Backing-up a winning concept

Deciding if a business idea actually stacks up is probably the most important decision any would-be entrepreneur can make.

When he attended his first ‘Start Your own Business Course’ with Dublin City Enterprise Board in 2006, Fergal Madden learnt a lot, but one of the most important lessons was the realisation that the business he had in mind was unlikely to succeed. That, however, did not deter him from pursuing an idea that would work.

Two years later, Madden launched a business that is proving itself in the market. Arion Online Backup provides a service that backs-up the vital data companies use to run their businesses, such as accounts, exchange, SQL and payroll information, at remote data centres. The service is an alternative to backing up information on portable discs, which Madden says is a flawed idea as it is prone to security risk such as loss or theft.

“Data is the most important asset a company has. Research has shown that over 60% of companies that lose their data will shut down within 6 months of a disaster while nearly one in three companies have experienced hard drive failures in a given year,” he explains.

The service operates on a subscription model. Clients sign-up to have their data backed up at two secure data-centres and their information is updated online on a daily basis. If they lose a file on their own system, they can recover it instantly from the data centre. “The service is a very valuable one but relatively new to some people so one of our key tasks is about educating the market,” he says.

Madden’s background has given him key skills to draw on as he builds his venture. Having qualified as a computer maintenance technician, he joined IT services firm, Calyx, but quickly gravitated to sales and marketing within the firm, undertaking a marketing degree at night. “My sales background has proved invaluable as I’m not afraid to lift the phone and talk to potential new clients,” he says.

With two business investors, Madden launched the business in early 2008 with seed capital of around €60,000. The firm targets small and medium enterprises (SMEs) and sells directly to these businesses and via distributors. Typical small business clients such as professional practices pay between €1,000-2,000 a year for the service and Arion had turnover of around €150,000 in its first year in business.

Madden says that the help provided by Dublin City Enterprise Board has proved invaluable. The Board provided an employment grant of €7,000 and access to a mentor, Michael O’ Callaghan. “Michael’s background is in the IT sector so he has asked all the right questions and pointed us in the right direction,” Madden says.

The initial plan had been to move quickly into the UK market but Madden says that the company has decided to capitalise on opportunities in Ireland first. “You have to have the flexibility to change your plan as you go. The UK is definitely in our sights, however, and we know that the Dublin City Enterprise Board will help us to get there when we decide to go for it.”

Networking has been another key tool in growing the business and Madden is an active member of both BNI, an international networking organisation with chapters throughout the country and Link!, a network run by the City Enterprise Board.

Like many small businesses in the current climate, one the challenges the company faces is getting payment. “We have noticed a deterioration in payment terms in recent months, with many people taking over 90 days to settle accounts. Ultimately, we have the option of cutting service so we have an advantage over others such as those who’ve supplied products. With our clients, we also bill them at the start of the year so our cashflow overall is good,” he says.

Among the other challenges for Arion is keeping abreast of the latest technology developments in the market and making sure that the service offering remains relevant and competitive. “This is a market that was not there three or four years ago as the technology was not widely available. We need to ensure that we are positioned well for the longer-term by staying ahead of the curve.”

Madden advises would-be entrepreneurs to do their research thoroughly before committing to a business and also to start small. “Ideally if you can develop the business idea side by side with your day job for a while, it can remove a lot of the pressure as you know that you have your overheads covered,” he suggests.

© 2009 Dublin City Enterprise Board. All rights reserved. No part of this publication may be reproduced in whole or part without the permission from the D.C.E.B.

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