Advising Entrepreneurial Students

Graduate Start-ups: Challenges and Opportunities

This section briefly describes a number of successful graduate business start-ups. It lists some of the things that went well, and the things that went badly, as well as the eventual outcome. It should give advisers some useful examples to quote, and also be a helpful resource for students thinking of starting a business

There are also a few examples of some really good ideas which couldn't be made into viable businesses.

Start-up challenges:
1. Not enough sales
2. Took time to find the right shop location
3. Problems with cash and staff
4. Almost grew too fast
5. Didn't pay enough attention to the 'back office'

And some that never started:

1. The City Centre Sandwich Shop

John started up a sandwich shop in the business area of a large city.

Went well:

• He created some very attractive sandwiches , which sold at premium prices
• He also branched out into supplying other sandwich outlets (but at reduced margins) to increase income

Went badly:

• Business people only buy sandwiches for a few hours per day, 5 days a week, so sales were less than he had hoped.
• The lease on the shop was very expensive, as it was a good location, so the total overhead costs were too high for the level of trade in the shop.

What happened?

• The sandwich shop closed.
• John has since built a very successful entrepreneurial career in a regional fashion retailer.

2. Imported African Art

Jim travelled in Africa for a while, then set up a shop in the UK, initially selling Zimbabwe statues and other African art pieces.

Went well:

• He visited Zimbabwe once a year to fill a container with wonderful pieces of art at very attractive prices.
• Although a lawyer by training, he found that he really enjoyed running the shop

Went badly:

• The first two UK cities he set up in (both excellent tourist centres) were unsuccessful, mainly because of the exact location of the shop
• He found that not enough people shared his enthusiasm for the African art-work.

What happened?

• The third location (a tourist village in a National Park) has worked really well. His new wife helps him run the shop.
• They have broadened into a whole range of attractive but affordable art objects and work closely with adjacent shops and cafes.

3. A Shopping Centre Cafe

Janet studied mathematics but, much to her parents' annoyance, decided to go into catering. She bought a fairly successful cafe in a good shopping street.

Went well:

• She improved the cafe a lot, and increased its turnover
• She then went into contract catering, using the cafe kitchen

Went badly:

• The cash flow in the first year was very poor, and she needed a lot of support from the bank (her mentor helped a lot in arranging this)
• She found that managing staff was a real headache.

What happened:

• The business continued successfully for some time and then she closed it down to have a family.
  

4. Mobile phones for students

Jerry and a business partner set up selling mobile phones to students through the Internet, when mobile phones were just catching on and becoming affordable.

What went well:

• The demand was tremendous and they did very well
• They were a classic example of a dot-com success

What went badly:

• They were so successful they couldn't manage the business, and were unable to finance the growth

What happened:

• They impressed a large mobile retailer so much that they put money and resources into the business, and eventually took it over.
• Jerry is now a business development manager in a thriving local IT firm

5. A Media Sales business

Mary, and a business partner, set up a media sales business - selling advertising for magazines. They had both worked as sales employees in the industry for a few years.

What went well:

• The business ran well for several years, and the partnership was a success (many aren't)
• They were very successful in taking business from their competitors

What went badly:

• They were very bad at the 'back office' work. The accounts got into a real mess, and took a lot of time and money to sort out.
• They eventually got bored with the business and wanted to move on

What happened:

• The business closed down and they both now have very well paid sales jobs in the advertising/media sector, based on the excellent personal reputations they built up.

6. Some that never got off the ground:

a) Parisian style round advertising structure in the streets of Gateshead: thrown out by City Planning Dept

b) Clever wireless mouse worn on finger and operated by thumb: tooling costs for manufacture too high

c) Innovative way to sell mortgages and loans: the young and inexperienced graduate could not get FSA approval

d) A high quality mobile coffee shop, for up-market events: the cost of fitting out the van was prohibitive

e) A campaigning student UK newspaper: advertising was impossibly difficult to sell, and distribution was a nightmare