For many, it means putting their lives on hold while they try to get started and generate a profit. It means asking the bank for a loan, having completed a business plan. It means using savings or a redundancy cheque to plough into a new entity that is fraught with danger. It means working with a new set of people like lawyers, accountants and consultants who ought to guide you through the troubles coming your way. It means going on holiday (if you can), while sitting on your sun lounger worrying about your business.
I’ve been there many times. It means diving into a big wide ocean where anything can happen even if you have completed a SWOT (strengths, weaknesses, opportunities, and threats) analysis and keep a risk register. I could go on for pages and pages.
There has never been so such help for anyone who wants to start a new venture. There are local business workshops, business accelerators, incubators, scale programmes and online “how to sites” such as inc.com. Add in the mountain of books that one can buy and there is no shortage of nous that can be built up in a budding entrepreneur’s head.
One could take six months and read, research and study just to get match fit and prepared to compete before even starting up. But having completed all this, and even got off to a good start, there is one element that will be needed to keep the business well-oiled and help it grow – money. Or to be more specific, other people’s money.
One of the key ingredients needed to get to the top of the start-up pile is finance and funding. One only needs to look at arguably one of Scotland’s most successful ventures – BrewDog – to assess how attracting cash has worked so well. Scotland has terrific start-up support with the likes of the Edge competition and angel networks like Archangels. But creating a bank of investors willing to go big into start-ups is about to get a whole lot harder when Brexit and Indyref2 come along.
The impending Brexit decisions coming our way will impact Scottish start-ups – make no mistake about it. Firstly, London will consolidate around London. The top start-ups raising big money just now are London-based. They will stay that way. Nested, for example, raised a whopping €135 million (£119m) in November. Moonbug has just raised a €132m Series A round.
Scotland’s start-ups struggle to attract such big investments. Unfortunately, it’s just the nature of the beast up North. But Scotland will be the last thing on big investors’ minds once the IndyRef2 button is pressed. The uncertainty unleashed by Brexit is still causing violent swings in investors’ portfolios, both private and professional. But they are placing their bets within the M25. It feels like a ring of confidence for them. Why would they contemplate sticking a few million into a new start-up in Scotland when there will be even more political and economic turmoil with a new independence referendum?
There you have it folks, it looks gloomy for a sustained period if you’re raising cash in Scotland. But, it presents an opportunity with some decision-making for local authorities, the Scottish Government and those fighting in the arena called “start-up”. Now is the time to develop a plan.
Scotland is never short of those willing to start a business. But it is about to get tougher. San Francisco, Boston, Singapore and New York do not have independence referendums coming swiftly after Brexit mania. These political battles create tensions for business at all levels, none more so than at the bottom of the pile. There is a saying in the world of start-ups – never run a marathon with a stone in your shoe – meaning start with as little friction as you can. IndyRef2 will present a rock coupled to a start-up’s leg rather than a stone. Politicians beware…
Jim Duffy MBE, Create Special.