No-one ever said being an entrepreneur was easy. But when the new economy took off a couple of years back, suddenly everybody wanted to be a dotcom entrepreneur and success stories abounded.
Then, of course, came the big crash and a lot of people discovered how hard being in the frontline can be as dotcom after dotcom bit the dust. Even the big names that had a strong identity and customer base - such as Amazon and Yahoo - ran into trouble.
Not that IT professionals who are aspiring entrepreneurs should despair. There is still hope, but you will only succeed if you know exactly what you are doing and can convince other people of that.
Sheila Dance was formerly an IT project manager and is now the founder and managing director of Suffrage, a company that sells professional clothes for women. When she decided to set up her own business two years ago, she spent a year establishing her business plan before she felt ready to launch.
Her first step was to research the market and ensure the demand was there to generate sufficient revenue. She embarked on a mission to find out everything she could about the fashion industry and what running her own business would entail. "I attended some evening classes, one on fashion design and the other on starting your own fashion business. The second one also examined whether or not you were someone who could start their own business and in the end only about 2% of people on the course went on to set up their own business."
Dance says she learnt some invaluable lessons from the courses that stood her in good stead when she finally launched. They also helped her to form a solid business model, a vital step for anyone seeking financial assistance.
A big mistake that many an inexperienced CEO made during the dotcom gold rush was to underestimate the importance of financial expertise. Instead of appointing a finance director, many would assume the role themselves and learnt about finance as they went along. Unfortunately, most of them learnt the hard way and these days venture capitalists are unlikely to back any companies that do not have a finance director on board.
Lucy Marcus, founder and managing director of Marcus Venture Consulting, a company that works with entrepreneurs and financiers in the technology sector, says the first rule of being an entrepreneur has to be the ability to recognise your limitations as well as your strengths. "It is about understanding what you can and what you cannot do," she says. "Just because you have a good idea, it does not mean that you are necessarily the one to build the company. One of the smartest things you can do is to surround yourself with really capable people."
Many first-wave dotcommers tried to be everything, rather than hiring experts to work in specialist areas. Harnessing the skills of people around you is essential, yet many CEOs seem to forget that a large part of their job is as a people-manager. "Running a start-up means managing people," explains Julie Meyer, founder of the networking event First Tuesday and now founder and CEO of the European networking start-up Ariadne Capital. "I would say 80% of your time should be taken up with that."
When running your own business, a lot of it is about convincing people to believe in the idea, from persuading sceptical venture capitalists to stump up cash to giving your staff the motivation to keep going during the hard grind of getting a business off the ground. "You need to have a charismatic presence so you can capture the imagination of people around you," claims Marcus. "And you have to make sure you are not the only one who understands what you are talking about."
Nikki Beckett, CEO of retail technology solutions provider NSB Retail Systems, places great importance on communication skills - and she knows what she is talking about, having won the Veuve Clicquot Business Woman of the Year award and Ernst & Young's business-to-business category award since founding her business two years ago. The Veuve Clicquot award judges singled out Beckett's management skills as a major factor in her success. "They said they chose me because of my charismatic and inspirational leadership skills," she says.
Beckett also attributes her success to a thorough understanding of how a business operates. When she started out in IT at IBM 15 years ago, she was put on a training programme that required her to work in every part of the business, from programming software to sales and finance.
Experience of all the business processes gives Beckett confidence that she knows what she is talking about. As an entrepreneur, you need endless confidence, not least because other people will constantly throw cold water on your ideas. You have to have a very strong belief in yourself and in what you are trying to achieve. While it is important to listen to other people and get as much advice as you can, at the end of the day you have to have the courage of your own convictions.
"If there is any lesson that every entrepreneur needs to learn, it is to trust your own instincts," says Meyer. "That was a big lesson for me. And once you have made a decision, act quickly as you do not have time to wait around."
A helping hand for bright sparks
Local Business Networks, an organisation that Sheila Dance used to help get started, has offices across the UK. To find out about your local branch and other business services, contact Business Link on 0845-600 9006 or visit www.businesslink.org.
The keys to success
David Wilkinson, member of Ernst & Young Entrepreneur of the Year Awards panel, gives his top five tips on what he thinks makes a successful entrepreneur
This was first published in March 2001