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The Entrepreneurial Exchange

Facing the hurdles of start-up

21 February 2007

It's never been harder to start a new business

The Herald


Times have never been tougher for Scots who want to set up their own business, according to a leading entrepreneur who runs a chain of outdoor equipment shops.

Chris Tiso, who took over the independent outdoor clothing and equipment retailer Graham Tiso Ltd after his father died in 1992, told the second of four mentoring events organised by The Herald and Sunday Herald that a raft of government legislation has done little to foster start-ups in the country.

"It's never been harder to start a new business," he told invited guests at the Audi conference centre in Braehead, Glasgow, last week.

He told the the audience of 80 or so, many of whom had complained of difficulties in setting up new businesses, that "you have to have a pretty strong constitution to start up a new business - it's bloody tough."

He said state-sponsored programmes to encourage start-ups had little value and were just "absurd amounts of legislation".

"It's stifling," he added.

The government, he stated, had shown "little interest in the engine room of the economy" - small and medium-sized enterprises.

Tiso told the audience that he had no mentors to help him when he took over his father's business in his early twenties and had to start from scratch.

"I had no knowledge of balance sheets, stock-taking or order books," he said. "It was a steep learning curve," adding that "it was sink or swim, I just had to get on with it."

Gradually, he learned all the aspects of how to run a business and now Edinburgh-based Tiso Group is a highly successful operation, having acquired other companies along the way.

Tiso pointed to the takeover of Aberdeen bikes chain Alpine in 2006 for more than £1m as an acquisition that later improved his firm's balance sheet with turnover worth £4m.

Tiso Group has nearly 20 shops with a total turnover of £30m.

"I drive the business forward in bite-sized chunks," Tiso said in response to a question on the importance of organic growth to his firm.

Tiso and his fellow panelists - George Morris, chairman of construction group Morris & Spottiswood; Graham Wylie, chairman of IT group TSG; and Angela Paterson, managing director of recruitment firm Kite Ltd - all agreed that finding enthusiastic, competent staff is a key element in building a successful business.

Wylie and the others said good staff, who believe in their employer's goals, are hard to find.

Leadership is also a key issue. "People (in a company) want leadership," said Morris. "People want to be inspired. It's too easy in this world to be cynical."

Tiso said senior management has to set the tone of the business so the staff understand what has to be done to promote success. "Be clear about your vision and have them buy into it."

He added: "If the staff are not willing to buy into it, then they have reached the end of their shelf life."

Wylie and Paterson both said it was important for a new business to have a plan, although Tiso said he did not think it was possible to plan for more than three years ahead.

Wylie, a Newcastle University graduate who helped set up the Sage IT firm and now runs TSG (Technology Service Group) and a stable of 115 racehorses, said entrepreneurs can run a new venture on "gut instinct" but need more once the business begins to grab market share.

"We you start to grow you need to start planning," he said.

The thorny issue of how to obtain financing was raised by several members of the audience. This has been a theme in earlier mentoring events.

Paterson suggested that new businesses consult a wide range of banks in order to get capital.


Stories of success Chris Tiso


While his contemporaries were out partying, discovering what they wanted to do with their lives, the young Tiso was thrown in at the deep end, taking over Graham Tiso Ltd, the Scottish outdoor specialist.

He had gone into the family business a year earlier and worked on the shopfloor for a year when the tragedy struck.

"It was a very, very difficult time," he said. "As a family it was almost as if we did not have time to mourn. We were immediately faced with a void. And a business. And a whole bunch of employees that we considered family looking to find out if their future was secure."

He had the support of his mother, Maude, who had set up the business back in 1962 with his father, and his brothers. But he had little business acumen, no experience and no contacts in the business arena.

He said: "I had to deal with my father's death and I didn't have a head for business - I was very young. I had to try and learn all the different facets of the business, I had to learn about management and managing people, and I had to deal with internal politics as well - and it put me off politics in business for life."

One person who did step into the void was Bill Syson. He had helped the Tisos set up shop in the 1960s while he was at the Bank of Scotland, and had become a firm family friend over the years. He helped guide the young Tiso through the first few years of business.

Later he relied on the counsel of businessman Michael Lunn, who was formerly chief executive of White & Mackay and now runs Michael Lunn Associates, which operates as turnaround specialists.

"It is great to have benefited from both their insights and experience," said Tiso.

Tiso joined the Entrepreneurial Exchange shortly after taking over and there he met other like-minded individuals with whom he could learn and network. The exchange has inspired him to now, at the age of 35, take on his own company to mentor, Boudiche, a luxury lingerie shop in Edinburgh, through the Princes Scottish Youth Business Trust.

"I could really have done with a mentor when I started out, and it is nice to be able to give something back," he said.

Angela Paterson Kite Ltd and Highjobs

Angela Paterson's father and grandfather both ran their own businesses, so it was in her blood. It seemed only natural to her that as soon as she got enough money together she start her own company.

At the age of 30 she set up her first company, Kite, a recruitment consultancy in Scotland. But while a good idea, she had no-one to guide her during her first two years of business. Fiercely independent, she did not want to be seen to go asking for help from her family, and was too embarrassed to ask for help from other business people.

That all changed when she joined the Entrepreneurial Exchange six years ago, and found a network of well-established businesses as well as start-ups like her own.

"I made a lot of mistakes that could have been avoided if I had been given some decent advice," she said. "My advice to anyone starting out is to knock on businesses doors, send e-mails, make calls, ask for advice. People are surprisingly generous with their time and information."

Paterson, now 38, got her first mentor through the exchange, John Anderson, who was the chief executive of the exchange. He started helping her in an unofficial capacity, allowing her to bounce ideas off him. Then the arrangement became more formal when she asked him to become a non-executive director of the company.

"I now have a whole range of people to call on for advice," she said. "Without it, you have no-one to tell you that you are heading down the wrong path or are about to make a poor decision."

Paterson set up a second business two years ago, Inverness-based Highjobs, an online jobs board for the north of Scotland.

"It was so much easier the second time round because I had people to turn to for advice and because I had the experience of already having made the mistakes and learned from them the first time round."

Now Paterson mentors two of her own businesses, an online travel booking company and a recruitment company, and is a non-executive director of another small company.

"They are young, but have high growth potential," she said. "I have been helping with business plans, recruitment plans and helping identify premises, find support and make sure they find the right suppliers."

George Morris Morris & Spottiswood

George Morris, the chairman of Morris & Spottiswood, an interior fit-out and facilities management firm, took over the company at the age of 30 after training as a lawyer and then deciding to join the family firm when his father asked him to help out.

The company was set up in 1925 by his grandfather as a joinery business and Morris took over from his father, Ian, 12 years ago.

"My father is the biggest mentor in my life," said Morris. "He really stepped aside when I came in. The single most important thing in passing on a family business is letting go. He is a model of non-interfering.

"He is a wise old bird. He told me you are going to get in trouble, if I'm there that is great. But you have to learn from your choices.'"

Morris completed an MBA before taking over the company, and from this he found many ideas on how to run companies differently. He was drawn to more non-hierarchical company structures, and says he decided to work his company around this kind of philosophy and says that his other mentors have come from books that have inspired him.

"It is hard for one person to fill all the roles demanded of in a mentor," he said. "If I had to name one other person, it is someone I have never met, Ricardo Semler. He ran a business in Brazil called Semco and wrote a book called Maverick. It is all about how a company can be run and is a very radical approach where the employees set their own salaries and things like that."

His own take on these non-hierarchical structures has worked. Last year the company was ranked 58th in the UK by the Times in its 100 best companies list.

The company now has a reputation for nurturing its employees and Morris says he spends about 50% of his time talking to his staff and working on their development.

And while he does not have specific companies he nurtures himself, he says it is the development of his own staff in which he is interested.

His in-house programmes range from courses on subjects such as health and safety and IT to a management training programme run with Durham University.

The company spent £500 per employee on training last year and also runs an apprenticeship scheme teaching trades such as French polishing, plumbing and joinery

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