So far this year over 400,000 startups have already launched across the UK, according to Startup Britain, but too few are making it through the first crucial formative years.
Small businesses are the engine room of the UK economy, making up more than 99 per cent of the private sector. However, all too many businesses don’t survive to celebrate their fifth birthday, falling at hurdles along the way. With interest in starting a business at a record low amongst young people in particular, looking at why some businesses succeed and others fail is an important step in providing sound advice to help get these businesses past the make or break early years.
In my experience, successful startups have certain elements that mark them out. Firstly, each identify a clear need in a market. A business idea doesn’t need to be ground breaking to be successful, but it needs to address a specific requirement. This is the “North Star” the entrepreneur needs to follow.
Secondly, successful startups seek out and are positive about opportunities and don’t fear failure. Recent research from NatWest found that young people are being put off starting their own businesses because they fear it’s ?too risky?. But with the right support in place, the fear of failure should never be a barrier that scares off budding entrepreneurs. Every mistake we make in business we learn from, and the lessons learned from failure can build stronger businesses and stronger leaders. There are no wasted experiences in trying to set up and run a business.
Thirdly, one of the absolute key traits of growing a startup is knowing when to relinquish part of the control and bring others into the fold. Entrepreneurs are fiercely passionate and protective over their business (and rightly so), but this can turn into a belief that no one else can help make their venture a success. Instead, entrepreneurs should let themselves concentrate on what they do best by surrounding themselves with people who can take on the tasks they may not specialise in, such as finance. It’s this support which can really help a business on to bigger and better things.
The bravest and most successful businesses are often the ones where the founder acknowledges that they will need to give up some responsibility to other employees, or even part of the ownership. Giving up a stake to an investor for a cash injection may help it reach a lucrative new market. It’s better to own part of a very successful business than all of an average one.
A great example of a successful business that has done all this is Trunki. Rob Law was just 21 when he came up with the idea for his much loved global children’s suitcase brand. Despite initial setbacks, Law qualified for a Prince’s Trust startup loan in 2003, his first real bit of success. He has faced a long journey to build the business he has today, but his now global success story is proof that with the right support and determination, anything is possible.
NatWest’s support for enterprise, along with being one of the very first supporters of The Prince’s Trust when it was established in 1976, means we work closely with young people starting out in business. Working with them allows us to demonstrate the power of good banking and the effect it can have on a business, and it also allows our people to become better bankers.
Young people are adding a rich mix of new companies to the UK marketplace, and this fresh flow of businesses is crucial to the economy not least because more than half of all private sector employment now and in the future will come from these small businesses. That’s why helping young people achieve their ambitions, and offering support and advice on overcoming some of the obstacles they?ll face, is so important.
Overall, entrepreneurs of the future should feel positive about the opportunities ahead. Being brave, knowing when to let go of control and seeking out support will ensure a lot more of tomorrow’s entrepreneurs celebrate that landmark five-year mark. Which is great for them, great for us as a bank, and great for the wider business community and economy as a whole.
NatWest has proudly partnered with The Prince’s Trust on its Enterprise programme for 40 years. Together, the two have recently launched the Tomorrow’s Business Awards, designed to showcase the talent and innovation of the young people who have received support from The Prince’s Trust within the last ten years. Entries demonstrated how their enterprises made a positive difference to their life, the environment, their local community, or towards sustainability.
Marcelino Castrillo is MD of business banking at NatWest.