Go for it

Successful starters offer an optimistic message to aspirant entrepreneurs

Your correspondent can testify: spending time with entrepreneurs is an invigorating experience. Because let’s be honest, our charming country can be dreary at times. The rain, the traffic, the politics, the many industries in decline—it does not exactly have the buzz of Silicon Valley about it. But impressions can deceive, fortunately. The fact is that there is a tremendous crowd of young entrepreneurs out there. They are enthusiastic, energetic and see the world as their oyster. And remarkably, they all have a reasonably consistent message for aspirant entrepreneurs.

Challenges

Starting a business in Belgium has its challenges. Our mediocre performance on the international entrepreneurship rankings testify to that fact. For example, in the Global Entrepreneurship Monitor (GEM) we score abysmally; less than 3% of the working age population is involved in setting up a business—that compares to nearly 6% for Europe as a whole. Indeed, we may not have enough starting entrepreneurs, but they do exist. And they are an impressive bunch—even the GEM can testify to that given their focus on innovation, job creation and internationalisation.

The challenges are clear. They are a mix of politics, geography, culture and economics. Take politics and government policy. While the inflexibility of our labour market and high taxes are the usual refrain, these are not the key pain points for starting entrepreneurs since they do not employ large numbers of people or generate large profits (yet). But they are looking for talent, to recruit or to partner with. And that is difficult, when your main competition is your own tax money, i.e., the public administrations with their generous (and some would argue, blatantly unfair) employment conditions.

Geography we cannot do much about. Belgium is a small and complex market. But that can have its advantages too, for example, in a less intense competitive environment. But for many entrepreneurs, that is exactly the problem. It has led to the establishment of semi-monopolised industries that are intolerant of innovation and new players in the market.

A common complaint among starting entrepreneurs is the lack of entrepreneurial capital. There are few venture capital players, and anyway, the argument goes, they are more in the business of growth financing than venture financing. Entrepreneurs complain that there is an absolute dearth of seed and pre-seed capital. There are angel investor networks, but they too are criticised for a lack of transparency. Reference is often made to the US and UK where the angel networks compete against other and where there is more openness in their screening procedures.

Finally, there is something amiss culturally. Where is the initiative, the courage, the creativity, the passion? While the many government support schemes certainly are welcome, some entrepreneurs remark cynically that many of these schemes are simply part and parcel of our nanny state. A subsidy may come in useful certainly, especially since there is no seed capital available, but many of the government’s advisory ‘services’ seem designed for people who will never be entrepreneurs anyway. And that is the core problem; that so many people seem to grow up with a sense of entitlement; that everything will be provided for, no matter what they do. The titanic is sinking; and we’re dancing in the ballroom.

Another cultural issue is the intolerance of failure. This is often mentioned as the main factor that distinguishes the United States from Europe, more important than taxes and bureaucracy.

Indeed, the challenges are significant and probably have their impact, not only in the lack of entrepreneurships. For example, Sasha Vekeman took Mobiya to the UK when he could not find his feet in Belgium; Maarten Van Laere’s ServerCheck can hardly be called a Belgian company; and Sebastien de Halleux (Playfish) set up offices in the US, UK, China and Norway, but not Belgium.

But challenges notwithstanding, there are worse places than Belgium to start a business. In fact, in certain sectors we absolutely shine. In the small retail and restaurant trade there are thousands of intrepid entrepreneurs. But also in the high-tech/high-growth arena things are happening. The top universities at Leuven, Liège and Ghent have had success with their tech transfer activities, creating a significant number of world-class companies, especially in the fields of biotechnology and microelectronics. The smaller universities such as the University of Hasselt are on track too, creating innovative young companies. A particularly exciting phenomenon is the increasing number of web entrepreneurs, clustering mainly around Ghent and Brussels. These are remarkable initiative takers, since they typically start with nothing except their idea. Spot them at the numerous networking events, such as the BetaGroup and BizCamp. And, importantly, there are the entrepreneurs who are trying to reinvent existing industries, like Jeroen Meens and his partners at Cynex, who have come up with a new approach to bookkeeping and accountancy. They illustrate an important lesson: many good opportunities are found in the decidedly ‘unsexy’ sectors; since it is there that the established players are most likely to be complacent.

The Art of the Start

So how do you start a business? Guy Kawasaki summed it all up brilliantly (especially at TieCon2006). This is the Belgian version.

Free up the idea. Too many would-be entrepreneurs are paranoid about someone ‘stealing’ their idea. But the idea itself is seldom worth anything; what counts is good execution, and that comes down to money and people. Investors invest in people, not ideas. Therefore, talk to people about your idea, as many people as you can, not only to test its logic and appeal, but also to find people who will support you in its execution.

Mix things up. Ideas do not come from nowhere. Do not try to dream up something completely new. On the contrary, look at what exists, what works, and mix it up. Mix up business models, product attributes, value propositions, markets, etc. Look for the ‘blue ocean’, sure, but look for the bits of blue in between the stuff that works.

Define the value. The basis is a business model. At a minimum, you need to create economic value; your customers must value your product or service more than what it costs you to make it. But the ambitious entrepreneurs need leverage; a business model that has the potential to grow very rapidly and be very profitable. Start small, but start something that has the potential of being a billion dollar company.

Do not start alone. To increase your chances of success you need a team. Surround yourself with people who are better than you, who compliment your skills.

Do not mix a product business model with a service model. Trying to develop a product business by first offering services is risky, because a service business is a different business model. In services, you need customer-orientated people; but an innovative product company needs to innovate despite its customers.

Think big, but start small. Develop a prototype. It does not need to be perfect, but the potential must be clear. Use the prototype to find money; or work with a select group of customers and suppliers to get the product to the next level. If you do not have money for the prototype then talk to potential suppliers or customers to help fund its development.

Cash is king. Watch your cash flow. Promising companies often fail because they run out of cash. Take all the money that is offered, especially from government. Given the lack of venture capital, Belgian entrepreneurs need to be pragmatic; quite simply, they need to start making money, quickly. Twitter would not find its feet here.

Stay the course, but be prepared to fail. This is a dicey one. On the one hand you need staying power since you will meet plenty of hindrances and detractors on the way. On the other hand, you need to recognise when the game is up, because most businesses fail—that’s just part of the game. But all entrepreneurs agree: it is a fantastic game. Once you start, you will never want to do anything else.

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The Fifth Conference puts the spotlight on our future. Think ten, twenty, even fifty years ahead and try to imagine how we will live and work. What will this world look like? How will we have solved the economic, social and environmental challenges that we confront today?