Tag Archives: Entrepreneurs

Intrapreneurship: corporations and startups can learn from each other

An entrepreneur is brainstorming new ideas for their start up company. The chalkboard has the words "start up" written in chalk.

Despite all the commentary and hype surrounding startups, there’s a reason that many fail to develop into bigger companies. The lean and hungry startup is not only able but supposed to take risks that more established firms cannot do owing perhaps to both organisational inertia and inflexibility. While this often results in more ‘failures’ than it does long-standing successes, the risks startups take can be of enormous teaching value in terms of providing case studies to larger, more well-established companies about what went right or wrong.

Likewise, start-ups looking to transition to the next stage could learn an awful lot from larger companies — once startups themselves — about long-term development and consolidation of both the brand and internal culture.  Startups lack the kinds of structure and procedures which characterise established firms, but these will need to be implemented if a startup wants to take it to the next level. There are a lot of opportunities for both sides to share good practice and learn from each other.

The exchange of ideas and good practice between big, established companies and startups is often derided as superficial ‘innovation theatre’.  Adopting the ‘perks’ of startup culture, such as open-plan office layouts or staff canteens, corporations posture and make it appear as if they are ‘innovating’ while sales continue to stagnate and the firm fails to break into new markets. They’re still just as rigid as before, having failed to learn the real lessons from startups about problem-solving, risk-taking, and experimentation. Investors remain conservative and management less entrepreneurial.

While startups do often successfully seek efficiencies by shaking up work patterns or by cutting through red tape and bureaucracy normally faced by bigger companies, it’s “how startups attack problems and mobilise talent that makes them unique,” argues Zachary Johnson for Forbes. “It’s being able to focus single-mindedly on one problem that allowed Salesforce.com to become the king of CRM. It was a reputation for hiring brilliant people that made Google such a desirable place to work.” For him, startups bring discipline to ‘mistakes’ (ideas, trial, error, iteration) building a safe space to incubate new ideas.

Building a space for corporate experimentation must have a clear end goal or objective in place to maximise resources. Both startups and corporations must strike a balance when learning from one another – taking too many cues from startups is untenable and risky for a company with a stable portfolio while inheriting a rigid organisational approach from larger companies can strip startups of their edge that makes them successful.

Before any knowledge exchanges can take place or be put into action, there need to be clear boundaries and goals in place. What issues are you aiming to solve by adopting similar practices to companies of a comparatively different size and perhaps even industry to yours? “Startups by nature have to validate their ideas, so they value experimentation and exploration.” Any experimentation or knowledge exchange should likewise be clearly justified.

The rise of ‘intrapreneurship’ could hold the answer to a clear path for knowledge exchange between firms of vastly different sizes and experience levels. Intrapreneurship involves giving employees the means to dedicate their time to pursuing innovative ideas unrelated to their everyday tasks. This gives stakeholders throughout the organisation the opportunity to rise above the ranks, take risks, and pursue new ideas without fundamentally upsetting the regular, productive order of things. The intrapreneur takes risks “within the context of their job in the company” to implement “policies, technologies, and applications that resolve a barrier to productivity increases”. Working in conversation with a wide range of trends outside of the company, and, supported by shareholders and management, these autonomous ‘intrapreneurs’ are able to become key entrepreneurial forces and push the organisation in a new direction and can even result in spin-off brands that have a totally different brand, culture and product line to that of the ‘parent’ company.

Intrapreneurship makes perfect sense in any market that is facing disruption or long-term stagnation, or for any firm that is failing to keep up with the pace of innovation in its industry.  Most entrepreneurs of startups want to grow and expand into an empire.  As they achieve this ambition, they too will need to implement more structures and controls to ensure the business grows in a particular direction.  Intrapreneurship and the acquisition of new business disruptors will ensure that they remain the dynamic and flexible players they were at the start of their journey.  Their future could depend on it.

Photo copyright: Christopher Futcher

An Entrepreneurial Christmas List

EDITED Christmas stockings DSCN8428

Most of us are reaching the end of our working year in the run-up to Christmas. With the economy finally on the rise, 2014 has been an exciting and productive year for entrepreneurs and start-ups.  As we’re looking forward to an even brighter 2015, we asked four of our entrepreneurial SMFs what’s on their Christmas business wish list.  Here they share their Christmas wishes, which range from financial investment for faster growth to a 3D chocolate printer!

James Harding, Co-Founder of Natural Juice Company

Gemma Harding launches Natural Juicing Company photo
Delicious range of natural juices

Specialising in dairy and gluten-free juices the Natural Juicing Company was recently launched by James Harding and his wife Gemma, and they are looking for venture capital financing, and marketing and communications experts to help them speed up growth and development in their new business. The company launched in November this year and is already causing a stir, having been invited to supply the juices for a leading UK premiere in 2015.

James said, “Like any start-up, we need help, particularly in the areas of marketing and business development. We have two Christmas wishes – the first is to find a communications expert who believes in our vision and is able to provide some advice pro bono to help us build brand awareness, secure trials and endorsements from health professionals and celebrities, and give us tips on getting into the media.

“Our second Christmas wish is to find a mentor/non-executive director who can provide ongoing marketing advice and introduce us to people who can help grow the business. We’re feeling optimistic as we set out on a round of meetings with venture capitalists over the next couple of weeks with a view to raising funds in early 2015.”

As we’ve discussed in the blog Raising money for your business venture, venture capital is often hard to acquire as you must demonstrate a high potential for growth. However, once secured, it is perhaps one of the best forms of start-up funding. Recruiting the sort of marketing and communications expertise Natural Juicing Company is looking for is equally challenging, but we are confident that we can connect them with Fellows within the SMF network who can give them advice and support.

Likewise, there are many non-executive directors who mentor new enterprises and by researching the processes NEDs go through as portfolio entrepreneurs, James and Gemma can gain the knowledge to find the right mentor.  Either way, they have made an important first step in identifying what they need to do to make their wishes come true. Do get in touch with us if you think you can help James and Gemma.

Mark Spence, CEO of Rheolab

Rheolab has a long tradition of hiring and training ambitious young people

Entrepreneur Mark Spence is the CEO of Rheolab, a world class business that sells polymers as cosmetic ingredients. Mark’s business is a great model of a dynamic, transnational company, and his wish highlights the challenge of finding the right people to expand the business across different national markets.

Mark explained, “We have 13 employees split between Chicago and Leeds. The US is the largest market and within the US the North East is the largest region. We have tried for several years to get penetration in this market using distributors, but our results have been mixed. English people go down well in sales roles when visiting large US cosmetic companies. As a Christmas present for Rheolab, I would like to recruit a smart outgoing UK chemistry or chemical engineering graduate who has the confidence and resilience to succeed for us in the North Eastern US market.”

If you’re a talented engineer with the skills Mark is seeking, don’t hesitate to contact us – you could be that illusive person who can help Rheolab penetrate the highly competitive US market by bringing uniquely British business and sales sensibilities to the table.

Serge Taborin, CEO at Q App

 Serge Taborin at  Q App voted Best Mobile Payment Service

Serge Taborin awarded Best Mobile Payment Service trophy by Mobile Entertainment Magazine

Q App is a leading mobile ordering platform that enables users to browse the menu and select and pay for their order at participating venues – all from their smartphone.  It also allows users to specify their collection time-slot, making it ideal for takeaway outlets, coffee shops, and theatre intervals. It is therefore revolutionising the hospitality sector by removing one of the biggest end-user pain points in the industry; queuing.

The company is now entering its next stage of development, which involves expanding the number of high quality venues using the app whilst simultaneously driving up the number of end-users. Serge Taborin’s wish is to secure the necessary venture capital funding to take the business to the next level.

Serge said, “It’s been a very exciting year, winning new contracts with big brands including the Royal Albert Hall, Southbank Centre and Premier League grounds, as well as theatres, bars, pubs, coffee shops and fast food outlets.  Now we need to raise our next wave of funding which will allow us to make a step change in the number of venues using Q App, taking it into the high hundreds over the next 18 months. We will be able to expand our team to support the increasing number of venues coming on board, boost marketing to ensure more people are aware of the service and invest in development so that the product continues to evolve.”

Nimesh Thakrar, Founder of Banneya.com

personalised rose gold ring
Beautiful jewellery created with a 3D printer

Banneya.com offers CAD-proficient jewellery designers access to the latest additive manufacture technology to create their designs in precious metals. This is in line with brand new technological developments in 3D printed metal. Each piece of precious jewellery is hand-finished to the highest standard, and Banneya offers a curated marketplace on which to trade. Banneya also offers a forum for building mutually beneficial business partnerships with all parties benefiting from the income collectively generated by the platform. Nimesh Thakrar, hopes to see new developments in 3D printing technology to bring new and exciting products to this blossoming market.

Asked for his Christmas wish he jokingly said, “We’re creating some stunning 3d printed gold jewellery – that doesn’t exactly help with treats in the office, so how fitting would it be to be gifted a chocolate 3D printer this Christmas? Yes, they do exist now!”

The business ‘birth rate’ has reached a 10-year high, with the number of new firms up by 28.5% last year.  More than ever, new businesses are looking for ways to get a foothold in their respective markets. By setting your wishes (aka goals) and timeframes, entrepreneurs, like our SMFs are well on their way to success. We hope all their wishes come true and that they have some real down time at Christmas in readiness for a sparkling start to the New Year.

Guide to Entrepreneurship – Getting Started

Chirag Shah (1)
SMF Chirag Shah, a successful serial entrepreneur, contributes his second blog in a series of six.

My co-blogger George Fowkes’ Guide to Entrepreneurship – Getting Started posted last October about the key steps of how to get started and a priority list of the key things to think about in the early stages.  So I thought I would complement his post with some practical tips that you won’t find in the textbooks.

At this stage you have a great idea that you are pretty sure can withstand the blows of competitors and make you some money. If you are going to take your idea forward into a business, the next thing you must do is set up a company. At this stage, it doesn’t matter too much what the company is called; you can always change it or set up a subsidiary with a more suitable company name later.  The UK is, in my experience, the easiest country in the world to setup a company. You can actually do it online in about 5 minutes and it only costs a few pounds! (Get the details from Companies House website.)

So why the urgency? Because it’s a quirky fact of life – especially in this day and age of heightened transparency – that most of your stakeholders (future employees, banks and clients) will assess your credibility first and foremost by the period of time that you have been in business – i.e. since your company was born! For example, most banks won’t extend credit to companies that have been in business for less than 6 months old – regardless of how much sales revenue they generate, so you might as well start the clock ticking. Completely meaningless and outdated, but that’s how it is. Now here’s the clever bit: get your newco set up now and hey presto in less than 365 days time your “Founded in 2013” cachet will make you one year old in the eyes of most stakeholders!

Tip 2: Know your numbers
By this I do not mean do a business plan. I’ll get to that in my next post entitled “Getting Funding”. I mean figure out what is the minimum you need to achieve to ensure you don’t go bust. The former Cabinet Minister and über successful publishing mogul, Michael Heseltine, is famously attributed with doing the numbers for his publishing business on the back of an envelope.

In my view you should be doing precisely that too. In any business only a few key numbers drive the whole profit equation and its imperative that you know what they are and understand them simply enough to do the calculation “on the back of an envelope”. Now, I appreciate that as a business grows it can get more complicated, but at the very least, you should be able to do the calculation to the point where you understand the “break-even” – in other words, working backwards to understand how much you need to sell to cover your operating costs.

Here’s an example that I use with prospective franchisees of my écurie25 Supercar Club concept:

KEY COSTS per month:

Staff – £10,000
Cars – £15,000 (5 cars @ average £3,000 per car per month)
Rent – £4,000
Marketing – £2,000
Other -£5,000 (round number factoring in insurance, service costs, professional fees, admin, etc)
TOTAL £36,000

On the REVENUE side
Average Membership (customer) Income per member per month (net of vat) – £1,200

Hence, the number of members required to hit break-even = 36000/1200 = 30

[Sanity check: Number of members that a club with 5 cars can support 40]

So, that’s it. If you wanted to start a Supercar Club, you’d need to ask yourself whether you could recruit 30 customers, at least.

Of course, you can go on from there to calculate how much money you would make with 40 customers, 60, etc and certainly you might have to add in more costs (supercars, in this case) to support the expansion; and of course there may well be start-up costs such as license fees, and fit-out costs and also other sources of income such as delivery charges and venue hire and so on.  Of course, there are many other revenue and cost items you can (and will) include in your business plan, but you now have your key metric that will shape your entire business thinking…I need 30 customers to break-even, let’s call it 35 to be on the safe side!  So now your focus can start to address key questions such as: can the market support that number? Where would I get them from? How many customers can I count on from my current network?

Tip 3: Ignore your customers
Well, at least for the time being. I know I’m flying in the face of convention on this one but here goes… I don’t advocate customer market research for start-ups! Henry Ford reputedly once said, “If I asked my customers what kind of car they wanted, they would say a faster horse”. When working in established markets, customers are very good at knowing what they want. But in the land of entrepreneurs, where hopefully you are bringing something to market that is a bit ground-breaking/innovative/disruptive, your potential customers are not the best source of feedback. By all means do canvas their opinions, but be prepared to take what they say with a pinch of salt. In reality most people are not that innovative; they are reluctant to accept change and slow to absorb great ideas even when they see them.

I find a much more beneficial route for entrepreneurial ventures is to undertake market research through talking with competitors (or “close-competitors” if there’s nobody doing exactly what you do), potential partners and key suppliers in the sector. Certainly, if what you are doing has been tried before, they will know, and more importantly they will have a good idea why your idea won’t work or didn’t work (in the past) which will help you refine your proposition to maximise the chances of success.

Of course you’re probably now wondering how you do that without giving away your top secret plans. Well, you need to be smart – talk to them in roundabout ways or share only a part of your secret sauce to ascertain whether it’s an area that they have considered before, or are considering right now. In my experience, most people like to meet and discuss – in this era people understand that today’s competitor is tomorrow’s partner and an open information exchange with a current or potential player has value to them too. Just be careful and understand your boundaries about what you are willing to share well. Prepare beforehand and don’t allow yourself to overstep the mark.

If you don’t feel you can talk to competitors, vendors and partners then mystery shop them – either yourself or through an agent as the case may be.

Tip 4: Defend your IP
If there is an element of internet or web identity in your proposition (and there should be), then do spend a bit of money now making sure you have conducted some legal searches to ensure you are not treading on anyone’s toes, and simultaneously taking the necessary step to protect your IP (intellectual property). It may be a painful expenditure at this stage in the start-up cycle, but the harsh truth is that the later you leave it the less “protectable” it becomes. A few well-spent pounds now could save you a fortune in legal fees or lost business later.

Tip 5: Focus on “frustomers”
In early stage business, sales can be divided into two groups: personal sales and “others”.

Personal sales relate to customers that know you from before (friendly customers or frustomers).  Either they bought from you in a past life, or know (of) you from your previous achievements.  The key is that these people are buying you and your reputation, not the product/service that you are going to create.  Therefore, you can sell to these people before you have even made the product – perhaps a concept or prototype is sufficient for them.  Of course, I don’t mean literally that you can get a cheque from them, but you can explain what you are planning to do and should be able to gain a significant degree of commitment – emotional, letter of intent, handshake, heartfelt promise – from at least some of them that helps you increase your confidence about your early-stage sales trajectory.

Note: If you are struggling to get sales commitments from this group, or don’t know anybody in this group, think very carefully about whether and how you wish to proceed. You’re probably doing something seriously wrong.

The “others” group don’t know you and it’s not worth trying to pitch to them too soon; if anything, you will lose credibility and make selling to them even harder later on.

In summary, most of this post has been dedicated to eliminating downside risk before you go off and start spending major chunks of money creating your product and bringing it to market. If you address these steps effectively, you should have moved from having a great idea to a new business and you should also be feeling pretty good about your future prospects for this business – without actually having spent more than a few thousand pounds in getting there.

Guide to Entrepreneurship – Getting Started

George Fowkes Cropped
SMF George Fowkes runs The Clear Alternative, which provides interim director expertise to clean technology companies to catalyse their start-up and growth phases. George’s early career was in new product development for Cambridge technical consultancy Sagentia, and management consultancy at A.T. Kearney. Conversations with investors while raising finance for The CarbonNeutral Company in 2001 gave him the idea for a company that would bring commercial and project skills to clean tech ventures, to accelerate their development. This became The Clear Alternative in 2006.

Before I start I wanted to add to Chirag’s post by nominating David Hansson, the founder of software company 37Signals, as the international grandmaster of ‘CARD’. And in fact most things about getting a business started. I think he has written a book but his speech at Stanford boils his whole philosophy down into one irreverent hour that you can laugh along to on your way to work.

If I had to summarise the very best of what I’ve seen in the past 12 years of getting ventures started for people, it would be the following:

Find a complementary partner

Most people think that the expression ‘better to own a share of something than 100% of nothing’ came about from raising money. That may be true, but it’s even more relevant right at the beginning. To get any new organisation started is such a huge amount of work, requiring so many judgement calls and such a very wide range of skills, that even an engineer with an MBA cannot do it on their own. You can’t be world class at everything, and it’s lonely flying completely solo.

If I think of the half dozen really successful serial entrepreneurs that I’ve met – the people who have built and successfully sold more than one business – almost without exception they work with a business partner. That partner doesn’t just fill a skills gap with their co-entrepreneur, they also fill what I’ll call a ‘character gap’, as follows.
Everyone has a number of aspects of the business that they can’t help preferring. It could be sales. Or the numbers. Or building the team. It’s very difficult indeed for an individual not to give these preference – it’s part of their character – so stuff gets missed. The partner has an innate preference for different aspects of the organisation. Their first thought on Monday morning is quite different to their co-partner. And so most of the bases get covered. That’s why you see sales people paired up in business with accountants, marketeers with ops people, Myers-Briggs introverts with extroverts, and so on.

So my point would be to find someone who’s quite different to you that you can trust implicitly and make them a significant partner in the business. And even (especially) if you’re married to them, sign an agreement that at least covers what happens if things don’t work out.

Touch the market early and often
With the very rare exception that essentially comes down to luck, it is not possible to bring a successful new product or service to market without first exposing it to the target market. To compete against better-resourced incumbents your product or service has to not just work, but fit the way its users look for, assess, buy and use the thing.

For the product itself we need to bring the alpha and beta-test principle common in software development to our own business idea. How to do this depends largely on the nature of the product, but everybody should be able to find their own versions of customer and competitor interviews, pitching the concept to friendly contacts in the target market prior to development, lending prototypes to prospective customers, offering ‘no-regrets’ deals for early buyers and so on, as the feedback from this user experience is essential. The next proof point is the one where customers actually part with their cash for the product. Hansson is right that this cannot come too soon and, in general, almost any way to bring early revenue into the business (that does not distract from the main development effort) is a good idea.

Closely linked to this, especially in B2B markets, is that your product can only be successful in the context of the buying patterns in the target market. Every market has its idiosyncratic way in which solutions are sought and evaluated, buying decisions made, price and delivery negotiated. And if you’re not compatible with the time of year, use of OJEU, ‘Plan A’, Environment Agency regs, contract management or other trivial necessity you won’t sell any product to that sector. The least costly way to master an industry’s buying patterns that I have seen is to get an industry veteran on the board.

Have a plan

It is true that no plan survives first contact with the enemy, but keeping a plan (i.e. a list of milestones/targets and dates, with associated responsibilities and costs) updated on a regular basis confers many benefits. First, putting the plan together forces you to think about priorities and risk. What’s got to go right, and cheap ways to stop things going wrong. Second, it’s a fantastic communication tool. With a plan everyone can see where the effort has to go. Scope creep – possible the worst enemy of the pre-revenue business – is easier to keep at bay. And finally, it enforces realism. Not all milestones will be met. The insights from ‘why not’ and ‘by how much’ make achieving future targets more likely. And achieving targets is an essential skill to keep investors putting money into a business. So put together a plan and keep it with you. If you have to keep changing it, at least you’re learning!

None of this covers seed funding, getting an office, or marketing, recruiting and financing on the cheap, which will have to wait for another day. Or be picked up by another blogger.