Financing and expanding a business in the face of heavy competition is a problem that almost all start-ups will face.
How entrepreneurs view that competition and how they go about finding finance as well as planning future expansion will go a long way to determining whether they will succeed.
Finding finance is one of the first problems that businesses face. Many start-ups turn to the three Fs – friends, family and fools – for initial funding, says Doug Richards, founder of School for Start-ups and former investor on the TV show, Dragon’s Den, speaking at the ‘Entrepreneurs are born, not made’ debate, hosted by Barclays in London last month.
“Without families behind us, I seriously don’t believe we’d have been a success. They were massively important,” agrees Russell Hall, co-founder of taxi mobile app, Hailo.
“Family was crucial in helping me get where I am,” adds Roksanda Ilincic, a fashion designer, entrepreneur and founder of her own clothing line. Illincic adds that she had not had a financial backer until this year – relying on contacts for initial funding and then organic growth. There are other, more unusual sources of funding that start-ups should look for. For example designers can apply for funding from the British Fashion Council, she says.
Planning on how a start-up will expand is crucial, says Jamal Edwards, founder of SB.TV, an online youth-oriented broadcaster. For example, Edwards looked at expansion into other lifestyle categories. He now covers other genres of music as well as games, comedy and many other lifestyle areas.
But not every business will be able to expand the same way. Entrepreneurs in different countries expand their business in different ways. For example, entrepreneurs in the UK are more likely to sell out when a company reaches a certain level due to limitations in other options for expansion, says Edwards.
“What you see are rational people making rational decisions when opportunities comes to scale up, he adds. “At this point, it is often the smarter choice to sell in the UK rather unfortunately. In the US other opportunities are presented.”
This is not necessarily a bad thing – despite the British entrepreneurial community portraying it as such, he says. “It’s a peculiar British tradition to kick ourselves for it and claim it’s some unique characteristic,” he adds.
Fortunately progresses in technology are removing some of these barriers. According to Richards, Jamal Edwards represents a new type of UK entrepreneur that is not tied down by problems such as capital as expansion becomes less capital intensive and more egalitarian.
This article was written by Freddie Dawson from Forbes and was legally licensed through the NewsCred publisher network.