Ireland's 2013 GEM Report | What can we learn?

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Earlier this year, I was invited to speak at Young Fine Gael's annual summer school, a part of which was their seminar focused on SMEs and job creation / economic recovery.  It was timely that, in the run-up to the conference, the most recent GEM [Global Entrepreneurship Monitor] Report, which spanned 2003-2012, had just been published.

The GEM is a hugely beneficial report, not least of all, due to the comparative data and insights included, but also because of the specific, topline facts which can be gleaned from it.  Given the continuous theme of SMEs and economic recovery - picking salient points and the clearest thematic emblems stemmed mainly from observational experience in my own work over the past few years - not least of all, since the onset of the recession.

The times they are a-changing... or are they?

The initial comparisons presented by the GEM offer some very interesting, and somewhat surprising stats regarding real change in public opinion and within entrepreneurial circles over the ten year period.  A drop of 3% in those aspiring to be entrepreneurs, while those classified as established entrepreneurs has stabilised [up almost 2% from 2003].  Furthermore, a drop of 2% is seen over the ten year period, in those categorised as early-stage entrepreneurs - whilst entrepreneurs discontinuing businesses has fallen by 50%. A heartening figure for those of us working hard to engage more women in entrepreneurship, is the ratio of women to men starting businesses in 2012, which is a little over 2:1 versus 3.4:1 in 2003.  So, some positive strides made in this area - which is good news.

A lot done... a lot more [don't say it]... 

One figure which sticks out - is the 'fear of failure' statistic, stuck at 41% in both 2003 and 2012.  Clearly this is something which is a challenge, culturally, for Ireland - despite much talk of creating and facilitating a more conducive culture for entrepreneurs [which of course, involves risk].

Lessons to learn?

There are some heartening signals in the GEM; not least of all that, despite a particularly turbulent five or six years, Ireland's entrepreneurs continue to start businesses and most importantly, keep them trading. However, there is more scope to develop on the cultural aspects of what it means to be an entrepreneur.

Failure is always a possibility - and honest failure - is part of the learning process.  The perception of failure, however is all too-often associated with major, unbridled [ill-advised] risk-taking, with little thought for the outcomes.  This is where education, at various junctures, is critical - and I am one amongst many colleagues advocating a multi-level approach to 'educating' entrepreneurs.  At school, third level and at start-up.  Meting out the prescriptive ABC training with real-time, experiential insights is critical in really establishing what entrepreneurship is all about, as well as demystifying the fear factor.

There are other possibilities, too - not least of all - the sectoral and demographic focuses which can be brought to fruition through specific measures and programmes.  Having worked on, spoken at and advised on programmes with just these exact types of focuses - their impact pays dividends - but a sustained approach is required.

In general?

Though economic forecasts are indicating a variety of outcomes for the Irish economy in coming years - it is fair to say that the green shoots seem to be putting down strong roots.  If the GEM indicates anything, it is that there is scope for more improvements, sustained focus and cohesive, meaningful policies to further cultivate and support Ireland's entrepreneurial culture.

Service providers... Time for productisation?

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Over the past few years, I've worked with many service businesses - through both acceleration programmes and enterprise support sessions.  The one core issue I see them struggle with? "Boxing up" their services into products. Why? Because often service providers are fearful of the 'cutting the nose off to spite the face' factor of culling or repackaging their offering to appeal to a wider or more sustainable target audience [and drive a more sensible, profitable revenue model].

Having battled through the pain barrier several times with growth-focused businesses and high-potential start-ups, this initial moment of panic stems only from one thing: [to borrow a phrase from my US colleagues] decisioning.  The reality is this: without a proper 'shelf of products' any business is going to spend an inordinate amount of its time chasing client orders, delivering to all sorts of unmanageable demands, and, ultimately, struggling to achieve or develop a tangible growth model.

This is where the truth of decisioning [or decision-making] comes to the fore.  Service businesses, in some ways, can shadow their colleagues in product-based businesses - for in a lot of instances, it's the simple analogy of developing a 'line of products' out of your service offerings that will create ultimate scale possibility.  When you walk into a supermarket or store, and you know what you're there to buy - you simply head to the section of the market you know the item will be found.  It's that simple.  Herein lies the root of the analogy - knowing your customer well enough to be able to define your services' productisation clearly to resonate with their requirements...

Which brings me, nicely, along to ... So, what drives the decisions you need to make? Well, you need to be paying attention to #1 - your customers [current, past and future], their habits, needs [refer to my comments on NOSE of old!]; #2 - your market-place, trends, upcoming legislative / other changes etc; and #3 - bear all this in mind in line with your own business's vision.  Thinking about these few questions - where are the opportunities  potentially, going to surface from?

Another key driver in moving to productised services for business development, is the role regular strategy reviews play - how often have you [or do you] spend on analysing or paying attention to service demands and their trends? Which ones are rising and which are falling?  How are revenue projections and sales forecasts performing versus their real outputs? Or are you simply like that exhausted hamster on its wheel, continuing on the same track with no real sense of what's going on around you - either good or bad?

Finally - when you sit back and assess these realities - what are they telling you? Are customer trends, demands, the market-place conditions and your own strategy review revealing what your 'product line' should look like? If not - why not? Remember that your customer should be at the centre of every decision you make regarding your business [especially when it comes to your business model]... so listen carefully to their feedback and keep their [aforementioned] NOSE in mind at all times.

A reflection on business, three years' on...

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Time flies when you're having fun... time also flies when you're in business.   While I might be accused of telling a tiny fib if I said that building a business from start-up was fun - I don't think I could be contradicted when I say it's, well... challenging, exciting, nerve-wracking and most definitely one of the most intense learning experiences anyone could possibly have.

Reaching the end of year three, and looking into year four of this - I'm sick of the phrase 'journey', so I'm opting for 'excursion' - provides a really timely opportunity to consider what has passed and take the opportunity to reflect.  If I could say definitively, the specifics of what I've learned in three years - and not the day-to-day management 'stuff' - but the real qualities of survival and personal development... what would they be?

First and foremost, being successful - e.g. achieving goals in any context of your professional life - requires commitment and an unerring sense of bounce-back-ability.  Ostensibly, I'm sure many people would expect that I've never experienced a failure or disappointment... however I can say wholeheartedly that I have. It may not have concerned a magnum opus coming crashing down around my ears, but I have experienced my fair share of un-won tenders [despite very good odds], the high praise and enthusiasm of a great prospect [which fell by the wayside] and the general regret of discovering that something wasn't 'as you thought'.

In the very early days of any venture or enterprise - these disappointments / outcomes become the 'norm' - you battle daily with them.  In a lot of ways, you are no different than a musician chasing the all-important record deal - and can expect a lot of 'nos' until someone realises your talent. Resilience is key.

Another nugget of great import: if it's broke, do fix it.  I write regularly about the vanity complex many businesses suffer when they are so in love with what they do, they can't see that nobody wants to buy what they're offering.  Even the best-researched, well-thought-out and developed service or product can experience road-bumps [and of course, we're all subject to changing times and demands] - keep your eyes wide open, remain innovative and fresh.

Don't dwell on things that haven't come to pass; if it's not for you... is probably the hardest accepted reality [and not always confined to business].  Having the ability to let go of the things that haven't come your way is a skill to learn, and the sooner you do, the better.  In the fast-pace of business - it becomes easier to see why things happen the way they do, and in every instance - it's for the best, though it might not seem like that at the time.

Finally, I think the significance of connection - with others - both virtually and in person, is critical.  I can honestly say I have learned more in three years of this excursion than a degree and several years in various managerial roles could ever have taught me - much of this learning came not just from experience, but from the generosity of spirit and kindness of colleagues.

Getting the Green Light - The Safe Cross Code for Funding Applications [Mark II]

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I'm on a funding and finance 'tip' at the moment, and with this in mind, thought it would be timely to revisit this post on getting the 'green light' for your funding application.

So, what do you need to know before you go for funding?

1. Identify your 'point in time': there are many different sources of finance - from the enterprise agencies offerings, to crowd-funding, VCs, and traditional routes, such as bank finance.  Knowing where your business currently stands in terms of its 'point in time' or juncture in the business life-cycle is critical... which brings me on to point [2]...
2. Identify the right funding option for your business: Having a clear sense of your business's "point in time" also means it will be easier for you to determine which funding / form of finance is best-suited to your business.  For example - start-ups requiring working capital or cash-flow for initial costs may apply to the micro-finance fund at MicroFinance Ireland, or for priming grants via their CEB; VCs or large SME investment funds [such as the recently announced Bluebay SME Fund] are typically the right route for large scale investments / acquisitions... whereas crowd-funding may be more appropriate for new products, as are R&D funds from Enterprise Ireland, including their innovation partnership portfolio, due to the fact that they are tailored to new products / services and testing / validating or researching these propositions.  
3. Do the homework: Understand what is required of you in applying for any funding mechanism or support; avoid duplication of work by defining which internal documents [such as business plans, strategy documents and business cases] can be used as support documentation or form the basis of your application.
4. Crunch the numbers: Spending time on understanding the financial requirements of your proposal is a no-brainer, though you'd be surprised how many businesses fail to spend adequate time on this key area.  Start with the overall figure [maximum total investment / funding requirement] and work backwards, breaking down each element in detail.  Expect to be rigorously questioned regarding every figure - its relevance to the project - and just how neccessary the cost element is.  
5. Value the proposition: Like any proposition or proposal, being able to identify, clarify and 'pitch' how valuable, unique and distinctive your proposal, product or service is, is key to delineating yourself from others.  Ensure your proposition is compelling, focused and has considerable 'niche' potential.
6. Make sure your case stacks up: Again, a pointer which many would think is as obvious as the nose on your face - however it is sometimes overlooked in the melee of paperwork and the day-to-day.  However, it is crucial that all the various components of your application or pitch 'stack up' - and connect with one another - from formal application documents, to business case / plans and financial data - interlinking, referencing and notations should be clear and resonant.  
7. The four-eyes approach: Always [always, always] have your key [and most honest] advisors or team-members review the application and associated documents - when you've spend countless hours poring over it - it's a struggle to see the 'woods for the trees' and often simple things can be missed.  

Whatever you do... don't panic if you're unsuccessful on the first attempt.  Oftentimes an initial proposal which may not be approved on a first attempt will provide ample learning for the promoter / proposer - in terms of focus, proposition or business case data.  I have worked with several SMEs and promoters whose initial submissions to various funders were unsuccessful on their first attempt - the learnings and builds we were able to generate from these experiences provided the basis for successful, second-time applications.

Finally... if at second, third and fourth time you don't succeed: ask yourself why.  Don't plow on regardless ignoring the inevitable messages which [surely] must be coming your way by now.  Learning what's not working is an absolute must in business as ignoring this, in the long-run, is perilous.  

Good luck!

Avoid the Vanity 'Trap' - Get Behind Your Customer's Eyes...

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I was reminded of this topic from the recent SFA Conference, which featured a really energetic and engaging presentation by Gerard Tannam of Islandbridge - focusing on the importance of understanding your customer's values [indeed a strong pitch on the importance of value proposition], matching your offering to these values and needs, and ensuring your brand promise is delivered.

So, Gerard automatically had a converted audience member in me, as this is an argument I regularly have to make to clients, programme participants, and indeed - colleagues.  The 'build it and they will come' view just doesn't cut it, folks - and more importantly - related to other posts on failure or strategy, not knowing your customer is one surefire way of pressurising your business to the point of implosion.  That's not mentioning the huge waste of time involved in finessing a product or service to the point of obsession, only to discover that - uh-oh - your customer segments [if you have done that bit of homework] don't want what you're offering.

Sure - I hear you say - but how do I develop strong customer intelligence on a shoe-string, if I'm starting out and trying to juggle the myriad of 'hats' involved? It's not hard... take Gerard's advice and turn the mirror around, stop obsessing over how amazing your product or service is, and actually talk to your customer.  You'd be surprised how easy it is!

... I don't want to know... yes, yes, I know, you might find out something you didn't know, or more importantly, didn't want to know.  I'm afraid to say, this happens - and you've got to roll with it. Market insights, customer views and real-time information regarding your offering aren't always nice but they are always [pretty much] relevant - why? Because what you don't know, in business, will always hurt you.  Sit up, pay attention and understand how you can use this information to shape how you will redefine your offering.

Boot-strapping or lean approaches often don't require massive R&D / market research investments to generate good data which will inform your product / service development, in fact - simple ways of conducting good research can be done through focus groups, one-to-ones and demos.  However, as your business progresses, more detailed analysis work can be conducted to validate the instinctual or 'fed-back' concepts.

More? Try this for size... Small Business Can | Special Edition Newsletter  Keep Your Eye on the Ball

The 'F' Word...

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A subject of the moment, and one which never really goes off the 'agenda' - it's the 'f' word... AKA, funding, finance, figures, forecasting.

Businesses, at all points in their 'life cycle' will need access to finance.  Regardless of whether it's at the early stages of start-up, during expansion or at a juncture where acquisitions / mergers or further development / scale plans come into focus - finance is central to facilitating growth / development... it's the life-blood of any business.

As someone who continually expounds the value of strategy in business, a key 'FYI' in funding acquisition is to fully understand not just what your funding requirements are, but more importantly, why they exist and how you can justify [depending on the type of funding you're pursuing] return-on-investment, long-term potential, scale opportunities and a strong vision for the product, service or business.  Remember that funders and financiers are buying into the strength of the proposition and the individual ability exhibited [or team, depending on the pitch / proposal].  An ability to clearly highlight vision, purpose and strategy, all stacked up by strong financials can certainly offer higher probability of a successful funding application.

More?
No Plan | No Future  Sailing the Four Cs  Getting the Green Light | the Safe Cross Code for Funding

SMEs & the Entrepreneurial Contribution to the Economy | Job Creation | Presentation to YFG