With ongoing fears among business leaders about a Brexit uncertainty damaging their operations, small businesses and start-ups are perhaps feeling particularly vulnerable.
According to the Global Entrepreneurship Monitor (GEM) study, Wales has a lower level of entrepreneurial intention than the rest of the UK, with just nine per cent of the adult population here who are non-entrepreneurial expecting to start a business in the next three years, compared to 11 percent for the UK.
Wales is seeing a lower growth than the rest of the UK in terms of new businesses. However, leading South Wales business owner Simon Williams, who has seen his Storage Giant group flourish having established it on the cusp of recession, is encouraging entrepreneurs to grasp the nettle. In fact, he says, times of economic uncertainty, and even recession, can provide the ideal opportunity to set up a new business.
“I established Storage Giant in my home city of Newport, in late 2007, around the peak of the UK property market, but just before the financial collapse of 2008. Initially, the business did well, although on a very small scale. Due to the consistent increase in occupancy at our Newport Store by the summer of 2008 we decided to look for another building in Cardiff. It wasn’t long before we located a prime retail building on Newport Road, and entered negotiations to acquire it. However, the timing of this couldn’t have been worse. We exchanged contracts in early September 2008 and then Lehman Brothers failed in late September 2008, which was the spark that initiated a severe stock market collapse due to worldwide collateralised debt obligations.”
Because of the financial collapse, my bank withdrew its funding agreement at the end of 2008, so the company was then faced with trying to secure almost £4m of speculative funding to develop the store, which we were already contractually obligated to acquire. The situation could not have been much worse, at a time when banks were not funding any real-estate transactions.
Simon adds: “Through sheer determination we managed to secure all the funding we needed from our existing lender by February 2009, and the store was opened in October 2009. The Cardiff facility was completed to an extremely high standard but also on a very tight budget.”
The business continued to grow throughout one of the worst economic downturns for Wales and the wider UK in recent history.
But, says Simon, he had no doubts that it would succeed: “This was not because our sector was immune to the fluctuations of the economy, as we were a business just like many others which relied on consumer spending. But from the start we had an extreme focus on cost control, customer pricing, and the customer experience.
“It is vital, of course, to get the foundations of your business right, to have a sound business plan, to be astute about financing, forecasting and cost control. However, during a downturn, a start-up is likely to have a competitive edge because people will begin shopping around, even if they have been with a competitor for years. It will also open up a larger pool of suppliers and contractors who are more desperate for your business.
“You will have the added advantage that large corporations may be scaling back during a downturn, and smaller competitors may be in a vulnerable state too. Start-ups are nimble enough to respond to new opportunities fast. A start-up is also in a prime position to negotiate hard with suppliers.”
Simon has seen the challenges and opportunities from both sides of the coin – both as an entrepreneur himself, and as someone whose company supports SMEs within his premises.
“We have seen more than 900 SMEs flourish under the Storage Giant roof in Wales alone –
everything from charities to tech start-ups and fashion brands have set up their operations within Storage Giant facilities, since we offer flexible space for both office and storage along with attractive terms. So, we see small businesses thrive with the right support. It is notable too that smart use of technology has redrawn the landscape for start-ups, many of whom are now able to operate successfully from a single, well-designed unit.
“Crucially, start-ups that are forged in tough times are resilient, lean and ultra-efficient – because they have to be, it is the survival of the fittest. You are prompted to develop business habits that stand you in good stead over the long term and that help you get ahead of the game for when economic good times return. But remember not to jump on that bandwagon when it comes around again, as so many do, because its human nature to repeat our mistakes, which is part of the process of boom and bust cycles.
“Storage Giant is now the 5th largest self-storage company in the UK, and the second largest private self-storage firm in the UK, with nine operational sites and eight more in development. We probably wouldn’t be quite the same firm we are today if the business had started at a different time in the economic cycle. You have no choice but to be extremely focused on getting things right when times are bad, you don’t have the luxury of surfing the economic prosperity wave, but there is no question you will be better for it. Remember that obstacles are just opportunity in disguise”