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Friday, 11 July 2014

What a great idea because now...

You need to see if it works
In the previous post in this How to Startup a Business series, Death by Startup and how to avoid it, we discussed the main causes of business failure and having the right funding can be critical. In the Bank research we mentioned 79% suggested the cause of failure was “starting with too little money.”

However, some businesses do not even get to the end of their first year because the idea is not viable.

Apparently it is a myth that 90% of restaurants fail in the first year ( Business Week )

Nevertheless,  restaurants often fail quickly because they think it is the menu and recipes that are the key to success.

A restaurant concept is not a menu and a set of recipes. Rather, it encompasses a location, a marketing plan, a service scheme, design, atmosphere, price point, a defined position in relationship to the competition, and almost as important as the food itself, a long-term strategy”.

Christine Letchinger, Associate Professor, School of Hospitality, Kendall Collge, USA
Follow link for full 2013 article TheAnatomy of Restaurant Failure: Dead Man Walking 

Letchinger believes there are two basic strategic choices:

1.       Be the first one to come up with an idea
2.      Take an idea and execute it better.

and she makes the point that McDonald’s and Apple were not the first companies in their markets but there is no doubt about their success and they did it by being different and doing it better.

She concludes that “A winning concept should be distilled to its very essence and defined in a simple, clearconcise, and highly communicable sentence”.

So, when you try to tell someone what your business is about, can you tell them in ONE SIMPLE SENTENCE and what expression do they see on their face.

Other research suggests,  to check if your idea can become an “opportunity” by considering the following:
The idea needs to be attractive to the customer and this means in terms of convenience, price and visual/comfort attributes.

You may not have considered whether your idea is timely but even really good ideas may not appeal to today’s market.

With the current market the idea of a C5 might be appealing but in the 1980’s it was a complete failure.

Lastly durability is the ideal thing but not perhaps a necessity. Durability is about will it last and some business ideas can be very profitable and successful but not designed to last. As an example, a musical festival, some product for a specific celebration such as World Cup.  Durability may exist in the format or management techniques of the event, which could be applied to another event.

Certainly to be durable your business needs to develop what is known as “Competitive Advantage”. Something that makes you different from your competitors and attracts people to you. Michael Porter, a leading authority on competitive strategy identified three key routes:

  •  Cost Leadership – the emphasis is on your being the cheapest (ASDA)
  •  Differentiation – is where you try to make yourself different through branding, design, service, quality and new product development. This strategy can apply even with low cost companies (IKEA) or where design is the factor (Audi).
  • Focus – Is the more likely option for a new enterprise. It is where you specialize either in terms of some aspect of the market. You could be a specialist in terms of geography (your local bakery) or product/service.

Deakins and Freel (2012) indicate that this is the “the most important section of the business plan” and that by creating a business model “the development of a competitive strategy will be a natural outcome”
So now some practical ways of developing this model and testing your idea.

Alexander Osterwalder did some considerable research on business models and this resulted in the Business Model canvas. This brilliant model lets you lay out on the table all the aspects of your business you need to consider. 

Take a look at this 2 minute video to see how works.  

Now you can go onto our "How to Start a Business Course" Forum by following this link and download a Preview of their book which explains the idea in more detail. You can also buy the full book from our Amazon Store of Knowledge. Also available there is the book mentioned earlier (Deakins and Freel, 2012, Entrepreneurship and small firms)

Try using the model on your business idea and, via the Forum we can respond to any questions you have or provide more help.

Our next post in the series will look at how you start to move this business model forward.

Best Wishes
Adding Wisdom and Spice to Business and Personal Development

Tell us what your thoughts are by leaving a comment below or connect with us at :


Saturday, 5 July 2014

Pay is not everything at work

When I was in our local One Stop convenience store  a young man serving was responding to a customer's enquiry on how he was. "Fine, he said, hard work and feeling tired but fine". To which the customer  commented "Hard work and low pay".

The young man, I guess in his 20's, replied "No, its not a lot of money but it pays the bills"

 Now I know that this chap is naturally a happy person and I cannot say for sure how much of his comment was politeness or truth, but if its not true, then its dam good customer service skills.

I like to think he meant it and if so, what a good outlook on work and life. 

Perhaps some people, who find their work hard and boring and so negative that they moan all the time, can appreciate that life does not have to be that way. 

Attitude is a big aspect of how you lead your life, and we need to have greater self-awareness of how it impacts on our life and that of others.

You only live once, so make it matter.                                                
Best Wishes

Adding Wisdom and Spice to Business and Personal Development

Tell us what your thoughts are by leaving a comment below or connect with us at :


Wednesday, 2 July 2014

The end of segmentation

The places we buy things have changed dramatically over the past few years, but does that mean our buying models have.

Marks and Spencer have just appointed Laura Wade-Gery as their new CEO,  having been in charge of the companies online service. (The Daily Telegraph,  1st July).

One reason mentioned was to have "one view of the custoner". Is this the end of segmentation, the end of different buying models or just just a desperate move in the light of declining sales.

We would be very interested in your views.

Friday, 30 May 2014

Death by Startup and how to avoid it

Nobody likes failure, but every day businesses close for one reason or another and it is best to understand the causes so you can do your best to address them and avoid your own enterprise dying a prematurely. 

However,there is a difference between business “closure” and “failure”.As Stokes and Wilson (2010) put it “there is an unfortunate tendency to associate business closure with business failure” (p450). Companies may close for very good and valid reasons. They may close because their purpose for setting up is completed (creative industries, social enterprises). Their owners sell the business (about one third of UK closures).

In reality a mere 20% of closures are where companies owe money. This represents 1% of the European business population. Bearing in mind 0.7% of the UK population die each year then it is reasonable to deduce that businesses failing, with creditors, are not as frequent as one would expect. 

It is clear that closure rates are highest for young small businesses and that some sectors (construction) are more vulnerable than others (manufacturing). Whilst we may have come leaps and bounds in reducing infant mortality, there is still a concern that we could do better with company mortality and certainly none of us want to put ourselves up in front of the firing squad of emotional, legal and psychological trauma that comes with any form of death. 

Research by Cressy highlights one problem, entrepreneurs do not secure sufficient capital in the first place. So it’s easy you might think; you can avoid business failure by ensuring you do not run out of cash! 
Cressy 2001 Business Failure Curve

 Easier said than done, and the real question is why did they run out of cash? 

A business can have a lot of money, but it may be tied up in property, stock etc. It is when it runs out of cash in the bank the problems start. It is like the human body, you may have plenty of blood but if it gets blocked and fails to reach the right place……. 

This becomes quite obvious when you look at other research and data starting with a bank’s perception.

US Bank Research on Reasons for Business Failure

> Poor Management &                                               Planning
> Not enough Startup capital
> Lack of Self Awareness 

> Poor Research 

> Poor Marketing 

Richardson, Nwankwo & Richardson (1994) carried out research which was more focused on the Leadership aspects of business failure and they concluded that there were four types

 • Boiled Frog      • Drowned Frog    • Bullfrog      • Tadpole 

Boiled Frog

If you were to put a frog in pot of hot water it would jump out. In cold water he would sit quite comfortably and even if you turned the heat up, he would not notice it even if the water was boiling. Our entrepreneur may have a viable business but is so busy doing the day to day tasks of running a things, he is oblivious to the changing environment and decline of his own business. Strategic drift or in simple terms the company has lost its purpose. Some large company examples are easy to find (Woolworths, Kodak etc) but there are lots of family businesses, particularly older companies that won’t change. 

Drowned Frog 
 In this case the entrepreneur behaves in a Dell Trotter style. Often a great salesman, bubbling charisma, lots of great ideas but quite forceful and autocratic. Taking advice is not something our Drowned Frog does unless it agrees with his views! The business booms and Trotter wants the world so starts putting his profits into strange areas that he lacks the knowledge and skills in; thinking his success will naturally work here to. Examples, Next’s growth out of Hepworth, Air Europe’s growth out of International Leisure Group, Polly Peck’s growth from its family business heritage). 

 In a similar way bullfrog swims around his “pond-lily garnered, for all the world to see, with the trappings of status and power”. The difference here is that the Bullfrog is more selfish than ignorant. He is unable to separate his business and personal life and this can create ethical issues as in the case of Robert Maxwell. 

 Our tadpole never becomes a frog. The highly promising startup project fails as in the case of Sir Clive Sinclair and his C5 Bike that not only failed but brought down his parent company. Some links here with the Drowned Frog. 

So, pulling all these views together we can see the causes of business failure are. 

 As we progress through the “How to Startup a Business” blog training course we will look at these issues in more depth. 

If you want to explore these more, join us at the Sage Saffron Forum on Entrepreneurship where you can raise questions and find out more and share with others your thoughts and learn from them to. 

If you would like to ensure you do not miss the next post then see how here

References for this post

Stokes & Wilson (2010) Small Business Management and Entrepreneurship (link to Store of Knowledge) 

Available at our Store of Knowledge.  in the Business Development Section

Richardson, Nwankwo & Richardson (1994) Management Decision, Vol. 32 No. 4, 1994, pp. 9-22

Best Wishes
Adding Wisdom and Spice to Business and Personal Development

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Wednesday, 30 April 2014

What are the 3 R's of an Entrepreneur?

The business celebrity Sir Alan Sugar has been quoted as saying
Sir Alan Sugar

 “The entrepreneurial instinct is in you. You can't learn it, you can't buy it, you can't put it in a bottle. It's just there and it comes out.


In our first blog training post of  "How to Startup a Business", we tested your ability to see the positive aspects of things, but before you get your business going we need to go a little deeper.

Researchers have spent the last 300 years trying to identify what makes an entrepreneur and in modern times they have attempted to understand it, even at a genetic level and could only conclude that.

People can always overcome their genetic predispositions; but at the most basic level, over¬coming predispositions means recognizing that one is acting against one’s natural tendencies. While such action definitely can be successful, it usually requires more effort and more conscious action than acting in accord with those tendencies.

at University of Portsmouth on March 14, 2014 Downloaded from 490 International Small Business Journal 31(5)

One may conclude, that Sir Alan is not strictly right, those with a natural instinct may find it easier, but the lack of it does not prevent you being one and achieving success.Rod Stewart has achieved considerable success, but singing was not his natural skill, the Kinks turned him down because of his voice.

Chell’s research into entrepreneurial skills did highlight that “the key skill identified is ‘alertness to opportunity’ though this appears to be an ability, with which endowment the entrepreneur arguably is born”.
Elizabeth Chell, (2013),"Review of Skill and the Entrepreneurial Process", International Journal of Entrepreneurial Behaviour & Research, Vol. 19 Iss: 1)

However, most of the people that start a business do so because they have already identified their opportunity, unlike people such as Dyson who was pursuing a dream based on something that did not already exist.

What researchers have found is that entrepreneurs have behaviours that impact on their ability to be successful. I have pulled the key ones, in terms of starting a business, into the 3 R's:

Risk Tolerance


A resourceful person is someone that has the skills to handle new situations and difficulties.  Other words that help describe this are inventive, enterprising, adventurous and creative. This need not be on a large scale.
If your idea needs a lot of money and a good team then your skills in this area will be pulling this all together by using contacts (human resources) to find these.

Nigel Taylor used his credit card to set up his business, Taylor Made Computer Solutions, which now has sales in excess of £10m. That was his solution to the difficulty of finding money (financial resources) when he had just been made redundant.
Nigel Taylor

In my first business we used a friend’s garden shed as our first office (physical resources). We had no manufacturing capacity or capability so we contracted it to a company that had (inventive), certainly in those days although it is quite common now.

Being resourceful implies you are a proactive person, you do not sit around and wait for it to happen, you make it happen.  Leadership, motivation, coordinating skills can be part of being resourceful, bring all these things together.


This is more about your ability to bounce back. When things go well, we can all be brilliant. When things go wrong many of us fail. The resilient person will carry on in the face of adversity.

You might think your idea is brilliant, but when you put it in front of potential customers or investors, will they. What if they do not!

Sir James Dyson
James Dyson worked on his idea for some 10 years or so getting knocked back from investors and manufacturers but he continued to believe his idea was right. He showed commitment and determination.

If your resilience is not challenged like Dyson in getting your idea off the ground, then it certainly will when it is going. Things will go wrong, people will let you down and external forces will do their best to make life difficult (Governments, Competitors, Lawyers). Commitment and determination is what you need.

Risk Tolerance

Research has investigated this aspect of entrepreneurship right from its early beginnings where  Richard Cantillon (1680-1734), an Irish Economist with a Spanish name who lived in France most of his life, was the first to use the term entrepreneur . Someone who engages in exchanges for profit and who operates under uncertainty. He is a speculator, a trader, a dealer with an eye for opportunistic profit.

By the 20th Century with the introduction of limited companies and industrial development there are still risks but it is not so random and you can limit your losses.

You will certainly need to take some risks, even the one of giving up your day job, but you can plan for it. Entrepreneurs are very rarely outright gamblers, more lottery players. They are willing to invest, can accept certain losses but hope their winnings make it worth it.

Psychologically you need to be able to tolerate risk and not let this dominate your thoughts.

If you feel you have these three capabilities then you are ready to explore your idea and learn some of the other characteristic and skills you will need to succeed. If you want to explore these more then join us at the Sage Saffron Forum on Entrepreneurship where you raise questions and find out more about the skills and characteristics.

In the next post we will be looking at How to avoid failure. Click on this link to see how you can easily follow this training course.

Best Wishes

Trevor Andrews for

Adding Wisdom and Spice to Business and Personal Development

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Wednesday, 2 April 2014

Don’t Startup a business unless..

Welcome to Sage Saffron, an online business learning buddy to help you develop your personal and business skills.. This “How to Startup a Business” blog training course will show you how to start a business or social enterprise and avoid failure.

Step by step we will take you from idea to reality and give you a chance to ask questions and meet others that have trod this ground before you. We will provide you with useful links and information.

So let the learning journey begin.

Starting a business is relatively easy if you are based in the UK, so if you are from another country you may need to check out your countries rules and regulations. Nevertheless the three steps are:

1. Defining your offer
2. Choosing a location
3. Choosing a name


You need an offer, be it a product or a service even a combination of both. Later we will put your idea to the test; in the meantime, you can carry out some tests yourself.

Ask your friends if they would be interested in your offer
Search the internet to see if you have any competition
Look through local media and directories to see who you might be in competition with

If you think you have a novel idea then just be careful who you speak to. You do not want them to run off with your idea. You may need a confidentiality agreement first.


What we mean by location is:

Geographical coverage
Business Location

Are you planning to make your offer in a specific town, county, country or continent; or can the World take it up?

Your offer may make a successful business if you focus on a limited area, whereas in other areas you may have a lot of competition.

In one of the case studies we will be using, the owner set up his business based on a geographical area within one hours travel of his office, so that he could offer a first class service to local businesses. It now has a turnover of £10m.

Does your startup need an office, a studio, a factory or just an internet site? Business property is not cheap and for many enterprises, premises are not necessary to get started.  You can operate from home. Other businesses will need some physical presence and you need to consider how you would handle this.

Either way, you need an address for mail and other business purposes. If you cannot, or prefer not to use a home address then you could use virtual office services like that of national supplier Regus who will provide an address and services. Companies like Mailboxes will let you rent a mail box for your post.


Now this can be a puzzle and choosing the right name can be critical. The simplest and quite popular option is to use your own name. When Steve, a qualified electrician and plumber, decided to start his bathroom company he used his surname and called it Samways Bathrooms  and has been successfully trading since 1995.

When Lee and Neil, skilled engineers, set up there company they used a name they had seen on a box in a company. It reflected their desire to set up an engineering company that offered a first class service, so it became Excel Metal Spinners.

If you are going into a partnership with someone, or have another valid reason for setting up a limited company then you would have to check your preferred name with  Companies House as no Limited Company can have the same name as one that already exists.

Using the nature of your business within the name, like “metal spinners” makes it clear what you do and in the engineering industry this can be beneficial. A potential supplier looking for a metal spinner would find you quite easy in a Google search or directory. Be careful, there are Company names you cannot use like “Bank” without prior permission. See the list here at Companies House

A former student, Josh Cole, had a business idea and created a digital business card company he named it to match the product One Tap Promotions. There is nothing wrong with this but the name of your company may make it difficult to add products and service later. He could have set up a company name i.e. Josh Cole Enterprises and then use One Tap as a brand name.

Having a company name will start making your dream a reality. You can write it on a folder containing all your notes. You can start to feel what it is like to have your own business. BUT, don’t finalise it just yet. Do some research on names but let’s be clear your idea is a viable business opportunity before you make any final decision on its name.

What Now?

Congratulations, you have made a start on setting up your new business but here’s the catch. It’s easy to start a business but harder to keep it going. If I said that half of business start-ups fail in the first three years, what is your response?

a) Oh dear, I did not appreciate that, think I will give it a miss!
b) Yes, but 50% succeed and so bring it on..

If your answer is a) then thank you for being so patient, good luck and do take a look at our resources and materials for managers; perhaps some time in the future you may feel more optimistic.

If it’s b) then great, you showing the first signs of being an entrepreneur. A positive outlook is important as you will have several battles to fight and you need to believe you can win them.

So, don’t startup a business unless you are willing to put aside some time to learn how to avoid failure, and learn from others, how to increase your chances of being successful in your new enterprise.
In the next post we will look at other desirable characteristics of entrepreneurs

Select this link to see how you can easily follow this training course.

Best Wishes

Trevor Andrews for

Adding Wisdom and Spice to Business and Personal Development

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Monday, 17 March 2014

Teaching Using Student Teams

We are coming to the end of another academic year in HE and students are preparing their assessments.

Working in teams can provide students with some excellent experiences and they can learn a tremendous amount about teamwork and personal skills. 

However, the units that rely on student teams, have mixed results and one of the frustrating issues rises again. The social loafer.

Source Unknown: Social Loafer
Students have mentioned this topic in their  reflective reports and colleagues may be surprised to know this terms is not new. According to Ray Williams it was first used by Professor Max Ringelmann in 1890 (Psychology Today 2012).

It does not seem right that those students who aspire to achieving a good mark may encourage social loafing by doing it themselves. Team Allocation systems that allow students to penalise colleagues seem a negative solution.

This post does not aim to give you solutions, but to encourage you to join the debate and share your ideas and perhaps together we will find a positive solution.

Love to read your thoughts in the comments section of this blog or join me at in the TEA Room at the Sage Saffron Forum.

Best Wishes

Trevor Andrews

Adding Wisdom and Spice to Business and Personal Development

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