Converting your corporate provident fund to cash to go into business knowing that this will keep you financially afloat for just three months, is the ultimate in business risk taking. But, when the ‘entrepreneurship bug bites’ and you need challenges in your life; it can seem like the only thing to do.
This was the case for Mahmoud Homayoun who walked away from a job with a major oil company. He later convinced colleague and friend Boston Moonsamy that they could parlay their knowledge into building their own Petrochemical Business, Umongo Petroleum.
As simple as the concept sounds, the business is much more complex than obtaining product and distributing it to customers. It is about having bulk stocks on hand, place to warehouse inventory, storage, transport and then only getting product to customers.
Mahmoud received his first order before he even owned a phone or a fax machine. Fortunately he had an obliging friend with a carpet business just down the road-and more importantly a fax machine that he was prepared to share.
“It was on the carpet shop fax that I received my first confirmed order. It was fairly complex and so required a lot of fax paper, something that concerned my friend. He saw almost a roll of fax paper disappear into his machine and emerge as printed sheets that just about covered the floor in his office.
“Our head office was a garage in the early days. It was also the place where we ate breakfast, lunch and supper and worked an average 15 hour day. Our start-up costs were contained, leaving income to be ploughed back into the business to build sustainability and a steady cash flow,” recalls Boston.
”Chevron, our supplier, which provides petroleum products for Caltex, agreed to provide stock on consignment and allowed us to pay them as we sold stock on to our customers. Although the oil business is usually conducted in US dollars, they also allowed us to pay them in Rand – a major convenience and one that cut a fair amount of costs out of our early operations.”
Their total dedication to business has paid off over the years.
With nearly 18 years in business their mantra is still on keeping costs low and reinvesting back into the business. They also recruit staff carefully – looking for people who are not necessarily steeped in the petroleum business, but individuals who are energetic and are determined to learn and meet their requirements about having a lean, productive business structure.
Their almost zero staff turnover is testimony to the fact that employees are justly rewarded with opportunities to grow with the company. Encouragement and the chance to better their educations and build futures keep them where they are; part of a proud, effective team.
Just how far they have moved is illustrated by their turnover. From their ‘heydays’ when they celebrated a monthly turnover of just over R2 million, they have a business today where this figure equals their daily business levels.
The original single division business now boasts six divisions with different specialities and customers that span 10 sub-Saharan countries.
“This move into Africa required years of preparatory work, building of contacts and relationships and then taking care to ensure that the business grew steadily and did not expand exponentially beyond our capabilities to control it,” Boston recalls.
Having both worked in major energy companies before setting up Umongo and aware that the energy field is massive and highly competitive, both partners agree that staying focused, knowledgeable and delivering quality is needed if a business is to enjoy the opportunities and ride out the ‘bad times’ that are an integral part of the oil industry which is vulnerable to swings in the economy.
Trust between partners suppliers and customers are the basis of cementing strong relationships which last and ultimately create a sustainable business.
For Mahmoud and Boston, the formula works – the testimony is their business which is highly ranked within the oil industry locally and across South Africa’s borders.