With lockdown forcing many people into furlough or redundancy, the thought of turning a personal passion into a startup has never been more tempting.
I had always wanted to run my own business, so when I saw the opportunity to take a small part of Coca-Cola and turn it into an independent business, I led a management buy-out of a business unit that focused on fruit juices; and formed Big Thoughts.
A few food and/or drinks company buyouts later, I took a controlling interest in Cracker Drinks to do it all again. Cracker is an independent craft drinks maker with a healthy obsession for great tasting and all natural juice and juice drinks. Over the years, I have learned what it takes to turn a passion into a viable business and through to a trade sale. Here’s what I’ve found to be really important:
Be really clear what you are trying to achieve – and for whom
All business ideas start with “I think”. I think people will want computers in their home. I think we could use technology to improve taxi services. I think people may enjoy healthier fruit drinks. There is nothing wrong with thinking big. To adapt a quote from Paulo Coelho: If you think big you might be, if you think small you will be. It’s why I named my first company “Big Thoughts”!
However, before you start investing the big bucks, you need to move to “I know”. Knowing and understanding your potential customers gives you a real insight into the available opportunity and it is that opportunity that will become the driving force behind your business.
You still need to be really, really focused on execution if you want to get anywhere. A great strategy poorly executed will only disappoint and frustrate; and you need a bigger purpose than simply making money. As I’ve often heard it said, if you set out to make money you’re less likely to succeed, but if you set out to grow a quality business, you’ll end up making money.
Here are two resources you might find useful. They are both good frameworks to keep ideas focused and organised at this stage:
People are your most important asset
Lots of people say it. It’s important to believe it and to walk the talk.This is especially true for startups as you may not have investors, a product or even an office when you start out.
However, if you surround yourself with the best people you can find, all working towards the same goal, you can achieve anything.
When I started out, I hired the best CFO I could find, even if I couldn’t afford them at first. I knew that with someone expert at managing the numbers, I could focus on my passion and the aspects of business management that I felt I was better at, leaving the figures in good hands. By supporting and growing with great people around you, they will understand the essence of the business and support it to grow. You will also develop loyalty that will inspire investors, customers and partners.
Equally, however, it’s important to notice when things aren’t working out and to walk away. The wrong person in the business can, at best, hold you back and, at worst, completely suck the life out of your business.
Startups are almost completely reliant on other people, including people within your supply chain, your customers, investors, etc. Long-term partnerships are really important; way beyond a transactional relationship of supplier – customer.
As a startup, your biggest weapon against large companies is your passion. At Cracker, I like to call it a “healthy obsession”. Big companies find it hard to inspire and harness the same level of passion and obsession as a startup where everyone is super-focused on achieving great things. That passion will infect everyone you meet, breathing excitement and purpose into their lives, and helping you develop strong partnerships that will help you grow the business.
However, it’s important to appreciate the value partners can bring to the business, listen to their ideas, and include them in the business development. Every mistake you will make has been made before, so make use of that experience by listening to your partners.
Being passionate can make entrepreneurs too single-minded, sometimes, which can make partners feel excluded. True partnerships involve both sides, creating a mutuality of benefit, as we used to say at Mars.
As a startup, it can be easy to get distracted. It’s what I call the “rubber dustbin principle”: while you could make money selling rubber dustbins, if it’s not part of your core business it will only serve as a distraction. You are far more likely to get traction and success by focusing on a smaller number of products/services and avoiding mission creep.
Yet, while focusing on your goal is important, it needs to be balanced with a great deal of flexibility in your approach. In my businesses, I have always aimed to make us as professional, data-driven and robust in decision-making as larger companies while being more flexible and agile in execution. Flexibility is a great advantage over bigger businesses but you still need to focus on a solid strategy to avoid moving away from your core business.
Quality is fundamental
To build a strong business that will stand the test of time, quality is key. Your products, services and attention to detail will help you stand out and develop customer loyalty. It seems to me it is far easier to achieve consistent high quality in the long term if you build it into the way you work and make it part of the way everything is done in the business. It’s tough to remain quality focused when you’re busy or short of cash. It’s too easy to cut important corners and gradually undermine the business.
That being said, entrepreneurs shouldn’t get caught up in trying to make things ‘perfect’. To quote Voltaire: “The best is the enemy of the good.” Perfectionism will slow you down and frustrate everyone you work with. As Confucius said, “Better a diamond with a flaw than a pebble without.”
We’ve had our fair share of challenges – I guess every business will encounter obstacles. The trick is knowing whether the obstacle points to a systemic problem with your business model or whether it is a bump in the road. Either way, success comes down to your ability to adapt and evolve.
You may have structural issues which need a complete rethink of the business model. Don’t simply continue to watch the business struggle without changing your approach. As the quote often misattributed to Einstein goes: “The definition of insanity is repeating the same thing over and over again and expecting different results.”
The best way to get a sense of whether an issue is temporary or structural is to ask someone outside of the day-to-day running of the business. It is far easier to see what’s going wrong from the outside and, as I said earlier but worth repeating, every mistake you are going to make has already been made. So tap into that expertise by appointing trusted board members or non-exec directors.
Resource: Find a Virgin StartUp Mentor
This year has been a real test for businesses of every size and in every market. Yet, if you’re confident in your idea then challenging times can be a great time to bring ideas to market.
I’ve seen lots of smaller businesses finding great success even when the overall market isn’t performing simply because they have a better understanding of what customers want and a more flexible approach to delivering it. What’s more, with new sources of funding available, such as equity crowdfunding, many more businesses can now gain investment.
While it may seem surprising which companies are thriving and which are barely surviving, some of these market movements in the wake of the coronavirus represent fundamental long-term shifts which represent opportunities for fast-moving, flexible, agile businesses with the ability to execute now. If you have a business idea you are excited and passionate about that fits into one of these markets, now is actually the ideal time to channel your drive and enthusiasm into a startup.
I am often asked if I have any regrets moving from relatively secure, well-paid jobs in large international businesses to an unpredictable, poorly-paid position at a startup. My only regret? I wish I’d done it sooner!