How successful entrepreneurs get their breaks

  1. Sauces on a market stall.
    iStock/encrier
    James Martini

    James Martini UKBF Ace Staff Member

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    Most of us who use UK Business Forums dream of making our first £1 million after spotting and seizing upon a gap in an overcrowded market, but according to Forbes as many as 90% of startups simply fall at the first hurdle – that is, the sourcing of finance. 

    You have to wonder why that is. Do we simply expect cash to drop into our laps as soon as we have that eureka moment? It simply doesn’t work like that, even allowing for the various government grants, startup loans, or appealing crowdfunding options on the table. More reliable ways of bringing your startup to life as to self-invest, or get friends and family to help. 

    “Spit on your hands and get going”

    One of our recent articles touched on the topic of bootstrapping, and that’s essentially a modern-day version of what Sir Richard Branson dabbled in before getting Virgin off the ground. (Literally, you might say Virgin Galactic has been launching people to the edge of space for a while now.) That’s probably the best entrepreneurial example of mighty oaks growing out of acorns. 

    Before forming Virgin, Branson tried - and failed – to fund his business by selling Christmas trees and budgies, before his first successful venture – a magazine called Student – launched in January 1968. Within a year, his business was valued at £50,000 – a lot of money back in the 1960s.

    Branson, by his own admission, started his business “out of a sense of frustration”, brought on by high-street retailers charging over the odds for records. His solution was to undercut those retailers, essentially by defying an industry price cartel, selling the same music considerably cheaper than chains like WH Smith. And so, Virgin was born, without any government startup loans or venture capital trusts – just hard graft, sheer nerve and clear vision.

    Then there’s Levi Roots, a friend of reggae legend Bob Marley, who was making his jerk barbecue sauce long before his big break arrived. Roots sold more than 4,000 bottles of Reggae Reggae Sauce to revellers at Notting Hill Festival in 2006, before being spotted at a food trade show by a BBC producer, who invited him to appear on Dragons’ Den. He secured a £50,000 cash injection from entrepreneur Peter Jones and before long his Reggae Reggae Sauce was being sold in more than 600 Sainsbury’s stores.

    In other words, Roots had already done the hard yards before the investors (and the media) came knocking – devising the product, building a brand, and getting it out there ready to be spotted.

    As UKBF member The Byre puts it, “nobody is going to give you however many thousands to find out if your business will succeed – but they will pay to get a piece of the action when they see you succeeding”. 

    What do investors look for?

    It’s far easier for an investor to say “yes” to ploughing their own cash into your business if you can prove you already have a healthy collection of loyal customers.

    Whether you’re trying to attract investment from Theo Paphitis or a family member, investors are more likely to put their own money into your startup if you can prove you’re a self-starter - someone who gets things done, despite difficulties and drawbacks.

    Self-starting and self-sufficiency extends to marketing your product – what methods are there for reaching your desired customers without spending on billboard or print advertising? Back when it was a plucky startup rather than a multinational giant, James Watt, co-founder of Scottish brewery BrewDog, memorably said of paid advertising, “I would rather take my money and set fire to it.” Instead, BrewDog generated the equivalent of millions of pounds of free advertising through stunts, generating newsworthy controversy, and by courting ‘influencers’.

    You could grab some of that action in a small way by writing an article for a local magazine or news website. These days, they're often hungry for content but short on funds to pay for it so a substantial, decently written piece with a strong message – but not a blatant advertisement for your business – can work wonders in raising your profile.

    Alternatively, personal marketing could mean demonstrating your products at fairs or trade shows, exactly like Levi Roots did. In this case, you're making up for your lack of hard cash by investing shoe leather and elbow grease.

    And, of course, there’s social media – less of a goldmine than once it was, perhaps, but still an opportunity to build your brand and reach potential customers for practically nothing, as long as you’re willing to persist. And with tools such as Canva.com it's easier than ever to create slick, branded content with a few clicks.

    It pays to be rich in the first place

    It goes without saying that money often comes from money: it’s much easier to make big bucks if you come from a wealthy family willing to bankroll those early experiments.

    The children of celebrities and aristocrats have easier acccess to funding than most of us and more reliable safety nets if their startups should fail.

    And, of course, there's a certain US president who likes to promote himself as a rags-to-riches entrepreneur, despite the fact that his father got rich in the gold rush before building a real estate empire in New York City. I'd fancy my own chances of making a few quid if that was my starting point.
     

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  2. The Byre

    The Byre UKBF Ace Free Member

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    I thank you for the honourable mention. There is however one vital ingredient that our wannabe tycoon has to find before he or she can conquer the World - demand!

    I'm very fond of telling those seeking to enter the world of business that your very, very first step, long before you worry about where all that money to get going is to come from, is to spot demand.

    And it had better be a very funky demand! The punters have to be mad for whatever it is that you are hoping to sell. The very moment you tell them that you are going to offer them X, they should be banging your door down, desperate to get X.

    "How do I find such an unsatisfied demand?" is, of course, the immediate response of our future tycoon. My answer is, look into your own wants and desires and look at the wants and desires of those around you. A teenage Branson found a burning desire for new music and youth culture. Roots found a demand for a mild and sweet Jamaican sauce (if you want a good laugh, try giving an English person a real Jamaican sauce!)

    I can already hear voices saying "That's a whole lot easier said than done!" and they would be right. The trick is to start with a niche and build from there. Pete Waterman found that there was a huge and totally untapped demand for camp, gay, over-the-top pop music and launched 'Devine'. Dutch businessman Olaf Wyper did the same for prog-rock and heavy metal and launched Vertigo Records.

    But your product or service does not have to be sexy or wild and exciting. Fortunes are made with some very boring products. Brew Dog make beer that actually tastes of beer. Oak Furnitureland makes furniture out of solid wood and not chipboard and plywood. As the economy stumbles, punters are rethinking their budgets and demand lower prices - Aldi and Lidl will sell them food and in the past few years Arnold Clark has found a huge demand for cheap used small cars.

    In 1972 a Korean lens maker launched a one-man company called Wako Ltd. and in '79 wisely changed the name to Samyang. Today Samyang is still a small company with just 150 employees, but their cheaper camera lenses are hailed as some of the best in the World and upsetting the market for the big boys.

    Right now UK businesses are struggling with the uncertainties of Brexit, new labour and data laws and industrial investors moving away. That makes it a fantastic time to launch a new business! Remember the words of H.G.Wells, "Today's emergency is tomorrow's joke!"

    So go out and find your 'Devine' and get going!
     
    Posted: Mar 28, 2019 By: The Byre Member since: Aug 13, 2013
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  3. Noah

    Noah UKBF Ace Free Member

    1,200 299
    That's by-the-by. Their real product is marketing, and, like all great marketing product, it actually smells of ********.
     
    Posted: Apr 2, 2019 By: Noah Member since: Sep 1, 2009
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  4. Noah

    Noah UKBF Ace Free Member

    1,200 299
    Jesus H. ****ing Christ on a pogo stick ! What sort of prick thinks a word for bovine excrement needs to be censored?

    Merde! as they say in Timbuktu.
     
    Posted: Apr 2, 2019 By: Noah Member since: Sep 1, 2009
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