Esmeralda De Souza-Obwaka — transcript

She Built a Sh40M Catering Empire. COVID Wiped It. She Built Again | Esmeralda De Souza-Obwaka Ep 29

This transcript is generated automatically by YouTube and has not been checked by a person. It misspells names and mishears words, particularly around Kenyan English and company names, so read it as a guide to the conversation rather than a quotable record. Each timestamp opens the video at that moment.

0:01 [Music] Greetings, ladies and gentlemen, and welcome to episode 29 of the African Do podcast. And uh today we come into my space. I've never had a guest who lives in my world, but Esmeralda Obaka. Um do how do you do you go with Duza? Do you hyphenate or you Okay. Emeralda Duza. Yeah, a good friend become a good friend and um she runs a very interesting business called Space Catering Limited and Space is an institutional catering company that specializes in institutional catering and outside catering and has done so for almost 20 years now. Yeah. Is that right?
We turned 17 last month.
17 years last month and and and and still going strong.
So Esme, welcome to the African Do podcast.

0:58
Thank you very much. excited to be here.
So, you're not you're not me. You're not a hospitality trained person. Yeah.
You you but you're running uh um first of all longevity in our industry is not common in the sense that a lot of restaurants start and close. I have closed several myself. Yeah.
But 17 years in you're still in.
So maybe take us to the beginning of this journey of establishing spares skatering. Okay.
Where did it start? How do you find yourself as a caterer? And how do you still maintain yourself as a caterer all these years later?
Okay.
Um so I started very many years ago and officially almost 19 years ago.
Um at the time I was actually expecting my son Miguel who's now 19.

1:49
Yes.
And I needed a source of income to support him. So I tried a bunch of things before that selling and buying and selling secondhand books.
Um selling of Masai chains abroad. I had done BGV with Nyan. I don't know whether you remember Nyan. I was a BGV.
And then finally decided okay none of this is sustainable. Let me try something in the kitchen.
Yes.
So started baking cookies and cakes. Approached a cafe that was nearby home and as owner can I sell you these things and you sell them um to your customers? and the cookies didn't do very well and then I started doing cakes. So she said, "Why don't you learn how to make a Black Forest cake?" Because everybody loves Black Forest. It was the in thing at the time.

2:30
So I said, "Okay, I'll learn." So I went to a friend of mine who was in cooking school, asked him to teach me how to make the cake. He taught me, started selling to friends and family. And then one day someone assumed that I did catering.
Mhm.
So they called me and said, "Okay, um, we have this AGM we're having for 25 people. I hear you do catering. can you cater for the board
uh for the AGM rather? And um I said, "Okay, just give me a few minutes. I'll call you back."
So I didn't say no. Um called my friend who was learning to become a chef and I told him, "Listen, there's this event. Um can we can we do it? You know how to cook, right? I'll help you with everything else.
Um we can do it from my house cuz it's close to where the event will be, my my parents house, not my house at the time."

3:15
And we did that event. Um it was chaotic. Um but the at the from the customers perspective they were very happy. We underestimated all the work that needed to be done.
Um my father ended up being the one chaiing theama at the event.
Um we told our friends to dress in jeans and a black t-shirt that they were the waiters.
Um so at the end of it all we made like 4,000 shillings which we split between the two of us. But
um it it showed that it can be done.
Okay. So from that one event we started getting others um and the business has grown over the years to
to you know what it is now. So in summary that's how it started.
So what is it now?
Um now we are about 100 permanent staff with over of course 100 casuals um located in five different locations um actually six. our main headquarters and central kitchen and then we're doing several institutional caterings for corporates in Nairobi. So those are the other five um outlets that we have.

4:20
Mhm.
Yeah.
And you're dealing with the blue chips.
Yes.
You're you're are we right in calling you the caterer to the blue chip corporate companies?
Yes. We do a lot of stuff. We were at Safar for 7 years doing the inst institutional catering and 12 years doing um outside catering. We serve General Electric, IBM, um Absa Bank, Cydian Bank, we do the board, we do um Deote, we do we do quite a number of Yeah. blue chip companies in Nairobi.
Okay. Not bad for for what is actually a very challenging industry. Yes.
So what have been your learnings and do maybe maybe let me start with a question. M
do you think you are fortunate not to have technical training in the restaurant industry in building your business? Do you think that has been a plus or a minus?

5:11
Uh I think it's been a
both actually but more of a plus because if I knew what it entailed I may not have gone in. If I had had that experience I don't think if I knew what was coming.
Yeah.
Um I may not have gone in.
Yes. And because that set me up to be someone very willing to learn
because I knew I didn't have the knowledge. So I was willing to learn from everyone and everything and every resource available.
So I think I learned more just because I was I knew I had a sort of crutch.
Yeah.
Um and I continue to learn from even other industries.
Yes.
So there's that. The negative side of it is there are lessons I could have learned or I didn't have to learn. Very hard lessons.

5:56
It would have been shorter. It would have been a much shorter journey to getting the lessons um beforehand.
Mhm.
Yeah. So, a bit of both.
So, you start this business. You're um in your parents home. Yeah. New mother. Yeah. And uh you are now of course in the in the process of these 17 or let's call them 19 years before you've had to go through nuances formalization of the business registering.
So but you've also had to
um is the right word say evolve.
Yeah. Over time because businesses are different in different places.
So when you look back 19 years ago M
um talk us through what SP the company was then
and the various highlights of how SP has evolved over the years, challenges, frustrations, joys, you know, um you're now married, you know, you have a family. So you and all through Spurs has been there.

7:00
Yeah.
So how has that journey been for you?
Wow. Okay. So key moments maybe I would highlight um when we first when we got our first kitchen um which was on loan we got a loan from my parents of 100,000 and we had to buy basic stuff like a cooker and stuff. So that was very exciting one because I had just asked for a break. I was studying geology by the way in University of Nairobi.
So I had just asked them for a year break to start up the kitchen.
So I remember the first day we got in it was it was so exciting like oh my gosh we have
where was this kitchen? It was in Kilimani. It was a ladies lounge called Saraf. I don't know whether it still exists. Um so it was a really tiny space. Um and it was just the two of us. Um my co-founder Spencer and I. And it was exciting. I remember that first time when you bought all the schoolers and you're like, "Oh my gosh, we're starting a business officially now where we have to, you know, cater for many things." So

7:54 that was very exciting. Um getting our first employee at some point the the work was just too much. So we're like, "Okay, we need help." M
so so getting that first employee um and then moving to a bigger space that was u it was an old um railway house in Killeshawa and we took up the SQ and garage renovated it with some investment
from um an investment company and then
um renovated and remember the first time we walked in I'm like oh my goodness what are we going to do with all this space
and about 4 years later maybe less we had outgrown the space
so just those key moments so I think that the moves
um in especially the first maybe 10 years were the most exciting part cuz you're growing, right?

8:38
Um the team is growing, the space, you need more space. Um of course the client list is growing as well. And then fast forward to 2020 and actually 2019 was a really turbulent moment in the business um because we were in trouble financially. Um I unfortunately hired someone who was not very competent um as my financial director. Yes.
Finance director. So it was it caused a lot of issues. Um so it was a very turbulent time. Um caught a break so to say early 2020 when you know I made arrangements with the people we owed money various institutions. Um so it was like okay let's there's there's a chance to save this business. Um and then March 2020, everything falls apart.
Everything falls apart.

9:32
Um we had just opened our second cafeteria with Safari in February. Um and at that time, I think we had 65 members, full-time staff.
Yeah.
And we used to have this board in the office where we write down the events that we have.
Yes.
Um for the week.
So every day there was about maybe 10 15 events. So early March the board started slowly by slowly events are being cancelled
and then when the biggest event of the year then for us which was a Kenya open we got a call from the customer and it was canceled that's when it hit me that this thing is real whatever this pandemic is is real
and it's going to be a challenge. So um that was a very key moment um for the business because essentially for months after that we had zero revenues.

10:19
So people were not eating. Of course there was government directive stay home. Our business was it was non-existent. Nobody. Yeah. Completely.
So that was one of the moments that um or the seasons that were really hard. Um a year later made the decision to move. My husband at the time, my husband, my husband at the time um at the time needed to do a course in the in the UK. So he had gone for 2 years. So the plan was he goes and we remain but a year after the pandemic hit um finances were just it was just not possible to live in two different countries. Um and it was a bit unfair to make him pay for all the bills um two different households. So decide made the decision to move um which was extremely hard because my dream has always been Africa. It has always been based in Kenya. I mean I love traveling but I never wanted to live outside of Kenya cuz my dreams were here. So that was very difficult. Um adjusting to life abroad of course and um I remember we had one meeting with the team before I left. All of us were breaking down

11:24 because that's when I told them listen guys I need to leave. And um it was yeah it was a key moment for me because I asked them you know the the position the business is in you know we have a lot of debt um are you willing to continue with this or should I just shut it down um and they were willing there were about 12 of them um remaining and they said okay we'll continue with the business just keep posting online because I had by then I had started posting a lot online um and engaging with people who ended up being my clients and some already were and come and visit when you can. So leaving leaving Kenya was difficult. First of all, just the the trauma of packing your life into two suitcases and leaving and starting over.

12:08
Um so that was in 2021 and then making the decision to move back home in 2023 December about.
Um it was very exciting, very anxious because it's not that the business had recovered fully.
It was a bet I was making of okay things seem to have stabilized. We seem our clients are coming back. people are going back to the office. Things had sort of to an extent were you know returning to normal. So yeah coming back and then of course this is now a year and a half later um to where we are. So those are the the key highlights of the the
So let's unpack one of those key highlights because it's you you you speak of it u with relative simplicity but it's a very complex thing. Yeah. For you to

12:51
decide to leave your business. Yeah.
Um in this We let's admit that we we live and work in a relatively low trust environment,
but you make this decision that I'm going to
uh keep this business open.
And um I would say that in that time,
your team did the best they could, but you still came back a few years later and found a business. Yeah. Maybe there were one or two things to fix, but the business was still standing.
So, walk us through the thinking behind that decision. What is it about you that makes you make that kind of decision
with regards to leaving the business? Yeah.
Not closing it down. You could always come back and open again. But you decide, oh, okay, I'll leave this business open. I'll leave it with my people. I'll communicate with them

13:41
electronically or digitally and we'll see where that finds us. Does Was it as well thought out as it seems now
or was it a Hail Mary? It was it was a bit of a hail Mary because one
there was a lot of debt that we had that the business had. So I knew that it wasn't exactly that easy to just close up shop and and exit.
Um two the business had a lot of potential. I mean we were already established brand by then with a very healthy you know client base.
So I knew at some point that that this thing the pandemic would end.
I I couldn't predict how long it would take. So I knew the opportunity would we would we would get back on our feet. I just didn't know how long it would take and I couldn't afford to stay in the country long enough to you know see that happen. And the team that I actually left behind was because we remember I mentioned we were about 65 permanent staff before co

14:35
and um what happened is after of course the pandemic hit I had to then scale down the team. So a lot of things I had I need take I need to take a lot of things into consideration. So who are the best performing guys? who are the guys who understand the brand who are so the 12 actually were the best of the team um that I had at the time and so it was a trust thing I mean business is a lot of trust right
so you trust and hope that they'll do the right thing that they'll maintain the brand um so that's how I ended up with the team so I knew I had left a fairly good team behind
um and some of them I had been with them for quite a long time over eight maybe eight or nine years at the time Yeah.

15:17
So, yeah, those are the things. I mean, first of all, I had the debts that I had to sort out, so it wasn't that easy. And then you have a team that you trust and believe can hold the brand for you because they've been with you for so long.
Um, and then then the knowledge that this thing will end, it'll end. So, so it was just that just yeah, that that those are the three things I would say.
So, entrepreneurship entities, yeah, tend to be um a bit of a roller coaster relationships. the relationship between the entrepreneur and the business that they have built. Yeah.
Um what have your seasons been for your business? It's not always a wow I love this place. I really want to be here kind of story. There are days when it's a bit tougher than most.

16:02
Where have you been in this 19 years and where are you now with your business? Yeah.
At first it was exciting. I mean we were privileged to be running the business from our parents house, right?
Yes. Um, so that means the bills are taken care of generally. So you're buying products but you're not really exposed to everything else. Um, and then you now go out on your own and you have to deal with so many things. There's city council, there's K, there's everything. Um and then you proceed to so the growth part of the business is always exciting
and then the problem starts
whether it's staff, whether it's cash, whether it's um I mean and what I think I've learned over the last few years is that the problems are generally the same. It's just the number of zeros.

16:47
Yes.
That are different.
Yes. Yes. Yes.
So of course the stakes are higher um now than they were 19 years ago. um I can't afford to just have one event a day or one event a week. You know, we have to keep pushing, you know, the the revenues to sustain the expenses that we have. Um
yeah, the stakes the stakes are the zeros are just more, but the problems have been generally the same.
The days that we the days that I really feel like quitting are the days when we disappoint the customer cuz for me the customer is it's everything in our business. So those are the days I'm like man I just want to be a housewife
you know I need to close this shop yeah less stress um yeah so so I mean the problems have been the same cash flow issues are the the same just number of zeros that are different now

17:37
um dealing with um all the stakeholders the the staff members the the suppliers um statutories like it's all the same problem it's just the zeros that are are more So when when when I think about your journey
in the last let's say let's say the last seven years was there a shift is there something you are looking for
because um as I understand your business you started to explore
um
structure
yeah and formality of the business what triggered that
um postco there were several you know during the pandemic was a it was a prime time to reflect
about okay so when this thing is over what kind of business do I want you know to to be running um so a lot of thought of that around that was okay I need this business to grow beyond what it currently is and um I realized I needed to get you know competent people on board with advice of you know how can I how can I scale this business what what exactly is the problem that I'm facing that you the problems that we're facing.

18:50 So post pandemic it was like okay I need to grow this thing and even when I was coming back to the country it was a decision of okay I'm coming back to grow this business I'm not coming back to play small it's time to play big
so the you know just the decision to make an advisory board and get people who I trust who people who are competent um in different fields um was important for me because then I knew I need some form of governance you know as entrepreneurs we're the ones they Kusma
were the ones. So I realized ah I don't know everything um and I want to learn and I want to scale this business.
So that's why I decided to you know just have some levels of governance um in the business. Yeah.

19:33
But you didn't just do it on the governance front because even on the operational front of your business you started to build a team. Yes.
Now you have been running the business. It's been there for x number of years
and it's it's still open. That means you're doing something right. But what triggers you to say I need different skill set?
What drove that?
It's knowing my my own competencies and knowing areas that I don't, you know, have competence in. Um, so for example, when I was away, I was not sure about coming back yet and decided, okay, I need someone to run this business and lead the business. The team I had was fantastic, but it lacked leadership. So decided okay the kind of person who I needed of course consulted with different people and then got a COO um

20:22 cuz I knew operations is something that if we want the business to scale operations will be very key um and then decided okay we need to to set up um it's it's competence around finance as well. So now we have a fractional CFO in the business. Um yeah so it's it's it's just realizing this business needs to grow. So what does it need to grow? What does it look like 5 years from now? Or if it's at maximum capacity of what we're able to do now.
So how do we prepare for that? And how do we set up the organog basically or the organizational structure to
to sustain the business in its different
periods? Yeah.
You're a dreamer.
Yes.
You're a creative and you're a dreamer. Yeah.
And um you you have dreamt about this business and what it can be. M

21:13
what do those dreams look like and what's the journey
of connecting your reality to these dreams that you're seeing about the potential of the business? I know you've even traveled
out of the country to look at other businesses that are doing this best case scenario.
So what where do you see uh with the local nuance that you have and the business that you currently have and the dreams that you have for it?
What do you see and where do you think you can take it?
The dream is Africa. So the vision is intimate and creative food settings across Africa. Um and the reason I chose food settings is I don't necessarily want to restrict it to outside catering or institutional catering. Uh it's just happens to be what we've done um very well for the last 17 years.

21:58
So if I'm able to expand within Africa or when I'm I would like to be able to to expand within Africa. So having an outlet in um or a base in Rwanda, Uganda, Tanzania, Ethiopia, it would be fantastic and it's not too out of out of reach because the companies we currently serve have bases in these countries.
So um I would really like to move out of of Kenya. Um first of all, expanding beyond Nairobi would be fantastic.
Um the current issue of course is just cash. Um and that's the problem. that's that's where we're currently stuck and trying to navigate just positioning the business in the way that it can um investment can come into the business.
So structure, governance um and just making sure ops are running very well

22:46
cuz we've done the I've done the hard work of building the brand.
So what what else comes in the the biggest impact would be cash?
Have you walked a capital raising journey of any kind?
I haven't but I'm beginning to.
Okay. So hence the fractional CFO trying to you know make the numbers make sense first of all and also just show whether the the business actually has potential. You know as dreamers you can be stuck in your dream very well but the reality may not be
be it. So
yeah having him come in come on board and just look at the numbers and position the business in a way that it's
um the only thing that's left is now just investment. Mhm.
So making sure expenses are are you know in line um and yeah just to the point where we just need an extra bit of capital and then that'll be done. What does that investor look like

23:37
in your dreams? When you dream and say, "Oh man, this would be my dream investor if I could get the person who not as an individual or but what do they what character traits do they have that you think would align with you as a business or with spares as a business as it currently is?
Someone who can understand the vision and buy into the dream.
Mhm. um someone with of course the same values as I am and someone who is patient with their money
because I think um we would need a bit of time to to have of course the ROIs well maybe not significantly long um but yeah I think someone one importantly you must be able to share the dream that I have um and we have to align on that because that's the that's the compass right of where where the business is going

24:26
um and someone who I mean if they have knowledge in the industry then That's even more fantastic.
What are those? Um, what are those values? You talk about someone who aligns with my values. So, what are Esme's values?
Good question.
Um, my values have cost me actually over the years.
They tend to
um people are important to me.
Yeah.
So, how I treat my people um people are people are really really important. So, it can't be I I I'll give you an example. We have people who have been in the business for years and have grown. We have a barister who's now in client service. We have a waitress who's in client service. We had a steward now who's an excellent baker. So, I like growing people.

25:11
So, it can't be a decision. A business that's running on anything other than growing people.
Yes.
Um, of course, when it comes to um what would I call it? That's correct English. Um, deals. Mhm.
There's there's certain deals I just won't cut.
Okay.
Um with regards to customers coming in, there's certain things I just won't do.
So, we have to align on that.
Um and what else would I say? Yeah. People and I suppose that those are the two main ones I can think about.
People and integrity.
Yeah. Integrity. Exactly.
Okay.
Yeah.
Okay. So um you you live in this you you now have a family.
Yeah. Your son is now 19 year old and your you your your your husband is a doctor and his career is growing.

26:06
Tell us a bit about um I hate to use the word work life balance because I don't think that exists in an entrepreneurial context.
You know if the kitchen is burning
there's no one else to call but you. If it's midnight, I have a burning experience and that's why I use it as an example at midnight and my wife ask me, "Where are you going?" I said, "The kitchen is burning. I have to go. There's no one else to go. It's me who has to go." Yeah. So, how do you then achieve balance? There's no other word, but how do you then live your life? You're a mother, you're a wife, you're you're and you're an entrepreneur running a a rather intense involving business. M
so how do you then make those words all make sense at the same time?

26:53
So yeah there's no balance at all. Um so what the word that's being used now is integration work life integration.
So when it's time I what I do is I try and give everyone attention depending on what's going on. So for example if the kitchen is burning you just have to attend to the burning kitchen. There's nothing else you can do. But if I try and make sure I'm there for key moments. So whether it's um graduation, my son recently graduated, make sure you're there. Um key moments, sports day for the little girl because she wants to see you cheering, you know. Um so there's key moments you have to be present for. Um and then you just need to make time for different things. So um it's an interesting thing cuz my son is now um working interning at Sp.

27:38
Um so it's very interesting having him there. In fact, he's it's it's a it's a challenge. He's deciding whether to call me mom or Esme. So I said when we when we enter the gate I'm as me
and then when we leave I do that to mom. Yeah.
Um so it's giving like just being in the moment that you're needed at the time. So if I'm at work and I'm in a meeting I'm in a meeting. Um the truth is my husband has also been very understanding but we've all had seasons. The season I've been there and been a housewife for 2 and a half years.
Yes. Running a business but mostly with them.
Um coming back I told him what my plans were. So the communication is important of especially in the couple dynamic of listen I'm going back and I'm going to build a big for the last 2 and a half years I hope you guys have enjoyed I'm out of the kitchen

28:25
we need this kind of support in the house you know a good um domestic manager and blah blah blah so it's just having the conversation with them um when I can I take my children to work with me of course now Miguel is is at work but um the little girl comes for events when I can cuz of course it's still a professional setting. So when it's a family fun day and their kids, I'll bring her.
Um, so it's just trying to figure out, okay, how do I integrate it when I can and then making time for including for myself when I can.
Yeah. Yeah.
Wow. Uh, as you talk, you know, because this is the first time I have a podcaster who's in my space. So, uh there's a lot of deja vu with deja vu in what you're saying,

29:12
but let's speak a bit about um
we have we we have talked about capital. We have talked about people.
We've talked about the vision that you have for space. Yeah.
But let's go back into time. You were a young lady when you are starting this. Yeah. It was uh I'm sure at the time you are starting this you are not looking at it as it becoming what you you are becoming a mother and you needed revenue and that was the the fix.
There must be one if not many more young ladies or young men who are at your age or around your age
and are exploring this either through a bakery. M
what would Esme of today
having a conversation with 20 odd year old Esme then
what would you say to them?

30:06
What what what would you tell them to to think about to look out for to be aware of?
Yeah. What what what advice would you give your your your your startup as myself
today? That's a good question. Um I think the first thing is to learn a lot about numbers.
Mhm.
That's the one thing that I suppose it's my regrets right in hindsight.
Um learn a lot about numbers.
Um or have someone on your team who
has that competence.
Yes.
Because we're not we're all gifted in different ways, right? We can't be be everything. So
that would be the first one. Um telling her it would be a it's going to be a very wild ride. M
um and you just have to keep pushing, keep moving forward as much as you can. Um what else would I tell her? Other regrets.

31:07
They cannot be they can also be joys. They don't have to be regrets. Also,
um you don't know it, but you're going to build something amazing.
Mhm.
Yeah.
Mhm.
You have it in you to build something amazing. Yeah. Yeah.
Okay.
Yeah,
that's that's pretty sound advice. I mean, I wouldn't have minded getting that advice myself.
Okay.
Yeah.
So, let's let's speak about the generality of the market.
Yeah. So, you you are a support function for a lot of business.
Uh the businesses you go into, you're coming in to give a service.
Mh.
What's the state of the market now in your opinion? M um there's a lot of demand um uh for the for the services. However, budgets especially this year have been cut significantly. So we find that um there's a lot of business we may be lo are losing to people who are offering cheaper services. But we also find that these cheaper services come at a cost and the customer unfortunately has to learn it the hard way and then comes

32:16 back to quality um and comes back to us because at the end of the day especially for the market we serve which is corporate they need you to be there on time. They need very good food because they're either hosting customers or you know um their staff. So food is a really big part of of it. Um and so so there's that. So yes, budgets are changing, but people still appreciate um what we offer.
Um it's a very difficult time in terms of expenses because every day something is changing. Recently, of course, fuel has gone up.
So it's it's difficult in terms of your profits are constantly being eaten into.
Um it's a very tough um market to be operating in at the moment.
Um especially just because cost of goods is just changing like almost daily now. Um so you have to be so now it's a game of okay we need to increase the top line so that maybe that'll compensate a little on the way down um to the bottom line. So it's a tough environment but there is demand for the business for a offering a good service to of course the market that we serve. Yeah.

33:23
Okay. Um you spoke a bit about your values.
Yeah. M
and um I think maybe you are diplomatic about it because uh but let's scratch that scab a bit and see what comes out of it. Uh so um I I find that in our market we tend to look um at
uh corruption for example solely from a very government perspective
and we are hard on government and I would say rightly so
but we we tend to give corporate Kenya a free pass. Yeah. But I know in our landscape we do
face front row
um some of those challenges. Those deals that you spoke about that you will not do,
what do they look like? And how can someone
in your space who maybe has not yet encountered them
see them coming and still dedicate themselves to a quality product

34:22
by avoiding these minefields of those deals
that that can be detrimental.
Um what do they look like? They're sometimes very straightforward. We had um a customer who approached us for work and um they were very clear that they wanted us to almost triple the cost um in our invoice and then give them
the difference
the difference and it was just I mean just no
just no it's not happening.
Um and it's it's sad of course I can't mention the organizations that have done this um but we have lost a lot of business over the years because of this.
Yes. Um sometimes it it may be a conversation that's that starts off of you know I've done a lot to ensure you you know you keep this contract. Yeah.

35:09
And yeah and sometimes you just have to you know ignore Yeah. and just act a fool like oh yeah exactly like oh thank you so much God will bless you
but we'll do a good we'll continue doing a good job.
Yes.
So it's um yeah it's a mix of things. Um, and you have to make a decision which way you're going.
And you know, it's funny because recently, uh, there's an organization that we have served for a while.
Yes.
And apparently we found out that we were flagged because they believed that we had a contact inside and there was a deal going on.
So in such a moment, you know, I'm so relieved because I know there's absolutely nothing they're going to find. Yes.
Because it doesn't exist.

35:48
You can walk into that assessment with confidence.
Exactly.
Yes.
So, um, we're just waiting it out to see. um in the meantime they continue asking for quotations but you know I can sleep well at night you know basically
so it's it's a tricky environment because that's the culture in the country um but you have to make a decision very early on and then just stick with it will cost you but there are also organizations that will be attracted to watch how you operate because you operate in the way you do so it's a you just decide which field you want to play in and commit to whatever it is and and stick with it. Yeah. So let me as you notice I'm I'm moving back and forth based on the stories that you have told us but let me come to the other one. You you in passing told us that you made a mistake in the appointment of your um finance director.

36:41
Yeah.
And I know that that has led you to have a rather intimate relationship with the tax man. Yeah. So just tell us about that for the benefit of those that maybe take uh compliance a bit casually. Yeah. Um
what are the limiting factors of of taking that for granted
and how does it limit you into the future and how do you solve for it?
Yeah, it was it was quite actually maybe one of the things I would also mention is if if I was giving myself advice is to get a mentor early on. Mhm.
Um because I waited until about 2019 which was very many years in
and when I when trouble had already begun
to you know get a mentor and um so
I never used to really like dealing with numbers when you first started and the numbers were small it was okay. In fact I still have the notebook where I used to you know keep a record of account. Um but as the business grew I realized my strength was actually in the BD side of it and the creative side of it. So what our buffets look like

37:51
etc. So at some point when we needed when my co-founder actually left the business uh because he left in 2012 to go to South Africa um one of the other um shareholders volunteered to come and assist with the numbers. So for me I'm like take this thing up.
I don't like it. I don't like it. I'll continue doing what I'm good at. You come and you know do it. And so there was a lot of trust in that um arrangement because one they they were part of a shareholding um you know entity and so I knew you're not coming to harm but I took for granted the aspect of competence.
You can have very good intentions but if you're not competent then
things go go south. M so um yeah we had very big losses in 2018 2019 and a loss is someone's money right it's not just a number it belongs that money belongs to somebody

38:45
so that was supplier and um of course carry debt
so that that that that I don't even know what to call it that ship sunk very quickly you know you you can figure out that you know the ship is going down but then it it was it was quite fast when um one of I woke up one morning um and I called by the bank and said, you know, your bank account has been um frozen by K. I had no Exactly. I had no In fact, they said agency notice. So, of course, I had no idea what that was.
So, I'm like, sorry, what do you mean?
Like, you can't access your account.
Um, and for me, it was just devastating. One, because I had already gone through a very tough year. Um, and of course, we had to end the relationship with the finance director, which was already it was also very, it was a very high stake year generally. M so I remember just you know calling one of our mentors and just crying on phone like what does this mean is it the end you know what so um luckily they had been through it as well

39:45 so it just guided me of listen you need to have a conversation with them give them exactly what's going on with the business and give them and figure out how you can come to a payment plan for the debt um so that's what I was doing a lot in 2020 January um and what I realized is you know Kerry is always portrayed as this big bad institution.
Yes.
But it's human beings who work there.
Um so of course I found very good um people at K and just told them this is my situation.
I want to pay um but I don't have the money now. Give me some time.
Um so yeah it's very dangerous not to one have competence with numbers or have someone competent
you know managing the finances or both preferably.

40:26
So because then you cover yourself.
Um it's it's it's costly because then you can't operate. I mean once your your account is frozen frozen you just can't operate.
Yes.
So it was a very it was a very hard lesson to learn.
Yeah.
But I'll take this I'll take the lesson differently
because um and maybe for the benefit of uh Kenyans or Africans I think we are we are heading to a good place
because like you say most people fear
uh any type of notice from the tax man.
Yeah. It's like a death kid, you know. Someone says if this thing if I receive this thing, I'm finished. Um
but um
it'll pass,
you know. And if you confront it openly. Yeah. And you don't run away from it. Yes, we made this mistake. Yes, we owe you this. But

41:20
it's it's neither in your interest or my interest for us to close.
Yeah.
Cuz if we close, I can't pay you. Yeah,
we're better off working and keeping and commit to paying
because here you are, we're having this podcast, your business is running. Yeah.
Um, you still have consistent conversation with the tax man and you still working towards reducing
uh your tax liability.
But I think that's the that's part of the conversation we need to get more of. Yeah. I find that um one of the things that I think about when I say local context and what type of investor do we want
I find that foreigners when they come and assess a company in Kenya they see tax liability and they're like oh

42:08
they don't touch yeah but I'm like why don't touch you know can we get into the nuance of why this tax liability is it solvable
cuz there may be a very good underlying business there
which you write off
because of a tax liability that is actually fixable.
Yeah.
Yeah.
I remember an an old man I know
who um
used to and I won't mention any names but he used to uh
cook the books
in the '9s in the late '
90s and I had so much respect for this man. I was like, "Boss, you you're why are you cooking the books to take the tax man for a ride?"
But I never asked him. And I asked him probably 10 years later.
And I told him, "You know, you really disappointed me as a young man when I found out

43:02
that he he used to buy export fuel
and sell it in the local market." and he looked at me and he says, "You know, you had every right to be disappointed, but uh you also have to contextualize what I was doing.
I was running in a b I was running a business at a time when I got nothing for my tax shielding.
Yeah. And so I had to game the system to survive
because there were no good roads. I used to go to the depo. As a result of there being no good roads, I had to pay more to maintain my vehicles. I had to buy tires more frequently. So my expenses were so any any chance I got, I still paid my taxes.
But I also had to find a way to survive. Now you come and find that guy without that context and you say ah this guy used to evade taxes you know and you write him off while his circumstance at the time or the nation as it was at the time being an emerging market that's dynamic and changing was different.

44:08
So I think what I take from your story is that tax liability is not the end
of the world. Yeah.
So let's speak about the future. Where is SP going? What should we look at for the next 10 years of Spares?
Okay. Um, like I said, the dream has always been Africa. So, figuring out how to make that possible. Um, figuring out how to fund that dream. So, that's the that's the season I'm in at the moment. Um, and hopefully that's the end game. So to have a couple of outlets in around Africa and um yeah a team of fantastic human beings.
Yeah.
Yeah.
Do you want to be there for that journey?
I
on a day-to-day basis or are you happy to
to be like a a conductor from a distance?

45:05
I'm happy to be a conductor.
One I think there's a lot of talent in the market. I think there are more competent people
available to push this dream forward. So I definitely want to be to be a witness to it.
Mhm.
Um but not necessarily, you know, being there in 10 years time.
Yes.
Yeah.
What's your relationship with your partner with your parents,
your early funders?
It's fantastic.
The guys who gave you a loan, what do they think about spares now? What kind of conversations do you have around the business?
And if I was to have your mom or your dad sitting here, what would they say to me about
Es's a risk taker. My mother always says like, "Hey, these jeans are not mine. These jeans, these jeans are not mine." Um, my my parents have been I mean, they were the reason for everything, right? the support they gave me being 19 and pregnant in 2015 16 was it was not uh not sorry 2005 2006

46:11
was um was hard I can imagine on them um let alone what I was going through
so they've been supportive
throughout um I like the fact that what they gave us for the first kitchen was a loan cuz it taught me a lot about you have to give back this money it's not just falling you know
um
they are very supportive along the way as well even through co they've been the silent witnesses but just urging me on like yeah okay how is business doing okay have you gotten this contract cuz I I would share we're pitching for this for that
so they're not business people themselves but they found they have their perfect way of supporting right
um what do they say about me yeah the the risk taker my mom is always I think I don't know whether she's shocked disgusted or surprised by the things that I do um

47:00
um Yeah. So, it's they're very they're extremely supportive. So, they would say that um I'm someone who sticks with something first of all. Um and yeah, I'm I'm a risk taker.
Okay.
I'm a risk.
But I'm sure there'll be a pride. There'll be a lot of pride there.
I I hope so.
Yeah.
I hope so.
Okay.
Yeah.
You've had a 19-year-old journey of entrepreneurship in a Kenyan context. Um
let's wrap up by speaking about uh what's your relationship with um the financing landscape
business? So how your relationship with banking and and the banking industry? Have you found it to be positive?
Have you found it to be supportive? Are there gaps? What do you think are things that could make could unlock even this enterprise potential that Kenya has?

47:59
My relationship. Um, so from the beginning I remember I don't know what year it was probably 2009 and maybe 8. All I wanted from the bank was a credit card
so that I could purchase the items
and when the customer pays pay them back
and I remember it was extremely difficult. We we couldn't get one. So you fast forward a few years and all of a sudden the banks are calling you like, "Oh, do you want a loan? What do you want?"
So they're not supportive. The banks back then anyway, they were not supportive of um small businesses, let alone a bunch of 19 year olds, you know, managing a business.
Um but eventually they did come through. There were some um that were fantastic for us. Um like back in then was Chase. Chase was able to take the risk um on businesses like ours and they were one of the businesses that really one of the banks that really supported our growth.

48:54
Um it's unfortunate that things played out the way they did.
Yes.
Um I think there's not enough around hospitality support because they don't understand it.
Yes.
Um and that has been a constant constant issue because what assets do I have? suuras, you know, I don't have much in terms of assets.
Um, so they're trying, but not we're not where we we could be.
There's still a lot to be done.
There's lack of understanding. Although right now, I see many banks trying to empower entrepreneurs with even how do you present numbers in a way that you can get funding. So there's that's changing. It's slow, but it's changing.
Um,
but yeah, I hope I hope that that that changes. I remember one day walking into a bank and asking for a loan and you know the branch manager was like no but you must have a plot somewhere like my goodness I don't actually I don't and yet here I am serving a very healthy you know list of customers so I find that the lack of understanding of our business models uh very it's it's very much there um so that understanding and

50:00 also just maybe empowering the entrepreneurs of how do you present your numbers in a way that the bank would accept Yes.
Yeah. So there's there's a there's still a very big gap there.
Excellent. Essald, episode 29 of the African group podcast has come to an end. But I'll give you a chance to speak about spares. Where can people find you? Okay.
Um what do you do? What do they what do you offer that would be of interest to them both as corporate entities or individuals?
Okay.
Yeah. Um so Sparz is um you can find us online on Instagram Sparz Catering um and on um Facebook as well. We are primarily a catering company. So we do a lot of corporate and also private catering. We've done lots of weddings um private events in houses. So if you're interested in you know hosting in style, you can call us for your events. Um we also do the cakes I mentioned earlier. We we still do those cakes. Um there's a

51:03 wide list of that and we also do institutional catering. So if your workplace has a kitchen and you're looking for someone to run it, would be happy to come and serve you.
So yeah.
Excellent. Ladies and gentlemen, that brings us to the end of episode 29
of the African Do podcast. Mhm.
It was a pleasure to have you as me and wish you all the best as you venture on this next phase
for spaceing and we look forward to hearing huge success stories from your end. Thank you very much ladies and gentlemen and we look forward see seeing you in the next episode. [Music]