Dr Graham Davies, Investment Director at Mercia, which provides funding for tech firms and other SMEs, explains how to give your business the best chance of success.
With around 63,000 digital technology jobs, Manchester is now the single biggest tech hub outside London and home-grown businesses such as Intechnica and Blue Prism are recognised globally as leaders in their field. However, building any early-stage business is challenging and tech start-ups have a higher failure rate than most. Here is some advice on how to thrive and grow, based on our own experience of supporting technology firms.
1. Create a solid foundation
Ensure your business has a sound basis to build on by putting systems and structures in place from day one – and find a good accountant.
2. Listen to your customers
Don’t spend all your time behind a laptop – get out and talk to your customers. Without them, there is no business so it’s crucial that you build relationships with them and listen to their feedback.
3. Avoid over investing too early
Often taking a more cautious approach in the very early days will ensure you have a more sustainable business in the long-term.
4. Know your weaknesses
Identify the gaps in your own skills and abilities and those of your team, and then consider how you can fill those gaps.
5. Build a good team
It’s crucial for a CEO to have a highly experienced, complementary and passionate team that all buy into the company’s vision.
6. . . . and an experienced board
A strong Chair or a Non-Executive Director can add value and help fill a weakness or gap in the senior management team.
7. Leverage external resources
It’s too expensive to hire every resource in-house, therefore knowing what to keep in-house and what to outsource is important. As a rule of thumb, never outsource your core competency but consider outsourcing supporting functions.
8. Learn from others
Whether it’s fellow entrepreneurs, mentors, investors or even your competitors, listen to their feedback and advice and learn from their mistakes.
9. Ensure your investors share your vision
There are various sources of equity finance – from friends and family to angel investors, accelerators and venture capitalists – and all will have different objectives and criteria. Make sure you understand these and that they fit with your own aims.
10. Understand that cash is king
No matter how great your technology is, unless you keep an eye on cash flow, the business can soon run out of money. Be ready to cut back your cost base if needs be.