The ‘necessity entrepreneurs’: Ireland’s recession businesses

It’s not always a bad idea to start a business in the midst of recession. As a number of billboards that appeared across the US in 2009 noted, “Bill Gates started Microsoft in a recession.” So did Ted Turner, who launched CNN in 1980, at the beginning of a double-dip recession.

Still, to start a new business in Ireland in the period between 2010 and 2014 took a particular kind of courage. It was a period when GDP fell from peak to trough by just under 10 per cent, and GNP by over 15 per cent. Between 2007 and February 2012, unemployment nationally rose from 4.2 per cent to 14.6 per cent.

It would not be not true to say that the surge in unemployment unleashed a wave of entrepreneurialism across Ireland. According to Enterprise Ireland’s Global Entrepreneurship Monitor (GEM) reports, between 2007 and 2010, rates of early-stage entrepreneurial activity fell, from 8.2 per cent to 6.8 per cent.

But the rate of “necessity entrepreneurs” – those who launched their own business because they couldn’t see any other option – jumped sharply, from 6 per cent to 32 per cent.

Even in the worst-hit pockets of the country during these years, there were people who chose to defy the economic climate – and, on occasion, the advice of family and friends – to start their own businesses.

Some of the fledgling businesses started in those years inevitably failed. But for others, as the country entered recovery, their resilience, scrappy approach and close eye on the bottom line would pay off. They were able to take advantage of lower cost bases, a wide talent pool, and less competition.

“A deep recession can be a good time to start a business. You do need to be leaner and you are more competitive by virtue of the need to keep costs down. And it really helped companies who were exporting,” says Orla Battersby of Enterprise Ireland.

Paula Fitzsimons, co-author of the GEM reports, points out that what a lot of entrepreneurs have in common is that they will all have experienced some “discontinuity” in their working lives, allowing them to seize the opportunity to launch something new.

Here are the stories of some of Ireland’s recession entrepreneurs, whose businesses were formed out of discontinuity, necessity or opportunity. They started businesses across a range of sectors and with a wide spectrum of ambition, but they have three things in common.

The first is that they are in possession of what Orla Battersby identifies as the right formula for an entrepreneur: “passion, vision and resilience.”

The second is that they started out at what was arguably the worst possible time, in some of the country’s worst-hit areas.

And the third is they are still standing.

‘I didn’t take a wage for four years’

Yvonne Brady, EVB Sports, Drogheda, Co Louth

“There was a real sense of hopelessness across the country in 2010 and 2011, and Drogheda was no different. The area had suffered higher than average unemployment rates during the Celtic Tiger years and had been completely ignored by the 2002 National Spatial Strategy,” says Labour Senator Ged Nash.

Nash says the mood in the town has improved since. “There is a real sense of the area becoming a hub for start-ups.” He points to recent job announcements in the food and drink space, and the 2013 opening of a new enterprise centre, The Mill, which is now full.

But back in 2011, Ireland’s largest town was still mired in recession. Unemployment was at 24.4 percent, with 8,700 people out of work at one point. That was the climate into which Yvonne Brady decided to launch her business, EVB Sports.

“The idea came about by accident. After the birth of my third child, I was ready to get back into shape. I went out walking and started jogging, and that turned into training for the marathon.

“I was doing an 18-mile run. I had never had any issues with my pelvic floor before, but it is a muscle, and it must have been fatigued, because I lost control of my bladder in the middle of the countryside. I still well up when I think about it. I felt horrified, like my body had failed me.

“But I didn’t want to give up on training. I started researching support sports underwear, and couldn’t understand why it didn’t exist. Women were out there exercising and doing damage to themselves, and the industry wasn’t paying attention.

“I’m an engineer, and had been running an engineering company and planning consultancy with my husband for 12 years. Our business had been very badly hit in the recession. We’d gone from 14 employees to four, and in the back of my mind I knew we needed to diversify.

“So I decided to develop my own support sportswear product for women. Entrepreneurship didn’t scare me, even in that climate. I’m definitely somebody who will take a risk.

“In 2011, Enterprise Ireland put out a call for the New Frontiers programme. I wasn’t thinking about a change in direction. I thought I’d do the programme and have a product on the market within six weeks. Little did I know.

“Coming at it completely raw with no industry knowledge was actually helpful. I didn’t think in terms of competing with Nike or Adidas. I took it step by step, and the next step was to find a manufacturer.

“I tried to find one in Ireland, but I got nowhere for a year. So many suppliers had been burned, it was very tough to get credit – it had gone from them offering 60 to 90 days’ credit to manufacturers wanting payment up front. Banks were very risk-averse. But ironically, the recession had also opened up opportunities. Manufacturers were more open to talking to smaller customers.

“Finally, I heard that a manufacturing company was coming from Portugal who had worked with Helly Hansen and Stella McCartney. I met them in a hotel in Dundalk in January 2013, and managed to convince them that we were huge in Ireland.

"A week later, I had a chance meeting with a producer on The Late Late Show, and suddenly I was on television, launching the company. After that, I got on a plane to Portugal to go and get this product that I'd been talking about made. In April 2013, we started to sell.

“We have a patent pending for our product, which activates the deep core muscles and optimises the position of the pelvis. It kickstarts the muscles and offers all-round perineum support. We get letters in every day that we’ve changed people’s lives. They’re running marathons, and they’re kickboxing, and they’re horse-riding again.

"Appearing on Dragon's Den in 2014 was another key moment. We had 500 sales that week. The CEO of Elvery's spotted us on it, and got in touch the next day. We went from four shops to eight shops to 16 shops, and now we're selling nationwide, and exporting to the States and Australia. We're in talks with a distribution company in the UK that has 90 members over there, and we're looking at a collaboration with a British Olympic champion. There's four of us employed in the company, and we're doubling our turnover every year.

“I didn’t take a wage for four years, until this year. And for every high point, there’s still a low point. But if you believe that you’re making a difference, that helps. If you love the people and love what you’re doing, then you can grow to love the journey as well.”

‘I got someone to show me how to make coffee’

Patrick Murphy, Larder, Waterford City

The southeast entered the recession earlier than other regions, and suffered a “deeper and more prolonged” employment crisis, according to a recent report by Cormac O’Keeffe and Ray Griffin of WIT.

“In 2012, the southeast had the highest unemployment rate in the country, at 20.1 per cent, and the lowest education attainment,” says Eddie Mulligan, a business owner, founder of a group which campaigned successfully for rate cuts in Waterford city, and a Fianna Fáil councillor since 2014.

Recovery was slow to come to the region, and to Waterford city in particular. A report by consultants DKM in 2014 described a lingering “low level of confidence” in the city. “It’s only in the last year that we have begun to turn the corner,” says Mulligan.

For Patrick Murphy, the decision to start his first business in Waterford in 2014 wasn’t so much an act of courage as a question of putting his money – in this case, a start-up budget of €200 – where his mouth was.

“I thought: if I can make a business work in the worst recession in history, in the worst-hit city in the recession, in what must have been the worst-affected area of the worst-hit city, then when the economy starts to improve, I’ll have a very good business model.

“By 2013, I had quite advanced plans to open a specialty food store in Cork or Kilkenny, but I love Waterford. I was driving down the Quay one day, and every second or third shop seemed to be empty. It occurred to me that I couldn’t exactly give out about the fact that nobody started anything in Waterford if I was going to go to Cork or Kilkenny to start up.

“I’d been in retail for a long time. I grew up on a farm in Stradbally, so I was always around good food, and I knew how hard it was for suppliers to get in front of customers. So I wanted to open a shop selling artisan and local foods.

“I started looking for a unit, and found an old blind shop on the Quay with a double front, lovely light, great energy. I had never made coffee before, other than instant coffee, until the day before I opened. There’s an old saying: you can make a good coffee bean taste bad, but you can’t make a bad coffee bean taste good. So I sourced the most expensive coffee beans, and I got someone to show me how to make coffee.

“The guy from the coffee bean supplier came in. He looked around, and said ‘Are you sure about this? There’s no one on the street.’

“I gave myself a budget of €200 to open the shop. I managed to do it for €189. I found all the materials, and my brother-in-law did all the shelving and carpentry work.

“The day I opened, I didn’t have enough money for petrol to get home. So that sort of focuses your mind. With my first week’s takings, I bought outdoor tables and chairs. I didn’t have a sign for about four months, until I was able to cobble together €16 for a sign – I used stick-on plastic. Nothing is impossible – you just need to think about it and come up with solutions.

“The first year was like being in a boxing ring with Mike Tyson and trying not to get knocked over. I don’t know if it’s true that most businesses fail in the first year – I think most business owners give up in the first year. I remember one Friday evening when there were five people in the shop, and I thought, ‘Great – five customers.’ It was four people looking for money and the fifth was trying to sell me something.

“I think I did what I needed to do to get the business through it. After the first year, I was able to make decisions about what had worked and what hadn’t.

“In Waterford at that time, there was an attitude that there is no point starting up anything, because if it was any good you’d be doing it in Dublin. But there were various start-ups defying that, in retail, tech and design. We all found each other, and we congregated here in the Larder. Now we have regulars who come in every day. They have their home, and work, and this is their third space.

“There’s much more positivity in Waterford now. This is a great city, with its own character. The Viking Triangle is fantastic. The Quay is wonderful and very under-utilised. Things have improved so much over the past year, but we’re nowhere near realising the city’s full potential yet.

“I want to become known for excellence within certain products. We’re definitely in an expansion stage now, rather than survival.”

‘I needed to put food on the table’

Carl Widger, Metis Ireland Financial Planning, Limerick City

Limerick was brought to its knees when Dell cut its workforce in Raheen by 1,900 in 2009. Local estimates put the number reliant on the computer manufacturer at around six in every 100 people, and in the months afterwards, several hundred people employed in service industries were let go.

The 2011 Census revealed that seven of the State’s top 10 unemployment blackspots were in Limerick city, with joblessness reaching 57 per cent in one area.

As the national economy began to strengthen, the city’s weakness would become its strength, says Dr James Ring, CEO of Limerick Chamber of Commerce. “House prices were low, and the cost of living was much lower, so we were at a competitive advantage.”

That advantage served Limerick well as it aggressively went after and secured higher-value jobs in recent years.

But the promise of recovery was still a long way off when Carl Widger started his financial services business in 2010.

“Our triplets were born on Valentine’s Day in 2007. In 2008, our fourth child was born. Then the crash happened. I was a sales director and minority shareholder in a financial services firm, and the business was struggling. I couldn’t see much light at the end of the tunnel.

“In 2010, I handed in my notice, with a plan to start my own financial services brokerage.

“Limerick in 2010 was a desolate place: you would walk down O’Connell Street, and at least every second shop was closed. Everyone was telling me I was mad to be starting something at that time, and in the financial services industry, but if there was any other choice, I would have taken it. My wife had to give up work when the triplets were born, and I needed to be master of my own destiny and make sure I had enough to pay the mortgage and put food on the table.

“The opportunity I saw was to work with people who had some pension funds and investments, but weren’t being given any service. So I set up a business doing pensions and investment consultancy for high net worth individuals.

“I started out in a serviced office that barely fit me. It was five square feet with no window, because a window would have cost more. Four months in I moved to a slightly bigger office of eight square feet. I was working until midnight a lot of nights, because our business is very heavy on paperwork.

“My wife was at home looking after four kids under four, so to say it put a strain on us is an understatement. One of the lowest points was when I had to ask the bank if we could not pay the mortgage. I was asking them for a three-month break, but I had no idea how I’d even be able to pay it in three months.

“In the boom times, my income was very good. When I went out on my own, we had no standard of living, and debt we had to pay. In hindsight, deep recessions are great times to go out and start on your own, because you cut the costs to the bare, bare bones and you just become more efficient. I needed to bring in €8,000 a month gross, so that I could pay the mortgage, debt and put food on the table.

“But from the very first month, I hit my targets, and we’ve just grown and grown since. In 2014, we merged with another firm to form Metis Ireland. We now manage more than €100 million in funds and have six people working for us. We’ll turn over €1 million in 2017, and employ eight people.

“To anyone starting a business now, I’d say focus on sales, sales, sales. Understand that the first 24 months will be the toughest of your entire life. Act with integrity when nobody is looking and that will pay off in the long term.

“We have great plans for the future, but none of them will ever involve borrowing from the bank. We’ve just moved to a new office, and we’ve done it up, and we’ve paid for all that out of cash. I’m unbelievably proud of the people who work for us. I go into work every day with a pep in my step and I absolutely love what I do.

“But honestly, I’m not sure that I’d go back and do it all again.”

‘We completely ignored all the advice’

Ian Harkin, Arklu, Letterkenny, Co Donegal

To a large extent, the boom bypassed Donegal. Per capita disposable income lingered at 85 per cent of the national average during the entire period from 2002 to 2011. By the 2011 Census, the county’s unemployment rate had climbed to a staggering 26.2 per cent.

“In 2011, a number of multinationals had located in Donegal, and because they were exporting, were shielded from the recession. But other areas were hit hard. Manufacturing was down. Retail was about three years off beginning to recover,” says Patsy Donaghey, who manages the CoLab incubation centre attached to Letterkenny Institute of Technology (LYIT).

But the outlook wasn’t all grim. In 2011, CoLab had already had some success attracting emigrants back to Donegal, and there was a burgeoning atmosphere of entrepreneurialism and innovation.

“We were showing the country that we’re not all sheep farmers. We’re entrepreneurs and tech innovators too,” says Donaghey.

One of those returning diaspora was Ian Harkin.

“Racing grannies were how I got my start in business. I was on a year out in Australia, and I met a product designer who had some ideas for novelty gift ideas, the kind of things people buy as secret Santa presents. We brought his racing grannies idea to market and the business rocketed: within three years, we had offices in Hong Kong, New York and London.

“My next business venture was a Kate Middleton doll – I developed it in 2011 with Lucie Follett, who became my business partner at Arklu.

“We found ourselves being approached again and again by people who said there was a gap in the market for a wholesome, alternative doll for younger children. For a year and a half, we researched the idea and found that pretty much every doll in the market was based on an adult.

“We designed our doll, Lottie, based on the body of a nine-year-old child, to be relatable, age-appropriate and fun.

“Retailers were saying that won’t work, it’s not what the public wants. They said if you want to do a doll it has to be 11.5 inches, it has to be pink and glittery and have blister packaging. We completely ignored all that advice when we developed Lottie. Our packaging is 80 to 90 per cent card and we’ve reduced the amount of ties inside the packaging.

“At that stage, I was working from a laptop at my kitchen table in London. It came to the point where we had to make the decision to just do it. So I sold my home in London and put every penny into the business. I approached Enterprise Ireland, who agreed to match my funding of €250,000. We wanted to create 10 jobs. The idea of doing it in Donegal, where it was needed most, really appealed to me.

“Pretty much everybody else said it was a terrible move, from the perspective of networking, talent and access to funding, or customers. But as long as there was broadband, I knew it didn’t matter. No matter where you’re based, you’re still going to have to get on airplane and go to America, China or the UK.

“Ireland is one of the best countries in the world for start-up businesses. I travel a lot and the assistance that Enterprise Ireland provides to start-up business is not rivalled anywhere else in the world.

“I started off at a hotdesk for just myself in CoLab. We’re up now to a 200-metre space within the building. Last year we doubled our turnover, and this year we should double it again. Next year we will have playsets, buildings and some exciting new partnerships to announce.

“Six of our dolls have been designed by children. One of them, Stargazer Lottie, was designed by a little girl in Canada. The doll went up in a rocket last December and spent 264 days in space.

“One of the things we’re doing this year is addressing gender stereotypes. We’re going to introduce some more Finn dolls, and we’re developing four ethnic dolls. We recently announced a book deal with Penguin, building it into storytelling and adventures.

“One of the most difficult phases for a start-up is the growth phase – nobody really appreciates that growing requires more money. You need to be constantly looking at your business plan and revising it – every two weeks or so. My background is as a chartered accountant, and I believe that’s a fantastic grounding for entrepreneurship.

“If you’re starting up your business, you have to be prepared for something to go really wrong every six months. There’s some days things go wrong, and you think, ‘How am I going to get through tomorrow?’ My advice is to get your sleep, because it never looks as bad the next day.

‘When I hired my first employee, that was scary’

Aisling Maher, Aisling Maher Millinery and Boutique, Adare, Co Limerick

Today, “Limerick has a very high rate of disposable income compared to the rest of the country – we’re second only to Dublin,” says Dr James Ring, CEO of the Limerick Chamber of Commerce.

But in 2010 and 2011, the city was still struggling – the 2011 Census recorded an unemployment rate of 23.8 per cent. The construction industry had been decimated, and the future for architecture students like Aisling Maher looked bleak.

“I left uni in the summer of 2010. I was going to the Galway Races, and wearing a lime green outfit. I couldn’t find anything to wear on my head. So I went into Hickey’s, and I bought a load of stuff and I made a piece – a lace headband with little feathers and handmade flowers.

“At the races, I met a few people I knew from studying architecture. Everyone was like, ‘How did you know how to make that?’ I couldn’t understand how they didn’t know how to make it – we had the same training and skills.

“When I started, architecture seemed a sensible, solid career option, but by the time I qualified, there were no jobs – at least, no paying jobs. People were emigrating or working for free. So I had already started thinking about what else I might be able to do with the skills I had acquired in college.

“After that day at the races, I started making a few little pieces – sparkly hairbands and fascinators, mostly. I approached boutiques across Munster and asked whether they liked them and they would buy them. And everywhere I went said yes.

“When I started I wasn’t scared – it didn’t feel like a massive step for me. Later on, when I hired my first employee, now that was scary.

“I started the business with around €200, and reinvested everything that I earned. My Local Enterprise Office were so helpful: they set me up with a mentor whose advice was that anything is possible. If you aim too low, you’ll reach it and you’ll plateau. Within six months, I had my products stocked in 15 places across the country.

“There was a Pro-Am tournament in Adare that summer run by JP McManus, attended by A-list stars like Tiger Woods and Samuel L Jackson. One of them was Catherine Zeta Jones. She came across some of my pieces in the boutique at the Adare Manor Hotel, and bought them to wear to the event.

“After that it was a whirlwind. I was on TV shows and in magazines, and by the end of that year I was stocked in 25 boutiques and shops around the country. I showed my collection in London and Paris and I started exporting. Everything was on the up and up.

“Then, in 2012, I moved into a physical space in Limerick city with another designer. It’s amazing how when you start something with somebody else, everything is aligned and you think you’re on the same path. But after eight or 10 months, our paths were very obviously diverging, and I realised I had to go it alone. That was really difficult, but in hindsight, it was the best thing that could have happened to me. I was 27 then, and it toughened me up and made me ready for whatever the world of business could throw at me.

“I found a new space in Adare, Co Limerick. I started with a small space in 2013. We doubled in size between 2014 and 2015 – in terms of the size of the space, the turnover, and the number of employees – and then earlier on this year we moved into a bigger unit.

“I now have five staff members, and I’m hiring a sixth – four of them are full-time. I’ve built a fantastic team around me of people that I completely trust.

“Now, we also import fashion from across the world and our customers come in and get uniquely styled.

“I don’t think I’ll ever get to a five-day week. The minimum I do is six days, and there’s always early mornings and late nights. My mind is never at rest when it comes to the business – there’s always something on the back burner.

“I’d definitely do it all again, though. Last night, I got an email from a bride who got married a year and a half ago, and she wanted to thank me for minding her and her mum, and send me photographs. I feel like I don’t go to work every day – I go to play.”