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FEATURE - South African flexes entrepreneurial muscles to exploit health club industry gap

GeneralDec 11, 2018 14:30
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FEATURE - South African flexes entrepreneurial muscles to exploit health club industry gap

Fitness clubs are big business in South Africa. The industry generated more than US$930-million in revenue in 2016, according to The Economist. Virgin Active, the biggest chain which commands at least 60 percent of the market, was established in 2001 when Nelson Mandela reportedly asked Richard Branson to save thousands of jobs by taking over the liquidated Health and Racquet Club.

But despite the presence of established players, entrepreneur Tumi Phake spotted a gap in the industry. In 2014, he quit his investment banking job to start Zenzele Fitness Group, which focuses on establishing and managing in-house gyms at large companies. These organisations understand that an active workforce is more productive and engaged, typically gets sick less often and is generally happier. Zenzele's newest gym is on the top floor of insurance group Discovery (JO:DSBPp)'s imposing head office in Johannesburg.

Phake is one of the business people featured in a new book, titled 'How we made it in Africa' (, which tells the stories of 25 entrepreneurs who've built thriving businesses. Jaco Maritz, the book's primary author, recently sat down with Phake to discuss his journey as an entrepreneur.

Why did you start Zenzele Fitness?

I've been eyeing the health club industry for several years, but what got my entrepreneurial juices really flowing was when Rand Merchant Bank (RMB), where I previously worked as an investment banker, refurbished its employee gym. They brought in an outside company to set up the gym and manage it. The new gym was amazing. It had a fresh design and equipment, and they literally ran it like a world-class commercial health club right inside our office building.

I recognised that many other companies and institutions would probably also be interested in similar gyms for their employees. I began thinking about the possibilities – if you had 50 to 100 of these gyms it could be a real proper business. I tried to get information from the owner of the company running the RMB gym but he wasn't very forthcoming. However, this didn't dampen my enthusiasm. I thought I could do it better than him.

How did you grow the business into what it is today?

When Zenzele was little more than an idea, I managed to raise about R5 million ($360 000) in funding from an investment firm. It isn't common for investors to give money to such an early-stage business, but I won them over with solid financial projections. Through this I learnt that investors don't look for ideas that give them goose bumps, but rather an execution plan. You need to be able to clearly show them a strategy that will sustain the business for five, 10, 20 years.

We opened our first gym at South African Breweries (SAB), the country's largest beer maker. The partnership with SAB assisted us with sharing costs and this would then act as an indirect subsidy to the membership subscription making it cost effective and affordable to the predominantly blue-collar workforce.

We built a state-of-the-art facility that looks and feels like something you'd find anywhere in the world but at an affordable price. The gym saw strong uptake and half the staff are still using it. This proves to me that people are very aspirational and conscious of their health, and that the reason they haven't used such facilities before is because they are too expensive.

And our business grew from there, and since then we've opened gyms for several corporate clients, including Absa (JO:ABGJ), Hollard Insurance, Rand Refinery and Alexander Forbes.

Tell us about your greatest weakness as an entrepreneur.

My greatest weakness is wanting to do everything on my own. A lot of the responsibilities that I took on in the past were things I had no real experience in. I think typically we entrepreneurs tend to want to do everything ourselves, and I quickly realised that's no good – you need to find people that have skills you don't have.

Which popular entrepreneurial advice do you disagree with?

There is a saying that not everyone is born an entrepreneur. I disagree with that. Every single day I meet people that have ideas on how to change the world. I think society has instilled fear in us and structured us in a way so we don't really explore those opportunities. The only thing that's stopping those people is fear.

What are some of the most important business lessons you've learnt?

The first thing is to trust your instinct. If something doesn't feel right, it probably isn't. Listen to your gut. The second one, is to find smart people to work with you. Finding people who have experience really helped me because they were able to show me the blind spots and the mistakes I would have made. Having the right people in your team is critical, even if it means you as a business owner have to earn a lower salary than them.

The third point is live a balanced life. Entrepreneurship is very tough. You need something to take your mind off work and to relax. I enjoy exercising, for instance. But whatever it is, you need to unwind, otherwise you are going to go crazy.

FEATURE - South African flexes entrepreneurial muscles to exploit health club industry gap

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Lerato Mogale
Lerato Mogale Dec 30, 2018 21:56
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Intresting story to read about Zenzele gym. May it grow by leaps and bounds.
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