Introduction
3 years of existence grown to a fleet of 16 trucks.
Eldakk Logistics has been operating in the sector since June 2019. The vision to trade in this sector came to George Konde after running Sharlykon Logistics, a family-owned logistics company that he took over after his father died. Sharlykon Logistics was a training ground for George, allowing him to learn the trade, forge relationships with people in the industry, and make big money decisions that would eventually impact his career.
Eldakk Logistics is fully owned by George, with his wife as his business partner. Their business model is primarily that of leased trucks with the main contractor offering a fixed and variable payment based on truck usage and mileage.
How it started
The story of Eldakk Logistics starts in 2019. Through the years the business has experienced unique transitions and pivoted to new business models.
Watch the video below where George shares more insights on how the company started
The factors driving ELDAKK Logistics growth
Growing from Sharlykon Logistics into Eldakk Logistics, George Konde acknowledges that the journey has been one marked with many growth pains. But even in the face of these challenges, he is satisfied with the fruit that the journey has borne and looks forward to what the future holds. He attributes the success that his entrepreneurial journey has held to the following factors:
1. Faith in God
George believes that his faith in God has been central to his success by allowing him peace in the moments when the business was doing poorly. He believed that when things are beyond his control, God orchestrates things in His divine power for George’s good. Taking this approach has helped him exonerate himself from the many variables in business that cause stress. In relinquishing control to God, he only does the things that are within his control. This has given him better clarity in business, offering him a chance to be present and not too worried about the future.
2. Risk-taker
George left a stable job that offered a monthly salary at Barclays Bank (now Absa) to venture into business. Sharlykon Logistics at the time was not profitable. At the point of his resignation, Sharlykon Logistics had shrunk to two trucks after the two partners pulled out. The business was already taking from his income and demanding more of his time. In essence, the business was a liability to him. His mother pleaded with him to abandon it on account of the frustrations his father had had to endure.
Before his resignation, George had taken out a mortgage in 2015, and resigning meant that his payment terms would shoot to market rates as opposed to the terms negotiated for bank employees. Even with all this, George proceeded to resign from his banking job to get into a full-time business. At heart, George says he has always been a business-man. During his banking career, he participated in multi-level marketing with WorldVentures, took up professional photography as a side hustle, and also sold shirts. He found great pleasure in selling things for a profit. The fulfillment he derived from his photography business contributed greatly towards his desire to take up Sharlykon Logistics, full-time. Sharlykon Logistics was also a family business, he felt that he needed to keep it alive. All these things put together, he was willing to risk it all for the business.
Moreover, upon receiving his pension, he used it to buy a new truck for the business, a decision that he later regretted. Initially, when he was making the decision to buy the new truck, George had made the assumption that the business was making losses because he was not fully present. He thought with his resignation, he would streamline processes and the business would generate profitable revenues quickly. Unfortunately, his assumptions did not work out as planned. The business was barely making enough money to finance the loan nor meet his needs. Eventually, he sold the new truck.
Years later when Eldakk Logistics was incorporated, he was required by the Cement Company to take up the demand vacuum that had been created after Dakawou Transporters discontinued their 10T trucks contract. To meet the terms of this contract, George needed to have 10 trucks in his fleet. At this point, he did not have any trucks.
"I agreed to the terms of the contract with the hopes that I would source the trucks in two months. Thank God I was able to meet this demand by changing the model from buying trucks to leasing them and start operations as Eldakk Logistics in March 2020. I got to use some of my wife's benefits as down payments for two trucks and getting a loan to top up the balance. Then we outsourced the remaining 8 trucks."
3. People management skills
George’s social skills were sharpened during his tenure as a trade salesperson at the bank. He learned how to relate to people and problem-solve with great ease. Taking these skills into the business world, he says, has been a great gift for him.
People-management skills have allowed George to maintain an open-door policy for feedback. In so doing, he has managed to continuously improve on operations and made his drivers and other stakeholders feel heard and appreciated. This kind of working environment, he notes, yields motivated staff. George adds that his drivers, whether directly hired or outsourced, are eligible for their end-of-year monetary packages. This culture has enabled George to build a team that has minimal turnover.
When George took over Sharlykon Logistics, drivers took advantage of how unknowledgeable he was about the business. They would siphon fuel from the trucks and request fuel refills. Unaware of what was happening, George would deposit money into petrol station accounts quickly to avoid any delays.
"Today, I use a fleet management system, In-Vehicle Management System, that allows me to manage the entire fleet remotely. The system allows me to manage the trucks, tracking their movement and able to tell how far they are from the depot and how long they will take to arrive."
Moreover, he is able to manage the driver behavior from this system. Through this system, he can monitor things like harsh acceleration, harsh braking, speed violations etc. He says, with drivers knowing that such monitoring tools are in place, better driving behavior is enforced and he is able to reward drivers for the same. Most importantly, the management system is able to track fuel consumption and this is able to calculate the profitability of each trip -the cost of fuel against each trip taken.
Technology has revolutionized the logistics industry and it is imperative that one adapts to these changes so that one stays relevant and profitable in the market. George notes that with the fleet management system, vehicle maintenance has become easier. Because trucks in logistics are of a manual transmission, any harsh acceleration and braking leads to damage of the clutch. Frequent vehicle repairs become detrimental to profitability. In the long run, the incorporation of this fleet management system has kept costs low and inevitably, promoted the profitability of the business. With Eldakk Logistics, using the fleet management system has grown transparency with the subcontractors allowing operations to be smoother and faster as time wastage is reduced and more trips are achieved.
Business Model
Sharlykon and Eldakk Logistics, both being managed by George, though operating in the same industry, have different business models. Sharlykon Logistics is paid per trip, whereas Eldakk Logistics is paid on a fixed and variable component of truck and mileage respectively. That serves as a major distinguishing factor between the two businesses. In both businesses a majority of the trucks are outsourced. This business model works to lower operational costs and the financial burden that presents itself in financing loans and maintaining trucks.
George manages both Sharlykon Logistics and Eldakk Logistics. While it could have been easy to merge the two companies, Sharlykon Logistics being a family business would have to relinquish all its rights over to him. Owing to the fact that there have been previous family wrangles around Sharlykon Logistics, it is easier to run the two businesses as two separate entities. Both Sharlykon Logistics and Eldakk Logistics have the Cement Company as their main customer but with two separate contracts, a gesture that goes to show that George has managed to run the two businesses without a conflict of interest. Sharlykon Logistics, in addition to the Cement Company, also has Agility Logistics as a customer. In terms of fleet size and customer base, Sharlykon Logistics is a much bigger business than Eldakk Logistics.
It is worth noting that, even though Sharlykon and Eldakk Logistics operate in the same industry, George runs them as different companies because they have different directorships. Sharlykon Logistics is a family-run business and therefore, decisions are not solely made by George as opposed to Eldakk Logistics which is solely owned by George, making the decision-making process shorter and final with him. Moreover, Eldakk Logistics and Sharlykon Logistics have different revenue models. As such, have they registered different profit margins.
1. Asset development
As of 2017, when George’s father passed away, the fleet had 4 trucks. Two of those trucks belonged to his father while the other two had been outsourced. Shortly after his death, the two partners who had outsourced their trucks to him pulled out with the fears that George would not manage their trucks well. The fleet was down to two trucks. In 2018, George bought a new truck in partnership with a former colleague using his pension as a deposit and seeking a loan to top up the balance. Later in the following year, he had to sell the truck when the revenues from the business failed to raise enough money to finance the bank loan.
In late 2018, George found business partners that were willing to work with him to grow the business. In doing so, the fleet started growing and he was able to lock contracts with the Cement Company. In June 2019, amidst family wrangles, George decided to start his business where he was the sole director, a decision that led to the registration of Eldakk Logistics. Eldakk was later contracted by the same Cement Company in March 2020. This contract required Eldakk Logistics to have a fleet of 10 trucks. Through partnerships and bank loans, George was able to provide this.
George was able to turn Sharlykon Logistics from a loss-making business in 2017 with only two trucks to a business with 35 trucks. This asset-building was initially achieved by bringing business partners on board who invested in the business. In the years that followed, George plowed back the profits by taking up loans and getting new trucks. As the company scaled, George adopted the model of outsourcing trucks to cut down on asset development. He has continued with this model with Eldakk Logistics which currently has a total of 16 trucks, with only 4 being owned by the business.
2. Revenue model
Sharlykon Logistics and Eldakk Logistics run on two separate revenue models. This discrepancy is due to their contractual payment model. Sharlykon Logistics operates under a pay-per-trip model while Eldakk Logistics is a hired service. Both Companies maintain a certain percentage of the revenues as margins. The profit margins sustain operational costs of the business including paying his full-time employees, office rent, government levies, trade licenses and any other operational costs arising.
"It took a couple of years to fashion this revenue model. Initially, I would transfer my entire cut to the subcontractors and ask for a 10% pay after all costs had been deducted, unfortunately, because of delays in payments from both the company and subcontractor, cash flow problems became imminent, and crippled the business. Working with this current model has fostered transparency and accounts for every truck and trip done."
For the outsourced trucks, George gives full ownership of the trucks to the provider. This method makes management easier. It is also an easier model to distribute revenues and losses as well as driver payments.
3. Customer acquisition
George notes that building networks is important in this business. For both Sharlykon and Eldakk Logistics, customer acquisition has mostly been through referrals and networks. Eldakk Logistics got its first contract by being seconded by Dakawou Transporters. However, the lack of transparency in payments is a great hindrance in customer acquisitions. Most contracts look good on paper, but it becomes a great challenge when it comes to honoring payments which eventually leads to cash flow problems for the business.
Logistics companies are known for hoarding payments or paying out in other forms of payment which is not legal tender, something that is of great frustration to fleet owners. Due to such problems, many opt for the reliable customers they have rather than acquiring a new customer who does not pay in time or does not pay at all.
Currently, Eldakk Logistics has two customers, the Cement Company which is their main customer allowing them a minimum of 200 trips per month, and Lori System, their newest customer, onboarded in July 2021. Sharlykon Logistics trades with the Cement Company as well as Agility Logistics working as a partner for East Africa Breweries Limited.
4. Sales & Marketing
George notes that the best way to market yourself is to ensure that the stakeholders are satisfied. Because the logistics business is very reliant on referrals, George is keen on ensuring that his delivery is top-notch. He is dedicated to ensuring that his work speaks for itself. That is not-withstanding, he is looking to grow his social media presence as a means to reach a bigger audience and grow his customer base.
Market Expansion
Eldakk Logistics expansion plan involves long-term contractual work with multi-national companies. Multi-national companies provide room for growth for the companies that they onboard. Furthermore, because of their organizational structures, processes are clearly defined making it clear for third-party companies to pursue payments with greater ease.
"I hope that Eldakk Logistics will form partnerships with more multi-national companies, companies that will allow us to grow our presence outside the Kenyan boundaries"
In doing so, his fleet too will grow. He is positioning himself better by building his fleet and approaching brands with an international presence with the hopes of gaining visibility and networks. He hopes that he can provide a bigger fleet to expand his capacity.
In the meantime, he hopes that he can set an operational standard within the Kenyan market when it comes to prompt payments in the logistics industry, a problem that plagues the industry. He hopes this standard will set him above the rest, providing him a competitive advantage in the market. He has partly achieved this by making payments on time and where there is a delay, offering communication in good time. Through the years he has been in the logistics business, he has appreciated the sub-contractor model of business and hopes to increase his trade routes and trucks using this model. In this regard, in the absence of heavy capital investments, cash flow problems have been greatly reduced allowing him the chance to think about market expansion. In the next 10 years, he believes Eldakk Logistics, which he has full control over, will have a presence in all East African countries and trade with more brands.
LEARNINGS, RECOMMENDATIONS AND FUTURE OUTLOOK
This is a good portrayal of the complexities of a family business. Even with the passion and desire to grow Sharlykon Logistics, to the point of resigning and using his pension as capital investment, when personal interests in the company took the day, his efforts in keeping the business alive were disregarded. It could have been easier to walk away from it all but, George Konde has found a healthy balance to run both companies. Entrepreneurs like George embody the resilience necessary to run a successful business having had very little exposure prior. Both Sharlykon and Eldakk Logistics have survived through the years by debt financing and eventually outsourcing plans that took away the financial burden from George. This is a clear indication of the tenacity that many business owners carry, and the financial fortitude they embody to see their vision to life.
The growth of this industry is only set to grow bigger. With proper positioning, Eldakk Logistics is likely to grow bigger. This is especially true because the payment model that is set in place for Eldakk Logistics ensures that truck maintenance, driver payment are upheld by the subcontractor. In this model, George’s profits are higher and the operational stress is lifted. In addition to this, they have kept themselves relevant by using technology that allows them to keep track of their drivers, therefore ensuring that their reputation in terms of driver behavior and delivery and pickups is protected at all times. Overall, Eldakk Logistics is not only playing by the books, they are setting a standard that might be hard to match up to.