With the worries continuing over the economy many entrepreneurs considering starting up at this time may be getting cold feet. But the truth is this: new companies can prosper in hard times as opportunity still knocks for those who know how to take advantage of it.

Despite the gloom some sectors are doing very well and therefore we at Venture Wales like to take the Chinese view that in every crisis there is opportunity. But anyone launching  a business in today’s economic climate must take the right steps by planning their start-up carefully as the process of launching a new business is characterised by a great deal of uncertainty and risk, conditions which are obviously exacerbated during these financially trying times.

 

Although financing start-ups and early-stage firms is perceived as a problem, there is funding available for the right type of businesses and the hope is that the banks will move swiftly to improve the liquidity in the financial markets which will help stimulate entrepreneurship.   

 

Where new businesses are concerned, there are still opportunities and support available to help people with their entry into entrepreneurship. In fact, history shows that businesses established during times of recession are well placed to secure a larger share of the market when economic conditions improve.

 

Many entrepreneurs considering starting often look at franchising or buying a business which is for sale. If you buy the right business you will already have a foundation and income stream that can be developed rather than starting from scratch. You may have to pay more to get off the ground but you’ll have money coming in from day one.

 

In Wales we have seen the overall numbers of start-ups drop considerably over the last six months.  The recession however is increasing the amount of so-called “necessity entrepreneurs” who turn to self-employment as a viable alternative when traditional employment prospects are low.

Start-up companies are divided by their level of expected turnover and broadly fall into three categories; sub-VAT start-ups, often referred to as lifestyle businesses, growth start-ups, which have a turnover above the VAT threshold within the first year of trading, and a third category of higher growth where turnover is on a much larger scale.   

 

We at Venture Wales monitor the start-up activity in the above categories throughout the country and recognise that the type of start-up often varies according the part of Wales one lives.  

 

In the Heads of the Valleys sub-VAT clients dominate the landscape and we see very few growth companies by comparison.  More prosperous areas produce more growth companies. University research can greatly influence the higher growth and quality starts in surrounding towns.

 

Identifying why some individuals are more enterprising than others is a fascinating area of research which shows that there are a broad range of variables that govern entrepreneurial behaviour.  

 

One thing is for certain; enterprising individuals are not a homogenous mass and therefore different approaches are needed by government when formulating policy.

 

Success in the start-up process depends on a large number of factors.

 

The starting point is in the viability of the business idea, the competitive advantage of the product or service and the fit with the customers and market. This forms the basic entry strategies for the new business which is critical for success. Necessity-based products or services often stand a better chance of success in an economic downturn or have a very focused strategy is required for higher value goods.

 

 

Secondly, the resources needed to get the new business off the ground – e.g. the physical and financial requirements to cover the cost of the start-up - are critical in whether a business is successful or otherwise.

 

As life can be very chaotic when you are starting a business we always recommend writing a business plan which gives the budding entrepreneur something concrete to show outsiders to help raise funding, set targets to aim for and tasks to achieve. A detailed plan can be used as a yardstick to monitor the progress of the new business.

 

But without doubt, the greatest determinant of success is the entrepreneur themselves; namely their determination levels, motives, abilities and skills. A capable person can turn a mediocre business into a great success but conversely I’ve witnessed many a business with excellent potential fail with mediocre people at the helm.  

 

Too few of our entrepreneurs have the internal drive and motivation to take what they have created to the next level of success.  In many cases their aspirations or their courage fall well short of the true value of their enterprises.  This is an area of policy which needs to be addressed but there are excellent mentors and a highly trained support services available within Wales to help with this problem.

 

We need to ensure that when the economic landscape begins to look a little brighter, Wales is well placed to start punching above its weight.  Well-run start-ups and established businesses can hold their own in difficult times as the boy scouts say, be prepared and you’ll stand a better chance of being a survivor. One thing is indisputable; Wales’ budding entrepreneurs need our support now more than ever.