The number of new startups in the UK continues to soar as more aspiring entrepreneurs, people of all ages and backgrounds, take the plunge. In 2015, the Centre for Entrepreneurs and StartUp Britain reported 608,110 new incorporations. In the first four months of this year alone, 216,523 new startups were created, and that’s not counting the many thousands of sole traders.
Sadly, for many, their entrepreneurial journey will be short-lived. After five years, just four in 10 small businesses are likely to still be trading, according to research from Ormsby Street.
Should new entrepreneurs be deterred by the dismal failure rates? Not according to these successful small business owners who started out five years ago, with no previous business experience, but plenty of stamina and staying power.
The graduates
Sam Bruce, Alex Narracott, and Guy Bowden are the founders of Much Better Adventures, a travel platform they launched in 2012 after graduating from university. Their idea, hatched in a cabin in the Alps, aimed to uncover amazing global outdoor experiences and help the best local guides and hosts turn them into simple, logistics-free adventures.
“We’d all travelled and had learned first-hand how difficult it was for local specialist guides and hosts to compete online with the major players in travel,” says Bruce. “We wanted to level the playing field in the industry.”
Initially they reached out directly to the suppliers they wanted to support, typically buried on page 13 of Google, and also had recommendations from their own network. Platforms like Google and Facebook helped to put their business in front of their target travel customers. Five years on, they’ve sold over £7m worth of holidays and achieved consistent 45% year-on-year growth. Much Better Adventures now has a team of 12 and plans to internationalise the business.
Surviving those crucial first five years, says Bruce, came down to three things: developing one new product at a time with a scaleable business blueprint, building a passionate team with industry expertise, and having a clear destination but being flexible with the journey.
He says: “We’ve changed our ‘how?’ a few times, but our core reason for existing, our ‘why?’, has been consistent; to recalibrate the travel industry, channel more money into local economies and businesses to make them the real beneficiaries of tourism, and give travellers much better experiences than large tour operators could ever dream up.”
Unseasoned entrepreneurs in more traditional service sectors have also shown that with hard work and sacrifice, five-year business survival rates are achievable. In 2012, Dave and Anna France gave up their jobs with the Royal Mail and took redundancy to start their home-based dog walking and boarding business Best Paw Forward.
Taking care
“Anna started the business on her own, which initially involved walking two dogs a week,” says Dave. “I carried on working to see how it developed, and it did, much more quickly than we’d expected, and within a few months I’d left my job as well.”
The pair had spotted a growing demand from dog owners for an alternative to kennels, and crucially, were first in their local area to launch in this fast growing area of the pet care sector. Five years on, with over 100 canine customers on their books, a busy walking schedule and a full house most days of the week, they have achieved a level of success that others in the same sector have failed to do.
“The demand is there, and the idea of working from home, surrounded by dogs is very appealing,” says Anna. “But the reality is very different; you are out walking several hours a day in all weathers, and if you are boarding dogs, it is a 24/7 business, which means you have to make sacrifices. But the hard work has paid off for us, and the word of mouth recommendations we get from customers who love the service we provide have been key to our business growth and success.”
Community ties
Another very traditional, but much more lucrative market, the jewellery industry, was where entrepreneurs and school friends David Sutton and Nikolay Piriankov had set their sights in 2012 when they launched their online custom designed engagement rings startup, Taylor & Hart.
Piriankov says: “After leaving school David went to live in South Africa, but during a holiday visit, he suggested that we combine our experience – mine was in digital marketing and e-commerce; he had worked in the wholesale diamond industry – and start an online business, which we initially called Rare Pink.”
Their biggest challenge, he says, was raising funds while they were still unprofitable. “Selling the business vision took a long time to master,” says Piriankov. “I dealt with rejection so many times, I lost count.” Nevertheless, by 2015 they had secured £500,000 via crowdfunding platform Seedrs.
Last year the business rebranded to Taylor & Hart to encapsulate its British heritage. It employs 16 people and has an annual turnover of $2m (£1.56m). Expansion into the US, Europe, South Africa and Australia is now on the cards. Their success, says Piriankov, is due in no small part to the calibre of their many mentors. “We were like sponges. We’ve had a dozen mentors over the years on different topics and some still mentor us to this day.”
Being based in a co-working space, they’ve also had ready access to mentoring and advice from a startup community of other founders. The Techstars accelerator programme, which they graduated from in 2016, has been pivotal to their rapid growth. “The input from the programme directors and other business founders in our cohort enabled us to learn more about how to move forward than any other source,” says Piriankov. “At the start, it’s just you, and the only way is up, so survival is really about whether you have the motivation, stamina and grit to keep going, and the ability to learn lessons quickly.”
Why startups fail
Startups fail for many reasons in the early years. Entrepreneur and business advisor Carl Reader highlights three of the most common ones.
Running out of money
“Entrepreneurs often start with extremely detailed budgets, aimed at satisfying the bank manager, only to file them away,” he says. “By reviewing actual performance versus budget, business owners can stay on top of their cashflow and make changes before their hands are forced.”
Lack of action
“Creative avoidance”, doing anything but the things that will really grow the business – such as meeting potential customers – is a common trait in entrepreneurs,” says Reader. “Many harbour fears of rejection, but they need to be out there building the business.”
Missing the mark
Failure can simply be the result of launching the wrong business at the wrong time. He says: “You might be convinced that your business is the next big thing, but in the real world, the market is judge and jury. If the customers aren’t out there, the business will fail.”
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