Start-ups are the lifeblood of economies all over the world. Since the financial crisis, small businesses have become the trailblazers dragging the economy back together and propelling it forward ever since.
To keep the lifeblood of the UK economy flowing, we need to help more entrepreneurs to start-up and to turn their ideas into sustainable and scalable businesses that create jobs and wealth.
But start-ups are notoriously volatile, with eight out of ten failing within their first year. So is it wise to place the hopes and dreams of our economy on their shoulders instead of creating a system that limits failure and backs the safe bets instead? Absolutely not. Lucky then that the alternative finance movement is going from strength to strength, helping entrepreneurs to fund businesses that banks are still running a mile from.
That’s where Virgin StartUp sits. You see we have a different view to traditional business funding institutions.
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We believe that failure can sometimes be a good thing. Launching a start-up and failing or finding out you’re not the right person to take the idea forward has some silver linings that can make the whole experience worth the fail. Arguably those who start-up and fail learn more about business in that experience than they would by completing a degree in business studies and getting themselves into student loan debt at the same time.
At Virgin StartUp, we pride ourselves as a company for entrepreneurs by entrepreneurs. One of our Investment Managers, Nick Coates, founded Federation Coffee, a coffee shop in Brixton, before joining Virgin StartUp. Nick will readily tell you that his business was built on a foundation littered with failures. He fitted out his first shop in the wrong order, delaying the launch by months. He bought too much coffee and didn’t manage to roast it all – costing the business thousands. Luckily Nick learnt from these failures and built Federation Coffee into one of London’s most loved coffee shops and was able to exit it successfully. It was because of his first hand insight of running a start-up which makes him great at what he does now – advising other people on their business ideas and making sound investment judgements.
"If you’re in the early stages of starting a business, especially if you’re doing it for the first time, then you probably have no idea what you’re doing - but that’s not a bad thing," says Nick. "I actually think embracing the fact that you’re completely clueless is the key to your business eventually becoming successful, and having continued success. Because that will mean you’ll ask more questions and have the opportunity to learn from small mistakes."
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On a bigger scale this ability to celebrate and learn from failure has been perfected at Virgin through 30 years history of starting over 400 businesses. The history scattered with some of spectacular failures such as the frequently quoted Virgin Cola, Virgin Brides, Virgin Vodka, Virgin Vie (cosmetics company in case you have never heard of it) and Virgin Cars to name but a few. Yes these failures were costly both on a human and financial levels, but without them, Virgin would not be where it is today with one of the most respected brands in the world. These failures have humanized Virgin as a relatable brand, made Virgin stronger by providing unique insight and learning opportunities that would be unobtainable through a conventional business journey.
That’s why Sir Richard Branson still says, "I consider our cola venture to be one of the biggest mistake we ever made – but I still wouldn’t change a thing."
So rather than to always play it safe, let 2016 be the year where we celebrate failure, encourage entrepreneurs to be bold and go for their dreams rather than live in regret of never trying due to fear of failure. As Henry Ford says "failure is the opportunity to begin again more intelligently," as long as you try intelligently, proactively anticipate and manage the potential blind spots, do all you can to limit the impact of failure and learn from it, success is not beyond impossible!