Roger Trapp: At last, a guide to business that tells it like it is

Chris Lilly's survival book will give starry-eyed would-be entrepreneurs a rude awakening

Not so long ago, politicians were uneasy about business people. Especially those termed "entrepreneurs". How times have changed. With this year's Government-inspired "Enterprise Week" having just drawn to a close, it is clear that - in Whitehall circles - enterprise is very much in vogue. Indeed, it is almost as if "enterprise" is seen as a synonym for "excitement". Perhaps for this reason alone a new book, The Start-Up Survival Guide, should be required reading.

From the beginning, author Chris Lilly makes it clear that he is in a different game to most authors of books aimed at entrepreneurs. Whereas theytend to focus on the thrills of starting and developing a business and take a "go for it" approach, he opts for caution. "It's a daunting fact for all those starting a business that, on average, more than one in three of start-up businesses don't survive the first three years!" is the book's opening sentence.

Who needs a downbeat careers teacher or a sceptical parent when you have an author like Lilly, you might think. But frustrated ministers and others tempted to throw the book away in frustration should resist that thought. This is among the most useful tomes out there. Why? To put it simply, television programmes, newspaper articles and the continuing fascination with internet millionaires have - despite what politicians and policy makers might think - helped create an aspiration for some young people that is on a par with being a premiership footballer or a pop star. In other words, they have given the impression that anybody can do what is in fact likely to be attained by only a few.

This is not to say that young people should not think of starting their own businesses any less than they should think of becoming footballers or pop singers. It is just that they should not think it is easy. By reminding would-be entrepreneurs and even those who have already taken the plunge that a company needs to survive - usually an initial few years - before it can set its sights on expansion , Lilly focuses attention on the fundamentals. As somebody who has worked in both multinationals and has established a number of start-ups, Lilly has plenty of experience on which to draw.

For instance, he begins with a list of "essential ingredients" for the successful business. These include a differentiated product or service, a customer base that will buy the product or service, appropriate experience in the top team and ensuring adequate cashflow.

It seems basic stuff, but recent history suggests that one or a combination of these factors is usually responsible for failure in the early days. The last - cash - is particularly important. Nearly nine out of 10 companies who fail do so because they run out of cash, he says. There are many reasons for this - some, such as natural disasters, are out of a business's control. But many, such as inadequate sales or setting the price too high, are foreseeable and avoidable.

In simple language, Lilly takes the novice through the issues in a way that a business adviser should and gives tips on avoiding the pitfalls. There is information on dealing with suppliers, keeping IT secure, protecting intellectual property, and handling venture capital investors.

Indeed, when you see the chapter headings, it is easy to realise why even those businesses that keep an eye on the cash can still fail. There are just so many ways of getting into trouble.

And, in keeping with Lilly's realistic approach, after the chapter dealing with selling up or planning for retirement, there is a section entitled "If it all goes horribly wrong". This is a guide to the various forms of insolvency and not as glum as it sounds. After all, by managing failure, a would-be entrepreneur can live to try again.

The idea, of course, is that those who read the first part will not get into such trouble that they will need to consult this section. By making the hurdles to be cleared obvious to all, a dose of reality will have been injected and advisers, finance providers and the rest can all concentrate on those likely to succeed.

'The Start-Up Survival Guide' by Chris Lilly (Prentice Hall Business, £12.99)