Issue 9: July - August 2019
Inspire • Inform • Connect
Meet the man who built a unicorn BLM talks to Rishi Khosla Co-founder of OakNorth Bank
Meet some of the UK’s most inspiring entrepreneurs Page 36
Scale-up 30 series comes to Cambridge Page 42
Michael Portillo talks Thatcher, Blair and Brexit. Page 54
www.businessleader.co.uk
CONGRATULATIONS TO OUR EMPLOYERS OF 2019 Weston College Business Awards 2019 winners:
SMALL EMPLOYER OF THE YEAR
MEDIUM EMPLOYER OF THE YEAR
LARGE EMPLOYER OF THE YEAR
NEW APPRENTICE EMPLOYER OF THE YEAR
INDUSTRY PLACEMENT EMPLOYER OF THE YEAR
WORK EXPERIENCE EMPLOYER OF THE YEAR
TRAINEESHIP EMPLOYER OF THE YEAR
PRE-EMPLOYMENT EMPLOYER OF THE YEAR
DISABILITY CONFIDENT EMPLOYER OF THE YEAR
INSPIRING FUTURE TALENT EMPLOYER OF THE YEAR
COMMERICAL TRAINING EMPLOYER OF THE YEAR
OVERALL EMPLOYER OF THE YEAR
The hard work and dedication that each of these businesses have shown, is crucial to the development of our future work force. “Thank you for believing in our students, and together we are creating brighter futures. Dr Paul Phillips CBE Principal and CEO of Weston College Group, and FE Leader of the Year
GET IN TOUCH www.weston.ac.uk/employers
|
enquiries@weston.ac.uk
|
01934 411 594
FROM THE EDITOR
29 32 56 48 BUSINESS LEADER COLUMNISTS:
MARK PEARSON FOUNDER, FUEL VENTURES
GREG LE TOCQ FOUNDER, CLOUD SAVINGS COMPANY, WHICH OWNS VOUCHERCLOUD
CHARLIE MULLINS OBE CEO, PIMLICO PLUMBERS
BUSINESS LEADER VISION:
INSPIRE
INFORM
LATEST NEWS
Breaking business news from around the world and UK. Featuring news on Amazon, Gumtree and Readly.
FINANCE:
FINTECH
BLM FAST TRACK
LEADERSHIP:
REPORT
34
46
How to launch your business in Brazil.
LIFESTYLE
LUXURY CAR BRANDS
10
Rishi Khosla talks about his thoughts on UK fintech, and what makes OakNorth so special.
29
Why does your company need to have B Corp status?
Business Leader profiles the fastest growing companies in the UK. This edition is Velocity Commerce.
INTERNATIONAL TRADE
Business Leader - Inspire • Inform • Connect
14
How does the UK fintech sector compare with the rest of the world?
GROWTH:
CONNECT
04
COVER STORY
LEADERSHIP:
INTERVIEW
32
The battle to stay authentic. Adventurer Ed Stafford talks to BLM.
TOP30 ENTREPRENEURS
36
As part of our growth series, we profile 30 of the UK’s most inspirational entrepreneurs.
48
How do the wealth creators spend their leisure time?
HR:
FLEXIBLE WORKING
56
An excuse to cut overheads or the future of work?
1
LATEST NEWS
Michael Portillo to host 2019 South West Business Leader Awards Inspire • Inform • Connect EDITORIAL Oli Ballard - Editor E: editor@businessleader.co.uk Barney Cotton - Assistant Editor E: barney.cotton@businessleader.co.uk Joanna Jones - Assistant Editor E: joanna.jones@businessleader.co.uk DESIGN/PRODUCTION Adam Whittaker - Senior Designer E: adam.whittaker@businessleader.co.uk Melissa Larkin - Website Development E: melissa.larkin@businessleader.co.uk Kirstie Wood - Digital Communications E: kirstie.wood@businessleader.co.uk SALES Sam Clark - Business Development Manager E: sam.clark@businessleader.co.uk OPERATIONS Lucy Dennis - Operations Manager E: lucy.dennis@businessleader.co.uk CIRCULATION Adrian Warburton - Circulation Manager E: adrian.warburton@businessleader.co.uk ACCOUNTS Jo Meredith - Finance Manager E: joanne.meredith@businessleader.co.uk Ashley Cartman - Finance Director E: ashley.cartman@businessleader.co.uk MANAGING DIRECTOR Andrew Scott - Managing Director E: andrew@businessleader.co.uk
No part of Business Leader Magazine may be reproduced, stored in a retrieval system, or transmitted in any form or by any means without the prior written consent of the editor. Business Leader magazine will make every effort to return picture material, but this is at the owner’s risk. Due to the nature of the print process, images can be subject to colour variation of up to 15%, therefore Business Leader Magazine cannot be held responsible for such variations.
If you would like to get involved or have any news you would like to share, please contact us on 020 3096 0020 or email: editor@businessleader.co.uk.
Journalist and broadcaster Michael Portillo has been revealed as the host for this year’s South West Business Leader Awards. After a long political career and several business endeavours, followed by an illustrious career in television and radio, Michael Portillo promises to make an incredible host. Previous Business Leader Awards hosts include explorer Sir Ranulph Fiennes OBE, business icon Michelle Mone OBE, TV celebrities Gyles Brandreth, Jeremy Vine, Russell Kane and supermodel Caprice.
Award-Winning Legal Advisers to Regional Businesses 2
The 2019 South West Business Leader Awards will bring key figures from the region together on 26th September at Ashton Gate for a night of entertainment and celebration. Independent panels will judge the high-fliers of South West business, and the winners will celebrate their new accolades in style. Founder of the Business Leader Awards, Andrew Scott, said: “The South West Business Leader Awards are all about achievement and inspiration. As such, I can think of no one better to host the awards than the multi-talented Michael Portillo.”
0117 925 2020 vwv.co.uk Issue 9: July - August 2019
SALFORD BUSINESS SCHOOL In partnership with industry
WORRIED ABOUT THE SKILLS GAP? / Take a student on work placement (3, 6 or 12 months) / Be a named industry partner to ensure we are teaching the skills you need / Become a guest speaker / Give our students live briefs and projects to look at your business problems / Host an industry visit / Commission academic research into your business challenges
OUR STUDENTS GAIN REAL-WORLD EXPERIENCE; YOU ACCESS HIGH-QUALITY, BRIGHT AND ENTHUSIASTIC STUDENTS Find out more about your opportunities to work with us www.salford.ac.uk/business-school +44 (0)161 295 2222 sbs-admin@salford.ac.uk
BECOME UNSTOPPABLE
LATEST NEWS
Amazon leads £450m investment in Deliveroo
ADVERTORIAL:
BUSINESSES NEED NOT BE BAFFLED BY FINANCE OPTIONS
T
here’s a lot more to business finance than meets the eye and increasingly there are more and more options open to businesses that need that extra bit of help or security to support and grow their business. One of the most established ways of funding is Invoice Finance. This releases the cash tied up in your invoices without waiting to get paid. Businesses can draw funds against the amounts due from customers and can help improve cash flow; this can help to pay bills, wages or suppliers, or even be reinvested in new projects and growth earlier than anticipated - instead of having to wait until customers have paid their balances in full. At Castle Business Finance, Invoice Finance packages can be put in place swiftly and once invoices have been billed to a customer, an agreed percentage of the amount will be released straight to the business. It can work on a number of different levels, from full-service factoring where Castle will collect your debts for you; to a ‘CHOC’ facility where a business handles their own invoice collections; or even a service only where Castle will collect debts without the initial funding. It can also apply to all of supplier invoices or just a select few depending on the level of funding required. Alternatively, for wholesale and retail businesses, Trade Finance
4
might be the right choice, which is usually provided alongside an Invoice Finance facility. This is a cash facility to buy goods for resale. It bridges the cashflow gap between paying suppliers and receiving payment from customers and can be provided in multiple currencies. The benefit of this is in providing businesses with up to 90 days’ credit, so goods can be bought, received and sold before the finance needs to be settled, as well as providing end supplier confidence that their bills will be paid promptly too. Jeremy Coombes, CEO of Castle Business Finance, explains: “Business finance can be confusing and with a number of different routes available it is understandably a daunting venture for any business. “However, by looking carefully at your options and choosing a provider like us who takes the time to look at each application separately and on its own merit, Invoice and Trade finance can provide a breath of fresh air.” To find out more about invoice and trade finance, visit Castle’s new website at www.castlebusinessfinance.com or call 01275 390 665.
Amazon has led a $575m (£450m) investment in food delivery company Deliveroo. The e-commerce giant led the Series G round alongside existing investors T. Rowe Price, Fidelity Management and Research Company, and Greenoaks. London-based Deliveroo operates in 14 countries, with 80,000 restaurants and with 60,000 delivery workers. Deliveroo has now raised $1.53bn (£1.2bn) to date. The company was valued at over $2bn (£1.57bn) in 2017 following a funding raise in 2017. An updated valuation has not yet been provided. Will Shu, founder and CEO of Deliveroo, said: “This new investment will help Deliveroo to grow and to offer customers even more choice tailored to their personal tastes, to offer restaurants greater opportunities to grow and expand their businesses, and to create more flexible, well-paid work for riders.” Doug Gurr, Amazon UK Country Manager, said: “We’re impressed with Deliveroo’s approach, and their dedication to providing customers with an ever increasing selection of great restaurants along with convenient delivery options. “Will and his team have built an innovative technology and service, and we’re excited to see what they do next.” Just Eat shares fell 7% following Deliveroo’s announcement.
Issue 9: July - August 2019
LATEST NEWS
Gumtree co-founder launches online investment platform
Manchester firm raises largest ever maiden EIS fund to scale North West businesses
Gumtree co-founder Simon Crookall has launched a new British digital financial service – InvestEngine – which provides globally diversified investment portfolios for people with as little as £2,000 to invest.
Praetura Ventures has closed its 2019 Enterprise Investment Scheme (EIS) fund at £15m, making it the largest-ever maiden EIS fund. It will use the money to help address the £300m venture funding gap in the North West of England.
InvestEngine is a web platform and an app that has a management fee of 0.45% per annum, making it one of the lowest fixed rates available. There are no dealing fees, set up costs, custody or exit fees, and InvestEngine rebalances portfolios as part of the service. Simon has co-launched the business with this sister Joanna Crookall – who is CEO of Ramsey Crookall. Simon comments: “After selling my tech businesses, I gravitated back to financial services and I could immediately see there was a real opportunity for a quality solution for
people with smaller sums. Everyday people simply weren’t able to access the same level of money management as people with larger sums. “The vision for InvestEngine is to become the ultimate destination for investors and savers. Over time our offering will diversify and expand to include an array of services from pensions and ISAs to investment advice and ethical investing options with green portfolios.”
The £15m investment vehicle will back 8-10 tech-enabled early-stage businesses predominantly in the region, who will use the capital to hire key staff, invest in new technologies and, ultimately, scale. The £15m amount was raised in three months from investors across the UK. The firm has invested over £100m since 2011.
You could be eligible for R&D Tax Credits You might be surprised by what can qualify as R&D (it’s not always about white coats and hadron colliders). We’ve helped numerous businesses claim back significant sums of money in all sorts of sectors. Here’s one bit of research you needn’t spend any more time on. Ask us about your own tax affairs today. Find out more: rdtc@burton-sweet.co.uk | 01934 620011 @burtonsweet | www.burton-sweet.co.uk Business Leader - Inspire • Inform • Connect
tax advisers
5
LATEST NEWS
Readly secures £13.4m in new funding
Nick Sturge awarded MBE in Queen’s birthday honours list
Readly, a digital magazine subscriptions platform, has today announced that it has completed a £13.4m investment round, led by the Third Swedish National Pension Fund (“AP3”), London-based Zouk Capital, and Swedbank Robur, with participation from other existing and new investors.
The Cabinet Office has announced that Nick Sturge is to receive an MBE in the Queen’s Birthday Honours. The citation reads “Director, Engine Shed. For services to the digital economy.”
Since the Company was founded in 2012, Readly has pioneered the market for digital magazine subscriptions by providing its users with unlimited access to local and international high-quality content from well-renowned publishers both in the UK and globally.
LISTEN
Commenting on his award, Nick said: “I am honoured to have been recognised for the work I’ve had the privilege of being able to do in the city. Only someone with a very vivid imagination could have predicted how the local tech sector would have progressed over the last 10 years.”
THINK
CREATE
Creative communications for businesses with ambition Sprague Gibbons is a creative agency that helps ambitious businesses be heard. Whether you’re communicating with clients, customers, investors, staff or potential recruits, we’ll help you find a voice that cuts through the noise. Our simple LISTEN | THINK | CREATE approach ensures we consistently produce stand-out work that delivers results. Want your business to speak louder? Find out how at www.spraguegibbons.co.uk
B R A N D
6
|
A D V E RT I S I N G
|
S T R AT E GY
|
W E B S I T E S
|
D I G I TA L
Advertising | Marketing | Design
M A R K E T I N G
|
C O N T E N T
|
D E S I G N
Issue 9: July - August 2019
ADVERTORIAL
We will outlive our pensions and therefore need less income. After this time, we’ll likely need more money to pay for long term care, which is something else the government need to address.
W
ith the World Economic Forum (WEF) recently suggesting people in the UK will outlive their retirement funds by more than a decade, Stuart Price, Partner and Actuary at Quantum Advisory, looks at what needs to be done to avoid a pensioner poverty crisis. Stuart said: “The WEF’s report is very worrying. It states that the average retirement savings will last around 8.5 years - nowhere near as long as you’d expect to need it for and therefore many will be reliant on the State, which only provides a basic level of income in retirement, in the latter years of their retirement. Traditionally, when we first retire, we’re active and need more spending money to enjoy ourselves. As we grow older, between the ages of 75 and 84, we’re less mobile
We didn’t need the report to tell us that we need to be saving more. The current minimum contributions from an individual and their employer to a defined contribution (DC) pension arrangement are not nearly enough to allow people to enjoy a comfortable retirement. Policy makers and the government need to take responsibility for allowing this to happen. Some potential solutions, as I see it, are to bring back the defined benefit (DB) regime – albeit a watered-down version – to allow people to build up a guaranteed income in retirement on top of the State Pension but something that is affordable to employers. Or even a combination of DB and DC such as collective defined contribution (CDC)
Contact us on the number/email address below to learn more about our offering. Stuart Price: Direct: 0117 905 8766 Email: stuart.price@quantumadvisory.co.uk
pension schemes. CDCs are widely used in the Netherlands, Denmark and parts of Canada, that sees pension benefits available at retirement calculated by the Scheme Actuary. They basically merge DC and DB schemes so employees enjoy similar benefits as DB schemes without the increased risk to employers. The pension dashboard should also make a difference to people’s saving habits. Physically seeing what they can expect to receive in retirement will hopefully awaken employees and persuade them to put more money away for retirement. However, currently politicians and the government just seem to have one item on their agenda – Brexit – and the fundamentals for a good society such as pensions and care for the elderly are sadly lacking far behind.” Quantum Advisory specialises in pension and employee benefits services to employers, scheme trustees and members. For more information about Quantum Advisory, please visit www.quantumadvisory.co.uk
www.quantumadvisory.co.uk
Quantum Actuarial LLP, trading as Quantum Advisory, Registration Number: OC326665, registered in England and Wales. Quantum Actuarial LLP is authorised and regulated by the Financial Conduct Authority. Registered office: Cypress House, Pascal Close, St Mellons, Cardiff CF3 0LW. A list of all members is available for inspection at our registered office.
Business Leader - Inspire • Inform • Connect
7
DEALS
NATIONAL DEALS
The Body Shop parent company to buy Avon for £1.6bn
LEGAL
The Body Shop’s parent company, Brazilian-headquartered Natura, has announced that it has acquired UK-based direct-toconsumer retail brand Avon in a £1.6bn deal.
Allianz UK have agreed to buy out the remaining 51% stake in LV General Insurance Group (LV GIG) for up to £578m from Liverpool Victoria Friendly Society (LVFS).
TECHNOLOGY
Ideagen plc, a UK-based global software firm, has announced the acquisition of Redland Business Solutions Ltd for £15.8m.
The deal creates the fourth largest beauty group in the world, and the combined group revenues are expected to exceed £7.8bn this year. Natura and Avon have a combined workforce of over 40,000 individuals, and are now present in over 100 countries around the world. As part of this transaction, a new Brazilian holding company, Natura Holding SA, has been created. Jan Zijderveld, CEO of Avon, said: “Together with Natura, we will have broader access to innovation and a portfolio of products, a stronger e-commerce and digital platform,
and improved data and tools for Representatives to drive growth and enhance value for shareholders. Further, with the support of Natura, we will continue to invest in cutting-edge technology to enhance our digital capabilities and productivity for our representatives.”
MANUFACTURING
Savaria Corporation, a global manufacturer in the accessibility industry, has announced that it has acquired Silvalea Ltd and its sister company, D-ansermed Ltd for £4.6m.
RETAIL
FM Mattsson Mora Group, a supplier of kitchen and bathroom taps, has acquired Netherlandsheadquartered Hot Bath BV for £15.6m.
Rolls-Royce buys Siemens’ electric aircraft division Rolls-Royce has agreed a deal to acquire Siemens’ e-Aircraft business. The company aims to accelerate its electrification strategy and become a major player in the ‘third era’ of aviation. The acquisition is expected to complete late 2019, following a period of employee consultation.
SOFTWARE
Glantus, an Irish analytics software company, has acquired London-based business intelligence company Dynistics Ltd for a consideration of £1.75m.
8
The e-Aircraft business, based in Germany and Hungary, employs around 180 specialist electrical designers and engineers who have been developing a range of all-electric and hybrid electric engines for the aerospace industry.
Rob Watson, Director – Rolls-Royce Electrical, said: “Electrification is set to have as dramatic an impact on aviation as the replacement of piston engines by gas turbines. We are at the dawn of the third era of aviation, which will bring a new class of quieter and cleaner air transport to the skies.” Issue 9: July - August 2019
ADVERTORIAL BARCLAYS
How are Barclays supporting Malvern Property? BLM recently spoke with Helen Rogers, Director at The Malvern Property Limited to talk about the two hotels within the group, the main challenges facing the hotel and spa sector, and how Barclays have helped the business.
Can you give me an overview of the company? The Malvern Property Limited operate two very different hotels. One is a modern and contemporary spa hotel with 33 bedrooms based in Malvern, Worcestershire. It benefits from 14 treatment rooms and a stunning 20 metre indoor/outdoor hydrotherapy pool. It also has a substantial health club with over 1,800 members. The property itself was built and opened in 2008 but, very quickly went into administration. Myself and my business partner Huw Watson became involved in the business in 2010, and in 2011 we acquired the property. From a loss making operation when we took over, this current year we are targeting a turnover of nearly £4.4m and an EBITDA of just over £1m. In 2014, Huw and I acquired a second property in Worcestershire, six miles away from the Malvern Spa. The Colwall Park Hotel is nestled at the foot of the Malvern Hills on the western side in the small peaceful village of Colwall. The hotel was built in 1904 and has 22 bedrooms and extensive function and wedding facilities. Since we have had Colwall Park we have focused our efforts on developing the restaurant and bar offering, achieving a AA Two Star Rosette in 2017 and increasing our wedding and function business.
What products and services do you offer in the spa? Our treatment rooms at the spa offer a range of holistic and results-driven treatments. We have recently become a sole brand product house spa, supported by ELEMIS. We cater for spa day clients who travel up to a 90 minute drive time from Malvern. These customers arrive in the morning, enjoy the facilities, have some lunch in our AA Rosette restaurant and finally have some relaxing treatments before leaving at the end of the afternoon. Our hotel guests will predominately stay for a two or three night break, completely immersing themselves into a relaxing and holistic environment. As the hotel is situated on the edge of a business park on the outskirts of Malvern, we also benefit from our midweek corporate guests. These are regular visitors to the hotel and choose us over other hotels due to the fantastic facilities on offer. What sets you apart from other spa resorts? Our hydrotherapy pool is very unique and there isn’t another spa in the region that can compete with this! We have also found that guests with injuries and mobility issues find the pool very beneficial. Our spa hotel is also adult only, which does increase our popularity, especially amongst school teachers. What are the main challenges facing the spa industry? One of the biggest issues facing the spa
and therapies sector is recruitment. Our Spa Manager has recently developed a partnership with nearby Worcestershire College on their therapist training programme to recruit newly qualified therapists direct to the spa. This is an issue facing spas and salons across the UK. Being a therapist is a demanding position. It is a very physical job, often working long unsociable hours. As the spa sector grows, ensuring that we keep up with demand by training highly qualified therapists with competitive pay, advanced training and a flexible approach to shifts, is paramount. The Malvern Spa is at the forefront of this initiative and our staff retention reflects this. How have Barclays helped your business? We are a relatively new customer of Barclays, joining them in March of this year. As soon as Huw and I met with the Barclays team we were hugely impressed with their knowledge of our sector, their commercial approach and their supportiveness. This was very refreshing and we are very much looking forward to growing this relationship with them for the years to come. It was a natural progression to move forward with Barclays. Malvern Spa Limited Email: Helen.Rogers@themalvernspa.com Call: +44 (0)1684 879 128
To find out more about how we can help your business success please contact Greer Hooper, Relationship Director: Mobile: +44(0)7775 545 706 Email: greer.hooper@barclays.com
www.barclayscorporate.com
Barclays Bank PLC is registered in England (Company No. 1026167) with its registered office at 1 Churchill Place, London E14 5HP. Barclays Bank PLC is authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority (Financial Services Register No. 122702) and the Prudential Regulation Authority. Barclays is a trading name and trade mark of Barclays PLC and its subsidiaries July 2019 + Please note: this is a mobile phone number and calls will be charged in accordance with your mobile tariff.
Business Leader - Inspire • Inform • Connect
9
COVER STORY
10
Issue 8: 9: July - August 2019
RISHI KHOSLA
THE MAN WHO BUILT A UNICORN BLM interviews Rishi Khosla
Indian-British serial entrepreneur Rishi Khosla has achieved something remarkable: he founded OakNorth, a company which is both a ‘unicorn’ and profitable. BLM spoke to Rishi about his background, his thoughts on the UK fintech sector, and what makes OakNorth so special. WHAT WAS YOUR BACKGROUND BEFORE FOUNDING OAKNORTH? After gaining my Bachelor’s Degree in Economics from University College London and a Masters in Accounting & Finance from the London School of Economics (which is where I met my business partner, Joel Perlman), I started my career in banking at ABN Amro before joining GE Capital in 1999. In 2002, both Joel and I were keen to start something of our own so in our late 20s, with only $60k (£48k) of start-up capital, we launched Copal Amba – a financial research outsourcing business. Over the next 12 years, we scaled the business to 3,000 people across 11 markets, eventually selling it to Moody’s Corporation in 2014.
to scale Copal that the idea for OakNorth first came to Joel and I. It was 2006, so pre-crisis and before the days of alternative finance such as P2P lending or crowdfunding, and we were looking for finance to grow. However, the best offer we could get was £100k from a high-street bank and only if we could secure it against a property. We were already all-in so this wasn’t an option for us. Fortunately, we then went to the US several times over the next few months and were approached by the special situations desk at Citi who took the time to understand our business and provided us with a $10m (£8m) dividend recap. This gave us the ability to continue scaling the business without having to dilute.
HOW HAS THAT BACKGROUND INFLUENCED YOUR APPROACH TO FOUNDING A BUSINESS? It was whilst looking for debt finance
Business Leader - Inspire • Inform • Connect
Cont.
11
COVER STORY
Over the next few years, we met countless entrepreneurs who’d had similarly painful experiences when looking for finance, so this inspired us to found our second business – OakNorth – which would focus on tackling this problem for growth businesses globally. WHAT IS YOUR VISION FOR OAKNORTH? The business’ mission is to provide small and medium-sized (SMEs) growth companies with the debt finance they need to compete against large corporates. Historically, there’s been a massive focus on tech efficiency within the retail and small SME space, and a massive focus on people within the corporate and large business space. As a result, the segment of the market that we focus on (the mid-market growth companies) has been overlooked and underserved for decades. Whether you’re an owner-managed business looking for a £500k loan, or a small caplisted business looking for a £20m loan, the issue is the same and your requirement for a bespoke, structured lending solution is the same. HOW DO YOU EVALUATE POTENTIAL SME LOANS? We look for a number of things: the businesses have to be fast-growing, profitable companies with sufficient cash flows to carry interest and amortization, and have an
experienced management team with a strong track record. We only lend in the UK, but lend to businesses across the UK and across sectors. Outside the UK, we license the OakNorth Analytical Intelligence platform to other banks who in turn lend to businesses who meet the above description. OAKNORTH HAS BEEN HAILED AS ONE OF THE UK’S UNICORNS. DID YOU EXPECT OAKNORTH TO SCALE SO QUICKLY? HAS IT RAMPED UP THE PRESSURE? While we are extremely proud and humbled to have reached a $2.8bn (£2.25bn) valuation as quickly as we have, and a “unicorn” valuation faster than any other business in European history, the “unicorn” tag isn’t what excites me. What drives me most is our achievements as a business. Ultimately, valuation should be a function of the result of a business rather than a function of any potential hype. So, for me, what matters most is the actual business. The fact that we got the third new banking licence in the UK in 150 years is a big positive. That we made a net income of £10.6m in our second year of operations (2017) and increased this by 220% last year to £33.9m is another huge positive. We are operating at four times the original plan we had when we launched. All these things are the core drivers that make
me more excited than being a unicorn. HOW DOES RUNNING A UNICORN DIFFER FROM SLOWER-GROWING COMPANIES? My personal view is that we’ve been lucky on how robust the economy has been. I don’t necessarily believe that will continue. One of the major things which most lenders do is pull back out when times are bad because they’ve got so many issues with their loan book. We like to think we approach our lending differently – we stay on top of our loans in a different way so we won’t be so subsumed with issues that we can’t carry on lending. WHAT ADVICE DO YOU WISH YOU COULD HAVE GIVEN YOURSELF IN 2015? To not hire too quickly because you require someone in a seat as soon as possible. You therefore recruit lesser qualified talent because you just need the horsepower. That is, without doubt, the biggest mistake we have made. Money-lending in the UK has been dominated by a handful of banks, which are monolithic, public-service-type organisations. In these firms, you generally find people with this approach: “The less I do, the less trouble I can get into. The more I do, I can only get into trouble.” When that’s your pool to hire from, it’s challenging. The solution is to hire from
“WHILE WE ARE EXTREMELY PROUD AND HUMBLED TO HAVE REACHED A $2.8BN VALUATION AS QUICKLY AS WE HAVE, AND A “UNICORN” VALUATION FASTER THAN ANY OTHER BUSINESS IN EUROPEAN HISTORY, THE “UNICORN” TAG ISN’T WHAT EXCITES ME.”
12
Issue 9: July - August 2019
RISHI KHOSLA
“WE HAVE A RELENTLESS FOCUS ON HELPING SMALL AND MEDIUM SIZED BUSINESSES ACROSS THE WORLD THAT ARE IN GROWTH MODE ACCESS BETTER FINANCING TO FUND THEIR DEVELOPMENT – AND WE WILL ENSURE THIS CONTINUES.”
outside, which is what we ultimately did. The people we have here now come from lots of different paths. WHAT ARE SOME OF THE MOST EXCITING DEVELOPMENTS IN FINTECH AT THE MOMENT? I often link this back to some of the excellent work that the government has done within this space – for example with its fintech bridges, its international sandbox, and fintech trade missions. We go to other countries where we meet bankers and regulators, and everyone looks at the UK as the leader in the fintech space. This argument has strengthened as a result of the huge investment that the UK fintech scene has been subject to in recent years, including by businesses like OakNorth. WHAT ARE SOME OF THE CHALLENGES IN FINTECH? One of the biggest challenges that the fintech sector will need to overcome is to withstand a market correction, proving the viability of individual business models and the strength of management teams. However, I always believe that the best businesses thrive in times of economic turmoil and with over $1bn (£800m) in capital raised and triple-digit profit growth, we’re in a strong position to turn the economic threat into a significant opportunity. WHAT ARE YOUR GOALS FOR THE NEXT FEW YEARS? We have a relentless focus on helping small and medium sized businesses across the world that are in growth mode access better financing to fund their development – and we will ensure this continues. These businesses are the backbone of Business Leader - Inspire • Inform • Connect
economies and communities, as evidenced by the thousands of new homes and jobs created from the loans we’ve provided so far. Our latest fundraising will also help our lending operations in the US, providing North American lenders with the capability to greatly expand business lending opportunities and accelerate their business lending, while creating efficiencies and improving credit quality.
Our NYC-based team have already built up a pipeline of more than $100m (£80m) of initial deals with the first loans expected to be transacted this summer. Moreover, the latest funding round will also help open doors to market-leading institutions, with the goal of enabling OakNorth to deploy the OakNorth Analytical Intelligence platform to more banks and lenders around the world.
13
FINANCE
How does the UK fintech sector compare with the rest of the world?
T
he UK fintech sector appears to be booming but what does its future hold, and how does it compare with the rest of the world? Business Leader Magazine investigates.
A recent report by international technology M&A advisor Hampleton Partners showed that 2018 marked the highest total investment on record in fintech start-ups, reaching a cumulative disclosed value of £24bn. But how does the UK fintech sector fare globally? There are 76,500 people employed in the UK fintech sector, making it one of the largest in the world. This comes from a 61% increase in fintech employment in 2018 – a leap forward which marked fintech 14
as one of the fastest growing sectors in London’s economy. The UK fintech sector is concentrated in the capital, with the regions experiencing only an 18% increase in fintech jobs last year. The UK also boasts the highest consumer adoption rate in the West, with over half of UK consumers using fintech in some capacity. This is ahead of the global average of 33% and behind only China and India worldwide. Characteristics of the UK fintech sector Clearly, the UK is well positioned when it comes to FinTech but should we be concerned about London's domestic dominance? Charlotte Crosswell, CEO of Innovate Finance, comments:
“The UK fintech ecosystem has a strong track record of technology, innovation and development – and, unlike in the US, where financial services operates on the East Coast and technology on the West – our geography means that tech and financial services have often been in close proximity and this is naturally centred around London.” But fintech firms are becoming increasingly common in the regions, too. Louis Spencer, Senior Relationship Manager, NatWest Corporate and Commercial, explains: “Fintech is a very prominent part of a growing startup and scale-up scene here in the UK. We are beginning to see ‘unicorns’ pop out of Issue 9: July - August 2019
FINTECH
Ratesetter, and Funding Circle,) digital banking (Atom Bank, Starling Ban and Monzo) and remittance services (Revolut, WorldRemit, and Transferwise).” Charlotte adds: “Fintech thrives where capital, tech and talent connect with regulators and government. The progressive regulatory and policy framework within the UK has been a significant contributing factor to the growth of its fintech space.” The importance of an eco-system Pundits have said that what has helped the UK become so successful, in regard to fintech, is the creation of solid eco-systems built around universities, incubators and entrepreneurs.
centres outside of London. For example, Bristol has created two unicorn businesses in 2019 alone, with Graphcore and Ovo Energy.” So, what are the leading FinTech verticals in the UK? The UK government has identified four leading areas in UK fintech: payments, platforms, software, and data analytics. Charlotte says that open banking has been a particular success: “The UK has been internationally recognised as having set a gold standard in the establishment of open banking. We are seeing some early signs of how open banking is powering technologies to help address some of society’s issues, in particular in the debt advice areas. “The UK fintech space has also produced world-leading innovators in other verticals including peer-to-peer lending (Zopa, Business Leader - Inspire • Inform • Connect
Louis Spencer of NatWest says: “The UK has a strong and long-standing pedigree in traditional financial services with more than 60,000 banking, insurance and financial service firms. These have provided an attractive starting place for many early stage fintech start-ups to immerse themselves within. We're good at creating eco-systems in the UK. Take Bristol as an example, which has close collaboration between tech, education and business.” Another feather in the cap for UK fintech has been government funding. One example of the government’s commitment to UK fintech is its recently launched FinTech Bridge Program. Under the program, the UK government is offering support to fintech companies from Australia, China, Singapore, Hong Kong, and South Korea which hope to tap into the UK market, and to UK fintechs looking to expand into the listed partner countries. Justin Fitzpatrick, CEO at DueDil, urges for this support to continue. He says: “The UK has a unique combination of ingredients that makes it a natural leader in fintech: A large
end market for digital products, a pool of financial services, creative and engineering talent, and a consistent and supportive regulatory framework that encourages innovation. “These advantages are currently at risk, but my hope is that political and business leaders will protect the things that make the UK a great place to build a fintech business.” Global competitors It is interesting to consider, then – how does the UK compare to other leading economies? EY produced a report in February 2016 entitled ‘UK FinTech: On the cutting edge’. The report ranked seven fintech hubs (UK, California, New York, Singapore, Germany, Australia and Hong Kong) according to talent, capital, demand, and policy. EY listed the UK as the narrow leader, with California and New York close behind. The remaining regions scored some way below the first three. The report also hailed the UK’s regulatory environment as key to its success: “A particular competitive advantage is its world-leading fintech policy environment. This stems from the supportiveness of regulatory initiatives, tax incentives, and government programmes designed to promote competition and innovation.” The UK has kept its competitive edge since EY’s report was published too. 39% of European fintech venture capital funding was invested in London last year – almost double the 21% which went to the runner up in Berlin. UK fintechs should not rest on their laurels, however: the average VC funding round in the Asia-Pacific region reached almost double the worldwide average in 2018, and the same EY report predicted that China would outstrip US FinTech in 2020. Cont. 15
FINANCE
Threats to UK fintech With hungry global competition and the UK’s international relationships somewhat stuck in a drawn-out transition, what are some of the key threats to the UK fintech sector? Charlotte Crosswell says: “UK fintech is highly dependent on global talent. Approximately, 42% of the current UK fintech workforce is drawn from non-UK nationals. As UK fintech is set to top 100,000 employees by the year 2030, fintech firms will require further clarity from political leaders to ensure the sector remains open to recruiting overseas talent post Brexit negotiations.” Charlotte adds: “The UK will also need to look at our education system and define our five and ten-year plans in digitalising skill sets for the future and attracting more young people into the sector.” Henry Whorwood, Head of Research & Consultancy at Beauhurst, also highlights some potential instabilities in the FinTech sector itself. “These FinTech companies are using a model of company-building that has been developed by companies with different capital requirements” Henry says. “A challenger bank is in some ways a software company, but it cannot raise money like a software company because it also needs greater capital protections for its customers. Moreover, the ability to monetise users is very different in FinTech.” The future of UK FinTech The UK fintech sector is now well established with a mix of start-ups and mature brands. Jonathan Simnett, director and fintech
16
FINTECH
specialist at Hampleton Partners, predicts that the natural progression of the fintech sector will involve a period of consolidation. Jonathan says: “Going forward, it is anticipated that the largest fintech firms will soon realise value through IPO in 2019. Meanwhile, most start-ups that have grown large enough to gain traction, attract a strong customer base and produce a profitable balance sheet, will remain small enough to be acquired by fintech and traditional incumbents, leading to an ongoing process of consolidation and M&A.” Jonathan also lists current and potential trends, including: the widespread adoption of biometric technologies; a tendency towards regional rather than global dominance due to regulatory differences; and increased scrutiny by investors. Despite the general furore around artificial intelligence (AI), Jonathan cautions against wild predictions in this area. He says: “Though AI continues to show promise as firms adopt algorithms and advanced modelling techniques for investment decisions, change is more likely to resemble a gradual process than a quantum leap into new data sources and methods.” Innovate Finance’s Charlotte Crosswell calls for another type of change. “Fintech also needs to address diversity,” Charlotte says. “Women represent just under a third of the total staff in the fintech sector and have to face unconscious and conscious biases which limit the talent pool further. More action needs to be taken to solve the talent gap through a broader sector diversity strategy, and to encourage more funding of female-led businesses.”
THE UK’S FINTECH UNICORNS
Founded: 2011 CEO: Kristo Käärmann USP: Currency exchange market Reached unicorn status: May 2016
Founded: 2015 CEO: Rishi Khosla USP: Multi-million SME business loans Reached unicorn status: October 2017
Founded: 2015 CEO: Nikolay Storonsky USP: Fee-free currency exchange and transfer Reached unicorn status: April 2018
Founded: 2015 CEO: Tom Blomfield USP: App-based bank with budgeting tools Reached unicorn status: October 2018
Founded: 2012 CEO: Guillaume Pousaz USP: Online payments in multiple currencies Reached unicorn status: May 2019
Issue 9: July - August 2019
VIP SEASONAL HOSPITALITY THE ULTIMATE HOSPITALITY EXPERIENCE 2019
2020
With the new seasons fast approaching for Bristol City and Bristol Bears you still have time to secure your VIP Seasonal Hospitality. Our Lansdown Restaurant is the perfect way to entertain clients or to spend time with friends and family. You can enjoy one of three packages which each offer an exclusive premium dining experience along with entertainment from guest speakers along with ex and current player appearances. You can soak in the atmosphere from a premium central padded seat in the iconic Lansdown Stand whilst taking in the breath taking views across the pitch.
SEASONAL HOSPITALITY PACKAGES FROM £1,250+VAT PER PERSON
HOSPITALITY@ASHTONGATE.CO.UK 0117 963 0630
FINANCE
WHY ARE THE HIGH STREET BANKS SELF-DISRUPTING? T
he banking sector is changing. New technologies and consumer expectations are forcing banks to innovate, and a favourable regulatory environment encourages challenger fintech brands in the UK. The fintech sector attracted double the venture capital investment in 2017 than in the year before. So, how are the banks responding? NatWest made the move to self-disrupt.
2,868 bank branches closed between 2015 and 2018, showing that a widespread physical presence on the high street is of lessening importance for banks. Yet consumers still feel reassured by banks that have branches: GlobalData’s ‘Global Digital Consumer Analytics 2018’ survey of 5,000 consumers found that 41% were against wholly digital banks, while 30% were neutral. 67% stated a preference for a bank with branches, while only 9% of respondents said branches would not factor into their decision of where to bank. The old guard of the high street banks still dominate the market – a recent study by the Competition and Markets Authority (CMA) found that Barclays, Lloyds Banking Group, HSBC and RBS still provide 70% of current accounts – but a wave of digital challenger banks have caught the public eye. Even if customers are slow to switch accounts, digital banks have raised the bar for consumer expectations. High street banks have been left with a choice: innovate or face a gradual slide into irrelevance. 18
The rise of digital challenger banks The UK is a global leader in fintech with a supportive regulatory environment. Only this week, Chancellor Hammond announced the government-backed FinTech Alliance, a community-led digital platform for accessing investment, sharing resources, and recruiting talent. Alongside the low barriers to entry are fast-moving technological developments. Head of Innovation at NatWest, Andy Ellis, comments on the shifting banking landscape and what it means for customer expectations. “One of the big challenges for any bank is the move from physical to digital,” Andy says. “That is underpinned by enhancements in technology which mean that we – and everyone else – can build things much more quickly and test products and the barriers to entry are much lower. “The regulatory environment is also much more supportive of being open and moving to the cloud. And then there’s customer demand saying: we want to open an account quickly, we want everything in one place, and we’re tired of having fragmented ways of running our business.” Numerous digital banks and financial services apps have sprung up over the last few years – and they keep setting the bar for incumbents higher and higher. In particular, digital banks have challenged established brands’ products by offering friendly, convenient customer service and an intuitive, streamlined digital experience. “There is a lot of competition in this market,”
Andy says. “There are a lot of investment dollars being spent, which is great for customers. And it’s not only digital banks – it’s accountancy platforms too.” “Disruption is inevitable and good,” Andy adds. “Banking is probably one of the later sectors to be disrupted, due to the large trust and regulatory elements. But undoubtedly, we are being disrupted, and there some prime examples already in things like current accounts, payments and lending products.” NatWest’s move to selfdisrupt November 2018 saw NatWest launch Mettle: the incumbent’s answer to digital brands. Mettle is a digital banking platform, an attempt to offer the kind of user experience which is drawing customers away from the High Street banks – even if it means taking some of NatWest’s own customers. Andy Ellis says: “We’re seeing from our small business customers that they want to bank and run their businesses in a different way. SMEs want to see things in one place, whether it’s a cash flow analysis, advice to manage their business better, invoices, tax receipts, etc. Mettle is an attempt to put that all in one place in a digital way to serve this big and vibrant segment that wants something different.” The logic is simple to follow. Mettle may inadvertently poach NatWest’s customers, but they will stay within the RBS Group rather than abscond to challenger brands. Issue 9: July - August 2019
FINTECH
The future of fintech How do both these industry experts predict that fintech will develop? Andy and Matt agree on one thing: there will be value in service ‘bundling’, offering a full suite of services via one platform. Matt says: “We are seeing customers seeking to ‘rebundle’ their banking services. We previously saw people were increasingly using financial products from a range of providers, which was great for new providers seeking a market share, but now they are returning to one provider that offers multiple services. “Tandem fits into that because we are developing a suite of products that each aims to help with a certain part of our customers’ lives, but they are also integrated for a streamlined financial ecosystem.”
And the model is clearly working, as Andy mentioned a further eight or nine digital ‘challengers’ in development or operation at NatWest. “Self-disruption is self-evident,” Andy says. “You can have a passive, steady decline, or you can go bold. It requires the ability and attitude to listen to customers and evolve with them. And it requires that you hold your nerve, develop new capabilities and think in a different way. The need to self-disrupt is obvious to anyone; the internal alignment needed to get on with it is difficult.” Challengers vs. incumbents What about those challenger brands? Does the launch of ‘in-house’ digital brands like Mettle make the market smaller for independent fintech companies? Matt Ford is Chief Product Officer at Tandem. Business Leader - Inspire • Inform • Connect
Matt says: “I wouldn’t see the new launches from NatWest or other high street banks as any more of a challenge than the other fintechs that are growing from start-ups. “They certainly have more resources, but they also have their own limitations, be that in terms of culture or processes. The sector is diversifying and thriving and the big banks are at risk of bringing their same slowmoving structures along with them.” Matt adds: “The wave of established banks’ challenger brands widens the fintech market, rather than shrinks it. The challenger brands will have to work hard to prove their value and attract customers just as any other new market entrant does.”
Andy predicts much of the focus will be on the SME space: “There are huge amounts of money going into the SME space. I have no doubt there will be huge changes in the next five years in how SMEs are served, and that has got to be a good thing. It’s a vibrant, attractive sector, and it’s probably going to become more important economically, so there’s plenty for everyone. “In terms of the value pool it increases in a sense, because you start to move into accountancy, lending, insurance – you think, what does a small business need to operate? Then you start to look across sectors and the cake gets bigger, and it gets more competitive for us, but it’s better for customers.” Ultimately, the future of fintech looks promising for customers – and for companies which are quick enough to adapt. “Innovation in business models will drive competitive advantage in the Fintech industry,” Matt says. “Simply charging less or offering free products isn’t enough. Customers will look to business models that are aligned with their interests and services that create real value in their lives.” 19
FINANCE
What is impact investing and why is it on the rise? “No one wants to tell their grandchildren they built wealth for their family by locking up someone else's in private prisons.” Morgan Simon
I
mpact investing’ has long been a term in the investment vocabulary. Until recently, however, impact investment was on the periphery: a feel-good activity for ethically minded investors, but not a mainstream concern. But this is changing. So, what is impact investing and what is its future?
Impact investing is on the rise. Many will argue this is because of a shift towards the new concept of the ‘Triple Bottom Line’, where businesses are considering people and planet, as well as profits. But what exactly is impact investing? Which demographics dominate the sector? And how might impact investing evolve in the future? What is impact investment? Impact investing is the act of choosing investments with the intention of creating positive social or environmental change as well as a financial return. Investments may be made in developed or emerging markets and across a range of sectors. The aim of impact investment is to provide capital to solve the world’s most pressing challenges whilst simultaneously building investor wealth – a win-win proposition. Morgan Simon, impact investing expert and 20
author of ‘Real Impact: The New Economics of Social Change’, traces the origins of impact investment back to Quakers in the 1800s. “Quaker religious organisations sought to avoid profiting from slavery, going as far as rejecting sugar from the south and using maple from the north instead,” Morgan explains. “It gained popularity through the South African antiapartheid movement, and then expanded
over time to be more holistically about proactively investing in companies doing good in the world rather than the whack-amole of avoiding the bad.” The term ‘impact investment’ was coined in 2007. Impact investment organisations have since proliferated, with the Global Impact Investing Network (GIIN) estimating that more than half of active impact investing organisations made their first transactions in the last ten years. GIIN’s April 2019 report, ‘Sizing the Impact Issue 9: July - August 2019
IMPACT INVESTING
Investing Market’, states that there are now more than 1,340 organisations managing $502bn (£402bn) in impact investments globally. 58% of those organisations are based in the US and Canada, while a further 21% are based in Western, Northern and Southern Europe. The positive nature of impact investments is key, but so is the financial return. Barclays’ July 2018 report on ‘Investor Motivations for Impact’ states that 82% of investors expect near or above market returns from an impact investment.
Why choose impact investments? The impact investing movement has made significant gains over the last few years. According to Barclays’ report, 15% of investors reported having made an impact investment in 2017, compared to 9% in 2015. With initiatives like the UK government’s Impact Investing Institute, impact investment is set to exponentially increase. Morgan Simon attributes the sudden influx of impact investors on two major factors. She comments: “The first is the numerous studies that have shown impact investing outperforms on the market, as sustainable companies build sustainable value. “The second is how both people and institutions are thinking more holistically about the legacy they want to build. No one wants to tell their grandchildren they built wealth for their family by locking up someone else’s in private prisons, or destroyed the environment so thoroughly that there’s no world left to enjoy. People are thinking more about a holistic return definition that is not just about making 8% vs 7%, but about societal impact.” Investors can choose impact investments according to the causes most near and dear to them. Specialist funds cater to issues like racial justice, environmental protection, and other areas. FinTech company PensionBee introduced their Future World Plan following clear interest from consumers in sustainably invested pensions. Currently 12% of PensionBee’s users are invested in the Future World Plan.
“A MUCH BETTER STRATEGY IS BUYING AS MANY SHARES AS POSSIBLE IN THE COMPANIES WE WANT TO CHANGE AND THEN USING SHAREHOLDER RIGHTS TO GET THEM TO BEHAVE DIFFERENTLY. ”
Romi Savova
Business Leader - Inspire • Inform • Connect
The traditional notion of impact investment is to avoid unethical or unsustainable investments and cherry pick the good. PensionBee have taken a slightly different approach, using shareholder sway to create positive impact in unsustainable industries. Romi Savova, CEO of PensionBee, explains: “There is a current movement to divest of shares in companies that are harming the environment. What the movement fails to recognise is that capital markets are large and the divestment by one party is usually
replaced by the investment of another. “A much better strategy is buying as many shares as possible in the companies we want to change and then using shareholder rights to get them to behave differently. For example, the Future World Plan and the asset manager behind it, Legal & General, have been instrumental in getting companies like Shell and BP to commit to carbon reduction targets.” Impact investors can put their capital towards both wealth creation and societal influence. Which demographics are taking the lead? Perhaps unsurprisingly, millennials are the most active demographic in the impact investment sector. Barclays’ ‘Investor Motivations for Impact’ report states that in 2017, “43% of respondents under 40 had made an impact investment, compared to 9% of those aged 50-59, and only 3% for those aged over 60.” On one hand, this predilection among younger generations for impact investment seems to bode well for the sector’s longterm popularity. On the other hand, the majority of the world’s wealth – and therefore potential impact capital – is held by older generations. The Barclays report states: “Developing products and services built around the wants and needs of millennials will be crucial to attract and retain ‘next generation wealth’. But we mustn’t overlook older investors - after all, these are the investors with the highest investable assets and the wealth to drive the impact sector forward today.” Over a decade on from the Great Recession, total global wealth has recovered and then some. The Financial Times’ 2018 report, ‘Investing for Global Impact’, states that as of 2017, there were a record 2,257 billionaires in the world – a 55% increase on the previous five years. Impact investments can make huge changes if they attract the richest investors.
Cont. ▸
21
FINANCE
IMPACT INVESTING
The future of impact investment More capital may be needed for impact investing to truly boom, but the GIIN is optimistic. In ‘Sizing the Impact Investing Market’, the organisation states: “One in four dollars of professionally managed assets (amounting to $13tn) now consider sustainability principles. There is great potential for these investors, who have already aligned their capital with their values, to more intentionally use their investments to fuel progress through impact investments.” The UK National Advisory Board on Impact Investing (UK NAB) agrees. In its report, ‘The Rise of Impact’, UK NAB states: “A rapidly growing number of mainstream investors are entering the field, such as Barclays, Bain Capital, TPG, Goldman Sachs, UBS, AXA and Blackrock. We believe impact will ultimately become a standard element of business and investment decisions, alongside risk and return.” The UK has been a major player in the rise of impact investing, but with its ascension to the mainstream, UK NAB warns that the UK will have to work harder to keep its edge. It says: “While the UK has historically led the world in this field, we are now seeing an explosion of interest around the world – and others are catching up fast.” And what about those on the ground? Romi Savova, CEO of PensionBee, predicts sustained growth for impact investing.
“THERE IS GREAT POTENTIAL FOR THESE INVESTORS, WHO HAVE ALREADY ALIGNED THEIR CAPITAL WITH THEIR VALUES, TO MORE INTENTIONALLY USE THEIR INVESTMENTS TO FUEL PROGRESS THROUGH IMPACT INVESTMENTS.”
“Over the longer term, PensionBee expects impact investment to become less of a ‘trend’ and just part of ‘the way companies do business’,” Romi says. “There is overwhelming evidence that action on environmental sustainability, gender diversity and effective governance leads to better economic outcomes. “Investors don’t need to sacrifice returns to achieve social impact in fact, responsible investing could enhance returns. It’s just the way things should be done.”
ADVERTORIAL:
Considering an MBO? Momentum Corporate Finance explains management buyouts By Rob Crews, Partner, Momentum Corporate Finance Why consider an MBO? An MBO suits current owners who are not closely involved in the business and are looking for a smooth and confidential exit, or situations when one but not all shareholders want to leave. MBOs help to protect the employees post deal, as compared to a sale to a competitor who might focus on cost savings. Which businesses are suited for an MBO? MBOs suit businesses with: • Stable and predictable cash generation • Potential for growth • A strong management team What are the key steps in the MBO process? MBOs include the agreement of: • Value (the price) • Deal structure (when and how the price is paid) • Exclusivity (a period of time to raise the funding) An advisor can help with these elements, especially assessing the funding the business can support going forward. The advisor helps to create a detailed set of financial projections focused on cash generation – which then repays the funding for the deal. Once the projections are complete, management can approach financial institutions to raise the necessary cash to fund the deal. An experienced advisor will ensure the mix of debt and equity funding is sustainable for the business whilst optimising returns. Due diligence will ensure the business plan is supportable. Completion Then comes agreement of the legal documents – primarily the Sale & Purchase Agreement and the Investment Agreement. Finally, enjoy a well-earned glass of champagne.
For further details, please contact Rob Crews or Alastair Boorman on 0117 9200130. rob.crews@momentumcf.com | alastair.boorman@momentumcf.com
22
Issue 9: July - August 2019
020 7201 8990 contact@triplepoint.co.uk
FINANCE
ADVERTORIAL:
BUSINESS LEADER COLUMNIST
How can you continue to create wealth and jobs as a modern leader? Mark Pearson is the founder of investment fund Fuel Ventures, which specialises in early-stage companies and offers a Londonbased incubation studio to its start-ups.
Triple Point Impact Investing: Do well from doing good For over 15 years, Triple Point has focused on investing responsibly and delivering a positive outcome for all parties. We challenge the traditional views that social and environmental issues can only be addressed by philanthropy, and that financial investments should focus only on financial returns. We believe that by investing fairly and responsibly for the long-term, we can deliver both attractive financial returns and make a positive impact. Our focus on leasing and lending to the public sector, NHS and charities for equipment including ambulances, baby monitors and electric streetsweepers has evolved to include renewable energy and supported social housing. We have also raised capital to provide equity funding for socially impactful growth businesses. We target four key areas: health, education, the environment and inequality. Triple Point was a pioneer of Social Impact Investment Relief (‘SITR’) which led to the launch of our dedicated Impact EIS fund. This fund targets capital growth by investing in companies with a commercial proposition that makes a measurable positive impact to society. To date our renewable energy credentials include over £150m of investments in solar, hydro and anaerobic digestion projects, and in 2018 Triple Point was chosen by the Department for Business Energy and Industrial Strategy to manage its £320m investment programme to promote energy efficient heat networks, making a significant contribution to decarbonising the gas grid and meeting 2050 net zero carbon targets. Through our Social Housing Fund we invest in properties that house vulnerable adults. Last year we accommodated over 1,000 individuals in high quality housing, supporting them to live a fulfilling and independent life within their communities. We estimate the cumulative positive social impact of our social housing portfolio has so far generated £124m of positive Impact, compared to previous suboptimal and hospital-based accommodation. 24
In my experience, creating wealth and jobs goes hand-in-hand with leadership – after all, a leader’s job is to ensure that his or her business continues to be a success, therefore opening the door for more employees to join the company. However, to be a leader, you need to have people to lead. That is where every entrepreneurial journey – every leader’s journey – begins. As an entrepreneur, you are essentially a lone wolf; unless you start your business with a co-founder, you are on your own. However, entrepreneurs are natural leaders – they start by leading themselves in the right direction before leading others. Entrepreneurs are risk-takers and rule-breakers; they are the people who carve out a new path of their own. And more often than not, they will not be alone for long. Rule-breakers It is very rare for an entrepreneur to become successful without help. As I said, these are the rule-breakers, and people tend to follow those who stand out from the crowd. Entrepreneurs think differently from other people, and they will step outside conventional methods of recruitment to attract the right talent. They are also more likely to attract like-minded talent; people who not only like the business they work for but believe in its vision enough to take a risk, jump out of the corporate bubble and join a start-up. As a result, entrepreneurs build a ‘following’ of employees, investors, business partners and other people who trust in and buy into that company’s future. Little by little, you see your customer base grow and your revenue begins to grow with it. That’s how entrepreneurial businesses start to gain momentum. As the business profits from that momentum, it begins to create both wealth and value. There comes a point when entrepreneurs and founders have to shift their approach to leadership though, by appointing people to manage those tasks, and in turn inspire others themselves. There is a saying from Warren Buffett I refer to quite often: “One of the best things you can do in life is to surround yourself with people who are better than you.” Don’t make the mistake of shutting people out of your vision. Instead, empower your team and you are likely to see more leaders rise from your ranks to further your success, ultimately creating more jobs in the future. Issue 9: July - August 2019
Why should YOU advertise with Business Leader Magazine? If you’re looking to connect with the entrepreneurs and business leaders that run the UK’s most successful companies – and the professionals that fuel their growth – you should consider advertising with Business Leader. Business Leader is national in its coverage, with print magazines covering the South East, South West, Midlands and the North. You can advertise in all editions to gain full national coverage or focus your content regionally.
WHAT IS THE READERSHIP OF BUSINESS LEADER MAGAZINE? The readership of the magazine is made up of Directors, CEOs and professionals in businesses that turnover between £1m and £500m. Total readership is split by regions as follows. DISTRIBUTION PARTNERS
72,100
FOR LONDON & SOUTH EAST
46,345
FOR SOUTH WEST
and many more
27,555
FOR MIDLANDS & NORTH
For more information please request a media pack by calling 020 3096 0020 or emailing editor@businessleader.co.uk www.businessleader.co.uk
LEADERSHIP
HOW CAN YOU BUILD A WORLD CLASS LEADERSHIP TEAM?
F
or leaders in SMEs and scale-up businesses, building a world-class leadership team can be critical to fuelling success. But is it best to upskill and train staff from the shop floor or bring ready-made talent into the business? BLM investigates.
Any leader will know that to scale their business, the creation of a team around them that is able to drive growth is essential. But is it better to build a leadership team by promoting staff up through the ranks, by bringing talent in, or through a combination of both? 26
Upskill or recruit? Dragons’ Den star and prominent investor Sarah Willingham comments: “I think upskilling staff and creating leaders from within the business is important. “By providing a clear progression path and showcasing what is possible, you can empower staff to grow within a business and become what they want to be in their careers. Those that make it to senior management from shop floor positions tend to be the best employees as they fully understand and appreciate the roles at all levels and can be great leaders for your business.” However, this progression can be down to the individual and their willingness to embrace being taught leadership qualities. Nicki Sahota, Head of People at restaurant
chain Tortilla, says: “Upskilling your people is a win-win for the whole business. Having well-informed, high-performing teams creates better business results in both crew retention and satisfaction, as well as driving the top-line through greater role ownership and pride. Investing in employee development gives crew a sense of belonging and in turn they are more likely to return the favour. “However, there are benefits to bringing in external talent as those additions can bring with them new ideas and different experiences.” So, there are clearly advantages to both upskilling and recruiting to create the best possible leadership team. Talent is hard to find However, the real issues could lie in the Issue 9: July - August 2019
DEBATE
Sarah Willingham Dragons’ Den star
Nicki Sahota Tortilla
Rob Perks Inspire
recruiting suitably skilled staff as the main thing holding them back from growth. The UK currently has record levels of employment and so there is a real dearth of candidates to fill vacancies. “Enticing people away from their current employers is expensive and difficult, as they will look to hang onto good people by countering any financial incentive used to entice them away. More positively, training and developing your people is motivational for them, and encourages them to stay with you and offer a better experience to your customers through increased knowledge and skills. “Bringing in ‘new blood’ from time to time keeps the business fresh with new ideas and approaches, but developing and promoting some staff to better paid positions motivates both them and other colleagues who can see there are opportunities for progression.”
current skills gap. For businesses looking to bring in leadership talent, it isn’t always easy. Rob Perks from Inspire comments: “Most businesses are now citing difficulty with
“UPSKILLING YOUR PEOPLE IS A WIN-WIN FOR THE WHOLE BUSINESS. HAVING WELLINFORMED, HIGH-PERFORMING TEAMS CREATES BETTER BUSINESS RESULTS IN BOTH CREW RETENTION AND SATISFACTION.” Nicki Sahota
Business Leader - Inspire • Inform • Connect
What are the challenges with upskilling? Many business leaders will be debating what the best course of action is, and with positives and negatives on both sides, it can be difficult to make the right choice. But what are the main difficulties when developing leaders from within the business? Sarah comments: “Time and money are usually the biggest challenges for staff development and building leaders. All too often we don’t have enough hours in the day to do our job never mind taking on a perceived luxury like training and development. This is where technology and external support such as leadership training programmes can potentially help.” Nicki continues: “We need to ensure everyone gets the same growth and development opportunities and the biggest challenge is that one size does not fit all. We have to ensure each person’s journey
Clare Hindley Redrow Homes
Johanna Morris Filtermist
is right for their individual needs and desires, while also fitting with our business objectives. “However, with the help of our internal training team, we have the advantage of adding a personal or restaurant-specific touch to each training visit. Additionally, maintaining the skill level once training is complete is difficult. As well as regular top-up sessions, our focus is on developing leaders with the sole purpose of maintaining the golden standard.”
“BRINGING IN ‘NEW BLOOD’ FROM TIME TO TIME KEEPS THE BUSINESS FRESH WITH NEW IDEAS AND APPROACHES, BUT DEVELOPING AND PROMOTING SOME STAFF TO BETTER PAID POSITIONS MOTIVATES BOTH THEM AND OTHER COLLEAGUES.” Rob Perks Keeping up with the skills gap This focus on keeping up with education and training is vitally important. Research from the World Economic Forum found that 35% of skills that are considered important today will change in five years. Clare Hindley, Group learning and development manager at Redrow Homes comments: “Upskilling staff is important because it ensures that they fulfil their potential and progress in their careers. In the case of Redrow, partnering with further and higher education providers, means that recruits are able to develop the aptitude, attitude and strategic nous that is required in the current business context. Cont. ▸ 27
LEADERSHIP
DEBATE
“One of the ways we do this is through our partnership with Liverpool John Moores University (LJMU) and Coleg Cambria. Working together we established the UK’s first dedicated Housebuilding Degree, where students can combine their studies with working for us. Each module is delivered by a specialist in the field and is accompanied by a Redrow business expert to talk about the theory in practice.
“It will then break down into job roles and describe how any skill gaps will be closed. This will require research into the training support available, offsite training, onsite training, distance learning, online training and on the job training.” Changing business cultures There is also an argument that as we look towards a post-Brexit future, where the ability to access talent from other markets is uncertain, it is more important than ever to unlock the talent from within.
“The three-year degree gives candidates a full overview of housebuilding skills; these include housebuilding quality, project management, health and safety, business skills, negotiation, right through to relevant aspects of law, mathematics and economics.” For business leaders looking to develop their teams, Rob says that planning is key: “Upskilling can come in many forms, from formal training courses and programmes to on the job training from more experienced staff. The first and most essential thing is to have a training plan. “This plan sits alongside the main strategic plan for the business and sets out what
To do this, many businesses may need to also address the growing demand from the millennial generation, which will be 75% of the workforce by 2025. As is widely reported, millennials are disrupting the workplace by learning in a different way, getting to the point faster, working more flexibly and focusing on different goals.
skills will be needed in order for the business to achieve its strategic aims and objectives.
This brings up a whole new host of questions, as before leaders decide whether to recruit from the shop floor or bring in talent, it may be best to think about how expectations of work are changing.
CASE STUDY:
From the shop floor to CEO An example of where education and training can see somebody from the ‘shop floor’ rise to the top is at Midlands-based manufacturing firm Filtermist. Johanna Morris, Group HR Director, she comments: “Our CEO (James Stamsfield) is an excellent example of the power of good training and development. He joined the business as a Sales Coordinator in 1998 and then worked his way up to Sales Office Manager, UK Sales Manager, Sales and Marketing Manager and Managing Director, before being appointed as CEO in 2018. He was also appointed as Vice President of
28
Filtermist’s parent company, Absolent Group, in the same year. “He has in-depth experience of all aspects of the business and can relate to every employee at all levels which is extremely valuable. He is also proof of the benefits of investing in people as his progression through the business included undertaking an MBA and CIM qualification which were both funded by the company. Having him at the helm means our employees can see that with hard work, commitment and the right attitude they can achieve whatever they want.”
Issue 9: July - August 2019
REPORT
Why does your company need to have B Corp status?
I
n a world where being more socially and environmentally conscious is becoming increasingly important, there is an accreditation where businesses can highlight that they are embracing this change.
B Corporation certification, also known as ‘B Corp’, is a certification issued to private businesses that have demonstrated 'the highest standards of social and environmental impact'. Based in Pennsylvania in the USA, B Lab grants an accreditation through their online ‘social and environmental performance tool’ on their website. If a company meets a suitable accreditation score, then the company is eligible to apply to be a B Corp company. Business Leader - Inspire • Inform • Connect
Why should you look to become a B Corp business? Certified B Corporations are businesses that, as well as aiming to meet the highest standards of social and environmental performance, also boast public transparency and legal accountability to balance profit and purpose. Through this third party accreditation, B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy. B Lab’s belief is that society’s most challenging problems cannot be solved by government and non-profit organisations alone.
Cont. ▸ 29
LEADERSHIP Kate comments: “Since we started in the UK, we have risen to just over 200 B Corp businesses. This is really exciting and we have almost tripled in size in the last four years. We are now seeing a huge amount of interest and our job is to meet that demand. We need to certify as many as possible, but without losing standards and maintaining the rigorousness of the process. “You see a lot of prominent B Corps like Innocent and TOMS shoes who are certifying and showcasing their B Corp status – but we also have a lot of smaller companies who are doing the same.” Rozanne Davis, Head of Sustainability & Nutrition at Innocent, believes that B Corp is an important accreditation and has helped change the way business is done. She comments: “Business has an opportunity to step forward and prove it can act responsibly. It’s about shifting the purpose of business from greed to good. The global challenges facing us can only be tackled through collaboration and partnership, which act as a hothouse for innovation and driving change at scale. So far, over 2800 companies in 50 countries have signed up to have B Corp status, and they have formed a community of leaders who are aiming to drive a global movement of people using business as a force for good. Many companies in the UK from across a wide range of sectors are now applying to receive this status. However, it is a long process, as Kate Sandle, Director of Programmes and Engagement at B Lab UK (the charity responsible for rolling out the B Corporation movement in the UK) explains: “Certifying to be a B Corporation is not easy. Most businesses that apply will fail the first time around. On our online application, businesses need to score over 80 out of 200, and a lot of first time applicants score around 50. It is not just about ticking a few social and environmental boxes and they will be certified. The process is long and the company needs to be very dedicated to its beliefs in order to become certified.
30
“If they have achieved B Corp status, you know that they have given everything to the belief of being more environmentally and socially conscious. Some businesses can take a few years to get this certification if they are in a transition stage whereas for other businesses it has always been the way in which they have operated.” What has it meant for British businesses? B Lab has seen a sharp rise in the number of British businesses utilising B Corp status to their advantage.
“We believe business can be done differently, not just with the narrow mindset of profit above all else, but with a genuine commitment to the environment on which we all depend, and to all the people we set out to serve – our drinkers, employees, suppliers, and wider community. And this is what B Corp is all about.” Modern world and workforce Much of the change being implemented by scale-up firms and corporations is being driven by the increased influence of the millennial generation.
Since launching in the UK in September 2015, with 62 founding B Corps, it has gone from strength-to-strength.
According to a recent Deloitte study, by 2025, 75% of the UK workforce will be made up of millennials and their expectations are wildly different to traditional workforces.
“YOU SEE A LOT OF PROMINENT B CORPS LIKE INNOCENT AND TOMS SHOES WHO ARE CERTIFYING AND SHOWCASING THEIR B CORP STATUS – BUT WE ALSO HAVE A LOT OF SMALLER COMPANIES WHO ARE DOING THE SAME.”
Kate comments: “Millennials want to work in purpose-led businesses, and are willing to be paid less to have this. They are now becoming the investors, and the largest transfer of wealth is now coming to this generation. This is going to drastically change the investment world. In addition to that, you have the environmental issues and an awareness that we are in a climate emergency.
Kate Sandle
“If we don’t transform the way in which we Issue 9: July - August 2019
REPORT help the planet, then our world is going to be dramatically different in a short period of time. Everyone needs to be aware of the impact of people on the planet. “Futureproofing businesses for employment and the environment are vitally important – being better businesses in this way creates a better future.” Staff retention and the future of employment need to be taken into consideration by businesses of all sectors and sizes. It is because of this that evolving with the beliefs of younger generations will be key to future business success. Is B Corp status going to become more popular? Being an original adopter of the latest trend or piece of tech is often a vital selling tool to companies, so will B Corp be a flash in the pan or a cornerstone of global business for the foreseeable future? Sandle explains why the process and certification will be important to businesses of all sizes going forward.
She said: “There are many reasons why businesses want this status. One is through certification – an external validation that they are doing the right things as a business. B Corp analyses all aspects of a business to see how it is working towards social and environmental improvement, as well as how it impacts on overall performance. “The second is that they want to join a community of like-minded businesses – ones that they can learn from, share and partner with. Through these forums and discussions, you realise that capitalism is broken and through this we can come together as a movement, and demand change.”
“BUSINESS HAS AN OPPORTUNITY TO STEP FORWARD AND PROVE IT CAN ACT RESPONSIBLY. IT’S ABOUT SHIFTING THE PURPOSE OF BUSINESS FROM GREED TO GOOD.” Rozanne Davis
It is this community that will drive its popularity and influence throughout the business world, according to Davis. She comments: “We were excited to see a movement of businesses in B Corp who were aligned with our thinking, so for us, it felt like a very natural extension of our mission to become a B Corp. And we are hungry to look for new ways to be continuously improving and challenging ourselves, and B Corp acts as a compass point for this improvement. “The scale of challenges facing us across the planet means that everyone needs to play a part in finding a way forward – from government, through to charities and foundations, and absolutely through to business too. “Business is uniquely placed, as business has the link all the way along the chain, from raw materials provided by our planet, to consumers, who have the purchase power. And businesses can sound a powerful rallying cry to other businesses to join this movement for change.”
NEWS
Prime Minister hopeful Boris Johnson visits inspirational Somerset school Conservative leadership contender Boris Johnson was in Highbridge, Somerset, to visit a school which has been named one of the most inspirational in the country. Boris took time out of his busy schedule to meet students aged nine to 15 who work out of the Jill Dando News Centre at The King Alfred School Academy, which is one of the county’s fastest improving schools. The school is part of The Priory Learning Trust, which also contains Priory and Worle community school in Weston-super-Mare. Boris was given a tour of the Jill Dando News Centre as part of the visit. Jill died 20 years ago in April and along with Boris was an awardwinning journalist in the 1980s and 90s. Now students at TKASA and across The Priory Learning Trust are working with Jill’s brother Nigel and local journalists to get out hundreds of inspirational good news stories across their communities. Business Leader - Inspire • Inform • Connect
Since The Priory Learning Trust started to assist TKASA 18 months ago it has introduced a raft of measures that has now seen it improve in a whole range of areas. Earlier this year it set up Britain’s first school-based scout group with 100 members and was praised by Bear Grylls and Sir Ranulph Fiennes. 31
LEADERSHIP
The battle to stay authentic Adventurer Ed Stafford talks to BLM
Edward James Stafford FRSGS, known as Ed Stafford, is an English explorer, adventurer and television personality. He holds the Guinness World Record for being the first human ever to walk the length of the Amazon River. Stafford now hosts shows on Discovery Channel and most recently recorded 60 days on the streets for Channel Four.
CAN YOU TELL READERS ABOUT YOUR BACKGROUND? My careers advisor told me that I was best suited to the role of a logistics manager for Boots, which was very random and specific. I joined the army though because I had always liked the outdoors and I saw it as being an excuse to not get a proper job. The army gave me a good grounding in leadership and management, before I left in 2002. I then wanted to become a stock broker and studied for a diploma in securities, but when I saw a role as an expedition leader I applied and the rest is history. It wasn’t long before I wanted to go out on my own though and do something big. I had the idea to walk the Amazon and was looking for examples of where somebody had done this. I couldn’t find any, so it was a lightbulb moment and I realised it could be a world first. I managed to secure sponsorship and a publishing deal even before we started, so it 32
was a major thing and the beginning of my career as an explorer and adventurer. OF ALL OF THE SURVIVAL EXPEDITIONS YOU’VE BEEN ONE, WHICH ONE WAS THE TOUGHEST? I would say walking the Amazon was one of the toughest but for duration and intensity, being stranded on a desert island on my own for two months – Naked and Marooned with Ed Stafford – was hard to top. It drew a line under survival TV as we weren’t making anything up. There was no script and I unravelled mentally. Isolation is very raw because you have no phone, cigarette or drink to reach for to distract yourself from the issues you’re facing and should be addressing. It was a huge test of my mental state and it was incredibly tense. WHAT DID YOU LEARN FROM BEING NAKED AND MAROONED THAT YOU CAN TAKE INTO OTHER SITUATIONS? I suffered from a breakdown about two years
after this experience and what I learnt was that meditation is something that can greatly help you. I was very caught up in my head, but I learnt that you don’t need to engage with every thought, and you can step back from them. It all starts to calm down once you do and you can approach life and events from a much more peaceful place. When you’re in survival mode, having a clear mind can make a huge difference.
“I WOULD SAY WALKING THE AMAZON WAS ONE OF THE TOUGHEST BUT FOR DURATION AND INTENSITY, BEING STRANDED ON A DESERT ISLAND ON MY OWN FOR TWO MONTHS – NAKED AND MAROONED WITH ED STAFFORD – WAS HARD TO TOP”
Issue 9: July - August 2019
INTERVIEW
“I WOULD SAY THAT GOOD LEADERSHIP IS ABOUT HARNESSING THE STRENGTH OF THE GROUP AND TAKING OTHER PEOPLE’S OPINIONS ON BOARD, AS OPPOSED TO ALWAYS ASSUMING YOURS IS CORRECT”
IS IT A COME-DOWN TO RETURN TO THE UK AFTER SPENDING TIME IN THESE EXOTIC LOCATIONS? I love to come back to the UK now as I have made a home for myself and I am married with a child. This was different though when I was coming back to a two bedroom flat in Battersea and I was single. You would go from the most beautiful corners of the world and the coolest job to come home and drink beers until 4am. I have a harbour to return to now, which is my wife Laura and son Ran. It’s not about the physical possessions but the purpose of a family. IN YOUR OPINION, WHAT MAKES GOOD LEADERSHIP? Honesty and trust are very important. I never understand why people tell lies, and I don’t understand the point of being a false version of yourself. It just seems to complicate everything. Secondly, being confident enough to make decisions is a trait of good leaders but it’s always a balance between not being arrogant and thinking you know everything. Arrogance is a trait of bad leadership because if you don’t question yourself, you have less capacity to grow. Having less confidence and a bit more insecurity makes you more humble and able to improve yourself. Finally, I would say that good leadership is about harnessing the strength of the group and taking other people’s opinions on board, as opposed to always assuming yours is correct. WHEN LEADING A TEAM, HOW DO YOU DEAL WITH A NEGATIVE TEAM MEMBER? If you can’t get them out of the team you can go both ways. You can be very compassionate with them and invest in that person and try to bring them back into the group. To be honest though, often the person needs to make that decision for themselves and look at why they are being so negative. Alternatively, you sometimes need to be heavy-handed with them and use discipline to correct the issue. Moaning is a caner when you’re trying to achieve something, and you can’t let it come into your environment as it spreads and eats away at everything you’re doing. Every team has somebody like it. You can take them to the most beautiful island in the world and they’ll find a problem. WHAT DOES THE FUTURE HOLD FOR YOU? We’re excited about the future and there is a lot of activity in the pipeline. We will continue to make programmes, but for me it’s a battle to try and stay authentic and ensure we’re making television that is raw and true. Business Leader - Inspire • Inform • Connect
BUSINESS LEADER COLUMNIST
Why is success at all costs a harmful strategy? By Greg Le Tocq, the co-founder of Cloud Savings Company – which owns Vouchercloud. Groupon recently bought the business for £49m. Success ‘at all costs’ is one of the most harmful leadership strategies in play today. There are too few realworld scenarios where perpetual success correlates with perpetually positive results. Success – achieving a desired outcome – is honed by creative thinking and drifting away from the beaten track. If we don’t experiment and attempt new things, the success achieved is in fact very narrow. Stagnation, after all, is the enemy of creative thinking. Giving your employees permission to develop creative solutions – to attempt things outside of the mould – all comes down to allocating individual responsibility over their projects. With that in mind, what can business leaders do to actually cultivate a culture of responsibility? For this strategy to really be successful, it requires a confident leader and a robust hiring strategy from the offset. You’re looking for a combination of courageous and methodical traits. Ultimately, people who are happy to pick up the ball and run with it, as it were. As a business leader, it should be your prerogative to guide, inspire and ultimately lead. The often seen culture of putting success on a pedestal – whether implicit or explicitly detailed – encourages employees to play it safe – using the same strategies for lessening results. Einstein once said: “Anyone who has never made a mistake has never tried anything new.” Many business leaders – particularly with smaller teams – will be tempted to micromanage. This is a self-fulfilling prophecy borne from a desire to see teams succeed. If you micromanage, you’ll wind up with a team that needs to be micromanaged, instead of a team you can trust to do the job well. In short, micromanagement leads to a required handson approach, instead of a hands-off one. When you trust your employees with important projects and allow them to actually learn, a funny thing happens. People enjoy it. They enjoy the mutual respect, the responsibility, and the opportunity to own something that could improve business outcomes. In everything, there’s a lesson, and failure is one of the greatest teachers of all.
33
GROWTH
BLM FAST-TRACK
IT WAS A HOBBY THAT GOT OUT OF HAND Meet the e-commerce service company going through exponential growth
I
n each edition of Business Leader Magazine, we profile a UK business that is experiencing strong growth and meets our criteria to be included in BLM Fast-Track. This time, it’s Velocity Commerce.
Velocity Commerce is a Cambridge-based e-commerce firm that was founded in 2013, and has since become one of the country’s biggest companies within the online marketplace sector. The company was founded by Eddie Latham and PJ Scott while they were at play.com, and were part of the team that led this business' transition from an online retailer to an online marketplace. Through their combined knowledge of the industry, and just £1,500 each of their own money, they started selling products out of Latham’s garage. Almost seven years later, the business has
experienced incredible growth. In year one the business had sales of £500,000, while the following years saw them achieve sales of £1.5m in 2014, then £4m, £8m, £13m, and most recently, £20m.
They did this through buying bulk clearance and end-of-life product ranges so they could control the market prices and profit margins. This meant that any competition couldn’t undercut their service.
The company is expecting sales of around £30m in its latest financial year.
The value of SEO Velocity Commerce offers a range of services that aim to help retail brands create a stronger online presence and then see the returns through online platforms and marketplaces.
From disillusioned to enlightened Velocity Commerce’s journey started out of the combined frustration that Latham and Scott had experienced with their employer, play.com, during a period of extensive change. Latham comments: “After a few months into this transition, we were quite disillusioned with our day jobs and decided to start our own company. We started the business selling clearance products from my garage. We worked on the business part-time for the first 18 months, and in that time, we built it up from a couple of products in my garage through to a business turning over £100,000 a month.” However, Latham and Scott had to quickly find a way to deal with their growing demand. Latham continues: “In that time we moved warehouse three times. We employed one of my friends to work for us during the day, while we were working. We woke up at 5am and worked before we went to our day jobs, and then worked until midnight after work, and then throughout the weekend. We had a lot of fun and the business grew a lot quicker than we ever thought it would.” It wasn’t just their determination that helped the business grow, but also the decision to make it a full-time career. Around six years ago, the pair took voluntary redundancy from play.com and Velocity’s sales grew massively year-on-year.
34
But how does the company get its customers’ products viewed by potential buyers, especially in such a crowded sector? Search Engine Optimisation (SEO) is the answer. Latham comments: “Our business is built out of our knowledge of SEO in terms of search results on Amazon or eBay. We have used the knowledge gained by selling clearance products to then grow into selling products for major brands, such as Hoover, Brita and Sony. And for each of those brands, we offer a different service. This is to help them with their products through our years of experience in the online marketplaces. “Some major brands just put their products online and expect them to sell – they don’t understand the way to market them on marketplaces. They don’t understand the algorithms or how to describe their products.” What was the plan? The founders have clearly maximised their skill sets to achieve incredible results since 2013. So, how does a company achieve exponential growth in sales? Velocity Commerce never intended to see this growth and it was just a learning experience to begin with. Latham comments: “Initially we were not looking to see a return, we were just here Issue 9: July - August 2019
VELOCITY COMMERCE
to learn, and both of us were prepared to give up our time in order to learn about this industry. We weren’t concerned with profits – we were concerned with what to learn and the experience we gained selling those products. “Off the back of that we did turn a profit, although we had zero expectations. I think people start a business and expect to make a profit from day one, but all I wanted to do was give up some time and learn about the processes of cashflow and profits to then gain knowledge in order to forge a business. When you start a business, most of the time, you do not have money and the only resource you have is time, so making sure you are labour intensive is key to that growth.” It was this mentality that led the company to be recognised as one of the fastest growing in the UK last year. Latham continues: “The best way to describe us is that we are a hobby that got out of Business Leader - Inspire • Inform • Connect
hand – to then be ranked as one of the fastest growing business in the country is phenomenal. We just keep trying to push the limits of what we think is achievable.” Learning as they grow By learning on the job, the founders managed to see huge year-on-year success. Also, by living in the moment, rather than having a long-term concrete goal, they were able to adapt to the industry and the demands of their customers. Latham comments: “We were learning on the go and seeing where our business would end up. If you have people that are young, keen and hungry, they can create something new and different, which is very important for a growing business.” Velocity Commerce investigated ways they could create an inspired and driven team that were hungry for knowledge and always looking for ways to keep ahead of the curve.
He continues: “We have done a lot of work with government apprenticeship schemes, as we are looking at taking on people who don’t necessarily have the skill set but really want to learn. We have then gone on a journey with them. Through this, the business has retained its agility.” Creating the right environment Learning and analysing the mistakes made along the way has played a vital role in Velocity’s success. Scott comments: “It is very important to nurture an environment where your staff can make mistakes and learn from them. We both worked for a corporate business in play. com that made its staff petrified to make a mistake, so they always played it safe. The business effectively died slowly because of this. For your business to grow, you need to make mistakes and learn from them. Too many corporate companies don’t let that happen and it holds them back.”
35
GROWTH
Meet 30 of the UK’s most inspiring entrepreneurs
A
s part of our growth series, over the next three print magazines we will be profiling some of the UK’s most Inspirational entrepreneurs. In alphabetical order, here is the first instalment of our top 30 inspiring UK entrepreneurs series.
KIM ANTONIOU KAFOODLE
Kim Antoniou founded Kafoodle in 2014 with her long-time friend Tarryn Gorre. Inspiration for the business came from trauma: Kim watched her husband be resuscitated on a restaurant floor in Greece after a waiter gave wrong allergen information. Kafoodle aims to help chefs list ingredients and empower diners to know exactly what’s in their food. Also a co-founder of Auris Tech, the multitalented Kim has turned a traumatic experience into a product that could save lives.
RICHARD BLAIN EARTH-I
Earth-i is at the forefront of the UK’s private space sector. The company has a constellation of satellites which can produce high-resolution images and video of Earth from space. Richard also founded an aerospace company, is a licensed pilot, and owns a healthcare company which deals with professional sports players. 36
CHAY BLYTH
CHALLENGE BUSINESS Sir Charles (Chay) Blyth rose to fame as the first person to sail non-stop the ‘wrong way’ around the world. Born in the Scottish Borders, Chay served in the Parachute Regiment and rowed across the Atlantic in 92 days. Chay founded Challenge Business to break down barriers to adventure sport. The company organised four of the ‘World’s Toughest Yacht Races’ as well as creating the Atlantic Rowing Races and the Transat for Open 60’s.
TANIA BOLER ELVIE
FemTech pioneer Tania founded Elvie in 2013 with partner Alexander Asseily. The Elvie Trainer, a Kegel training device, is a direct response to Tania’s experience of pregnancy, when she realised how little technology exists to help women. Passionate about challenging taboo women’s issues, Tania aims to create a global hub of connected health and lifestyle products for women.
HELLEN BOWEY
ALCOVE
Hellen Bowey is co-founder and CEO of the care-tech company Alcove. She founded Alcove in 2014 to help disabled and elderly adults live independently. The company provides software, smart tech and an installation service to put motion sensors in vulnerable people’s homes. If a resident suffers a fall, the motion sensors detect the lack of movement and raise the alarm. There are other packages, such as the ‘Wandering’ package which alerts family members if dementia sufferers leave their residence unexpectedly.
SIMON CHINN & JONATHAN CHINN LIGHTBOX
The Chinn cousins founded Lightbox together in 2014. With Simon based in the UK and Jonathan in LA, Lightbox produces high-end non-fiction and has worked with Xbox Studios, Netflix, Fusion, Esquire Network, Channel 4, BBC2, FX, National Geographic and ESPN. Simon is a double Oscar-winning producer, and Jonathan has won two Emmys.
TESSA CLARKE OLIO
Tessa co-founded Olio with Saasha CelestialOne to combat food waste in the UK. Olio connects neighbours and small businesses to spread around surplus food. Tessa was inspired by her farmer parents, seeing firsthand as a child how much work goes into food production. Olio has won numerous accolades including a UN Momentum for Change Award, a Europa Award, a Sustainable City Award and a national CSR award.
JENNY COSTA
RUBIES IN THE RUBBLE Jenny Costa is also on a mission to limit food waste. She founded Rubies in the Rubble in 2011 after feeling uninspired by her career in finance. Rubies in the Rubble saves surplus fruit and vegetable produce from going in the bin by turning it into jams, relishes, chutneys, ketchups and other condiments. Jenny wants to make food waste a mainstream issue.
Cont.
Issue 9: July - August 2019
TOP 30 ENTREPRENEURS Kim Antoniou
Richard Blain
Simon Chinn & Jonathan Chinn Tania Boler
Chay Blyth Hellen Bowey
Jenny Costa
Business Leader - Inspire • Inform • Connect
Tessa Clarke
37
GROWTH ANDREW DIPROSE ROOTWAVE
Andrew Diprose is the CEO of Ubiqutek, which is branded as RootWave. RootWave uses electricity to kill weeds, offering a scalable and sustainable alternative to chemical herbicides. RootWave reduces carbon emissions and water consumption, is cost-comparable to herbicides, and offers instant results. Because there is no need to till the earth, the technology can also reduce soil erosion, carbon emissions and spread of disease.
STEPHEN FITZPATRICK VERTICAL AEROSPACE
Stephen Fitzpatrick is founder and CEO of OVO Energy, CEO of Kaluza, and, since 2016, founder of Vertical Aerospace. Vertical Aerospace aims to revolutionise air travel, with carbon-free, inter-city air taxis which transport people from their local neighbourhoods direct to their destination. Stephen also used to own a Formula 1 team.
AMIT GUDKA & HAYDEN WOOD BULB
industry to cater to customers of all skin tones.
BRENT HOBERMAN
Amit Gudka and Hayden Wood are out to disrupt the energy industry. Both worked previously for energy companies and noticed widespread problems like poor service, inefficiency, expensive tariffs, and environmental harm. Bulb is now one of the fastest growing UK energy companies and consistently receives the top rating for energy providers on Trust Pilot.
ADE HASSAN MBE NUBIAN SKIN
Ade Hassan founded Nubian Skin, a lingerie and hosiery company which caters to a diverse range of skin tones. Ade has been featured in every major fashion magazine, supplies the wardrobes on Broadway and the West End, was listed in the EBONY 100 list, and was chosen to supply the underpinnings for Beyoncé’s Formation Tour. Ade’s products have challenged the fashion
FOUNDERS FACTORY
Brent Hoberman co-founded Founders Factory and Founders Forum to encourage and advance entrepreneurship in the UK through education and start-up/scale-up support. Beyond the Founders platforms, Brent Hoberman is a busy man. He co-founded lastminute.com, selling in 2005 for £880m. He is a co-founder of Karakuri.tech, mydeco. com, made.com, and PROfounders Capital. He is a board member of LetterOne Technology (a £13bn investment fund), the Oxford Foundry, the UK Gov Digital Advisory Board, and formerly of the Economist. His political positions include: Young Global Leader of the World Economic Forum, Prime Minister’s Business Trade Ambassador, Business Sectors Council for Britain under Prime Minister Gordon Brown, and CoChair of the Prime Minister Theresa May’s Business Sector Council for Britain for entrepreneurship, scale-ups and small business.
ANNE-MARIE IMAFIDON
Amit Gudka & Hayden Wood
STEMETTES
At 11, Anne-Marie Imafidon was the youngest girl ever to pass A-level computing, and at 20 she received her Master’s Degree in Mathematics and Computer Science from the University of Oxford. Anne-Marie has worked at Goldman Sachs, Hewlett-Packard and Deutsche Bank, and has Honorary Doctorates from Open University, Glasgow Caledonian University, Kent University & Bristol University as well as Honorary Fellowship at Keble College, Oxford.
Belinda Kirk
Anne-Marie co-founded STEMettes, an awardwinning social initiative dedicated to inspiring and promoting the next generation of young women in STEM. Since its inception six years ago, it has exposed more than 40,000 young people across Europe to Anne-Marie’s vision for a more diverse and balanced science and tech community.
BEN JEFFRIES INFLUENCER
Stephen Fitzpatrick
38
Ade Hassan MBE
In 2014, Ben Jeffries dropped out of university to found his second company, Influencer. Now 23 years old, Ben has led Influencer through multiple rounds of
Issue 9: July - August 2019
TOP 30 ENTREPRENEURS Neil Laughton
Martin Lewis
investment and secured clients such as Apple, Alibaba and McDonalds. Ben’s secret: he correctly predicted major changes in online consumer behaviour. He saw that trust in ads was low, but that there was huge potential in product recommendations from social media microcelebrities. Ben was recently named Media Week’s Rising Star and BMW’s UK Tech Founder 2018.
BELINDA KIRK
EXPLORERS CONNECT Belinda Kirk has spent the last 24 years of her life leading groups into the wilderness all over the world. These trips include numerous personal expeditions, youth development expeditions, biological research missions and remote filming trips for the BBC. Today she is a motivational speaker, a Fellow of the Royal Geographical Society and a campaigner encouraging others to live adventurously.
NEIL LAUGHTON LAUGHTON & CO
Another explorer, Neil Laughton is a former Royal Marine Commando and Special Forces Officer turned entrepreneur. He founded a group of companies in the design, construction and office furniture industries. These companies grew to £40m turnover and were then sold to a FTSE 100 company in 2011. Business Leader - Inspire • Inform • Connect
Neil is now a full-time business consultant, leadership coach and team trainer. He is a recipient of the Ness Award for “inspirational leadership” from the Royal Geographical Society and works with clients including B&Q, Virgin Atlantic and BP.
MARTIN LEWIS
MONEYSAVINGEXPERT.COM Martin Lewis is a financial journalist and television presenter who founded the website moneysavingexpert.com back in 2003. It is a consumer finance information and discussion website that aims to provide the public with information on saving tips and deals. It was bought by moneysupermarket.com in 2012 for £87m. Lewis is a known campaigner who has taken on unfair bank charges, extortionate energy bills, student loan surcharges and mental health issues caused by debt.
ISHAAN MALHI TRUSSLE
Ishaan Malhi created the UK’s first online mortgage brokerage in 2015, after a career at Merrill Lynch and as an entrepreneur/ investor in early-stage tech companies. Trussle uses its proprietary algorithm to filter through thousands of deals from 90 national lenders to save British citizens millions on unfair mortgage charges.
CLAIRE NOVOROL
specialising in clinical genetics. With a degree in both pathology and medicine from the University of Bristol and a PhD in Neuroscience from the University of Cambridge, Claire is the co-founder and overseer of all of Ada’s medical affairs. As an industry thought leader, she gives a voice to the clinicians, patients and doctors to ensure that Ada’s products meet their needs.
GUY RIESE UPLEARN
Before the age of 25, Guy Riese is already an experienced businessman and entrepreneur, having started his first company at the age of just 13. That company, an internet hosting firm, grew over the next seven years under his stewardship before he sold the business. With UpLearn, Guy aims to reinvent tutoring and help those whose education has been affected by illness through the use of AI and cognitive science.
JUSTINE ROBERTS MUMSNET
Justine Roberts is the founder and CEO of Mumsnet and Gransnet – an online forum for parents to discuss the issues surrounding raising children. The idea came following a disastrous family holiday, and has since grown to an incredibly influential website. Roberts was awarded a CBE for her services to the economy.
ADA
Dr Claire Novorol is a trained doctor and served as a paediatrician in London before
Cont. ▸ 39
GROWTH CHIKA RUSSELL
TOP 30 ENTREPRENEURS Chika Russell
CHIKA’S
After moving to the UK from Nigeria at the age of five – and the youngest of seven siblings – Russell was inspired by her mother, and at the age of 14, she got her first job ironing shirts. Throughout her education she worked hard and at the age of 22 she bought her first investment property, showing an early entrepreneurial flair.
Nigel Toon
While on maternity leave, Chika returned to her roots and sought a more autonomous career by starting her own African food company. Chika famously turned down all the dragons on Dragons’ Den. Emma Sayle
MARK PEARSON FUEL VENTURES
Mark grew up on a Liverpool council estate with his mother, where he overcame family and money issues and the feeling that education wasn’t for him. He is now an awardwinning serial entrepreneur who grew his first company, Markco Media from his bedroom into a multi-million-pound enterprise, before selling it for £55m in 2015. Mark founded Fuel Ventures in 2014. It invests in high-growth tech entrepreneurs who have the ambition to build a global company. Fuel has an expanding portfolio of 26 companies, adding 10 new investments a year.
RAFAEL DOS SANTOS HIGH PROFILE CLUB
Rafael dos Santos is a Brazilian entrepreneur, who is the son of a fisherman. His humble beginnings were the push for his parents to move to Santos, Brazil, so Rafael could receive a better education. After moving to London at the age of 21, he spent more than a decade working in a wide range of roles. After growing his own housing business to over a £1m turnover, he launched a Migrant Business Accelerator programme to help migrant entrepreneurs start their journey.
EMMA SAYLE
KILLING KITTENS In 2005, there was nowhere women could go to feel in control and explore their sexuality in a safe environment, so Emma created Killing Kittens. The business has sexually liberated people around the world, through events hosted from New York to Venice to Sydney on top of a global online community platform. 40
Ben Scott-Robinson
Emma faced a lot of social obstacles when founding her company, but despite her critics, the Killing Kittens brand is valued at £5m and has smashed its crowdfunding targets along the way.
BEN SCOTT-ROBINSON & SAM WATSON-JONES THE SMALL ROBOT COMPANY
The Small Robot Company is a start-up company focused on revolutionising the way that technology is used to create food. Ben Scott-Robinson an experienced entrepreneur working at the cutting edge of user-centred design, while Sam Watson Jones is a fourth-generation farmer. The pair aim to replace much of the work done by tractors in fields with a series of highly accurate, smart, lightweight robots.
ANTHONY ROSE SEEDLEGALS
Known as ‘the man who saved the BBC’, Anthony Rose helped to launch the BBC iPlayer. The prolific South African/British tech entrepreneur has founded a number of companies including Beamly, 6Tribes, Hey Blab and QJAM.
Anthony is currently the founder and CEO of SeedLegal, the world’s first legal automation platform for start-up funding.
NIGEL TOON GRAPHCORE
Within three years of founding his company, Nigel Toon helped to grow Graphcore – a Bristol-based semiconductor company that develops accelerators for AI and machine learning – into one of the UK’s few unicorn businesses. Under Nigel’s leadership, Graphcore has received large amounts of funding from some of the world’s leading tech firms, including Robert Bosch, Samsung, Amadeus Capital Partners, Microsoft, BMW and Dell.
SOPHI TRANCHELL DIVINE CHOCOLATE
Sophi Trancell is the CEO of Divine Chocolate, a Fairtrade pioneer, a social enterprise ambassador, the Chair of Fairtrade London, and a champion of doing business differently. A prominent campaigner for equality and fair trade, her business is 45% owned by a collective of cocoa farmers in Ghana. This means that they have the same level of profits as the UK employees, and also have two seats on the board. Issue 9: July - August 2019
INTRODUCING THE UK’S LEADING
SCALE UP AWARDS Bought to you by Business Leader Magazine
Sponsor the Scale Up Awards and connect with UK’s leading business brands and entrepreneurs. These new and exciting awards look to recognise pioneers, innovators and visionaries – the companies large and small who are ‘best in class’, along with the entrepreneurs, founders and leaders who run them. As a sponsor, you will benefit from a host of brand exposure and promotion including:
H C R A M 0 2 TH
ne,
a rk L a P , otel on H n d Hilto Lon
High profile national press advertising Major PR and editorial coverage Branding on our dedicated award website Extensive social media promotion Inclusion in the awards video reel National direct mail and email marketing campaigns Marketing collateral and finalist programme Full branding throughout the venue on the night Post event marketing
Sponsors include:
To get involved, or become a sponsor call us 020 3096 0020 or email editor@businessleader.co.uk. www.scaleup-awards.co.uk
GROWTH
Meet the UK’s most successful scale-up businesses
W
elcome to the Business Leader Scale-Up 30 Series where we will be profiling and identifying some of the UK’s leading scale-up companies creating wealth and jobs. In this edition of Business Leader Magazine, we reveal 30 of the most successful scale-up businesses in the golden triangle
- the area between London, Oxford and Cambridge. WHAT ARE THE CRITERIA FOR INCLUSION? The qualifying businesses operate within a ten-mile radius of the chosen area and in their latest published accounts have a turnover between £10m-£50m*. These are the often-forgotten mediumsized firms that are the heartbeat of the UK economy.
THE CITY PUB GROUP Turnover: Turnover growth: Employee count: Sector:
£10m – 15m 27. 97% 200 – 230 Food and drink
MTCE LIMITED Turnover: £35m – £40m Turnover growth: 40.35% Employee count: 150 – 200 Sector: Manufacturing EVI TECHNOLOGIES LTD Turnover: £15m – £20m Turnover growth: 46.74% Employee count: 100 – 150 Sector: Software CENTURION SERVICES LTD Turnover: £10m – £15m Turnover growth: 33.61% Employee count: 40 – 60 Sector: Property RASPBERRY PI FOUNDATION Turnover: £15m – £20m Turnover growth: 92.86% Employee count: 60 – 90 Sector: Education UBISENSE GROUP PLC Turnover: £25m – £30m Turnover growth: 104.69% Employee count: 140 – 160 Sector: Technology ALLIED MECHANICAL SERVICES LTD
* Turnover growth compares the last two financial years
42
Turnover: £10m – £15m Turnover growth: 29.14% Employee count: 50 – 80 Sector: Manufacturing Issue 9: July - August 2019
SCALE-UP NEWS
DEILLA LTD Turnover: £10m – £15m Turnover growth: 29.12% Employee count: 60 – 80 Sector: Technology GRANTA DESIGN LTD Turnover: £10m – £15m Turnover growth: 33.69% Employee count: 130 – 150 Sector: Technology KEW INVESTMENTS LTD Turnover: £15m – £20m Turnover growth: 23.82% Employee count: 20 – 50 Sector: Technology LEICA MICROSYSTEMS CAMBRIDGE LTD Turnover: £10m – £15m Turnover growth: 46.80% Employee count: 40 – 60 Sector: Manufacturing SCIENTIFIC DIGITAL IMAGING PLC Turnover: £10m – £15m Turnover growth: 26.85% Employee count: 100 – 120 Sector: Manufacturer CRYSTAL MOTOR GROUP LTD Turnover: £30m – £35m Turnover growth: 29.52% Employee count: 60 – 90 Sector: Automotive
Leading business figures come on board for the national Scale Up Awards. The Scale Up Awards – brought to you by Business Leader Magazine – are gathering momentum, with business heavyweights backing the event. The event was launched in 2018 to provide a platform for the UK’s ‘scaleup’ and high-growth businesses that are fuelling economic growth. They are the first awards of its kind in the UK to celebrate scale-up success. The first round of entries in 2018 saw hundreds of companies put themselves forward and a secondround which will now open on July 12
COULSON GROUP LTD
and close on October 11 2019. Business leaders such as ex Dragons’ Den investor Piers Linney, Mike Clare (Dreams Beds founder), Caprice (ex model turned entrepreneur) and Jackie Fast (star of The Apprentice) have already come on board to support the event. Andrew Scott, event founder, comments: “The UK has a thriving scale-up business community and these awards provide a platform to celebrate the entrepreneurs and businesses fuelling growth in the UK economy.”
JUDGES ON BOARD
Turnover: £15m – £20m Turnover growth: 33.96% Employee count: 90 – 120 Sector: Construction FRONTIER DEVELOPMENTS PLC Turnover: Turnover growth: Employee count: Sector:
£35m – £40m 74.87% 300 – 330 Video games Cont.
Business Leader - Inspire • Inform • Connect
Piers Linney
Mike Clare
Caprice Bourret
Jackie Fast
TO FIND OUT MORE ABOUT THE EVENT VISIT: WWW.SCALEUP-AWARDS.CO.UK 43
GROWTH
NICHINO EUROPE CO. LTD
RECROOT LTD
R.H CLAYDON LTD
Turnover: £10m – £15m Turnover growth: 57.95% Employee count: 10 – 30 Sector: Agricultural
Turnover: £20m – £25m Turnover growth: 20.47% Employee count: 1400 – 1450 Sector: Recruitment
Turnover: £20m – £25m Turnover growth: 22.98% Employee count: 70 – 100 Sector: Automotive
MORRIS EDUCATION TRUST
INVISION UK LTD
CLAAS SOUTHERN LTD
Turnover: £15m – £20m Turnover growth: 63.64% Employee count: 250 – 280 Sector: Education
Turnover: £10m – £15m Turnover growth: 23.83% Employee count: 30 – 50 Sector: Technology
Turnover: £10m – £15m Turnover growth: 37.15% Employee count: 30 – 50 Sector: Agriculture
CASHFLOWS EUROPE LTD
CECIL & LARTER LTD
INTERNATIONAL DIRECT PACKAGING LTD
Turnover: £35m – £40m Turnover growth: 87.41% Employee count: 70 – 90 Sector: Finance
Turnover: £20m – £25m Turnover growth: 24.64% Employee count: 50 – 70 Sector: Automotive
Turnover: £20m – £25m Turnover growth: 58.92% Employee count: 10 – 30 Sector: Logistics
EXECUJET (UK) LTD
SERVEST BUILDING SERVICES LTD
R3 POLYGON UK LTD
Turnover: £15m – £20m Turnover growth: 25.99% Employee count: 150 – 170 Sector: Aviation
Turnover: £20m – £25m Turnover growth: 47.59% Employee count: 170 – 190 Sector: Property
Turnover: £35m – £40m Turnover growth: 22.42% Employee count: 330 – 360 Sector: Construction
GREEN ENERGY OPTIONS
ADVENTURE FOREST LTD
CTD HOLDINGS LTD
Turnover: £20m – £25m Turnover growth: 53.07% Employee count: 50 – 70 Sector: Renewable
Turnover: £25m – £30m Turnover growth: 21.78% Employee count: 800 – 850 Sector: Leisure
Turnover: £15m – £20m Turnover growth: 270.06% Employee count: 100 – 130 Sector: Science
Failed fundraisers hurt businesses looking to scale-up - but they can be avoided Says John Morris, Partner and Scale-Up Lead at Smith & Williamson It is common knowledge that access to finance is a critical requirement for most businesses looking to grow. More than half of UK firms are actively seeking investment and, of those, 70% fail to secure external finance on their first attempt.
equity or venture capital and, indeed, many waste time approaching the wrong type of investor.
The UK is a fertile land for companies with ambitious plans for the future but unfortunately many lack the knowledge to get themselves there. This presents a huge challenge for those looking to scale up.
By far one of the most common reasons for failed fundraising attempts is that the management team isn’t strong enough, followed by issues with the business model and not meeting investors’ criteria. Taking a mirror to your business and properly understanding your investors’ needs is absolutely key.
In the majority of cases, the more formal or institutional the investor, the less confident businesses are about approaching them. Many are unsure about how to access private 44
Business owners should know their target audience and ask themselves the difficult questions before they are in front of an investor, rather than discovering pitfalls during the process.
Access to debt is not universally understood,
either. According to Smith & Williamson’s recent report, ‘Dream Bigger: funding ambition’, 83% of businesses were unsure how to access peer-to-peer lending platforms while most businesses admitted they were not up to scratch when it came to the process of obtaining a bank loan. Other more technical routes, such as grant funding and applying for R&D tax credits, were understood by just a minority. This represents a significant missed opportunity. Business owners need to educate themselves about the different routes to finance and their relative strengths and weaknesses, as the best route may not always be the most obvious one. Once businesses know how they want to raise money, they must be investorready. Issue 9: July - August 2019
What if you had updates on every ambitious company in the UK? Beauhurst is the professional platform for rich information on the UK’s most ambitious companies, their funders, and ecosystem.
Alert: we’ve found 20 new companies matching your criteria
raised funds in the last 3 months have a headcount under 50 £
Seed-stage fundraising
with Cambridge Angels
£567k £2.9m pre-money £
Growth-stage fundraising
with Octopus Ventures
£9.5m £40.6m pre-money www.beauhurst.com Business Leader - Inspire • Inform • Connect
45
GROWTH
HOW TO LAUNCH YOUR BUSINESS IN BRAZIL F
or its latest business trip feature where we are looking at emerging export markets, Business Leader gives an overview to all you need to know about doing business in Brazil.
Brazil has been climbing the global economic ladder over the last decade and is now the world’s ninth largest economy, and fifth largest by population. The country is also the fifth largest in terms of land mass, and the largest nation in the Southern Hemisphere. But what do business leaders need to know about doing business there? What do you need to know about Brazil? Department of International Trade (DIT) Trade Commissioner for South America, Joanna Crellin explains: “Brazil has 28 states, and they all have different regulations. So, before you do any sort of business in Brazil, you need to do a great amount of research into this enormous market and to locate where 46
in the country your business will be most successful to launch and grow. “Different states have different strengths – some are more about manufacturing, some are more related to agriculture, and in the states in the south of the country where there are more of the middle classes based, there are more professional service companies.” And it is not just regional differences you need to be prepared for, but the vast amount of legal work that will need to be completed before you can set foot in the country. According to the TMF Group: “On average, it takes 11 procedures and around 90 days of work to start a business in Brazil, and construction permits demand an average of 20 procedures and 404 days to finally get authorised.” However, despite the challenges, Brazil is a very promising investment and venture destination for British companies.
Crellin continues: “One of the interesting things about Brazil and Latin America is that they have suffered from a perception problem in recent years. There is currently a lack of understanding, with UK companies not knowing the market. “For those companies that are here in the market and working, they think it is a great market. It can be tricky and hard work, but it is very profitable. With the right support and guidance, you can do great business in Brazil.” Is Brazil attractive to British businesses? Although there is currently no Free Trade Issue 9: July - August 2019
INTERNATIONAL TRADE
Agreement with Brazil, the nation is still very attractive to British companies. DIT South West Market Specialist for Latin America Sarah Hildersley comments: “Brazil is the largest economy in Latin America and its development is generating demand for products, technology and services across a range of industries, despite the difficult recession it went through in 2015-16. Positive reforms took place in 2018, which aims to attract investment, create more jobs Business Leader - Inspire • Inform • Connect
and make the economy more competitive and these initiatives are starting to make traction. “UK companies are unlikely to see a quick return from establishing business in Brazil though. Most will already have experience of trading internationally, such as in Europe or the US, before they target the market. Sales via distributors or other partners will usually take place initially, proving that there is demand and having a good, reliable partner is key. It may become viable to then set up assembly or production facilities further down the line, once the market is proven.”
The ability to have more distributors, partners and production facilities is due to the societal changes the country has experienced in recent years. More than 35 million Brazilians out of a population of 209 million have risen out of poverty and into the middle classes, with many of them getting jobs within tech, pharmaceuticals, manufacturing and professional services. This increase in the skilled labour force has made Brazil an increasingly attractive proposition.
Cont. ▸ 47
GROWTH
INTERNATIONAL TRADE
The Brazilian government has also worked hard to put Brazil in the shop window for foreign investment. Leonardo Ferreira, Brazil services group leader at Deloitte UK said: “The federal government is seeking to attract foreign investment in the oil & gas and infrastructure sectors, with a number of steps already being made. Real estate development and consumer businesses are also likely to increase as the economy grows. “Right now there are big opportunities for foreign firms to enter the market, as prices are depressed due to the recession. But entering all these sectors requires a long-term investment commitment and understanding of the country.” Although growth has slowed in the last few years the current economic downturn offers many opportunities for foreign investors. Foreign-led transactions and mergers and acquisitions (M&A), grew by 5% last year. Investment opportunities range from manufacturing, tech, pharmaceutical, professional services, energy, oil and gas. Cultural customs No matter the sector or industry, there are many cultural customs should be aware of. A major part of the Brazilian economy is driven by family businesses, which is important to consider before starting any ventures within the country. A large part of Brazilian business culture and entrepreneurship is about having a decent family background – as this is a common topic of discussion before, during and after business meetings.
“BRAZIL IS SUITED TO COMPANIES THAT HAVE EXPORTED AND WORKED IN PREVIOUS COUNTRIES BEFORE. BRAZIL SHOULD NOT BE THE FIRST COUNTRY TO MOVE INTO – IT IS A COMMON PHRASE THAT ‘BRAZIL IS NOT FOR BEGINNERS’ – AND THAT IS TRUE.” Rozanne Davis
48
This close and personal element of business is key to embrace if you are a British business looking at expanding into Brazil, as Ferreira explains: “Personal relationships in business transactions are very important. It is possible that the success or failure of a deal – such as an acquisition or partnership – could depend on the chemistry between the Brazilian owner and the foreign investor. “It is important that besides the normal activities one would expect like carrying out a proper due diligence, the foreign investor must also invest some time in developing the relationship.” What are the challenges? It is clear to see that Brazil has many opportunities available, especially if their cultural customs are embraced. However, any business looking at starting a Brazilian venture does need to be aware of any potential pitfalls. The country has a very complex tax system, with many extra taxes for companies who aren’t from Brazil. This also applies to import tax duties. Overall, there are over 90 taxes, duties and contributions that British companies need to be aware of, according to the TMF Group. Getting a local law firm as well as services from the Department for International Trade (DIT) are vital before anything is done.
Sarah comments: “Services can attract taxation of 40-50% on the basic cost. Some products also still attract significant tariffs and an early requirement will be to work out what the level of tariff is on your product. Not only that, but import duties can apply on entry, and between States for certain products, increasing the cost of some products by 60-80%, depending on the sector.” Should you start a business venture in Brazil? Despite the clear and serious challenges that face anyone looking to do business in Brazil, carefully negotiating your way through Brazil’s business community can lead to rapid growth for British businesses looking for overseas expansion. Sarah comments: “Perceptions of the Brazilian market are often out-of-date. Demand for UK goods and services is strong, as we are seen to have high quality products and to be trusted business partners.” However, due to its complexities, it is worth having experience of international expansion before looking at the Brazilian market. Joanna summarises: “Brazil is suited to companies that have exported and worked in previous countries before. Brazil should not be the first country to move into – it is a common phrase that ‘Brazil is not for beginners’ – and that is true.”
Issue 9: July - August 2019
NEWS NEWS BUSINESS LEADER COLUMNIST
Sadiq Khan’s not making friends with the business community, says Charlie Mullins OBE
New Board appointments announced at prestigious club
By Charlie Mullins OBE, the founder of Pimlico Plumbers. Ever since Sadiq Khan first proposed the ULEZ, I’ve been vocal about its shortcomings. That’s not because I don’t get the importance of tackling pollution in the city, but because of the crippling effect it will have on the economy. It seems to me that if the Mayor was really serious about preventing the unnecessary deaths of Londoners, then he’d focus more on curbing knife crime rather than diesel vans. His relentless pursuit to be seen as a champion of clean-air initiatives, is leaving the very people he relies on for support – London business owners – stomaching a hefty fee. It begs the question – has he even taken into account the potential cost to businesses and jobs? Fleet of over 250 vans Pimlico Plumbers has a fleet of over 250 vans, 150 of which are now deemed ‘non-compliant’ according to the new ULEZ ruling. The penalty for keeping my vans running in central London, would stack up to a ludicrous sum of £908,000 annually in penalties. Meanwhile, the cost of replacing them is even more – a whopping £4.5m – meaning I’m caught between a rock and a hard place. Electric alternative Had there been a viable electric alternative on offer for the past few years, with multiple charging stations dotted around the capital, then maybe I and many other business owners might have been more prepared, but unfortunately that’s not the case. In February, City Hall announced a scrappage scheme worth up to £6,000 per vehicle. Yet the £23m in funds available was allocated to micro businesses alone (with fewer than 10 employees). It’s unfair on larger businesses to be expected to bear the brunt of the rest of the cost and not only that but the money’s not even being used. In March the Evening Standard newspaper reported that fewer than 100 had applied to have their vehicles scrapped. Don’t get me wrong, I accept that London pollution levels need to be tackled– but there surely has to be a better way to achieve that without fast tracking the London economy down the drain. Business Leader - Inspire • Inform • Connect
A prestigious Private Members Club in Bristol has appointed a new chairman and five new directors to the Board at its recent AGM. The Clifton Club was founded in 1818 to create a haven for social and professional relationships. A ballot vote in April saw the appointment of Pam Townsend, Stephen Edwards, Joshua Mudie, Andrew Scott and Ron Stagg as new directors while Mike Beesley becomes the Club’s 75th chairman in the Club’s 200-year history. The Clifton Club boasts a magnificent, historic building with luxurious regency surroundings and exclusive hospitality making it an ideal space for functions, weddings and corporate events. The Club overlooks the Mall Gardens in Clifton Village. Membership provides access to a range of Club facilities including fine dining, sports and games, special interest activities and networking events alongside a busy social calendar from black-tie and themed events to summer garden soirees. Mike Beesley, Chairman, commented: “The Clifton Club is steeped in history spanning 200 years but is also progressive, meeting the needs of members today and into the future.” The new board joins a line-up of existing directors that includes Stuart Smith, Lindy Tasker, Alan Lewis, Charles Cook and Steve Smith. 49
LIFESTYLE
DRIVEN TO SUCCESS
Business leaders from around the UK reveal their dream cars For this feature, BLM gets in the driving seat with some of the UK’s most successful entrepreneurs to give readers an insight into the enduring relationship between business leaders and their cars.
HELEN LACY Redberry Recruitment
FAVOURITE CAR? F-Type SVR V8. YOUR FIRST CAR? Turquoise Vauxhall Nova SRI. WHAT DO YOU DRIVE MOST FREQUENTLY AT THE MOMENT? Black Mercedes SLC.
WHAT WAS YOUR DREAM CAR WHEN GROWING UP? Lotus Exige. BMW OR JAGUAR? Jag. HOW DO YOU SWITCH OFF? Gym, shopping and prosecco.
PAUL BROWN
Mail Handling International
FAVOURITE CAR? Jaguar XK140 OTS. YOUR FIRST CAR? Land Rover 1966 Series II. WHAT DO YOU DRIVE MOST FREQUENTLY AT THE MOMENT? Tesla Model S. Clients and suppliers love the Tesla equally and is a great conversation starter. It is the only car I have ever owned that has won us new business while parked.
MICHELLE MICHAEL MBE AGM Holdings
WHAT WAS YOUR DREAM CAR WHEN GROWING UP? Ferrari 308GTS.
FAVOURITE CAR? Porsche 911 turbo cabriolet.
BMW OR JAGUAR? Jaguar before 1985, BMW after.
YOUR FIRST CAR? VW golf. My dad bought it for me when I was 21. I hated the colour but my brother chose it!
HOW DO YOU SWITCH OFF? I go flying. You can’t think of work when being a pilot, I find it both a rewarding and exhilarating way to switch off from the world of post.
50
WHAT DO YOU DRIVE MOST FREQUENTLY AT THE MOMENT? Porsche Cayenne.
WHAT WAS YOUR DREAM CAR WHEN GROWING UP? Porsche 911. BMW OR JAGUAR? Jag. HOW DO YOU SWITCH OFF? I don’t (and I like that I don’t). Travel is my bug though.
Issue 9: July - August 2019
LUXURY CAR BRANDS
ANDREW SCOTT The Ascot Group
FAVOURITE CAR? My Jaguar XJS, a very special ‘modern classic’ that I drove across the Alps and it never let me down! YOUR FIRST CAR? My first car was a bright orange 600cc Fiat 126 at the cost of £75. WHAT DO YOU DRIVE MOST FREQUENTLY AT THE MOMENT? Bentley Continental GT Convertible. WHAT WAS YOUR DREAM CAR WHEN GROWING UP? Lamborgini Contach - still on my list to own! BMW OR JAGUAR? Jaguar every day of the week. HOW DO YOU SWITCH OFF? I never switch off. When your work is also your passion, it is no longer work.
CHARLES COOK Cook Corporate
JEREMY COOMBES Castle Business Finance
FAVOURITE CAR? Currently, my Maserati GranCabrio MC Sport Stradale. YOUR FIRST CAR? Fiat X1/9. WHAT DO YOU DRIVE MOST FREQUENTLY AT THE MOMENT? Mercedes GLS 63 AMG.
BMW OR JAGUAR? Jaguar, all day long! HOW DO YOU SWITCH OFF? Drinking good wine, watching movies, dining out with friends and driving unusual cars like a Hummer or Camaro!
WHAT WAS YOUR DREAM CAR WHEN GROWING UP? Jensen Interceptor/Lancia Stratos. Business Leader - Inspire • Inform • Connect
FAVOURITE CAR? Mercedes SL 63 AMG. YOUR FIRST CAR? Mini – the original one! WHAT DO YOU DRIVE MOST FREQUENTLY AT THE MOMENT? Range Rover Vogue. WHAT WAS YOUR DREAM CAR WHEN GROWING UP? Lamborghini Countach. BMW OR JAGUAR? Jag! HOW DO YOU SWITCH OFF? Relaxing at home with the family, weather permitting, in the garden. 51
ECONOMY, POLITICS & MARKETS
Trump touchdown Do state visits from world leaders benefit business and trade in the UK?
U
S President Donald Trump made his inaugural state visit to the UK this year from 3rd to 5th June. Donald Trump is only the third President of the United States (POTUS) to attend an official state visit, following Barack Obama in 2011 and George Bush in 2003. But what impact do such visits have on business and trade in the UK?
What is a state visit? A state visit comes at the invitation of the royal family, under advisement of the UK government. Such visits last a few days 52
and follow a set formula, with a ceremonial welcome, gun salute, and carriage procession to the palace. A State Banquet is held in the visiting dignitary’s honour, and talks are hosted with politicians and industry leaders. The Royal Family usually hosts one or two state visits per year. In June, President Trump made headlines for bringing all his adult children along for the trip, but the Foreign and Commonwealth Office limits the direct expenses it will cover for state visits to accommodation, transport, food and incidentals for the Official Delegation.
How much do state visits cost? According to the UK government’s figures, the average cost of a state or ‘Guest of Government’ visit between October 2017 and July 2018 was £50,727. State visits are traditionally much more expensive than ‘Guest of Government’ visits due to the pomp and ceremony, but Donald Trump’s 2018 working trip cost over £320,000 in direct expenses – almost double the £176,374 spent on the King of Spain’s 2017 official state visit. Trump’s 2018 visit was the most expensive since Chinese President Xi Jingping’s Issue 9: July - August 2019
REPORT
2015 state visit, which cost about £3,000 more but also included accommodation and translators. Direct costs like accommodation and food are just the start. When Donald Trump made a ‘Guest of Government’ visit last year, his arrival inspired mass protests and considerable security concerns. Though Trump pointedly avoided London – and the biggest protests – the UK police forces spent an estimated £14.2m on additional policing, according to figures released under Freedom of Information laws.
Published costs of UK state visits, April 2014 – July 2017 Date
Country
Accommodation
Transport
Hospitality
Total
April 2014
Ireland
£52,844.16
£53,249.64
£64,450.19
£170,543.99
October 2014
Singapore
£63,971.99
£50,921.17
£43,463.76
£158,356.92
March 2015
Mexico
£62,791.18
£65,562.17
£59,936.68
£188,290.03
October 2015
China
£93,372.40
£113,899.36
£117,519.82
£324,791.58
November 2015
Colombia
£73,109.38
£89,329.15
£58,709.50
£221,148.03
£7.9m was later reimbursed £176,373.50 Spain £37,462.19 £46,065.05 £92,846.26 July 2017 to the Metropolitan Police, Thames Valley Police, and Essex Police by the Home Office. The Treasury further refunded Police Scotland £3.2m for of UK Trade & Investment released a to Turkey and Ireland and neglecting to take additional policing expenses incurred by statement that claimed almost £40bn worth any Welsh businesses with him. Trump’s two days of golfing. of deals were agreed during the visit. Andrew RT Davies AM said at the time: Costs have not yet been published for Dr Jonathan Swift, Senior Lecturer in “Trade missions can be an effective way Donald Trump’s state visit in June. International Business & Marketing, Salford to encourage investment and nurture job Business School, cautions: “I suspect the creation, but such missions must focus on What are the benefits of state visits? business that comes out of state visits has the promotion of Welsh businesses and not If state visits are such a drain on the public just the First Minister’s face.” purse, why bother? What do state visits offer actually been organized months before. So you have this big flourish to sign contracts, beyond photo opportunities? Should you consider a trade mission for but it’s all been agreed beforehand.” your export business? Before the US delegation’s arrival, Theresa State visits vs. trade missions Trade missions can be worthwhile – but only May said: “The state visit is an opportunity Where state visits are for political figures, with thorough planning, proper execution, to strengthen our already close relationship trade missions are intended for business and solid post-mission support. in areas such as trade, investment, security leaders to make contacts abroad. Rather and defence, and to discuss how we can Dr Swift says: “It all depends on how well than attending banquets, the delegates build on these ties in the years ahead.” they’re organized and who’s going. If of trade missions meet the key business Though much of a state visit is swallowed someone like Liam Fox, the International players in an area – such as agents, up by entertainment and tradition, there are Trade Secretary, is involved then it becomes distributors, partners, buyers and sellers. pockets of time dedicated to areas like trade Trade missions may be organised by the high profile, and companies – especially and industry. After President Xi Jingping’s SMEs – are able to make contacts that they public or private sector. state visit in October 2015, the Department couldn’t on their own. As with state visits, trade missions have “Trade missions introduce our exporters sometimes been criticised as vanity projects to export markets. The problem with them, rather than an efficient use of public funds. “TRADE MISSIONS INTRODUCE Dr Swift says: “If they’re properly thought out which you hear from businesses which and targeted, and the groundwork is done in have participated, is that once the trade OUR EXPORTERS TO EXPORT mission is over, they’re left high and dry. advance, trade missions can be a good use MARKETS. THE PROBLEM WITH They don’t know what to do. What’s needed of public funds. The waste of time comes THEM, WHICH YOU HEAR FROM when they are a sort of political adjunct. – and this is a role universities can step BUSINESSES WHICH HAVE If they are planned by business, they are into – is continued training with things like worthwhile, but not when they mix politics languages, markets, analysis of demands, PARTICIPATED, IS THAT ONCE THE and so on.” TRADE MISSION IS OVER, THEY’RE and business.”
LEFT HIGH AND DRY.” Dr Jonathan Swift
Business Leader - Inspire • Inform • Connect
For one notable example in 2013, the First Minister for Wales Carwyn Jones was censured for attending two trade missions
So, weigh the pros and cons and do your research. Not all trade missions are created equal. 53
POLITICS
Michael Portillo gives his idiosyncratic take on life, politics and Margaret Thatcher
MICHAEL PORTILLO ANNOUNCED AS REGIONAL BUSINESS LEADER AWARDS HOST
F
ormerly a Conservative MP, Michael Portillo is now a broadcaster and political pundit. Here, he talks to BLM about views on Britishness, business and the ‘formidable’ Tony Blair.
HOW DID YOU END UP WORKING IN POLITICS? As a child I lived in a very political household. My father was a refugee from the Spanish Civil War and my mother was active in left-wing politics. As a teenager, I had a poster of Harold Wilson on my bedroom wall. My politics changed though due to the situation in the country at the time, and in 1975, the Conservative Party was forward-looking, dynamic, and had appointed Britain’s first female party leader. 54
After reading history at Cambridge University I went to work in industry for Ocean Transport and Trading, before I had an opportunity to join the Conservative Research Department in 1976. CAN YOU ELABORATE ON THE POLITICAL SITUATION IN THE UK AT THE TIME? In 1976, the Labour government was in danger of collapse but managed to hang on until 1979. At the end of that period, I was responsible for briefing Margaret Thatcher, which was fascinating as I was seeing the metamorphosis of the leader of the opposition into the Prime Minister.
“TONY BLAIR WAS AN EXTRAORDINARY POLITICIAN. WHEN HE WAS PRIME MINISTER, WE COULDN’T LAY A FINGER ON HIM AND WE COULD NEVER FIND A NARRATIVE WE COULD USE TO CHALLENGE HIM.”
HOW DID YOU BECOME AN MP? After working for Margaret Thatcher, I worked for Nigel Lawson – who was then Chancellor of the Exchequer. A year into this role I won a by-election in Enfield Southgate, before famously losing the seat in 1997. WHAT WAS YOUR OPINION OF MARGARET THATCHER? I liked her very much and I found her to be an inspiring leader. The political leaders I’ve seen since her have only reinforced that view. I believe I was fortunate in my relationship with her as I was very junior. In her dealings with her colleagues she was often exacerbating but that didn’t matter to me as I found it fun. Whereas ‘big beasts’ like Michael Heseltine, Geoffrey Howe and Ken Clarke would often become upset with how they were being treated. WOULD YOU DESCRIBE MARGARET THATCHER AS PRO-BUSINESS? Margaret was very pro-business. Her husband Dennis was a businessman and her father was a grocer, so she had some grounding in this area. I would say she was more businessIssue 9: July - August 2019
INTERVIEW orientated than any Prime Minister has been since, but she was also very cautious and people forget she was in office for many years presiding over a top-rate of income tax of 60%. It was several years before she changed this (in 1987 she cut the top rate of income tax to 40%). Some industry leaders didn’t always see her as pro-business though, and in the first two years of her premiership, unemployment was zooming up. Factories were closing and the economy wasn’t performing well. I recall 365 economists writing to the papers saying that her economic policies could not possibly succeed. Industry wasn’t happy with her fully until after 1981. From then she oversaw a terrific recovery in the UK economy and boosted the UK’s self-esteem and standing in the world. WHO IS THE MOST FORMIDABLE OPPONENT YOU CAME UP AGAINST IN POLITICS? Tony Blair was an extraordinary politician. When he was Prime Minister, we couldn’t lay a finger on him and we could never find a narrative we could use to challenge him. He was excellent in the House of Commons and had a lightness of touch. He was also self-deprecating and carried the burden of office well. Another very impressive person is Michael Heseltine. I disagreed with him on most things, but he was charismatic and talented and almost unique in that he is somebody who has been successful both in business and politics. WHY DO YOU FEEL IT IS IMPORTANT FOR GOVERNMENT TO SUPPORT BUSINESS? The prosperity of the country depends on the innovation and enterprise that comes from business. I’ve been a sole trader since 2005 and I’ve never seen relations between business and politics at a lower ebb.
result in them taxing relatively high earners too and history has shown that this policy results in the tax take being reduced and lower income people suffering.
It’s the same with the Heathrow expansion. The idea that the Mayor of London is against expanding the airport is insane. Where else in the world would this happen?
I think many people would find this dispiriting. Would they continue to want to work in the UK in this environment?
WHY DO OTHER COUNTRIES BUILD BIG INFRASTRUCTURE, BUT WE DON’T? It’s a sort of British decadence and at its heart is something of which I do approve, which is the belief that government works for the citizens, so that as a nation we can stifle projects and plans we don’t approve of.
COULD YOU REALISTICALLY SEE THE DESTRUCTION OF THE LABOUR AND CONSERVATIVE PARTY? I work in political punditry and it’s never been this hard to predict what’s going to unfold, but anything could happen. My guess is that if the Conservative Party settles the European question the issue will fade away again and we’ll reach normality. If the issue is left lying around though for the next three years, I think a pro-Brexit party will get millions of votes at the next election.
“I DON’T THINK MOST PEOPLE WILL SEE ANY DIFFERENCE WHETHER WE LEAVE THE EU OR NOT. IF WE DO LEAVE, THEN BIG BUSINESSES MAY HAVE TO ALTER THE WAY THEY OPERATE BUT THEY WILL ADAPT.” MOVING ON TO ANOTHER TOPIC, IN YOUR OPINION WHY IS THE UK AND US ALLIANCE IMPORTANT? The Trans-Atlantic Alliance has historically brought very good things to the UK. If I were deciding whether to attend a state banquet with China’s Xi Jinping or Donald Trump, I would consider this fundamental question.
The stark reality is that two of our capitals (London and Cardiff) are not connected by electric railway and in any other country in the world, this would be inconceivable. TO CONCLUDE, WHAT WOULD BE YOUR MESSAGE DURING THIS POLITICAL CLIMATE TO BUSINESSES? I don’t think most people will see any difference whether we leave the EU or not. If we do leave, then big businesses may have to alter the way they operate but they will adapt. What has been interesting is that there has been no word from the City recently. I think this tells us that people are just getting on with things. None of the facts of life will change – people will still want new products and innovation.
Do I want to live in a world that is quite like the USA – built on innovation, freedom and enterprise – or would I like to live in Mr Xi’s world?
This isn’t good and the Conservative Party needs to shoulder some responsibility. But then the alternative government is the Labour Party, which is run by avowed anticapitalists.
HOW DO WE SOLVE THE ISSUE IN THE UK OF THE REGIONS NOT PERFORMING AS WELL AS LONDON AND THE SOUTH EAST? I would argue that connectivity is at the heart of the issue, which is why I’m in favour of HS2 as it connects the regions to the South East.
WHAT IMPACT DO YOU FEEL A JEREMY CORBYN GOVERNMENT WOULD HAVE? I think it would have a negative impact on the UK and business conditions. As a fairly prosperous sole trader I feel I’d be caught in the crosshairs. Labour say they are looking to tax just the super-rich, but this would
The issue is that the British have this exceptional view - that is different from every country in the world - that we can be immune from major change and that we can get by on 19th century infrastructure. Britain is the only developed country that isn’t embracing high-speed rail.
Business Leader - Inspire • Inform • Connect
But this culture can be frustrating when it stops us building big infrastructure projects. This bloody-mindedness and belief that ‘my home is my castle’ is a good thing but it produces a side effect that your life must not be disturbed in any way, even if it’s for the common good.
55
Harpreet Singh
Rob Vivian
Phil Flaxton
Frances O’Grady
HR
Flexible working -
An excuse for businesses to cut overheads or the future of work? The Experts: Frances O’Grady Trades Union Congress (TUC ) Phil Flaxton Work Wise UK Rob Vivian PureComms Harpreet Singh Brickendon EJ Flynn The Supper Club Emma Bullen MHR Dr Jonathan Lord Salford Business School
56
T
he modern workforce is currently going through a multitude of changes, with flexible working becoming more popular. But what does the future hold for this approach to working and what are the benefits and pitfalls?
Is the traditional 9-5 working day as old-fashioned as tea and scones and is flexible working approaches for businesses becoming the norm? What the answer is will depend on what type of business you run and what your definition of flexible working is. Broadly, it is defined as a member of staff that is allowed flexible working hours, job sharing, home working
and variations of self-management. This article will look at the pros and cons of flexible working patterns. Why should you embrace flexible working? According to a recent YouGov survey of 4,000 working individuals in the UK, only 6% continue to work the traditional 9-5 workday. This alone shows that business is constantly evolving and adapting to new working environments – many of which can make your business appealing to new and existing employees. TUC General Secretary Frances O’Grady said: “In many cases, homeworking is a winwin-win. Workers get more time with their families, employers can boost productivity and hang on to experienced staff, and the environment benefits as well. “But too many employers are clinging to Issue 9: July - August 2019
FLEXIBLE WORKING
tradition, or don’t trust their staff enough to encourage homeworking. They need to catch up.” Chief Executive of Work Wise UK, Phil Flaxton echoes this: “Whilst it is encouraging to see a significant increase in the number of employees working from home, there still needs to be a cultural shift for it to be accepted more widely. “Attitudes are changing on how we balance or mix work and lifestyle. Increasing mobility and technology is shifting the acceptance or need for traditional 9-5 work patterns, to be replaced by a more flexible approach to the working week and this trend will continue as more of us embrace new, smarter ways of working such as working from home. “More employers need to realise the tangible benefits of changing outdated working practices to reflect the connected world in which we live. These include, increased productivity, staff retention, less absenteeism and employee burnout. The business case is sound, and it really can be a win-win for all concerned.” Productivity In a recent survey by CV Library, ‘flexible working’ was the most sought after office perk, with 55.8% of people believing it vitally important as a modern approach to the working week.
“People then want to be here and are inspired to work to get the job done. If you trust and empower your staff, then people will want to go above and beyond to help the company.” However, one of the main issues that business owners are concerned with is the levels of productivity if flexible working is implemented. Harpreet Singh, Executive Director at Brickendon explains why businesses shouldn’t be concerned: “Take flexibility, eco-friendliness and well-being for example. With massive improvements in communication-related technology, it is now possible to work remotely without any loss of productivity. Providing flexible working options not only reduces real-estate costs and lowers the firm’s carbon footprint but can also help increase employee motivation. “So, if done correctly, one single action or statement, such as allowing employees to start work earlier or later, or to take longer lunch breaks to facilitate participation in sporting activities, can lead to a chain of events that significantly improves the attractiveness of an employer.”
the argument that flexible working can help businesses to reduce overheads and costs. Business Leader spoke to The Supper Club, to find out their views on flexible working. Managing Director EJ Flynn comments: “While technology is an enabler of flexible and remote working, it’s being driven by a growing freelance and contractor community as well as a boom in homebased businesses. It’s not just start-ups looking for alternatives to expensive offices, with larger employers looking to reduce employment costs with more contractors. Many have introduced hot desking and provide more flexible working options.”
“IN MANY CASES, HOMEWORKING IS A WIN-WIN-WIN. WORKERS GET MORE TIME WITH THEIR FAMILIES, EMPLOYERS CAN BOOST PRODUCTIVITY AND HANG ON TO EXPERIENCED STAFF, AND THE ENVIRONMENT BENEFITS AS WELL.” Frances O’Grady
Helps businesses to reduce costs Regarding the benefits to employers, there Is
Cont. ▸
Many businesses are therefore embracing the benefits of flexible working.
Phil Flaxton Business Leader - Inspire • Inform • Connect
Emma Bullen
“MORE EMPLOYERS NEED TO REALISE THE TANGIBLE BENEFITS OF CHANGING OUTDATED WORKING PRACTICES TO REFLECT THE CONNECTED WORLD IN WHICH WE LIVE.”
EJ Flynn
Rob Vivian, who Is Managing Director of Pure Comms, is one such person. Although he does have reservations too (as seen later In the article). He comments: “We have always been supportive of flexible working and have the view that if someone enjoys their job, then they will be thinking about it and working for the business, irrespective of what time of day it is. I have always been cautious about telling staff to clock in and out at certain times, because that way you can create a clock-watching culture within the business.
57
HR
FLEXIBLE WORKING
However, the benefits don’t end there, as Emma Bullen, HR expert at MHR explains: “For employers, when done on a large scale, flexible working can allow for a scaling back of office space and therefore a decrease in expenditure on overheads. It may also result in more creative output from employees as they have the space to work from wherever they think is appropriate. This may give them inspiration to make effective changes or simply achieve a greater output than they can in an office environment.” Aligning yourself with a modern workforce According to a recent study by Deloitte, by 2025 75% of the UK workforce will be made up of millennials, so where does flexible working fit with them? In addition to having been born and grown up in an online age, there are several characteristics that differentiate millennials from previous generations. Whilst they consider themselves equally as hardworking and as ambitious, if not more so than generation x and baby boomers, they also require more flexibility, faster results and care more about their personal wellbeing. Harpreet comments: “As a result, it may be worth managers considering the way in which a flexible work schedule provides a stronger sense of work-life balance – a
quality that is reported to attract millennial employees to a workplace in droves and keep them happier for longer than the twoyear stint that has become the norm.” And according to the Trade Union Congress, there are 374,000 more people working from home when compared to 10 years ago. But why has this happened? According to an Instant Offices survey from earlier this year, 74% of millennials, and 94% of baby boomers, want a flexible schedule that works for them. What issues can flexible working cause? It is obvious that there are many positives for both employer and employee when it comes to flexible working. However, there are also many challenges which business owners and managers need to face. Rob comments: “Some people are not very good at self-management, so if you allow someone to manage their own time, allowing them to choose when they work, some people will always take the easy option, if you give them that opportunity. “This means that being a leader in a business has changed. If you are not visible as a leader, then standards then start to slip, as I experienced with my own company 18 months ago. To counter this, I moved out of my own office and moved into the thick of things in the main office and noticed an immediate difference. Being that visible presence can make a huge difference in a business.”
Dr Jonathan Lord
Therefore communication and chains of command need to be strictly implemented and respected if modern working ideals can be successful.
58
Dr Jonathan Lord at Salford Business School comments: “Communication is essential for remote working as employees need to be able to work effectively “SOME PEOPLE ARE without constant NOT VERY GOOD AT supervision. SELF-MANAGEMENT, This means that managers have to SO IF YOU ALLOW ensure that workers SOMEONE TO MANAGE are doing their jobs THEIR OWN TIME, fully and accurately. ALLOWING THEM TO This can be conducted through CHOOSE WHEN THEY performance WORK, SOME PEOPLE tracking software WILL ALWAYS TAKE such as Time THE EASY OPTION” Doctor, Roadmap App, TickSpot and Rob Vivian HiveDesk.
“WHILE TECHNOLOGY IS AN ENABLER OF FLEXIBLE AND REMOTE WORKING, IT’S BEING DRIVEN BY A GROWING FREELANCE AND CONTRACTOR COMMUNITY AS WELL AS A BOOM IN HOME-BASED BUSINESSES.” EJ Flynn
“The software does empower managers but using tools such as these can be very disruptive to efficiency if the workforce feel they are constantly being monitored.” Mental health concerns Other Issues and concerns around flexible working Include cybersecurity and mental health concerns. On the former, Dr Lord says: “Cybersecurity is also another issue to address with remote working as an increasing number of these workers are using their own devices work. Rigorous HR policies and procedures, as well as providing security software for free on these devices can manage security breaches.” Regarding mental health, Emma Bullen, from MHR highlights that flexible and remote working may exacerbate Issues with staff who may be suffering from mental health concerns. He says: “Many people suffering from poor mental health describe a feeling of loneliness which is likely to be compounded by their home working arrangements if handled poorly. Remote working can be lonely when done on a regular or permanent basis. There is a distinct lack of office chitchat or human interaction when going to fetch your mid-morning coffee for example. “Chances are most employees who work from home will not see another person during their entire working day. To help combat this, employers should ensure that regular catch ups are scheduled between the employee and their line manager so feedback can be given and actions agreed.” Cynics have also said that many large organisations have wrapped their marketing messages up In the warm glow of flexible working but have actually been more Interested In the cost savings It can make them. Issue 9: July - August 2019
Looking for a telecoms provider that can handle your
BIG IDEAs? PureComms are a multi-award winning telecoms provider offering bespoke services to SME and Corporate clients across the UK. What we can offer: ▸ Creative & customised business solutions ▸ Cutting-edge technology ▸ Long term & flexible contracts ▸ I.T. infastructure & networks ▸ Reliable & efficient service ▸ 24 hour technical support
To find out how PureComms can make your big ideas a reality, call us today. T: 01275 812500
PureComms
www.purecomms.co.uk E: info@purecomms.co.uk
East End Court | Tickenham Road | Clevedon | BS21 6QY
MY WORKING DAY
EMMA SAYLE
CEO & FOUNDER OF KILLING KITTENS & SISTR
A
s the leader of a company, you are there to set an example, to lead and inspire a team of individuals to achieve a series of business goals. But how do business leaders go about their daily routine? Business Leader spoke to Emma Sayle – CEO of Killing Kittens – about her working day. What time do you usually wake up? I have three children under the age of five years old, so I’m wide awake by 6:30am every day – although that is not through choice! What do you typically have for breakfast? I usually just have a coffee as I’m not typically ready to eat anything until around 9am or 10am, and then I’m an eggs and avocado on toast person. However, I’ve just started intermittent fasting as a way to help kickstart my metabolism in the mornings. Having been pregnant so often throughout the last six years it has made my body very sluggish. So, three days a week I won’t eat until late lunchtime. What is the rest of your morning routine before you start work? I take the children to nursery and drop my 60
husband at the station by 7:30am. Then it’s coffee in a thermos time and head for a good hour long walk along the river with our cocker spaniel. I look over and respond to all my emails during this hour, and I really find fresh air is good for my soul. If I don’t walk then I hit the gym or swim. Then I’m on a train into the office by 9:30am.
so it’s very important to have face-to-face time together. I think it’s important to have these meetings in business. Whilst some might seem an old school process, I believe it builds relationships and because it’s too easy to hide behind the digital world now, we sometimes lose that ability to form great relationships.
What is the first thing you do at the start of your working day? Open my old-school A4 diary, look it over and add to my weekly to do list that I start over every Monday morning. Just crossing items off is such a satisfactory feeling.
Do you have a working lunch or is it good to take a break? I have a working lunch as juggling kids means I’m home by 5pm, so I like to just blitz work and properly focus on what needs to be done.
How do you prioritise your day’s work? I’ll flag up emails and topics in my to do list that need to be done that day and move others to the next day so that things don’t feel too overwhelming.
How do you prepare for the next day’s work? I’ll finish emails and flag those key ones for the next day and add to my to-do list. Then I pack up my laptop and diary and put it away so I don’t see them until the next day.
When does your working day finish? It never really finishes when it’s your own business and the nature of our business means we have events taking place all across the weekend, in different time zones too, so there is always work to do. However, I have definitely become a lot more disciplined at putting my phone down at weekends to ensure that I have quality family time. Do you plan meetings or are they a waste of time? I plan meetings. I try and have a monthly face-to-face with our team as we have a very flexible and remote working set-up,
Favourite piece of technology? My Huawei phone. How do you switch off? I swim in the river or take long walks along the river – any repetitive exercise where I can’t have my eye on my phone, for a break. Best piece of advice you’ve received? When I was 18 years old and stressed about university options and jobs, etc, a family friend told me: “Just know what you want to be doing by 30 and ensure you’re doing it by 35!”
Issue 9: July - August 2019
ENTER YOUR BUSINESS FOR
THE UK’S LEADING TECH AWARDS
The Go:Tech Awards are now open for entry and businesses from across the UK – operating in every sector – are encouraged to enter.
VISIT WWW.GOTECHAWARDS.CO.UK TO FIND OUT MORE
EVENT PARTNERS
BUSINESS FINANCE with
NO CONFUSION Invoice. Trade. Import/Export.
Call us on 01275 390 660
castlebusinessfinance.com