Why businesses fail: Being unattractive to investors

Welcome to Why businesses fail, the second of five blogs that delves into the reasons for businesses failing and offering solutions. This series was launched by Lucy Robinson of Birkbeck Futures and Ghazala Zia from Windsor Swan. In this blog, they share some practical tips to get investors to demonstrate traction in your business and attract potential investors.

Lucy Robinson is the Employability Consultant for Business and Enterprise at Birkbeck Futures. She runs the Pioneer programme for aspiring and early-stage entrepreneurs and hosts an enterprise series on the #FuturesPodcast.

Ghazala Zia is a Venture Capital Advisor at Windsor Swan, a boutique London business advisory firm. She has an extensive legal background and currently specialises in advising start-ups of all stages on funding, strategy and business analysis.

Being unattractive to investors is a primary reason why some start-ups fail, and there’s a few pitfalls to avoid here. One big one is not showing traction.

Having a strong and evidenced market need for your product or service is the best way to demonstrate traction. By traction, we don’t mean a few thousand likes or free users – that’s not enough for an investor. It needs to be clear that this engagement is converting into paying customers, which is a trackable and easily identifiable metric. Engagement without custom isn’t traction or validation of your product. It could be a sign that you’ve got great marketing or that you’ve got a particularly active customer base, but if they’re not actually buying your product it suggests they don’t really need it.

One metric you should always know as part of your financial model is how many customers you need to stay viable. Before you start pouring hours into creating content, or spending time and money adding new features to your product, ask yourself: “What value am I adding?”. If the effort, energy and resources you use won’t actually convert to more sales, you should consider if it’s really necessary.

Investors vary with the level of traction they’d like to see, and different types of investors look for different amounts. For example, if you’re an early-stage start-up you’re likely looking at individual investors like Angels. Angels want to get involved at an early stage and take a punt on your business, if they see something in you. At a later stage, when you’re in revenue, you might use Seed Investors. Seed Investors get involved when you can demonstrate more growth that they want to get on board with. Generally speaking, investors want to make ten times return on their investment. This means you need to demonstrate traction which suggests they’ll be able to achieve this by investing in you.

Further information:

 

 

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Back to normal? The government is underestimating the scale of change for workers.

As the UK government looks for a path out of lockdown, Professor Almuth McDowall considers the psychological impact of transitioning to a new normal.

Picture of people waiting for the tube in London

On Sunday afternoon, we were on our way back from a socially distanced walk with three moderately enthusiastic teenagers when the phone rang. BBC Radio London asked if I was happy to discuss the Transport Secretary’s announcement that the government was considering a phased approach to businesses reopening their doors. The suggestion is to put a number of safety measures in place to safeguard individuals from getting infected, but also minimise pressures on transport and infrastructure.

For employers, the key propositions are to minimise the number of workers using any equipment, to stagger work start and finish times and to maximise home working. The idea is also to encourage people to engage in more active commuting, including cycling and walking.

Many organisations have of course been open and operational throughout the crisis, including our now much appreciated local shops, which have introduced social distancing measures such as limiting numbers allowed in at a time and protective screens.

But will the transition back to the workplace be as easy as some might suggest while extra precautionary measures are implemented?

When quizzed on the radio, I took a rather cautious and even cynical view. Quite frankly, I do not think that the implications of what will be a gigantic organisational change exercise have been properly thought through.

First, let’s think about infrastructure constraints. Many returning workers have children who, we hope, will return to normal nursery and/or school hours sometime soon. This would make it difficult for all workers to shift start and finish times, as there will be practical issues such as school pick up times to work around. Transport will also be a challenge for this reason, given that peak demand is also due to children travelling to and from school. 

Furthermore, not everyone lives in cycling or walking distance from their place of work, quite the contrary. Surely, we also must avoid a scenario where more people are taking to their cars and driving alone, as we are already witnessing in our neighbourhood, to avoid public transport. 

Let’s also think about who will and needs to return to work. There will be workers who are scared about returning. There are also people who will not be able to return, at least not for the foreseeable future, because they are vulnerable, or someone in their family is. 

On the other hand, there are people who are desperate to return, because they currently live and work in crammed conditions, or because they live in areas with insufficient connectivity.  

Each business has to start with a detailed analysis of how a phased return to a mix of onsite and virtual working will play out in practice and accommodate individual needs and preferences. This is not a quick solution, but takes time, skill and effort. 

Research tells us that to make virtual working effective, particularly during times of crisis and uncertainty, managers and leaders need to take an individual approach to help people feel secure and build up trust and effective ways of working. Again, this is no quick fix. 

Some organisations are getting this intuitively right, others not exactly. One of the keys is a combination of communication and clarification of expectations and roles. This will become much harder as businesses are required to adjust and manage a staged transition to open their doors again. If we are not careful, businesses will spend all their energies on managing logistics, rather than concentrating on the core business to keep their customers happy and deliver a good service.

The literature on organisational change firmly agrees on one issue. Change is hard and stressful, even where it is for the better. Humans are hardwired not to like it. This is why times are tough at the moment. Acknowledging this, and our own vulnerability is an important step to manage sustainable change. My fear is that the UK government is considering too complex a range of practical measures without due acknowledgement of the physiological impact on people. It’s time for a rethink.

Further Information: 

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Why businesses fail: Identifying market need

Welcome to Why businesses fail, five blogs that delve into the reasons why businesses fail and offering solutions. This series was launched by Lucy Robinson of Birkbeck Futures and Ghazala Zia from Windsor Swan.

Lucy Robinson is the Employability Consultant for Business and Enterprise at Birkbeck Futures. She runs the Pioneer programme for aspiring and early-stage entrepreneurs and hosts an enterprise series on the #FuturesPodcast.

Ghazala Zia is a Venture Capital Advisor at Windsor Swan, a boutique London business advisory firm. She has an extensive legal background and currently specialises in advising start-ups of all stages on funding, strategy and business analysis.

According to CB Insights in their 2019 update on a post-mortem of over 300 failed start-ups, “No Market Need” is the most common and significant reason for young business failure. A start-up can have the best team and a truly great product, but it can still fail if no customers need it.

The key mistake here is entrepreneurs going straight into their solution, and basing that solution on a perceived problem rooted in their own assumptions. In short, not properly identifying the problem they’re actually solving. Basing a business idea on untested and often biased assumptions is the quickest way for a product to fail.

Without a real problem to solve, the product won’t be offering a solution that customers want to buy. Without customers, sales won’t come. Without sales, a product will have no traction. Finally, without traction, investors won’t touch the business with a 10-foot pole.

Luckily, this is a failure that can be avoided by putting in the right work at an early stage. The three most important things an entrepreneur can do at the ideation stage of their business? Test, test, and test again!

A good way to start testing is through surveys, from which you can get an idea of your intended audience’s perceptions and priorities. Following this, you can create a beta version or prototype – this is your MVP (Minimum Viable Product). With this, start with just one or two features so you know exactly what you’re measuring a reaction to. Once you’ve got your MVP, consider offering the product or service for free to some users to gather feedback, data and insights.

Always be focusing on moving towards paid users, but don’t discount the value of free users for the valuable insights you can gain. Once you’ve got the data you need on your customer-base, it should be clear what problem your business is solving. Free users give you insight, paid users give you traction.

In short: don’t assume the way you experience a problem is the same as the way everyone experiences it. Test it objectively.

 

This is the first in the Why Businesses Fail series. Come back next week to find out how to appeal to investors.

Further information:

 

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How Birkbeck has helped me achieve three of my biggest dreams

Faranak Pourzamanie attended the recent Certificate Holder Celebration, after completing a Certificate of Higher Education in Management. Faranak is now studying BSc Management with Accountancy and Finance at Birkbeck, and explains how Birkbeck has changed her life.

Faranak Pourzamanie

As a completely new student to the UK’s education system, Birkbeck has given me the great opportunity of achieving not one, but in fact three, of my biggest dreams.

Firstly, I was able to enter university through Birkbeck’s Certificate of Higher Education in Management. I came to the UK with my family and had no qualifications, and I was reluctant to spend extra years at college to get into university. After two frustrating years of applying to different universities, my friend introduced me to Birkbeck and told me to apply for their Certificate of Higher Education in Management. I was hopeless, but I didn’t give up and applied. I was elated when Birkbeck accepted my application and gave me the opportunity to “jump” to higher education. Even though academic study wasn’t that easy, I had great support from the College which helped me achieve my Certificate of Higher Education.

Secondly, another dream of mine was to open my own business. Studying at Birkbeck gave me the opportunity to partake in the Pioneer programme, which introduced me to resources and people who have started their entrepreneurial journey. Listening to a number of guest speakers at Birkbeck events also really inspired me to set up my business. The Pioneer programme really helped me shape my business idea and make it happen. I have now started my online business selling saffron, and I’m applying the knowledge I have from the programme as well as getting help and advice from people I met through the programme.

Lastly, the final dream was getting a job while studying at university. Networking with one of the guest speakers after a lecture allowed me to know more about working in the corporate world. This individual has trusted me by putting me in front of the right people, which has opened the doors to the beginning of my career.

In conclusion, one small step to Birkbeck has given me so much in such a short time. I’m so happy that I had the College’s help in my life journey so far. Soon I will be graduating from my undergraduate degree at Birkbeck, BSc Management with Accountancy and Finance, and I can’t wait to see what the future holds.

Certificate Holder Celebration

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Banking by day, Birkbeck by night

Mina Yau studied the BSc Economics with Business at Birkbeck while working full-time at the Bank of England.

I applied for the Bank of England school leaver programme after completing my A-levels in Economics, Accounts and History. After a successful application, I was able to start full time at the Bank of England. This meant I chose to work instead of pursuing further education, however I did not want to regret this decision and miss out on university. As such, I decided to take on further studies after my one-year probation at the Bank. It was difficult to find a university where I could continue working. However, Birkbeck gave me the opportunity to pursue further education whilst working full-time by offering evening classes (and an extra bonus of part-time studying across 4 years).

The Economics, Maths and Statistics classes at Birkbeck really helped develop my career in the bank as they taught me the necessarily skills for my day to day role. Whether it was better understanding how the economy works, the maths behind the metrics or even data programming – Birkbeck really helped widen my knowledge and skill set.

At the Bank of England, I started as a school leaver in the Data and Statistics Division, where I would collect data from banks and building societies via our internal systems and process this to specialist teams. After, I moved to the Financial Stability, Strategy and Risk directorate, working in the Macrofinancial Risks Division in the Households team. Here I was able to deep dive into risk metrics relating to Households and built a very strong understanding on housing data. I then moved to the bank’s Resilience Division where I currently work; this is similar to my last role but more focused on risks and the resilience directly to banks.

Diligence is fundamental for balancing work and study commitments. Often, late nights are required at work, which meant I was unable to attend some lectures. Luckily Birkbeck does have facilities such as room recordings which means I am able to catch up with classes over the weekend. Thankfully, the Bank of England is also filled with talented colleagues who are able to explain and help with any queries on the classes or homework which makes studying a lot easier.

If you’re in doubt on whether or not to apply to Birkbeck due to work commitments, I highly recommend just going for it. It’s an excellent learning opportunity and gives high rewards. I can proudly say that not only after four years at Birkbeck (part-time study) I have completed my degree, I also have five years’ experience at the Bank of England to go with it.

Finally, I’d like to mention Tony Humm, a fantastic lecturer for Maths for Economists – it’s a very well taught class and definitely my favourite module! If you have a choice, I highly recommend taking this class!

Further Information:

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What is intrapreneurship and how can it help your career?

The life of an entrepreneur isn’t for everyone, but you can still reap the career benefits by embracing an enterprising spirit in the workplace.

Brainstorming, Business, Cheerful, Clap Hands

I don’t know about you, but a pretty clear picture springs to mind when I hear the word entrepreneur: suited and booted, firm handshake, these are the people who can talk to anyone, are interested in everything and have a remarkably persuasive knack of bringing people on board with their ideas.

While the risk-averse among us may want to steer clear of the career path of an entrepreneur, you might be surprised at how much there is to gain from embracing an entrepreneurial spirit from within an organisation.

That’s where intrapreneurs come in.

What is intrapreneurship?

Intrapreneurship involves developing the skills and mindset of an entrepreneur, but using these to benefit the company you currently work in, rather than starting up your own business.

Intrapreneurs are recognisable in organisations as the people who are confident, question how things are done and are willing to try new approaches in search of better outcomes.

What’s in it for you?

Adopting an enterprising attitude in the workplace might sound like a lot of hard work, but it’s a smart career move. Putting forward suggestions and championing new ideas allows you to put more of your own personality and interest into your role, making it ultimately more satisfying. We also know that increased autonomy at work is one of the keys to staying motivated.

Entrepreneurship develops skills that are transferable in any workplace, such as emotional intelligence, innovative thinking and leadership. Plus, any suggestions that you make and work on can be used as concrete examples of your achievements when you’re looking for your next opportunity.

What’s in it for your employer?

Although the concept of intrapreneurship has been around since the 70s, it’s becoming increasingly relevant in today’s world. Creative thinking, emotional intelligence and the ability to embrace and adapt to change, all key skills of an entrepreneur, are becoming essential in the modern workplace and are where humans differentiate themselves from artificial intelligence.

Employers value team members who are proactive, resilient and who can offer creative solutions to the challenges their business is facing.

Enterprise at Birkbeck

At Birkbeck, there are many ways to get involved with enterprise to suit any level of ability and time commitment.

  • Pioneer

Pioneer is a fantastic way to launch your enterprise journey, and applications for this year’s programme are now open. Birkbeck’s flagship enterprise course is open to Birkbeck students and recent graduates from any discipline who are looking to develop their entrepreneurial skills.

  • Workshops and Events

Birkbeck Futures host events throughout the year focusing on a different aspect of enterprise.

  • Courses in Enterprise

Birkbeck’s School of Business, Economics and Informatics has a strong reputation for research excellence and innovation and offers a range of programmes where students can prepare themselves for the modern workplace.

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The Ultimate Guide to Networking

Love it or hate it, when 85% of jobs are filled via networking, you can’t afford not to get involved. Lucy Robinson from Birkbeck’s Careers Service explains how to make networking work for you.

Play Stone, Network, Networked, Interactive, Together

If the idea of networking has you running for the door faster than you can say “So what do you do?”, you’re not alone. Many people with career ambition shy away from networking for fear of appearing manipulative, exploiting friendships for personal gain, or because they don’t know the rules of this odd social game.

The truth is, we unwittingly network all the time in our day to day lives. If you enjoy meeting with and learning from people in your university, workplace or industry, you’re already an experienced networker. Here’s how to make the most out of networking to help you achieve your career goals.

Do your homework

While networking is a far cry from a formal job interview, doing a little prep beforehand will make it worth your time. If you’re attending a formal networking event, research the people or organisations that will be there and plan who you want to speak to. Think of a few questions you might like to ask, so you can get the most out of your time when you’re there.

Plan your entry

Often, the hardest part of networking is finding a way into discussions. Prepare a few low-risk conversation starters that you’ll feel comfortable using on the night. Something as simple as “What brings you to this event?” or even “May I join your conversation?” is a great way into a discussion. People come to networking events to get to know others, so it’s highly unlikely that you’ll be rebuffed.

Understand networking etiquette

There’s no single correct way to network, but there are a few ways it can go very badly wrong. Fortunately, once you know the pitfalls, they’re easy to avoid.

While it’s important to be open and friendly, don’t disclose or expect personal information from contacts you’ve just met. Similarly, avoid controversial topics that might cause disagreements.

Networking won’t change your career prospects overnight, so avoid handing out CVs or expecting immediate results – you never know when a contact you make will come in handy later down the line.

Practise your story

“So, tell me about yourself?” It’s a simple question, but one that can throw you completely if you’re caught off guard. Take some time to think about what makes you unique – what events and experiences have shaped you?  What challenges have you faced and where are you heading now? Telling people about yourself in story format means they’re more likely to remember you as well.

Listen as much as you talk

If the idea of networking is way beyond your comfort zone, remember that it isn’t just about personal gain – it’s also an opportunity for you to see how you can help others professionally. Really taking the time to listen to people isn’t just polite, it will give you a better understanding of their role and industry and help you identify opportunities to help others.

Create a LinkedIn profile

LinkedIn is THE social media platform for building and maintaining professional connections. Your profile is an online version of your personal story that will help employers during the recruitment process. LinkedIn is also a great tool to follow up on any in-person connections and make sure you don’t lose touch. Make the most of it by joining relevant discussion groups for your industry or career interests.

Birkbeck Futures offers careers support, advice and guidance to students, researchers and graduates. Drop in to their Student Central office any weekday afternoon – no appointment necessary.

Further Information:

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Life in London as an international student

We catch up with Yvette Shumbusho, an MSc Marketing Communications student from Rwanda, who in a December blog post talked about settling in London as an international student. As the academic year draws to a close Yvette reflects on what she enjoys most about living in the capital.

London has been home for the past ten months, and I have easily integrated into the diverse culture. This fast-paced, metropolitan city lives up to the hype for many reasons, its culture, food and entertainment, to name a few

The diversity found in London puts it at an advantage compared to many cities in the world. There are a number of food markets that I have been able to visit such as Maltby Street Market and more in various parts of London. I have eaten some of the best meals in these places, freshly made and satisfying overall.

You don’t have to worry about gaining a few pounds because there are so many gyms around the city – there are three different gyms within a radius of 0.3 miles of where I reside! This is surely motivation to keep fit but even if you’re not fond of gyms and exercise classes, walking around alone can help you get in a quick workout. I walk almost everywhere and now that it’s nice and warm (on some days), I walk a lot more than I normally would. I have come to realise that Londoners like to power walk everywhere.

Between juggling school assignments and regular everyday activities, it is a real challenge to get time off and explore, but I have managed to visit a number of places including the London Aquarium. I was a few inches away from a family of sharks, which was exciting as I had never been so close to them. I’ve also visited a number of parks, some unintentionally as I strolled to school or back home, which got me thinking how beautiful it is that London has so many green spaces; it makes walking and general living that much better.

Before I complete my course, there is still a number of places I need to visit within the city and even outside of London but all in all; my experience has been one to remember. I will surely miss this place.

Further information: 

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Building an (Inter)Disciplinary Career

Lucy Tallentire from the School of Business, Economics and Informatics explores the challenges and opportunities in interdisciplinary studies, raised in a recent seminar from the TRIGGER Project (Transforming Institutions by Gendering Contents and Gaining Equality in Research). 

Gender is pertinent to many disciplines, from literary theory to anthropology, film studies to linguistics, and sociology to geography. However, these disciplines sometimes differ in their approaches to how and why gender is studied. So what are the challenges in a field of study that spans several disciplines? And how can scholars make the most of their interdisciplinary roots?

These were just some of the questions considered at a recent event on negotiating careers as a gender studies scholar within a mainstream discipline. In her welcome address, Professor Helen Lawton Smith, who led Birkbeck’s participation in the TRIGGER Project, said: “Over its four-year lifespan the objectives of the TRIGGER project became more than just to support women in Higher Education, but to champion equality and what Birkbeck can do to support diversity.” Organised collaboratively by the Birkbeck Gender Sexuality (BiGS) research group and the Birkbeck TRIGGER project, this event is the first in a series of seminars that will be the TRIGGER project’s legacy, supporting PhD students, early career researchers and aspiring professors.

The seminar took the form of a conversation between Dr Kate Maclean, Director of BiGS, and Dr Gabriela Alvarez Minte, who recently completed her PhD at Birkbeck after many years of working in women’s rights at the United Nations Development Fund for Women (UNIFEM). As a feminist geographer who started her academic career with a PhD in Women’s Studies, Kate reflected on her unique experience of completing her doctorate and moving straight into a career in the “mainstream” Department of Geography:

“It is widely acknowledged that gender, queer, and feminist theory is some of the most intellectually challenging theory across the social sciences and humanities. However you may still face challenges as a gender studies scholar – it is not as prevalent an attitude now as it used to be, but intra-departmental dynamics can be difficult!  And it can be difficult to find a network of people to develop your ideas with – particularly important in the early stages of your career. ”

The conversation then moved to discuss the ways in which the challenges of an interdisciplinary field can be overcome. A real breakthrough for Kate was realising the need to network with other feminist scholars in different departments. When she found that other, even senior, staff were facing similar challenges, she organised a meeting for feminist academics across the institution to come together and discuss the need for a space as feminist academics – for both research and mutual support. The size of the meeting was a real testament to the need for this network, which gave them a space to knock around ideas in a very constructive way. As a result, the Gender Matters @ King’s research group was born.

Taking questions posed by the audience of early career researchers, both Kate and Gabriela were able to reflect on their personal academic journeys. Gabriela sees herself as a combination of academic and practitioner and discussed the benefit of field experience: “working at UNIFEM was extremely beneficial to the development of my ideas and drove me to fill out the knowledge I lacked in gender and development”. Kate recognised that she was lucky to go from a PhD straight into an academic teaching and research position, but emphasised the merits of postdoctoral research opportunities, which allow a unique insight into a different field, the benefit of another’s experience and good networking opportunities. Like in any other profession, networking is very important in academia, and refreshments after the seminar offered participants an informal opportunity to engage with one another’s work, ask questions, and learn from one another.

You can find out more about BiGs and TRIGGER on the Birkbeck website.

Click here to find out more about future seminars.

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How one student makes the most of his 24 hours a day

Samuel Harris, second year BSc Financial Economics student, discusses how combining work with study is furthering his aspirations as part of National Work-Life Week.

Time. It is perhaps the most valuable commodity an individual owns yet we all have 24 hours a day to spend as we see fit. That’s 1440 minutes or 86,400 seconds where we all make individual choices that may or may not have consequences that shape our future with most choices made in the hope it will create a better future. Getting my work-life balance is vital, in my opinion, to avoid burnout in my future career path and aspirations, and will help me be the best I can be as a person, socially and academically.

So, what are my future career aspirations? I’m writing as a member of the Birkbeck Economics and Finance Society and I aspire to, one day, own my own financial investment firm. Financial services and especially investment banking makes the news consistently on the topic of work-life balance for the wrong reasons. You hear the stories of graduates spending 80+ hours a week in the office but to me, I see people chasing a dream – a dream to be the best and to be affluent. To me, work-life balance is about always enjoying what you do, whether at the office or wherever your workspace might be, as well as when you’re out with friends or doing a hobby. If you enjoy what you do, you won’t burn out!

I am starting my second year on the BSc (Hons) Financial Economics course this October and I currently work full-time doing either 7am-5pm, 9am-5pm or during the university summer break, occasionally 9am-9pm. I am always described by my friends who are at traditional universities as crazy and the most frequent comment I get is “how do you do it?”

The answer? Very simply. Whilst they are partying away, I’m studying here in a 6pm-9pm lecture. Whilst they are being lectured to, I’m working gaining practical experience. No amount of reading or memorising will make you successful in life because it is the understanding and application of wise thought that counts – and that is what Birkbeck is all about. I will be job-market-ready. I still have the time to see my friends in London at the weekend after I finish my university work and I make visits to my friends further afield at other universities 3-4 times a year. Whilst sacrifices must be made, and don’t underestimate the sacrifice needed to work full-time and study full-time, I don’t overestimate it either as it is very feasible with a strong work ethic. It’s not for the faint-hearted and I must stress the necessity of a strong work ethic! Working part-time is also an option.

The most important piece of advice I would give to fellow students is not to lose focus on why you do what you do. Whether it is that you are academically inquisitive, or you are hoping to change career, or to become better at your current one, commitment is key. There will be challenges along the way. Being glued to my desk and the library during exam season and using every available term holiday to prepare is just the beginning. You’ll find time goes very quickly and your external commitments will need to be tapered. I manage my time by using a diary on my phone and I put everything in, no matter how small or insignificant.

Life as a Birkbeck student is tough and unforgiving but it could possibly be the best decision you ever make. Everyone who studies here has unique life experiences and you can use one another as a sounding board for great ideas and experiences. Make the most of your time here and you won’t regret it.

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