And behind this tool are three entrepreneurs who believe that technology can and should be used to making business decisions – especially when computers can analyse, interpret and find patterns in huge amounts of data within a couple of seconds.
Fin24 spoke to founders Pieter Francois Theron, CEO of ForexForever, Johann Strauss, CFO and Willem Engelbrecht, Gaunteng area manager.
Where did it all start?
About six years ago a friend of Pieter Francois who had an oil trading company approached him with a challenge. He was doing his exchanges from dollar to rand each day at 11:00, a widely accepted standard for the oil industry, but wondered if there was a way to determine if the rate at 11:00 would be favourable for his company or not.
Knowing that Pieter Francois had been involved with forex trading as well as computer programming for the last 12 years, he set the challenge for him to create a program they could use to make this decision.
Six months later and a friend smiling from ear to ear as a result of increased profits in his business, we saw the opportunity to combine technology and the foreign exchange market and package it in such a way that the client is empowered to make accurate and effective foreign exchange decisions, without increasing the risk for the company.
ForexForever was officially launched in February 2012 after a couple of years of product testing, development of the final algorithms and ensuring the security of the code.
The software, ForexNow, was developed specifically for the South African import and export companies to provide them with a tool to answer the “when to exchange” question.
Using mathematical algorithms, the software analyses and identifies historical market patterns through the use of technical analysis and predicts the most probable outcome on a short, medium and long term projection.
How would you describe your journey? Was it easy to start?
Not at all. As with many start-up business, you are bringing a new idea or new way of doing things to the market – sometimes the market has been functioning a certain way for a number of years and bringing a new concept not only requires the need to convince people that you have a good product, but also you need to convince them that there is a different way to do things.
The hardest part has been challenging the status quo.
We entered a market that is flooded with fundamental analysts making their predictions on what the rand is doing currently and where it is going (none of them usually in agreement) – now we come into the picture and tell the clients whom have been at the mercy of these analysts for years that it is actually impossible to predict the movement of the rand and in most cases pointless.
We found that companies that are committed to innovation and staying ahead of the latest technological breakthroughs were the first to test and appreciate what we have created.
Believing in your idea and your vision, even when it seems that no one else does, we believe is the success to breakthrough.
What were/are the stumbling blocks and how did/are you dealing with it?
Everything you do in starting up a business is challenging and could present a stumbling block – unless you are a serial start up specialist and have gone through the process a couple of times, you normally will find yourself thinking about and doing things for the first time.
We found that having strong company values (we call it our WHY’s) has helped us to overcome obstacles and lay a strong foundation from which we can grow our company. As these values are also the personal values of the employees it creates a sustainable business model.
Marketing for example will have a major influence on the success of your business, but in our case having a chartered accountant and computer programming and trading background did not prepare us at all for the decisions we had to make on marketing.
We believe that the only way to learn about business is to be responsible for everything in your business.
Costs are always a consideration for anyone setting up a small business. How did you overcome this hurdle?
Cashflow is one of the major reasons for start-up company failures and as such a very important aspect of the business to focus on. We did not have a lot of money to start off with, which I believe was a very good thing as it made us think differently in finding solutions - if we had money the fix might have been short term, but still present a problem in the long run.
We came up with clever ideas for attracting agents, building our brand and getting exposure that added very little cost to our operating expenses.
What attributes do you think a person needs to start a business?
- A lot of determination and fighting spirit (especially needed when you feel like giving up).
- Belief in your product/service/concept.
- Ability to identify and build a strong support team.
- Having fun while doing it – we believe this is a breeding ground for excellent ideas.
What do you think will help grow start-up businesses in South Africa?
There is a point in the life of a business where the advice of an experienced businessperson would greatly benefit the start-up.
When I think of a Board of Independent Directors adding value to a Company, a similar concept could be beneficial for start-up companies (maybe seasoned campaigners looking to give back to the community / business world?). Access to this kind of advice / mentorship is very hard to come by and usually involve very expensive hourly consultants.
What exactly it is that you do and how is this different from the way it is being done now?
We believe that technology can and should be used to making business decisions – especially when computers can analyse, interpret and find patterns in huge amounts of data within a couple of seconds.
We start off by telling our clients the following:
- There is no need to outsource this important aspect of your business when you can have a tool that can expertly advise you at any time of the day.
- No need to read the news and latest events to make a more “informed” decision
- No need to read and interpret complex market analysis offered by different banks and
- No need to spend more than 30 seconds making a decision.
We believe that everything that happens in the news and in the trading markets is reflected in price and that nothing reacts faster than price does – as such, we are not trying to predict what price is going to do if this data comes out or if this or that happens – we say that price is the only true indicator and we follow what the price is doing.
Our software analyses historical patterns in price and uses this analysis to indicate which way the currency is moving. Based on our tests we have conducted on various companies in various industries, we have been able prove that we can add at least 3c saving per transaction for our clients and in some cases even as much as 12-15c.
Our software is installed on the client’s computer and he has access to it 24 hours a day, knowing exactly what is happening in the market at any time of the day.
How big is the company now and how do you foresee growth going forward?
We currently have 5 permanent employees and have about 40 agents across the country – we grew our software usage from approx. R300m foreign exchange transactions p.a. end of October last year to almost R6.5bn p a currently.
Growing our business in the year to come we intend on aggressively marketing the product and to meet with as many import export companies as possible.
We want to create and become the benchmark in answering the when to exchange question when it comes to foreign exchange transactions.
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