Starting a business is challenging enough even in normal times, but at least there is plenty of expert advice on offer for the UK’s new wave of novice entrepreneurs
Ironically, no one knows who invented the adage ‘necessity is the mother of invention’. This ancient proverb has rarely been more relevant in the business world, given the pandemic’s seismic impact on enterprises of all sizes.
The Covid crisis has caused widespread job losses and limited the career prospects of millions of people. This has led many to start their own enterprises. In the 12 months to March 2021, more than 810,000 businesses were incorporated in the UK, 22% up on the preceding year’s total, according to Companies House. In Q4 2020 alone, 221,000 companies were established – the highest quarterly figure in a decade.
Starting a business from scratch is no mean feat even when there isn’t a pandemic. Fortunately, several successful entrepreneurs, acknowledging the help they received when they started, are willing to share their insights with first-time founders. One such high-flyer is Markus Villig.
As a secondary-school student in 2013, the Estonian had used a £4,300 loan from his parents and brother to start the business that would become pioneering transport company Bolt. Five years later, he became the youngest CEO of a European ‘unicorn’, a privately owned startup valued at $1bn.
Give people what they need – even if they don’t know it yet
Villig’s original plan had been to provide a digital platform for cab users in his home city of Tallinn. The teenager hadn’t passed his driving test (he still doesn’t have a licence) and was frustrated by the capital’s disorganised taxi facilities.
Today, Bolt is worth over £2bn and has 1.5 million drivers in 40 countries. But it wasn’t an immediate success, partly because Villig had trouble persuading people to adopt his pioneering technology.
“There was a resistance from drivers to joining, as they didn’t understand how easy it was,” he recalls. “To combat this, I took to the streets myself, approaching drivers at taxi stands to pitch the idea and show them the simplicity of the technology and how it could benefit them.”
Villig stresses the importance of clear, concise communication in marketing, adding: “Don’t expect people to love your idea as much as you do from the get-go. I was faced with a tough market when I started Bolt, so I had to go out of my way to show that our common enemy was the private car. Once I began using this as my key message, we began getting taxi drivers on board.”
He continues: “It’s easy to overthink things. What I have found is that we humans like things to be simple. The simpler your business targets are, the better. At Bolt, we do our best to boil ours down to a few sentences.”
Start with a business plan to evaluate strengths and weaknesses
Erica Wolfe-Murray, the author of a guide for new entrepreneurs called Simple Tips, Smart Ideas, echoes Villig’s advice.
“If you have a new idea for a product or service, don’t expect everyone to understand it automatically. They won’t,” she says. “If you’re thinking about launching a business, ask yourself: ‘Why now?’ If you can’t answer that, or your response is just flannel, rethink everything. I’ve seen so many startups that were little or no different from other companies. It saddens me, because they can take a huge amount of effort to launch yet will often fail quite quickly.”
Another common – and often fatal – error that new entrepreneurs commit is to make the pursuit of financial success their main reason for starting a business, Wolfe-Murray suggests.
“So many companies focus on their offering and the money before they focus on their unique experience, possible trends and different ways of approaching markets,” she says. “To start with, I always look at devising a business plan without involving money. The internal aspects of the company inform its strengths and weaknesses, while the external factors present opportunities and threats. This simple divide can often be overlooked, yet it is crucial to any business plan.”
Wolfe-Murray adds that the process of evaluating weaknesses and what outside help might be needed to address the latter requires a key entrepreneurial skill: resourcefulness.
“Don’t underestimate the value of what and whom you know,” she explains. “You can analyse and harness these elements to launch an original, smart business in ways you may not have originally thought. Why copy others when your own assets give rise to a much richer offering?”
The financial hard yards – external help needed?
Wolfe-Murray warns that poor financial management is the “biggest pitfall” for new entrepreneurs. “It can take most companies up to three years before they get going, but that relies on regular customers and decent cash flow,” she says. “Yet founders take their eyes off the ball because there is so much else to do apart from looking after cash flow. I often ask founders who manages the money in their households. If it’s not them, they may not be used to doing the financial hard yards.”
Hannah Bernard, head of Barclays Business Banking, agrees. She would encourage any new entrepreneur to keep money from their business separate from the funds in their personal account. This will make it more straightforward to track the company’s cash flow and keep on top of supplier payments.
“This will help you to build up a business credit history, which could make it easier to access a loan – should you need it – as your venture starts growing,” she says, stressing the need to keep a scrupulous record of all revenues and expenses.
Bernard believes that most entrepreneurs will never be able to master every aspect of running a business, so they “should not be afraid to seek external help. A good place to start is online, where there are lots of free resources. The Barclays business hub, for instance, has tips on aspects ranging from writing a business plan to building a team.”
Wolfe-Murray offers a final word of encouragement to those pondering whether or not to start a new venture. “Britons have been running an entrepreneurial, startup culture for centuries – it’s what we do very well. Small companies are the bedrock of our economy. They enable inventive people to do things that intrigue and fulfil them,” she says. “If you have a hankering to start your own business, just do it.”