From Silicon Valley to Swaziland by Rick & Wendy Walleigh (psychology books to read .TXT) π
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I discussed this with Mkhululi on our drive back to Swaziland. I explained that this type of phrasing had been considered professionally unacceptable and racist for many years in the United States. I wondered what the standard was here. Mkhululi explained that in Swaziland, this type of phrasing was definitely unacceptable. He suspected that in sophisticated society around Johannesburg and other South African cities, it would also be unacceptable. It was probably just in the more isolated rural areas where this manner of speaking still existed.
Race and racism are interesting, if usually unpleasant, topics. It is fascinating to me how people can devise complex schemes to discriminate against their neighbors and fellow citizens. Itβs also fascinating, and of course sad, to contrast the differences in the way the United States and South Africa practiced discrimination. Mkhululi pointed out that the former king of Swaziland, Sobhuza II, had been very wise in this regard. When Swaziland had gained its independence from Great Britain, Sobhuza had not expelled the whites from Swaziland or even quickly replaced them in their important jobs as had been done in most other African countries. Sobhuza had believed that the different races could live peaceably together and that the Swazis should benefit from the accumulated knowledge of the whites who were in the country. The transition in Swaziland was peaceful and successful, and Mkhululi insisted that Nelson Mandela had used Sobhuza II as his role model for the transition in South Africa. Most Swazis are very proud of their heritage but have a slight tendency to embellish their history.
Several weeks later, Mkhululi and I visited another smaller pig farm and an abattoir. We got more information, and I learned a new word. A cutter is a pig between the size of a porker and a baconer. They get cut from the group if they eat too much food and donβt gain enough weight.
We also confirmed our financial analysis that said the best economic return for a pig farmer would come from selling all of his pigs at the baconer stage. However, we learned the market would not accept all of its pork in cuts that large. There was a sizable demand for porker or cutter size cuts of pork in the markets. Consequently, most farmers couldnβt realistically sell everything as baconers. Who knew? Mkhululi and I were becoming so informed!
Tasty Meals Business Plan and the Bank
For a number of weeks, I had spent many hours developing the Tasty Meals business plan. Tasty Meals needed financing to restart their operation. We had to go back to their bank and demonstrate how they could be successful with additional financing. Without a really solid business plan, there would be no hope, and Tasty Meals would become just another one of the hundreds of businesses around the world that fail every day. The business plan would show that they could be successful, and it would show how. There would be two crucial pieces, one describing how Tasty Meals would assure a year-round supply of mealies and the other describing how they knew that they could sell enough mealie bread to be reliably profitable. But in addition to these two crucial pieces, there would be a lot of other required sections. When financing a business, the investor has to know how all parts of the business will work. He has to know that all the pieces will be integrated without weak links to endanger the business. I had to convey this information in two forms, text and pro forma financial statements. The text described the market, the consumers, and the competition. It then explained how the business would satisfy customers, overcome competition, and garner enough market share to be successful. The pro forma financial statements showed how everything in the text got converted into financial numbers, which was, of course, the bottom line. Developing each of these required a lot of work.
A good business plan must describe very clearly how the business will operate to show that the entrepreneur has thought very deeply about the business and the many alternatives for running it. It shows that the entrepreneur has selected consistent approaches for all aspects of the business to support the overall strategy. Both the text and the financial statements must all be internally consistent. That leads to one of the challenges in developing the business plan. Everything is linked together, and a small change in one area ripples through with implications for everything else. For example, a decision to do more advertising in the early stages of the business naturally increases expenses on the income statement. However, it also generates the need for additional financing, which changes the cash flow statement. But the additional cash required means that the loan payments and interest charges must be recalculated to again update the income statement and the cash flow statement. The increase in expenses means that the breakeven production volume has to be recalculated as does the loan payments coverage. Fortunately, another TechnoServe colleague had developed a package of ten linked spreadsheets that allowed for a lot of the financial statements to be updated automatically, but the numbers had to be checked, and the related textual comments had to be updated manually and individually.
As I continued to make adjustments and refinements, I waited for our controller to produce up-to-date Tasty Meals financial statements so we would have a starting point for our projections. When they were finished, it was great to have real numbers, but the numbers were very depressing. Tasty Meals had gone through (i.e., lost) $70,000 in the seven months they had been in business. This included a $50,000 bank loan plus a $20,000 line of credit. Now we were going back to the bank to ask for $40,000 more! On the other hand, the business plan looked solid. If the bank wouldnβt grant the new loan, they would have to foreclose on the property that Phiwa put up as collateral. Originally, I had been thinking that this would be a difficult decision for the bank, but I was just being too hopeful for my client. When supporting hopeful entrepreneurs, it was very easy to get sentimental and let hopes and dreams for their success get in the way of cold, hard, realistic thinking. I thought Leslie and Mkhululi were letting their emotions cloud their thinking on dairy, and I was doing it myself on Tasty Meals. If we had been dealing with an equity investor, he could have seen a potential upside from a successful business. Realistically, I knew the bank would just see more risk, and I knew that banks hate risk. In my experience, when banks lend money, they want to have at least two ways of getting their money back. First they want to see pro forma financial statements from a successful business plan that shows the company generating more than enough cash to pay back their loan. But this is never enough. Banks also want to see how they will get paid back when things donβt go well for the business. Typically this means collateral. The banks want access to the customerβs assets that the bank can sell to pay off the loan if things donβt go well. I thought we had a great business plan, but Phiwa had no more collateral to pledge against a new loan. I resolved to remain hopeful, but the feeling in the pit of stomach told me what was going to happen. I knew times would be tough for everyone involved but especially for Phiwa.
Finally, Leslie and I accompanied Phiwa to the bank to request the additional loan for Tasty Meals. The meeting went about as well as could be expected. We had given the bankers the Tasty Meals business plan the day before, but they had not had time to read it. So they hadnβt had a chance to be impressed by our wonderful prose or elegant pro forma financial statements. Actually, the current balance sheet didnβt show in our favor, and I donβt think bankers ever get impressed by nice prose. In any case, after Phiwaβs overview of the loan request, the lead banker asked the predictable questions. I can actually say they were predictable because I had coached Phiwa on them ahead of time. The banker wanted to know what arrangements had been made to secure the green mealies. She asked why he had lost so much money in such a short period and how it would be different with a new loan. She asked about competition. She especially asked about additional collateral that certainly would be required and Phiwa didnβt have. Finally she suggested that Phiwa get a partner who could provide management help as well as additional capital. She said that they would read the business plan, do their own analysis, and then get back to Phiwa.
Phiwa remained upbeat throughout the meeting, and we assured him that he had responded well to the questions. It was just that from the basic situation, it was nearly impossible for the bank to justify a new loan. He said he would look for a partner.
Wrapping Up in Swaziland
December came quickly, and it was time to wrap up our work in Swaziland, not because we had accomplished all that we had hoped for, but because our planned stay was nearly finished. But before we left, we had one last adventure. Our good friend Carolyn had come for a visit, and we got to do some touring with her. On her last day in Swaziland, I played chauffer for a shopping day, taking Carolyn and Wendy to many different locations that sold various Swazi craft items. Our last stop was Ngwena Glass near the border with South Africa. After sizable purchases by both Wendy and Carolyn, we were ready to leave and noticed that the weather was becoming threatening. Large black clouds were moving in our direction from the west. After driving for a while, the rain started and then began falling hard. I told Carolyn not to be surprised if it began to hail since we had experienced hail several times over the past months. Within thirty seconds, we began to hear the pitter-patter of hail as it bounced off the car.
I donβt know precisely why it is, but I think the mountainous terrain of Swaziland combined with its geographical location generates extreme weather patterns. Although the terrible windstorm we experienced when we first arrived was unusual, Swaziland frequently has very strong winds at certain times during the winter. Also hail was not uncommon. For the nonmeteorologists, hail is generated by turbulent weather that causes raindrops to be swept up into the upper atmosphere where they freeze before falling to the ground. Very turbulent weather can carry small hailstones, which accumulate more water on their downward journey, back into the upper atmosphere to refreeze into larger hailstones. This process can continue until the turbulence can no longer lift the large hailstones, and they fall to the ground.
This is relevant because, as we drove along, we were about to experience very turbulent weather and very large hailstones. The best way to describe the experience is to recreate the dialogue in the car as closely as I can remember it.
βItβs hailing, just
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