Small businesses play a vital role in the UK economy and we need more of them.
I’m all for “StartUp Britain” but, on its own, it’s not enough. We need people with bigger dreams.
For UK businesses of up to £1m in sales, the average annual sales growth rate is 73 per cent; but once the business hits £3m sales, this growth falls to a meagre ten per cent.
I was recently asked by Radio 5 Live whether it is a good time to start a business in the UK. One caller astonished me when he said: “There’s no incentive to start a business.” I compare this attitude with a recent trip to Mumbai, where I witnessed intense entrepreneurial energy. India is one of the most bureaucratic and challenging countries in which to do business, but they don’t need “incentives”; they just get on with it.
If we’re to maintain our ranking in the world economy, we need to create more high-growth firms with the potential to become big.
Here are the lessons I learned in the early days of Coffee Nation:
1 Is it really worth inventing?
Is there a real need for your idea? I’ve seen plenty of new firms that are solutions looking for problems to solve. Wrong way around.
2 Better or different?
Why will you succeed? Because you do it better than everyone else, or because you do it differently? Either way, play to win.
3 The perils of business plans
Write your business plan, but raise the money only when you can prove it really works.I nearly took £75,000 from a business angel early on. I had the wrong product in the wrong locations, but an impressive business-plan document. I’d have used his money to try and grow a business that was marginal at best.
4 New market category
Create a new category and make the competition irrelevant. Firms that own their space are highly differentiated, have an unfair advantage and explosive growth potential.
My eureka moment came when I realised I had created a third space between coffee bars and vending machines.
5 The set piece
If you’re serious about building a high-growth business, you need to be able to answer “yes” to these questions: Are you in a growth category? Can you become market leader? Is there a large market to address? Can you scale up? Do you play to long-term trends?
6 Build the board
It amazes me how many entrepreneurs hold back their business through fear of recruiting people smarter than they are. Find formidable people that are as excited as you are about what you’re building – and hold onto them.
7 Don’t be alone on the journey
Building a high-growth company is not for the faint-hearted. I found it invaluable having someone with me who’d been there before. My chairman and I spoke at least once a week – he was a terrific sounding board in difficult times.
Pleasing customers can sometimes be dangerous. Our corporate customers often tried to pull us around and we had to stand our ground on many heart-stopping occasions. Had we capitulated, we’d have ended up a white label machine-supply firm of little value.
Real success usually comes from doing one thing brilliantly. If the core idea works, you don’t need anything else. Narrow the focus.
Finally, this will be a long and hard path. Make it worthwhile. Craft an extremely ambitious global goal. Think huge. At the top of our very first machine, we painted “Europe’s leading self-serve gourmet coffee”. It’s so powerful – and so inspiring – when you can sum it all up in one sentence.
Martyn Dawes founded self-serve gourmet coffee company Coffee Nation in 1997. After two successful exits, Dawes is now looking to acquire a promising small business and build it into one of the UK’s leading mid-sized companies over the next few years.
Share this story