Navigating the Entrepreneurial Ocean

Hugh Griffiths, Board Advisor with us at elephants child, is a former military aviator, turned entrepreneur. He founded Inzpire Ltd, one of UK’s fastest growing defence companies, which he led as CEO for many years. He shares his tips for SME leaders to help them survive and thrive beyond the start up phase.

 

The entrepreneurial scene in the UK is vibrant.

There are around 5.6 million businesses in UK and 99.9% of them are SMEs. They employ around 60% of the UK workforce and generate over 50% of UK sales. Unfortunately, though, around 60% of startups don’t survive beyond the first three years.

This article aims to act like a lighthouse – illuminating some of the most dangerous and predictable pitfalls for new founders and entrepreneurs.

Understand your customer

Issue: Understanding your customers is crucial. It is important to be fully aware of their needs, desires, and pain points, so that you can tailor your products or services to meet their expectations.

Tip: Be wary of starting a business in an area that you don’t understand. It is much easier to focus on what you know. It gives you a natural advantage.

Example: My own business, Inzpire, provided aviation training services to the UK Forces. It was successful because of a deep understanding of military aviation customers, arising from having been military aviators ourselves for many years.

Solve a Real Problem

Issue: It is important to address a genuine need. Do not create a solution in search of a problem.

Tip: Conduct market research and engage with potential customers to validate your idea before launching your business.

Example: Monzo, the London-based digital bank, identified the clunky, hidden-fee-laden experience that traditional banks offered. They saw an opportunity for a transparent, mobile-first alternative. Their focus on a real problem was key to their growth and success.

Secure Funding

Issue: Securing sufficient funding to fuel the business remains a significant hurdle for UK entrepreneurs.

Tip: Think about how you will fund your business before you start. Try and fund the business yourself, as this preserves your equity. If you can’t do that, approach friends and family. If they can’t help, consider debt, start-up grants, selling equity to angels or, later, VC /PE firms. Whatever your approach, you need a compelling pitch that tells your story and shows your potential for growth.

Example: Innocent Drinks, began with founders Richard Reed, Adam Balon, and Jon Wright convincing attendees at a music festival to vote on whether they should quit their jobs to focus on the business. This eventually led to £250,000 early-stage funding from Maurice Pinto, a wealth American businessman, and eventually from Coca-Cola.

Build a Reliable Team

Issue: A company’s success is built on the strength of its team. However, hiring can be fraught with difficulties in start-ups, due to budget constraints and uncertainty.

Tip: Be very selective about who you hire. Look for potential rather than just experience. Seek people who are adaptable, aligned with your vision, and ready to tackle challenges head-on. Then invest in them so they stay with you. Provide training, create a positive and enjoyable work culture, and empower them to contribute to the company’s growth.

Example: Google has often been highlighted for its enviable culture, in which employees felt valued. This resulted in high employee retention, increased innovation, and productivity.

Understand your finances

Issue: So many entrepreneurs have no idea how they are doing financially. This is very dangerous because running out of cash is normally 100% fatal.

Tip: Establish proper financial management accounts. Learn to read a P&L, balance sheet and cashflow statement. Create proper financial management information. Set a budget and follow it. Be frugal. Prepare for the unexpected. Avoid unnecessary expenses. Monitor, monitor, monitor.

Example: Ford Motor Company faced difficult times during the global financial crisis of 2008/9 as the whole automotive industry was hit by plummeting sales. Unlike some competitors that received Government bailouts, Ford managed to navigate the crisis without external help. A key factor here was protective financial planning, including a pre-crisis $23 billion loan, which provided the required liquidity during the downturn.

Keep an Eye on Your Competitors

Issue: Competitors can make your irrelevant.

Tip: Only the paranoid survive. Look around you constantly. Understand your rivals’ strengths and weaknesses. Continuously improve your product or service to stay ahead.

Example: In the early 2000s Netflix was primarily known for DVD rental but it faced fierce competition from competitors such as Blockbuster. It countered this competitive threat very successfully by pivoting its business model to online streaming.

Become Visible

Issue: People can’t buy what they are unaware of. Even with a groundbreaking product, your venture will remain unnoticed, unless you make your product visible.

Tip: Utilise cost-effective marketing channels such as social media and content marketing. Have a clear and compelling message. Tell your brand story so that potential customers understand what you offer and why it matters to them.

Example: Gymshark, the UK fitness apparel giant founded by Ben Francis, leveraged social media marketing long before it became standard practice. Francis’s approach of sending products to fitness influencers on YouTube and Instagram catapulted Gymshark to global recognition.

Embrace Technology

Issue: Technological capability is growing so fast. Technology can be a powerful tool for growing your business, or it can make your business irrelevant.

Tip: Adopt tools and platforms that can automate tasks, streamline operations, and enhance customer experience, allowing you to focus on strategic growth. Think about the implications of AI, Blockchain, Quantum computing. You may not think they are relevant to you, but they probably are.

Example: Amazon is a great example of a company that is continually adapting to new technologies, in order to expand and to dominate various markets. The rise of cloud computing, for example, led to the creation of Amazon Web Services, which diversified Amazon’s revenue streams. Voice recognition and artificial intelligence technology led to Alexa.

Don’t Forget Yourself

Issue: Entrepreneurship can be all-consuming, very lonely, and lead to burnout.

Tip: Set boundaries and make time for activities that recharge you. Remember, that you will not achieve your business milestones unless you sustain your health.

Example: Sarah Wood, co-founder of Unruly, sold to News Corp, has spoken openly about the importance of balance. She emphasised the need for recharging and spending quality time with family. Ariana Huffington, of the Huffington Post and Thrive Global, has been a vocal advocate for prioritising sleep, reducing stress, and attending to overall well-being.

Setting Sail

Before you set sail on your entrepreneurial journey, try to learn from those who’ve navigated those unpredictable seas before. Be aware of the typical traps and have a plan to address them in advance. In this way, you can probably avoid the worst rocks. Every stormy sea eventually gives way to calm waters and, if you prepare diligently for squalls before setting off, you definitely maximise your chances of arriving at a beautiful destination that justifies the long voyage.

 

If you are keen to grow your business, and arrive at a beautiful destination, the herd can help. Contact us for a free half hour call to discuss where you are now and where you’d like to be.