A lesson for start-ups: A great idea will only get you so far

The start-up community in Ireland is thriving, with more than 20,000 new companies registered here in 2016, according to latest figures from Vision-Net.ie.

However, a great business idea will only take you so far. Setting up your own business is a minefield of financial planning, product development, consumer research, marketing, and branding. Here, successful Irish entrepreneurs share their wisdom and reveal what they’ve learned since they first started out.

Having the right people around you is key, according to Lulu O’Sullivan, founder and chief executive of GiftsDirect.com.

“You can’t do it all yourself; you need people to balance out your strengths,” she says. “If you’re a big thinker, you need someone who’s going to look after the everyday stuff and keep you on track.”

It’s important for the members of the founding team to have complementary skills, according to David Kerr of price comparison and switching service, Bonkers.ie.

“If you have two people and they’re both great at marketing, but you don’t have a nerd on the founding team of a web company there’s a big problem,” he says

Members of the team should not include friends or family, according to Daragh Murphy of online Irish-themed clothing company, Hairy Baby. Mr Murphy’s brother and sister were involved in the early days of his company. However, when they started arguing, he says “they decided to go their separate ways and remain friends. It was the best thing we did.”

Raising money is one of the most difficult aspects of running your own company. Too little and you could run out before your business gets going; too much and you give away too much control.

Ms O’Sullivan raised £2,000 in 1989, which she spent on PR, advertising, and stock.

“I could look back and say that it was a bad thing, that I couldn’t grow as fast as I wanted to, but I could also say it was a good thing because it made me really watch every penny,” says Ms O’Sullivan.

Sophie Morris, founder of nutritional coaching firm Fitometrics, said she’s always been an advocate of getting as far as you can on your own before trying to raise funding.

“You’re in a much better position, negotiation-wise, with an investor if you have brought the business to a certain level,” she says.

Mr Murphy says that working with a mentor can radically change a business.

“I now value a mentorship as one of the most important elements of the business.”

Of course, without a great idea, your business is unlikely to get off the ground. While working as a DJ, Mr Murphy had a big collection of T-shirts, all imported from the US and UK.

“If you wanted something Irish on a T-shirt back then, in 2007, you were limited to shamrocks and leprechauns,” he says

He started printing his own T-shirts and selling them to shops.

“When they started calling me for repeat orders I knew I had touched on a bit of an idea that people hadn’t done before,” he says.

Timing is crucial. GiftsDirect.com was one of the first e-commerce sites in Ireland in the mid-1990s. In hindsight, Ms O’Sullivan said it was too early.

“The market wasn’t ready for it, customers were not ready to put their credit card details into a website,” she says.

She added that all changed “thanks to Ryanair offering flights for £50”.

“It’s not just about ‘is this a good idea?’ but is this a good idea now,” says Mr Kerr.

When the recession hit in 2009 and energy markets were deregulatedm there was a “huge amount of eagerness” for householders to save money. During the Celtic Tiger, the business model wouldn’t have worked, Mr Kerr says .

So you have a business idea and you’ve decided it will be a big seller. How can you be sure of what your customers want?

Develop a prototype or a minimum viable product and test the market before investing a lot of time and money, said Ms Morris.

“The mistake a lot of people make is they think they have a really great idea, and they spend a lot of time and money to make it perfect,” she says. “They go out and try to sell it and they realise it’s not quite what the customer wants.”

From Irish Examiner (18/4/2017)