Starting a business or unleashing the imagination

Belgium’s future lies in starting up and developing new businesses. There can be no two ways about it. Government programmes over the past few decades have often said so. But everyone who is involved in the world of entrepreneurship in Belgium is in agreement about one thing: running a business in Belgium is no sinecure. Much will have to change to create a business-friendly climate. Magazines, newspapers etc. are full of exposés about the lack of entrepreneurship. That’s good to know, but it achieves the opposite of what is intended. It’s not because conditions are not ideal that entrepreneurship is lacking.

The urge and satisfaction to create something is stronger than anything else. It’s like an intoxicating drug that allows you to overcome all frustrations in order to reach a goal.

This piece is aimed at those people who want to start a business from nothing. Those who risk a great deal of their own money in order to realise their dream; those who launch their idea without external resources; those for whom starting a business is often a very serious decision.

Starting a business, where do I begin? The purpose of this short piece is to give the reader a few tips that can help him get going. What follows is based on personal experience, mistakes and lessons drawn from the past. Entrepreneurs starting out should get as much advice as possible from others who have already taken the plunge.

The first thing you learn about entrepreneurship at school is that you have to draw up a business plan. With that plan you then go in search of capital. The first disillusionment: venture capital no longer exists – certainly not with the traditional investors. They still talk of venture capital but this is intended for companies that already have a product or service on the market and customers paying for it. That is no longer venture capital. Growth capital is a more appropriate term.

So one has to look for alternatives to finance that business plan. Where can one find it? From Business Angels? Certainly. But such people are more selective than ever before and therefore the chance of getting finance from that quarter is much smaller. In all probability you’ll have to get it from what is called the 3 Fs: Fools, Family and Friends. This translates into much fewer resources. Must you therefore put your idea on ice and wait for better times? Not at all! On the contrary, this climate is a blessing for the entrepreneur. Engaging with its limitations in an innovative manner provides new and wider opportunities. Perseverance is the watchword.

The present difficult context forces an entrepreneur to think out of the box. With very few resources one needs to make a product and find customers to buy it. Below I shall give a few examples of thinking out of the box.

In my experience in the technology sector there is one mistake that is made all too often and frequently spells failure of the idea: trying to make a Rolls Royce from the start. This is typical of start-up enterprises in the engineering sector. In this phase, however, one needs to produce a marketable product without bells and whistles. These can be added later, once there is income from paying customers. You must produce version 1 which does what you promise, no less but certainly no more. The more one does, the more time and resources one needs.

Supposing the entrepreneur wants to market a product. Doesn’t this require a lot of capital? Or can a product be developed without too much investment? It can also be done with limited resources; at least if one has enough imagination. A typical example is the development of a product which is financed by means of consultancy assignments. Instead of selling a concept to a venture investor, one now has to make do with a pilot client. If a client believes in the concept and places an order one can develop one’s own product by means of consultancy income. This also has an enormous advantage: you are developing a product based on a market need; a need for which at least one person is prepared to pay. The entrepreneur’s strength will be to make that product sufficiently generic so that it doesn’t become a dedicated product for one client only but a version 1 that can also appeal to others. In this way one can develop a product while using hardly any of one’s limited capital. Also, don’t underestimate the importance of the first client. One needs to see the concept of client more broadly and “user” is more appropriate in this context. If the first user is well-known in your target group, there’s a big chance that others will follow more readily. This is what they call “going with the flow”.

This sounds relatively easy when one is marketing a non-physical product (a service or software, for example). But what if you have to develop a physical product? Building a prototype surely costs a lot of money? This is true if you have to build a prototype from scratch. But, if you don’t try re-inventing the wheel, quite a few savings can be made. You need to realise that most companies outsource production today. They still do the R&D themselves but production is carried out by a third party. The advantages are countless. This way of doing business is possible not only for the big boys but also for the new entrepreneur. It requires a bit of research but here, too, it’s true to say that a concept can be pitched to a manufacturer just like the pilot client earlier on. He can help to develop the prototype.

I’d like to end by quoting Jean-Paul Sartre during an interview in 1968 with Le Nouvel Observateur in the context of the uprising of May 1968 : “Quelque chose est sorti de vous qui étonne, qui bouscule, qui renie tout ce qui a fait de notre société ce qu'elle est aujourd'hui. C'est ce que j'appellerai l'extension du champ des possibles. N'y renoncez pas.”