Every hour, 80 new businesses are born, according to research by StartUp Britain*. But survival rates are low. Just four in ten new UK businesses make it to the age of five. With the odds stacked against you, how can you make sure your business thrives? At MT’s recent Future of Work conference, we brought together a budding entrepreneur, a veteran entrepreneur and a business expert to share their tips on scaling up your start-up.
Solve a problem
Shazia Saleem says the seeds for her business ieat Foods were sown back in 1992. She was seven years old, standing in the queue for her school dinner. ‘I was desperate for the shepherd’s pie but, as it wasn’t prepared in the halal manner [according to Islamic dietary law], I couldn’t have it,’ she says. ‘The dinner lady gave me pizza instead, which was basically a biscuit with tomato ketchup and a bit of cheese on the top."
The hunger pangs got worse as Saleem got older. ‘I’d watch my uni friends buying tasty-looking ready meals but I’d be confined to the "ethnic" section at the back of the grocery store,’ she says. ‘The halal products were atrocious; a retail buyer once told me he wouldn’t feed them to his own dog. Given that there are three million Muslims in the UK, that’s absolutely shocking.’
She started ieat Foods in 2014. Her range of halal ready-meals was initially stocked in Sainsbury’s. Within 500 days, all four of the big supermarkets were on board, making it the largest ready meal brand launch by a start-up in UK history. ‘We’ve been successful simply because we’re solving a really credible problem. Retailers have been waiting for a brand like ieat Foods to come along.’
Learn from big companies
Nishul Saperia was a co-founder at financial data provider IHS Markit – launched from a barn in St Albans in 2002. ‘We started out providing banks with vital data about the volume and prices of their trades with each other,’ he explains. ‘At first, no-one knew who on earth we were and no-one cared about us. But then the banks started recommending us to hedge funds and investment managers and demand for our data spiked.’
Saperia realised that his start-up needed to grow up in 2006. ‘We hadn’t invoiced half our clients for that year; we’d failed to chase up $5m in revenue and we were constantly playing catch-up. That’s when we started to structure ourselves like a big company, creating finance and operations departments.
‘We also changed the way we hired and managed people,’ he adds. ‘When you’re a scrappy start-up, everyone mucks in and everyone is deeply connected to the company. But you can’t expect that level of buy-in from employees once you hit 15 different business lines.’
‘When you launch a business, you’re the expert in everything. But one person can’t do it all,’ agrees Karen Penney, Vice President and General Manager, Commercial Payments and Small Business Services, American Express. ‘You need to think about how you’re going to bring people on board with skills that complement your own.’
Think creatively about funding
While Saleem describes cashflow as ‘the least sexy thing about entrepreneurship’, Penney says it can undo your whole business if you don’t get it right.
‘The most popular source of funding is still the banks,’ says Penney. ‘It’s important to have a great relationship with your bank but you also need to think creatively about other channels of finance. A lot of entrepreneurs start out using their personal credit card to fund their business, for example, then move on to using a business card to pay suppliers. By using a business card for company purchases your suppliers get paid early (potentially getting you an early-payment discount); but you don’t have to settle the bill for another 45-odd days. Plus you could earn reward points on spend, which you could then redeem on things like flights to business meetings.’
Take a step back
Don’t underestimate the value of ‘relaxed thinking’. Saleem worked 20 hours a day, seven days a week to build ieat Foods – and she didn’t have a holiday for four years. ‘I was so busy running around putting out fire after fire, I didn’t stop to think "why is everything on fire?" Actually, the three biggest milestones in the business have come when I’ve been on a break. You need to take a step back to get perspective.’