No stopping on the road to success

Jan 9 2008 By Christopher Knox

THE North-East has some of the fastest- growing companies in the country, helping it to become a hot-bed for new entrepreneurial talent.

Once established, many start-ups have gone on to become multi-million-pound companies within six years due to a combination of tremendous foresight and an upnwillingness to rest on their laurels.

One example is Newcastle-based web design company TH_NK. Only four years since moving into his first proper office, with just three staff, Tarek Nseir has built TH_NK into a £4.5m turnover business.

Another is drug discovery firm e-Therapeutics, which recently floated on the Alternative Investment Market (AIM) with a valuation of £35m after spinning out of Newcastle University only six years ago.

So what sets these businesses apart from the significant number that fail in their first year?

One reason is planning. One of the most vital measures to be taken before taking any step to grow a business is to review its progress. A continual assessment of where you want the business to go can help pinpoint any problems down the line and help stay one step ahead of the competition.

Prominent local businessman Neil Loxley, who is the former chief executive of X-ray technology firm Bede and now non-executive director at three companies, said: “Once they get their business up and running, too many people get trapped in their own bubble and take their foot off the accelerator. New entrepreneurs need to be looking around at the wider business community, as well as constantly assessing their goals in order to prevent being left behind.”

There are many sources of useful advice available to firms that are unsure about how to adapt their business plans from the initial funding stage to the growth stage.

If their business has the potential to play a significant part in the local economy, as well as provide a number of jobs, entrepreneurs can seek support from a dedicated business adviser. These can be provided by a number of business support groups such as Business Link in the North-East.

A recent benefactor of such advice was Janice Auton, owner of Poppys hairdressing salons. Janice approached Business Link for financial support last year to help launch her third salon in Hartlepool
to sit alongside those in Billingham and Stockton.

As well as receiving £2,500 from Business Link for fixtures and fittings, Janice also received the support of adviser Gill Cairns.

She said: “Business Link has saved me time and money by helping me to identify expansion options. With its support, my business partners and I have taken management training courses, I’ve improved financial systems and implemented new marketing strategies.

“As well as access to funding support to open the Hartlepool salon, Business Link has also introduced me to key suppliers and worked alongside me to implement quality control systems. The support we’ve received from Business Link has been invaluable as we couldn’t have launched the third salon without their support.”

There are many ways in which to grow a business once it has started up and these are a few of the options available.

Websites

One way to increase your profile dramatically is to set up your own website. According to online retail group IMRG, monthly online spending is now in the billions, with internet shopping in the UK topping the £100bn mark in 2007.

Trade between businesses via the net has also grown, with more than half of all British firms now purchasing goods and services online.

It’s not just with direct selling that a website can help to grow a business. It also acts as a brochure for your company and, unlike a physical shop front, can be constantly updated and accessed from anywhere in the world.

One business that has harnessed the potential of the internet is online designer boutique
Xclusivetreats.co.uk, which provides a platform for other firms to sell gifts and experiences such as sky-diving.

Owner Louise Milligan has recently set up the business with the help of funding from Business Link in the North-East, which provided 80% of the cost of creating the site.

She was also able to call on the expertise of Newcastle-based Green Media to create her site as well as Newcastle-based PR and design agency Silver Bullet to design it.

She consulted Green Media and Silver Bullet on a number of other areas such as how to increase the site’s success through Google web searches as well as implementing a large advertising campaign through a number of regional radio stations.

She said: “Being an online proposition, it was always important that the website was professional. It has now adapted to include things like an online blog so shoppers can share their thoughts about some of the experiences we offer.

“However, I would say that entrepreneurs should not think that a website will instantly improve their fortunes tenfold. It is very much an organic thing and takes time to grow within its market.”

The question for many small firms may be; can you afford not to have an online presence when your competitors could be increasing their brand awareness, accessibility and profits by hosting an effective site?

Whether it be a simple web page that gives out your contact details, or an all-encompassing e-commerce proposition, having some kind of online presence is becoming increasingly vital.

Pascal Fintoni, head of e-business at Gateshead-based North-East Regional Portal n-e-life.com, said: “The role of a website is important and can be relatively cheap considering the rewards. “Our research shows that, for most people, the internet is usually the first port of call when people want to find out more about a business.

“However, entrepreneurs must realise that the main priority isn’t to create a nice website, rather it is to create the right online experience which is user-friendly but also has the right elements for their particular business.”

Marketing

While a website can provide a business with much-needed profile, it is by no means a replacement for direct marketing.

A well-thought-out marketing campaign, especially during the early stages of a business, can help get the ball rolling much faster than traditional word of mouth.

Marketing can prove a stumbling block for many small enterprises looking to grow, especially if they are unable to afford the services of a dedicated marketing company. Barbara Oliver, owner and founder of designer clothing and art boutique @FernAvenue in Jesmond, is currently in the process of applying to Business Link for funding to launch a marketing campaign.

She said: “I am finding it difficult to find the funding to market the business as it is so expensive. However, I realise how important it is to get the name out there and am hoping to push it this
year.”

Due to the costs involved, many businesses may believe that marketing and the service providers involved exist only to serve big business.

However, James Thwaites, chairman of the North-East branch of the Chartered Institute of Marketing, warns that such a perception could be detrimental to the fortunes of many small businesses.

He said: “It is not uncommon for small businesses to dismiss marketing as the fluffy stuff conducted by arty types far removed from the real world of their business. They regard it as the preserve of the big brands, even an expensive luxury they could do without.

“This view is not only misguided but dangerous. The successful business succeeds because they know what their customers want, know how to deliver it, and how to do it while making a profit.

“Numerous studies prove that nothing contributes more to the bottom-line success of a business than marketing. Yet it is staggering how few business people actually understand marketing and how to apply it to their business.”

One way to keep costs down is to engage in business bartering. The age-old practice has recently become fashionable again with the help of independent support and advice group Durham Business Club which launched its Bartering for Business trial last November.

The trial saw South Tyneside-based web designers Atomic Web Solutions and Durham-based PR consultancy MC Communications agree to carry out work for each other in order to avoid heavy costs.

In exchange for Atomic helping to increase the hits on MC Communication’s website, MC agreed to rewrite much of the supporting text on the designer’s site.

Durham Business Club believes this is the way forward for a number of the region’s start-up
firms and has provided advice on how to go
about a bartering agreement on its website
www.durhambusinessclub.co.uk. Christine Yule,
development director at the club, said: “The Bartering for Business scheme puts an official face
on the process of bartering. However, we encourage any business to try it, especially if they are worried about costs.”

Networking

The art of networking can be a frightening one for many new entrepreneurs, especially for those that are web-based as they can be left feeling cut off from the wider business community.

To combat this the businesses have embraced the many social networking sites that have sprung up over the past few years, with sites such as Facebook and MySpace helping them to spread the word about their venture to like-minded individuals.

Although these sites are a welcome addition to the networking community, many believe they can never replace physical meetings. Recent research by Vodaphone revealed that 57% of people prefer to meet their potential suppliers and business contacts face to face, 47% preferring to meet over lunch at a restaurant.

To help facilitate this activity there are a number of networking clubs and businesses in the North-East, including the Entrepreneur’s Forum and the Bridge Club, which help businesses make contacts by hosting a number of events and workshops.

Caroline Theobold, managing director at the Bridge Club, said: “A lot of people may think of networking as standing around a big room, trying to chat with a load of suits. However, there are many ways of networking and thousands of people in the same boat as you.

“If you do find yourself at a formal networking event, try to project an air of confidence as people will always be attracted by good ideas. Attending networking events put on by other people is always a good way in as you can ask the hosts to introduce you to anybody you feel may be useful.

“Networking is an exercise in listening, not talking. That would be my top tip. Try to take in as much
as you can from people who are experienced in
business.”

Recruitment

Once a sole trader has grown to the extent where they need help in the day-to-day running of their business they may be thinking about employing staff. They may also need to employ somebody to carry out a specific task. Once again, this can prove an expensive task.

One of the most popular means of advertising a job is through a local newspaper. It isn’t the cheapest form of recruitment – a small ad will cost in the region of £300 – but you are guaranteed to get a sizeable response.

An even more cost-effective approach is to approach Jobcentre Plus. The Employment Service has more than 1,000 jobcentres nationwide that can help you find recruits for a whole range of positions
and sectors either locally or UK-wide in some cases.

It doesn’t cost anything to post a vacancy with them and you can benefit from support both before and after the position is filled.

However, this can prove a time-consuming process as you are relying on people coming into the job centre to see your adverts.

For those entrepreneurs who want to employ someone quickly, a more direct approach may be more suitable. One avenue is to become involved with local colleges and universities in order to benefit from up-and-coming talent.

By visiting open days and gallery showcases, entrepreneurs may be able to forge contacts with talented students, especially within the creative sector.

Steve Ridgeway, graphic designer at Newcastle-based graphic design firm Komodo Design, said: “There are six of us at the firm but we are always on the lookout for talent.

“Last year saw us regularly visit student galleries at Northumbria University and Newcastle University to see first-hand the potential of the city’s young people.

“Although we have yet to employ anybody this way, it is certainly a route we will continue to look
at.”

Another cost-cutting measure is to employ someone on a temporary basis in order to complete a specific project which will give your business the momentum it needs to grow.

Gateshead-based movie producer FNA Films is used to bringing on freelance and short-term staff in order to complete individual productions and has found success using this business model.

Its newest production Get Cuthbert – a retelling of the death of one of Anglo-Saxon England’s most revered saints – has seen FNA acquire the services of American script editor Wendall Thomas, who also teaches at the UCLA School of Theatre, Film and Television in Los Angeles, to help give the film the mass appeal needed to sell in the US.

Zahra Zomorrodian, producer and founder of FNA, said: “The nature of our business means that we need access to a wide range of talent in order to shoot each production. These can be anything from scriptwriters to special effects artists. Hiring temporary and freelance staff enables us to benefit from a wide talent pool.”

There are many measures that can be taken to grow a new start-up business into a growing medium-sized enterprise and enough help and support available to ensure that firms do not get left behind by the competition. Although the costs can be daunting, especially for small sole traders, the success of business such as TH_NK and e-Therapeutics, which were not long ago classed as small enterprises, shows that a little investment can go a long way.

PAGE TWO: Top tips for business growth.