Cashbuild Insights Every Small Business Should Know

By Carl Reynolds, Founder of Kudos One

(small.news) — The sustainability space can become very academic. And I worry sometimes that the field remains inaccessible or a little daunting for small businesses to engage with. Practical examples are necessary and a great way to demonstrate how companies can reap the very real benefits of sustainable business.

This is how I got started…

Many years back, I did some work with Cashbuild and, in particular, the CEO Pat Goldrick.

The Code

The Cashbuild success story has had much publicity, and for good reason. Pat was able to build a real ‘ownership’ culture with all the regional managers and individual stores, which ultimately took a start-up hardware store to an African phenomenon with almost 5,000 employees and over 250 stores across Southern Africa.

By the time I met Pat, they had approximately 100 stores, and if you know the Cashbuild model, most of them in rural Africa. As we were going through the business, we quickly became aware of the passion and dedication of all the staff and franchisors. We saw the really strong governance structures and clear vision that everyone seemed vested in. What is not common knowledge, however, and in my opinion, probably the biggest contributor to their success, was the fact that they had never had a single break-in!

The Unheard-of Truth: Zero Break-ins

Imagine that! In this country, with that product and in those areas! Unheard of!

I started trying to understand this phenomenon, and this is the journey that ultimately led me to start my own company, Kudos One.

Eventually, we deduced that the reason for the negligible stock shrinkage and no recorded robberies was quite simple and also quite complex. Sure, they sold good quality building material at rock bottom prices, but Pat also had a great business philosophy—he really cared about his customers!  He went into every area where a new store was planned and identified immediate community needs, like materials for schools, soccer kits for local clubs, etc., and contributed. Instead of in-house store deliveries, they found out who the drivers in the communities were, enlisted them, and set them up as small businesses.

They started little micro enterprises within their stores—if you bought glass, they had a glass cutter on site who operated as his own entity, etc. They also provided training and support for these small businesses. All of which made CashBuild part of and essential to the well-being of those communities.

Community First: The Secret Weapon

Pat did most of this because he wanted to improve the quality of life wherever he went, but he also understood the value of having a social license to operate!  By being part of the community, these communities not only supported the business they also protected the turf of Cashbuild. They made it almost impossible for competitors to move in, and ultimately the model allowed for the business to grow to today’s market Cap of R6.7B!

Stakeholder engagement, social license to operate, empowering communities, skills development, employee ownership, transparent management structures, and absolute clarity on governance structures—each of these factors contributed to the success story, yet they were nowhere to be found on the Balance Sheet.

This is a classic example of the value of ESG. Back then, the term didn’t really exist, and the systems to manage it were nonexistent, but that’s all it was: Holistic thinking about a business, its place in society, and an attempt to manage those aspects as effectively as the figures.

Making Sustainability Accessible to Small Businesses

So how do we take this kind of thinking and make it accessible for small businesses that are often so focused on survival? The opportunities and indeed risks of not doing it are too great to ignore. How do we address the current barriers to entry for more engagement on sustainable business behaviour?

At a company level, we felt the first challenge that needed to be met was the issue of getting good material data easily. The second challenge was minimizing the time and admin required from the company, and thirdly… show direct correlation between ESG interventions and bottom line value. 

We also had to achieve all of this while catering to the needs of the capital markets which are engaging with these SMEs.

Sustainability Is Becoming Mandatory

The fact is that this work is rapidly becoming mandatory. Already, it is increasingly difficult to become a supplier to large listed companies if you are not demonstrating awareness of ESG and sustainability considerations. Consumers, too, are making buying decisions based on company sustainability credentials, as are the young, talented graduates looking to start their careers.

Obviously, various models exist! The DFIs have Risk matrixes, the GRI has reporting templates and models, various investors have bespoke impact measurement methodologies and internal systems set up. All of which is great and very necessary. These systems have, however, evolved to assist those companies with the resources to devote to the process, predominantly listed companies.

The process, currently, is costly, labour-intensive, and not adequately related to financial return. So now we have a way of operating that we know (beyond doubt) contributes to better-performing companies yet remains largely inaccessible to the unlisted sector. This feels like a missed opportunity.

Our mission is to demystify this process, to open it up to the other 80% of the economic activity on the continent. We’ve built the platform that can do this. Let’s make it happen together.

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