All would-be entrepreneurs are told that ‘most start-ups fail’. A popular factoid from the US says nine out of ten new businesses don’t survive. UK statistics are more encouraging, but not spectacularly so. Here, surveys say roughly four out of ten new businesses live to celebrate their fifth birthday.
Some sectors have higher survival rates than others, but whether your entrepreneurial vision is to make hats, cakes, apps, medical devices or space rockets, survival through infancy is your first challenge. You’ll have to risk your own savings and persuade family or angels to provide capital that will allow you to perfect your product and bring it to market — while praying no one else comes up with a better or cheaper product in the same field. You’ll wrestle with red tape and the complexities of government grant schemes. Most importantly, you’ll scramble for sufficient cash flow to keep the business growing even if profit is still beyond the horizon.
And then what? By now you’re more than just a survivor. You’ve got a proven product and the potential to scale up, nationally and internationally. You’re delivering radical change in your marketplace — which makes you, incidentally, a contender for The Spectator’s Economic Disruptor of the Year Awards. Sooner or later your business is going to be worth a lot of money. You’ve got choices, you probably have a business mentor who has helped you leap those first hurdles — but have you got the right financial advice? That’s where Julius Baer comes in, says Reddings, head of front office at Julius Baer International in London, and her colleague Julian Cooper, a former investment banker who has advised hundreds of companies and now works with private individuals to help them manage their wealth.
‘We want the entrepreneur to see us as a trusted adviser from an early stage. We want to help them meet the right people, the right lawyers, the right potential investors,’ says Cooper. ‘A really dedicated entrepreneur works 16 hours a day building the business and probably thinks of it as his child. But he or she really needs to think ahead — to the time when that business will need a lot more capital, or it might be more sensible for the founders to sell. We can help put the right structures in place today, both for the business and for the entrepreneurs themselves, to protect their future wealth.’
‘It’s best to have these conversations as early as possible, before wealth is created. Once a sale happens, everyone will be calling and it will be easy for an entrepreneur to get advice fatigue,’ adds Reddings. ‘We can also help by introducing entrepreneur clients to like-minded people, practitioners who have had to work through these choices for themselves.’
In forthcoming articles, we’ll talk to entrepreneurs about the way they handle key decisions in the lifecycle of their businesses and the management of their resources. In the meantime, there’s time to enter your own business for the Economic Disruptor of the Year Awards. We’ve had a fascinating range of entries but we would welcome more. The deadline has been deferred to 1 June and the entry form can be found at www.spectator.co.uk/disruptor
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