Fledgling entrepreneurs Anna Richey and Alla Chapples are undaunted by the
recession. They see a strong opportunity for their start-up firm and plan to
continue expanding despite the economic gloom.
Their business, Two Chicks, which sells egg whites in a carton, reaches
consumers through big food retailers such as Ocado, Waitrose and Sainsbury’s
and they do not expect to be badly affected by the downturn.
“Although ours is a premium product, food is one of the last things people cut
back on in a downturn,” said Chapples. “Egg whites are really popular in
America and we think there will be a strong demand for them here.”
The duo have also proved that money is still available for start-ups. They are
in the final stages of negotiating six-figure funding from private investors
for more in-store marketing and leafleting.
A recession might seem like the worst time to start a business but for those
with a strong idea — and the right business plan — it can work to their
advantage.
Robert Matthams pressed ahead with the launch of his online freight service,
called Shiply, in the summer despite warnings from friends about launching
at a time when the economy was going into recession.
“People did ask me whether I thought this was the right time to do this but I
think it was a great time to start,” said Matthams.
“The timing has almost worked to our advantage. It’s a business that helps
hauliers cope with slower business and record diesel prices and which helps
to deliver goods for up to 75% less than traditional services. It’s also
good for the environment because it cuts down on overall miles travelled.”
Anyone looking for a good business to launch in a downturn should consider
ones that save customers money, said Matthams. “It’s a great time for
businesses that can do that. Look at Aldi.
“I got the idea for Shiply when I took delivery of a snooker table when I was
a student in Manchester. The driver said he was going back to London with an
empty truck, which amazed me. I started doing some research and found that
25% of lorries on the road travelled empty. I thought I could help hauliers
earn extra money by helping them fill their vehicles.”
His hunch has so far proved a good one. Shiply has signed up 5,000 customers
and 3,000 hauliers so far and has arranged the delivery of everything from
small parcels right up to a super-yacht, said Matthams. “We are ahead of the
business plan. We did not expect it to take off this quickly and we are
going to expand into regular contract work this month.”
Starting a business need not be expensive, either. Matthams estimated he
initially invested £5,000-£10,000 to get the business going, although he
continues to invest in the website and to improve the technology it uses.
It can also be cheaper to start up in a recession, he said. “It pays to look
for the advantages a recession can give you — being able to negotiate
cheaper things like advertising, for example. You can get some very good
deals.”
Vesna Maynard, director of Didcot-based Maynard & Boldis, hopes that a
strongly differentiated product and a new approach to selling will ensure
the success of her start-up, which sells environmentally friendly cleaning
equipment. “Our machines are very good for getting rid of dust mites, which
helps people with allergies or asthma-related disorders.
“On the Continent these machines are sold through recommendations but we think
we can go much further. They are ideal for hospitals and hotels. They are
energy-efficient and they don’t use chemicals, just water. We’re just
starting to get it off the ground. We’ve recruited and trained four sales
staff and we’ve sold our first machines to households and to a local school.”
The main challenge for Maynard was funding. “It was very difficult to find
finance. In the end we had to use our credit cards and a personal loan.
Money is tight. In times like these you have to be really smart about how
you spend your money.”
Managing your cash is even more important in a recession, said Nick James,
founder of consultancy Fresh Business Thinking. “Make sure you have enough
cash because people are going to take longer to pay you. Don’t let late
payments go past 28 days.”
Some of the best opportunities to grow your business will come online, he
added.
“The most important thing to do is make sure you have an online strategy. The
opportunities for many start-ups will come in exploiting small niches
online. Consumers spent £100m online on Christmas day — that’s incredible.
Small firms can take a big part of that and punch well above their weight if
they know how to compete online.”
Despite the many difficulties of launching during a recession it can still
provide great opportunities, and those who have faith in their own judgment
should not be put off, said Anna Richey of Two Chicks. “Everyone said we had
no background in food and no knowledge about business. Everyone tried to put
us off, but we carried on because we really believed in the product.”
