17 June, 2013

The rise of the online entrepreneur: part one

The word “entrepreneur” has been bandied around a lot recently. It used to be that the media would refer to “small business owners” or “owner/managers”. In 2013, everyone from self-employed plumbers to eminent businessmen like Sir Richard Branson or Lord Alan Sugar are referred to as entrepreneurs.

I don’t wish to disparage plumbers for one moment - or indeed anyone else - but perhaps we’re missing a sense of scale in all this?

I was fortunate enough to be selected as a regional finalist in the prestigious Ernst & Young Entrepreneur of the Year awards program. It was interesting to see such a wide criteria applied to the other finalists. Among them were CEOs of successful companies, but a number of those CEOs hadn’t started the business themselves. Rather, they’d been employed to grow the business beyond the point that the founding entrepreneur was able to.

So firstly, what is an entrepreneur?

For me, an entrepreneur creates value. They might start with nothing or they may receive funding - either way, the role of an entrepreneur is to create capital value. They may employ people, they may not, but their business should still have value without them. This is certainly true of plumbers, online entrepreneurs and a variety of other trades; Charlie Mullins, who founded Pimlico Plumbers has done an amazing job of building a very successful business. He’s one of the UK’s top entrepreneurs and, crucially, he built the business from scratch.

Building from scratch is, for me, an important element of being an entrepreneur. When Steve and I started Global Personals, we had no real money to invest. I was not long out of university, still living at home with my parents and Steve was running a successful recruitment business full time.

So we borrowed. We each got half a dozen credit cards and we bought advertising on Google. Each month, we moved the balance from one credit card to another until members started paying to sign up and we made enough money to repay the balance off the first card.

We didn’t have money from angel investorsVCs or private equity (frankly, I for one, didn’t even know those options existed) but we believed in our business and we believed in ourselves. By taking a calculated risk (and protecting our downside), we built a business together that is now generating annualised revenues of £50m a year. Just ahead of its 10 year anniversary, Steve and I still retain 95% of the business.

And yet, the most fulfilling part of the experience has been helping our entrepreneurial partners build online businesses that have enabled them to live the life they’ve always wanted (or are on their way there).

Tomorrow, Ross will be looking at what it takes to be a good online entrepreneur.

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