Launching a business is fraught with challenges, so much so that almost half of all start-ups fail within the first three years. Hefty taxes, too much competition and poor financial planning are often the most cited reasons as to why. The startling statistics demonstrate the importance of planning for failure, as well as for success.
But it’s not all doom and gloom – it is possible for budding entrepreneurs to build a successful company with a little grit, determination, and sound advice.
The Telegraph spoke to 10 founders of UK companies to ask about their secrets to success, and for tips on how to build a multimillion-pound company.
Pull in the favours
George Wood, chief executive and founder of The Luna Cinema, an outdoor cinema company with a turnover of £3m, suggests pulling in as many favours as possible to get the business off the ground.
“When we were first starting out and needed sponsorship, I knew I couldn’t just approach massive companies who had never heard of me. I went back to who I knew and contacted my first employer, P&O ferries, and they agreed to help in my first (small) deal.”
Nearly 20 years ago, Rachel Clacher co-founded communications provider Moneypenny with her brother Ed Reeves with just £10,000. Today, the company is turning over more than £38m a year.
The siblings advise entrepreneurs to recruit experts in areas they have little knowledge in.
“Entrepreneurs are great generalists (because they have to be) and not necessarily great specialists,” explains Rachel.
“Neither of us were great at finance so we quickly identified that we needed someone who was brilliant at it. Hiring people with more specialised knowledge of specific areas has allowed the business to grow and develop, while we have been able to maintain that vital overview.”
Cut out the middleman
Layla Chapman, founder of luxury furniture store HOS Home, which is worth £10.7m, recommends taking control of the entire supply chain in order to cut out the middleman and reduce costs. Her company manufactures 95pc of their items and furniture is sold from the start of the manufacturing process, eliminating the need for large warehouses to store the products. “[Manufacturing our own products] also gives us the ability to adopt a design-focused approach and push boundaries, with new product launches most weeks,” she says.
Siblings Suzie and Jimmy Cregan founded Jimmy’s Iced Coffee eight years ago, with the Dorset-based drinks brand now turning over £5.4m a year. Their top tip is to be persistent and original. “Find original ways to get attention – even if it means standing in a retailer’s HQ reception area dressed up in a carton, morph suit and flip flops… Yes, we did that. And yes, we did get the listing. If you don’t ask, you don’t get,” says Suzie.
Friends James Kinsella and Adam Carnell founded Instantprint while at university eight years ago, and the online printing company is now bringing in more than £30m a year. One of their most important pieces of advice for entrepreneurs is to focus on getting revenue coming in and products out of the door.
“Many start-ups we meet seem to sit in limbo as founders debate detail with branding, delivery or something else which will inevitably change when they have customer feedback. Pre-revenue decisions are steered by what you think the customers want rather than what they actually want. Get revenue coming in, get feedback from your customers and steer your business based on this.”
Geeta Sidhu-Robb, founder of Nosh Detox, a meal delivery service worth £2m, offers similar advice.
“I got my business off the ground quite literally by selling stuff. Whatever your business is – be it a product you can package up and sell, or a service – the goal is to make money from it. So start from that point.
“A business plan is crucial, but pages and pages of jargon never made anyone a penny – sales did.”
Passion is the bedrock of a business
Henrietta Morrison, founder of pet food brand Lily’s Kitchen, worth £30m, disagrees that the most important thing is to get money coming in straight away. She says, “When starting out focus on your passion rather than ‘how do I make a fortune’ and you will always make good decisions. It’s more fun chasing a dream than chasing the money.”
Focus on employee happiness
Girish Mathrubootham founded his computer software company, Freshworks, in 2010, and it now turns over more than £75m a year. His greatest lesson for budding entrepreneurs is to scale up the business as well as the culture.
“I want to ensure I build a company where my employees are happy doing what they’re doing and want to work for the company, so that my customers are happy.”
Mike Branney, co-founder of £15.6m clothing brand Oh Polly, agrees that a business’s success is often dependent on employee happiness.
“We have no gender pay gap and our employees benefit from flexible working. The impact of these policies is reflected in the make-up of our global senior management team where 59pc of positions are held by women.
In 2010, husband and wife Alan and Juliet Barratt launched sports nutrition brand Grenade, which last year recorded revenue of £44m.
“Diversifying your product range is an important way to ensure your brand continues to grow and attract even more new customers,” says Juliet.
“Ambitious brands should always be on the lookout for new target audiences because the market is constantly changing.”