Matthew hosted our Basics of Building a Business event this week, inviting the three professionals he considers to be integral to the growth of his business to share their advice with an audience of founders and entrepreneurs. Matthew explains why he asked Steve Ellis, Stewart McTavish and Ludo Chapman along…
“All businesses fail: When I was 14 years old, I started writing to businesses asking for summer jobs and I’ve been working for startups ever since. I was kept busy in various ways, including dissembling computers, designing a mouse mat, writing patents and building an accounting database – and I’ve also been really lucky. Some of those businesses have put me in a position where I’m now an angel investor. As a result I see a lot of businesses and a lot of failure: Every business fails on its mission at least once. The trick is not to fail on the avoidable basics and doing this can put you into a position where you might be able to succeed.
The trick is not to fail on the avoidable basics and doing this can put you into a position where you might be able to succeed
Businesses fail for lots of different reasons – and every story of failure is different. This makes them much more interesting than success stories. You may fail because you didn’t get the right product market fit, or you hit the market 5 years before anyone was ready for your idea, or you were outcompeted – all proper reasons a business might fail. Don’t let the basics be the reason your business fails. If you spend time on getting them right, they will lay the foundations for building success.
For me, there are three categories of failure - organisational, environmental and strategic. Each person I brought along has helped me avoid falling in these areas.
I’m not very organised – and anyone who knows me knows this. Now, everyone can have small business slip ups. In fact, every business I think I’ve ever met got their business cards wrong on the first print. But that’s not the organisational failure I’m talking about.
I’m talking about making mistakes with the structure of your business. Which means you have a funding round fall through because you messed up your cap table, you run out of cash because you assumed HMRC would process an R&D tax application quickly, or your employees end up paying over 70% of their rewards in tax. The basics of cash, accounting, tax, board meetings, minute taking, EIS/SEIS and funding of a business are core to a well-run business. Get them wrong and they can be hard or impossible to put right.
There are literally hundreds of these things, often small, often easy to forget. You need to have someone that can help you with them, so you don’t get frustrated and bogged down doing them yourself. That’s where Steve Ellis has been invaluable for 10to8 and for me.
The environment in which people work is vital. You have people coming to work for you - they have to be focused, they have to be happy and they have to be motivated. So it’s up to you to get the culture right and provide a workplace for them that fits.
We were a group of friends who decided to simplify the whole appointment booking process – to take it from 10 minutes to 8 seconds. We founded 10to8 and made a lot of mistakes – we failed all over the place. Our biggest was trying to scale too early: from 3 to 15 and ahead of the business and product performance. Our funding round to keep us growing fast and supporting this relatively-large team fell through. It was plan B time - and because we had our organisation right - we knew exactly what we could afford. We went back to 3 people and it was dramatic to say the least.
At that moment, without ideaSpace, the business would have disappeared. It was only because they provided an ‘out of the box’ environment which culturally fitted with us we survived. It gave us a space alongside other entrepreneurs where I could go and sit and essentially recover from what had happened. It gave us a place to rebuild and to look forward from. We are now 12 people, the business is growing fast, and 10to8 have moved out - but I’m still a member and work there once a week as the flexibility of ideaSpace is still a great fit for our business.
Providing the right environment for your team is vital – and Stewart’s ideaSpace was the best place for ours to grow.
The old adage that genius [insert startups here!] is 2% inspiration and 98% perspiration is spot on. Building a business is hard work but needs to be strategically focused. Achieving a balance is really hard.
When 10to8 was first starting out, before putting fingers to keyboards, we spent months and months formulating strategy. There were so many ideas that today we’re still, years later, less than half way through them. Now we’re growing fast and used across the world we struggle to find a day in two months where we can sit down and think about strategy: We get lost in the day-to-day and are too busy finding the immediate and obvious ways of growing the business.
The trap businesses fall into is simple: Startups spend too much time thinking up lots of new ideas (inspiration) and not enough time doing the implementation (hard work). Scale ups spend too much time implementing and not enough time thinking about what they’re implementing and why.
Neither startups nor scale ups are very good at creating a framework that helps them make better decisions on which ideas to pursue and why: Laying down the framework to make decisions based on the strategy. And subsequently to iterate that strategy on a regular basis with new knowledge.
You need to move and think, move and think; anything else and you’re wasting time
It’s a bit like chess when the opponent doesn’t care what moves you make: You don’t need to sit there trying to think 3 or 4 moves ahead. You need to move and think, move and think; anything else and you’re wasting time doing thought experiments in an imagined world. This is exactly where Ludo Chapman comes in. He is one of the best mentors and business strategists I’ve met and helps businesses think and act in balance.
Steve, Stewart and Ludo have helped me get through failure and move through to success. If you’re building a business you need to remember that you will fail and that often businesses don’t work. You’ve got to find people inside and outside to help you get the business basics right so you can fail for right reasons and maybe find a way to succeed.”
