There is a story that Ike Cha tells that reveals his attitude to risk. The story goes that in the mid-’90s while working for a large multinational, he used his credit card to finance his first investment property. But what he will also tell you is that it was done after careful cost-benefit analysis and a healthy appetite for risk.
“Downtown property values were significantly depressed, and I saw an opportunity as the cost of interest (even on a credit card) was less than the return on the investment,” says Cha.
That first property is what enabled him to buy his next property and then the next.
“At first, I bought just one property and continued buying one by one until I bought my first block of flats.”
This was off the advice he received from a mentor and what he saw travelling the globe, including Atlanta, where he saw first-hand the opportunities for property investments that came with a city in renewal.
“It was a no-brainer,” says Cha.
This no fear attitude is typical of his relationship to risk.
“Everything in life is a risk: even being too fearful to do anything is a risk … maybe even the biggest one,” he says.
Whether you’re leading a big or small team, the principles are the same
A Diversified Portfolio
Zimbabwean-born Cha is the founder, chairman and CEO of the investment company, Lionshare Venture Holdings (LVH). Their key investments are in property, logistics, tourism, FMCG and fuel.
Their most well-known investments are the Reef Hotel in downtown Johannesburg the Sand River Resort in Limpopo and the advisory firm, Grovest.
“From the onset I wanted to set up a business with a diversified portfolio to mitigate risk and to provide multiple income streams.
“Some businesses help keep the lights on and others are for long-term value creation.”
The property business was his first love and one that Cha says he finds “deeply interesting”.
“It’s leveragability and long-term growth driven by the power of compound rental growth, even just by the compounding of inflation in rental.”
He ventured into the service industry for its job creation potential.
“I like service businesses because they are usually capital-light and have huge job creation capabilities, which is a bigger benefit than the prospect of merely making money,” he says.
As for the infrastructure sector what excites him is its capacity to enable the economy and other businesses.
“Additionally, it is an anchor of a growing economy. There is a huge opportunity here for government and private partnerships as the need is insatiable.”
These sectors are open for black entrants, says Cha, particularly now with the issue of economic transformation taking centre stage.
“Many big businesses understand the socio-political and business case for transformation and are more willing to give new entrants an opportunity, but entrepreneurs must not take these opportunities for granted.
“Like any business, you have to compete and demonstrate capability and professionalism. All the rules of the game apply, and if granted that opportunity, you have to maximise it.”
Like a farmer, they [funders] have to take that leap of faith and understand that out of 5,000 businesses funded, maybe only a third will succeed and scale
The Devil Is In the Details
Cha studied Industrial Psychology at UCT, he followed this up with an MBA and went on to spend his early and mid-working years in the corporate world. Before venturing out on his own he worked for several years in top executive management at the multinational corporation, Coca-Cola.
This is largely because of advice that he received from a lecturer, who told him he had all the traits of an entrepreneur, but advised that Cha first work for a multinational company before venturing out on his own to gain critical skills.
But Cha has always been familiar with the language of “buying and selling stuff”, as he calls it. In his varsity years, it involved buying and selling electronic goods like Walkmans and cassette players in what was then known as the ‘grey market’.
His initial entrepreneurial leanings were sparked by the need for survival in reaction to the lack of employment opportunities and the “black tax that hits when you hit 18”, he says.
He credits the corporate world for helping to hone his business skills.
What he took away from from the corporate world was the importance of planning and thinking things through, he says.
“Corporations have a systematic way of approaching each project, with clear objectives of what they are trying to achieve – a clear end-goal – and how they plan to achieve it.
“The devil is always in the detail. You learn the art of conceptualising and writing everything down, and this streamlines your thought process. Finally, executing and measuring your activities.”
Some of the leadership principles that he continues to operate by were learned during his time in the corporate environment. Today Cha leads his team of over 1,000 people.
“Whether you’re leading a big or small team, the principles are the same. When it’s a smaller team you are more hands-on and on the ground, personally passing on the ethos, vision and mission of the business. As the business expands you lead through mentoring the business unit heads to be better leaders and custodians of the company culture.”
Funding as Planting Seeds
Cha is equally passionate about developing entrepreneurship on the continent and sees it as the solution to youth unemployment and economic growth. Not surprisingly he describes himself as an entrepreneurship advocate.
“Lessons from around the world teach us that all countries that have progressed economically in recent history, like China and Singapore, or the more established economies like the United States and some European countries, had their economic growth spurred by entrepreneurs who started small but scaled.”
Cha has especially been vocal about challenges with accessing funding and the “bureaucracy” which he says does not work for entrepreneurs.
“Funding entrepreneurs is like farming. If you plant 5,000 seeds, 3,000 might germinate, and 2,000 could make it to the harvesting stage. Yet those 2,000 plants could produce a 1,000% multiple of the original seeds. Most funding institutions are not approaching it correctly.
“Like a farmer, they have to take that leap of faith and understand that out of 5,000 businesses funded, maybe only a third will succeed and scale, creating jobs and contributing to the economy. Additionally, funders have to go beyond funding and nurture and mentor businesses, like a farmer would weed, fertilise, and practice pest control on the crop to ensure a good harvest.”
The one thing that surprised me and also encouraged me was that it was not as impossible as it seemed
Entrepreneurship Does Not Come With a Guarantee
Entrepreneurs are not spared his scrutiny. He is especially critical of what he sees as a culture of entitlement among would-be entrepreneurs.
“Unfortunately, many budding entrepreneurs approach getting into business like a South African Social Security Agency (SASSA) queue: with the expectation of some kind of guarantee, or that the government should come and help, and give (not lend) funds. They miss the ‘X-factor’ that entrepreneurship demands – the guts, the skin in the game, and the mantra of ‘no pain, no gain’.”
It’s not all doom and gloom, Cha says hope can be gleaned from “some pockets of excellence amongst young entrepreneurs, which are assisted by technological advances and tools”.
“Some of these are game-changers as they optimise efficiencies and lower the cost of doing business for small enterprises,” he says.
Cha is a fan of technology and considers it a great enabler for entrepreneurs on the continent. This is the advice he says he shares with young entrepreneurs asking for advice.
“Technology has opened up a whole world of access to information, tools and knowledge. Look around you, research online, follow the BEST people in your industry. Google, YouTube, and LinkedIn are amazing for getting meaningful nuggets of advice and coaching from the best resources in the world.
“The knowledge out there is mind-blowing, and comes at a fraction of the cost of a formal education – just some data or a Wi-Fi connection will give you access to amazing information. You are carrying an advisor and mentor in your pocket. Use it. The world does not owe you anything. Get off your butt, apply yourself and you will see amazing results!”
This year marks fourteen years since Cha ventured into entrepreneurship.
“The one thing that surprised me and also encouraged me was that it was not as impossible as it seemed. Difficult yes, but if you are determined and hard-working, people will see your commitment, and are prepared to offer support.”