Den of equity

The future of Ireland’s economy will be based on our ability to grow indigenous businesses, the experts say. To successfully do this, they further expound, we must foster entrepreneurship and promote it as an ethos. This month, five successful businesspeople, hailing from backgrounds as diverse as IT, construction and retail, will appear on our screens doing just that. Sean Gallagher, Sarah Newman, Gavin Duffy, Bobby Kerr and Niall O’Farrell will preview some great and not so great business ideas, as the Irish version of Dragon’s Den rolls out over the coming weeks.

A champion of start-ups and entrepreneurship, it wasn’t too much of a surprise to see Sean Gallagher in the line-up. A booming presence, chasing opportunities is not something Gallagher shies away from. Demand for him as a speaker on the business-training circuit is growing following a number of years spent working for the Louth County Enterprise Board mentoring and coaching businesses. He also has passion in spades when it comes to running his own business, Smarthomes. A start-up in 2002, by 2007 it was turning over €8m.

Keen initiative led him to seize a generous share of national media coverage last year in a somewhat unorthodox fashion. He and his business partner, Derek Roddy, featured in one of AIB’s campaigns, which was advertising business packages to small businesses. Their award-winning business was named as an example of one of the successful companies the bank has as a customer. And the kicker? It didn’t cost them a thing. Instead, the bank paid them to appear in the ad.

Viability

With further exposure ahead in his new role, Gallagher says this show represents TV viewing that is as real as it gets. Other businesses can really learn a thing or two from those coming into ‘the Den’, he says. “People are learning how to pitch a business and are fielding questions that need to be asked regarding viability, sales, distribution and financial projections. It’s educational, informative and inspiring.”

The programme is coming at a really crucial time in the Irish economy and for the Irish psyche, says Gallagher. “With all the doom and gloom that’s out there at the

moment, this will be a ray of light. It will show that even with the downturn and the recession, there are still people who have ideas, who are creative and ambitious, who have a lot of talent and skill and who will create jobs not only for themselves but for others. At a time when there is restricted access to start-up capital, this is a perfect opportunity for real businesses to get cash injections.

“They’ll have to answer questions about their business idea, the product they’re going to be selling, the market they’re chasing, how they’re going to get their product or service to market, how much money they need and how they are going to pay back the investor. Whether it’s to a bank, a venture capitalist or a business angel, they are going to find it so much easier to explain and sell their business.”

On the opportunity of funding novice entrepreneurs, Gallagher says he’s a risk-taker, not a gambler. “Anyone who gets into business and takes the risk of leaving secure employment to set up on their own, as I did, is happy to take calculated risks.”

Picking winners

Accepting there’s a high failure rate among start-ups, he says the challenge will lie in the opportunity to pick good business ideas that are driven by passionate, committed people and hard-working entrepreneurs. “It’s as much about picking the entrepreneur, as it is about picking the ideas. Drilling down to get to the kernel of things – the viability and sustainability of the business – will be so important. It’s all about picking winners.”

Depending on what you believe, the growth of a start-up has more to do with the industry you choose, and less about entrepreneurial talent. However, Gallagher is resolute the person behind the business is nothing short of crucial. “There are good ideas that poor entrepreneurs will never make happen. And there are great entrepreneurs who will make a living from very simple ideas. Everyone thinks they have to be coming up with the next light bulb or the next PC, but most entrepreneurs don’t generate innovative, first-ever-to-market businesses. They come up with a unique selling proposition for something already out there.”

Clarity of purpose and communication are other vital building blocks to success. “It’s about having the passion, commitment and determination too. If the entrepreneur has clarity about what they are going to do and explains that to the Dragons, then they can explain it to their bank, customers and staff.”

And Ireland needs its own batch of budding entrepreneurs, Gallagher says. “Foreign direct investment will be absolutely crucial to maintaining Ireland’s economic position. However, the future of Ireland’s economy will be based around our ability to grow indigenous businesses, so we need to identify key sectors and train graduates in college. We need to have a 15- to 20-year plan for this. Qualified graduates in the fields of technology, biopharmaceutical, green energy and clean tech will help indigenous companies in these pivotal areas.”

His involvement in the Hothouse Venture Programme, which helps entrepreneurs of knowledge-intensive businesses start up and build firms with global potential, has shown him first-hand that business and communication skills are severely lacking. There is also a dearth of quality sales people, he says.

A focused and goal-orientated individual who is constantly revising his life plan, Gallagher says the one positive thing that will come out of the economic slowdown is a return to work-life balance. “The last five or six years of the boom meant that people didn’t have the time to talk to each other. I think people are now going to make choices to live a more balanced and healthier lifestyle.”

Behind the woes, we can’t forget about the fun and enjoyment in life; making a positive contribution is what it all boils down to, he believes.

Good business idea

Fellow panellist Sarah Newman also knows her stuff when it comes to spotting a good business idea, having sold her company www.needahotel.com for a widely reported €60m.

She has just opened a high-end, bespoke chalet in the Swiss town of Zermatt, which has taken two years to build. Called after her daughter, Chalet Grace is aimed at those looking for a luxurious break away.

Born in Essex, Newman left school aged 16 with few formal qualifications. She moved to Ireland in May 1994 and set up Needahotel.com. Starting with zero funding, the site sold hotel accommodation wholesale to travel agents and tour operators in Ireland at heavily discounted prices. “I know what it’s like to sit in a one-bedroom apartment with a blank sheet of paper and no money. I’ve grown my company into a multimillion- euro business and sold it, so I’ve been through all the processes. I think I know a lot of the trap doors.”

Newman says it’s not just novice entrepreneurs who are pitching for business in the Den. “Some of them coming in have established businesses and might need a bit of guidance and certainly funding.”

While the perception out there is that banks are not lending to small to medium-sized enterprises, Newman believes there is still capital available for start-ups. “It might be more difficult to get money and you might have to go through more stringent interrogation, but I do believe there are certain amounts of money being lent, just not as freely as before.”

Undeterred

Newman is not deterred or surprised by recent figures that reveal the number of business failures is up significantly on last year. In fact, she interprets it as a mark of courage. “Ireland is a nation of entrepreneurs. We seem to create more entrepreneurs per capita than anywhere else in Europe. The more people who give it a go, the higher the failure rate is going to be. Certainly, it’s better to fail than not to try at all.”

Like Gallagher, she has no set agenda and says she looks to the person behind the business when making her investment choices. “I have learnt over the years that the idea/business is secondary. It has to be the person – they need to have a

similar thought process and work ethic.”

Her shrewd approach, which has served her so well in business, boils down to “an instinctive gene that kicks in” when sizing up an opportunity. Newman admits she would be less likely to take a risk than she was a couple of years ago. However, she points to people who made investments in highly regarded, supposedly secure institutions who ended up losing it all. “So, what is high risk? I don’t think anyone knows anymore.”

As the only woman on the panel, Newman believes she will stand apart from her peers and will react differently. But this, she says, suits her just fine. “There’s going to be that female dynamic there that men cannot create.” But, she believes, being in the minority as a woman is something that’s changing in the wider business world. “I think there are a lot of women out there in very powerful positions globally.”

As a single parent, a strong impetus not to depend on anyone else drove her forward. “I don’t know any woman who doesn’t have the lioness in her and doesn’t want to fight tooth and nail to get the best for her kids.”

Operating a business in tough times has made her realise that nothing can be taken for granted. To the many businesses out there feeling the pinch, Newman has this to say: “Work harder. Work longer hours. And cut back on all unnecessary expenditure. And I mean everything. There are always savings to be made. As an owner manager, you must lead by example – take a wage cut. If your car’s too expensive, get a cheaper one. If you’re parking in a multi-storey car park every day, get the bus. People need to look at their lifestyle and budget accordingly. It’s more important to hold onto your business and keep it going than to eat in a fancy restaurant every Friday.”

Ultimately, it will turn a corner and the country will start trading again, but until then owner managers need to hunker down and take the hit, she says.

Looking ahead to 2009, both Newman and Gallagher agree that success in business is going to be measured, not by growth, but by survival.

Dragon’s Den will be on RTÉ 1 from Thursday, 19 February.

Pictured: The Dragons (from left): Sean Gallagher, Gavin Duffy, Niall O'Farrell, Richard Curran (presenter), Sarah Newman and Bobby Kerr

This article first appeared in Owner Manager magazine.