The Royal Marines Hasler Company is the naval service Recovery Centre. The objective of the centre is to administer a bespoke recovery pathway for every soldier and to provide effective assistance and support for the soldiers and their families. For many soldiers trying to get a civilian job is not going to be an option and starting a business may be the only way they can create a viable economic future.
The objective of the workshop was to give the soldiers confidence to consider doing a business start up. This was the second time that I had spent a day with the unit and based on my experience from the first visit completely redesigned the workshop.
What was clear from my first visit was that despite having seen active service, the prospect of starting a business filled them with dread. The key thing was to give them the confidence to consider this option.
The workshop was broken down into three sections:
1. Obstacles to overcome.
2. Business navigation i.e. the numbers.
3. Organisation and management.
This article will focus on the first one – the obstacles to overcome. Three key obstacles were identified:
• Idea generation.
• Do I have the right skills.
• Raising enough money.
The workshop included a very relevant case study, which featured a company called Van Girls. I had met the founder when she came on my workshop ‘Get Cash Flow Confident’. Emma’s background before starting the business was within the Services (Fire Service).
She had seen first hand poor removal service and believed she could do better. As we shall see later this is a classic way of coming up with a good business idea. So lets look at the obstacles.
Finding ideas to start a business is probably similar to finding a partner – when you’re not looking there are lots of them and as soon as you start looking you can’t find one for dust. So if you’re struggling with your idea or rather struggling to find an idea, there are four key sources of ideas. (This is taken from a great book by John Mullins called the New Business Road Test.)
First there is the blue-sky business idea – the Dyson approach. In practice there are very very few businesses which are based on a completely new and original area. And usually this requires a huge amount of time and cash.
The second source of ideas is finding a pain or a need that no one else is solving. – something which you want or find painful and no one is addressing this need. A small example of this would be the Cambridge Satchel Company which was started because the owner couldn’t find any traditional leather school satchels.
Next there is a pain or a need and you believe that you can satisfy better than anybody else. Van Girls is a perfect example of this. Emma believed she could provide a much better service using a team based predominantly on women, taking greater care of packing and removals.
Finally a great source of ideas is to import something that you have seen working well in another country. A good example of this is Go Ape which as it happens was set up by a former soldier Tristan Mayhew who had seen high wire activity centres in France. He brought the idea to the UK and after a lot of hard work that business now operates something like 25 centres and turns over in excess of £20 million pounds.
Do I have the right skills?
I mentioned at the beginning how I was surprised that the Marines viewed the prospect of starting a business with apprehension. The big change I made in the presentation this time was to highlight how their skills and experience as Marines was more than a sufficient qualification to start a business.
You can see this clearly when you look at the Royal Marines ethos which comprises:
• professional standards
• commando humour
Clearly teamwork and determination are crucial when running a business. But when things are going wrong and cash is looking tight I am sure a good dose of “commando humour” is what’s required to keep the spirits up!
Raising enough money
There is a big misconception that the first thing you need to do is raise a big heap of money before starting a business. One of the reasons I chose Van Girls as an example in my workshop was that Emma set the business up with a very modest amount of money – literally enough to put down a small deposit on a very very old transit van.
So what are the options for funding a business start up? First you need to be clear about the difference between debt or loan finance and equity finance. A business loan is very similar to any other kind of loan. You will need to make monthly repayments of principle and interest and inevitably you will be required to give some kind of personal guarantee. However you will not be selling any of your business.
Equity finance is what goes on in Dragons Den where an investor puts money into a business in exchange for shares. There are no monthly payments and no interest – the investor makes their money when they come to sell the shares. And because they’re sharing risk (which is why it is called equity – they are equal with you) they are looking for a considerably higher return, typically at least 5 to 10 times the money.
And then there is the new development or comparatively new development of crowdfunding. You can get loan finance and equity finance through crowdfunding platforms, but you can also get product funding i.e. advanced sales – literally before your product has even been built. For example, two entrepreneurs came to my workshop wanting to set up a craft brewery and I suggested that they look at Kickstarter. They successfully raised money for buying brewing equipment – I put in £50 – what did I get? A T-shirt, a bottle of beer with my name on and a lash up in Shoreditch. Well, two lash ups.
So as you can see you can use crowdfunding to get money from your customers before you have had to actually produce your product. But it would be a mistake to underestimate the amount of work that is still required for fund raising even with crowd funding.
Finding an idea, assessing your personal skill and getting the funding are some of the big challenges to starting and running a business.
When it comes to assessing your skills – in my travels running workshops, I have met so many entrepreneurs (and they are all very very different). Successful businesses are run by introverts, extroverts, thinkers, party goers, sports fans, book fans – but there is one consistent theme – they have all had bad times. And that’s where a good dose of Commando Humour comes to the rescue!