“Failure is part of being an entrepreneur. Like it or not, you are going to have ups and downs. What determines whether you fail or succeed is how you interpret the setbacks and whether you learn from your mistakes. Failure is simply a life lesson on how not to do something. It is a natural result of trying. Nothing more, nothing less. Learn from it and keep trying until you succeed.”
These awesome words are by our Thursdate for the week who is none other than Bobby Forssman, lifelong entrepreneur and CEO of Co.Space. When it comes to entrepreneurship, Bobby knows a thing or two. Here’s what he had to say on a radio interview with Mix FM’s David Watts and The Finance team:
What do you do?
I started my career in property development in about 1988, so I’ve been in the game for about 28 years. I am primarily in commercial and industrial developments so over the years I’ve done a lot of developments for multi-tenants; warehousing and office complexes. I’ve also been involved in quite a few businesses that belonged to tenants and some that I started on my own.
I’ve been self-employed since I left varsity
One thing I learned earlier on in life is that job stands for “Just Over Broke”, so you don’t really want to have one and need to be self-employed. I have been self-employed since I left varsity. I’ve never ever received a pay cheque.
Property development, the economy and set-backs
Property, like any other business, follows a business cycle. The only thing with property is that you have to be able to read the market 2 to 3 years ahead because when you normally identify a piece of land or come up with a concept of what you want to develop its only just coming out the ground and coming up for occupation in 3 years so you don’t always get it right. You might end up with a great looking development that’s now ready to be tenanted and the economy’s turned and interest rates are hitting 24-25% and that kind of blows you out the water. If that happens, pick yourself up by the boot straps and keep going. Failure happens, we’ve all been there.
As and when you fail, which you will do on occasion (it’s one of the risks of being an entrepreneur), you shouldn’t take it as a failure but rather as a learning. Interpret what does go wrong in a way that empowers you. Use the learning to move forward so you don’t make the same mistakes again. That’s the crucial part of any failure. Know what went wrong, why it went wrong and what you’re going to do about it next time to avoid it.
Property development, risky customers and contingency plans
It’s not just home owners who’re asked ‘how do you pay the bond?’. When things do turn the wrong way, if you’re a landlord and a tenant struggles to pay their rent you become a partner in their business whether you like it or not. The landlord always seems to be the last guy to get paid. Tenants assume you must have a lot of money. “Look at all these big buildings; he can afford to get his rent next month or the month after.” But that is not always the case, we have bonds, financiers and financial commitments we’ve got to honour.
With commercial property the tenants you get generally sign long term leases of 3 to 5 years so you do have security of income to a certain degree. But obviously, your tenants are subject to economic fluctuations and when your tenants start struggling you have to try to accommodate them and help where you can. So you too are really also subject to the economic cycles that are going on at the time. When you do see negative writing on the wall insofar as the property market is concerned then you can be sure that tenants’ requirements are going to change. You may no longer be attracting tenants that are prepared to sign 3 to 5 year leases. It’s just too risky for them in a negative economic climate. We recognise this and we try to be proactive by offering tenants a combination of shorter lease periods, rent free periods and reduced or waived deposits, as an example.
So yes, you do have to cut your cloth according to market conditions and take the initiative to see what you can do to ensure you get continuity of cash flow. When challenges arise, as they will, you need to remember that no stakeholder, financier or bank wants you to fail as a developer or entrepreneur, so talk to them. They are always available to assist where they can, where it makes sense, where there is a prospect of a healthy exit for them. It’s all about communication with all your stakeholders. Always keep the ball in play, be transparent and communicate with them all the time.
Great ideas, timing and failure
In the late 90’s the interest rates started hitting 25% and it looked like the commercial property market was grinding to a halt. I put on an entrepreneurial hat and thought to myself ‘what other businesses could I look at getting involved in that were affiliated to property development and construction?’. With that in mind, I remembered that most people, when finding out that I was in property development always asked me to recommend electricians, plumbers, builders and the like and it dawned on me that there was a desperate need in the marketplace for an ‘old boys’ network of trusted suppliers with proven credentials that could be recommended and referred. I realised that there was an opportunity to create a huge database of pre-approved, pre-accredited suppliers to refer to the general public at large. I formed a new company called Redflag to take this offering to the market.
The idea behind Redflag was to provide ‘the best suppliers on call’ to the general public, whenever and wherever they needed them. We launched in 2001 having developed a really good IT and database system with about 4000-5000 signed up suppliers. We had a big database and a massive call centre. People could call in to ask for a supplier and the system would match the enquiry to suppliers on the system who had indicated that they offered the required services in the required area. It would then send the customer’s contact information to the supplier so the supplier could call the customer back within 5 minutes of the request having been made.
I think that what we found was that it is very difficult as an entrepreneur or supplier to gain access to your chosen market, particularly if most of your work is once off and non-repetitive. What we did for them was to give them access to the market. It really was addressing the needs of our suppliers, who were entrepreneurs. This was about 6 years after cell phones came into South Africa and SMS communication was quite a new thing back then. The idea was ahead of its time in terms of the technology that is now available and if it was born in this day and age it would be offered by a mobile App and it would be that much easier to interact with.
Sometimes you win, sometimes you learn
It took me about nine months to put the business plan together and raise the capital needed to launch the business. After a prolonged roadshow I managed to raise R5 million to back what was essentially only an idea at that stage and we were in business. We launched in April of 2001 and started doing very well but unfortunately the now infamous September 11 happened in 2001 and all the financial markets crashed. The venture capitalists that were backing us at the time were also victims of the market crash and unfortunately withdrew their funding of our business. In a nutshell, our money line dried up. Although the business was doing well, times were hard economically speaking and raising new venture capital in the then current market proved to be impossible. But sometimes things happen outside of your control and I had to make the difficult decision to close the business. If it weren’t for this major hiccup the business would be huge success story today.
Bobby on what Co.Space is and does
Co.Space is a complex of 350 garage style units which we rent out to small space users. It is a place where they can work, play or simply store stuff. The units can be used for storage, warehouse, studio, workshop, man caves, office space and anything in between.
Essentially, the unit gets rented at a base rental rate and we have different unit sizes to suit different types of businesses. The units can be tailored to a particular individual’s or business’ requirements. When it comes to tailoring a unit at Co.Space, think of a basic storage unit then think of one that is on steroids. Think of a storage unit with a pedestrian door, roller shutter door, windows for natural lighting and ventilation, high ceilings, double volume and that can be customised by adding electricity, insulated ceilings, a shopfront, mezzanines and different types of flooring.
Entrepreneurs need space to do business
When researching the storage market we identified that a big need exists amongst entrepreneurs for space where they can go and operate their businesses from. Although there’s the normal mainstream “shared offices” that one can rent in most areas which are great for your white-collar professionals, sort of suit and tie workers, there is nothing available for the guy who makes guitars, does laser cutting, creates metalwork furniture, is a tailor and the like. The list of small business operators and entrepreneurs is endless. Where do they find space that is specifically designed for their individual and business needs?
At Co.Space we provide exactly this. Space for small businesses to operate from. But it’s not just about them working out of their own unit, Co.Space is an active community of entrepreneurs. For the benefit of this community, we’ve created an area called The Hub. It is a 400 square meter business centre that offers lounge and coffee areas, meeting rooms, free Wi-Fi, toilets, ablutions, outdoor pause areas, braai areas, wash bays, recycling areas and more.
Entrepreneurs don’t work from 9 to 5
From my experience of being an entrepreneur, I know that entrepreneurs don’t keep business hours; they work normal hours then put in extra hours at night as well. That’s why Co.Space is open 24 hours a day with 24/7 access control and security. It is really a safe environment to spend time and run your business.
Being an entrepreneur can be lonely but it doesn’t have to be
The underlying theme of Co.Space is that the units are designed for small space users who are business owners. We’re a community of entrepreneurs. Entrepreneurship can be a lonely existence but when you’re a Co.Space tenant it doesn’t have to be. Our tenants can simply go to The Hub and freely chat to anyone because they know as entrepreneurs; they are facing the same issues and challenges. Which makes it easy to talk to others.
Whatever your space needs, we will have the space for you at Co.Space
Co.Space opened in the middle of April this year and our offering has been very well received and our letting is way ahead of schedule. Some of our current tenants have come from home-based businesses where they were operating out of their lounges, kitchens or garages at home. We’re also finding entrepreneurs who are renting office space in town and a storage unit elsewhere, which means they have their business operating in two different locations. They are finding that they can do both office work and storage all in one place at Co.Space. We have also had several tenants who have been so encouraged by the Co.Space offering and community that they have decided to actually start their own businesses. So we currently have a very diverse bunch of tenants and businesses, all very excited but all connected by a common trait. They are all entrepreneurs doing what it takes to succeed.
Putting the garage back into garage-entrepreneurs and garage-bands
Great entrepreneurs such as Richard Branson, Steve Jobs and Bill Gates, all started their businesses in garages or basements. In today’s compact living spaces, most people living in flats and clusters don’t have garages. So in this day and age where do all the garage-entrepreneurs start from? That’s why Co.Space exists, to put the garage back into the garage-entrepreneur community. We’re also getting requests from guys who do band practice, so we also help out garage-bands by putting the garage back into bands as well!
Our community is designed for everyone to get along
Co.Space is divided into different zones; namely, the office & studio zone, hobby & leisure zone, commercial workshop zone, and storage & distribution zone. Our community is designed for everyone to happily co-exist and get-along. We’ve made it easy for people to do business with us. Our leases are month-to-month, which makes it easy to come in and easy to go. Co.Space believe that space should never stand the way of what you want to do.
Watts Involved is hosted by David Watts on Mix FM, 93.8 FM, and is sponsored by The Finance Team (TFT), Monday nights 6pm – 7pm. Want to listen to Bobby’s interview? You can listen to the full interview on the podcast.
Want to know more about Co.Space Thursdates? Read our previous weeks’ Thursdate blog articles and keep a close eye on our blog every Thursday for future Thursdate features. If you need space to work, play or store, Co.Space has the right space for you. Send us your details and we’ll help you find the right office, workshop, showroom, studio, storage, man cave and parking space for you.