Do you long to leave the corporate boardroom and set up on your own? Richard Prime left a FTSE 250 company to co-found fintech business Sonovate. This is his advice on how to move from director to entrepreneur
Rising to the board of directors is a huge achievement and, having reached success at the highest level within a business, it’s not uncommon to start considering what it might be like to start and run your own venture.
The process of consideration will be a long and thoughtful one: to become an entrepreneur is to enter a world of uncertainty, and to face the possibility of failure. Nonetheless, for very many aspiring entrepreneurs, the risk is completely worth it. There’s a great sense of pride in seeing your idea become reality.
If you are thinking about moving on from your director-level position, you may well feel equal parts excited and uneasy. Having left a FTSE 250 business to start my own venture in 2012, I can certainly relate to that – this is not a decision that should be made rashly. Feelings of trepidation are understandable: entrepreneurship demands sacrifice – and it does not automatically assure reward.
But if you’re going to proceed, consider the following as some of the most important steps you’ll need to take…
1 Establish competitive differentiation
To do this, you will need to have more than just some kind of inspirational lightning bolt: you will need to identify a true gap in the market.
In my case, I spent almost two decades working in the recruitment industry, which gave me huge insight into the size and scalability of the contractor market. Incumbent providers hadn’t innovated, and traditional practices hadn’t evolved so I spotted an opportunity for my new business to alleviate the financial and administrative burdens recruitment agencies face when placing contractors.
In pursuing this vision for your business, you’ll need to be committed, and you’ll need to work with committed people. You can’t do everything yourself. Identify some key hires who both share in your long-term vision and are capable of helping you realise it.
2 Lock down business funding
No matter how innovative your business concept is, you’ll struggle to get it off the ground without a mindful approach to money. Always assume that building a business will take much longer than you think and will cost a lot more! If you start with that notion, you can budget accordingly and always ensure you have enough money in the bank to make decisions for the long-term future of your business.
As part of this you’ll need to identify and assess the different funding options available to you, and with this comes several key considerations: should you give up equity in your business to take on an investor? Also, which type of funding is actually best suited to your business?
Whatever path you choose to secure funding, your strategy for attracting investors needs to be led by a focused and competitive business vision – one worth investing in for the long term.
3 Ask for help
Being open to the problems and challenges you will face as an entrepreneur is one thing; asking for help to address them is another – but both are critical to understanding how to build a successful business.
This is especially true if your business is trying to innovate and challenge the norm. Challenges and unexpected situations will arise as a matter of inevitability. In short, the best action you can take to mitigate them is to ask for help; even if you don’t feel like you need it, there’s a good chance you’ll learn something valuable in the process. Take this approach and you’re far more likely to respond positively – and effectively – to setbacks.
4 Prepare for leadership
Your staff will expect certain qualities from you – leadership most of all. As a founder, it’s on you to design the business vision, and to make sure the business adheres to it. Whether your goal is to increase your immediate profits, receive growth funding, or something else entirely, you need to appear consistent – not chaotic.
It’s also vital that you’re able to juggle the interest of multiple stakeholders – from the C-Suite to the ground floor. If there’s some kind of spat between sales and marketing, you’ll need to resolve it. If an investor is getting restless, it’ll be your job to pacify them. In the paraphrased words of Harry S Truman, the buck stops with you.
5 Utilise your industry experience
As a director-turned-entrepreneur, you’re actually at something of an advantage. The current business ecosystem – particularly in areas driven by technology – is skewed towards the young and more inexperienced. Having a long and varied career before starting a new venture will – in most cases – give would-be entrepreneurs a solid grounding in a number of key practices.
Before founding Sonovate, I gained a lot of experience in everything from sales and product development to recruiting and retaining (and sometimes losing) staff, expanding into new markets, launching international offices and everything else in between.
Whatever your background, use the experience you have to your advantage. Going from director to founder is never going to be a simple process. Setbacks and obstacles will come in all shapes and sizes, some of which will be unavoidable – so it’s essential to be prepared. Keeping these principles in mind helped me realise my ambition; if you are looking to make a change, they may prove useful for you, too.
Richard Prime: CV
Role Co-founder and co-CEO of Sonovate, an alternative finance provider for the recruitment industry. Helps recruitment businesses fund and manage their contractors by removing the cashflow and administrative burdens associated with traditional invoice finance.
Previous positions Worked for almost 20 years in the recruitment industry, including as a director at FTSE 250-listed company, SThree, before co-founding Sonovate in 2012.
Start-up experience Grown Sonovate from start-up to an industry leader with a projected turnover of £65m in 2016. Successfully closed a £5m Series A funding round in January 2016, led by Dawn Capital and supported by DN Capital, and raised a further £15m in debt funding from Shawbrook Business Credit.
More guidance on how to move from director to entrepreneur
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