Jim Duffy: The importance of luck in launching a business

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At some point in the life of any new business that is starting up, the owner, business-builder or entrepreneur will have to think about raising finance. Some lucky souls may have parents with a few bob that they can gift, loan or invest.

Mind you, taking money from family can be tricky. As long as it comes with love and no caveats, then this type of arrangement works. But, beware a family member casting it up to you around the Christmas dinner table, should the business tank and they feel a trifle aggrieved. So, what does taking investment finance mean for you? And more importantly, what type of start-up do you want to be?

Ostensibly, anyone starting up a business is a start-up, right? Not so. There are many who deem the term “start-up” to mean a new business that has mega ambition and wants to climb the investment ladder. This type of start-up is tremendously ambitious and the entrepreneur behind it usually has an eye on an exit — typically between five and nine years — where they can take a big pot of money and literally live like others can only imagine. It’s a lottery win. But, this is not all plain sailing and not for the faint-hearted. Don’t get me wrong; it’s a brilliant journey and one that I have seen so many embark upon, and many, indeed, who are in the throes of this just now… just look at the amazing journey of BrewDog! It’s stunning to watch and the team there deserves all the success this current investment round brings them. Can you see yourself as this type of start-up?

Well, if you do fancy a lottery win some day, and moving up the investment ladder, then you have to frame your mindset accordingly. This type of start-up requires serious cut-through. And, with serious cut-through comes huge uncertainty and big decision-making. This type of start-up is deemed an “entrepreneurial start-up” and it takes no prisoners along the way. It doesn’t need to be a tech business either, as the team at BrewDog have shown. This type of start-up needs a few things to make it big, but let’s focus on two here.

The first big thing is luck — or, otherwise put, timing or serendipity. Many say “timing is everything in life” and I wouldn’t argue with that. A bit of luck goes a long way as well and this is where so many of this style of start-up usually fail. This is where the science of start-up becomes less credible and mother nature kicks in. You will all have your own definition of luck. But, in the world of start-up, good luck is hard to find, but when it comes along it makes a huge difference. When you launch, where you launch, the type of investors who get around you and the networks they have, who latches onto your product or blogs about you. These all have a luck effect that can accelerate a start-up. Luck can result in a tailwind that whooshes a start-up along. Many successful start-ups generate their own “luck” — determination, not giving up, a positive mindset and a cultivated network all help.

The second thing that this type of start-up needs is a convincing entrepreneur or leader who can “sell the sizzle and the sausage” at the same time. This individual is like gold dust in the start-up world. In short, they are the business for that period when others are considering making an investment into the start-up. Investors will have this person on their mind. Essentially, they are investing their money into this person, or perhaps two people as co-founders, whom they believe will give them a return. If the investors don’t believe this, then they won’t invest. That is why so many brilliant university ideas lie in the bottom drawer of the professor’s desk. They simply do not have the entrepreneurial flair to convince others to invest. The entrepreneurial-type individual is a must-have for success.

So, if you want to be an entrepreneurial-style start-up and raise investment, make sure you think about luck, and make sure you are perceived as investable. This is just the start, but it goes a long way to getting you off the starting blocks.