely, however they function on separate platforms. We will now provide a QR code that accepts virtually any QR Pockets.
“Then again, a peer-to-peer cell pockets was developed inside Healthbridge that by no means gained the traction wanted for fulfillment. It was too early for the market and deep pockets have been wanted to fund the enterprise. The enterprise had an amazing crew that labored on the venture and Sureswipe benefited from accessing them.”
At present, Sureswipe has built-in many features that have been beforehand outsourced. “Our variable cost-model allowed us to enter the market with out large monetary backing, however the place it’s made monetary sense, or it affords us a robust aggressive benefit, now we have introduced providers 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, but it surely makes the area extra aggressive for service suppliers who should keep high quality merchandise and repair as revenue margins slender.
Sureswipe’s worth proposition is captured in a single sentence: They arrive for worth, they keep for service. “Every thing we do wants to stick to that,” says Paul. “We have to deliver 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 shouldn’t be all the time essentially the most cost-effective answer out there, however a concentrate on service and comfort signifies 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 worth. Retailers need to have the ability to settle for any authorized foreign money from their prospects. As a service supplier, we wanted to determine a means to try this in essentially the most cost-effective means potential, with out rising our administrative burden because the enterprise grew. With its low margins, this enterprise solely works at scale. If our inside prices escalate with every new consumer, that’s not a scalable enterprise.”
So, what’s Sureswipe’s aggressive edge? “We’ve all the time 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 basically shedding time and income.”
This was the enterprise’s entry into the market, however progress has been the results of constantly fine-tuning Sureswipe’s providing primarily based on its data of buyer wants. “The extra time we spend understanding our goal market, the extra we’re capable of recognise their ache factors. Every thing we do is concentrated on simplifying the lives of outlets and serving to them to develop their companies.”
In a extremely aggressive area, that you must 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 quicker and cheaper.
Profitable firms discover a totally different aggressive edge, one which focuses on delivering worth to the client past the product.
Sureswipe has a two-pronged strategy. 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 prospects in flip), then the enterprise isn’t residing as much as its core values. The second is maintaining prices as little as potential. Sureswipe wants to have the ability to provide its services and products to the market at extremely aggressive costs. That is solely potential if the enterprise has lean operations and is scalable.
So, how have Paul and his crew managed to supply distinctive service whereas maintaining prices low? “It’s essential sweat the main points,” he says. “This panorama has turn into more and more aggressive. Banks have caught as much as us. An unbiased retailer can choose up the cellphone and the financial institution will ship somebody the next day to talk to them.”
To counter competitors, Sureswipe focuses on service and value to serve. It’s one factor buying a buyer, it’s one other maintaining them, and this has been the place Sureswipe’s crew focuses their ardour and power.
“We’ve discovered that complicated buildings hinder service ranges and so we’ve saved our construction flat. Our inside tradition is extraordinarily vital for customer support. Hiring the correct people who find themselves enthusiastic about retail and enterprise means we’re capable of service our purchasers higher. We care about their companies. 86% of calls get resolved by our name centres. If they will’t remedy the issue, a technician is distributed 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 can be higher, extra seamless and extra built-in into the enterprise.
“There may be all the time an preliminary price when introducing a brand new product, whether or not it’s a tool or an app. Nonetheless, every new providing will increase our purchasers’ income, which in flip will increase our income. Scale is important — 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 consider in both low price or good service — we have to ship each. If one thing is just too costly for us or our purchasers, we both don’t do it, or we discover a less expensive strategy to deliver it to market.”
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four. Guarantee you’ve a ‘stickiness’ issue
One of many risks of a extremely aggressive market is that it’s easy for patrons to modify service suppliers if they’re solely worth. 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 value-added providers that improve model loyalty and scale back churn.
“We name it preventable churn,” says Paul. “If enterprise house owners have a POS system and take only one extra product from us, the stickiness issue is exponential. This may embrace a money advance product, or creating a present and loyalty programme by means of our platform, or each. As a enterprise proprietor you possibly can nonetheless change to a different service supplier, but it surely’s extra difficult and also you’re receiving a bundle of providers that every one add worth to what you are promoting.”
To realize this, Sureswipe has partnered with Retail Capital to supply its prospects money advance merchandise, whereas a loyalty programme permits customers 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 prospects’ revenues have elevated. For instance, if somebody has a present card, they’ll typically spend a bit further in-store as nicely. Our service provider low cost price means we provide these merchandise to our prospects at a low price, however our churn charge has lowered by 70%.”
Every thing Sureswipe introduces to the market is predicated 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 price, with the correct returns, you’ve a sustainable enterprise. These further merchandise scale back churn, remedy ache factors for our prospects 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, now we have an amazing buyer base, and we consider 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 methods.
The acquisition enabled Sureswipe to cut back prices by providing prospects 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 technology 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. All the time look to the longer term
Sureswipe’s potential is large. With 10 000 gadgets out there, the enterprise will facilitate R10 billion in transactions this yr alone, which accounts for under 6% of its goal sector, 2% general, and 1% when you contemplate 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 progress over the previous few years. We all know that in the long term, if we wish to maintain progress, we might want to cannibalise the stand-alone gadgets, which we’re already doing. In the end although, what we actually wish to deliver to market are merchandise that may compete with money.”
In line with Paul, every part comes down to 2 issues: Comfort and value. mPOS is a decrease price possibility; contactless funds are all about comfort. Sureswipe wants each — and to maintain looking forward to 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. It is a huge driver for us.”
To remain forward of the sport, Paul focuses on the enterprise’s capabilities, and his personal. “I want 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 concentrate on private progress.
“Certainly one of my greatest fears is that the enterprise will outgrow me. It’s a standard founder’s worry, and for good cause. Many founders are nice at launching companies, however they don’t possess the abilities 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 means of IE Enterprise College in Madrid.
“I believe it’s important for all entrepreneurs and enterprise house owners to maintain the pencil sharp and study as a lot as potential. If I reached a stage the place I didn’t suppose I used to be the correct particular person for this place, I’d step again. We’ve constructed a crew to enrich one another; I’m not a particulars man, however somebody who’s can fill that function. A part of my journey has been working my means out of a job by bringing in somebody who can do what I’m doing, and infrequently they do it higher than me.
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Turn out to be an knowledgeable in a distinct segment
Our concentrate on the unbiased retailer area has given us a deep understanding of our prospects and their wants. We’ve had worldwide firms which can be all in favour of buying us state that firms in different markets don’t have our stage of understanding for every factor of the enterprise.
Take a look at issues with contemporary eyes
We have been naive about banking and monetary companies; we’re extra retailers than bankers. This meant we didn’t have legacy methods after we launched, which allowed us to take a look at the unbiased retail sector with out preconceived concepts and ask: What does this market want and the way can we service it?
All the time search to take away ache factors out of your prospects, regardless of how small
In our sector, as companies develop, their house owners return to the financial institution annually to renegotiate their charges. We eliminated this administrative burden by signing them up on a sliding scale, and as they develop, they mechanically 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. Every thing we wanted existed, and it was far less expensive to licence merchandise than construct from scratch. As a substitute, we innovated round our enterprise mannequin and repair providing.
Every thing begins together with your individuals
Our workers are pleasant and useful, although we now have a employees complement of 139 individuals. We foster a ardour for studying, promote from inside, the place potential, and champion a can-do perspective. We’re a service-based organisation, which implies everybody’s visions must align with our service objective.
Listen regionally and internationally
Learn lots, 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 observe it.