Starting is easy building the business is challenging
There is no such thing as a Start-up, OK well there is but it’s just a phase. Businesses, like products, have a life cycle and Start-up is just the first phase.
You are a business as soon as you commit to your plan and start doing it. There is also a lot of you out there; 2014 broke the record for the number of new businesses registered at 581,173 compared to 526,447 the year before. This year could see that figure rise above 600,000.
So what is a Start-up? It’s the bit we all go through when you have an idea, explore it, take some advice, write a plan, do some research, tests out the idea and get ready to form the business.
This phase is well catered for with incubator programmes or boot-camps and a range of support structures and mentors. There are also a growing number of grants and start-up or proof of concept cash funds, some seed capital investors, even of course crowdfunding. There are a huge range of huge number of variations on how to start-up and it’s a good thing. Then it gets harder to get the cash beyond start-up phase and you are now competing with a growing pool of new businesses not just for customers but for investment.
So you need to shape up quickly. Also, I’m not sure who you are fooling if you still call yourself a start-up once you take someone else’s cash investment, hire people and go live in front of potential or actual customers/users. You’re a business.
Eventually, some sooner than others, the users or customers will start buying your service or product. Freemium or cash generative is doesn’t matter the business model becomes the most important aspect of the operation. Not the product the business model, how you engage with customers and make money, even if it’s not flowing in the business in the short term.
You need to ensure you take tax advice, you have investors to deal with, whether the crowd or VC it hardly matters. You are spending someone else’s money. They need managing and their expectations, you remember the stuff you wrote in the business plan, now means something. Of course it will get revised but it becomes a tracking tool of performance. Staff have to be hired and possibly fired. You need to comply with the Data-protection Act/law, health and safety, VAT, reporting to Companies House. Ignorance is no excuse and the list is almost endless.
It can all be done but it take a lot of work, courage and knowledge you may have to find in a hurry.
It’s fun but is also the reason the majority of new businesses fail in the first 3 years. Mis-management or misunderstanding. Funny, I have never met an entrepreneur who failed blaming themselves, it’s always someone else’s fault. It was you in control however, of your business. Start-ups don’t fail businesses do, so grow up and use the advice and cash wisely. Good luck.
Rivers Capital Partners is an independent venture capital management company. The company offers an entrepreneurs approach to venture capital, all the founders have set up and managed their own businesses.
If you are looking to finance your business idea, come along to the Raising cash for your business events