“I was so excited when Stuttafords (South Africa Leading department store) gave me the opportunity to list my products. I was so happy I signed the contract out of trust only to find that, by listing my products there, it means that I agree to only buying retail space… I signed a deal I didn’t understand that just emptied my pockets,” he says
It cost a pretty penny to buy shelf space at Stuttafords, one of South Africa’s top retailers. Sock sales came to about R40,000 ($3,000) a month at best and a mere R2,000 ($150) or R1,000 ($75) at worst.
“There was also a big spend on making sure we market the products and drive traffic to the store. At the time, the store itself wasn’t doing well and less and less people were going there… it was tough but we tried to keep up appearances for it to seem like we are doing well,” says Ngwenya.
It was expensive. He started taking money from his corporate division, that distributes bulk unbranded socks, to finance Skinny Sbu Socks. The problem was he was also living a life of a rock star, traveling, partying and buying gifts for girls; all through the business account.
“Stuttafords was taking a big percentage of the money and all in all, in just a year, all these things cost me R800,000 ($60,000).”
The whole business suffered. He tried to take up speaking engagements to supplement the income. It didn’t help.
“I started borrowing money from friends and family just to survive. I lost my apartment, car and everything. I couldn’t afford the life I was living anymore and my debts kept piling.”
He moved back home, to Tsakane, a township east of Johannesburg, with his grandmother. It humbled him. It was time to start over.
“My sister went out of her way and took a huge personal loan to help me. My uncle also played a huge role in helping me. I needed someone who could look out for the numbers of the business so we didn’t mismanage the money,” says Ngwenya.
His uncle was what he needed. He helped him revive the dying business.
“We did a whole turn around to make sure we build up the business again. I am now very careful with every rand. It was a huge character-building experience that taught me not to rush into things and not to treat a business account as a personal account.”
Together with his uncle, they are also reassessing the business marketing strategy and ensuring Ngwenya concentrates on the creative design of the socks.
“I am happy this happened now rather than in 10 years when I have a family and larger responsibilities. Someone once said to me ‘you didn’t go to school to study what you are doing. This mistake was your school fees. You needed something that was going to wake you up’.
Unfortunately I had to pay close to R1 million ($76,500) for my fees,” says Ngwenya.
Source: Forbes Africa