The chat has ended
Today’s webchat has now come to an end. Thanks to everyone who took part – we hope the blog summaries below are useful.
If you would like to get in touch with the Guardian Small Business Network, please email smallbusinessnetwork@theguardian.com.
Final thoughts for disruptive entrepreneurs from our panel
Julia Elliott Brown has this advice:
From Adam Morgan:
Three suggestions:
1.Don’t be too intimidated by what the big players in the category are doing at the moment. Many successful challengers are created by people who have very little experience in the category they are launching into (Bezos, Dyson, Airbnb), and that fresh perspective/ Intelligent naivety allows them to see an opportunity the rest of the ‘experienced’ category has missed.
2. Be really clear on what you are challenging about the category – what aspect of the user experience, or the emotional relationship with it, or the part it plays in popular culture, for instance. Clarity on what you are rejecting will make it much easier for you to be clear on what you really stand for instead. And the clear desire to really change the category/ consumer for the better will give you and your team energy when you feel the world isn't yet going your way.
3. Sacrifice and overcommit. Don’t try to be all things to all people. Take a position, and sacrifice everything that doesn’t fit it; otherwise you will simply dilute what makes you fresh and different – and potentially disruptive. And it will focus all your energies on selectively doing what will make the real difference, rather than being sucked into less relevant or important work.
And from Emma-Jayne Parkes from SquidLondon
Its not easy, but its worth it! We started our business journey whilst graduating from University in 2008. It has been a bumpy journey and continues to be so. Our goal was always to make sure there were, and are ,customers for our current products and new products we are developing. Having customers is key and retaining those customers whilst gaining new ones is the challenge. You have to be 100% invested in your idea and business and believe in it, because if you don't why should anyone else! All the best!
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How do we encourage more innovation in the UK?
Phillip Monks from Aldermore says we need to embrace failure:
We really have to embrace failure as they do in the States. Trying and failing is seen as perseverance in the States whereas in the UK it carries a stigma. Then we need to raise awareness of the support available to entrepreneurs, celebrate UK innovation and provide education and training for budding entrepreneurs.
Gayle Mann at Entrepreneurial Spark would like to see more support
I don't think there is a shortage of innovation in small businesses I think it's the support for the individuals running and growing the businesses that isn't as joined up as it could be. It's a lonely journey being an entrepreneur so being surrounded by like-minded peers and the right support is vitally important.
And Timo Boldt believes it comes down to education and funding
Education and funding :) ... The better educated people are the better for startups and innovation really. We need tons of data scientists and millions of developers so need a big commitment to remove that bottleneck at university level. More funding especially at late stage would really help, people in the UK compared to the US tend to sell out very quickly which limits innovation potential.
Paul Mason from Innovate UK believes all businesses need to innovate:
One further thought, that for me focusses the mind, is "innovate or die". Very few companies exist today that are selling exactly the same product/service (or using the same processes) that they were 20 years ago. Someone else will be trying to have a better idea. Better that you find it first.
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What's the best way for a challenger brand to secure investment?
Fundraising coach Julia Elliott Brown says:
If you're at early / idea stage with your challenger business, the people that are most likely to back you are friends & family - those who know you and are prepared to back you, BEFORE you have really had the chance to prove yourself with this particular idea. The exception to that is if you are a serial successful entrepreneur, in which case you may be able to go straight to institutional investors with your back-of-the-fag-packet proposal.
If you've already got early proof that you're disrupting the market, then your options are much wider...angel investors, crowdfunding, VCS... all depends on how much you want to raise, your overall exit strategy, and what type of involvement you want from your backers.
When you're pitching for investment, just make sure you focus on the OUTCOMES that you will give to investors.... they don't really care too much about the details of your product features, they just want to know that you're going to make them a great return on their money within a reasonable timeframe.
So.....make sure you give those investors proof that you are already solving a real and large customer problem; proof that you can commercialise it; proof that this is a big and growing market that you can exploit; and proof that you are the right team to execute on the plan.
And don't forget...show them how you plan to exit the business, so that everyone can take their money off the table!
Remember, you won't be able to convince everyone. Grow a thick skin, don't take the nos personally, and move on to the next investor who may well be the one who does 'get it'.
Adam Morgan has this story about Olivia Knight, who took an alternative route when finding funding for her business Patchwork:
Olivia Knight at Patchwork was brilliant at the way she approached investment. Needing a six figure sum, she was offered it all by one investor, but turned that investor down, because she didn't want to have someone else being so influential on her young business. Instead, she raised that same sum from 24 different investors. This meant that no one investor could tell her what to do, but she still had the same injection of cash. And she also chose those investors to have different skills and expertises, so had a panel of different experts she could then call on for help when she needed.
Jas Bagniewski from Eve adds:
There's really a lot of investment money floating around these days, so if you persevere with it and believe in your idea it should be possible to find someone who buys into it. IN our case the main ingredients were:
1) Large archaic market (I would say this is the most important)
2) We had a lot of experience in the sector
3) We had a lot of experience in online and e-commerce
Those 3 things were enough in our case but speaking with other founders everybody has a different journey. I do think the most important is going after a market that is big enough and where you see significant opportunities to disrupt/improve it.
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How can you disrupt a market with big competitors?
One of our readers runs an auto parts business and is struggling against the buying power and established supplier connections of big conglomerates.
Gayle Mann from Entrepreneurial Spark has an interesting idea:
Build and link in with a great network, pick specifically who you would like to link in with and hunt them down. Be persistent in terms of connections and think about who you could collaborate with who might be looking to meet similar people. In our experience it's the money can't buy introductions that are most fruitful so get out and network. People buy people...
And Adam Morgan has these tips:
You will never be able to compete with them on price. You surely have a very finite range of options:
a) Create an experience that has more value for your customers than price alone. One Toyota (a car dealership in the US), for instance, offers a car service in just six minutes - less time than it takes their customer to drink their complementary offer. What kind of service value could you wrap around what you do?
b) Partner with one of the conglomerates to create a new kind of offer - become the way that they progress the category for their own customer
c) Find a new kind of 'open' ecosystem to champion - perhaps a confederation of smaller suppliers, which collectively pack more punch. Alliance and coalition is a key challenger strategy to scale.
Emma-Jayne from Squid sympathises with this predicament but says their size enables them to be more nimble
Echoing Julia and Paul - the hardest things is volume as this always drives price it is something we struggle with every day. And the catch 22 is then cashflow! But being smaller does allow for more flexibility and quick decisions. We are strict on our payment terms from our customers so never place orders without a 60% down payment allowing us to take bigger volume risks as we have covered our costs.
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Being innovative doesn't pay and is time consuming. Can a balance be found?
Paul Mason from Innovate UK says:
I'd say that innovative is the commercially successful exploitation of ideas. So getting paid is a prerequisite. But yes, finding time and resources to do the hard work isn't easy - and you often can't get paid for this work. Although, in some schemes we run (like SBRI) this is possible.
And Julia Elliott Brown suggests finding funding may help:
Hi SewKirsty - sounds like you have a lot on your plate! It's a constant challenge balancing short term cash priorities with longer term development projects, whether you're a SME working from home or a large corporation. The danger is that if you constantly keep getting pulled back into other work just because you need to generate immediate cash, you will NEVER get to your bigger dream of really disrupting your industry. If it's cash that's holding you back, it's worth looking at how ELSE you can find the money to keep your dream alive...a Start-Up Loan perhaps, government grant, bank overdraft, or finding an investor.. these are just some of the options to consider. Which funding route you go down depends partly on how much money you need and where you want to take the business. But to be innovative and disrupt the norm, you're going to need to give this as much of your focus as possible!
Readers might also be interested in this piece we published in February:
An interesting comment from Jas Bagniewski regarding the last question:
We think so at eve. We see our category (mattresses) as a very archaic, enormous opportunity. Disruption allows us to offer a better experience for customers at a better price. When we started we looked at how we could improve every aspect of the traditional mattress buying experience, and because we could make so many changes and improvements it made us inherently feel like a disruptor. I think if startups in general try to improve every aspect of their industry, they inevitably become disruptors too
Is being disruptive the holy grail for startups and why?
Our first question kicks off our webchat today. Adam Morgan from eatbigfish says it’s about having the right idea.
Nobody is waiting for a new brand or product to launch. People have busy lives, full of too much choice already, and very limited attention. You’re going to have to push your idea to be significantly different or better or cheaper or more useful to get their attention. Which is what disruption is usually taken to mean.
Chris Morton, the founder of Lyst, says that as a startup you need to either have a 10x product difference, or a really distinctive point of view about what’s important in the category you’re launching into - or both. If you really want a defensible long term business, you need both, but many startups in reality begin with one or the other and – if they’re good - develop the other side as they grow.
Phillip Monks, CEO of Aldermore Bank says:
No. Understanding your own customers implicit needs and sizing the scale of that market and serving it effectively is just as important - but that might be disruptive in its own right.
And Timo Boldt, founder of Gousto firmly believes having a disruptive business should be fun
Love Chris, he's a great guy. But as Edison said it's 1% inspiration and 99% perspiration, and having 1-3 big ideas (what's true today and true in ten years) is enough, and the acid test is execution against these big ideas. To link back to the Q, no it's not the holly grail, do what's fun, what you love and what you really enjoy and if it makes lots and lots of lives better by an order of magnitude GREAT!
The chat has started
Welcome to today’s live chat on being an industry disruptor. In the next hour, our panel will be discussing how to challenge established markets as a small business.
Join us as we discuss how you can get there, what challenges you will need to overcome and what support is needed to help more small business owners think big. Please do put your questions to the panel in the comment space below.
Submit a question
You can post questions in the comments section below during the chat. Or you can send questions in advance, or during the discussion, by emailing smallbusinessnetwork@theguardian.com or by tweeting us at @GdnSmallBiz with your question. You can also post questions in the comments section at anytime before the chat and the panel will take a look when it begins.
How to join in the discussion
Make sure you are a registered user of the Guardian (if not, it’s quick to register) and join us in the comments section below on 11 July, from 1-2pm.
What we'll be discussing
Disruptive startups grab headlines both for their innovative ideas and the eye-watering sums they can raise in investment. London-based Deliveroo, for example, closed a $275m (£212m) funding round last year. But for small business owners, challenging established industries can seem a fruitless task.
Maybe you’ve got an idea that’s going to turn a sector on its head, and rewrite its rules? You know customers will embrace it, investors will make money from it and, within a few years, everyone will wonder how they coped without it. But, right now, you’re faced with rejections, apologies and maybe laters. So how do you convince backers to work with you?
Many British entrepreneurs are breaking the mould and launching high-growth companies that have potential to influence the global market. In this webchat, we will discuss how you can get there, what challenges you will need to overcome, and what support is needed to help more small business owners think big.
Questions we’ll look to cover in this webchat include:
- Is being disruptive the holy grail for startups and why?
- What’s the best way to challenge an established industry that includes big players?
- What unique difficulties do disruptive entrepreneurs face, and how can you overcome them?
- How do you embrace and encourage innovation without impacting growth or your businesss’s bottom line?
- How should your marketing and brand strategy differ when launching an innovative concept?
- What is the best way for a challenger brand to secure investment?
- How do we encourage more innovation in the UK?
Our panel
Timo Boldt, founder, Gousto
Jas Bagniewski, CEO, Eve Sleep
Gayle Mann, director, Entrepreneurial Spark
Phillip Monks, CEO, Aldermore Bank
Emma-Jayne Parkes, co-founder, SquidLondon
Adam Morgan, founder, eatbigfish
Julia Elliott Brown, fundraising coach
Paul Mason, director of emerging and enabling technologies, Innovate UK
Updated
It's all about your mindset. If you don't have the right mindset, nothing else matters.
Four things:
1) Focus only on what your success looks like. Live, breath, smell and taste it.
2) Know what you want, and do not settle
3) Visualise and mediate on this every day
4) Every day, do the most important thing, do it right now, and do only that until it is finished.