Recap: Entrepreneurship and failure

On Tuesday 21 February, Dr Nick Williams welcomed Tom Allchurch, Jonathan Straight, Steve Baker, Bradley Martin and Pete Mills on campus for a talk on entrepreneurship and failure. As he put it: ‘In our modules we talk about and study entrepreneurial success a lot, but here we want to think more about failure and when things go wrong, the mistakes, mishaps and missteps. How entrepreneurs learn from them and take things forward.’

The evening began with brief introductions from our speakers before diving into the discussion where all entrepreneurs present answered honestly about mistakes they have made before giving some pieces of advice to the students.

Tom started a coal mining business back in 1999. He’s now an angel investor in a start-up business in Kent as well as a coach and mentor.

Jonathan is best known for a company called Straight plc which he founded. He left this company two years ago and is now involved with charities, social enterprises and start-up businesses. Most notably he is a trustee of Tetley Art Gallery in Leeds.

Steve is a serial entrepreneur and with his most recent enterprise being Baker & Co Accountants.

Bradley founded a digital agency. He now is a freelance designed and consultant, user-interface design under the brand UIUX London.

Pete is a graduate from Leeds. He founded and is now involved with Calls9, a technology company.

Mistakes are going to happen. Learn from them and move on.

Q1: What are the common mistakes that entrepreneurs make?

Jonathan recognised two big mistakes over the 21 years he ran his business; mistakes that threatened the very existence of the business. One was in 2006 when there was a drought and everybody in the country wanted water butts but the business’s supply chain fell over. The second one was around 2010 when the company’s bankers thought that the company was in breach of its governance. Both problems were dealt with but were challenging at the beginning.

Tom agreed with Jonathan that banking governance is a tricky thing to deal with. ‘Every business that you ever run… If you’re going to go somewhere, you are going to make mistakes. You have to learn very quickly that mistakes are inevitable and you learn from them.’ One mistake he talked about was that his business grew too quickly. They outgrew the capability of managing efficiently the business and he felt that he didn’t have a tight grip on the business at the time.

Steve mentioned two important things to remember in business; contract negotiation and people. He emphasised how important get-out clauses are in contracts and how once something is done wrong once, you don’t really do it again. When it comes to people, he mentioned how they can sometimes be an issue for the business, particularly when it comes to recruiting. Selecting the right kind of people is very important.

Bradley also mentioned two specific mistakes. The first one was that the company was very dependent on a single client who would bring in 50-60% of the work and the income. When the recession hits this can be a problem. The second problem was that after a few years of great success they started having some great ideas and they would run a lot of those ideas without bringing money in.

Pete recognised how the lack of planning was the biggest mistake for him and his co-founder. They were not sure what they were doing as a company. In the first two years they scaled with contractors but a week before Christmas all of their cash flow went to those contractors and they got there because they hadn’t planned where the company was going. This mistake didn’t pull them under but is was still a great challenge they had to face.

Q2: When things went wrong, what was your response and has that affected your confidence to grow and go forward?

Bradley admitted to being more cynical and cautious now. Jonathan said that there wasn’t a day that went by that a thing didn’t need fixing. As the entrepreneur, he had to fix things. He believes that fixing the problems that arise actually increased his confidence and he now pays more attention to detail. Tom pointed out that ‘running a business for a period of time is a journey which sometimes goes in a direction you don’t anticipate’. He advised students to become comfortable with that and work on their problem solving skills. ‘When problems pop up they seem worse than they actually are. You just need to step back, take a breath and then deal with it.’

Running a business for a period of time is a journey which sometimes goes in a direction you don’t anticipate.

Steve used the phrase ‘It’s not that bad’. It is about experience of having dealt with problems. People try to overcomplicate problems but Steve’s advice was to simplify them instead which, according to him, is the route to solving them. Pete didn’t have to deal with something as big as other examples the panellists talked about. He once again highlighted the importance of planning, dealing with problems as they come along and showing your team that you are strong enough to tackle these problems.

Q3: How do you make sure that when something goes wrong everyone in the team learns from it?

Effective communication was an important point for this; talking with people is always the best way. Processes are also important in order to control the learning process.

The harder the fall, the bigger the bounce back.

Q4: Have you had any mistakes that were blessings in disguise?

All panellists were able to find blessings in disguise. Jonathan mentioned how a disaster turned out to be a great PR success and they were able to use a positive spin on the story. Tom explained how important health and safety is, especially in the coal mine industry. After having had to deal with two major issues in health and safety, he decided what he wanted in health and safety which in the long run led to not having any fatalities. Pete talked about an opportunity that arose from that Christmas situation which led to them developing their own software and eventually funding their product development start-up.

Q5: How do you manage other people making mistakes?

Some panellists agreed here that it depends on the magnitude of the problem as well as the level people are working in; whether they are junior level people who are bound to make some mistakes or further up the hierarchy. Others emphasised the importance of educating people on that mistake and implementing processes to make sure those mistakes don’t happen again.

Jonathan explained that it’s not that simple. ‘Generally you grow through making mistakes and you learn so you shouldn’t dismiss people because of their mistakes.’

Tom highlighted once again the culture of the business. It is important to have an open culture where it’s okay to make a mistake as long as you learn from it and you don’t repeat it. ‘In a business where you are not allowed to make mistakes, you can’t really move on.’

Generally you grow through making mistakes and you learn so you shouldn’t dismiss people because of their mistakes

Q6: Have you experienced a trough of sorrow – the stage in the development of the company where everything gets stuck and nothing progresses – and how did you deal with it?

Panellists agreed that experience is important here and can help when you are experiencing a trough of sorrow but as an early stage entrepreneur it is possible to panic over this. It was highlighted how every issue needs to be dealt with as it happens and be distilled down to smaller individual problems instead of a big clump.

Tom interestingly mentioned that if you can’t find solutions anymore you need to ask yourself whether the business has outgrown you; a question that might be answered by your investor or by doing some soul-searching if this is what you want to keep doing or not.

Jonathan said that you have to be ruthlessly honest with yourself and that is often difficult if you don’t have the experience to recognise things are going wrong. ‘The ability to be critical of yourself is a very important skill.’

The ability to be critical of yourself is a very important skill.

Q7: When starting your own business, what did you sacrifice and why?

One panellist stated sacrificing sleep to which other panellists agreed since the business never leaves you, even at the weekend or the holiday.

They all agreed that there’s a fine work-life balance when you’re an entrepreneur and it can be challenging to depersonalise the business.

‘The sacrifices at the beginning are also about getting the business running but then you realise you need a balance.’

Q8: Any advice for the students?

Tom: ‘Mistakes are going to happen. Learn from them and move on.’

Jonathan: ‘The harder the fall, the bigger the bounce back.’

Steve: ‘Don’t worry about making mistakes but try not to make stupid ones.’

Bradley: ‘Be prepared to be brutal. Stay agile. Get a good accountant that would also act as a mentor. Collect data from your failures and learn from them.’

Pete: ‘If you know where the risk is, understand the worst-case scenario.’

Thank you to Tom, Jonathan, Steve, Bradley and Pete for their time.