Corporate Vision August 2015

Spotlight on Business Books l Profiling the Brightest and the Best CEOs l Tips on Executive Decision Making

www.corp-vis.com

Spotlight on Internet Start-ups How three well known firms built their online empires.

Business Intelligence Gets Blurred We take a look at blur Data, an exciting new platform set to transform the business intelligence market.

Don’t Act Your Age James Thomas shows how skills learned from children can improve negotiation skills in business.

August 2015

Editor’s Note Welcome to the August edition of Corporate Vision.

This month we ask: Just how much business acumen can be gleaned from books?

We have Liz Copeland’s top tips on how to make the best decisions possible and James Thomas examines whether negotiating like a child will help you get ahead.

Focusing on internet start-ups, we take a look at what drives top business leaders to routinely start online ventures and we spotlight famous brands that have grown from micro businesses into multinationals.

Martin Hook tells us exactly how the summer budget will affect businesses and Chrisol Correia, Global head of AML at LexisNexis Risk Solutions talks us through how the Greek crisis will impact on anti-money laundering efforts.

We put the spotlight on innovative new ideas, with blur data set to rejuvenate the business intelligence market and Cortexica’s new visual search technology set to revolutionise the retail industry.

As SMEs look for alternative funding Philip Ciniglio takes a look at the role bartering and crowd funding will have to play in the market and our LSBF Great Minds feature this week explores the philosophy and business practices of Tom Cijffers, Managing Director of media agency Zenith UK. We hope you enjoy this issue.

Contents 4 News

8 CEO Profiles Chris Noblet Greg Zontanos Peter Bardwick

15 Strategy Effective Decision Making in Business Can Success in Business Be Learnt from Books?

21 Industry Insight Changing the Peer-To-Peer Lending Landscape Socially Engineered Hacks Now Target Financial Organisations Start-Ups Set to Shake-Up the Market What Impact Will the SMR Have on Recruitment at UK Banks?

Management Accountants Get Compromised Can Business Leaders Learn Negotiation Skills from Kids?

Visual Search Tool Taking Retail World by Storm The Allure of Internet Start-Ups blurring the Lines of Enterprise

41 SME Global Mobility Strategies for SMEs Expanding to the US Alternative Funding for SMEs Continues to Grow with Business-To-Business Bartering on the Rise

47 Money Staff Travel Expenses: Have You Got Yours Under Control?

A Budget for Innovation?

The Impact of the Summer Budget on R&D How to Understand Your Business Costs, and How to Treat Them

55 60-Second Interviews

News

Brand Money New Laundering Ideas amid the

Tactics to build a unified brand experience.

An increasingly-competitive corporate marketplace has made it essential for companies to identify their brand’s individual place in the market whilst maintaining their current marketing efforts. Budget-conscious and often resource-strapped small business marketers may implement a tactic into their strategy, which results in brand fragmentation and can create confusion in the minds of their audience.

Claire Prendergast, Senior Strategic Communications Manager at agencyEA, believes that it is possible to consistently deliver an engaging and unified brand experience, and in her latest article she offers a few tips on how businesses can achieve this.

• An eye for detail. Prendergast suggests that if embarking on a marketing campaign that is “on the go,” pay attention to marketing materials and ensure they are consistent with others. Pay attention to branding guidelines in order to not violate the sanctity of your logo, colors, tagline, etc.

• Misaligned focus. If incorporating social media into your strategy make sure you don’t overemphasize product promotion. Focus on creating a community of followers who are loyal to your brand.

• Quantity vs. quality. In regards to your content creation process, focus on churning out quality and compelling content in order to not burn out from your efforts. Do not make the mistake that the only way to maintain your brand’s visibility is by blanketing various platforms with an endless stream of content.

This advice comes from PR Newswire’s Small Business PR Toolkit. The online help kit is a comprehensive resource that provides small businesses and entrepreneurs the tools to develop an affordable public relations and marketing plan that helps generate interest from potential customers, engage with key audiences and grow their businesses.

Greek Crisis Chrisol Correia, Global head of AML at LexisNexis Risk Solutions discusses the Greek crisis and the implications for anti-money laundering institutions.

1. What opportunities will the Greek economic crisis afford money launderers?

Ongoing, country-specific economic uncertainty establishes the country as a “higher-risk jurisdiction,” which is a red flag for money laundering. The scale of capital flight from Greece in recent months suggests that a lot of black money will have already left the country, heading to less volatile jurisdictions. However, with the current capital controls and the Eurozone members calling for even more heightened austerity programmes, this may stimulate new motivation for criminals or tax evaders to seek new ways to transfer funds out of the country.

2. What steps could emerging nationals such as ourselves take to avoid money laundering?

When it comes to money laundering, banks are on the front line. Country-specific and global regulators expect banks to know their customers (both individual and corporate customers) so that money laundering can be detected and prevented. If the European banking sector is overwhelmed by the scale of the Greek crisis and its consequences, money laundering activities might easily go undetected.

U.K. banks need to increase preparedness and scrutiny for these potential spikes. They can do this by utilising an efficient combination of technology, data and analytics to check that customer relationships and transactions are free from red flags. For example, funds transfers coming in from or going to a high-risk jurisdiction, large funds transfers with limited transparency about the parties involved, or overly complex trade finance deals could all indicate money laundering or tax evasion risk.

U.K. banks also need to think ahead, and adjust their AML programmes accordingly. There is an expectation that the weaker European economies (Spain, Portugal, Italy) are going to come under pressure, resulting in large scale capital flight from those countries into less

4 Corporate Vision August 2015

volatile jurisdictions. This presents a huge opportunity for money launderers. Much in the same way that criminals attempt to launder money during the Christmas shopping season, money launders or tax evaders could take the opportunity to transfer illegal funds during periods of high cross-border transactions.

3. How will the six measures negotiated between Eurozone and Greek officials to avoid an exit from the Eurozone affect money laundering risks?

Money launderers thrive when economic conditions are precarious. Today, even the definition of money laundering is broadening. For example, the convergence of money laundering and tax evasion is very real. Regulators around the world consider tax evasion now as a type of money laundering. As a result of the recent all-night negotiations, Greek tax authorities will become more aggressive in their pursuit of collecting all tax due on the overseas assets of Greek citizens and companies, seeking repatriation of funds when tax is owed. As such, banks outside of Greece may instigate new Know Your Client (KYC) procedures to verify the tax legitimacy of these relationships in anticipation of more investigations instigated by the Greek government.

4. What technologies will influence money laundering in this instance?

Persons keeping cash outside of the banking system will not be able to use banks to move money to more stable locations. A rise in bulk cash smuggling or the misuse of new payment technologies, such as P2P and virtual currencies should therefore be anticipated.

Illegal money transfers might also be disguised as complex commercial transactions.

News

‘Cell Smell’ and the Key Components of a Successful Spreadsheet

Top 10 Digital Marketing Tips

Chris Aldred, Director at Operis discusses problem detection in financial spreadsheets

1. Don’t believe that just because you have a product that is better and different customers will naturally find you and buy from you. Very rarely does this happen and even those who seem to take off organically have given themselves a sizeable push to gain some initial traction.

‘Code Smell’ is a term used by programmers to describe small problems they notice in a large programme block that indicates there might be a more significant problem in the code. These are little warning signs that indicate the designer may have taken short-cuts or may have lacked attention to detail.

The same principle applies to financial models. Here, though, we might call it ‘Cell Smell.’

Whether you are an accountancy firm, investment bank or any business, financial models are at the very core of all major projects, and small problems can have significant consequences.

Modellers need to train themselves to spot the red flags within a model, and fix problems early. Here are 5 indicators, some of which are best practice and some are key things to avoid, that contribute greatly to ‘cell smell’. I recommend you look out for: 1. Clear separation of inputs, workings and outputs The number one thing to review before anything else is if the model is structured like it should be.

We consider best practice to be where the inputs, workings and outputs have been clearly separated and no unexpected or hard coded numbers are stuck in formulas. A typed up number buried in the middle of a formula is a warning sign that good structure may be lacking elsewhere in the model.

2. Consistent structure across worksheets I recommend using the same columns to refer to the same periods across worksheets. When you do not have this fundamental structural point in your model, then you are opening yourself up to a catalogue of errors between sheets. Having varying columns requires more complicated formulas, and it’s harder to tell at a glance if any cells are assigned incorrectly.

Consistency – across all areas of a workbook – breeds confidence in the model. Of course, this can be easier in principle than practice, because...

3. If multiple people are involved, errors are multiplied Seeing a model where all of the worksheets are completely different and have been formatted differently is a bit like entering a room and having ten people try to tell you the same story at once. An inconsistent style can point to the fact that the people who did the later work on the model may not be familiar with the workings of the original. Figuring out whether the worksheet even still performs the purpose it was originally designed for can take lot of time to unravel. Spotting this problem early (ideally with the first contributor who goes off-style) can save a lot of headaches later on.

4. Be sure to avoid circular references In general, project finance models tend not to feature circular references – where formulas refer to themselves – because of how quickly they breed workbook-breaking errors. Still, we often get people coming to us saying there are one or two circular references in their model have been left in deliberately and they are happy with them. Of course, on review we invariably find there are actually 15 circular references, because the modeller has lost track of them. In the world of project finance, it should be universally accepted that you should not put circular references in your models; we prefer to ban them outright, without exception.

5. Simplify your model It’s easy to think that putting everything in one place makes it easier to spot problems – it keeps you from hunting through the workbook, after all! However, overcomplicated formulas are often a breeding ground for hard-to-spot errors. Instead of focusing on a series of complex formulas, break your calculations down into three or four different steps. This makes your spreadsheet easier to review – something that senior decision-makers (particularly investors) will be more comfortable with. Formulas comprised of a hundred terms that barely fit on the screen are likely to irritate savvy analysts. Similarly, reams of inactive or unused code can cause confusion and lead to errors.

August 2015 Corporate Vision 5

By Joby Russel, CMO at hybrid estate agency Purplebricks.com My top ten marketing tips for a digital brand are as follows:

2. To outperform the market leader or disrupt a new market, you have to provide a service that is materially superior, not just a bit better. A bit better is rarely good enough to gain market share from a brand who has been there for some time before you and has become entrenches in the minds of consumers.

3. Marketing shouldn’t stop at the acquisition strategy - marketing efficiency only comes when marketing can influence the customer journey and the product appeal.

4. Online brands often just think in online acquisition channels. Offline broadcast spend continues to be the fastest way of achieving high levels of reach and frequency of your message, but more importantly helping to educate the market.

5. Don’t just build for all device types, but understand the nuances between consumer behaviour on each device type and develop accordingly.

6. Cosy up to your Google industry lead, they can be invaluable.

7. Don’t be seduced by every new trend. Remain focussed on the core principles of marketing: how do you position the brand, what do you want to stand for in the mind of the consumer, how do you create winning products. Spend less time thinking about a new trendy app you heard about - they can be a total waste of time.

8. No one is ever going to wander past your store front and pop in to buy something. Investing in marketing to grow traffic is crucial – sorry, engineers and product developers.

9. Try and organise your data so you can clearly see LTV at a customer level and make use of your audiences.

10. Forget fixed budgets, establish the economics of creating a sale and fill your boots.

What:

We partner with high technology companies to assist in developing intellectual property assets, formulating and executing strategic plans for achieving maximal value for our clients. Our clients have achieved over $1.6 Billion (USD) in market value, either through financing rounds, merger and acquisition, licensing or litigation awards. To achieve this success, we combine professional and technical skills with level-headed business principles and experience. Or practice is devoted to supporting our client’s intellectual property asset development, commercialization and, when necessary, enforcement.

Planning:

The focal point of an intellectual property plan is to secure maximum value for intellectual property assets. This is achieved by first defining the business objectives to be achieved.

Strategy:

Once the IP plan has been identified, a management team, including business, technology and legal expertise, reviews the business objectives, considers the congruence between the plan and the objectives, then pressure tests the plan against identified opportunities to challenge that the intellectual property assets will achieve those objectives. Being dynamic, the plan will be consistently and constantly assessed, revised, and reassessed as new objectives are identified, new opportunities are presented or new challenges arise.

A coherent IP strategy will include IP landscaping to identify and analyze existing IP rights and players in the relevant technology space. The white space opportunities will be identified and an evaluation of the coherence between the IP plan and the white space analysis will be completed. In addition, IP forecasting may be undertaken to predict, based upon a third party’s prior IP behavior, what are the likely IP protection pathways a third party will be pursuing with their IP portfolio. Additionally, licensing and collaborative research and development opportunities may be undertaken, “blue sky” evaluation for next generation products and/or superseding technology and opportunities for developing IP in those areas, freedom-to-operate issues relevant to the pre-commercial products under development to minimize the risk of material liability in litigation should be undertaken and processes for dynamic and real time IP tracking within the technology space, may be implemented.

Who:

Members of the firm have scientific training and regularly work across a spectrum of technologies including pharmaceuticals, medical devices, biotechnology, therapeutics, diagnostics, nanotechnology, organic and inorganic chemistry, biochemistry, materials science, agricultural chemicals, plant breeding, environmental protection systems, semiconductor processing, industrial and medical lasers, computer hardware and software, digital and analog electrical systems, water purification systems, evaporative cooling systems, skin care products, clothing, motor vehicle assemblies and systems, and general mechanical and electrical technologies.

“

We combine professional and technical skills with level-headed business principles and experience.

”

Address: 1480 Techny Road Northbrook, Illinois 60062 Tel: 847-770-6000 Fax: 847-770-6006

info@RosenbaumIP.com www.rosenbaumip.com

News

CEOs Afraid of Poor Customer Loyalty KPMG’s 2015 Global CEO Outlook shows top CEOs fear customer disloyalty more than being rendered obsolete.

With customer choice now a major factor in many corporate environments, it is perhaps not surprising that CEO now fear customer dismissal, with 86% citing decreased customer loyalty as their top fear.

This comes above the 66% who feared their product or service might not be relevant in three years’ time.

Additionally, 68% of the participants in the survey stated that they feared their competitors’ ability to steal business from them, highlighting the today’s CEOs have on losing custom to their competitors.

CEOs who participated in the research were selected from companies over US$500 million in revenue, with over 1,200 global chief executive officers taking part to ensure the research was both accurate and wide reaching.

Other eye-opening points found by the survey include the fact that 62% of CEOs involved in the report felt confident in the future of the global economy, however only 54% felt the same way about their company’s ability to grow, proving that many CEOs do not have confidence in their internal handling of growth strategies but believe that the external factors will improve.

The Fake Reviews Scandal: Is It Happening on Your Watch?

Anne Marie Olsen, VP of EMEA at PowerReviews offers advice on how to stop fake reviews appearing on your website and how to use all reviews to your advantage.

A few weeks ago, some devious practises were brought to light by the Competition & Markets Authority (CMA) surrounding online reviews and endorsements in the UK. An investigation into the £23bn reviews industry and subsequent report unveiled shocking truths. A number of businesses were found to be posting fake reviews in order to increase their ratings, going as far as commissioning authors to write fake reviews for them glorifying their products and services. Worse still, some firms were caught writing reviews on competitor websites to mislead customers and maliciously hurt the competition.

These tactics were particularly devious considering that the CMA found that more than half of people in the UK use online reviews to help them make buying decisions.

Most consumers appear to trust online reviews and the majority said the product or service matched up to the review. These findings also align with PowerReviews research carried out in April which found that 80% of shoppers use online reviews to help them shop in-store, so there is no doubting their value to consumers.

However, with evidence of businesses cherry-picking positive reviews, suppressing negative reviews and using fraudulent reviews, its clear consumers are not getting the full picture when they research online.

For companies offering reviews on their websites, vigilance is crucial. Both fraudulent reviews and profanity should be monitored by your reviews technology provider. If they are not, consider moving to a different partner. Equally, negative reviews should be displayed alongside positive reviews, as any suppression of negative reviews without disclosure to consumers is not only bad business practice, but also risks breaching the law; specifically Consumer Protection from Unfair Trading Regulations 2008. As a warning to those guilty of such foul play, the CMA has stated that it will investigate any business that breaches consumer law

August 2015 Corporate Vision 7

and will take enforcement action where necessary, a stance wholeheartedly supported by PowerReviews.

The purpose of reviews is about trust, information and transparency and that means displaying the good and the bad. Contrary to popular belief, research carried out by PowerReviews shows that negative reviews can actually be good for business.

While negative reviews may feel like a slap in the face, resolving issues and using the feedback to improve a product or service can generate trust and respect and help distinguish your business from competitors.

For consumers, reviews help them shop wisely and displaying a mix of positive and negative reviews can help shoppers identify whether a product is a good fit for them or not. A quiet hotel may be a bore for some, but could be absolute paradise to someone else.

Not only does a mix of balanced feedback benefit the customer but it also provides a goldmine of valuable consumer insight. This can be used to improve products and services, as well as the overall shopping experience.

Crucially, negative reviews are key to adding authenticity to your brand and are a great opportunity to prove your credibility and engage with your customers.

So what does the CMA report mean for you? Well, while the CMA report revealed some bad practices, it’s important to ensure it is not happening on your watch.

If you’re concerned about negative reviews, take our advice and don’t be. Give customers the transparency and information they deserve and expect.

But if you suspect any foul play at all when it comes to negative reviews, check how your reviews partner verifies real reviews so you can be confident you are stopping any fake ones.

CEO Profile

Chris Noblet Chris Noblet is CEO of Rivo

In an age where public perception is playing an increasingly important role towards a company’s bottom line, maintaining this is absolutely paramount.

With news now a 24 hour service and the ability of stories to circulate quicker than ever thanks to technology, businesses need to be savvier than ever.

Health and safety breaches and slips in operational risk are areas that can tarnish a company’s reputation, for a considerable amount of time, and having a substantial impact on profits. Hence, the popularity of procedures and processes put in place to help are growing in popularity, and Rivo are one of the companies leading the charge.

The majority of Chris’ acquisition experience came from his time at Capita in his role as Acquisitions Director; a company Chris describes as ‘an incredible acquisitions machine’. Chris’ job was to speak out, identify and buy IT businesses for the IT arm of the company. Although there was somebody above Chris at board level whom he reported to, Chris was doing much of the leg work in this area. In such a position at the heart of a £400 million company who look to make between 12-15 acquisitions a year, Chris, without doubt, learned an enormous amount about the acquisition process. Using the processes and lessons learned from his experiences, similar methods have been applied to Rivo who are keen to expand through acquisition if suitable.

Rivo is a software platform that allows organisations to manage risk, compliance (corporate & regulatory) and performance across your business and third parties.

Data can be captured from any of your operational locations, from any person in your organisation (and third parties) and at any time. They have 400,000+ users across 82 countries who can target key risks areas to mitigate threats, enhance performance, strengthen governance and increase growth.

Their risk management SaaS solutions platform lets you combine solution layers to drive a complete risk management capability across any element of corporate safety, security and sustainability.

A man who has been integral to their continued growth and success is Chris Noblet, CEO. Chris was appointed Rivo’s CEO in late 2014 and is responsible for the overall growth and strategy of the global business. Prior to that, Chris held a number of senior IT and operational roles for organisations including acquisitions director at Capita and Global Operations Director at Arthur Andersen. He was educated at the Sunderland University and completed his post graduate degree at Manchester Metropolitan University.

Throughout his career, Chris has been involved in approximately 25 acquisitions, both as the acquirer and the acquired. Despite the volume of deals Chris has overseen, he is adamant that companies should choose partners stringently and not bulk for the sake of bulking. Having a very clear strategy of how a business will fit in to your own, from the services offered to the people being integrated, preparation must be meticulous.

8 Corporate Vision August 2015

One of the differentiating factors for Rivo is their belief that they possess the best technology roadmap both in terms of user interface and underlying tech.

The company are continually recognised for being customer centric and have great customer retention to reflect that. They are also the only top 20 operational risk software company to run a single version of software in the cloud, meaning they can be lean and provide many more features to their customer base than perhaps other companies. A new version of the software will also be available later this year, featuring tools which will be industry firsts. With big name clients including Crossrail and Thames Tideway Tunnel involved in huge projects, it certainly is a busy and exciting time for the company.

CEO Profile

Greg Zontanos Greg Zontanos is CEO of on-demand shipping app, Weengs

Weengs is an on-demand shipping app that wants to revolutionize the way people send packages.

The firm , often dubbed ‘the Uber of shipping’, has created an easy to use system that enables customers to send parcels more easily. Customers take a photo of the item that they want shipping and the company sends a ‘Weengs Angel’ within 15 minutes to pick up and professionally package the item for the customer.

The Weengs Angel then takes the item to be sent out by the fastest and cheapest of the firm’s partner shipping providers, which include Royal Mail, ParcelForce, Hermes, UPS and DHL. The service is accessed via a free to download app and each collection is a flat fee of £5 enabling customers to send as many parcels as they choose in one collection. This speed and convenience is why their service is fantastic for home businesses shipping out goods or for time-strapped people who can’t get to the Post Office.

The pair began their journey towards changing the face of the shipping industry three years ago when they both left their jobs to launch a technology startup, a mobile app called Locish. They started from Athens, then moved to NYC and the San Francisco, raised two rounds of investment and finally, almost a year ago, shut down the company. The pair took some time out of business and then started researching innovative business models that would interest the European market. The first mile of shipping seemed very challenging and promising to them, so they eventually came to the decision to launch Weengs in London.

Short term the company plans to ingratiate itself into the UK shipping market very quickly by targeting different segments of potential customers until they have a loyal customer base. Once this is acquired the firm intends to raise awareness through word of mouth, as customers pass on details of the exemplary service they received from Weengs to other potential customers.

The Weengs system is designed to alleviate the hassle of the ‘first mile’ of shipping, the packaging up items and going to the post office or scheduling collection which is what keeps people from sending more parcels.

While there have been many attempts to improve the last mile of shipping, for the last 100 years no business has ever tried to change the first mile. Even in their first two months of operation, customers have started sending more parcels than they did before, because of the convenience that Weengs offers.

Customers are changing their habits because of the firm’s convient and reliable system, with the company reporting an increase in customers sending gifts to relatives and friends globally because of their easy to use service. SMEs and online sellers have also found themselves focusing more on selling than delivering thanks to the service.

Weengs is currently in its infancy, having only been established six months ago, but has already had a flood of interest thanks to its unique approach to shipping. Zontanos believes that the industry has remained static over the years, something he and his co-founder Alex Christodoulou are keen to change.

August 2015 Corporate Vision 9

In the long term, the Zontanos has the ambitious plan to launch Weengs in every central European city.

Zontanos is very passionate about customer service and ensuring every customer has a good experience, which could potentially propel Weengs into the forefront of the global shipping market.

“We enjoy having happy customers. The surprise of our customers when they first use us is the thing we enjoy the most. Sometimes we even achieve pickup times in under 10 minutes, which they find unbelievable. The second ‘aha!’ moment comes when they hand over their item unboxed. They always ask if this is all they have to do. We always assure them that, yes, that’s all.”

CEO Profile

Peter Bardwick Peter is the new CFO of Nitro, a leading technology firm specialising in PDF collaboration software and e-signatures.

Prior to his recent appointment at Nitro, Bardwick was at Rocket Fuel, where as CFO he led the company to one of the most successful IPOs of 2013 and increased revenue from $40 million to $400 million during his three year tenure. Prior to that his career included stints with CBS MarketWatch, Citicorp and Salomon Brothers.

Bardwick believes that there are three factors inherent in making a good technology company, all of which are present at Nitro.

“If you think about what makes for a successful tech company, in my opinion, there’s three ingredients, one is the right people, and the second is the right product and then of course there’s the right timing in the market. I’m bullish on Nitro having all three. I think Nitro has got a great team that is very focused on executing and achieving their goals. A good product in today’s environment is one that people want to use and that makes their work life better.

Today’s employees want to think, not to be dragged down in mundane repetitive tasks that can be done better through technology and software. And we want to be on the forefront of the “consumerization of the enterprise”. If your phone or social media software is fun and intuitive, why shouldn’t your software at work be the same? Thirdly there’s market timing.

Right timing is about having the right product when the market is thirsty for it. In 2015 that means having products that people can pick up and use easily.

Right timing is also about the migration of software to the cloud, and corporate recognition of the opportunity to make their employee’s lives better and more productive. I like to say “it doesn’t matter how good the surfer is if the waves aren’t up.”

pave the way for the San Francisco based company to build upon its cloud based products as customers grow increasingly accustomed to buying and using their software online Having been responsible for two very successful IPOs and having raised almost $11 billion over the course of his career, Bardwick looks set to propel Nitro’s growth strategy forward using his fundraising capabilities and relationships. The company’s customers are looking to grow in parallel to Nitro, with the firm expecting to help their customers in their growth in order to accelerate its own. Nitro is also looking to expand their customer base by penetrating new and larger firms and provide them with products taking care of all their pdf requirements.

Bardwick is also responsible for the company’s internal IT systems, which he is currently integrating in order to reduce the amount of time that staff spend on spreadsheets and increasing the amount of time they have to spend on actionable information. He is a firm believer in clear, concise communication and will enable this throughout the company.

Being a successful investment banker has prepared Bardwick for the role, as it requires a good sense of corporate strategy, for example how the company and its products fit into the competitive ecosystem, and the potential opportunities and risks of certain strategies. Additionally it also gave Bardwick the skill to communicate these strategies and opportunities to potential investors persuasively.

Rocket Fuel is perhaps Bardwick’s biggest success to date, being the fastest growing tech company in the US from 2008- 2013. During his time there the firm went from 120 people to about 1100, expanding from three countries to around 15, with Bardwick responsible for all the corporate infrastructure as well as capital markets activities, highlighting his driven growth focused strategy.

Nitro is in the midst of a growth surge itself, having raised a venture round late in 2014 and recently launching Nitro Pro 10, the latest version of their desktop offering, and Nitro Pro+ 10, a new SaaS document productivity solution. The new products

10 Corporate Vision August 2015

Ultimately, Bardwick believes that his role is no longer limited to working in finance, with a much more business focused approach required to succeed in the role. He believes that in today’s tech environment, with a preponderance of younger and highly mobile employees, good leadership must focus both on achieving corporate goals as well as helping individual employees achieve their own goals.

“The CFO’s role has changed a lot in the past 20 years and I think especially for CFOs of growing tech companies. The focus has moved from simply closing the books and reporting the numbers to being at the table for strategic and resource allocation discussions. This is a much broader and more business focused approach. I think the most important quality in a good leader is to understand who you are. If you set out to try to be Steve Jobs you will surely fail.

Many people have a model in their heads of great leadership, but don’t understand that they will fail in emulating a model that is inconsistent with their own core assets. This doesn’t mean they can’t be great leaders, they just have to do it in the context of who they are.”

CEO Profile

August 2015 Corporate Vision 11

LSBF Great Minds

“The challenge is to find something original that isn’t already being done better,” says MD of Zenith UK With marketing becoming more and more digitally focused, Tom Cijffers, Managing Director of media agency Zenith UK, says it is essential for new brands to launch with an original digital idea. As part of the Great Minds series, Mr Cijffers sat down last week with Ze Zook, marketing lecturer at London School of Business and Finance (LSBF) and discussed the changing landscape of marketing and branding.

“There has to be an underlying digital usefulness for any brand launching today; this is particularly true for offline brands. For example, a new sports drink is not going to have an obvious digital channel, compared to something like Uber.”

He added: “Nowadays you have to give customers something extra, and with everyone trying to jump on the digital bandwagon, the challenge is to find something original that isn’t already being done better.”

ZenithOptimedia Group, of which Zenith UK is a part, is a marketing consultant and advertising agency and a part of Publicis Groupe, the world’s third largest communications group and second largest media counsel and buying group. ZenithOptimedia was the first agency to apply a rigorous and objective approach to improving the effectiveness of marketing spend.

With a vast array of key clients including Aviva, BBC Worldwide, Nestlé, L’Oréal, Telefónica O2, Toyota/ Lexus and Verizon, ZenithOptimedia stands out from other agencies by offering a bespoke service, going above and beyond the traditional.

Tom Cijffers has been a part of Zenith UK for over ten years, having held various senior positions in the company. Speaking about what he brings to the business, Mr Cijffers said: “I aim to provide an environment for my staff that has the right structure and space for them to innovate for each client. I try to enable my staff to be empowered, I give them the right objectives, and at the same time deliver for our shareholders.”

The global marketing sector is currently in a state of flux, with digital platforms like Twitter, YouTube and Facebook becoming major influences in the way that brands approach advertising. There is an obvious shift in focus away from more traditional media like television and magazines. Discussing these issues, Mr Cijffers commented: “Marketing is now a more complex and challenging environment. Digital media was 5% in 1999, it is now 50%. There’s been a massive cultural shift.”

As we become more and more technologically advanced, marketing and communications companies are finding new ways to integrate technology into their strategies, championed by intelligent computers.

ing, you can disappear down a rabbit hole becoming more and more specific with data from machines.

Ultimately you still need a brand that people will be interested in emotionally.”

The full video interview with Mr Cijffers will be released on the LSBF website in the upcoming weeks.

LSBF Great Minds Series As well as offering programmes dedicated to fostering leadership skills, LSBF also endeavours to provide students with insight and inspiration through a number of innovative resources. One of these initiatives is the LSBF Great Minds Series: a collection of video interviews with leading business and political leaders promoting debate on education, employability, entrepreneurship and the economy.

The video series started in 2011 with a conversation with former British Prime Minister Tony Blair, followed by an interview with former Education Secretary Lord Kenneth Baker. In 2012, entrepreneur Sir Richard Branson, founder and chairman of the Virgin Group said that universities worldwide should become hubs to boost entrepreneurship and inspire self-starters to develop their own businesses. In 2014, LSBF spoke to Will Butler-Adams from Brompton Bicycle, Guy Hayward-Cole from Nomura Bank International, with former British Prime Minister Sir John Major, entrepreneur and investor Deborah Meaden, Google UK sales director Kevin Mathers and BBC Worldwide CEO Tim Davie.

Kicking off 2015, LSBF hosted interviews with Andrew Miller, CEO of Guardian Media Group; Jill McDonald, CEO of McDonald’s UK; Kevin Costello, CEO of Haymarket Group; Amy McPherson, CEO of Marriott Hotels Europe; veteran BAFTA-winning broadcaster Jon Snow; live chats with Kevin Ellis, Managing Partner of PricewaterhouseCoopers, Claudine Collins, Managing Director of MediaCom UK, and Robert West, Partner at Baker & McKenzie; and, most recently, Mark Wood, CEO of JLT Employee Benefits.

About London School of Business and Finance (LSBF) London School of Business and Finance (LSBF) is a global provider of professional, executive, vocational and higher education. With campuses across three continents and 40,000 students from over 150 countries, LSBF offers industry-relevant programmes that are tailored to the career goals of today’s students and professionals. Under the royal patronage of Prince Michel of Kent, LSBF has a powerful e-learning platform and over 130 programmes, covering industries from fashion to finance. LSBF is a Queen’s Awards for Enterprise winner and an ACCA Approved Learning Provider Gold, in the London, Birmingham and Manchester campuses.

Despite all this, Mr Cijffers believes simplicity is always the best way forward: “Machine learning is the future, but in the end this has to be simple for our clients. Machines won’t ever provide break-out think-

12 Corporate Vision August 2015

LSB Gre Min

LSBF Great Minds

BF eat nds

August 2015 Corporate Vision 13

Strategy 16 Effective Decision Making in Business We spoke to Liz Copeland, a success coach for CEOs and business leaders about what it takes to make balanced and efficient decisions in business and the main considerations to take into account before taking the plunge.

18 Can Success in Business Be Learnt from Books?

A new range of books aimed at top-level managers in business proposes to teach executive skills and offer insight into complicated corporate issues, but is there anything a book can teach that can’t be learned on the job?

Strategy: Effective Decision Making in Business

16 Corporate August 2015 Corporate Vision August Vision 2015 16

Strategy: Effective Decision Making in Business

Effective Decision Making in Business We spoke to Liz Copeland, a success coach for CEOs and business leaders, about what it takes to make balanced and efficient decisions in business and the main considerations to take into account before plunging in.

The first thing to consider, according to Copeland, is what decision needs to be made and what process you are going to use to get to it. Often, when reflecting on decisions retrospectively, people can worry about whether they have made the right decision without considering if they got to it using the right process.

The process made to get to a decision is crucial, as it will affect all aspects of the decision and will allow the maker to examine all the options before finally committing. Also, it ensures that everyone affected by the decision is taken into account, and gives a rounded perspective, ensuring even small, easily missed details are noticed.

An experienced coach who, in her own words “coaches successful people who are ready and looking for new a challenge”, Liz Copeland has a firm understanding of what a good decision making process is. Here are some of the factors she believes are crucial to making an objective business decision that will benefit everyone involved.

• What do you want to happen? Copeland believes this is a key aspect of all decision making. She says that when deciding what you want it is key that you think more generally around the type of change you want, rather than predicting exactly what you hope will happen. “Pre-empt the kind of change, not the outcome” • Who will the decision be affecting? Remember to consider everyone involved. Copeland has seen a lot of top level decision fall down because the deciders do not consider the opinions of those who have to implement the change.

• How much input do you need from your colleagues? The key to this is balance, with Copeland being a firm believer that whilst inclusion is important, too much can cause problems.

“It’s about finding a balance between a dictatorship and a democracy in decision making.

Too much either way and problems can occur.”

Ensure that any feedback you ask for is asked for before the decision is made so that staff feel their opinion is valued, but understand that it will not necessarily be adhered to strictly.

• What is your decision making style? Pinpointing this is crucial, particularly if the choice is a joint decision and you require board approval or the compliance of other leaders and managers.

According to Copeland, the main issue here is whether or not you are a cautious decision maker or not. Once you have analysed how much risk you take in your decisions you can look at your fellow decision makers, and then pitch your ideas to them according to their style.

Finally, Copeland stresses that the decision and the process that created it are not always to blame if a decision ends up failing. Luck plays a big part as well, but as long as the decision making process was good, the damage will be reduced.

• Are you aware of any bias you have? Decisions in business are very rarely entirely rational.

Copeland believes that often, decision makers are biased towards the familiar. This links with the level of risk you are willing to take, but you should always examine whether you are deciding something purely because it seems familiar or easy, or if the decision is actually the best way to go. Equally, choosing something just because it is very different to what you usually do is not the best idea either. Always make sure you are not just jumping to the most innovative solution you can find because your process is not working: check that there is not some smaller change that can be made first.

“Just like every Hollywood star is only as good as the last film they were in, every business leader is only as good as the last decision they made for their business.”

• Are you emotionally involved in the decision?

Another key balance which needs to be struck is between the logical, emotional side of the decision and the logical, sterner side. Copeland is keen to emphasise that this balance is key, because too much of either logic or emotion can create a bad decision. Try to look at the problem objectively and if you feel you are emotionally connected, ask the opinion of others who are not.

• Have you examined every possibility? There are always numerous courses of action and each one should always be explored thoroughly before coming to a final result. Liz Copeland also advises that past decisions and the processes that made them should also be explored thoroughly.

August 2015 Corporate Vision 17

Ultimately, Liz Copeland believes that every business leader needs to constantly be reviewing their decision making process to ensure each decision is made properly.

Strategy: Can Success in Business Be Learnt from Books?

Can Success in Business Be Learnt from Books?

A new range of books aimed at top-level managers in business proposes to teach executive skills and offer insight into complicated corporate issues, but is there anything a book can teach that can’t be learned on the job?

Managing a business is always a stressful and demanding role, and many fail where others succeed. There are many aspects of business that can become pitfalls if not handled correctly, such as mergers, transitions in management and general corporate change.

Ciampa, who was named one of the top five CEO advisors by Business Week and has lectured at Harvard’s Graduate School of Business. Both writers clearly have the experience to back up the teachings they deliver through their book, with the book aiming to bring to focus an often overlooked topic.

A new book called Transitions at the Top: What Organizations Must Do to Make Sure New Leaders Succeed by Dan Ciampa and David L. Dotlich (Wiley) aims to help facilitate a smooth CEO transition in business organisations, an area where success rates remain dismally low. One of the authors, Dan Ciampa, outlines why books around this topic do not always address the correct aspect of the problem.

Ciampa highlights how the book takes a new perspective on culpability in CEO transitions.

“The net result of missteps early on in a new leadership role is that new leaders do not achieve notable successes within their all-important first 18 months.

That, in turn, limits the commitment of a critical mass of people to support their agendas. Ultimately, the person at the top in this situation never attains the loyal followership needed for effective leadership.

“It is important to master the transition challenge.

But, there has been insufficient attention paid to it.

That began to change with the publication of Right from the Start. Since its release, there have been over a dozen books on this topic; and it also led to intense effort of many companies to improve the onboarding of senior executives. But, the body of literature that has explored top leadership transition has focused on the new leaders who are hired or promoted—their personalities, skills, behavior, attitudes, preparation and management of the taking-hold process. Little has been written about the other, equally important, factor in a leadership change—the company and what it does, or does not do, to make the transition a success.”

The text is aimed at most of the senior management of firms experiencing CEO transitions, from current CEOs and Board Chairmen to Chief Human Resources Officers.

The book is written by Dotlich, a former academic who is now Chairman and CEO of Pivot Leadership, one of the world’s largest providers of top-level customized executive programs and consulting and

I believe that the person assuming the senior spot can do much to succeed once in the top position if she moves quickly to avoid or resolve these common mistakes. But, there is a second answer to the question of why more leaders do not succeed: that the organizations that have hired or promoted them have not done their part to ensure success. Until a company that hires or promotes leaders into its top position does its part, the problem of transition failures will not be solved.

By “the company,” I mean the major players who most determine its strategy, how it operates dayto-day, who is hired and who stays, how its various parts are expected to coordinate, and its culture. In particular, the players on the company’s side of the transition equation who have the most significant roles in determining whether a transition at the top is successful are its board of directors, the incumbent CEO, the chief human resources officer, and the other key senior managers who report to the CEO. Not “doing its part” means that the major players on the company side of the equation commit errors in

18 Corporate Vision August 2015

how they think about and in how they execute the transition task.”

Another recent addition to the body of business related books is Samir Parikh’s The Consultant’s Handbook (Wiley), which offers insights into the broader consulting industry, with examples of the types of work that consultants do, the techniques that they apply to structure projects and drive results as well as approaches that have been used successfully to deal issues and obstacles in the industry. Parikh is keen to emphasise that The Consultant’s Handbook is not like ordinary business literature.

“Many business books contain valuable content but can be hard to digest, leaving the reader with the challenge of translating theory into practice. The writing style employed in The Consultant’s Handbook was therefore a particular point of consideration: to the point, enlightening and easy both to absorb and to implement. Each chapter is built around a set of industry examples, considering both good and poor practice, that bring the content to life but also challenge the reader to reflect upon their own experience and professional work situation.”

Parikh’s book aims to shed light on principals of consultancy, and whilst the book is not designed to directly teach the skills needed or replace valuable lessons that can only be learned through experience, it does aim to teach business leaders and other corporate managers how they can adapt and use consulting methods in their roles.

“The ability to understand the essence of consultancy is one of the key principals this book explores. A consultant’s role is to help clients, drawing upon our own credentials and those of our colleagues to do so.

Our ability to formulate a clear consulting proposition explaining the value that we can add shapes the relationships that we build with clients. The skill of

Strategy: Can Success in Business Be Learnt from Books?

engaging effectively in a structured, business driven way is fundamental to solving complex problems.

And an understanding the mechanisms required to deliver a solution, yet deal with a wide range of obstacles and the unexpected, is key to the achievement of results.

The book unravels these topics systematically, beginning with a fundamental question that many struggle to answer – What is consulting? After exploring the cornerstones of a consulting service a range of practical techniques for client engagement are introduced, whether collecting a client’s requirements, defining the scope of an assignment, or presenting solutions and recommendations. The art of proposal writing is considered, highlighting some of the most common pitfalls in proposal development. Finally a range of consulting delivery mechanisms are discussed, from the design of a project organisation, to the use of consulting methodologies, the handling of issues and methods for optimising the on going client relationship during delivery.�

Many professionals within their respective fields of expertise are required to assume consultative roles, often in the absence of a consulting title. Large corporations delivering professional services to clients who rely upon the ability of their people to consult effectively as well as those working in internal support functions such as human resources, sourcing and finance are also among the target readership.

The book is not trying to change these readers into consultants, but to help them apply the principals to their own roles.

Ultimately then, whilst experience in business is always vital, books such as these serve as a useful guide to applying principals and explaining complicated subjects, offering an understanding which can help eliminate basic mistakes.

August 2015 Corporate Vision 19

RICHARDTYLER I N T E R N A T I O N A L Richard Tyler International, Inc.® , a world leading Training and Management Consulting firm with a worldwide reputation for delivering powerful sales education programs and managementconsulting services.

A group of proven professionals with extensive experience ranging from Fortune 100 companies to business start-ups. Teaching success philosophies and techniques in such areas as Sales, Leadership, Management, Customer Service and Quality Improvement.

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Industry Insight 22 Changing the Peer-To-Peer Lending Landscape

24 Socially Engineered Hacks Now Target Financial Organisations

26 Start-Ups Set to Shake-Up the Market

28 What Impact Will the SMR Have on Recruitment at UK Banks?

30 Management Accountants Get Compromised

32 Can Business Leaders Learn Negotiation Skills from Kids?

34 Visual Search Tool Taking Retail World by Storm

36 The Allure of Internet Start-Ups

38 bluring the Enterprise Lines

Industry Insight: Changing the Peer-To-Peer Lending Landscape

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Industry Inisght: Changing the Peer-To-Peer Lending Landscape

Changing the Peer-To-Peer Lending Landscape Despite recently celebrating its first birthday, peer-to-peer mortgage specialist Landbay is changing the landscape with their fresh approach to lending which is helping to ensure rapid growth for the fledgling firm.

Despite only being in its first year of trading, Landbay is the UK’s fastest growing peer-to-peer lending platform with an impressive growth of over 2000% this year.

Growth is a top priority for Landbay, with the coming months set to see the company expand rapidly in order to keep up with their competitors in the market.

The firm currently has 15 permanent members of staff but this is growing quickly in order to fulfil their ambition to turn finance on its head by introducing slick design and bringing user experience to the forefront of an outdated mortgage lending industry.

The platform provides both ordinary consumers and institutional investors with access to the resilient UK residential buy-to-let mortgage market, which is estimated at £30 billion a year.

Landbay has simplified the traditional mortgage lending process by taking out the banks and offering a direct transaction between lenders and borrowers. Through their extensive risk mitigation and underwriting the firm provides an ideal first step out of risk-free cash savings for investors looking for sound returns without exposing their money to more volatile markets.

One of the firm’s lead objectives is to set the peer-topeer lending standards in transparency. In December 2014 Landbay put their loan book through a rigorous independent stress test which is documented in the firm’s report- ‘Democratising Mortgage Lending’. This was followed up with the publishing of their full loan book, including borrower rate, available for anyone to download on the Statistics page of their website.

Landbay is also an Everline Future 50 Business Winner, and The Times featured them in the ‘Top 10 UK Startups to Watch’, both of which the firm modestly describes as “small things that have made us quite proud!”

They also operate an FCA authorised and regulated platform where investors’ money is always secured over a diversified portfolio of conservatively geared

residential mortgages, although they are not currently FSCS covered. Lending with Landbay can start from as little as £100, meaning smaller customers are able to use the firm’s innovative lending services as well as larger investors.

As well as making history in the lending market Landbay has also revolutionised the Association itself, with their bold move to publish their loan book prompting the Association to introduce loan book transparency into their membership rules.

Landbay is revolutionary in their approach to both the market and customers, being the only peerto-peer lending platform to operate solely in the residential BTL market. As the UK’s most resilient lending market, BTL is a safer market for Landbay’s investors to use while they get to grips with the varying risk levels and different models on offer within the nascent peer-to-peer market.

In addition to the Peer-to-Peer Finance Association, Landbay has also teamed up with other alternative finance pioneers via Innovate Finance and the UK Crowdfunding Association, as well as established mortgage lenders and banks via the Intermediary Mortgage Lenders Association.

The company has just completed their ‘Year of Firsts’; as well as being their first year of trading, the firm completed their first loan of £178,938.00 in July 2014, following which momentum has grown rapidly.

The firm has recently taken over the funding of the Keystone BTL Mortgage range, a channel that was previously funded by Aldermore Bank. Landbay’s agile, high-quality service coupled with a low overhead structure is what differentiates them from the banks and has enabled them to step into a role that banks have previously occupied. Landbay is predicted to fund more than £200 million of Keystone mortgages in 2016 and will be doing so via the largest annual funding line secured by a UK peer-to-peer platform, £250 million per year.

Landbay has also forged a number of important partnerships, becoming one of only nine platforms accepted into the Peer-to-Peer Finance Association which sees the firm working together to set industry standards in the emerging peer-to-peer market.

Since joining the Peer-to-Peer Finance Association, Landbay and other members have been heavily involved in drafting lobbying materials for the inclusion of peer-to-peer lending in an ISA wrapper, resulting in the Chancellor’s announcement that from 2016, capital lent and invested via peer-to-peer platforms and other innovative financial institutions will be eligible for the new IFISA (Innovative Finance ISA).

August 2015 Corporate Vision 23

In the coming months Landbay is keen to build on their current success and completely change the lending market by creating an institutional and retail marketplace for mortgages in order to change the funding structure for mortgage lending. Additionally the firm has set themselves the ambitious target of achieving £1 billion worth of annual lending by 2018, meaning the young company has an exciting has an exciting future ahead of it.

Industry Inisght: Socially Engineered Hacks Now Target Financial Organisations

Socially Engineered Hacks Now Target Financial Organisations

by Stuart Poole-Robb, chief executive of business intelligence and cyber security adviser, the KCS Group.

Socially engineered hacks are now starting to take their toll of senior executives as organised criminal gangs (OCGs) target smaller financial organisations.

As the banks are now finally waking up to the threat of cyber crime and securing their networks, the OCGs are going for lower hanging fruit such as private equity houses and hedge funds.

Once again, a senior executive has lost his job as result of his company’s security being breached by a hacker. Thomas Meston, the former finance chief at hedge fund Fortelus Capital Management, who is also reported to be being sued by his former employer, was duped by a bogus caller claiming to be from Coutts, the hedge fund’s bank.

Despite the fact that the attack came down an old-fashioned telephone line and not via computer link, it bears all the hallmarks of a professional hack, bearing evidence of social engineering - one of the newest weapons in the cyber hacker’s arsenal. It is, for example, interesting that the call ended just after 6:00pm on Friday evening. Choosing a time when their targets are likely to be tired and anxious to leave the office works in the hacker’s favour. Nor do we yet know if the hacker had, as is likely, done his/her homework and discovered details about Weston and/ or his company or bank which would have helped validate the call in the the target’s mind. The same technique is used in so-called “spear phishing” attacks using bogus emails, which are also sometimes followed up with plausible bogus phone calls.

KCS’ case file reveals that law firms and companies involved within the investment sector are increasingly now being targeted; thus far over eleven cases have come to light. In May, Zurich Insurance Group also warned that law firms were being targeted by fraudsters impersonating banks, often late on Friday afternoons.

As the OCGs are now using ever more sophisticated methods of breaching the security of organisations such as private equity houses and law firms, those in these sectors must now do all they can to protect themselves against the kind of targeted attack that cost Fortelus Capital Management’s finance chief his job.

Cyber security must not be seen in isolation. People, rather than software, are often the weakest link in a firewall and can easily be tricked into revealing passwords and key codes. So employees must be educated to treat incoming emails and phone calls with a degree of caution. It is al-so vital they they are taught never to accept on face value any phone instructions - however credible they may seem. Even if they appear genuine, it is important to validate the communication.

Staff, particularly those in key posts, should also be discouraged from discussing company busi-ness on social networking sites such as Facebook or its professional equivalent, LinkedIn. Failure to do this makes it simple for the hacker to engineer the attack as information such as that relating to the dates of an overseas trip or personal details can be used by a hacker to establish a spurious credibility in a hoax email or phone call. It is also important that staff immediately report lost phones and other communications devices as a call or message from the device of a trusted colleague which in the hands of a hacker can carry a validity a communication from an un-known source would not.

The same advice now applies to all small-to-medium companies. According to research from identity protection firm CSID, 52 per cent of small UK businesses are failing to take preventative steps to secure their communications networks with 85 per cent also admitting they have no plans to increase security budgets.

Too many small-to-medium sized organisations still labour under the dangerous delusion that they have little worth stealing and are below the range of OCGs. This is far from true. Not only do they hold cash but they also often have clients or contractors whose databases are being targeted not only by OCGs but also by State actors in the pay of foreign powers such as China and Russia.

24 Corporate Vision August 2015

Industry Insight: Socially Engineered Hacks Now Target Financial Organisations

August 2015 Corporate Vision 25

Industry Inisght: Start-Ups Set to Shake-Up the Market

Start-Ups Set to Shake-Up the Market

26 Corporate Vision August 2015

Industry Insight: Start-Ups Set to Shake-Up the Market

As start-up firms begin to make headlines, with numerous firms making huge successes from humble beginnings we examine how firms can optimise on their small status to make it big.

Household names such as Ella’s Kitchen, Amazon and Über all began as small start-up business which blossomed into multinational enterprises. Despite many people believing that small businesses are doomed to stay that way, many companies have grown into successful firms.

Ian Wallis, one of the organisers of the Startups Awards, outlined what he believed were the qualities that made a start-up with the potential to win an award.

“Firstly you’d need to have a pretty solid business.

We’re looking for businesses that have started up in the last four years so ideally what we want to find is companies with a lot of potential. We’re not necessarily looking for profitability at this stage because we recognise that quite often investment upfront in a business to expand itself can take away from that but what we’re looking for is a sense that the company’s going in the right direction, that it’s increasing its revenues year on year winning some impressive clients and building a team around it so it is beginning to employ people. A great product or a great service are important as well. We want a combination of all of those things.”

Matt McNeil, the founder of Sign-Up.to, an email, SMS and social marketing campaigns company and previous winner of a Startup Award, highlighted the idea of being attention grabbing and innovative whilst also emphasising how winning an award can help with this.

“When you’re trying to start something innovative into the market – it does help give confidence. But it also has that magnifying effect. You win one and it’s easier to get press coverage. It feels that little bit easier to get through the door and get people’s attention.”

Being innovative and standing out is a key aspect to attracting key high profile investment and establishing small start-up firms within the industry. Company’s need more than just a gimmick to remain in the market, with good business strategy also vital, but an eye catching initial product is also useful.

The very existence of the Startup Awards proves how far small business have come over the last few years.

The awards began in 2004, when there was a limited market in the UK for start-up related awards. Although America has embraced entrepreneurism for many years, the UK market was slower on the uptake, taking longer to recognise the potential of small businesses.

Sponsored by the UK’s favourite business insurance broker Simply Business and organised by Startups. co.uk, the number one website for start-ups and small businesses, the Awards recognise the success of Britain’s newest businesses which have been trading for four years or less.

Previous winners have included some of the UK’s fastest rising brands and many recognisable names, such as BeatThatQuote.com, which has since been sold to Google for £37.7 million; The Cambridge Satchel Company; Raspberry Pi; Ella’s Kitchen; Naked Wines; Notonthehighstreet.com; YPlan; Joe & Seph’s Gourmet Popcorn and Secret Escapes.

August 2015 Corporate Vision 27

Secret Escapes is a key example of a firm which has risen from a small start-up to a renowned and respected business. An exclusive member’s travel company, the firm started as a small start-up and has expanded, with business so good the firm recently announced that they were using NewVoiceMedia’s ContactWorld solution to transform its sales operations, increase conversion rates and improve business efficiencies in order to capitalise on their increased sales.

Ella’s Kitchen is another business which has successes to create a multi-national business out of almost nothing. The company, which sells sachets of healthy children’s food in colourful packaging, won the Startup Award’s Microbusiness of the Year back in 2005 and was basically being run from its founder, Paul Lindley’s kitchen at the time, has now started selling internationally and generates revenue of more than $100 million a year. Lindley himself has become one of the UK’s best-known and most-respected entrepreneurs.

Joe & Seph’s Gourmet Popcorn has risen from a small homemade popcorn firm operating in a niche market to supplying over 40 flavours of gourmet popcorn, winning a total of 15 Great Taste Awards and supplying their product to established stockists such as Cineworld cinemas.

David Lester, founder of Startups.co.uk, itself a startup business originating through a gap in the market, announced the launch of this year’s awards recently, making it clear that the awards have gained in popularity since the beginning.

“We are very excited to launch Startups Awards 2015 which we hope will be the biggest ever. This year we have a new iconic venue and we are also moving the ceremony from a lunchtime to an evening start. It promises to be a very special night attended by some of the most exciting young companies in the UK. The deadline for entry is September 11 and I expect the standard to be the highest ever.”

Headline sponsor, Simply Business, returns for a third year in 2015 and are a keen advocate of the awards.

Head of Marketing & Communications at Simply Business, Jasper Martens, commented: “There is absolutely no doubt in my mind that the Startups Awards are the most important and prestigious awards for businesses under four years old. I would urge all new businesses out there to take a look and consider entering. I guarantee it will be a very special occasion at Vinopolis in November.”

Overall, the success of small, start-up businesses comes down to a variety of factors, with eye catching, unique products, services or business models clearly, judging from the examples of successful firms shown here, important, with a strong business plan and other fundamental enterprise attributes also vital to success.

Many factors affect failure also, with bad timing, poor initial market reception and bad decisions all affecting the success of a start-up.

Industry Inisght: What Impact Will the SMR Have on Recruitment at UK Banks?

What Impact Will the SMR Have on Recruitment at UK Banks?

28 Corporate Vision August 2015

Industry Insight: What Impact Will the SMR Have on Recruitment at UK Banks?

Colin Fox, CEO of Worksmart, examines how new regulations will change recruitment at banks.

With the regulator’s focus firmly on the banking sector at the moment, the Financial Conduct Authority (FCA) has implemented a new regulatory framework, the Individual Accountability Regime (IAR).

The Senior Managers Regime (SMR) which falls under this framework will see senior individuals from banks and building societies held responsible not only for their own actions, but also for the actions of those who report into them. The Certification Regime (CR) will cover all employees that have any dealings with customers, which means many thousands of additional bankers will need to be monitored and assessed. Where breaches of the Conduct Rules are either suspected or known, the regulator will need to be notified.

to ensure there is no duplication. Banks will need to consider very carefully which is right for them, however, as the cost and time taken to recruit new staff may be better spent on training current staff to take on more responsibility.

At whatever level an appointment is made, the formal process of on-boarding a new member of staff is also more stringent under the SMR. Any new members of staff who accept a role covered by either the SMR or CR will not only need to go through the usual interview process to demonstrate their ability to do their job, but will also need to complete an FCA application form that requires them to disclose their previous employment history, as well as details of any CCJs or previous criminal convictions.

This would be a significant undertaking for any company, but it will be even more arduous for the banks, since this sector has already seen a number of new regulations being implemented over the past few years. Whilst much has been said about the impact that this regulation will have on how banks operate from a business perspective, it is also worth considering what impact this will have on banks’ recruitment and retention policies as well.

MORE RESPONSIBILTY COULD MEAN HIGHER PAY It’s no secret that employees covered by the SMR will be required to take responsibility for the actions of their team. As a result, banks may find that they will have to raise the salaries of their senior level staff to compensate for this risk. As well as increasing pay and bonuses, banks may also have to offer additional support to senior managers, such as training on how to spot when things may be going wrong and how to step in if they do.

Once this application has been vetted internally and approved by the FCA, applicants may need to undergo additional training depending on the role they are taking on. Banks will also need to document all of this activity against any future audits. Whilst it is clearly important to make sure that only people with the right skills and attitude are appointed to work in the banking sector, making sure that all these steps are carried out in a compliant manner will mean that the process for recruitment may also take much longer.

These new responsibilities will require managers to have certain key skills above-and-beyond what is needed to do their day job. Managers will also need to embody these new rules in order to provide an example to other members of staff. This will mean fostering a culture whereby any mistakes or oversights that are made are reported promptly and dealt with, rather than covered up. HR managers will therefore need to look for candidates who display all of these so called ‘soft skills’ – as well as the capability to do their job – when making senior appointments.

We have already seen that some bankers have announced their intention to leave the industry rather than undertake responsibilities under the SMR to which, if their application is found to be wanting, could result in criminal proceedings. Against this background of senior level departures and more regulation emerging down the line, holding onto talent has never been more important for banks. Those banks that want to thrive under the new IAR regime will not only have to make sure that all of their systems and practices are compliant, but also take steps to ensure that their staff engagement policy helps them to retain the best talent.

With considerable responsibility falling on senior managers under the SMR, and particularly those with compliance roles, it is likely that those who accept these positions will command considerable benefits packages in return. Compliance officers who gain a good reputation in the industry are likely to become highly sought after, and banks may find they have to do considerable work to hold onto the staff they already have.

FINDING THE RIGHT STAFF FOR THE JOB Under the guidance set out by the FCA, certain senior roles cannot be combined. This could mean that smaller banks will need to appoint more senior people, either from their existing staff or from outside

August 2015 Corporate Vision 29

GETTING HR POLICY RIGHT NOW WILL MAKE COMPLIANCE EASIER IN THE FUTURE The banking sector is firmly in the regulator’s sights at the moment, and until these regulations are bedded in and shown to be working, this is unlikely to change. Embedding these changes both from a process and people perspective will be a major undertaking and will require significant planning by management teams.

Industry Insight: Management Accountants Get Compromised

Management Accountants Compromise

30 Corporate Vision August 2015

t s Get ed

Industry Insight: Management Accountants Get Compromised

Despite undeniable progress following the financial crisis of 2008, research included in The Chartered Institute of Management Accountants (CIMA) Managing Responsible Business report 2015, shows that finance professionals around the world are still experiencing pressure to compromise their professional and ethical standards.

Managing Responsible Business 2015, is the third edition of this global report which includes research based on responses from 2,498 finance professionals.

It highlights ongoing issues many organisations worldwide, are experiencing around embedding ethical practices in their business.

Although 82% of respondents acknowledged the organisations they worked for have a code of ethics, the report found that implementation is an issue. This is reflected in the UK, where 30% of respondents felt under pressure from managers or colleagues to compromise their organisation’s ethical standards – the policies, procedures and regulations an organisation might follow, rising from 18% in 2012. The research also found that 21% of UK respondents felt there was stigma attached to reporting concerns with those who do flag issues about unethical behaviour being seen as troublemakers by management.

The report also offers insight into why some respondents are being pressured. 18% of finance professionals based in the UK found that they felt pressured to compromise standards to meet deadlines whilst a further 20% felt that colleagues in other functional areas of the business put pressure on them to do so. Tanya Barman, author of the report and Head of Ethics at CIMA, believes that penalties will do little to help these problems, because in the UK compared to other countries such as the US there is not enough focus on individual culpability. Rather, she feels that a greater focus on implementation of policies is vital.

This she says is being slowly introduced as more business include sections on ethical performance in their annual reports.

According to the study, ethical management information (EMI) which is used to help businesses understand cultural pressure points within their organisation is also being underused, with just 36% of participants confirming that their firm collects this data, meaning many companies are not as efficient at highlighting risk, spotting red flags or, good practice. Barman is a firm believer that business behaviours matter and an ethically aware business culture is key to ensuring that standards are upheld. She believes that the board has a duty to help develop an open culture of responsibility so businesses are not just operating a tick box approach when it comes to compliance. She says: “It’s the behaviours that matter more than the rules. The financial crisis taught us that. This is why, despite seeming quite simple it is quite a complex area. A business culture cannot be imposed but, must develop. That takes time and resource from the top management and needs to be fed down throughout the organisation.”

The report does show one development which seems to be slowly encouraging business leaders to prioritise ethical and sustainable issues, and that is increased

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investor attention in this area. 30% of respondents identified investors as being the second-highest users of ethical information second only to senior management. Barman recognises that there is a significant role for investors here as it will encourage business leaders to think differently about this area and understand that these issues will have a long-term affect and an impact on their returns.

Tools already exist that business leaders can use to help them attain better levels of ethical performance.

An escalation model is one such tool, it allows a company to define a clear path for employees to raise concerns and make complaints can help companies improve their business culture and ethical behaviour.

These models also serve to build a positive business culture, by empowering employees rather than leave them feeling as if they are troublemakers. For example, Barman runs an ethics hotline as part of CIMA’s support to their professional members. They can get advice on how best to apply their professional Code of Ethics.

Owing to her experience on the ethics hotline Barman firmly believes that companies should enable their workforce to speak freely about concerns regarding potential ethical breaches via management lines and whistleblowing lines if need be. The report indeed noted an increase in use of such lines to 59% globally.

She says: “There is a clearly a gap in implementation that needs to be filled by skilled professionals using methods such as integrated reporting. Management accountants have a unique skill set that enables them to not only gather data but also analyse and interpret it, particularly through integrated reporting and as such have a critical role to play in identifying risks and safeguarding the organisation from unethical practice.”

Overall the report highlights concerns but, reassuringly also shows that in some emerging markets pressure is dropping. This could be due to a larger emphasis being placed on ethical practices and finance professionals such as management accountants who are bound by a Code helping their organisations realise how paramount ethical performance in business is to achieving sustainable success. Or, social demand for cleaner and more transparent economy managing to drive positive change in business culture.

Industry Inisght: Can Business Leaders Learn Negotiation Skills from Kids?

Can Business Leaders Learn Negotiation Skills from Kids?

You can learn a lot about negotiation from children. We have all endured childhood, so the skills should have been ingrained over the years. However in adulthood, these negotiation techniques become softer and impact our ability to negotiate as effectively as we could.

James Thomas, negotiation expert and director of Seren Partnership, highlights how children demonstrate some key negotiation tactics that those in corporate leadership roles can learn from.

5 negotiation techniques you can learn from children.

1. They’re not afraid to ask for what they want.

Children’s needs are often driven by emotion. “I want an ice cream” or “Will you buy me that game?”

They don’t think too hard about the appropriateness of their requests nor the rationale behind it. Unlike adults, they don’t worry about sounding greedy or unreasonable. This means they don’t talk themselves out of what they want before they start negotiating.

It’s the same in the boardroom. Business leaders need to be upfront about exactly what they want, which often shows they mean serious business.

2. They ask lots of questions.

Asking questions is extremely powerful because it generates control of a negotiation. It also gets the other person talking and revealing information.

Information is power and can be used against the other person to get what you want. The most common question asked by a child is WHY? This can be seen as a relatively confrontational question in business, but it challenges the status quo and signals to the other party that you’re not going to accept things at face value. The “Why” question also tempts them to justify their position, which is considered a sign of weakness in negotiation. However, it is essential you ask the right questions; ones that gather information, confirm the facts and develop meaningful corporate relationships.

3. They open high.

Aim for the stars and you’ll reach the moon, as the saying goes. Children will demand more than they really need, knowing they can work back to an acceptable middle ground. They are not concerned about a fair deal for the other party, just a great deal for themselves.

Be optimistic and you won’t walk away disappointed, regretting you didn’t ask for what you really wanted in order to make that business deal a success.

4. They’re persistent.

Children don’t accept no for an answer. If they’re rejected, they will persevere by using the broken record technique or by trying a different strategy, such as bargaining or trading. This tenacious approach eventually pays off, as the parent concedes in return for some peace and quiet. It’s the same in the corporate world. It may feel as if you’re nagging, but you’re actually demonstrating a determination for what you need. If your counterpart senses any lack of conviction on your part, they will exploit your position.

5. They make lots of proposals Children will happily list a number of proposals to get what they want. If one proposal is rejected, they will have a number of alternatives to throw back on the table. The more proposals they make, the more chance there is of one of them being accepted. Making proposals puts them in the driving seat. It’s the same in business. The more preparation you put into your proposals, the higher the likelihood of success.

Without well thought-out proposals, you’ll constantly be reacting to your counterpart’s requirements and feel out of control.

The next time you find yourself faced with a difficult negotiation situation, it may well be worth taking on board what the kids do… albeit without the tantrums.

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Industry Inisght: Can Business Leaders Learn Negotiation Skills from Kids?

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Industry Insight: Visual Search Tool Taking Retail World by Storm

Visual Search Tool Taking Retail World

by Storm

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Industry Insight: Visual Search Tool Taking Retail World by Storm

Cortexica’s ground breaking visual search technology mimics processes found in the human visual cortex to recognize content from digitally captured images, with scope to take clothes shopping to a whole new level.

Online fashion shopping is being reinvented thanks to Cortexica’s new visual search software. The firm’s software, findSimilar, enables customers to find and buy products in a more natural way, as the firm’s technology mimics processes found in the human visual cortex to recognize content from digitally captured images.

By allowing customers to browse for products online using software designed to recognise similar products the company offers a unique solution which creates an experience which combines the convenience of internet shopping with the more intimate feel of browsing through the shops.

Cortexica is the leading provider of cloud-based image recognition systems and visual search technology, and although their current focus is the retail industry, the technology has the scope to extend beyond this into other industries such as the FMCG and automotive markets. Additionally, any business environment that wishes to provide customers a better experience online and in store, or has a large database of images that are currently referenced only by text, would benefit from the firm’s visual search offerings.

Utilising state of the art image recognition technology developed by the biotech labs at Imperial College London, Cortexica provides the only visual search ‘white label solution’ for the retail industry, working with leading brands, retailers and app developers to provide their customers the ability to discover and purchase products simply by taking a photo with their smartphone or dragging an image from their desktop.

As text search is often a slow and an inaccurate way to search for visually inspiring items such as fashion garments and this is further complicated by language differences, Cortexica’s software offers a multifaceted solution for retail firms.

High profile users of the technology include Macy’s, who have large inventories across many categories who want to provide a quicker product location for the customers, to the Net Set powered by Net-A-Porter, where the experience is one of locating product through inspiring ‘real world’ images. In both cases, Cortexica provides retailers the opportunity to engage their customers through a more intuitive and quicker visual method. Other popular clients in the fashion retail market include very.co.uk and Zalando.

The core visual search technology is fully automated and is constantly being evolved by the firm’s 27 strong research and development team of engineers

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and scientists, making the product one of the most up to date visual search technologies on the market.

Some of Cortexica’s competitors provide search using slower and less accurate techniques such as ‘mechanical turk’, colour only recognition or auto-tagging whereas Cortexica provides the search results back to the display within just one second, making their visual search product one of the quickest and most comprehensive on the market.

Additionally the technology is able to search for a broad variety of products, making its applications ideal for the retail industry. Cortexica’s technology has the ability to be applied to complicated scenarios such as a user’s query photo being of an item of clothing being either worn outside, draped on a chair or hanging on a rack. The complexity of the recognition software also allows items that are similar, in colour, texture, pattern or shape, to be displayed for purchase decisions with the software’s range of searchable items stretching from cars to sofas to shoes.

The future for Cortexica will see the technology company expand beyond their current offering. The firm is moving into providing back end functions to customers, with the upcoming launch of Cortexica’s Visual Search Retail Platform, a Software as a Service (SaaS) product that provides efficiencies in speed and costs over both front and back end functions.

The Visual Search Retail Platform provides, amongst other features, the ability to create online and in store cross merchandising ‘looks’, a significant reduction in speed to market and Digital Asset Management that is completely searchable by image as well as text. This offers retailers a significant time saving when laying out their website content.

The technology also offers an innovative solution for retailers, as they can maximise their customer engagement and loyalty by providing a fast, simple and inspiring way to locate products. When combined with an effective Omni-channel strategy this allows for seamless integration between online and in store shopping.

Moving forward, Cortexica is also looking to continue to develop more advanced visual search technology solutions and support to retail businesses across the globe. By working in close partnership with their current client base, the company sees the potential for establishing visual search as the prominent trend by which retail businesses and consumers interact with each other.

Industry Insight : The Allure of Internet Start-Ups

The Allure of Internet Start-Ups We spoke to Andrew Michael, renowned for his successful start-ups, on his latest addition, Bark. com, his experiences in the marketplace and why he thinks the Internet is the way forward for start-up companies.

Andrew began his first company, Fasthosts, an online domain service, from his parents’ house aged just 17 and went on to sell this multi-million-turnover business for £61.5 million in 2006. He has since founded and built four online companies.

His latest venture is Bark.com an online tool that links consumers to local professionals across a range of services, from personal trainers to wedding photographers.

We spoke to him about what makes draws him to online companies and what lessons he has leant over the course of his journey from a room at his parents’ house to a successful Internet entrepreneur.

Could you tell us more about Bark.com?

Andrew: Bark.com is an online lead generation platform which helps connect customers to local service professionals. We operate across a wide-range of sectors, from gardeners and caterers to more obscure categories including a dove releaser. We make it as fast and easy as possible for customers to find local, reliable service professionals by doing all the legwork and providing multiple quotes for customers.

We firmly believe that there is not another service that offers the breadth and quality of professionals that we do and because of that, we are very excited about the next steps.

How did your experience running Fasthosts prepare you for setting up Bark.com?

Andrew: The experience of growing a business from scratch put me in great stead for building Bark.com.

I also love the fast paced environment of working online which I first experienced running Fasthosts, I learned that it is always changing and evolving, and you have to be able to adapt constantly. But it is so rewarding to see your original idea build, grow and manifest itself into a multi-million pound business.

Having a great team is essential in any venture. I am extremely appreciative of the work that goes in to launching a startup and maintaining its success, which is why I put a considerable emphasis on effective recruitment. You need to select talented people with the right ethos and then let them get on with what they do best, that’s when you see the most positive results.

What drives you to keep founding new companies?

Andrew: I think it’s just what I am passionate about; taking something small and growing it into something big. When it is your baby, so to speak, there is definitely an added motivation to make it a success and I am fortunate to have people around me who share that drive. Founding companies is what I have done since I left school and it is a challenge that I enjoy immensely.

What do you believe is the biggest indicator of a business’s success, besides financial gain?

Andrew: For me, a business is only as good as its customers. If they’re growing and giving you good feedback then you’re doing well, if not then you’ve got problems. We value feedback extremely highly and make sure we listen to both the buyers and sellers using our site, as their opinions are critical.

If they don’t like the site then they won’t come back and repeat customers are much cheaper to service than new ones, so it makes sound financial sense too.

What advice would you give to anyone looking to set up their own business?

Andrew: A big thing for me is that you have to be prepared to take risks. Never be afraid to make the wrong call, as the worst decision you can make is doing nothing at all. While you should listen to others around you, it’s important that you ultimately trust your gut instinct. You have to be confident that you’ve got to a certain position because of your decision-making skills. Never give up if you fail the first hurdle, plan A may not work but do not be afraid of plan B, C and D – many of the most successful business and individuals have had to endure their fair share of rejection so you’ll be in good company!

You also have to be extremely nimble and be able to adapt as things progress. Of course, you will lay a strategy and plan in place but this has to be flexible and open for negotiation.

How do you think the Internet has impacted on the business marketplace?

Andrew: The rise of ecommerce has dramatically changed the way people shop for both products and services. Customers no longer visit a photo studio

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to chat to a photographer, their first port of call is to view the website. Looking for local professionals now starts on Google, as opposed to the Yellow Pages and these businesses and individuals need to adapt to ensure they remain front of mind.

Bark is very much designed with this in mind and is aiming to bridge the gap between Google and local professionals to make it easy for Buyers and Sellers alike to find one another. The move from physical to online to mobile is ever growing and ultimately, the businesses that succeed are going to be those that can service customer needs whenever and wherever they want.

And finally tell us how you stay ahead in the business market?

Andrew: It is crucial to try and stay ahead of the curve in everything that you do to ensure that you’re offering your customers the best, and in our case most easily accessible, service possible – running a business without reviewing what else is happening in your sector is like trying to drive with one eye shut.

I regularly review competitors to see how the wider industry is attempting to take things forward. I also make sure that I heed advice of those closest to me; not just my colleagues but my friends and family as they are the people who know me best and will be looking for services in the market.

Industry Insight: The Allure of Internet Start-Ups

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industry Insight: blurring the Lines of Enterprise

blurring the Lines of Enterprise

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industry Insight: blurring the Lines of Enterprise

Blur Group has announced the newly launched blur Data, a business intelligence tool formed using data gathered from their other enterprise services platform. We analyse how the new product will drastically affect the business intelligence and procurements industries for the better.

The group’s original offering an enterprises services platform and marketplace, an established cloud platform which has been running for around six years. blur allows interaction between businesses with new projects in the pipeline, from a marketing campaign to a new website, and service providers who then bid for the contract. The businesses place a brief for the project, outlining what they need, when they need it by and how much they want to spend on this, then allow the service providers to make offers to try and win the contract.

Philip Letts right and Jon Hogg above

Additionally the product offers a project management app that enables the business and service provider to work together in a collaborative way from initial beginning to successful completion.

Now the firm has created blur Data, a wholly new tool using data gathered from the transactions and interactions from the market to create a database which offers customers an estimate of how much they can expect to pay for a service, as well as how long it will take across an international landscape.

This unique new product adapts the rich data from blur into a new format which has never been seen in the industry. There are numerous comparison websites offering price checks for commodity type products across a number of industries but as yet there is no way of establishing approximately how much a service will cost.

Jon Hogg, Chief Marketing Officer of blur Group, says that this is what makes the new product so unique and useful in the market.

‘I think blur Data brings a new dimension to the business intelligence marketplace. Traditional business intelligence projects available at the moment allow you to find and research trends and pricing of products in the marketplace, but there are very few companies that have a services pricelist, there are very few if any companies able to offer such a service. We are able to do this by bringing together various variables and enable businesses to actually define the kind of service they’re looking for and then using all of those data points that we’ve collected, we’re able to give them a price range that they can expect to pay for this particular kind of service. We are only able do this by working with both customers and service providers through blur’.

The biggest challenge faced by the firm has been collating all the data, as there are an infinite number of variables involved in service provision. Hogg explained how the company overcame this issue.

‘I think the biggest challenge we’ve faced is collating all of this data, so what we’ve had to do is to find what we think are the most popular and also the most sought after and the most important most relevant variables to our project categories and to our customers in enter-

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prise and make sure that we will be able to pull together the a solid amount of data for those. We’ve been collecting this data for a long time so there’s a vast amount, not in number of transactions that we’ve processed but in the amount of data around these transactions, as service projects have so many different variables. We have been able to collate all these variables to create tools that enables businesses to get a reliable result from the platform.’

Despite only being launched recently, with the product being officially released on July 31st, there has already been a tremendous amount of take-up, with the new idea proving popular among blur customers, although the product is not exclusive, with anyone able to purchase a blur Data license. However the product is especially useful to blur customers with businesses able to access a pricing estimate of their project before they write a brief for it and service providers able to see how much the average for a certain service would be enabling more accurate pricing for their pitch.

The new technology is also appealing because, like blur, it is accessible through most technology including mobile gadgets such as tablets and phones as well as computers. This versatility allows customers greater freedom when using the technology, a factor which is becoming more vital in the increasing mobile technology sector.

Moving forward, the blur group aims to enrich the data as their customers increase the volume of service transactions and the data available on blur building in volume. Hogg added that product is an exciting new venture for the company.

‘We’re excited about the interest we’ve had in blur Data.

The data on the platform is intrinsically linked to the number of transactions that blur do which is always growing year on year on year and therefore there will be more and more data available for the platform. As the breadth of services that we’re delivering increases and the volume of services we do increases this enriches the data in the platform allowing it to get stronger.’

Ultimately, blur Data has the potential to change the way business procure services and the business intelligence market will adapt around this exciting new product.

SME 42 Global Mobility Strategies for SMEs Expanding to the US

By William Diaz, Attorney at Immigration Law Firm, Laura Devine Solicitors

44 Alternative Funding for SMEs Continues to Grow with Business-To-Business Bartering on the Rise Philip Ciniglio, CEO at Bartercard UK

SMEs: Global Mobility Strategies for SMEs Expanding to the US

Global Mobility Strategies for SMEs Expanding to the US

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SMEs: Global Mobility Strategies for SMEs Expanding to the US

By William Diaz, Attorney at Immigration Law Firm, Laura Devine Solicitors For small and medium-sized enterprises (SMEs), establishing a foothold in the US is a milestone in expanding global operations and accessing the North American market. At the top of many international expansionists’ minds are tax consequences, protection of IP, general logistics, and business development. To the detriment of many SMEs, global mobility of talent is a consideration lost in the mix or treated as an afterthought when expanding. SMEs are often taken by surprise as failure to formulate and implement a sound strategy for transfer of personnel may delay or substantially undermine a US expansion. Early involvement of US immigration counsel will ensure critical considerations are addressed, including to ensure any US expansion or investment is structured in a manner to ensure transfer of existing staff and new hires while also ensuring that immigration solutions can scale with a successful business.

While not entirely comprehensive, common visa categories include for the expanding SME often include the E-2 (treaty investor), L-1A/L-1B (intra-company transferee), and H-1B (specialty occupation) visas.

In pursuing an E-2 visa, it is critical to engage immigration counsel early, so company formation and investment may be guided in a manner mindful of the complex regulations governing E-2 visa eligibility. Following the investment and creation of the US business, it is critical to maintain the required 50% minimum treaty nationality with regard ownership of the US entity. Should the US company fail to maintain the requisite ownership, E-2 visa eligibility ceases and the issued visas are terminated. With the stroke of a pen, signing over a large stake of the US company to another party can undermine the current workforce’s visas and future global mobility.

Facilitating intra-company transfers with the L-1A and L-1B visas The L-1A (mangers/executives) and L-1B (specialised knowledge professionals) visas facilitate intra-company transfers between a qualifying non-US entity and its US parent, subsidiary, branch, or affiliate relationships. This category proves useful when a company or its employees cannot meet the nationality requirements of the E-2 visa.

The E-2 visa is available to SMEs with US business entities that are at least 50% owned by nationals of countries that hold a treaty of friendship, commerce and navigation with the US. Treaty countries include many in Western Europe in addition to countries in North America, South America, Oceania, the Middle East, Africa, and Asia. Notably, Indian, Chinese, Russian, and Brazilian nationals are not eligible.

In order to qualify for an L-1A, the applicant must have held an executive or managerial position for one year in the last three years for the qualifying non-US entity while an L-1B visa requires one year in that last three in a position requiring specialised knowledge.

L-1A and L-1B visa recipients must enter the US to assume an executive/managerial role, or a specialised knowledge role respectively. Individuals classified as L-1A visa managers or executives are expected to be someone more senior than a first-line supervisor, while L-1B visa specialised knowledge employees are generally expected to have advanced or even proprietary knowledge of company products or operations. The standard for specialised knowledge for the L-1B visa is particularly stringent and visa denials are common.

Eligible individuals and businesses may invest in the US, establish a business, and acquire the E-2 visa for personnel to direct or manage the US company.

In addition to managers and executives, essential employees are also eligible for the E-2 visa. Transferee personnel must match nationality with the US company’s ownership. For example, an at-least 50% UK owned entity in the US may transfer UK nationals to the US on the basis of the E-2 visa.

For a new office, in operation for less than a year, additional restrictions apply and an initial visa will only be issued for one year. For renewal, a company must demonstrate operations have substantially progressed from an initial start-up phase. In the absence of ongoing business operations and a showing of some hierarchical staffing structure, denial of a renewal is common. An L-1A visa may be renewed, incrementally, for up to seven years while the L-1B is limited to five.

The true value of the E-2 visa for SMEs is revealed upon an initial successful application, as a US Embassy abroad may register the US company for up to five years as an E-2 registered company.

The L-1A and L-1B visas are effective tools for transferring personnel to the US on an intra-company basis, but there are some notable limitations. The L-1A and L-1B visas offer an alternative category for employees and companies unable to support the E-2 visa. While the E-2 visa offers a streamlined and convenient process for transfers subsequent to a company’s initial E-2 visa approval, a similarly convenient option is not available to SMEs transferring personnel on the L-1A or L-1B visas.

Establishing the US company as an E-2 visa treaty investment The E-2 (treaty investor) visa is a common and convenient choice for transfer of personnel that share the same nationality as a SMEs ownership.

E-2 visa company registration offers substantial benefits as it streamlines subsequent E-2 visa applications for addition personnel. While the initial E-2 visa filing requires extensive documentation regarding the US investment and creation of the business, subsequent applicant are able to apply directly at their home US consulate or Embassy, appear for an interview typically in a matter of days, and receive a visa approval the day of their interview. An E-2 visa may then be issued for up to five years and is renewable, in perpetuity, as long as the US enterprise maintains eligibility and the transferee maintains their employment with the company.

Employing staff in specialty occupations with the H-1B visa While the E-2, L-1A, and L-1B visas are likely to accommodate critical transfers to the US, there are scenarios where staffing a US company with non-US nationals requires alternative visa categories. Of par-

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ticular note are scenarios when a new hire lacks the necessary E-2 visa nationality while further lacking an employment history capable of immediately supporting the L-1A or L-1B visas as an intra-company transferee.

The H-1B visa permits for employer sponsorship of a non-US worker employed in a “specialty occupation.”

Specialty occupation is a highly technical term and an employee is expected to possess education or experience equivalent to a four year US bachelor’s degree in a field related to the position offered. In addition, the position offered must be of such a specialised level that it requires the attainment of a bachelor’s degree or its equivalent as a minimum for the occupation.

In practice, the H-1B category proves inconvenient and unreliable due to limitation designed to protect the US workforce. As such, it is often unappealing to SMEs that demand a degree of stability and predictability during their US expansion. The US Department of Labor requires a demonstration from an employer that non-US workers do not displace or adversely affect US worker’s wages and working conditions. This requires an employer to pay a government mandated prevailing wage while further adhering to a variety of complex compliance requirements.

There are also significant limitations on H-1B visa availability as new visas are generally capped at 65,000 each fiscal year. While there are cap exemptions, they are not typically available to for-profit SMEs. In practice the H-1B visa cap poses a significant challenge to employers as filings in the most recent year totaled nearly 233,000, resulting in an acceptance rate of approximately one-in-three applications. Applications are subject to a lottery. Those that were not accepted must wait until next year to refile. The H-1B is also inconvenient as applicants filing at the beginning of the fiscal year (1 April 2015) must wait six months before beginning work.

Given the onerous labor restrictions, limited quantity of visas, and delayed start-dates for employment, the H-1B is not an appealing option for SMEs establishing a presence in the US. However, this visa is often the only option for certain hires that do not qualify for the alternate visa categories discussed above.

Conclusion For SMEs expanding to the US, key global mobility considerations include transfer of current personnel and future hires, while ensuring business ownership, operations, and relationships between US and nonUS business entities are sufficient to support major visa categories.

While global mobility strategies vary based on the composition of a SME and its workforce, the combination of the E-2 visa and the L-1A/L-1B visas set a solid base for the transfer executives, managers, and critical staff.

While restrictive, the H-1B visa fills some gaps not covered by the other visa options. The E-2, L-1A/L-1B, and H-1B are prominent visa categories, but still represent just a few of a venerable alphabet soup of visa options. Given the complexity of US immigration law, SMEs should consult US immigration counsel early in an expansion to achieve optimal outcomes.

SMEs: Alternative Funding for SMEs Continues to Grow with Business-To-Business Bartering on the Rise

Alternative Funding for SMEs Continues to Grow with Business-To-Business Bartering on the Rise Philip Ciniglio, CEO at Bartercard UK The economy may be continuing its long haul back from the dark days of the 2009 financial crash but all the available evidence suggests that small and medium-sized enterprises’ (SMEs’) are still being starved of finance by the banks. The local bank was once the first port of call for a growing business seeking finance but now the economic landscape looks rather different from a decade ago, with SMEs looking to accrue finance elsewhere.

With banks still reluctant to lend money to SMEs, small businesses are not being deterred and have begun looking for alternative sources of funding. Alternative forms of funding for entrepreneurs and small businesses are booming around the world and it is no different for UK SMEs. The UK is at the forefront of the quickly changing alternative financing landscape. In fact, there are more funding options open to start-ups than ever before as new services have emerged to fill the space that was once solely occupied by the banks.

Alternative funding options look set to continue to grow in the current economic landscape and will also feature as an integral part of SMEs’ financial toolset as credit for them remains constrained. But the options available to SMEs vary hugely, from the contemporary, internet-driven crowdfunding, to the more traditional ‘angel’ investment, and to business-to-business bartering, an increasingly used alternative to the more traditional forms of small and medium-sized business funding.

Crowdfunding Crowdfunding has turned the SME financial landscape on its head and represents the antithesis to the tradition of a business asking a few individuals for large sums of money. Utilising the power for immediate communication, crowdfunding platforms allow SMEs to upload their ‘business pitch’ online which can then be viewed by thousands – if not millions – of potential investors that each have the potential to contribute a small amount. This 21st century concept means anyone can reap the benefits of investing in infant businesses - whether that be a £10,000 or £5.

In the UK alone, equity crowdfunding, where people invest in a business in exchange for a stake in the company, doubled in size last year to £50m and it is only set to accelerate further. Investors are also not just offering capital for equity in the business that’s needs

the cash either – minibonds and crowdfunding for debt are the also on the rise.

It would appear that in the internet age, gone are the days where a bank loan was the only option to get your fledgling enterprise off the ground. Take for example the crowdfunding platform Kickstarter, established in the US in 2009. The largest successfully completed project totalled $20.3million worth of investment from over 78,000 backers.

However, there are a number of problems that SMEs can encounter when pursuing capital through crowdfunding. Due to the sharp growth in crowdfunding, the market is becoming particularly saturated with a wide range of crowdfunding platforms. The platforms all serve the same purpose but differ in the means in which they achieve a shared end. There is a vast number of potential backers who are willing and seeking to invest in SMEs, but first there is the small matter of allocating the opportunity and choosing the best platform in which to launch. If an SME gets this wrong, it has the potential to result in not only a loss of time but also money and value.

Even if an SME is able to overcome the initial crowdfunding hurdles and secure investment there can be a number of implications at later stages. The favoured equity crowdfunding, where people invest in a business in exchange for a stake in the company, can result in problems of ownership for SMEs once they have grown and look for further investment or to sell the business.

Angel investment Angel investment is a traditional form of investment, whereby a business will ask a few individuals for large sums of money. The usually wealthy individuals who will invest in a fledgling enterprise will often have already earnt their capital through other business ventures and on top of monetary investment, may also provide an investment of time and experience.

The years of knowledge and experience that many angel investors bring to the table, along with industry connections, is a huge benefit for many SMEs looking to jump-start their business.

Often part of an angel network, this affords SMEs an automatic avenue into specific sectors through usually well respected and well connect individuals that make up the angel investment network. However, angel

44 Corporate Vision August 2015

investment typically requires SMEs to give up equity.

This may result in third parties being involved in running the business and making important business decisions. As a result, SMEs can encounter ownership problems, much like equity crowdfunding, whereby the direction and image of a business could be drastically changed by the third party investor and, in the worst case scenario, SME owners could be pushed out of their own business altogether as some investors will buy a large amount of equity.

Business-to-business bartering Business-to-business bartering has been steadily growing with 85% of the world’s fortune 500 companies operating their own in-house departments. In the UK, bartering is in a healthy state, with the total amount traded each year firmly into eight figures.

For SMEs, business-to-business bartering represents an alternative source of ‘cash-free’ finance - something especially attractive as the financial sector remains reluctant to return to previous levels of lending. It is a great way to protect coffers and use spare capacity at the same time, be it goods left unsold or spare capacity unfulfilled such as selling spare hotel rooms or filling empty tables at a restaurant.

Whilst in the cash world, excess inventory or capacity might be disposed of through discounting or, in the worst instance, being written off, bartering allows SMEs to realise full retail value. Because of this, bartering will always make business sense for companies with spare stock or capacity, regardless of the wider economic situation. Whatever the state of the economy, it is always better to pay for things that your business needs with your own products or services rather than using important cash reserves.

A significant factor in the growth of barter has been the development of trade exchanges. They provide transactional security and a record keeping facility that aids transactions and provides a firm platform for SMEs. In addition the trade exchange consists of a vast network of businesses that want to trade with each other. This gives SMEs who are members a huge advantage over their competitors who are not part of the growing barter community. These trade exchanges have been at the forefront of technology and innovation allowing transactions to be processed online and even with new mobile applications as well as traditional vouchers.

SMEs: Alternative Funding for SMEs Continues to Grow with Business-To-Business Bartering on the Rise

The financial landscape for SMEs is gradually looking increasingly favourable. The economy is forecast to grow and banks are under increasing pressure to support SMEs, which drive the UK economy. In addition to the traditional funding avenues, there are has been a sharp rise in alternative funding.

Crowdfunding has taken off globally and angel investment remains a viable option for many SMEs. Yet, both encounter a number of problems as a result of equity for cash that underpins both method.

Business to business bartering on the other hand offers business a cash-free alternative, thus addressing the equity for cash issue. It allows business to utilities spare capacity and realise value for services and goods that would otherwise go unsold. To really boost the economy, businesses need to look outside of traditional bank loan models and unregulated crowdfunding schemes and take advantage of business to business bartering, which helps preserve cash and improve profitability.

Bartercard is the world’s largest business-to-business trade exchange servicing over 55,000 cardholders across nine countries with the world’s largest computerised Barter Network. For more information on Bartercard, please call 0800 840 6333 or visit www.bartercard.co.uk

August 2015 Corporate Vision 45

Money 48 Staff Travel Expenses: Have You Got Yours Under Control?

John Linney, FAIRFX Corporate Product Director, discusses how to keep your travel and expenses under control.

50 A Budget for Innovation?

The Impact of the Summer Budget on R&D Martin Hook, Managing Director of Alma CG

52 How to Understand Your Business Costs and How to Treat Them There are a number of different ways to categorise the costs of a business

Money: Staff Travel Expenses: Have You Got Yours Under Control?

Staff Travel Expenses: Have You Got Yours Under Control?

48 Corporate Vision August 2015

Money: Staff Travel Expenses: Have You Got Yours Under Control?

John Linney, FAIRFX Corporate Product Director, discusses how to keep your travel and expenses under control.

With the UK government on a drive to increase exports, a dramatic rise in small British start-ups, and globalisation continuing apace, business travel to far-flung regions is only going to get more common in the coming years.

With this as the backdrop, it is essential businesses maintain control over travel and expense costs (T&E) while still delivering a comfortable experience to their globetrotting staff.

But many firms are unprepared. A survey of finance executives around the world conducted by Forrester Research found that 24% view T&E as one of the most challenging operating expenses to control.

And around 80% of businesses were not using automated tools for expense management with many still using spreadsheets.

Meanwhile, world trade is expanding and moving eastwards and UK exports have risen by over a third to China alone in two years according to a report released in March from the British government. Add to this that by 2018 business travel in Europe is forecast to rise to pre-credit crunch levels according to data produced last year by Oxford Economics and you can see that greater pressure will be put on T&E budgets.

Costs in the UK are also rising. Already exorbitant London hotel rates are predicted to tick up 3.5% this year and outbound flights from the UK by 1%. As a snapshot of price movements in Asia, hotel prices in India, Indonesia and Hong Kong are expected to grow by 4.4, 7.8 and 4.3% respectively.

In 2013, global corporate travel spend hit $1.1 trillion – over twice the size of the US budget deficit. It is expected to be 6.9% higher for last year (full spend data not available yet), and rise 8.6% this year.

But if businesses prepare well and implement a T&E process that focuses on cost control, they can shield their cost bases while allowing staff to travel in line with business growth.

But it’s not just implementing a proper T&E system firms need to be aware of. There is also travel expense fraud to tackle too.

A sensitive issue but tackling the persistence of fraud within travel and expenses will have a significant impact on the bottom line. Companies that clearly and automatically monitor T&E and produce reports on at least a monthly basis can see a sizeable drop in costs by keeping a closer eye on their T&E. A report by Oversight Systems, which analysed $1 billion of transactions by 160,000 people, found that one

August 2015 Corporate Vision 49

in ten people had violated company policy more than once. The report also found that for a company with annual travel spend of $10 million, there was roughly $500,000 in spending that did not meet company policy. However, a brazen 5% of employees accounted for 82% of violations.

There are knock-on benefits from cracking down on T&E fraud: research has shown it is often employees engaged in this kind of policy violation that also take part in other kinds of fraud. Rooting out this behaviour helps embed a culture of compliance across the business.

However, business travel is unlikely to disappear: an Economist Intelligence Unit report in 2013 found that 80% of executives consider it critical to staying competitive and increasing sales.

While videoconferencing provides a solution when travel is impossible, meeting face-to-face is likely to remain a business norm, meaning controlling and reducing T&E is crucial.

One way of ensuring this control is to implement a prepaid corporate card programme where all staff have funds pre-loaded onto a card with currency for their destination.

Prepaid currency card provider FAIRFX says its customers have reported reductions of 20% on travel and expenses as a result of implementing a prepaid card programme. As well as preventing staff from going over budget, it can reduce out-of-pocket expenses that are often found to be fraudulent, as prepaid cards mean employees can access cash 24/7 from ATMs. But there are other things that can be done too to prevent fraud in expenses but also reduce T&E impact on your bottom line.

For example, making it easy for staff to file expense claims with an automated system will help reduce ‘duplicate’ claims whether erroneous or fraudulent.

And using an expense management system and analysing staff travel and spending patterns will create internal benchmarks for the cities visited most regularly, making it easier to not only predict costs but also manage them.

While firms may traditionally let travel and expenses bloat in the good times and get lean during downturns. A more consistent approach is a far better way of smoothing and managing these costs for the long term.

Money: A Budget for Innovation? The Impact of the Summer Budget on R&D

A Budget for Innovation?

The Impact of the Summer Budget on R&D Research has revealed that the role of R&D for the future growth of the UK economy could not be more essential, with estimates showing that for every £100m the UK invests in R&D, the direct and indirect economic benefits total £290m. However, despite this importance, the UK is lagging behind in 20th place amongst major economies for R&D investments. Although the Government offers generous tax benefits to stimulate investment in R&D, there is still more to be done to improve the effectiveness of R&D tax relief. The recent summer Budget introduced a number of changes around R&D and it is important that companies are aware of how they will be affected.

Investment in HMRC The Chancellor has pledged an investment of £750m to target tax evasion, which could bring an added £3.1 billion to the treasury over the next five years. Whilst the Treasury has said that this policy is expected to bring in £9 from every £1 invested, this is a significant amount of money to solely tackle tax evasion. At a time where many areas of HMRC are lacking sufficient funding, the money may have been better used to also improve other frontline HMRC services. For instance, we have noted an impact on some Research and Development (R&D) tax claim processing times due to HMRC restructuring and R&D unit closures, which can delay much needed tax relief for innovating businesses.

These changes are a continuation of the Government’s tough line on tax planning, now lumping together evasion, avoidance and planning all as undesirable activity. This further the situation where genuine tax incentives, such as R&D tax credits, become more and more important to companies wanting to manage their tax position efficiently.

R&D Tax Relief In terms of R&D tax relief, the Government has corrected an anomaly in the Research & Development Expenditure Credit legislation, meaning that universities and charities will no longer be able to claim on expenditure from 1st August 2015 onwards. Whilst this may be disappointing for some institutions, this was never the policy’s original intention and is an area which needed clarification.

Annual Investment Allowance (AIA) The AIA is designed to encourage investment by offering companies a 100% tax relief on qualifying capital expenditure. The current £500k Annual Investment Allowance was only ever going to be short-term, however we had hoped the Budget might announce its return to the previous rate of £250k. Nevertheless, given that the rate had been due to fall to £25k at the end of the year, the new

permanent level of £200k is a welcome surprise.

Additionally, the continuity promised by a permanent rate will allow businesses to plan their medium to long term R&D strategies and investment with greater confidence.

The National Living Wage It came as something of a surprise when the Chancellor announced that as of April 2016, a new minimum wage of £7.20 will be put in place, rising to £9 by 2020. Many SMEs are going to feel this financial hit keenly as employment is usually the biggest cost for companies. However, changes to corporation tax could help to off-set this added burden.

Corporation Tax The announcement of a reduction in corporation tax to 19% in 2017 and 18% in 2020 is good news for British business, meaning greater investment and economic growth. However, from the perspective of R&D tax relief, it will reduce the amount of benefit claimable for tax paying SMEs. Nevertheless, this will slightly increase the benefit available for large companies through the R&D Expenditure Credit scheme from 2017 onwards. It is worth noting that the R&D tax benefit claimable by all loss-making businesses of all sizes will not be impacted by this change.

Going forward One of the key policies we had been expecting clarification on is the future of the Patent Box scheme and we were disappointed with its omission from the Budget. Under the Patent Box legislation companies are entitled to a reduced rate of corporation tax on qualifying patent income. This includes sales of patented products, licence fees and royalties and sales/disposals of patents. However, the retention of the generous R&D tax relief schemes at their current rates is undoubtedly welcome news as it demonstrates the Government’s ongoing commitment to innovation in the UK.

50 Corporate Vision August 2015

In addition, many companies would like to see further investment in HMRC resources and training for processing R&D tax relief claims. Recent restructuring within HMRC means the risk of claims taking longer to be processed is increasing, which could impact on the availability of working capital for some of Britain’s most innovative companies.

There is also still ongoing confusion in regards to HRMC’s position on whether staff expenses can be included in R&D tax claims and it is important that this point is clarified. Traditionally this has been claimed but there are indications that this might not be included in future.

As a general government philosophy towards business, it is essential that there are greater incentives for SMEs. SMEs are the lifeblood of the UK economy, responsible for employing over 24 million people. Supporting innovation through grants and funding will not only encourage essential job creation and economic growth; it will allow Britain to compete on an international scale. There are various grants schemes available at local, national and European level to stimulate investment in R&D. For example, Innovate UK runs funding competitions, offering companies the chance to win between £150,000 and £10 million to run a research and development project. It’s important that such projects continue or are indeed expanded to support business growth.

Moreover, the UK needs a long term strategy for creating a skilled and qualified work force. Creating a workforce with the skillsets to thrive in the 21st century is vital, especially in R&D and high growth industries. There are a number of ways to achieve this, including encouraging young people to pursue STEM subjects at school and university. We would like this encouragement to start at primary schools so that children are engaged from a young age. Additionally, the gender imbalance needs to be addressed so we can start to see an increase in the number of women taking up science and engineering careers.

Money: A Budget for Innovation? The Impact of the Summer Budget on R&D

It is also important that the quality of research institutions in the UK continue to maintain their current high standards. The Research Excellence Framework assessed the quality of research in UK higher education institutions last year and 30% were found to be world-leading and 46% were classed as internationally excellent. More and more nations around the world are investing heavily in research and the UK needs to ensure that they keep up with an increasingly competitive market.

For now, businesses need to ensure that they fully understand the Chancellor’s changes so potential pitfalls can be avoided and new opportunities are capitalised on. If in doubt, we recommend seeking professional advice as to how best to identify and address the issues relevant to your business.

August 2015 Corporate Vision 51

Martin Hook, Managing Director of Alma CG

Money: How to Understand Your Business Costs, and How to Treat Them

How to Understand Your Business Costs, and How to Treat Them There are a number of different ways to categorise the costs of a business: Direct or Indirect?

A direct cost is one that can be allocated to a specific product or service. For a manufacturing business, this would include any raw materials used in the production process as well as the cost of labour in creating the finished goods. For a service company, this would be the cost of providing the service (so for a cleaning company, the direct costs would be the costs of the actual cleaners).

An indirect cost is one that cannot be allocated to a specific product or service. An example of an indirect cost might be the rent and rates of the office, or the costs of running the finance team or HR department.

It is useful to consider the classification of costs as ‘direct v indirect’ on a scale – with pure direct (raw materials) at one end and pure indirect (rent on the head office) at the other end. The individual on the production line who is involved in the manufacturing process would also be classified as direct, but what about the overall production manager? Are they a direct cost, or more of an indirect cost?

When producing a Profit & Loss Account, businesses need to distinguish between direct costs (which are classified as ‘cost of sales’ or ‘cost of goods sold’) and indirect costs (which are classified as ‘operating costs’ or ‘sales, general & administration costs’).

This distinction is important as the direct costs are deducted from sales to calculate gross profit and indirect costs are deducted from the gross profit to calculate operating profit. Business can choose how to classify their costs as long as this classification is (a) reasonable (rent on the head office cannot be direct and raw materials cannot be indirect); and (b) consistent (costs are classified in the same way each month).

be rent (it does not matter how many of a particular product you make and sell, the rent you pay on your office space remains the same).

A variable cost is one that will always change with the level of activity. Raw materials are a good example of a variable cost – the more products you make and sell, the more raw materials you will need to buy.

You should now start to see a similarity between the classification of a cost as direct or indirect and the behaviour of a cost as fixed or variable. Direct costs are more likely to be variable and indirect costs are more likely to be fixed. This, however, is not always the case – a full time employee involved in the manufacturing process is a fixed cost (their salary remains the same), but they will be classified as a direct cost. Can you think of a indirect cost in your business that might behave as a variable cost?

When considering how costs behave, you should consider the cost drivers. Cost drivers are the activity that causes costs to change. In a manufacturing business this might be the number of goods made and sold; for an airline this would be the number of passengers; for a consultancy company this might be the number of contracts or projects on which it is working.

When considering fixed and variable, like direct and indirect, it might be useful to think of the classification like a scale. Some costs contain an element of both fixed and variable – known as semi-variable costs. Consider a phone contract with a fixed line rental and cost of calls on top, or a salesperson’s remuneration - a combination of a fixed salary and performance related bonus. In each case it is necessary to identify the cost driver and then how the actual cost behaves in relation to changes in that driver.

Fixed or Variable?

Having determined the classification of costs, we can now consider how those costs behave.

The costs of renting a warehouse would be considered to be fixed; but at some point in the growth of the business the warehouse will become too small and the business will need to rent a second warehouse. In this case, the rent (a fixed cost – direct or indirect?) can be considered as a ‘stepped cost’ – when a certain level of activity is reached there is a significant or stepped change in the costs.

A fixed cost is one that does not change with the level of activity. A good example of a fixed cost would

In this example, it is useful to consider the ‘marginal cost’. The marginal cost is the additional costs as-

What are the obvious direct costs of your business?

What are the indirect costs? Where would you draw the line in the distinction between the two?

52 Corporate Vision August 2015

sociated with producing an extra unit of output. For example, image that your business was involved in the production of widgets. The direct costs (raw materials etc.) of making each extra widget is 20p and you sell the widgets for £1 each. Capacity in your current offices allows you to make 100,000 widgets each month. Now imagine an extra order, which means you have to make 100,001 widgets each month. To make the extra widget means that you now have to rent a second office and set up all the machinery, as your current production capacity only allows for 100,000 widgets per month. The marginal cost (or additional cost associated with the extra unit of production) of the 100,001th widget would mean that it was not economical. It would be necessary to calculate the minimal number above 100,000 to make it worthwhile investing in additional capacity – bringing the overall average cost of producing a widget down.

Opex or Capex?

All of the costs that we have been considering so far will be found in the Profit & Loss Account (either as cost of sales or the operating costs of the business).

We now consider the costs of items such as new computers or production machinery. Where as the costs of running the business on a day-to-day basis are classified as ‘opex’ or ‘operational expenditure’, the costs associated with investing (long term) in the business are known as ‘capex’ or ‘capital investment’. Items of capex might include tables, chairs, computers, plant and machinery – anything that the business needs to operate and are expected to be used for a few years or more.

Whereas opex appears in the Profit & Loss Account – and therefore has a direct impact on the profitability of a business (the more you spend on opex the less profit is left over), capex appears in the Balance Sheet as an asset. At the time of purchase, it has no impact on profitability (purchasing a computer for £1,000 merely turns one form of asset – cash – into another form of asset – computer). Items of capex have a deferred impact on the profitability as the asset is depreciated over its useful economic life.

Direct or indirect? Fixed or Variable? Semi-variable or Stepped? Marginal? Opex or Capex? Considering how costs behave and how to treat them will give you greater confidence to manage the costs in your business.

Money: How to Understand Your Business Costs, and How to Treat Them

Ted Wainman is a Professional Business Trainer & Author of “How to Talk Finance: Getting to grips with the numbers in business” published by Pearson, priced £14.99 www.wainman.net

August 2015 Corporate Vision 53

60 Seconds

56 fastsms Oliver Burt (Marketing Director)

57 Sunrise Software Geoff Rees

The 60 Seconds Interviews

fastsms Oliver Burt (Marketing Director)

What does your business do?

Fastsms has been providing professional text messaging services to businesses and individuals since 2002. Fastsms were the first SMS Provider to adopt a fully transparent pricing model without contracts or expiration dates on message credits – this has since become the industry standard with all other major providers following suit.

Who are your clients?

Organisations of all shapes and sizes from local schools to marketing agencies, global corporations and emergency services all rely on fastsms for instant, reliable SMS communication.

and work wherever they want. As a result we’re all much more productive and better able to concentrate on our customers’ needs without distractions.

CONTACT DETAILS Name: Oliver Burt (Marketing Director) Company: fastsms Email: helpdesk@fastsms.co.uk Web Address: www.fastsms.co.uk Telephone: 0800 954 5305

What makes you unique?

Our company structure enables us to offer the latest SMS features on the most reliable technology coupled with a higher level of free UK 24/7 support than any of our competitors. Put simply we’re much lighter on our feet, which means we can offer all of this to our customers at the most competitive prices on the market without ever compromising on quality.

What’s your biggest challenge facing you at present?

We’re constantly developing our products in order to bring the latest features to our customers. The challenge lies in delivering advanced features using the latest technology and systems in a way that is accessible to users of every level.

What’s the aim for your business?

To continue to provide the best SMS platform on the market with the highest level of UK based support and advice 24/7 through Live Chat, Email and Phone to anyone who asks for it, regardless of how much they spend with us.

What’s your company’s biggest challenge?

Technology is constantly changing and it’s important to stay at the forefront of any changes or developments. Our in-house development team means we can be quick to respond to any changes in technology as well as the needs of our customers. We always welcome feature requests from our users and wherever possible will offer a solution that makes their life easier in an upcoming release.

What business/business person do you most admire and why?

37 Signals, having adopted their philosophy towards remote working, everyone at fastsms is free to live

56 Corporate Vision August 2015

The 60 Seconds Interviews

Sunrise Software Geoff Rees

What does your business do?

Sunrise provides powerful and comprehensive Service Management solutions designed to help our customers manage service centric processes, events and functions across their organisation. Typical ‘homes’ for our software could be Customer Service, IT, Projects, HR departments - anywhere where ‘service’ is requested , managed and delivered.

Who are your clients?

We have a wide variety of customers across both public and private sectors ranging from large organisations such as BAE Systems, Muller Dairies, Serco, United Biscuits and the NHS to SME Service Provider organisations such as ANS Group.

What makes you unique?

Companies claiming to be unique and having USP’s is a tired concept. What we can say is that during a customer’s buying process, they get to know us well and subsequently tell us that it is the integrity, experience and all-round feel good factor they get from Sunrise’s people that makes their mind up. The product itself is great too!

What’s your biggest challenge facing you at present?

Sunrise’s growth plans are going full steam ahead – ramping up our development and delivery resources is the biggest challenge – we are only interested in the best people and these take time to find.

What’s the aim for your business?

We have a business plan to reach a certain turnover and profitability in a known time frame. We intend to achieve this by introducing new products that will solve different challenges within businesses and appeal to different buyers. Commonly based on our powerful software engine, we have introduced 2 new products already in 2015, both of which are selling strongly.

What business/business person do you most admire and why?

Personally I admire any self-funded business that takes all the risks and strives to achieve its goals, often against the odds and with scant support from institutions and government alike.

August 2015 Corporate Vision 57

CONTACT DETAILS Name: Geoff Rees Company: Sunrise Software Email: enquiries@sunrisesoftware.com Web Address: www.sunrisesoftware.com Address: 50 Barwell Business Park, Leatherhead Road, Chessington, KT9 2NY Telephone: 020 8391 9000