When you start a business, you need to be a raging optimist. That’s because, frankly, it’s hard and many people don’t succeed. So to stand a chance, you really need to have a sunny view of the future.
However, you also need to be a realist. A friend of mine was working in a new start up. He asked me if I was interested in investing, so I took home a sample of his product. In the meantime, he had managed to place it with a couple of major high street chains. I tried it with my wife and daughter who were in the target market. Neither of them liked it, so I declined to invest.
The business in the meantime continued. A while later they were back to the drawing board, because the product hadn’t sold through the retail channel at all and had been dropped by the retailers. Fortunately they have now completely changed the offering and are doing okay, albeit on a much smaller scale. My friend is no longer involved.
Another business planned to sell a website monitoring service to small companies. After a few months of selling, it was clear there wasn’t much of a market. The management team changed direction and started selling to big corporate sites instead. This was a raging success and several years later they still have a razor focus on the same market. I was happy and this time invested in the company when they changed direction.
What are the lessons from these stories? It’s about realism and facing the facts. The lesson isn’t to chop and change, as the second company had to stay their new course for several years. However, the quicker you face difficult facts the better, particularly when it comes to customers.
The most important thing any start-up can do is to get some happy, paying customers. If the prospects won’t buy or don’t like the product after they do, don’t try to tell them how they’re wrong. Instead, change direction and provide something that they want. Then press on. A dose of realism is worth a ton of investment. In fact, having the money to continue backing a losing strategy can be the biggest disaster.
I was delighted to be invited to speak at the forthcoming Sage World event on 8-9 September.
For my part, I will be chatting about a question that has fascinated me ever since my first ‘proper job’ as an investment controller at the venture capital company 3i: What simple principles and tactics make business success easier? Or, put another way, what things allow you to survive the tricky first stage of business growth, so you can then have the time to build a truly successful business?
I’ve been discussing this topic with audiences for over ten years. It is a subject that never loses its excitement, because starting a business is never anything less than exciting for the people doing it. I come out of these sessions buzzing with enthusiasm and wanting to spend a couple of hours with each of the people who come and talk to me about their businesses straight after the session. I think it helps enormously that I started my own business as a one-man-band and I’ve continued to grow the company with no outside investment — in other words I am like 99% of the people in the audience.
Sage is one of a handful of mega-success stories in British business over the last 25 years and I’m pleased to see that Sage World is trying to do something different from the usual business event, by using their ‘interactive delegate technology’.
So there will be lots of demonstrations of the software tools you can use to get your business idea off the ground. If you’ve already established your business, then you’ll find plenty of ideas to help you build on that foundation and meet the technical challenges that small firms face in the modern business climate: finance, HR, sales, marketing, and so on.
Sage World also offers a tremendous opportunity for you to build useful contacts. Networking is about meeting the right people, making the right connections and tracking them during and after an event. So I’m dying to try out Sage’s Spotme electronic networking device - I’m sure this will really help me find and talk to the people that matter to me.
I’m sure it’ll help you, too. So please do track me on Spotme, come and say hello and make the time to hear the presentation.
Sage World is a free two-day event in September for anyone starting or growing a business.
Rory MccGwire, BHP Information Solutions
This week we're celebrating the Start Up Donut’s first birthday - and what a year it has been! With a new roster of great sponsors, popular content, a much-improved blog and some 30 enterprise agency partners now on board as syndicators, the site continues to go from strength to strength.
My personal highlights are:
Our followers on Twitter continue to grow but, more importantly, we’re having more and more conversations with start-ups and more established small businesses. By being able to speak to you directly, we can find out what information is most useful to you and tailor the site accordingly.
We’ve recently improved our Facebook page, too, so there’s more interaction with and between our users. Recently we asked what your favourite things about being a small business are and we got some excellent responses ― come and join the conversation.
A few months ago we integrated our blog into the main site (it used to be hosted on Wordpress), which has fuelled growth in visitor numbers and boosted content on the Start Up Donut. We now have a larger number of blog contributors including many of our experts. We add a new post every day or so, keep checking back regularly to see what’s been added. If you’ve got something you’d like to share or get off your chest then send us your blogs.
What better way to learn about starting and running a business than from people who have been there and done it? We’ve added a large number of case studies covering topics from “How I set up a business in my 50s” to “How I attract customers”.
In May we took a stand at the Business StartUp Show in Excel, London. It was great to be able to meet our website users and Twitter followers face-to-face, as well as get the opportunity to tell even more people about the Donut project.
In the week leading up to Mothers’ Day we celebrated mums in business. We discussed the term “mumpreneur”, looked at the issues surrounding running a business when you have children and posted a range of interesting guest blog posts. The week was really interesting and we learnt a lot about the different challenges young women face when starting up. My summary blog post captured the highlights.
The main thing I’ve learnt is that a project manager’s work is never done! There are always ways to improve the site, different types of article to add, forum posts to reply to, blogs to write and people to speak to on Twitter.
I’ve also learnt that there is such a vast range of start-ups and small businesses out there that are looking for need-to-know information and advice that can help them to start and run their own business more successfully. Please let us know if there’s anything we should be doing to make www.startupdonut.co.uk even better. Here’s to the next 12 months.
When starting a new business, the way that you spend your limited resources is critical to your chances of success. There are places where you can’t afford to scrimp, and there are places where you simply must not waste. You need to keep the chance of failure down by spending what you have very wisely.
It sounds easy, which it isn’t. However, following these tips will increase your chances of success. Good luck.
We’ve recently launched new interactive business website www.inafishbowl.com to help start-ups learn from the experiences of others. Arguably, there’s no better way to learn.
Through an energy-packed mixture of video, Twitter feeds and blogs that feature on the new Big Brother-style business website, we chart the trials and tribulations of three start-up businesses, as their owners share their experiences – the good, the bad and the ugly – in real time.
The three businesses featured are a record label, a bespoke tailoring company and a Mexican food range. Each are finding their way through the start-up maze and sharing their experiences along the way. From naming their business through to frustrating first meetings with banks, the businesses lay themselves open for others to watch and follow online.
The In a Fishbowl project was founded by entrepreneur Toby Reid and is being supported by Midlands-based entrepreneur Andrew Springhall, who says: “So many people go through the process of starting a business – it’s a truly daunting experience. There’s a wealth of information available, but nothing that really provides the chance to learn from the experiences of others in the way www.inafishbowl.com does.
“The aim was to show empathy with the challenges new entrepreneurs face, but also to inspire them and enable them to learn and benefit from an interactive source of support for any budding entrepreneur.”
Taking inspiration from her native land, Marcela Flores Newburn owns and manages Rico Mexican Kitchen. The new business produces a range of authentic, home-cooked Mexican food products that are sold through stores in the UK. Mother-of-two Marcela makes all of the products by hand.
“I’m really excited to be featured on inafishbowl,” she admits. “It’s a great idea and I really hope it will help other new entrepreneurs in the early stages of starting their business.” On the site, Marcela discusses everything from dealing with buyers and distributors at department stores to the reality of running a home-based business.
You can also follow www.inafishbowl.com on Twitter for latest snippets from all three of our entrepreneurs, while Marcela’s posts have been chosen to feature regularly on the Start Up Donut blog, too, so watch this space.
Why do people who should know better continue to give credence to the myth that it’s difficult to start a business?
A recent high-profile example of this came a few weeks ago on Sunday morning on the BBC’s Andrew Marr Show and it was uttered by no less a figure than would-be Prime Minister David Cameron.
Detailing measures he would take to aid small firms (and so the economy) if the Tories win the General Election, he said: “It takes something like 13 to 14 days to start a new [sic] business in this country. In America, it’s half as long. We have the ambition to make this [the UK] one of the fastest places in the world to start up a new business.” Later, this was reported on the BBC News website and others, but remained totally unchallenged.
It must be the party line. A few days later, shadow business minister Martin Prisk MP, in his ‘New year, new start, new business’ Blue Blog on the Conservative Party website, further fuelled the myth, saying: “We would cut the time it takes to start a new [sic] business in the UK. Currently, it takes twice as long as in the USA, Denmark or Hong Kong. Conservatives want to change that, so we would reduce the number of forms needed to register a new company and move towards a ‘one-click’ registration model.”
What type of business are they talking about? Have I missed something?
Setting up as a sole trader (AKA becoming ‘self-employed’) is likely to take 10 minutes tops. All you need do is call the HMRC Newly Self-employed Helpline on 0845 915 4515 to provide some key details (eg your name, DOB, NI number, address, telephone number, start date and type of business). You could even have been trading for up to three months previously (if you leave registration any later than three months, you’ll be fined £100). Should you prefer, you can register online. Where’s the problem?
And while forming a limited company (“incorporation”) takes slightly more effort (you need to fill out an IN01 form and complete a Memorandum of Association and Articles of Association), it can be done within a day if you pay £50 for the Companies House same-day service. Otherwise you’ll have to pay the standard registration fee of £20, which, granted, could take between eight and 10 days to process. Pay a professional to do it all for you and opt for the same-day service and your new company could become a legal entity in four hours or so.
So why spread the myth? Is it because our politicians are so out of touch with the reality of starting a business? Probably, yes. Few politicians of whatever persuasion have or will ever start or run their own small business. And that’s part of the problem, but one for another day.
And while it’s understandable that any party trying to gain power should seek to appeal to small firms and the wider electorate with the promise of a better new world, using untrue ‘facts’ (if you’ll forgive the deliberate oxymoron) merely increases the risk of putting people off, at a time when the economy needs them to start a business. We should encourage people to go into business – not discourage them.
Truth is, registering a business isn’t difficult and it doesn’t take a long time, the myth needs to be challenged (same as the ‘excessive red tape’ red herring). The real difficulty lies in surviving that all-important first 12-18 months and then moving the business onto the next stage. Any small-business owner would tell you that, Dave.
Mark Williams, Start Up Donut editor