10 Truths About The UK Start-Up Scene

Posted on January 13, 2008
Filed Under Uncategorized | | Written by Gary Reid

Whilst doing some research yesterday I came across this comment by Suw Charman on a post at Plastic Bag.

The post is quite old (C. 2005) asking where are all the UK start-ups but Suw makes some points that I think many UK entrepreneurs will recognise.

To paraphrase Suw

  1. banks don’t understand
  2. very little support or training
  3. you will spend the majority of your time fucking about writing pointless business plans, profit and loss spreadsheets, balance reports, blah blah blah
  4. having a failed business behind you here is seen as humiliating
  5. a risk averse culture
  6. we’re crap at marketing
  7. we have some astonishing talent around

This was Suw’s experience from a failed start-up.

So, what can we do?

1. Ignore Banks
Banks don’t know the first thing about business and even less about the web, in fact they don’t know much about banking - Northern Rock for example, they are stuck in the 1980’s. They will only lend you money if you have some collateral. Don’t waste your time with banks unless you are prepared to put up your house.

The only thing they understand about risk is that you should carry it all. If you talk to a bank expect to be inundated with calls from some Indian call centre trying to sell you insurance and other such profit draining services. Banks know jack shit and are next to useless - forget about them. I have never met anyone at my bank and I’ve been running web businesses for 8 years!

2. You Will Get No Help or Worthwhile Training
Don’t think your local Business Link will help you, they won’t, they will confuse you, distract you and have you doing stuff that gets them funding but adds no value to your business.

3. You Will Not Get Any Grants
Don’t waste your time applying for government grants because as Suw says you won’t get one unless you are a ‘one-legged, blind Croatian single mothers under 25 who live on the Isle of Man‘. Applying for or searching for grants is a time wasting process leading no where.

4. Conventional Business Plans Are Next To Useless
Writing a business plan, the type your bank or Business Link require is a complete and utter waste of time and effort. Only write one if you plan on applying for loans, grants, Business Link help (see above) or if you want angel or VC funding (see below). You do need to plan and I use what I call a venture plan to outline the business idea and get started, it’s just one sheet of A4.

5. Don’t Expect People To Be Happy
If you win or lose people will not be rushing to congratulate you. If your start-up is successful people will hate you and if you fail people will ridicule you. If you can’t put up with it don’t do it. These ‘people’ are generally your friends, family and neighbours, so just keep telling yourself ‘if I listen to them I’ll end up where they are’ - just depends if that’s where you want to be.

6. You Will Not Raise Equity
To say UK angel investors and VC’s are risk averse is the understatement of the century. If you are in any doubt as to how risk averse they are just watch any episode of Dragons Den. Even when one guy offered to give them their cash back after three years some of them refused the deal. It has to be a sure fire, absolute, 100% certainty, why do you think VC’s chase start-ups when there revenue hits $1 million? There’s approximately 360,000 web based businesses in the UK right now (ask me if you want details how this was calculated now here) - out of which 7 raised VC in the first half of 2007 - that equals about 0.002% got VC. That means for every one that got VC over 51,000 didn’t.

7. Marketing Is Not the Answer And It Shouldn’t Be An Excuse
I know strange coming from a marketer, but it’s true. Being crap at marketing is no excuse. There’s plenty of books around, plenty of case studies and plenty of free help from marketing blogs. So, being crap at marketing is no excuse. However, being good at marketing is no guarantee of success. Marketing and for the record business is not a science. There isn’t a set of rules to follow that you can repeat time and time again to get the same result. Marketing and business is an art.

You can learn the technical aspects, just like you can learn to paint, but that doesn’t mean you will produce a masterpiece.

8. Talent Is Not Enough
Just being a talented XYZ is no guarantee of success, being a talented XYZ with a strong business team is still no guarantee. Having a great idea isn’t enough.

9. You Can’t Network Yourself To Success
Despite the current environment networking isn’t enough, in fact there isn’t any definitive evidence that networking will equal success. For every business that claims success because of networking there is one that hasn’t done any networking but is still successful.

10. The Final Truth
The problem we have in the UK is that we don’t have enough people who accept the previous 9 truths but do it anyway. We don’t have a support system that helps people get started no matter what the idea. We should stop trying to solve these 9 problems and concentrate on creating folk who will just do it no matter what.

We should be telling people to just get started. If you can’t afford a coder then learn how to code, I did. If you know nothing about marketing then find out. If you don’t have enough cash then find a way to do it with what you have. The most basic test for an entrepreneur is getting it done with what you have. Think as big as you can, but start small, in fact just start.

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Comments

4 Responses to “10 Truths About The UK Start-Up Scene”

  1. jamescoops on January 13th, 2008 9:58 am

    The best advice i ever had was to think of the absolute minimum feature set you can and then build that. Banks were helpful actually as a i got a personal loan to pay for the development cost - no business plan required.

    On marketing the other best thing i ever did was learn about SEO.

  2. Harry on January 13th, 2008 1:59 pm

    I totally agree with you. This is a very good piece.
    Even though this post is geared toward UK Small Businesses, but everything on it can be applied to US Businesses too.

  3. Gary Reid on January 14th, 2008 7:58 am

    @James - yes SEO is probably the number one thing you need to really get to grips with. I hear what you are saying about banks, but it does always seem to come down to personal loans and not business loans and with the credit crunch they could be harder to get for some folk.

    @Harry - interesting that the USA has a similar situation, over here we always hear how it is so different there.

  4. UK Web Business Stock : Kitchen 2.0 on January 15th, 2008 8:07 am

    […] you may want to subscribe to my RSS feed. Thanks for visiting!I wrote the other day about some truths about starting a web business here in the UK and mentioned there was 360,000 web based businesses […]

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