James Oakes, director at ZEAL Investments tells Talk Business about his experience of starting a business but failing to making a success. Now as a successful entrepreneur he tells us what he has learned from his experience.
As an entrepreneur, I know about failure. When I was 30 I started an e-gaming business called Geonomics with my brother. It got off to a good start and we managed to attract funding from Canada’s Atlantic Lottery, a Crown corporation, and German lottery giant ZEAL Network.
What could possibly go wrong?
Unfortunately, despite massive investment and a disruptive product – the company didn’t succeed. Looking back, I believe that our biggest mistake was that we lost sight of our customers, the real end users, and spent most of our time focusing on building our B2B sales funnel.
Believe it or not, 90 percent of start-ups fail. It might sound discouraging but the reality is that it takes more than just a sizable amount of funding to succeed as an entrepreneur. A secure investment is of course critical, but it won’t amount to much if it’s not managed correctly.
Fortunately, I paid attention to where I went wrong all those years ago and have since enjoyed some successes. My experience along the way has helped me understand the potential pitfalls lottery start-ups face – and how they can turn a problem into an advantage.
Starting your own business is more than just a financial risk – you’re putting your entire life, or rather lifestyle, on the line. Essentially, you are stepping out of your secure career comfort zone into an unpredictable world with no guaranteed income.
In a ‘normal salaried job’ you may have had the pressure of a difficult boss or dissatisfied clients but the success or failure of the company didn’t rest on your shoulders alone. Now, it’s all on you. If you’ve employed people to join your start-up, then their livelihoods depend on you. If you have a family to support, then you have just injected a great dollop of uncertainty and risk into their lives. It’s an incredibly demanding position and the stress can quite literally, mess with your mind.
Different personalities respond to consistently high levels of stress differently. It’s important that you understand what your trigger points are, and put some protective measures in place to help you manage the pressure.
Have faith – but be brutally honest
Succeeding with a start-up requires a curious mix of blind optimism and brutal realism. You have to have an underlying faith in yourself and your vision – that you are going to get there in the end. At the same time you have to be totally honest with yourself everyday about what is and isn’t working. For most people this is a difficult balance to attain, and typically most first-time entrepreneurs let the optimism cloud their daily judgements on their startup’s performance (if you are the other way inclined, entirely self-critical and realistic, you don’t tend to ever become an entrepreneur).
Many entrepreneurs start their business with a brilliant idea but don’t realise that there’s more to it than just creating and selling a core product. As soon as your company is up and running, your job title changes from ‘daydreamer’ and ‘ideator’ to business manager. You need to get your head around the finances fast, and approach shareholder meetings and creative brainstorms with equal confidence.
Choose who you work with carefully
In the early days of starting your business, all sorts of people will approach you to work with you, claiming to be experts at everything from investor management to customer service to product development. It’s tempting to believe them, especially if you’re floundering in deep waters and could do with some help. The most important thing to remember here is that the real experts won’t throw themselves at you.
When it comes to hiring the right people, the real experts – take your time. People will try to sell themselves to you but make sure you scratch their surface to see what actual substance they can offer your business. A new business can’t afford to hire the wrong people. It’s very simple: a bad employee can ruin you, a good employee can help you grow quickly and solidly.
The same can be said for funding. The wrong source of investment can damage your start-up irreparably. Most early stage businesses are built on character, and are known for their unique and even irreverent personality. Some investors will want to adopt the role of ‘parent’ and treat your company like a child. Avoid them, no matter how sizeable the funding they offer, otherwise you run the risk of losing control of your business – and its soul.
Keep your finger on the pulse
The heart of your business is not you, or your product or your cool astro-turfed canteen. It’s your end-users, your customers, or even your customers’ customers if you’re in a B2B2C business. If you lose focus on them, then your business is basically going to go into cardiac arrest. Believe me when I tell you that this is remarkably easy to do: when sales are high and investors are happy, you might think you’ve got Midas on your side and forget who really matters.
My former company, Geonomics, was a B2B2C company. We sold our product to businesses for them to use with their end users. The businesses we sold to loved it, but their customers didn’t. This meant no one wanted to play the game. No players = no business. Immediately after we took our final, and largest funding round, we should have scrutinised the business for any problem areas, spotted the issues, and then gone back to start-up basics.
The bare necessities
If you’ve just started your own company, or are about to, ask yourself: what is the biggest problem standing between you and your business goal? Once you’ve identified it, you need to focus on solving it with laser beam intensity.
Having experienced failure and success first-hand, I can tell quite quickly which entrepreneurs are on track and those that aren’t. Successful start-ups are run by people who aren’t distracted by the minutiae of work but stay focussed on building a product that their end-users love. If your product is loved, then it will sell, and you will succeed.