Tips to steering clear of death valley

Nigel Bamford recommends budding entrepreneurs avoid "death valley".

It's a commonly seen graph, he explains, which depicts a start-up's financial situation.

No income for the first three or so years, burning through investor capital, recording loss after loss after loss before inching towards break- even.

It's an approach he eschewed when he launched Escea gas fires in 2005. Right from the get-go Bamford was focused on making money.

"You work out how to make $100 a week, then you work out how to make $200 a week, then a grand. For us that was the right thing to do," the Escea chief executive says.

This meant taking a diverse approach. Rather than focusing solely on designing a range of gas fires, he hired additional design staff and simultaneously began offering a design consultancy service.

It's a strategy that worked. In a competitive market Escea recorded rapid growth through its first three years. While the company saw growth dampen during the recession, Bamford is proud his company still managed to increase its revenue "modestly".

Increased offshore exports through new products are planned to keep Escea growing, Bamford says.

"It is always onwards and upwards."

Why did you become an entrepreneur?

For the adventure! We spend too much time at work not to love what we are doing and building a company is a very full on but satisfying long- term project.

I wanted to create a business that was not dependent on any one geographical market so if things went a bit flat in one market you could focus your efforts on a different one.

What have been the biggest obstacles in running your company?

In almost all business the major constraint is sales, we have been really lucky in that we launched our gas fireplaces at a time that the only other products available were either good looking and hopelessly inefficient or very efficient and very unattractive. We created a product that was both efficient and attractive and as a result it sold very well in quite a short period of time.

Name one thing you've learnt from while in business and from who?

To be successful in business you need to learn 100 things from 100 people. Then just when you think you know a fair bit, your business grows to the next level and you have to go and learn 100 more new things.

I believe in the importance of sticking to one product category and being world class at that focused activity. The importance of that is spelled out very well by Jim Collins in Good to Great.

What are your business and personal goals?

I guess they are tied very much together. We are building a company that we want to be around for a very long time. A key requirement to achieve that goal is to constantly innovate in our product design.

Do you have any tips for budding entrepreneurs?

People tend to underestimate the importance of building a great business as they strive to act on their great idea. The idea is a really important first step but when you have that idea you are about two per cent of the way through turning that into income. The other 98 per cent is about systems, processes, details, selling, marketing, data collection and heaps of hard work.

REBECCA STEVENSON

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