A new wave of start-ups is turning the recession into an opportunity

A new wave of agile and market-aware start-ups, keen to target challenger brands, is turning the recession into an opportunity, says Gina Lovett

A few years ago, while discussing the decline of the French economy with former Prime Minister Tony Blair, then US president George W Bush made one of his most famous gaffes, saying, ‘The problem with the French is that they don’t have a word for “entrepreneur”.’

Blair probably didn’t see the point in correcting Bush back in 2002, but in 2009 what’s evident – regardless of the appropriation from the Gallic linguistic repertoire – is that not even the deepening recession has dampened the entrepreneurial spirit in the UK.

Witness the wave of start-ups and breakaways in design over the past two months, which has seen industry figures such as Michael Peters launch his third consultancy, Pearlfisher creative director Shaun Bowen take the plunge with breakaway B&B, ex-Vibrandt chairman Ray Armes open Touch of Mojo, and former Established & Sons design director Mark Holmes launch the small-scale design collection Minimalux, to name but a few.

Accountant Kingston Smith W1 partner Mandy Merron points out that it is not unusual to see ‘green shoots’ in times of economic uncertainty. She says, ‘Traditionally in a recession we see waves of start-ups, as employees get hacked off with networked groups’ constant focus on cost. Those working in an atmosphere that has perhaps not been as positive as it once was move on, or designers made redundant launch start-ups according to their own principles.’

But with a dearth of credit, apparently shrinking consumer markets and shrivelling client budgets, why would you want to set up a company in the current climate? A widely held view among those starting up or breaking away is that the recession is a platform for change, a time to root out inefficiency and align business activity with current market conditions. In other words, it’s a perfect time for a new beginning.

According to Dave Allen, former chief executive of Enterprise IG (now The Brand Union), who opened the doors to his latest venture Brand Pie last month, recession is a good time to start a business ‘minnow’, because the pressures to downsize and manage costs that plague larger groups are not an issue.

‘You know how to set up a cost-base and get the prices right, so that you can provide the right service for the current market conditions. You can get some good deals in leasing property, and there’s a greater availability of talented creatives, making recruitment easier,’ explains Allen.

The latest start-ups and breakaways are all following the small, low-cost business model, which allows for the sort of agility and independent thinking that is attractive to challenger brands – just the type of clients that designers find so exciting.

A small team is also key to the entrepreneurial spirit and the ability to offer clients value, says Bowen. ‘Keeping it small, you can get back to having relationships with clients where it’s just you and them. You can be selective about clients and have that intimacy – with big consultancies, constantly chasing big accounts, you’re missing opportunities to work with smaller challenger brands that want to make it big,’ he says.

‘Clients have to be smarter with budgets, as they’re being pushed to get better value – and that’s where we come to the fore, where we will benefit from the entrepreneurial spirit,’ Bowen adds.

Allen also highlights a growing need for independent thinking. ‘There used to be loads of independent groups, but over the past 15 years these have all been bought by the big conglomerates,’ he says. ‘It’s now very difficult to get independent advice, in my view. We’ve tested out this idea with clients, and it resonates. That was our starting point.’

Brands now want to be seen to share in their customers’ financial hardship, Allen suggests. ‘The rules have been rewritten – for clients it’s about how they build loyalty in a new consumer environment,’ he says. ‘Clients want to get their thinking correct now, so that when things pick up they will be in a strong position.’

Bowen agrees, saying, ‘I think it’s more about that intimacy. Consumers want their brands to relate to them, and not be the “global monsters” of before.’

Holmes points out that ‘tailored’ products, geared to what the market wants, are more important than ever. ‘Setting up in the current climate can be a positive thing,’ he says. ‘It forces you to look at what you are doing in more detail, and to focus on delivering a relevant product. The market goes on, and there are still customers out there buying. It’s about ensuring that the credentials of that product are spot on.’

It’s been a busy couple of months…

January 2009: The opening of B&B (by former Pearlfisher creative director Shaun Bowen), Kimpton Creative (by former Hat-Trick Design director David Kimpton), Brand Pie (by former chief executive of Enterprise IG, now The Brand Union, Dave Allen) and Touch of Mojo (by former Vibrandt chairman Ray Armes), and the launch of small-scale design collection Minimalux (by former Established & Sons design director Mark Holmes)

December 2008: Identica founder Michael Peters forms his third consultancy, Michael Peters & Partners

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