Over the last 13 years, Agnes Loheni’s fashion business Mena Shop has weathered cyclones and tsunamis, and the upheaval of a shift from Apia to Auckland. She talks though starting from scratch and navigating unexpected challenges as a small business owner.
Throughout a period of massive upheaval for Ms Loheni and her fashion business, the company has funded its expansion primarily through reinvesting profit in a safe but slow strategy.
Now, Ms Loheni and her four daughters want to accelerate growth and are considering how much risk to take. To help with this, they recruited a business mentor to help with the process.
It's a decision applauded by Auckland Chamber of Commerce CEO Michael Barnett, who recommends recruiting an independent advisor from the start. There are a number of business areas a mentor will be able to help walk new business owners through.
- Cashflow - invest time into developing clear forecasts, have a strong grip on your balance sheet and enforce rock solid payment terms.
- Lack of business expertise - invest in your business education. Don’t think you can be jack of all trades without training and support.
- Knowing when to grow - hire the best mentor you can afford to help you see the big picture and work on (not just in) the business.
- Red tape - make sure you tap into the government services that can assist and educate you.
- Getting emotionally over-involved - ask your mentor to call you out at the first sign you are losing perspective on your business goals.
Starting from scratch
Mena Shop began as a cottage industry in Samoa with Ms Loheni and her daughters, printing their own fabrics and making up their own designs.
Mena Shop soon became a household name in Samoa, with products being sold around the South Pacific. But, growing the business from the island paradise was tough. Isolation was a problem and the infrastructure wasn’t reliable.
Ms Loheni says “basic internet in Samoa is quite costly and sometimes it just doesn’t work. Even though the cost of labour is reasonable, constant delays were frustrating.”
Navigating unexpected challenges
Those weren’t the only barriers to growth. There was also the unpredictable will of nature.
Ms Loheni has lost count of the number of cyclones and tsunamis she’s had to navigate, in Samoa and other markets like Japan, which have impacted on revenue. While it always bounces back, getting through takes creativity.
“A couple of times we’d just pack clothes into a suitcase and fly into Fiji or Tonga just to keep some cash flowing into the business.”
Moving to New Zealand
In 2006 Ms Loheni and her four daughters relocated to Auckland.
Slowly but steadily, the business has grown. In 2010, Mena was awarded the Pacific Exporter of the Year Award. Last year it was a finalist in the Export NZ Auckland Awards.
But, Ms Loheni does wonder if the cautious approach of only reinvesting profit has come at a cost, and opportunities have been lost.
The value of an outside perspective
This year, Ms Loheni made the decision to hire a mentor to help the business scale up production.
Auckland Chamber of Commerce CEO Michael Barnett says a good business advisor is far better than family and friends, because of their objectivity.
“In business you want the truth,” he says.
Are you on the right track?
Growth is not always the right strategy. A 2011/2012 survey by researchers at the University of Auckland’s Business School found only 20% of SME’s wanted to grow substantially. 57% wanted to grow moderately, 19% wanted to stay the same, and 4% wanted to become smaller.
The profitability of those wanting to shrink or stay the same was conspicuously higher than those wishing to grow substantially.
Ms Loheni has also had some initial discussions with her bank about the options to get cash into the business.
Now, she’s working on a detailed proposal to scale up three fold over the next five years. And she knows her pitch will be about more than just balance sheets.
“They’ll have your financial figures. But you’ve got to provide the colour to it and say, we’re worth investing in. You need to understand your brand value.”
Michael Barnett says it’s important to develop your relationship with your bank to the point they understand you thoroughly and there is a mutual trust.
They can also help you identify what assets can be borrowed against to fund business expansion.
Cutting out the Emotions
Ms Loheni says, over the years she’s learnt some valuable lessons.
“Be prepared to invest in yourself as the business owner, because we don’t actually have all the skills. Upskill yourself.”
“When it is your own start-up it becomes very emotional, and you need to cut the emotion out as early as you can. It changes the decisions you make.”
To find out more about business support services available to you, check out your local Chamber of Commerce.
Written by freelance writer Alistair Wilkinson
Information contained in this article is intended as general information only. This article does not take into account your current financial situation, and goals and is not personal advice.
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