How to launch a great business

A good idea combined with hard work can launch a great business, says Roger Trapp

What changed things? A big factor was the dot.com boom. Headed by lastminute.com, the travel company established by former management consultants Brent Hoberman and Martha Lane Fox, the wave of internet companies that appeared around the millennium created the impression that anybody could set up in business- especially if they did it on the web.

The result was that investment bankers and management consultants were suddenly giving up well-paid jobs in landmark buildings to work for nothing in dingy offices in the hope of exploiting supposed niches and gaining bountiful share options.

But even when the boom turned to crash the enthusiasm for starting your own business remained. Sure, venture capital firms and other investors were not so ready to throw money at ideas. But the go-it-alone bug had bitten a generation.

This is probably because the old attractions of working for big business - security, steady progress up the promotion ladder and a healthy pension - were increasingly no longer there. Those yet to join the workforce were not impressed by the lifestyles led by their supposedly successful parents, while those already at work realised that even the introduction of legislation on working hours and "family-friendly" policies were having little effect and so were increasingly prepared to give it up for a chance of freedom and maybe handsome rewards. Penny Schouten (see case study), for example, felt she had a better chance of balancing family and career by working for herself than in a big business.

Now, several years on, the word "enterprise" is everywhere - but most particularly in the speeches of Chancellor Gordon Brown. His Budgets Reports are stuffed with references to enterprise and with incentives designed to encourage more of it. This is because, although he made his reputation in the Labour government by being "prudent" with the public finances, he apparently recognises that the future wealth of the country - and hence its ability to deliver modern public services - depends upon a vibrant economy. And central to that are the competition and boost to productivity provided by eager entrepreneurial businesses. By challenging the status quo like, say, Virgin Atlantic famously has in the airline industry, new businesses can change the whole complexion of an industry, making it more efficient and more appealing to customers.

In an effort to promote such attitudes, Brown has been a key figure in the establishment of a national Enterprise Week in Britain. During the second such initiative, late last year, there were about 2,000 events celebrating and encouraging enterprise around the country. At one of them, the prize-giving in the Enterprising Young Brits competition, the Chancellor told the winning entrepreneurs that they were "creating new opportunities and advancing new ideas to create an enterprising society".

He added: "Do not underestimate the power you have to encourage others - you are making your mark by showing that enterprise is changing the face of Britain." Gordon Brown has also played a role in the Government's decision to spend £60m a year on providing "enterprise education" in schools to help encourage more pupils to regard entrepreneurship as a worthwhile career choice.

Opinion is divided on whether these and other initiatives have had much effect. The Global Entrepreneurship Monitor indicated early this year that the proportion of the UK population setting up or running a new business had stalled at a little more than 6 per cent.

However, research released by the Department of Trade and Industry shortly before Christmas set out to dispel a number of myths surrounding business start-ups. In particular, it said that - contrary to the widespread belief that most businesses fail within their first year - 80 per cent of new businesses survive their first year of trading. Barry Gardiner, minister for competitiveness, added: "There are now a record 4.3 million small businesses in the UK - this is over 500,000 more than seven years ago." Whatever the truth, the fact remains that the general climate is more favourable to business start-ups in Britain now than it historically has been. Critics suggest that the Government's apparent aim of matching the start-up rate of the United States is unattainable so long as British business is constrained by "red tape". But significant numbers of people - and not just young ones - are these days sufficiently inspired to have a go.

And perhaps just as significantly, the stigma of failure has largely gone, meaning that if their first effort does not work out they will often try again.

This does not mean that starting a business is as straightforward as ministers and officials sometimes seem to suggest. Barry Smith and his colleagues at SkyScanner.net (see case study) knew that trying to launch their online business at the time of the dot.com bust meant they would not attract financial backers and so kept up their old jobs until the business was able to support them. Likewise, Johannes Paul and his friends at Omlet (see case study) had to rely on prize money picked up in competitions and loans from friends and family to get going. "It's never easy. You'd be mad if you thought it was," says Paul.

OMLET

Johannes Paul and fellow industrial design students James Tuthill, Simon Nicholls and William Wyndham came up with the idea for the "Eglu" while at London's Royal College of Art in response to the growing interest in organic food. "We redesigned the chicken house for the sort of person who lived in a town and wanted to know where their food was coming from," explains Paul. Omlet not only supplies the huts but also the chickens to go in them.

SKYSCANNER.NET

Online flight search engine SkyScanner.net was born out of one of its founders' difficulties in finding cheap flights to ski resorts. Convinced he could do better, he and a group of other IT professionals developed the concept at weekends while continuing to work as contractors. Four years later, and only two years after they gave up their day jobs, they run the leading search engine for budget flights within Europe with about 1.5 million users, and they are about to move into the long-haul business. "By the end of the year, we'll have a worldwide service," says co-founder Barry Smith.

THE HEALING ROOM

Dawn Mead was a project manager with the international accounting and consulting firm PricewaterhouseCoopers before taking voluntary redundancy in January 2003. She had already begun learning Reiki, a form of complementary medicine, and saw this as a chance to change career. She has since acquired other skills in this area and runs The Healing Room from her home in Watford. Although branching out on her own entailed giving up the security and generous pay of a big employer, she enjoys the variety provided by mixing private clients with corporate work and time in a centre for the disabled. Above all, she says, she is passionate about what she does and so does not notice the long hours.

PENNY SCHOUTEN

As an international purchasing manager for a fashion accessories company, Penny Schouten had an apparently glamorous lifestyle. Deciding to try to combine a career with having a family, she left to become a franchisee of the Rosemary Conley Diet and Fitness Clubs on the grounds that joining an established franchise was less risky than going completely solo. Although she was comfortable with the business side, Schouten had to learn to be an aerobics teacher. But she has been so successful that she paid off the cost of buying the franchise within a year and now has two in West Sussex.