I lost £450,000 setting up three businesses – here's what I learned

Stephen Newton’s business Elixirr had a turnover of £16m last year, but his previous ventures weren’t as successful

Being an entrepreneur comes with risk, as everyone knows. While you need to be prepared to put it all on the line, what happens when you do and the gamble doesn’t pay off? What if that happened not once, or twice, but three times? My name is Stephen, and I’m an entrepreneur who has failed more times than I’ve succeeded.
I launched three businesses before my current successful enterprise: one importing African art, one working in SEO, and another developing an electronic trading company. All of these ventures failed, costing me a total of £450,000.
There is much talk about whether failure should be celebrated at the moment, with Silicon Valley and its “fail fast” motto on one side, and those believing failure is detrimental to progress on the other. Both viewpoints have merit, but here are the lessons I have learned (however much they stung at the time) from my unsuccessful ventures:

1 Business is not a democracy

Setting up a company with six other people, and each putting in an equal financial investment, may seem sensible, but it can be dangerous. A split consensus makes running a business very difficult, especially when a swift decision is required. A strong leadership model, with one designated captain who makes the final decision, has a much better chance of success.

2 Don’t jump at the first opportunity

Time is more valuable than anything else, and although you may have plenty of enthusiasm for an idea, you need to do some serious sums before you dive in. Fast-paced industries may mislead you into thinking you need to move quickly, but it’s much wiser to spend time developing a solid business plan.

3 Scalability is key

While everyone wants to buy low and sell high, you can only get so far without the right product. It’s important to understand the size of your market, and research what the appetite for your product or service is before you commit. A brilliant idea in theory doesn’t necessarily translate into a successful commercial proposition.

4 Celebrate the little wins

Whether it is your first client, first invoice or first employee, it’s important to toast every milestone as you set up your own business. New companies are very fragile, and can fail overnight, so every positive step, however small, should be acknowledged for the real achievement that it is.

5 Focus on what you know

Many people make the mistake of setting up a business based on what they are interested in, not what they know. Passion for your venture is crucial, but without an in-depth overview of your chosen industry and its unique intricacies, you risk losing out and ultimately failing.
Success masks our mistakes, whereas failure gives us the opportunity to reflect, and improve next time. Being an entrepreneur is about resilience, and while it’s important to manage decisions so you don’t lose it all, you won’t gain anything without taking risks.
Stephen Newton is founder and managing partner of consultancy Elixirr