Entrepreneurship Zone: 26 October 2023 :: South Africa: The journey of Ian Fuhr, founder of Africa’s largest beauty chain

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Entrepreneurship Zone: 26 October 2023 ::  South Africa: The journey of Ian Fuhr, founder of Africa’s largest beauty chain

 




 


 

 

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This article draws on information from a presentation by Ian Fuhr at the African Hidden Champions Summit held in Victoria Falls, Zimbabwe, in September 2023. It also incorporates excerpts from an African Hidden Champions case study on Fuhr and the Sorbet Group.

In his nearly five decades as an entrepreneur, Ian Fuhr has ventured into industries such as retail, music recording, and consulting. His most notable achievement was the founding of the Sorbet beauty salon chain. Throughout his career, he consistently drove profits by emphasising the crucial role of people in business.

In 2017, South African serial entrepreneur Ian Fuhr sold the Sorbet beauty salon chain, which he had founded, to Long4Life, an investment company backed by dealmaker Brian Joffe, for R116 million (US$6.3 million at the current exchange rate). But in the early 2000s, when Fuhr first envisioned Sorbet – a chain offering services from manicures and pedicures to skincare treatments, waxes, and massages – the beauty industry wasn’t necessarily on his radar.

Fuhr knew very little about the sector. “I always thought that a Brazilian was a person who lived in Brazil, and that Hollywood was a place they made movies,” he quips, alluding to specific waxing treatments.

Instead, Fuhr’s interest lay in the human aspect of business – specifically in crafting a company culture that created excellent customer service. From his previous business ventures in the retail, music and consulting industries, he had already developed a framework for a healthy organisational culture and subsequent corporate performance. All he needed was the right venture to apply it, and Sorbet provided just that opportunity.

Most entrepreneurs initiate businesses by pinpointing a concept, testing its viability, refining it, and only when they begin hiring do they ponder the company culture. For Fuhr it was the other way around. “I already had my culture. I had developed that over a number of years, and I was ready to find the business to actually try and introduce and instil that culture into that business. And that’s how Sorbet started,” he explains.


>From retail to records: Fuhr’s early business ventures


In 1976, at the height of apartheid in South Africa, a 22-year-old Fuhr and his brother launched Kmart. This discount retail venture primarily had black people as its customers and most of its staff was also black.

Having attended a Jewish school, even though his family wasn’t religious, Fuhr grew up largely isolated from South Africans of other backgrounds. However, Fuhr proactively educated himself and frequently engaged his staff in discussions about race to better grasp their perspectives.

His approach deviated from business norms in the 1970s. For example, under the Group Areas Act during apartheid, black people were not allowed to manage stores in white areas. However, Kmart appointed black directors and managers during a time when it was illegal to do so. This led to constant harassment by the police.

Despite the tense political climate, Fuhr was able to develop a corporate culture that acknowledged and addressed the realities of his black employees and customers. This made the workers more productive, contributing to Kmart’s commercial success.

After a few years in the retail business, Fuhr took a detour into the music industry. He co-founded a record company, signing acclaimed artists like Letta Mbulu and Hugh Masekela. With his focus on music, he handed the reins of Kmart over to his brother. However, when Kmart encountered financial hurdles some years later, he made his return to the retail world.

In 1991, with the end of apartheid just three years away, Fuhr pivoted once more, establishing a race relations consultancy named Labour Link. Here, he tapped into his Kmart experiences to guide South African firms on managing racial dynamics in the workplace. After doing Labour Link for seven years, his brother beckoned him back to Kmart (which by this stage was rebranded to Super Mart). Fuhr returned and remained until the business was eventually sold for over $7 million to the now-defunct Johannesburg Stock Exchange retail conglomerate, Edcon.


Entering the beauty industry: The start of Sorbet


Following the acquisition, Fuhr identified an opportunity in South Africa’s beauty sector. At that time, there wasn’t a national beauty treatment chain; most salons were either standalone or operated just a few branches.

Using the proceeds from the Kmart sale, Fuhr purchased several independent salons to familiarise himself with the ins and outs of the beauty industry. By 2005, at the age of 51, he was ready to launch the Sorbet brand.

For the company’s name, Fuhr tasked an agency with finding one – with the caveat that it shouldn’t have anything to do with beauty. Out of the about ten proposed names, ‘Sorbet’ resonated immediately. The pastel hues of the suggested logo also stood out, a departure from the prevailing beauty brand designs of the time. “Everything we tried to do at Sorbet was to be different to anyone else,” Fuhr says.



A Sorbet outlet at the Randridge Mall in Randburg, South Africa


Making culture front and centre at Sorbet


Culture became Sorbet’s backbone. Every employee underwent induction training, personally helmed by Fuhr. From the beginning, he tried to bring home the concept that the reason why they came to work was to serve, not to make money. “It’s not that money is not important, money is critical. But you have to serve first to get the money. Because if you serve well, the money will always follow,” Fuhr explains.

“The purpose of not only work but the purpose of life, as far as I’m concerned, is to make a meaningful contribution to the lives of the people we serve. And that was the philosophy. So our purpose was to touch people’s lives and make them feel good. And that’s why people come to beauty salons, to feel good … and it is our role to make them feel good … Every single person had to understand that. And the message was instilled over and over and over again, until it became second nature,” he adds.

Fuhr credits this service-centric philosophy as Sorbet’s competitive edge. He observes that many beauty salon chains have found it challenging to reach significant scale due to the intricacies of maintaining consistent service across multiple outlets.

“In the beauty industry, there’s a very low barrier to entry. Anybody can open a beauty salon. You can do it in your bedroom. You can do it in the garage … Anybody could walk into a Sorbet salon and copy us. They could copy our look and feel. They could copy our pricing. They could copy our treatment offering. They could copy the products that we sold. They could never copy the culture.”

Moreover, Sorbet also had a strong focus on developing interpersonal relationships among its employees. It tried to cultivate tolerance and understanding between people of different religions and races. Given South Africa’s apartheid past, Fuhr actively sought to address racial polarisation in the workplace. By doing so, employees developed a sense of belonging. They felt heard, safe, and respected. This environment motivated them to collaborate willingly to achieve the organisation’s goals.


Franchising the business


Fuhr’s intention was always to franchise Sorbet. However, in the beginning, the company struggled to attract franchisees. In fact, it took four and a half years to secure the first franchisee.

Sorbet opened 22 company-owned stores in total. This used up a lot of capital and put the company in a precarious financial position. “We were looking over the edge,” Fuhr recalls. The take-off of the franchising model came just in the nick of time. Sorbet sold most of its company-owned outlets to franchisees, which greatly improved its cash flow situation. Once the franchising momentum was established, Sorbet was opening as many as 30 new stores each year.

To ensure that the franchisees maintained Sorbet’s culture, all franchisees were also required to undergo the same induction training that the employees did.

By the time of its sale in 2017, Sorbet had about 220 outlets with over R1 billion (about $52.6 million at the current exchange rate) in annual turnover.


Including employees in the wealth creation process


Many corporate leaders and CEOs frequently highlight the importance of people for organisational success. However, the actions of these organisations often don’t align with the high value they claim to place on their people. A review of a company’s financial statement, for instance, is a good way to assess the real value which they place on their people. Fuhr learnt this lesson in 1991 from an economics journalist, Jerry Schuitema, who illustrated the concept of wealth creation and how to value people above things.



Figure 1

Figure 1 illustrates a profit income statement and shows staff listed as expenses. In this scenario, it is obvious that people are valued in the same way as any stationery – as mere costs and expenses. This might appear inconsequential, but it deeply influences the company psyche, and the way people are treated. Employees who are treated as stationery are less likely to be provided with the resources and tools needed to enhance their performance, given that the goal is to keep costs down. This also explains why during periods of economic downturn, organisations are quick to downsize their workforce regardless of whether the performance of workers warrant such actions.



Figure 2

Sorbet under Fuhr’s leadership proposed an alternative way of viewing people, as illustrated by this wealth creation statement in Figure 2. Here, people are not listed in the ‘expenses’ section. Rather, people are listed in the ‘wealth created’ section and this represents a paradigm shift in how people are viewed in an organisation. People are therefore seen as assets and are provided with the resources and the environment needed to thrive. Furthermore, Sorbet defined wealth creation differently from conventional businesses. In traditional businesses, net profit is what is left after sales, costs, and expenses (including staff) have been deducted. Here, staff are treated as an expense and the net profit goes to the business. At Sorbet, wealth was calculated before staff salaries have been deducted. This allowed Sorbet employees to share in the creation of the wealth – a sharp contrast to traditional businesses where the owner takes everything.

At Sorbet, 10% of wealth created went to franchise partners, 15% to tax, while the remaining 75% was shared among employees. Sorbet employees were informed of this wealth creation process, and this increased their motivation as they realised that they receive a significant part of Sorbet’s wealth. They were therefore motivated to provide extraordinary service, reduce expenses, and eliminate waste as these practices increased Sorbet’s wealth and consequently the amount available for sharing among the employees. This Sorbet approach, therefore, inspired staff to have a higher sense of purpose and display higher levels of commitment.


The business of building and moving on


Fuhr admits he much prefers building businesses to running them. “I enjoy starting things and building them up and then moving on,” he says, noting that overseeing a vast company isn’t his strong suit.

In 2020, after his tenure with Sorbet, Fuhr launched the Hatch Institute. This corporate coaching venture emphasises the significance of organisational culture, offering training to executives especially in the realm of race relations.

A theme throughout Fuhr’s entrepreneurial journey is that he constantly entered new industries. He believes a major advantage of this approach is the fresh perspective it affords. “You are not contaminated by the conventional wisdom of that industry.”--Howwemadeitinafrica 



Ian Fuhr speaking at the African Hidden Champions Summit in Victoria Falls, Zimbabwe.

 

 

 


 


 


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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 


 

 


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