Martin Webb is best known for holding the hands of the hapless budding entrepreneurs featured in C4’s hit series Risking It All. More often than not, that involves steering the over-ambitious and hopelessly under-prepared back-on-track when what seemed like a good idea is teetering on the verge of collapse.
Webb’s advice is particularly relevant because he’s been there – and come through it. After suffering several painful failures, in 1995 Webb opened a pub in his hometown Brighton and eventually grew £25m turnover retail group, C-Side, comprising of 30 bars, nightclubs, gyms and a radio station. In 2001 he sold it for £15m. He’s now doing the same with Medicine Group and has a number of investments in start-up businesses.
Risking It All, insists Webb, is about pointing out the mistakes and lessons he learnt along the way and prompting the growing numbers that see running their own business as a glamorous alternative lifestyle to think what it really involves.
“Being an entrepreneur is the new rock’n’roll. It’s a bit of a vogue at the moment. In a way that’s misleading as it’s still as risky as it’s ever been,” says Webb.
“Having said that, we live in a society where people value being in control of their lives and starting a business is the single one thing anyone can do to achieve that. It can also be a very good way of making money and immensely satisfying.”
For Webb, it’s about understanding the downsides. “There’s no salary and no safety net. If things don’t work out or you get ill there’s a whole lot of negatives.” He finds the notion of ‘escaping the rat race’ equally misleading:
”People always say ‘I’m sick of all these long hours’, well they should never see starting a business as a route to working less.”
First hand experience
So how do you prepare yourself for the reality? Webb's answer is resounding: get some experience.
“Most people fail because they don’t know how to run that type of business well enough,” explains Webb. “As a typical example, someone thinks they can run a restaurant having not worked in one because they’ve eaten in a lot.
“Even if you have to wait on tables in Starbucks, go and do it. Get hands-on experience with a successful operator, learn how their systems work, how they manage stock, how they handle staff and money.”
Basic business knowledge
Webb insists a degree of basic business knowledge is also essential. He studied business at Brighton University and while he doesn’t advocate such a qualification as a prerequisite, the ability to monitor your finances is.
“You have to have an understanding of profit and loss, margins, break even, how to add and subtract VAT; the basic arithmetic of business.”
Risking It All also provides a valuable insight into the point where flaws in a business plan are exposed. Webb says there’s one continually reoccurring issue: a lack of cash.
“Businesses are often under-funded,” he says. “A month in and it suddenly dawns on people this is an awfully lot bigger than they actually thought and they’re already massively over budget. Building in a contingency isn’t just an accounts thing; it’s a real buffer you’ll almost certainly need.”
Webb accepts, however, that raising finance isn’t easy. “You can have the best idea in the world but unless you’ve got security the banks won’t give you more than a couple of thousand.”
While admitting saving up or convincing friends and family to invest is the most sensible way to fund a business, Webb says you shouldn’t be afraid of debt – even if it's not the sort of advice they teach you at business school.
“When I started I got loads of money on credit cards. It’s never recommended but as a pragmatic practical step then why not? If you think you’ll be able to pay it back quickly, then do it.”
Three step guide to success
The key for Webb is ensuring it’s a sound idea in the first place. The first of three pieces of advice he offers, is to stay in your job while you test the concept. “Start on a small scale without losing your income as you’ll need that money during the first few months,” he says.
Secondly, Webb says you’ll need to surround yourself with support. “It’ll be one of the most challenging periods of your life. Make sure your partner, family and friends are onside.”
Finally, be critical of your own idea. “If there’s no one doing the idea there’s normally a reason,” he warns. “Rip it apart. If people say it’s not a good idea, listen. Don’t necessarily believe what they say, but often there are ounces of truth.”
Don’t be afraid
Despite all Webb’s proffering of caution, he’s passionate that providing you really believe in an idea and you’ve thoroughly explored its viability, then you should give it your all – and that includes being undeterred by the threat, or even reality, of failure.
“I’ve experienced failure, but hopefully out of disaster comes experience,” says Webb. “When people do go bust they shouldn’t see it as the end of their entrepreneurial career. Failure is emotionally draining; people feel humiliated and often it stops them ever doing it again, but I’d always encourage them to.”