Three Struggles Of An Entrepreneur

A lot is written about the struggle of being an entrepreneur, but in truth it is not that simple. Just as Shakespeare wrote about the seven ages of man (“sans teeth, sans eyes” and all that stuff) so there is in reality the three struggles an entrepreneur: the birth, the growth and the exit.

Just as the oyster creates a pearl around the grain of sand, they say that all successful companies are started in response to an aggravating problem. Mine was the pain of getting up at 5am in Mountain View in the heart of Silicon Valley in order to phone Hans, who was supposed to be located at a PR agency in Munich, only to be told that he had already left for the weekend (at 2pm German time) and was not contactable.

 "Paranoia is good and you’d better enjoy it because you will be suffering from it a lot"

A conference call a week later, again at some ungodly hour, with a British, French and German colleague went further in fermenting ideas of a better way. While the Brit had argued for two hours that a set launch strategy was wrong until finally placated, we had the German perfunctorily agree the strategy only to find that the Frenchman had simply got fed up with the Brit and just gone home.

It brought to mind the concept of a company that could coordinate PR across Europe in a professional and competent way and actually stop making the client’s life hell. So AxiCom was born - and so began the first struggle.

The first thing that hits you in this struggle is that all the questions you are being asked have nothing to do with the business you want to start. AxiCom was launching as a high tech PR firm, but my attention was on very different questions; how to arrange a bank loan, should I rent offices, do I need to register for VAT? All questions that had to be answered, but also very distracting.

The truth is that the only thing that actually matters in the very early days is customer satisfaction; keep them happy and you have a business. If you don’t, then it’s over. A few other things I learned were:

1. Don’t giveaway equity for a mess of potage.

Your friends or ex-colleagues might offer you cash for shares, but don’t do take it unless you absolutely have to.  Far too many entrepreneurs dilute their shares way too early and you can never get them back.

2. Everyone will be patient while you are setting up a company – even the VAT guy and HMRC.

They understand the challenges and they actually want you to be successful – as the bigger you get the larger the slice that they will receive.  I am not saying you should fall behind with tax payments, but all the paperwork is not your number one priority and if you need advice then call and they will help.

3. Focus everything on keeping the initial clients happy and winning new ones.

I have seen start-ups spend days wrangling about shareholder agreements and just ignore their customers only to fail a few months later.  Don’t get distracted and if you can, win the brand name customers that will attract others even if the fees aren’t great.

4. Surround yourself with supporters.

It might be friends who can help with accounting, your mum who can be the receptionist when a client comes for a meeting or even, as in our case, the chap who ran the local stationery store who would lug the binding machine up six flights of stairs and help us prepare the documents before a big pitch at no charge (and yes, 20 years later we still work with the same stationery firm).

5. You had better be the best at what you are doing or it will be tough to succeed.

It was Steve Jobs who said that it was not enough to be better, you need to be seven times better.

The idea is the easy bit, staying focused is a lot harder

Hopefully you have made it through the start-up struggle, kept you clients, held on to your equity and not been imprisoned for failure to pay your taxes. But now comes the growth struggle.

Starting a firm is often easier than growing it. All the initial adrenalin and goodwill provides the momentum and drive. But after a year or two you enter a new dimension where you have staff, payroll, budgets and fixed overheads that make waking up a scary proposition. You are told you are successful and proven, but you feel anxious and naked as the exposure to the whims of clients could be your undoing at any point. That’s the paranoid point of view, but as Andy Grove, the one time CEO of Intel used to say, only the paranoid survive.

Paranoia is good and you’d better enjoy it because you will be suffering from it a lot.  First you have negative paranoia in the form of the shakes when a client terminates a contract or an employee resigns.  Then you will have positive paranoia over what to do when you run out of room and have to rent a new larger office, or the paranoia of having just rented a new larger office and not knowing where the clients will come from to pay the rent.  Mainly you will have a lot of paranoia.

So what are the learnings from the growth phase:

1. If your momentum is upwards then do not fret about individual set-backs.
2. No employee is irreplaceable – it may feel that way but they are not.
3. Even if your business is growing with current clients, never neglect new business. Over time, you will lose all your clients.
4. Make sure the standard of your company’s work is maintained and improved. Never rest on your laurels.
5. Invest in strategic clients. Who are the ones that although small today could be tomorrow’s champions. Hitch a ride on their star.
6. Start to specialise. Own a niche, a sector or a market, but look to dominate it in time.
7. Make money. It sounds simplistic but far too many companies undergoing fast growth sacrifice profitability for revenue increase. These are not either-or propositions – you have to engineer growth with profitability.

So success has emboldened you, new branches have been opened and the business flourished.  At some point most entrepreneurs start to consider the third struggle; the exit.

I knew I had reached the point where I wanted to consider the exit stage when I saw that the business I ran needed to be part of a global rather than a European solution in order to satisfy the clients. Well, that and four sets of school fees.

Once you have made the decision you need to get good advice.  It might be a lawyer,  an accountant, or a professional intermediary – but select carefully from a long list of candidates and find the person with deep experience in selling businesses in your sector and with whom you have a personal chemistry (you will be spending a lot of time with them).

Don't get hung up on battles, it's the wars you want to be winning

Many books have been written about this phase and all are universally useless with the exception of one written by Rupert Ashe titled Making Millions From Creativity. This is a bedrock bible if you happen to be in the marketing services game and probably very useful even if you are not.

We were fortunate to not just have Rupert’s book but also Rupert himself on our team along with Adrian Luto, our superb lawyer. The process of the exit via a trade sale is long and byzantine and I could not possibly do it justice here, but my takeaways are:

1. Make sure you have more than one bidder in the process so that there is some tension and your receive a fair price
2. Expect the process to derail several times and maybe forever.
3. Watch out early on for tax – there are some stunning tax landmines waiting for the unprepared.
4. Trust your advisors – they really have seen it all before.
5. Don’t take your eyes off the day job – someone has to be running the company and making sure the work is being done well and that the clients are happy. The exit process, like the entry process, can be very distracting.

And congratulations to you if you succeed in starting and growing a company and then seeing through an exit. There are struggles, but there are great times along the way, colleagues you really enjoy working with (okay so you fired the ones that you didn’t) and the real freedom that comes from having done your own thing.