There are hundreds of start-up success stories of young, hungry entrepreneurs who decide they’ve toiled enough in their stable 9-5 jobs before cutting the umbilical cord and going on to build cutting-edge businesses.
But before you decide to chase the dream and follow suit without the safety net of a stable salary, there are many things to consider. The key point is to look before you leap.
John O’Dea, manager of Enterprise Ireland’s high potential start-ups division, says the first piece of advice he gives budding entrepreneurs is “not to get too wedded to the idea”.
“You get a lot of people who have what seems [to them] like a brilliant idea without really having kicked the tyres of the proposition,” he says. “You need to really carefully examine it before you give up the day job.”
Isme chief executive Mark Fielding also cautions against the hell-for-leather approach and says “not to quit to your day job until you feel you have real revenue from your start-up”.
“If you’re lucky enough to be in a job, don’t quit,” he says. “A true entrepreneur will know when the time is right to jump ship. One of the things I have found is that if you’re desperate to get out of an existing role, you might just be lurching into entrepreneurship, and you might find it even more stressful.
“The best people I find are those who feel they are competent but unsatisfied or bored in their current job. They make better entrepreneurs than people who feel they are being overworked, underappreciated and overstressed.”
In deciding whether entrepreneurship is for you, Fielding says it is important to assess whether you can marry creativity and discipline. “Have you got the stamina? Many people are creative and come up with great ideas, but do they actually have the discipline to get up in the morning when they are working for themselves, or stay later at night?”
The challenge, he says, is not just to ascertain whether there is a gap in the market, but whether it will actually make money for you.
“You have to look at your competitors. Market research is so important to understand the products and services that are in demand. Then you get down to the dirty work of preparing business plans. Not alone are you doing the sums and making sure they add up, but the first thing I say to entrepreneurs when they come in is to get rid of the rose-tinted glasses. Show me the costs and then double them. People forget costs or don’t take account of the ‘what ifs’. Everybody says ‘this will be up and running in six months or a year’. You could nearly double the timeframe as well. Making sure you have enough money is key. It’s cash flow as distinct from profit. That’s what keeps you going in the first year and a half to two years. If you underestimate the costs, you will run out of money.”
O’Dea says most people who come to Enterprise Ireland say they couldn’t have done it without the support of a partner who works, draws a salary, and pays the mortgage.
“Usually money comes from friends, family and personal savings,” he says. “You have to be careful where you’re taking your investment from because you’ll still be living with your family for the rest of your life if it doesn’t work out – and many don’t. Entrepreneurs are risk-takers and optimists by nature, but the reality is that if you are an optimist and you don’t take into account what it’s going to cost, you’ll end up in tears.”
Another key consideration is choosing your business partners and the team you will build around you. O’Dea says Enterprise Ireland will “almost never” invest in a one-man business. “No matter how brilliant you are, the question is: have you got a co-founder?” he says. “A start-up can never afford to pay for the right kind of people. You have to pay them in equity.
“Pick your co-founder with care. When we see projects that go off the rails, very often it’s because co-founders don’t pull together. That’s poisonous to any start-up. “You need a team that’s balanced. Having a sales guy, a tech guy, someone who understands the customer experience, and this hipster, hacker, hustler type guy – and pulling all that together.”
Fielding also highlights the importance of a “network of support” that includes not just investors but “friends, family, and people in business who will help you”.
O’Dea also advocates this approach over paying big fees for consultants and advice. “The critical thing is getting someone who has done it before and is willing to advise you,” he says. “The problem with paying for advice is you’re never quite sure if it’s really the best. You want someone who is doing it for you rather than for the money to some degree. See what you can get for free.”
The ever-expanding world of the internet is another part of the puzzle that needs to fit. “So many small businesses are just ignoring the online world at the moment, at their peril,” says Fielding. “It makes it much easier to set up your business, to grow your business, and to almost disguise your business as being bigger that it is. You could be working from your bedroom and advertising on the internet like you’re a multinational.”
The “overarching” concern is how you feel about risk, says Fielding. “If you’re not able to analyse and take the risk, then you’ll end up a basket case. You’ll either make a bags of the business or end up a quivering idiot.”
O'Dea also encourages prospective entrepreneurs to look not just at their own attitude to risk, but also that of their spouse. "Once the die is cast and you have given up the day job, it is difficult to go back." Nikki Lannen: 'It's all about risk analysis. I got a lot of advice from people with gaming experience' Nikki Lannen (35) from Galway was a senior member of Facebook's gaming team in Europe, the Middle East and Africa, before she left to set up her own business in 2014.
“I had a very good package,” she says. “I was thinking about it for a long time. It was a very difficult decision. It’s very hard to take such a big risk when you’re in a very secure job with obvious perks and a good salary.
“It’s all about risk analysis. I’m quite well connected in terms of people with gaming experience from my role at Facebook, so I got a lot of advice from them.”
She researched the market heavily and went about building a team that could execute her idea efficiently. Then she took the leap. “At the beginning, you do need to adapt,” she says. “I had saved a little bit to get me through the first bit without a salary but you need to adapt to a smaller wage, and there area lots of perks like free food and healthcare that are gone.”
Her game development studio is called WarDucks. She invested €200,000 of her own money, which was matched by Enterprise Ireland, and added €250,000 more from private investors.
Her key product is a “hidden objects game” with a narrative. “People are really engaged with hidden objects games on Facebook,” she says. “The genre was growing dramatically and there weren’t a huge number of them being produced to a high standard, so there was a gap .”
She says the business has about 100,000 active monthly users on Facebook. Most of its customers are in the US and the main demography is women over 35.
It employs three developers and an artist in Dublin. Lannen is looking to double the size of the team over the next two years.
Nikki Lannen ‘It’s all about risk analysis. I got a lot of advice from people with gaming experience’
