Brad Magrath on the power of entrepreneurship and building recession-proof businesses
The unprecedented emergence of the pandemic has impacted many entrepreneurs, forcing them to reimagine how they operate their businesses. In the midst of all this, many have found themselves questioning the value of pursuing entrepreneurship — a journey often only taken by the courageous few.
To demystify this viral yet often misunderstood topic, we spoke to Brad Magrath, co-founder and former CEO of Zoona to learn more about his exciting entrepreneurship journey. Born in Zambia in a family of four children, Brad grew up passionate about pursuing his value for creating equitable environments. Having grown up in Africa, he often observed how a lack of inclusion created inequality, and a disconnect between talent, hard work and opportunity. With time, he realized that entrepreneurship would be the gateway towards empowering more youth and unleashing Africa’s economic potential. Together with his brother, they grew Zoona to operate in 6 markets, transacted over $3 billion dollars, had more than 3 million active customers and generated more than 5,000 jobs! In this edition of our Member Spotlight, Brad opens up about the greatest lessons he has learned and the key steps he believes can help entrepreneurs build a recession-proof business.
It’s been over 15 years since you co-founded Zoona. What has the journey been like for you?
It has been a really incredible journey with a number of successes and setbacks. When we first started, I was driven by my value for creating a more equitable environment. This became more apparent over the years as we created employment and increased financial inclusivity. If I’m also being honest, I think I also turned to entrepreneurship to become my own boss — but very quickly realized that in your own business you are not your own boss, everyone else is!
When we started, we didn’t realize how difficult it would be and how much hard work it would take to run a business. But fortunately, we had the resilience to keep going and through it learned a lot of lessons including:
- Have the right team — this is very crucial for driving the success of your company.
- Keep it simple in business. A lot of complexity will be thrown your way, so learning to keep simple processes makes it easier to thrive.
- Learn how to prioritise your time on the most important things instead of stretching your efforts on things that don’t contribute to your goals.
- Deploy capital responsibility to generate returns. In entrepreneurship, you can raise a lot of funds and if you’re not careful, you can easily misuse all of this.
You founded Zoona with your brother. What was it like managing this relationship and business with someone?
Entrepreneurship can be very lonely. Many times you don’t have people to turn to when the going gets tough. In my case, it was amazing to go through this journey with my brother. Funnily enough, although we are brothers, we are really quite different in the way that we approach things. But it was great to have someone to bounce off and consult on ideas and someone who I could call at the end of a rough day and know that they would understand what I was going through.
In managing our relationship, one thing that helped us was open communication on our personal goals. We agreed that every year, we would take time to plan and discuss the next five years. If you wanted to go in a different direction after the five years, then that was fine. It was important to have these conversations as our decisions would greatly affect the teams we were leading.
One of the things many entrepreneurs struggle with is a work-life balance. Were you able to have one?
At the beginning of my journey, I didn’t have a conventional work-life balance. At one point, I overworked until I had to go to the hospital because of an anxiety attack. It wasn’t until one time when I was with family, that my daughter said something that served as a great lesson to me. Someone had been chatting with me but I wasn’t paying attention. In response, she said, “one thing you need to know about my dad is just because he is here, doesn’t mean he is present.”
This was quite heartbreaking but it also taught me a lot about being present. By being present in a situation, I am also respecting the relationships of the people I am with. I always say that if you want to finish a marathon, you cannot sprint the whole way, you need to learn how to create the balance in your journey to ensure you are able to accomplish all that you plan to do. I also learnt that your decision making when you are stretched and stressed is not good, so balance is important.
Is it possible to make your business recession-proof? If so, what can businesses do to ensure that they are able to come out of a crisis?
It’s possible to make your business recession-proof and it is something to be mindful of in times of volatility, complexity and uncertainty — now and into the future.
The absolute and critical question every business should know without fail is what is our cash position, what is our cash burn and what is our cash runway. Cash flow gives you optionality and optionality gives you the ability to make and take better decisions. In a recession, revenue always drops faster than expenses, and when things start to pick up, revenue also comes back slower, so cash reserves are so critical.
I like to think that there are three key stages in which you can act to ensure you come out of a crisis:
Before a crisis, you need to ask yourself ‘what am I doing today to prepare my business to be resilient?’ From building up your teams and instilling a culture of resilience within them to even managing how you spend your money — the key is to start preparing your business in advance. It’s also important to have a grounded and realistic perspective. In an attempt to be positive, entrepreneurs sometimes project only rapid growth for their businesses as they plan. However, sometimes, it’s good to also plan for when things are tough.
During a crisis, you are largely reactionary. These are tough times, and every day you need to step up and lead, especially as people will be looking to you. So communication, transparency and taking decisions is important. You need to be honest about the realities but also instil hope. The key task is to come out of the crises with a healed scar and not a festering wound. In addition, it is important to take time to create space under pressure to be deliberate about re-purposing back to your why! Re-imaging your revenue streams, cutting costs as deep as you can, and only then also having to have a tough think about laying off staff, all the while, keeping all your stakeholders on the same page.
After the crisis or recession is over, I would encourage you to take time and reflect on where you succeeded and where you failed. During a tough time, one thing that helped us manage was understanding what sort of crisis we had gone through — was it a temporary weather situation where perhaps the exchange rate had dropped for a few weeks or is it a long-term climate change where major things such as the market landscape have changed. In both instances, you will be faced with two decisions: you either continue operating the way you do, or you change your business to adapt to the situation. In Zoona, we learned this the hard way when increased competition forced us to reimagine our business model and strategy, and we shifted from a B2C to B2B business.
And the final thing to remember is that you can always start again once you have reflected. Failure doesn’t mean that you have to stop completely. But once you reflect, you can know how to move again, with lessons learnt and more experience.
What advice would you give people who are thinking about starting a business right now?
I think there are a lot of opportunities right now for entrepreneurship. From agriculture to financial technology, there are many challenges that can be regarded as opportunities. So my key advice for those thinking about starting a business is 1) find a problem worth solving that matters to you, especially one that can add value to your community 2) think about your team and the skills that you do not have that can help you 3) think about your customer and how you are going to provide them with a value and service they will be willing to pay for and 4) be aware how hard it is going to be, and how resilient you will need to be — there will be setbacks and challenges, so go in eyes wide open to this reality and 5) go in with an open mind to relentlessly experiment and learn to serve your customers better
My final advice is don’t hesitate to learn from other entrepreneurs. You don’t need to make the same mistakes that they did. So take time to talk to the entrepreneurs around you to not only learn from them but also get support because entrepreneurship can be lonely. When you talk to them, also remember to respect their time. Don’t go without a plan, but structure your questions into problems you are grappling with so that you can get the most value from the conversation.