STARTING A BUSINESS FROM SCRATCH REQUIRES VERY THICK SKIN

At Preen Partners we have started businesses from scratch. At first, the excitement of building something is almost addictive. You can be easily be led astray by the desire to succeed and forget some basic principles of what makes a good, sustainable business. Many large businesses today have seen their innovation and development rates plummet due to corporate molasses and have set up their own innovation centres with a 'fast fail' ethos. Banks, in particular, are seeing new disruptive technologies eroding their 'bread and butter’ business forcing them to concentrate on the more complex transactions. It isn't just banks suffering at the hands of the new upstarts. The internet has radically changed the way retail businesses operate, affected the margins that can be earned, and also put the fear of god into traditional bricks and mortar companies. Technology has also allowed products to be brought to market at unprecedented speeds but only if the team is unleashed.

Start-Up successes and failures

Ongoing start-ups include CallyCo (Retail), Krushr (Appliances), BusterandPunch (Manufacturing and Retail), Olsen Partnership (Marketing Agency), Lawrence&Preen (Appliance development). Some examples of the Good, Bad, and the Ugly

1. BAD : Direct Sales - Back in 1997 Strategic Trading Ltd was originally set up to sell products directly to end-users from a factory manufacturing industrial products. The concept was to use direct selling techniques such as call centres and direct mail to offer a slightly lower-cost product to customers at a much higher margin than would have been achieved in a traditional distribution model. Within six months it became apparent that the cost of sales and marketing, as well as the risk to the existing channels to market, made this route nonviable. Strategic Trading Limited was dissolved.  Today, utilising low-cost e-commerce platforms, social media and low-cost telephony this model may well have worked. We are seeing more and more product businesses taking control of their channels to market and brand.coms selling directly are everywhere. Lessons: Completely understand the impact of your actions on the market place

2. GOOD : Software - In 1999 B2B Systems was formed. Initially, this business was set on developing a new e-commerce platform to enable medium-size businesses to trade on the internet. As the technology developed it dawned on the founders that the flexible interface layer and combined workflow was too advanced for the original target market. Credit Suisse has demonstrated the power of this technology and with their appetite for change, the suite of software was transformed into a Control Platform for investment banks. B2B Systems worked with a London-based consultancy to support the growing banking customer base and a joint venture, VCM plc was formed (Visual Control Management). With the raging success of VCM, the founders of the consultancy and B2B merged the businesses and then listed the combined business on AIM in 2005. Lessons: A great idea may just be that and may not find traction in the market. Sometimes changing direction can be key to success

3. UGLY : Building Development- Victus Developments was a special purpose vehicle set up to develop land in South Lincolnshire for housing. Set up just before the demise of Lehman Bros in 2008, this business was put under massive strain as the banks completely changed the lending criteria and property prices crashed. Unlike many other developers caught up in this crash, Victus Developments managed to fund itself to the completion of the development but at substantially reduced expectations.  Lessons : Make sure that you thoroughly sensitise your business plan for the worst possible scenario and ensure you understand the implications of it going horribly wrong.