Richard Mukheibir, managing director of Cash Converters Southern Africa.
International franchise Cash Converters is the world’s largest retail chain that specialises in the buying and selling second hand goods as well as providing personal loans.
Richard Mukheibir, managing director of Cash Converters Southern Africa, explains the reasons behind the group’s significant growth and why franchising remains a solid investment for entrepreneurs.
Quick facts about Cash Converters
- The franchise has a three-in-one business model: it buys unwanted items in good working condition, and them sells them. It also provides personal loans.
- There are over 700 stores in 21 countries.
- The first retail outlet opened in 1984 in Perth, Australia.
- Cash Converters International is listed on the Australian Stock Exchange.
You are a seasoned businessman who has served on the boards of companies such as Postnet SA and Multiserv. Why did you decide to take up a position with Cash Converters Southern Africa?
Although I come from a family that has always had small businesses, I found myself working in an unfulfilling job in a large corporate in the mining industry. Eventually a few friends and I decided to look into franchising, focusing on successful businesses overseas. We had lots of excitement, lots of passion and no money!
“We think there is a massive opportunity in South Africa and we expect to open 20 new stores over the next year alone”
After doing some comprehensive research, we decided to bring two businesses into the country and they were Postnet and Cash Converters. We started planning around 1992 but we only opened the South African franchises in 1994.
Why did you decide to put down roots in the franchising sector?
I like the energy and the drive of it all. Combining money with people who have potential and drive to build their businesses is wonderful. Franchising is very symbiotic, a franchisee’s success is your success and should they fail, it is also yours to share.
I also enjoy the way franchising contributes to South Africa’s entrepreneurial climate. In South Africa not enough emphasis is placed on the possibilities of entrepreneurship and our youth are not educated to think in this way. There are not enough programmes and primary education aimed at supporting entrepreneurship.
How is Cash Converters performing in the current economic climate – is there still a demand for what the concept has to offer for consumers and franchise owners?
- The economic climate forces people to be cash conscious and assess how they are spending their money. Cash Converters is a suitable business model for this environment.
- South Africa has a large and established second hand dealer and pawn broker culture. With second hand goods, people can sell their used goods and get instant cash. They can also find good bargains where they will pay much less for items that are almost as good as new.
For franchise owners:
- The trend towards “re-purposing” durable items and recycling is now becoming more mainstream, which is a further benefit for the Cash Converters concept.
- All retail businesses face cash flow risks, but the cash advance and payday advance loan products act as a buffer if retail sales fluctuate. This means our franchisees are not simply selling second hand goods – they also understand finance and the changing market dynamics.
- Our money-lending products are a lucrative income stream for Cash Converters and we have managed to bring it into the mainstream retail environment. Our aim is provide people with cash quickly and conveniently.
Is there a demand for new franchise outlets?
We’ve been very fortunate because over the past five years our growth has been 20% to 25% compound, year on year. We currently have 70 stores in South Africa and we plan to build this up to 150 over the next five years. We think there is a massive opportunity in South Africa and we expect to open 20 new stores over the next year alone.
How does Cash Converters plan to keep the brand relevant?
Online sales is the next frontier and part of our strategy is to develop a platform that makes this possible.
Reference: SME South Africa www.smesouthafrica.co.za