Monthly Archives: February 2010

What’s the right age to start a business?

What is the right age for starting a business?In the past the stereotypical entrepreneur was always seen as young and if you look at Bill Gates and Richard Branson they started their empires when just out of their teens.

However latest findings in the States have shown that the fastest growing age group for people starting a new business are the 50 – 65 year olds. Presumably because of a forced move from corporate life, or even disenchantment with continually working for someone else.

But is there actually a best age to become an entrepreneur? Do the young have more energy and creativity? Certainly they aren’t held back by thinking that things “can’t be done”. Or are the accumulated wisdom, knowledge and connections of older people more valuable assets for starting a business?

There is also the question of opportunity. When in your twenties, you are more likely to not have a family and mortgage to support and so can take a chance with a new venture, likewise when much older you may have paid the mortgage off and the family is independent.

So perhaps you have got to start your business either in your early years, or give up the idea until you are much older, with the middle years being ones of hard graft as a “wage slave”.

Let me give the findings of the Company Partners statistician and my own personal views.

Looking at the age range of entrepreneurs on the Company Partners site, we have members starting at just 15 and going up to a grand 86 years of life. The average age however is 38. This closely matches a figure from the States that gives 39 as an average age for start-ups. The age distribution of Company Partners members is fairly even, with a slight skew towards the lower end.

We have to bear in mind that not all Company Partners members are just starting a business; many already have an established company and are looking to grow it faster. But these figures give a good feel for the entrepreneurial age range.

To my mind this vindicates the thought that now days there is no one age that you have to be in order to start a business. It may though be easier to start certain types of businesses at different ages. If you are designing and selling apps for iPhones, you’re likely to be younger than if you are setting up a consultancy. That is simply a question of personal interest and using the skills & experience that you have.

How long does it take to find a Business Angel?

Time to find a Business Angel?Angel Investors are not listed in the Yellow Pages and finding one can be a time consuming and expensive business, especially if using some of the pricey business angel intermediaries that are out there.

Actually the topic of where to find investors for a business opportunity deserves more attention and I’ll cover that in a later posting. You won’t see this covered in any of the other Business Angel networks blogs since they don’t invite comparisons, but Company Partners is probably the most cost effective and we aim to be open.

But back to timing. You’ve got a great opportunity, written your business plan and are just starting to look for an investor. How long do you think finding one will take? A couple weeks? A couple months?

The shortest time that I’ve seen that one of our members take was 2 days. The longest time 18 months. That’s in finding an Investor that was new to them (not family or friends).

There are so many variables at play; market area, quality of opportunity, how determined you are in searching, etc., that giving an average time can be misleading. However it is safe to say that it can take months rather than weeks and involve a lot of your own time.

There is a random variable also, Business Angels have a pattern of behaviour that means at any one time not all are available. They tend to dip in and out of the market, because once they have identified a couple possible opportunities they are out of action while investigating them. Coming back into the market if those opportunities hadn’t panned out, or just for more investment.

Finding an investor is though only one of the time elements, since you will also want to take some time to get to know each other and do due-diligence. The advantage of a Business Angel over for instance venture capital, is that they will make quick decisions, but both you and the Business Angel should do all you can to ensure that you will work well together before proceeding.

Finally there will be legal and accounting work to be completed in terms of possible partnership agreements (I suggest you do write down the roles and expectations you have of each other), share allocation and sorting out when funds may be input into the company.

As you can see this is not an overnight activity. Think of it in terms of buying or selling a house, the searching and surveyor (due-diligence) work necessary, together with the contracts, probably means they take a similar time and just like finding a Business Angel will be affected by the market and quality of what is being offered.


Be tenacious in making your business idea work – but not blinkered

A good business idea?During our last Business Plan Workshop we had an interesting question asked  – “when should someone accept that their idea for a business will not work?”

Normally I am adamant that you need persistence and belief in yourself, never give up your dream. But this made me stop and think.

Certainly in the past I’ve had entrepreneurs contact me to describe a business idea that I can see is never going to work and sadly they may have spent years of their time and thousands of pounds in developing it.

More importantly than my opinion, when I quiz them on the evidence to indicate there is a need and if anyone would actually pay for the product or service, the information is non-existent or poor at best.

By evidence I really mean market research and that’s not just asking your friends if they think it’s a good idea. Rather the idea must be one that will form the basis of a business, that will satisfy a real need and that the public will give you their hard earned cash for it.

Actually the market research doesn’t have to be rocket science, but it must be reality. There are a lot of papers already written on most market areas that can start you off (the British Library’s Business Centre is a good source).

There are always competitors, or alternatives to your idea that you can check out. You can talk to prospective buyers, either consumer or trade and don’t ask general questions leading them to say that it’s a nice idea, ask for advance orders – pin them down. Then you’ll see the reality.

Once you are up and running, the question becomes “how long should you give it, to show that it will work?”

Again my instinct is to not give up too easily. If the market demand seems to be there, but you have to overcome difficulties, that’s normal and the great entrepreneurs have all had to overcome initial hurdles. But if it’s not taking off, stop and think whether it’s anything that can be fixed, or a fundamental flaw.

Michael Birch, who sold his social web site Bebo for $850M a couple years ago had tried lots of different ideas. Some worked, but weren’t scalable. Some worked but weren’t able to make a profit. Others may have been a good idea but there were basic flaws. Such as the address book updater (I think there are still some of these around).  He found that unless everyone on the contact list updated their address books, the user would simply stop using it. Of course not everyone did update, so it never took off.

Each time he learnt from the experience and moved on. How long did he give each one? Probably only a few months, but the Internet can give very quick feedback. For a traditional business it can take longer, however you should have set realistic goals that allow for the market you are in and be checking against them. If you’re not meeting them, what’s the reason?

You may find it is obstacles that can be overcome, or it might be that there is a basic issue with the business concept that no amount of tenacity could fix. Being tenacious and determined needs to be applied to the overall goal of being a success, not just one venture.

Knowing when to take the learning and move on, without giving up at the first sign of trouble is a difficult one. But I think it can be seen as the difference between operational problems and concept failure. If the homework is done first many of the concept issues should have already been spotted.