Why it pays to know your weaknesses when starting a business

Roger Trapp looks at two books and an internet service that offer help in starting a business

Rightly or wrongly, many people have formed their impression of what it is to be an entrepreneur through watching television programmes such as Dragons’ Den and The Apprentice. They see larger-than-life characters with great drive and determination who are not afraid of sharing an opinion or two. So it should not be much of a surprise that there have been a steady stream of books offering advice from such participants in these shows as Duncan Bannatyne, Peter Jones and Deborah Meaden.

Now comes Shaf Rasul, of the Dragon’s Den online spin-off. Having made his fortune through businesses in information technology, property and asset management, he looks well placed to write Secrets of a Serial Entrepreneur (Capstone, £12.99). With chapter titles such as Ten Key Things To Know About Business Finance, Make A Business Profitable Fast and Drive A Hard Bargain, the book does not hesitate in getting to the nub of the subject.

Indeed, Rasul makes much of the fact that the book is about making quick returns by starting or acquiring a business, sharpening it up and then selling it and moving on to the next thing. Having started by dealing with the characteristics of entrepreneurs – self-belief, belief in others, an eye for detail – he moves quickly to the importance of establishing an exit strategy. Admitting that this looks counter-intuitive, he stresses it is important to have an end in sight: “Before you buy or start a business, make sure you’ve got a clear strategy of how, when and to whom you could sell it.”

Some might argue with his claims that “the point of being an entrepreneur is to buy companies for a low price and sell them for a higher one” and “if you picture yourself owning something and showing it off rather than picturing yourself going to the bank on the day you sell it on, then you’re not an entrepreneur, you’re a collector”. But there is no denying that if you are going to take a limited view of entrepreneurship – as a process of getting a business started or moving after a period of stagnation – then having a good idea of your aims and a strategy for achieving them is essential.

Moreover, Rasul is at least honest about his motivations. There are many businesses that started off well and ran out of steam when their entrepreneurial bosses lost interest. That is why entrepreneurs who stay successful tend to know their strengths and weaknesses and appoint steadier heads to run the business once it is established, or sell out.

John Mullins is another successful entrepreneur (his career includes a stint as vice-president in “the early high-growth days” of the clothing retailer Gap) who is now an associate professor at London Business School.

As such, his experiences are described in slightly less racy language than those of Rasul. But his book – The New Business Road Test (FT Prentice Hall, £24.99) – still gets straight to the point. As the subtitle, What entrepreneurs and executives should do before writing a business plan, indicates, he is trying to reduce the daunting odds of failure that

stalk entrepreneurs. “Right now, there are 2 million entrepreneurs in the UK actively engaged in starting a new business. Many of their ventures will never get off the ground. Of those that do, the majority will fail. There are more than 15 million entrepreneurs in the USA doing the same thing. Most of their ventures will fail, too. Of those who submit business plans to business angels or venture capitalists, less than 1 per cent will be successful in raising the money,” Mullins writes.

The fact that one in 10 Americans and one in 19 Britons actively pursue entrepreneurial dreams suggests that there are plenty of people with the inspiration and drive recognised by Rasul. But the problem is that not every opportunity turns out to be as golden as it appears to those attempting to set up businesses.

Indeed, Mullins cites research indicating that the vast majority of ventures fail due to opportunity-related reasons. These include market reasons, such as the target market not buying; industry reasons, such as it being too easy for competitors to steal your market; and entrepreneurial team reasons, such as members being unable to cope with the challenges thrown up at them.

As a result, he suggests would-be entrepreneurs pause and take stock before devoting themselves to producing the great business plan. The book’s title refers to the seven-part test that they should put themselves through to see whether it is worth moving to the next step. Doing so requires entrepreneurs asking themselves detailed questions about customers, markets, the industry, whether they have sufficient advantage to stay ahead of the competition, their commitment, their ability to meet the critical success factors and the extent of their networks that they can use to get going.

This might appear negative at a time when all and sundry are suggesting that entrepreneurs could play a prominent role in any economic recovery. But Mullins is unapologetic, claiming that the important thing is that businesses succeed and grow rather than just start. Entrepreneurs who have asked themselves tough questions before producing a business plan and raising finance will have the confidence to succeed, he says.

Somewhere between the approach of Rasul and Mullins lies yoodoo.biz, an internet service developed by a team of successful entrepreneurs and media professionals headed by Tony Heywood and Nick Saalfield with the aim of helping entrepreneurs to get started and then giving them the tools to succeed.

The service, which has the backing of banks and other big companies, is entirely free, and builds on the idea of the training video to take users through the issues associated with starting a business so that they can decide whether it is for them; and then – once they get going – can draw on various types of advice provided by more than 80 specialists as they require it. Because it is modular in structure and often concise, it is well suited to those who are currently in a job but who want to test out ideas, or find out more, before taking the plunge and going out on their own.

Sport
Luis Suarez and Lionel Messi during Barcelona training in August
footballPete Jenson co-ghost wrote Suarez’s autobiography and reveals how desperate he's been to return
News
newsMcKamey Manor says 'there is no escape until the tour is completed'
Voices
Hunted: A stag lies dead on Jura, where David Cameron holidays and has himself stalked deer
voicesThe Scotland I know is becoming a playground for the rich
News
people
PROMOTED VIDEO
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
newsSam Smith’s Mobo triumph is just the latest example of a trend
News
Laurence Easeman and Russell Brand
people
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Fans of Dulwich Hamlet FC at their ground Champion Hill
footballFans are rejecting the £2,000 season tickets, officious stewarding, and airline-stadium sponsorship
News
Shami Chakrabarti
people
Arts and Entertainment
Benedict Cumberbatch has refused to deny his involvement in the upcoming new Star Wars film
filmBenedict Cumberbatch reignites Star Wars 7 rumours
Sport
football
News
news
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker