Have you heard the news? ‘This is the age of the entrepreneur!’ ‘770,000 new businesses incorporated in 2020!’ ‘There’s never been a better time to start a business!’ Bank of England projects ‘rapid bounce back from pandemic lockdowns!’
I like optimism — after all, I would be an ill-equipped entrepreneur without it. But then there’s something else, an approach that sits between optimism and, well, snake oil selling. I am getting the sense someone is peddling something here. ‘Kool-aid’ is being quaffed.
The pandemic has wreaked havoc on the majority, with close to a combined 1 million job losses in the UK in the retail and hospitality sectors alone. Globally, some $10 trillion has been spent protecting workers’ incomes during the pandemic, with 88% of that spent in developed nations. (UN Labour Agency).
It is very cold out there indeed.
Whether the recovery will be slow or fast, who knows. What we do know is that there will be an explosion of entrepreneurs making their moves in 2021. You may be one of them. You may not be. Whatever business you are in there will be an upsurge of new entrants to your sector. And if you doubt the power of the SME, then just remember the mighty Pfizer (2019 income $52 billion) turned to BioNTech (2019 income $112m) to get the job done with their eponymous vaccine.
Over the last 6 years at King’s College London and in a personal capacity I have spent a fair amount of my time to giving entrepreneurs grant funding, investment funding, sound advice and occasional direction across a myriad of sectors – some of which don’t actually exist yet (you geniuses know who you are) and I’m nervous about this sudden explosion of praise for business creation. Or at least as it is being defined in reporting by a mere registration of a company.
Let’s remember that 1 out of 10 startups fail and only 1 out of 10 of those that don’t go on to scale – that’s a 1% success rate in the U.K. I suspect that’s why Government does so little for them. But in truth, what Government could do for startups it could do for all businesses, starting with the ridiculous property rates system (but that’s another piece).
Waffle like ‘it’s never been easier to start your own business’ is very misleading. By what metric? For those joining the fray, it’s never easy — so ‘easier’ must be a relative term.
As a veteran of over 100 startups as founder, investor or CEO, there are basics to think about. You are going to need to be patient, because your experiences in the earliest stages of your venture are going to be Kafkaesque.
The first stage is to understand exactly what needs to be done to get your new business ‘ready’ for business. A bank account — that seems simple enough. But frankly, right now it’s a nightmare with many of the high street banks closed to new business or so horribly inefficient you think they are. Challenger banks offer some respite to this, but not a lot. There’s a reason they never really dented the dominance of the usual suspects’ respective market shares. Merchant services also seem determined to make your life difficult and what you think should be quick is never that. Be prepared.
As for services, such as business mobile telephone or internet connectivity, we have moved from ‘too big to fail’ (the term coined in the last economic crash of ‘08) to ‘too big to care’ – unless you like listening to a weird selection of easy tunes whilst you are on hold to a certain nameless (bit like saxophone) mobile company – I did that recently for five and a half hours.
My point is that you need the time and the patience to get these things exactly right and the discipline not to launch until they are. Make a detailed checklist and prepare for a long haul.
Sadly, the ecosystem for startups is better in some cities than others in the UK. Thinking radically. If you are serious about getting the best possible start and you have a business that isn’t ‘bricks’, I would consider applying to an Accelerator and moving close to it once accepted.
I cannot over emphasise the value of good Accelerators to a young business, whether startup or scale-up. The vast majority don’t care where you’re from. I am sorry to say that not all regions in the UK are as well-equipped as others. Don’t let it stop you. If you are an alumnus of a university check there first. If not, then there are plenty of others that are excellent. Look for sector specialists if you can.
Finally, don’t get caught up in the euphoria or, conversely, dismayed by the inevitable avalanche of how easy it is, how there’s never been a better time for startups or the narrative that there’s so much money for them. Startups that succeed are about detail not broad strokes. Your investment thesis, no matter how humble, is the key to your future success, whatever size business you wish to create, and whatever the market conditions may be.