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Wednesday, 14 November 2001 00:00 |
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Recently two members of the Alienation Digital team took part in a roundtable discussion on the challenges entrepreneurs face in building their businesses in today's economic climate. The following is the result of the discussion, published in the November 2001 edition of Computer Headline.
The question was: 'how do businesses start up and grow in today's challenging economic times?'
The pool of entrepreneurial attendees shared one common factor - a startup scenario that was less than ideal. Interestingly, they concluded that the current dearth of investment capital available to the IT sector in general was most likely beneficial to the sustainability and long term growth of their companies.
Both Mussy Kurt-Elli, director of family owned edNET, and Scott Wilkinson, Commercial Director of web design agency Alienation Digital, strongly argued that the best way to grow your business was: 'to do what entrepreneurs used to do before venture funding encouraged us to take our eye off the business basics: namely, work all hours, forego holidays, take less out than you bring in and focus on building a product and service range that will generate revenue.'
Nonetheless, funding remained a key issue. Alistair Forbes of GlobalFarmers.com warned against over ambitious growth plans and argued that getting bought over by a company with a strong balance sheet had enabled his organization focus on its core strengths. Stephen McFadden of 20:20 partnership, an out of the ashes Buchanan offshoot, argued that the length of time, for instance, between getting a letter of intent from the bank and actually being able to draw down the agreed funds was not conducive to kick-starting a business at its most vulnerable stage of development.
Rhona Johnstone also of 20:20 agreed, arguing that credit control consequently became a mission critical activity: 'you quickly learn to cheer when you get paid,' she commented. 'Not when you win the order.' She also felt that the time taken to attend to what she described as the 'business fundamentals' - securing finance/legal arrangements etc - meant that you risked taking your eye off the business ball at a time when generating sales revenue was vital.
Scottish Enterprise were keen to learn what more they could do to support businesses through the volatile start-up and early growth phase. Kevin McPhillips, of change management specialist SentiaPlus, wondered how SE's e-supplier group might be able to assist him in marketing himself and his business, given that he was, in his own words, 'lacking in sales skills.' Joan Graham explained that this was precisely the type of project that her team were keen to explore, recognizing that getting a product/service to market was often difficult for people whose technical skills outweighed their sales skills.
Scott Wilkinson and Bobby Farmer, Technical Director of Absolute Studios, felt that it would be particularly helpful if there were a 'mentor pool' of 'hard-nosed business people,' to effectively act as non-execs. 'Their business experience in building businesses would be invaluable,' Scott believed.
Mussy Kurt-Elli was particularly concerned that Scotland's technical innovators were being failed by a 'merit assessement system' that was both overcomplicated and counter- productive. 'There ought to be a fast-track process, incorporating due diligence, that identifies whether an idea is marketable,' he suggested. 'And a body that pulls all the different linkages together in a way that entrepreneurs are often unable to easily do.'
Scott Wilkinson and Bobby Farmer, Technical Director of Absolute Studios, felt that it would be particularly helpful if there were a 'mentor pool' of 'hard-nosed business people,' to effectively act as non-execs. 'Their business experience in building businesses would be invaluable,' Scott believed.
Mussy Kurt-Elli was particularly concerned that Scotland's technical innovators were being failed by a 'merit assessement system' that was both overcomplicated and counter- productive. 'There ought to be a fast-track process, incorporating due diligence, that identifies whether an idea is marketable,' he suggested. 'And a body that pulls all the different linkages together in a way that entrepreneurs are often unable to easily do.'
Scott Wilkinson agreed. 'At the moment, we have a local enterprise conveyor belt process which starts, and often ends, with getting people on training courses. That is not the same as helping them pull a viable business together within the kind of timescales that reflect the changing nature of the technology sector.'
Stephen McFadden highlighted the benefits of being based in the Hillington Innovation Park, and suggested that it was perhaps a 'community model' that SE might consider replicating. 'The mix of companies based there provides a pool of experience that would be hard to access otherwise,' he suggested.
Liz Ibbitson of Scottish Enterprise explained that SE were working hard to address the inconsistencies of services delivered through the local enterprise structure. 'We are in the process of setting up esupplier forums that will disseminate to ebusiness companies precisely the type of consistent information that will enable them to better market their services,' she explained.
'It's so important for us to hear from companies about the sort of help that they need from SE in order that we can develop valuable and effective programmes of assistance which will really make a difference to their development. The business support service which the Software and Ebusiness Supply group is currently developing will be constantly monitored and evaluated together with participants and LEC representatives to ensure that both content and delivery are relevant and useful.
Scott Wilkinson and Mussy Kurt-Ellu suggested that SE could take their initiative a step further: Both argued that SE should be helping to educate companies about what they really need their websites for. 'Increased communication between SE and esupplier customers, focused on delivering educated messages about the specific benefits that companies can gain from being online, would be hugely beneficial to all parties,' he suggested.
As Lindsay Conochie, project co-ordinator with Alienation Digital concluded: 'In today's economic climate, it is the people that turn to the internet and use it smartly that are most likely to ride the downturn.'
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