South East
Mar - Apr 2020
Living the Good life The Duke of Richmond talks cars, business, sustainability and ‘perfection’ at the Goodwood Estate.
Productivity crisis: Is the UK’s ‘lost decade’ at an end? Page 37
How have mixed-use developments changed UK cities? Page 40
What does the rise of the robot mean for UK jobs? Page 50
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IN THIS ISSUE
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Contents IN THIS EDITION 2
Latest news Breaking business news from around the region and UK.
10 Cover story: Duke of Richmond Business Leader sits down with His Grace to discuss cars, business, sustainability and 'perfection' at the Goodwood Estate.
FINANCE 16 Review: Funding growth What are the best funding options for South West businesses that are scaling up?
GROWTH 22 Debate: Automotive industry BLM partners with Barclays Corporate Banking for roundtable debate on the industry's future.
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BUSINESS LEADER VISION: INSPIRE 26 Review: Business incubators How are they evolving? And what support do they offer businesses and entrepreneurs? 34 Report: International trade How to launch your business in Japan. 37 Feature: Productivity Is the UK's 'lost decade' of stagnant productivity at an end?
PROPERTY 40 Feature: Mixed-use development BLM investigates how mixed-use developments have changed UK cities.
INFORM
CONNECT
HR 46 Review: Immigration Immigration law changes, why getting it right is 'critical for economic growth'. 50 Feature: Future of work What does the rise of the robot mean for UK jobs?
REGIONAL SPOTLIGHT 56 Feature: Brighton A ‘collaborative city with no shortage of talent.
LEADERSHIP 44 Interview: CEO in Focus BLM talks to Judith Totten of Upstream Working Capital about her business journey.
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LATEST NEWS
Inspire • Inform • Connect EDITORIAL Simon Angear - Editor E: simon.angear@businessleader.co.uk Barney Cotton - Digital Editor E: barney.cotton@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 Ben Matthews - Digital Communications E: ben.matthews@businessleader.co.uk SALES Sam Clark - Business Development Manager E: sam.clark@businessleader.co.uk Emma Filby - Business Development Manager E: emma.filby@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 DIRECTORS Oli Ballard - Publishing Director E: oli.ballard@businessleader.co.uk 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. Follow us on social media
Business Leader targets North after office expansion Business Leader’s ambitious growth plans have seen its parent company sign the lease on a second office building – as well as begin hunting for its first premises in the North of England. The Ascot Group – which comprises Purplex Marketing and Insight Data, as well as Business Leader – this month took possession of a new office block adjacent to its main headquarters. The move comes after the company enjoyed major growth in 2019; its 70-strong team has outgrown its former base and will now be split across the two sites. ‘Ascot Two’ will house 30 extra desk spaces, a conference/training cenre and a new boardroom. This in turn will free up space at HQ for a new tech, media and marketing hub, featuring a studio to record video content and podcasts. With plans to triple the size of the business in the next three years, expand the events team and launch several new ventures, projects and businesses, additional office space was vital – however, further steps in the growth journey are already in the pipeline.
Ascot Group CEO, Andrew Scott
Andrew Scott, CEO of Ascot Group, explained: “We have exciting plans to create a global media, marketing and tech business and our second home will help us build that. “We have employed a huge number of people in the last two years and Ascot Two will allow us to expand Purplex, Insight and Business Leader and continue our upward trajectory. It will help us develop our team skills further and attract the very best marketing, media and tech people. “And, after our successful opening in Bristol and London, Business Leader Magazine will now build on its presence in the Midlands and North by opening a dedicated office and recruiting an editorial and commercial team ‘on patch’. “The new office and team will spearhead a new era as we expand our editorial coverage and launch several major events to inform, connect and inspire entrepreneurs in the region.”
Challenger bank N26 to quit UK due to Brexit European challenger bank N26 will close accounts for UK customers on April 15. The bank is blaming difficulties created by the ongoing Brexit process. N26 began offering current accounts in the UK after the EU referendum in 2016, and currently has more than 200,000 users in the UK. However, the bank said that the ‘timing 2
and framework’ of the Brexit Withdrawal Agreement made it impossible to continue. Thomas Grosse, Chief Banking Officer at N26 said: “While we respect the political decision that has been taken, it means that N26 will be unable to serve our customers in the UK and will have to leave the market.”
March - April 2020
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LATEST NEWS Former Dragons’ Den star takes Venture Partner role at White Horse Capital
Start of construction at HS2’s London super-hub moves a step closer
Renowned entrepreneur and former TV Dragon Piers Linney has been named as a Venture Partner with tech investment firm White Horse Capital. Linney is an entrepreneur and investor with a professional background in the City in both law and investment banking, and spent two years on the BBC TV show Dragons’ Den from 2013-15. HS2 Ltd has unveiled updated designs for Old Oak Common Station, following a submission to the Old Oak and Park Royal Development Corporation (OPDC). The station in West London will provide a world-class interchange for an estimated 250,000 passengers each day and will be a gateway into Old Oak and Park Royal, one of the largest regeneration sites in the UK. The station design development has been led by engineering professional services consultancy WSP, and architects WilkinsonEyre. The new HS2 station will incorporate passenger and retail facilities, and
will provide direct interchange with conventional rail services through eight conventional train platforms, to be served by the Elizabeth Line (Crossrail), taking passengers to Heathrow and Central London, and trains to Wales and the West of England. Matthew Botelle, HS2’s Stations Director, said: “Significant progress is already being made at Old Oak Common with site clearance ready for station construction to start. HS2 will transform Old Oak Common, and will be the key to unlocking thousands of new jobs and homes around what will be the UK’s best-connected transport hub.”
White Horse Capital (WHC) has announced Linney is joining its team as a Venture Partner, and will also act as ScaleUp Entrepreneur-in-Residence for the ScaleUp Accelerator programme, which is jointly operated by WHC and The Accelerator Network. Linney said: “Access to finance is key to growth and success and I am looking forward to working with the team to build on their success to connect more technology entrepreneurs looking to raise series A rounds of funding with the growing list of investors that recognise UK talent and the potential of our high-growth businesses.” Linney is also one of the independent judges for the 2020 Amazon ScaleUp Awards by Business Leader.
Oxford VR announces successful £10m funding round A firm which is using virtual reality (VR) technology to transform mental health care for millions has announced a successful £10m funding round.
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Oxford VR is leading the application of VR in behavioural health and builds on 20 years of research at the Department of Psychiatry at Oxford University.
Optum Ventures Principal Ash Patel said: “Oxford VR has taken a technology-led approach to create evidence-based solutions that will make treatment more accessible to patients who need it. We believe Oxford VR’s solutions will benefit those who need access to high-quality, effective cognitive behavioural therapy.”
The firm’s tech offers high-quality therapy via VR, easing issues of access and cost for users.
Oxford VR claimed the award for Best Use Of VR/AR at the 2019 Go:Tech Awards, run by Business Leader. March - April 2020
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LATEST NEWS
Podcast Host and Newable Avitus Business Development Director Morgan Pierstorff
Major new film studio will invest £500m per year in UK economy Blackhall Studios has announced an agreement with the University of Reading for Blackhall to develop the largest purpose-built film studio and digital creative hub complex in the UK. A new state-of-the-art film studio, incorporating extensive purpose-built digital production facilities, represents the first UK investment for one of the leading US studios, based in Atlanta, Georgia. Blackhall Studios has already produced some worldwide successes, including current box office hit, Jumanji: The Next Level. Located west of London on the outskirts of Reading, the new studios are ideally located to make the most of the creative corridor being developed through Thames Valley. It is set to employ up to 3,000 people, including 1,500 directly on-site and contribute over £500m per year to the economy. Ryan Millsap, Chairman and CEO of Blackhall, said: “We are excited to be establishing a base in the UK. Blackhall is the global standard for entertainment production space and our US-based clients like Disney, Universal and Sony are all asking us to expand into the UK to meet their desire to create productions here.”
Opportunities abound for ambitious British businesses eyeing a US expansion. America is the largest consumer market in the world with over 265 million consumers. Its £16.8tn economy accounts for a quarter of the world’s GDP and is eight times larger than the UK (even California’s economy is bigger). Much has been written about the ‘special relationship’ between the UK and the US, but any UK company that’s tackled the American market will tell you there are plenty of obstacles along the way. With scale comes complexity and America is far more complex from a regulatory, tax and even cultural perspective than most UK business owners realise. Rather than learning the hard way, UK SMEs would be wise to consider how best to route their US expansion and seek help along the way. The America Made Easy Podcast helps SMEs tackle the complexity of setting up and growing their
America Made Easy? New podcast helps SMEs streamline US expansion business in the American market. In season one, the podcast, produced by the transatlantic joint venture Newable Avitus, will be exploring the operational elements of scaling your business in the American market, speaking with experts on topics ranging from culture to tax to talent as it seeks to help SMEs map and execute a successful US expansion strategy. If you are leading or are part of a team responsible for executing a US expansion, regardless of whether you are at square one or have been in the US market for years… if you have wished you could test your business in the US market before fully investing, the America Made Easy Podcast can help you streamline your operations and growth. For more information and to subscribe to ensure you never miss an episode, visit: https:// newable.co.uk/advice/americamade-easy/
Huawei set for key role in UK’s 5G networks Controversial Chinese tech giant Huawei has been selected by the UK government to be used in its future 5G networks. However, it was also revealed that Huawei will be given restricted access, despite constant pressure from the US to block the company from entering the UK 5G market over data security risks. Huawei will only be allowed to account for 35% of the kit in the UK’s network, which includes radio masts. The firm will also not be allowed to be near a military base. 6
The government confirmed kit from Huawei will be banned from the ‘sensitive’ core of future UK 5G and gigabit-capable fixed broadband ISP networks. However, non-core 5G kit (antennas, street cabinets, etc) will be allowed. Victor Zhang, Vice-President of Huawei, commented on the announcement: “Huawei is reassured by the UK government’s confirmation that we can continue working with our customers to keep the 5G roll-out on track.” March - April 2020
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LATEST NEWS
Britain’s jobs boom continues as wages rise The UK jobs market continues to boom, as the first set of employment figures since leaving the EU show the number in work has reached a new record high. The figures from the Office for National Statistics saw the unemployment rate remain at its lowest since 1974, while the number of UK nationals in employment grew by over 2.3 million since 2010 to reach just over 29 million. The total number in work climbed to just below 33 million. The number of ethnic minority workers reached a record high, while there are a further 1.4 million more disabled people in work than in 2013, with more than 16,000 employers signed up to the Disability Confident Scheme. Employment has risen in every region and nation of the UK since 2010, and in the wake of the government’s newly-announced transport funding, jobseekers and commuters will be better connected to places of opportunity.
Minister for Employment, Mims Davies, said: “As we embark on a new chapter as an independent nation outside the EU, we do so with a record-breaking jobs market and business confidence on the rise. “With wages still outpacing inflation, UK workers can expect their money to go further as we look ahead to a decade of renewal. The upcoming Budget will steer us on that course, further driving our levelling up agenda – so we can all share in the country’s prosperity.”
Kumho UK welcomes new Managing Director
HqO raises £26.2m in Series B funding round HqO, the tenant experience (TeX) platform for commercial real estate, has announced that it has raised £26.2m in Series B financing to power the company’s continued growth. HqO will use this capital to expand its technology, double its engineering team, and grow sales and business operations to accelerate national and international expansion. The funding round was led by Insight Partners and included the participation of previous investors 8
Accomplice, Navitas Capital, Pritzker Group Venture Capital, and JLL Spark. HqO’s technology is currently used in properties in more than a dozen markets in the United States and United Kingdom. HqO CEO Chase Garbarino said: “HqO has become a true platform that offers tenants and landlords a seamless experience by integrating with the full stack of building technologies across mobility, property management, retail and community categories.”
Kumho Tyre UK has announced the appointment of a new Managing Director. He is Keon Park, who has held a variety of senior roles within the Kumho group since joining in 1995. Keon Park succeeds Myong Joong (Tino) Choi, who returns to Kumho’s Korean HQ after heading up the UK operation for the past five years. Park’s early years with Kumho were devoted to labour management. He then worked in the field of product quality, before spending five years in Europe as a technical engineer with responsibility for 15 countries in southern and eastern Europe. Park commented: “I will use my experience in management and technology to help develop Kumho’s strong brand image in the UK and Ireland with both our tyre industry partners and the driving public.” March - April 2020
LATEST NEWS
RBS announces profits of £3.1bn and will rebrand as NatWest Group Retiring Managing Director, Dave Hodgetts
The Royal Bank of Scotland Group has announced it has almost doubled its annual profits to £3.1bn (up from £1.6bn), and will be rebranding as the NatWest Group. Currently, the bank has several customer brands including RBS, NatWest, Ulster Bank, Coutts, Lombard and Drummonds – and they will all be under the new NatWest Group plc banner by the end of the year. Prior to the announcement, the NatWest brand accounted for 80% of the bank’s customer base. A statement from the bank said: “We have announced that we plan to change the name of our parent company to NatWest Group plc. We expect the name change will take effect later this year. This is the right time to align our group name with the brand under which the majority of our business is delivered. “NatWest represents approximately 80% of our customer base. Customers will see no change to products or services as a result of this change and will continue to be served through the brands they recognise today, including NatWest and Royal Bank of Scotland.”
Honda UK announces new UK MD Honda UK has announced changes to its senior management team, which will take effect from April 1. Current Managing Director, Dave Hodgetts, is to retire and will be replaced by Jean Marc Streng, while Phil Webb, will move to Honda Motor Europe (HME) as Deputy General Manager of HME Automobile Division, and be replaced by Rebecca Stead as Head of Automobile. After 30 years working at Honda in both the UK Manufacturing hub at Swindon, and the UK sales operation, Hodgetts has decided that 2020 marks an
appropriate point to step down. New Managing Director, JeanMarc Streng, joins with more than 20 years’ experience in the automotive industry, and having spent the last eight years as General Manager of HME Automobile Division. Jean-Marc Streng said: “I am looking forward to this new challenge and aim to ensure our three UK businesses continue to offer our customers outstanding products and customer service, whilst maintaining the positive relationships with our dealer networks.”
Amazon year-end figures show 20% sales growth to $280.5bn Amazon has revealed its trading results for 2019 – reporting a 20% growth in net sales to $280.5bn (£219bn) compared to $232.9bn (£182bn) in 2018. The US retail and entertainment giant’s year-end statistics were reflected in a strong fourth quarter performance which saw similar growth of 21%, and ended with a 2019 operating income of $14.5bn (£11.3bn) – up from $12.4bn (£10bn) 12 months earlier.
Amazon founder and CEO Jeff Bezos
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Net income increased to $11.6bn – or $23.01 per diluted share – compared with $10.1bn in 2018.
Key drivers of this success included retail trade through the holiday season, new investment in sectors like renewable energy, new Alexa technology partnerships with major brands, and acclaimed program creation bolstering the Prime Video platform. Founder and CEO Jeff Bezos said: “Prime membership continues to get better for customers year after year. And customers are responding — more people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world.”
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COVER STORY
"WE’RE NOT CHANGING THE WORLD, BUT WE’RE DOING THINGS THAT MOVE PEOPLE AND BRING PEOPLE TOGETHER. IF WE CAN HAVE AN IMPACT ON PEOPLE IN THIS WAY, THAT MAKES IT ALL WORTHWHILE." 10
March - April 2020
DUKE OF RICHMOND
LIVING THE GOOD LIFE G
oodwood is a name synonymous with luxury, hospitality and sport, hosting key dates in the horse and motor racing calendar and describing itself as ‘an English estate like no other’.
The contemporary 12,000-acre estate is home to 29 disparate businesses – ranging from organic farming to its famous Festival of Speed – and turns over around £100m a year. At its head is Charles Gordon Lennox, the 11th Duke of Richmond and Gordon, and a direct descendant of Charles II. Business Leader Magazine sat down with His Grace to discuss Goodwood’s ceaseless quest for ‘perfection’, and why his ancestors would think the modern estate ‘absolutely bonkers’…
THE HISTORY OF THE GOODWOOD ESTATE IS WELL DOCUMENTED, BUT HOW WOULD YOU DESCRIBE THE MODERN ESTATE AND ITS ACTIVITIES? Goodwood is a traditional estate, and we still have traditional estate activities at its core – property, forestry, farming – but its main area of differentiation over the past 300 years has been sport, in a very personal way. Various members of the family indulged their sporting passions, but what’s unusual is this involved sharing that passion with other people. The whole nature of the place is about shared experience, and that runs through everything we do. My dream 25 years ago – and still the same goal – was to be the world’s greatest luxury experience company. It sounds a bit unreal now, but it’s what we try to do, and we’re lucky in a sense that the experiential world has absolutely blossomed in that time. But the point of making it a success is to create a sustainable business, to create enough resource to be able to invest and support the estate. If that goes because we are so focused on other business, then we’ve lost the plot. If the family has to move out of the house and turn it into a conference centre, that would be pretty disappointing. Cont. Business Leader - Inspire • Inform • Connect
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COVER STORY
YOU CREDIT YOUR FATHER FOR LAYING THE FOUNDATIONS FOR MUCH OF THE MODERN BUSINESS. IN WHICH AREAS CAN HIS INFLUENCE STILL BE FELT? In 1967, when he and my mother came here, I was 12, and no-one really had been living in the house since the war. These places were considered irrelevant. Something like 1,000 houses a year were knocked down. No-one had any money, no-one wanted to keep them up, and even when people could afford to, it wasn’t considered politically the thing to do; the world had moved on.
Goodwood Revival
"SUCCESSION IS IMPORTANT IN BUSINESS, BUT IT’S VITAL IN THIS INSTANCE – IF YOU DON’T GET THE SUCCESSION RIGHT, THE WHOLE THING IS LOST." Sir Jackie Stewart taking part in the 2019 Revival Goodwood Racecourse
But the family had been here for 300 years, and my father was determined to keep it going. He was business trained, so he was good with numbers and the banks, which was important as we had to borrow money. And he was very, very good at putting groups of people together to get things done. These days people are much more embracing and most people are pretty positive about what goes on here; we’re doing things people want to be part of, we’re maintaining authenticity and heritage, and nowadays that’s considered to be important. And having the families and owners living in these houses and worrying about them is by far the most cost-efficient way of keeping them going. WERE YOU PREPARED FROM AN EARLY AGE TO TAKE OVER? I was involved in film and photography from the age of 16. I didn’t really love school, and I left very early. I was meant to still be in school but I wasn’t, I had got a job in London, which I loved. The idea of succession had always been managed. My father always made it clear that he wasn’t going to go on very long. So I felt good about it actually. SO THERE WAS NEVER ANY QUESTION IN YOUR MIND THAT YOU WOULD TAKE OVER? No question. I could have said no – that would have been difficult – but you have responsibilities. Succession is important in business, but it’s vital in this instance – if you don’t get the succession right, the whole thing is lost. The chances of survival are quite small really, because only one person has got to screw up and it’s all over.
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March - April 2020
DUKE OF RICHMOND
My father was only encouraging. We had the idea for the Festival of Speed, for instance, and I remember saying ‘look, I have this idea, it’s not going to cost us much, I think we can spend £100,000 on it’, and he was always saying ‘let’s do it, it’s a great idea’. He was always very positive, and that is a fantastic legacy. TO WHAT EXTENT HAS THE CONTEMPORARY ESTATE EVOLVED AS A DIRECT RESULT OF YOUR OWN PASSIONS AND AMBITIONS? I guess it’s evolved massively – but evolved is a good word to use, because we’ve tried to do everything that’s authentic to the place.
relevant to the modern world – and I hope we do. TO WHAT EXTENT DO YOU SET THE STANDARD? I’m very involved. This morning, for instance, we had a three-hour meeting, all on motorsport, to go through details. We went through what the new catering facilities might look like this year, and some sponsors want to do different things, so we’re looking at drawings to see how that might look. How the brand feels and how it all fits together, I’m very involved.
We’re lucky in that cars were easy for me, because I love them, so that was an easy door to push on. The first thing I did when I got here was to look at whether we could reopen the racetrack – it hadn’t been touched since 1966, and it was a big project. We had the idea of the Festival of Speed, but it was a small deal compared to what it is now. We thought we might get 2,000 people and 25,000 rocked up. The fences were all smashed in, and everyone was just everywhere – but it was a good feeling, as it meant we had something. From then on, the festival was always a cash surplus. It has produced revenue from year to year, the motor industry really got behind it, and that was the big turning point. That gave us the resources to do things with. We want to be exceptional and we invest accordingly. CONTEMPORARY GOODWOOD IS A SPECIAL BLEND OF TRADITION AND MODERNITY. DOES ITS HISTORY CREATE CHALLENGES? It’s good. It’s what we do. One of our big values is around authenticity, so it’s important we don’t do things that aren’t authentic to the place. Hence we deferred to the sports that were here originally. We can tell a great story around them, we’ve got books about them and pictures of them. I found a picture of my grandfather in the 1930s, driving his Lancia in his own event. So suddenly we were able to say that in 1934, the festival had already happened. So history is important, it has to be real, and then it’s a case of how do we make that Business Leader - Inspire • Inform • Connect
"HISTORY IS IMPORTANT, IT HAS TO BE AUTHENTIC, AND THEN IT’S A CASE OF HOW DO WE MAKE THAT RELEVANT TO THE MODERN WORLD AND I HOPE WE DO." ‘SHEER LOVE OF LIFE’, A SENSE OF ‘DERRING-DO’ AND AN ‘OBSESSION FOR PERFECTION’ ARE GOODWOOD'S VALUES – HOW DO YOU EMBODY THOSE VALUES? I’m a total perfectionist, so that’s the big one. First and foremost, we’ve got to do everything as well as we possibly can. Authenticity I’ve already mentioned. Derringdo? I want everyone to be creative, I’m passionate about that. It’s very unusual to have the venue, the event, and the brand, all together, and we do in all instances. All the tickets we do ourselves, all the transactional activity we do ourselves, we manage the events ourselves, and the hotel, and the golf courses. In the digital world now, you can run a hotel – globally – on your own, you don’t need a whole hotel marketing group behind you. We do it all ourselves. We have very few outsiders coming in.
YOU RUN 29 BUSINESSES AND WORK 12-HOUR DAYS. WHERE DOES THIS DRIVE COME FROM? It’s just the nature of the beast. I’m in backto-back meetings all day, and then I have all the other stuff to do, so I end up doing that at night. But the thing is to keep up, if I’m going to be involved and be on top of things. About a million people a year now come to the estate so it’s quite a sizeable operation, and we employ 750 people. It does require a very entrepreneurial spirit. HOW DOES A WORKFORCE OF THAT SIZE – WORKING IN MANY DISPARATE FACETS OF THE BUSINESS – BECOME A TEAM? It’s interestingly diverse. We’re doing everything from aviation to organic food, all in one place; I think that’s quite a challenge for everybody. But we’ve broken it down into divisions, there’s a Managing Director of each division, and a leadership team of seven, so if I fell over tomorrow, they would run it fine, and that’s obviously important to me. WHAT KIND OF RELATIONSHIP DOES GOODWOOD HAVE WITH THE WIDER SUSSEX COMMUNITY? Good. We’re a big local provider. We bring a million people a year into the area, and we’re putting half a billion pounds a year into the local economy. Of course we’re very closely connected to Rolls-Royce. They’re a tenant. I sit on the board. They have 2,000 people. Every Rolls-Royce in the world comes from there. Between us, we are by far the biggest employer locally. DOES IT GIVE YOU A LOT OF SATISFACTION TO KNOW YOU ARE SUPPORTING THE LOCAL COMMUNITY? Sure. The point for me is to try to maintain the community – a lot of families have worked here for hundreds of years. It’s really, really important. But we shouldn’t just talk about now. Since the 18th century, Goodwood has played a really important part locally. You look at these fabulous old photographs of the horse racing in the 19th century, everyone arriving at the station, bunting everywhere, carriages in the street and everyone dressed fabulously. In a funny way, it hasn’t really changed, there’s just perhaps a bit more of it. Cont.
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COVER STORY YOU’RE ON RECORD AS BEING ‘WORRIED’ ABOUT BREXIT. HOW DO YOU SEE IT IMPACTING ON GOODWOOD? I am worried about it. I don’t like it, but it’s better than it was; it’s good we know where we are. Of course, we’re massively close to the car industry and it’s going to have a massive impact there. The car industry anyway is going through huge change, and that’s not going to help, so it’s a big concern. I think it’ll be difficult for a while, and then it’ll probably get better and we’ll be back where we were, but I think it’s going to take a few years to come good again.
DUKE OF RICHMOND It says a lot about what we do, about the place, about long-termism. We want to produce great food, and that’s the best way to do it. HOW DOES THAT FOCUS ON SUSTAINABILITY RECONCILE WITH EVENTS LIKE REVIVAL AND THE FESTIVAL OF SPEED? If you look at Revival and think about the whole repair, reuse, recycle concept, it fits brilliantly well. These cars may be fantastically valuable, but that’s irrelevant. The GTO Ferrari, for example. In the 1960s you couldn’t give them away for £5,000 and they were sitting in every showroom in Europe, now they’re worth $70m (£59m); it’s just an old race car, they’ve been smashed up, rebuilt, smashed up again, rebuilt, and so they just keep on going. In that sense, they’re just sustainable old things. Also in terms of sustainability, the best thing to do is drive an old car rather than buy a new one, because the amount of energy involved in building a new car is way beyond the amount of energy any car ever consumes during its lifetime.
(L-R) Ross Brawn with the Duke of Richmond and Jenson Button the Goodwood Festival of Speed 2018
GOODWOOD’S FOOD AND DRINK OFFERING HEAVILY PROMOTES ORGANIC PRACTICE, SUSTAINABILITY AND ANIMAL WELFARE. HOW IMPORTANT ARE THESE ISSUES TO YOU? They are fundamental to the place, and very important to me. My mother ensured we were all brought up, not totally vegetarian, but with an unusually healthy lifestyle for the 1960s, which everyone thought was pretty crazy back then – now, of course, it’s just standard stuff. We had to make a choice with the farm about 20 years ago, and we decided to go organic. We have this closed-loop system where the animals are born here, live here all their lives, only eat food we grow; it’s very pure. 14
The Festival of Speed we’ve got to make as sustainable as we can. But we’ve got Future Lab, looking at ways of doing things differently and better. Its all about mobility, connectivity, and how the motor car is going to change, what does electrification mean. What does autonomous mean. We have a big conference here on the Friday of the festival looking at all of this. We’re right at the forefront of showing what the technology is going to look like – the two fastest cars at Goodwood last year were both electric.
barmy. They had no nostalgia, that wartime generation, they just thought all that stuff was finished, let it go. I hope they’d be pleased or feel excited – excited by what they've created, and the way it has turned out 300 years later – and I hope they’d feel it was a natural progression of their passion. Goodwood has always been about hospitality, and all these things they did – big house parties, entertaining, having the Tsar to tea – it was all about giving people exceptional experiences. YOU SAID AT THE OUTSET YOU WANT TO BE THE WORLD’S BEST – HOW CLOSE DO YOU FEEL YOU ARE TO THAT? We’re a long way away, I’m sure, but everyone is trying. All you can do is pick yourself up each time and have another go. And one of the challenges of running a business like this is doing just that. The guys running our restaurants have got to do it every day – that’s a huge ask. People doing the event have a long time to wait to do it again. They can’t just say ‘that bit didn’t go so well, we’ll get that right tomorrow’ so you’ve got to really focus on what didn’t go well, really making sure you remember issues and fix them. Otherwise, every year you’ll just be putting on the same old thing and it doesn’t move on. I see all of the complaint letters. I hate reading them, but you’ve got to take the pain, as I hate it when people don’t have a perfect experience. It’s a dagger to the heart for everyone. WHAT AMBITIONS DO YOU STILL HAVE LEFT TO ACHIEVE FOR THE GOODWOOD ESTATE? Lots. We’ve got to keep it going in a difficult world, that’s a big challenge, and we’ve got to find new things to do. And I’ve got to have a good succession plan with my son, that’s pretty important – if I fail at that, then the whole thing’s been a waste of time. We’re not changing the world, but we’re doing things that move people and bring people together. If we can have an impact on people in this way, that makes it all worthwhile.
WHAT DO YOU THINK YOUR PREDECESSORS WOULD MAKE OF THE DIVERSIFICATION OF THE CONTEMPORARY GOODWOOD BUSINESS? They would think it was all absolutely bonkers. My grandfather certainly would think the whole car stuff was absolutely March - April 2020
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FINANCE REVIEW
WHAT ARE THE BEST FUNDING OPTIONS FOR SOUTH EAST BUSINESSES THAT ARE SCALING UP?
B
Business Leader was the media partner for the recent Business Funding Show – which is the UK & EU’s leading event that connects funders with entrepreneurs. The event brought together thought leaders in the sector to discuss the future trends that are shaping the funding landscape. The Business Funding Show kicked off with a panel debate that provided an overview of the funding environment for businesses. The panel was chaired by Matt Adey, Director & Senior Economist at British Business Bank, and included: Juliet Rogan Head of High Growth & Entrepreneurs at Barclays Peter Cowley Author and prolific entrepreneur and investor Umerah Akram Head of ELITE UK
Matt Adey started the discussion by saying: “We’re seeing a big rise in alternative finance – with funding mechanisms such as asset-based landing increasing. The bank lending picture has been relatively flat and alternative finance companies have grown rapidly in order to support start-ups and scale-ups” The panel was then asked: WHAT ARE THE KEY DEVELOPMENTS THAT WILL SHAPE THE FUNDING ENVIRONMENT IN THE YEARS AHEAD? Jenny Tooth OBE: "Looking back at the last year there was some concern amongst investors about backing businesses and entrepreneurs, in what was a time of uncertainty. "Now, with more political certainty, it appears the investor community is back and ready to start backing start-up and scale-up companies again.
Tim Mills Managing Partner at the Angel Co-Fund
"I have also noticed that venture capital funding is going up and up the scale to fund bigger deals; and this has left angel investors to fill the space on the rung below."
Jenny Tooth OBE CEO of UKBAA.
Tim Mills: "We now have a strengthened government which will be unveiling policies
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that will have a direct positive bearing on the investment community. "The opportunity is there and with interest rates not looking like they are going anywhere, investing in businesses remains a sound and attractive investment." Umerah Akram: "I recently read with interest a Beauhurst equity investment report which showed that in 2019, £12bn was raised in private deals, with more than 1,700 deals pushed over the line. "In contrast to this, the IPO market was quiet last year but there was still £30bn raised on the markets, with around £6bn or £7bn coming through actual IPOs. "This shows that there are clear benefits to being a listed business because you can raise significant amounts of investment to fund growth."
"THE OPPORTUNITY IS THERE AND WITH INTEREST RATES NOT LOOKING LIKE THEY ARE GOING ANYWHERE, INVESTING IN BUSINESSES REMAINS A SOUND AND ATTRACTIVE INVESTMENT." Tim Mills
March - April 2020
FUNDING GROWTH
Jenny Tooth OBE
Tim Mills
Umerah Akram
Peter Cowley
Peter Cowley: "Becoming an entrepreneur has almost become a career choice but this has meant that there are more people looking for money to fund their businesses; and the number of disappointed entrepreneurs who can’t raise finance is growing.
Cowley: "In terms of trade – If you look at my portfolio, many of the businesses I deal with don’t in the short term want to trade into Europe because it’s not easy to do so due to different tax regimes and business psychology. In this respect, it’s easier to trade in the USA.
"The point is that you can’t just assume there will be money available. The statistics reveal that only one out ten get the finance they need – so that’s lots of entrepreneurs who won’t get finance.
"This is the case for smaller businesses but of course as you grow you do want to consider international trade. It’s also worth noting that funding from the European Investment Bank is being replaced by funding from the British Business Bank, so this looks like its safe.
"At the end of the day the best finance comes from customers – so product market fit is better than equity dilution." HOW MIGHT THE RECENT BREXIT MILESTONE AND THE SUBSEQUENT TRADE DEAL IMPACT THE FUNDING LANDSCAPE? Mills: "The negotiations around trade deals will be focused sector by sector and inevitably there will be winners and losers in any deal. As a fund, we have several fintech investments that are focused on Europe, so where we end up from a regulatory point of view regarding finance, will be vitally important. "You can already see that the grant funding landscape is changing because of our new relationship with the European Union." Business Leader - Inspire • Inform • Connect
"I don’t think the process of Brexit will make too negative a difference in regards to trade and funding, but I do feel that there will be an issue around access to talent and this will have an impact and will create difficulties."
"THE £13.2BN OF FUNDING RAISED IN THE UK LAST YEAR WAS MORE THAN GERMANY AND FRANCE COMBINED; AND MUCH OF THIS WAS FROM US AND ASIAN INVESTORS" Juliet Rogan
Juliet Rogan
Juliet Rogan: "The £12bn of funding raised in the UK last year was more than Germany and France combined; and much of this was from US and Asian investors, so it’s still clearly a very important market and this should be a positive." HOW DO ENTREPRENEURS ENSURE THEY HAVE THE CORRECT BLEND OF FINANCE? Rogan: "The current funding landscape provides a good opportunity for entrepreneurs to blend both debt and equity. This will be determined by the risk profile of the business and what stage in the business cycle it is. For example working capital can be funded by debt, whereas product development is more likely to be funded by equity or retained cashflows in the business." WHICH SECTORS ARE HOT GOING FORWARD REGARDING FUNDING? Cowley: "One interesting trend I’m seeing is the conflation of data and healthcare – with big data being used to achieved health outcomes." Tooth: "I’m going to bang the drum for female entrepreneurs as I’m seeing more and more of them and femtech is growing and growing." 17
REVIEW
FUNDING GROWTH
AN ENTREPRENEUR’S LIFE
T
he Business Funding Show then turned its attention to what it takes to be an entrepreneur and explored the real-life challenges that founders must take on during the cycle of running a successful business. This panel brought together: Gonçalo De Vasconcelos Rnwl Kenneth Siber WeWork Labs Anthony Rose SeedLegals
GONCALO – CAN YOU EXPLAIN YOUR LATEST BUSINESS RENWL? WHAT DO YOU WANT IT TO BE KNOWN FOR? Goncalo De Vasconcelos: "Insurance is boring and nobody wants to deal with it and must spend time shopping around and responding to autorenewal letters. So, we are looking to do something about that and automate the process for people."
WHAT ARE YOU DOING DIFFERENTLY WITH THIS BUSINESS?
you start to think about pitching for other people’s money?
De Vasconcelos: "You know it’s interesting to see how experience is so helpful because when I started my last business (Syndicate Room) I didn’t know the difference between a limited company and an LLP for example. It’s also been helpful that when people see my name in their inbox, they respond to my emails now."
"You can’t own more than a 100% of your business – so it makes sense to bring in debt or give away equity at some point but you need to remember that lenders only lend you money if you have a revenue steam.
ANTHONY – YOU’RE A SERIAL ENTREPRENEUR. WHY HAVE YOU DECIDED TO SET UP YET ANOTHER BUSINESS? Anthony Rose: "Once you’re a founder it’s very difficult to work for anybody again. On leaving the BBC I sold a couple of firms and was tired of paying law firms for my legal work. This inspired me to set up SeedLegals and we’re just trying to make things easier for people." IN YOUR OPINION ANTHONY – HOW QUICKLY SHOULD YOU RAISE EQUITY FINANCE? Rose: "Our data shows that founders put an average of 26k of their own money into the businesses. Why? Because nobody will invest in a PowerPoint – you must build something and show market fit before you can think about investment. So, the question then becomes– when do
"The time to raise is when you think you’ll need more money than you can spend yourself. Or when you’ve reached product market fit." HOW IS BEST TO START A BUSINESS – AS A CO-FOUNDER OR A FOUNDER? De Vasconcelos: "I would say it’s easier with a co-founder, but you do have to split the equity. With a co-founder it’s much more fun and starting by yourself can be lonely." Kenneth Siber: "I would say co-founder as well but make sure you align expectations when you start and make sure you both want the same things." Rose: "I believe there are three roles needed for a successful business: 1. Domain expert – this is the doctor and the person with the passion to drive the business. 2. Who is going to build it – this is the tech guy or CTO. 3. Mr or Mrs money – this is the person who is going to get it funded- usually the CEO. "If you’re a person that can cover all three roles, then that is great but it’s rare that one person has all these skills. This means that having a co-founder will make it more likely to have these skillsets and you can also have checks and balances on what you’re doing."
Cont. 18
March - April 2020
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19
REVIEW
FUNDING GROWTH
ENTREPRENEURS ARE GETTING YOUNGER AND THERE HAS BEEN 700% RISE IN TEENAGERS BEING ENTREPRENEURS, WITH ONLY ONE IN FOUR TEENAGERS NOW HAVING A PART-TIME JOB. CAN THEY HANDLE THE MONEY SIDE THOUGH, WHEN IT COMES TO BEING IN BUSINESS? Siber: "I wonder if it’s the case that people are starting companies much earlier because I saw some statistics that showed that in terms of returns, the perfect age to start a business is at the age of 48. "It showed that the maximum return for investor capital is a 48-year-old founder with some previous experience in the sector they are launching the business in. "On the question of can younger people handle the capital at a young age? Some can and come can’t. It’s tricky if you’re very young to handle this – you’re not just given a sack of money because it also often comes with the message that you’re the best thing since sliced bread and to go out and kill the world." WHERE ARE ENTREPRENEURS COMING TO YOU AND SAYING THEY NEED MOST HELP? Siber: "The common challenges are around skills and access to finance, but they will of course be different at different stages in the business – depending at where you are at in your cycle. What we try to do is bring people together at different stages."
Gonçalo De Vasconcelos
Kenneth Siber
WHAT ARE THE THREE ELEMENTS YOU NEED TO GET RIGHT TO RAISE YOUR FIRST MILLION? Rose: "You need to run it like a military operation – I talk to many founders and when you hear things like ‘my co-founder is going to be giving up their job to focus on this full-time’ – no! There are lots of businesses that investors can support, so you need to ensure you’re making the proposition as attractive as possible. "You need to have such a single-minded focus on your goal and how you are going to get there; that it becomes attractive to an investor. "People think the key problem is to build stuff, but the actual problem is finding a market for it and somebody to buy it. "All too often people spend the investment money building acres of stuff, but they don’t identify if there is a market for it."
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Anthony Rose
Siber: "Investors want to see somebody that will literally break down walls to get this product up and running and drive it to become a success. It’s that passion and drive that inspires investors to lend." WHEN IS THE RIGHT TIME FOR A FOUNDER TO STEP ASIDE AND LET SOMEBODY ELSE TAKE CONTROL OF THE BUSINESS? Siber: "I remember one of our first investors asking an insightful question, which was: “do we want to be rich or a king?” "This comes from metrics that look at control on the one axis and reaching maximum potential on the other axis. It is rare that you retain all the control and reach maximum potential – this is your Google or Facebook. Typically, you don’t get both. "If you take all the control, you’ll never realise the potential, but you will be the king. You must ask yourself – what do you want to be and how does this sit with your role as a founder? Control is a bit of an illusion because to be successful you do have to give it up." De Vasconcelos: "Entrepreneurs obsess about it too much – often they may not be the best person to run the business. For example, when a business becomes successful it can become very operational and letting somebody else run the business and you moving on can be good, as it means you can then start another business."
March - April 2020
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WHAT NEXT FOR THE AUTOMOTIVE INDUSTRY?
T
he motor industry is evolving at an unprecedented rate, with emerging technologies, changing mobility trends and environmental concerns setting the agenda.
Business Leader partnered with Barclays Corporate Banking for a roundtable with some key players from the sector to ask: What does the future hold for the automotive industry?
WHAT ARE THE CHALLENGES FACING THE CONTEMPORARY AUTOMOTIVE INDUSTRY?
the roads – there are massive, massive challenges for everybody in all sectors of the industry.”
Tim Bagnall, MD at CCR Motor Co: “Electrification – the transition from combustion engines to electric – is having a massive impact. I think general environment and social responsibility at board level, plus government policy, is driving the change through, and the pace of change is just immense.
Robert Freeman, CEO of Malvern Tyres: “When you get down to it, where is the infrastructure? Are you going to have electric wires hanging out of shop windows?
“The challenge in the marketplace is getting the customer to understand that change, to understand the technologies. The buying public don’t really know what’s going on. “From an infrastructure point of view too – how we charge these vehicles out on 22
“The public will not accept it unless the infrastructure is right. If the infrastructure is not right, they’ll do a u-turn, they’ll have to. I just can’t see the infrastructure spend.” Martin Wilson, MD at Scot Group: “Is electric the ultimate answer anyway? Or is it just a stepping stone to something else? Why would you put massive investment into electric if it’s not the ultimate answer?”
Michael Finn, CEO at Wellington Motor Group: “There are still some major manufacturers investing very serious amounts of money in diesel technology. Everybody says diesel is finished, petrol is finished – why are they investing so much money? It’s confusing, it really is. “If the world wobbles again – and we’re going to have another recession at some point – all of this gets put back at a dramatic rate. “The government bringing back its petrol and diesel end date from 2040 to 2035 was a nice statement for them to say, it makes good headlines, but I honestly don’t think they knew what they announced. When it comes to hybrids, I definitely think March - April 2020
AUTOMOTIVE INDUSTRY THE FUTURE OF THE AUTOMOTIVE INDUSTRY SPONSORED BY BARCLAYS COMMITTED TO HELPING BUSINESSES ACHIEVE THEIR AMBITIONS T: 07766 364 541 | E: howard.noye@barclays.com
The Panel Tim Bagnall MD, CCR Motor Co. Darren Lakin Aftersales Director, Wessex Garages Michael Finn CEO, Wellington Motor Gp Martin Wilson MD, Scot Group Robert Freeman CEO, Malvern Tyres Kieran Hector FD, Carbase Tim Lincoln Partner, Grant Thornton Keith Parry RD, Barclays Howard Noye RD, Barclays Sara Appleton Barclays
there’s going to have to be a bit of backpedalling.” Kieran Hector, FD at Carbase: “It is just a political target, and you’re right, they don’t fully understand it. There’s obviously a huge amount of climate change pressure at the moment, but it’s the technology and infrastructure that will dictate how quickly all this is possible. “In Norway, 40% of cars sold now are electric, so I think with the right push from the government to incentivise it and help with the roll-out, it can be done but I think the UK – despite its climate change claims – has a long way to go yet.” IS THERE THE SAME DEMAND FOR ELECTRIC VEHICLES (EVs) IN THE RENTAL MARKET? Wilson: “Not at all. The investment at point of entry is huge. Plus, there’s so much inconsistency on diesel engines in the press. If you talk to the manufacturers, the diesel engines are more efficient, have less Business Leader - Inspire • Inform • Connect
www.barclayscorporate.com
pollutants than petrol engines, but the big headlines are that we’re going to ban diesel – it’s crazy.
garages, which is a little easier because they have been in the flow of it for six years now. But supply is an issue for definite.”
“My thoughts are electric vehicles will be a stepping stone for potentially hydrogen, certainly for commercials and trucks, and I agree the infrastructure is not there at the moment. But you could invest significant amounts of money into infrastructure to charge cars that could be obsolete within five years – trying to keep pace with that is incredible.”
Finn: “I think manufacturers are just thinking about China and North America; that’s the driver. The reality is, if they move the pendulum in China just a little bit, they have made it.
Hector: “There is a problem as well with the physical space for charging, as it takes a lot longer to charge a car than it does to fill up with petrol or diesel. Having a petrol station equivalent where people could park for 45 minutes… the numbers don’t add up.” WHAT DOES THE GOVERNMENT NEED TO DO TO UNDERSTAND THE SECTOR AND GET THIS RIGHT? Freeman: “Stop playing games, and start being a government. It’s all about headlines and social media.” Bagnall: “Communication for me would be the key. If I make a statement in our business that I want to do something, the question is always how are we doing to do it. You’ve got to have a strategy. “And that’s the bit I find frustrating; they say by 2035, hybrid’s out. But unless they come out and say this is how we’re going to do it, that’s where confusion comes from, because they’ve come up with an idea and not told anyone how to do it. “I don’t believe they’ve consulted with Society of Motor Manufacturers and Traders (SMMT), with manufacturers, not in any wholesale way, not spoken to anyone who does this for a living and come up with a plan.” Finn: “You see all the headlines, but when you dive into it there’s not as much substance as you would want there to be. We want – and we plead for – clarity.”
“So you’ve got one bit that is legislationdriven but the other side is commercial opportunity; the point I made earlier about a lot of manufacturers still investing in diesel, that is because they clearly see a market in certain territories, and it’s a lot bigger market than we’ve got. The UK market will battle for supply because the percentages are so tiny. You’re looking at 1.5, 1.6% in that sector.” Wilson: “EVs are more expensive to produce, the margins are thinner, you haven’t got the profits driven through aftersales, so those things combined make electric vehicles more difficult. And the residual values aren’t as strong – or haven’t historically been as strong – as internal combustion engines.” Hector: “There’s not enough genuine demand for them at the moment. We sell used cars, so we have to deal with electric very little at the moment, but we have a fleet of 50 company cars, and we took on eight or nine electric vehicles and they have had all sorts of problems with the range and ability to use them. The headline numbers don’t stack up with the practicality. The public isn’t ready to follow up on all this political talk.” WHY ISN’T THE DEMAND THERE? Freeman: “Because they know how difficult it is. I had a rush of blood and thought I might get an electric vehicle, but I spoke to a mate who has one – he couldn’t get back from his holidays, the charging point was vandalised, and I’m thinking we’re just not ready for this. It doesn’t work.”
HOW IS THE SUPPLY OF ELECTRIC VEHICLES? Bagnall: “Supply has been genuinely difficult. We have a lot of Mitsubishi
Cont. 23
DEBATE THE FUTURE OF THE AUTOMOTIVE INDUSTRY SPONSORED BY BARCLAYS COMMITTED TO HELPING BUSINESSES ACHIEVE THEIR AMBITIONS T: 07766 364 541 | E: howard.noye@barclays.com
www.barclayscorporate.com Freeman: “We run 30 vans through the centre of Bristol every day, but we won’t be able to do it. It’s been going 70 years that business, but it doesn’t work; they say things that look great in headlines but they don’t think things through.” WE’VE TALKED A LOT ABOUT CHALLENGES. WHERE DO YOU SEE OPPORTUNITIES? Finn: “Because of the dreaded Brexit word, it feels as though the world has been up and down, but it’s settled down a bit. We have settled down, and our clients have settled down.” Tim Lincoln, Partner at Grant Thornton: “Speaking to one client recently whose volumes have been steady, actually profitability has improved and they’re starting to get back to their past percentage of profits. It’s through focusing on some of the fundamentals, and putting in more incentives around things like aftersales, where the margin is. I think there’s profitability to be made if you’re focusing on the right things.”
Finn: “The people who have bought into it love it, and they would find it really difficult to change back. If they can live with it, they absolutely worship it. The problem being is that still only fits that amount of people. “And of course they are perfect for city centres, perfect London vehicles, but you can’t charge out of your flat across the pavement with a lead, can you? If you live in the middle of nowhere you can have your home charging point, but then you’ve got this range anxiety. I think there’s an awful long way to go.” Hector: “I think a lot of people like the idea of electric cars, but they just can’t make it work. I’m not sure there’s even an electric charging point where I live because there just isn’t the demand.” BRISTOL IS THE FIRST UK CITY TO ANNOUNCE A DIESEL BAN, BUT OTHERS WILL LIKELY FOLLOW. WHAT WILL BE THE IMPACT? Hector: “I think the local authority has got it wrong by trying to impose a flat ban. Suddenly the whole middle of Bristol is 24
mapped out as banning all diesel. I don’t think people understand the implications of that, and we’re totally in the dark about whether that will be implemented in that form or will it be watered down.
Wilson: “I certainly think post-election that consumer confidence seems to be better. There seems to be a level of confidence that has come back in. Unfortunately we haven’t seen the residual value bounce Tim Bagnall that we lost from April onwards last year, but it’s definitely getting better. That’s much-needed because last year was tough.”
"FROM AN INFRASTRUCTURE POINT OF VIEW – HOW WE CHARGE ELECTRIC VEHICLES OUT ON THE ROADS – THERE ARE MASSIVE, MASSIVE CHALLENGES IN ALL SECTORS OF THE INDUSTRY"
“If you’re going to push for change, it has to be positive incentives to push people towards something rather than trying to ban something. The amount of upheaval from a blanket ban across the middle of cities is going to seriously threaten the survival of some businesses.” Hector: “We’re looking to the future and trying to expand. I couldn’t tell you where we’d need to go, but we certainly wouldn’t put another one in any city talking about the same kind of ban.
“But where else? It’s presumably going to be quite fashionable for local authorities to say we’re going to do that as well.”
Darren Lakin, Aftersales Director at Wessex Garages “We’ve certainly seen that. Consistently over the past 12 months, after-sales has been the bedrock of the business, while new and used car sales has been weak. “It’s a consistent approach to some very basic details which drives profitability, then you have a much more buoyant business – but we need all three facets of the business going at the same time.” March - April 2020
AUTOMOTIVE INDUSTRY THE FUTURE OF THE AUTOMOTIVE INDUSTRY SPONSORED BY BARCLAYS COMMITTED TO HELPING BUSINESSES ACHIEVE THEIR AMBITIONS T: 07766 364 541 | E: howard.noye@barclays.com
"I THINK MANUFACTURERS ARE Keith Parry, Relationship JUST THINKING ABOUT Director at Barclays CHINA AND NORTH Corporate Banking: “The AMERICA; IF THEY MOVE headline new reg stats were a bit disappointing, 7% down. THE PENDULUM IN But all the dealers I spoke to CHINA JUST A LITTLE BIT, said January was fine. Why THEY HAVE MADE IT." IS IT THE SAME PICTURE FOR NEW AND USED CARS?
do we put so much emphasis on that headline for new registration stats? If your aftersales is strong and you’re on top of used, then as a business you can cope with one of those plates not spinning as well.” Bagnall: “The end market is not there, so you end up with an oversupply, which results in the residual drop we had from April. All the 2016 peak registrations coming off contract hires, there was just a flood of three-year-old diesel vehicles. The market had to realign. That hurt us all, and it was really painful last year.”
Hector: “We’re finding it an ongoing problem that every year the used vehicle market just seems to drop and drop. It’s just a race to the bottom. It’s harder and harder to get a supply of cars at a margin we can make work and I don’t know where that ends. The typical margin in the industry is about 1%, so it’s not like you have a lot of scope to absorb it.” Freeman: “It is a race to the bottom – especially with increasing labour costs. We’re suffering from real creeping labour costs for MoT testers and technicians. The growth there is about 20% in the last few years, so you’re squeezing your margins all the time, with prices going down and labour costs going up.” IS THE SECTOR FACING A BIG THREAT FROM ANY DISRUPTORS? Bagnall: “Mobility as a service is one of the megatrends coming through. It’s subscription-based – the idea that you pay £300 a month, or whatever, and you can have a car for three months, or a city car during the week and an SUV at the weekends. “Our Japanese parent is a big rental firm, and that’s how they are pushing MAAS, Business Leader - Inspire • Inform • Connect
not through dealers, but as the preserve of the rental operations because they are geared up to do it. That swap and change of SUV for Saturday, a sports car for Saturday night and a city car for the week, I don’t see that as a dealership issue and I think ultimately we are going Michael Finn to lose business.”
Wilson: “When you’re talking about swapping cars two or three times a week, there’s a huge cost. If you look at some of the initial out-and-out subscription services, they are hugely expensive, and Mercedes-Benz has pulled out of the UK because there’s just no market for it. “The opportunity for someone to step into a sports car for the weekend, city car during the week, and an SUV for whenever – the cost of that is enormous. “The point of someone wanting to not own a car will come. But I don’t think everyone is ready for it yet.” Finn: “Ultimately there comes a time when a disruptor has to make a margin. In our business, it costs a lot of money to move a widget, it really does. When you start seeing those make serious money, you’ll see a lot of people want to get on board.” HOW IS THE AUTOMOTIVE LABOUR MARKET? ARE THERE ISSUES WITH SKILLS, RECRUITMENT AND RETENTION? Hector: “Technicians are the biggest problem – there just seems to be a shortage.”
www.barclayscorporate.com the MoT testers have gone up to £30k; it actually is making MoT testing unviable.” Lakin: “That has been driven historically by the race to the bottom. MoTs at £19.99 – we stopped that, £40 is our minimum. Otherwise it is not viable, because the cost of labour is skyrocketing. A guy doing 10, 12 MoTs in a day doesn’t cover his costs.” AND WHAT IS BARCLAYS’ VIEW OF THE SECTOR? Howard Noye, Relationship Director at Barclays Corporate Banking: “Negotiations around the UK-EU trade deal will be key to the industry’s long-term prospects, while motor dealers will also be focused on the recent government commitment to greener vehicle production by 2035. "If the infrastructure necessary for electric vehicles is committed to wholeheartedly, then the public’s appetite for more environmentally-friendly modes of transport could provide a significant boost to the UK car market.” Parry: “There are a lot of sectors, with the economy being the way it has been over the past couple of years, which are challenged. But since the election result in December, the market has been increasingly optimistic about an increase in consumer spending on big ticket items. Barclays remains keen supporters of the sector. “There are a lot of big headlines, and a lot of it may happen over time, but I think it will be evolution not revolution and I think the sector is really resilient to cope with that change, I really do.”
Freeman: “It’s not trendy, is it? Truck tyre fitters is ten times worse. We could double our truck business if we had the staff. They are earning £30k, £40k, £50k, these truck fitters and they are still leaving. The younger generation have changed their expectation of life, and they don’t want to get their hands dirty. We need to address this. “I have 20 MoT stations, and I’m actually looking at the viability of MoT testing because it doesn’t make money. You’re looking at £30 or £40 for an MoT, and 25
REVIEW
HOW ARE UK INCUBATORS SUPPORTING BUSINESS GROWTH?
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ome of the UK’s most successful businesses have been nurtured through the process of an incubator – but what is an incubator and what does the future hold for the concept? This article will also look at the true impact of their introduction to the UK. How are they evolving? And what support do they offer businesses and entrepreneurs?
Incubators come in many different guises, varying considerably in their offerings and areas of focus. In general, they all share the common remit of helping early-stage businesses achieve growth quickly by providing support around office space, mentoring, professional support, subsidised or free professional services and access to funding. By offering all these resources, participating businesses can focus on achieving product market fit, as opposed to spending valuable time securing this from external sources. 26
How are incubators helping businesses? Typically, incubators work with companies that aim to disrupt current business models in a variety of sectors to grow British industry, both at home and abroad. In late 2019, the Department for Business, Energy & Industrial Strategy (BEIS) issued a report which looked at the effectiveness of UK-based incubators. The report states that out of “428 start-ups that have previously or are currently attending an incubator or accelerator, we find that most start-ups consider the contribution of the incubator
or accelerator as significant or vital to their success.” Dr Francine Morris, Associate Dean, Enterprise and Industry Engagement at the University of Salford Business School, gives more detail around the benefit of incubators: “Incubators are vital support systems to those in the early stages of setting up their business. "They provide a sense of community and a safe place to test a business idea, whilst surrounded by like-minded people. March - April 2020
BUSINESS INCUBATORS
And, according to Nesta, 73% of start-ups consider the contribution of the incubator or accelerator they attended have been significant or even vital to their success. So, with entrepreneurs and start-ups gaining more opportunities to survive and thrive, the role of incubators has also become crucial to upskilling workers to new age technologies and working practices.
They can also give the entrepreneurs the necessary training and networks to become successful.”
"INCUBATORS ARE VITAL SUPPORT SYSTEMS TO THOSE IN THE EARLY STAGES OF SETTING UP THEIR BUSINESS. THEY PROVIDE A SENSE OF COMMUNITY AND A SAFE PLACE TO TEST A BUSINESS IDEA." Dr Francine Morris
Business Leader - Inspire • Inform • Connect
becoming a successful and stand-alone business. By providing a collaborative eco-system, these businesses within an incubator can share the trials and tribulations of starting a company – with the environment stopping an entrepreneur from shouting into an echo chamber.
Leon Howe, Incubation Manager at Durham City Incubator, comments: “Incubators help businesses by providing Johnathan Matlock from Bristol-based a workspace to share with other likeincubator Unit DX comments: “In my minded entrepreneurs which nurtures experience, one of the key factors of an collaboration, sharing of experiences and incubator is to upskill members of a team contacts. Providing a space, support and that wouldn’t have access to investment had the opportunity is critical to any new or experience to learn "ENTREPRENEURS BELIEVE business. Incubators can certain skills before. develop the founders to DIRECT FUNDING, ACCESS Employing people with understand the stages TO OFFICE SPACE, LAB the right skills is great, in starting and growing a SPACE AND TECHNICAL but one of the keys with business and if they get incubators is providing EQUIPMENT ARE THE MOST it right, have the potential the opportunity to give to scale and create VALUABLE SUPPORT THAT people that industryjobs and wealth for the INCUBATORS CAN OFFER." ready experience and economy.” Matt Smith skills. A key role of Impact on the economy incubators should be a The natural question way for people to access would be to find out what impact these opportunities to upskill from c-suite, all the incubators have had on British businesses way down to apprenticeships.” and the wider economy – especially as this Matt Smith, Director of Research and government (BEIS) has revealed ambitions Policy at the Centre for Entrepreneurs, to continue to support the concept. agrees. He said: “Incubators are important Howe continues: “Providing a safe for closing the skills gap because of the environment where founders are supported in-house nature of the services which and also challenged can help them develop they provide – many offer opportunities the business concept into a business model to businesses and start-ups to not only that can secure investment and scale. Not develop their businesses but also harness every business will be a success, however key skills through different services they those that succeed are likely to have a offer within the incubator space.” greater impact on the economy. Smith also believes that entrepreneurs “Many incubators in the UK have some can benefit heavily from developing their flagship businesses they have supported company or companies in an environment which have grown into successful like an incubator. He comments: businesses, creating wealth and “Entrepreneurs believe direct funding, employment opportunities. For those that access to office space, lab space and don’t succeed, the founders have the technical equipment are the most valuable knowledge to establish their next venture support that incubators can offer. However, and make it a success.” access to investors, access to peers, help with team formation, direct funding, press or media exposure, mentoring from an industry expert, help measuring social impact and mentoring from an investor are shown to have the highest positive impact upon entrepreneurs.” Incubators are providing start-ups and entrepreneurs with an easier route to
Cont. 27
REVIEW
BUSINESS INCUBATORS
Individual incubators have provided information on the successes and failures of the companies and individuals that use their platforms and spaces. In 2018, an independent study was carried out by Warwick Economics to access the economic impact of SETsquared – ranked the world’s leading business incubator. The study concluded that: •
965 businesses were supported by SETsquared between 2015 to 2017, with the partnership providing 3,645 business assists since 2002.
•
The Gross Value-Added contribution of SETsquaredsupported businesses each year indicates that they have directly contributed a total of £5.8bn to the UK economy between 2002-17.
•
The level of employment supported by these businesses is estimated at 10,900 jobs in 2017. This is projected to rise to 22,200 by 2030.
•
Projecting the forward impact of the programme, assuming the level of support continues at the current rate, supported companies could rise to 6,650 and contribute a further £12.4bn to the economy between 2018-2030.
•
Including an estimate of supply chain impacts of the businesses, the cumulated direct and indirect impacts on the UK economy are estimated to be £8.6bn by 2017 and a further £18.3bn by 2030.
Jane Khedair, Director at Institute of Innovation and Entrepreneurship at London Business School, comments: “Business incubators undoubtedly have a huge impact on the UK economy; creating jobs, stimulating innovation and fostering entrepreneurial flair to enable new products and services to be brought to market which would otherwise remain only as ideas.
"WITHOUT THESE INCUBATOR SPACES, THERE WOULDN’T BE ANY INNOVATIVE AND DISRUPTIVE COMPANIES ENTERING THE MARKET." Johnathan Matlock
28
The Unit DX team
“Although the selective nature of incubators, only taking on the best startups, makes it difficult to quantify their added value, it’s widely recognised that both success as well as survival rates are generally much higher for businesses which have been supported by the resources an incubator programme typically offers. “It’s well documented that, across the UK, less than 40% of start-ups exist after three years so a survival rate in excess of 80% for the businesses that we incubate at London Business School is hopefully indicative of the efficacy of incubation as a whole.” The growth of incubators has increased significantly in the past few years and has had an positive impact on both regional and national economies. According to Nesta data, in 2019 the presence of an incubator within a two to three kilometre area was associated with increased growth in normalised wages (i.e. average of wages relative to average wages in a specific sector and occupation) and increased high-level occupational change up to four kilometres away. Examples of successful business incubator services include the SETsquared Partnership, an incubation and start-up growth acceleration network, which is forecast to contribute £30.7bn to the UK economy by 2030. Have they been a success? An additional way of judging the success
of incubators is to look at their popularity across the country. In terms of capacity, a report from the Centre for Entrepreneurs showed 75% of UK university incubators were at or close to full capacity, demonstrating their demand from start-ups and entrepreneurs. Matlock comments: “Without these incubator spaces, there wouldn’t be any innovative and disruptive companies entering the market because you are relying on people discovering those elements of starting a business on their own. When an incubator provides a lot of shared resources and advice that can sit across multiple businesses. With businesses in an incubator you can surround yourself with creative and knowledgeable people that can sit across multiple companies – helping them all to share ideas and grow together.” And the future for the whole incubator space looks set to have a positive impact on the economy too. Matlock comments: “If you look at the government’s Industrial Strategy 4.0, it's about identifying which industries and sectors are going to add to the UK’s GDP over the next ten years. "One of the key elements of that is that those companies need somewhere to be. These are the spaces where innovation and disruptive technologies are born. Incubators are absolutely critical to the formation of new companies that contribute to the UK economy.” March - April 2020
ADVERTORIAL
SWEET CONSTRUCT BENEFITS FROM WESTON COLLEGE SUPPORT CAN YOU GIVE US AN OVERVIEW OF SWEET CONSTRUCT? Sweet Construct is a commercial construction company based in Flax Bourton. Working as a Main Contractor, we provide all services from formwork to fit-out. This includes design, civil engineering, construction, and with joinery and manufacturing involving our sister company Sweet Joinery. The company has been in operation for over 40 years and is now run by the third generation of the Sweet family. We have experienced considerable growth in the past 18 months and rebranded in September 2019 from H Sweet and Sons. This growth has led to an office move and the recruitment of many new departments, taking us from 21 employees to more than 60. In January, we were also delighted to win the Enterprising West of England Ones to Watch 2020 Awards for North Somerset. A very proud moment! WHAT ARE THE KEY CONCERNS/ CHALLENGES IN THE CONSTRUCTION INDUSTRY? Skills shortage is a major challenge in the industry, threatened by an aging workforce and by new technologies. At Sweet Construct, we recognise the importance of retaining our key employees and we want our people to enjoy working for us by giving them more than just a job. Developing our people is a priority, and we have rolled out initiatives such as communications training because good communications help to drive engagement. We also have company-wide personal development plans to help the team map their careers and a clear focus on upskilling our early careers and apprenticeships team through a programme of bespoke training and workshops. Business Leader - Inspire • Inform • Connect
WHY ESTABLISH A PARTNERSHIP WITH WESTON COLLEGE? We have chosen to work with Weston College as they are clearly aligned to our business needs. One of our key objectives for 2020 is to secure more work within a 90-minute radius of our head office so that our teams BLM speaks to Emma Tate can enjoy a greater Early Careers & Apprenticeships Lead at Sweet Construct work/life balance and in order for us to deliver the best possible service to clients. Weston with the experience we have had working College fits perfectly with that ambition as with Weston College, from the personal the location is ideal for those on our early service we get with the Account Manager careers and apprenticeships programme. and Work Placement Officer, to the recruitment support we have had from the We also wanted to strengthen our Apprenticeships team. relationship with the community and provide WHAT ARE SWEET CONSTRUCT’S FUTURE high-quality employment for the local area. We selected Weston College because we are AMBITIONS? We plan to continue to grow and develop confident their apprenticeships would be the perfect way to recruit new employees, as our early careers and apprenticeships programme, and will continue to work well as to upskill existing colleagues. closely with Weston College, notably WHAT IMPACT HAS THE PARTNERSHIP incorporating the Construction Manager HAD? Apprenticeship (level 4) into our plans for Through our partnership with Weston future pathways to site management roles. College we have employed apprentices from We also look forward to engaging on the new intermediate (level 2) through to higher T-Level programme and welcoming a digital apprentices (level 4) and have another work placement student later in the year. due to start in September. The people that These are exciting times for Sweet Construct come to us from Weston College are highly and for construction in the region. We are motivated and skilled, backed by a support really pleased to be working with Weston team of tutors and assessors, and an College to achieve our ambitions for growth impressive range of apprenticeships and and recruitment of skilled, motivated diploma courses. teams. Overall, we remain extremely impressed 29
FEATURE
Shaping Britain’s next generation of entrepreneurs
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lack of specialist teaching means most UK teenagers leave school with little or no business knowledge. Business Leader talks to Sharon Davies, CEO of Young Enterprise, to learn how the finance and enterprise education charity is working to fill the void.
Entrepreneurs stimulate growth, create opportunity and drive innovation and social change – so why isn’t the UK education system doing more to develop these skills in future generations? Only a quarter of the nation’s Generation Z leaves school with any specialist entrepreneurial education under their belts, according to a recent YouGov survey, and as many as one in two go further, saying their education has failed to prepare them for the world of work. The impact is that young people lack both the nous and the confidence to embark 30
upon entrepreneurial careers – and at a time when UK business needs dynamic leaders, this is a major worry. ‘Crucial for Britain’ There is no quick fix, but the government is being urged to look at teaching reforms as a key first step. Sir Anthony Seldon is Vice Chancellor at the University of Buckingham, which has recently secured pioneering private sector support to match-fund fees on enterprise degree courses to make its business courses more accessible. He believes British politics needs to take notice of the challenge facing industry in the wake of Brexit, and says classroom investment is essential if the nation is to remain a global business power. He said: “As British business faces an uncertain future, it is vital that we support entrepreneurialism, and ensure Britain remains a world leader in enterprise and innovation. But to do this we must nurture our next generation to enable young
entrepreneurial talent to shine through. “For too long, entrepreneurialism has been deprioritised in schools and children have been taught to avoid risk. This is a mistake. “We urge Prime Minister Boris Johnson to get entrepreneurialism on the curriculum in schools and change the perception on enterprise education. Teaching enterprise in schools is crucial for Britain to have the edge in creating ambitious entrepreneurs.” That view is endorsed by Phillip Salter, founder of The Entrepreneurs Network, who agrees future success hinges on an improved education system. He said: “Despite political turmoil, Britain has continued to remain a global hub of entrepreneurship. However, for this to truly continue we can’t overlook key issues such as talent and nurturing young entrepreneurs. A strong start-up eco-system is key to economic growth and innovation in Britain, and to maintain this we must consider modernising school curriculums to encourage entrepreneurialism.” March - April 2020
NEXT GENERATION
‘A massive game-changer’ Delve a little deeper, and it becomes evident there is already a potential solution out there – albeit one which needs support from business to truly turn the tide. Young Enterprise is a national financial and enterprise education charity. Launched in 1962, it now helps more than 300,000 young people a year, supplementing their schooling with specialist business coaching – a service which extends to guiding schools and teachers too. At its head is CEO Sharon Davies, a passionate advocate of entrepreneurial education. Davies believes businesses must work with schools to reduce disadvantage gaps so young people can flourish in the corporate world. She said: “We have a belief that all young people should be able to access financial and enterprise education. “We provide opportunities for them to learn to earn and to manage their money, and to develop an enterprising mindset, which obviously is key. “We’re leaving the EU, and those skills are going to be absolutely pertinent to the future of this country.” Crucially, Davies knows first-hand how important support of this type can be.
She left home herself at 16, and ‘moved around a lot’ in a series of temporary jobs, before a chance encounter with a youth worker proved a major influence on her future direction.
"AS BRITISH BUSINESS FACES AN UNCERTAIN FUTURE, IT IS VITAL THAT WE SUPPORT ENTREPRENEURIALISM, AND ENSURE BRITAIN REMAINS A WORLD LEADER IN ENTERPRISE AND INNOVATION."
“There is support there for the teachers in terms of lesson plans and other support. We can provide online resources on how to utilise those programmes within the curriculum, and we also have volunteer business advisors, where a mentor can come in once a week or once a fortnight. “We want to bring influencers into the classroom, so children get a better perspective on what’s out there.”
Sharon Davies
Business Leader - Inspire • Inform • Connect
“We know there is a massive gap between what employers are looking for, and young people coming out perhaps not prepared for the world of work.
She said: “This youth worker was someone who was interested in me “What we’re trying to do is Sir Anthony Seldon developing myself, without really bring closer together any angles, and I had the world of learning and never come across anyone like that before; the labour market. someone who genuinely wanted me to do better, who believed I had some value in the “What we’re talking about is young people who are adaptable, creative, curious – world and that I mattered. they have the right attitude and the right “I felt that someone had given me a break, mindset.” and I continue to feel that this sort of ‘We can’t do it alone’ opportunity is a massive game-changer for At present, Young Enterprise is supported people.” by 6,000 volunteers and 3,500 businesses, ‘Bringing influencers into the classroom’ and operates in around 40% of secondary Young Enterprise’s contemporary activities schools in England and Wales. are varied and evolving. However, it has clear ambitions to extend Its Company Programme gives students that reach. A new three-year strategy – real-life experience of setting up and called No Time Like The Future – is aiming running a company, and its Tenner high. Challenge encourages them to be creative “We want to deliver a million learning and resourceful in growing their cash. opportunities for young people to get that opportunity to build a bright future,” says Private sector support is available, as is Davies. “To do that we will need to mobilise backing and resources for teachers, while 40,000 volunteers, teachers and alumni, there is also a wide range of digital assets and we will need to secure an investment available to ensure its reach is not limited of £16m. by geography. “We try to work with the school to establish what it is they are looking for,” says Davies.
"WE WANT TO DELIVER A MILLION LEARNING OPPORTUNITIES FOR YOUNG PEOPLE TO GET THAT OPPORTUNITY TO BUILD A BRIGHT FUTURE"
corporates we work with, so the skills those young people are developing are real-world applicable.
In essence, it’s all about equipping young people with the tools and knowhow to thrive in the real world. Davies continues: “One of the biggest things is making sure we work very closely with our employment partners, the
“No Time Like The Future is really a positive opportunity for us to galvanise the country at a time when we are leaving the EU. “The potential we have got is to really develop a homegrown entrepreneurial pipeline of young people that are able to develop critical skills – adaptability, curiosity, creativity. “You can only do that if you invest in young people now. We can’t do that alone, we absolutely want the support of businesses, that’s key, and I would love to talk to any businesses that are interested in working with us to do that. “You’d get the opportunity to build the profile of your business, to professionally develop your staff, and you could have a direct impact on supporting young people to build a better future in your community.” 31
GROWTH
EXPORT
Why was 2019 a record breaking year for UK exports?
A
ccording to new figures published by the Office for National Statistics (ONS), last year was a recordbreaking year for UK exports. Up until the end of December, the UK has experienced 45 consecutive months of annual export growth on a rolling annual basis.
UK companies exported £689bn worth of goods and services across the globe in 2019 – up by 5.0% on 2018. Some of the UK’s fastest-growing goods exports include cereals, which were worth £2.5bn, up by 16.6%; fish and shellfish, which were worth £2.1bn, up by 13.1%; and meat and meat preparations, which were worth £2.1bn, up by 12.4%. Secretary of State for International Trade, Liz Truss, said: "The UK is an exporting superpower and these new statistics show UK companies are exporting record levels of goods and services. As a newlyindependent trading nation, we will strike new trade deals with key partners across the world, open up new markets and make it even easier for our businesses to meet global demand." Goods exports to non-EU countries grew by 13.6% in the lead-up to Brexit. The value of British goods sold to countries outside of the EU increased throughout 2019, according to Lloyds Bank Commercial Bank. The increase helped offset the falling value of UK exports to the continent. While analysis of the latest trade figures from HMRC revealed the EU is still the UK’s single largest trading partner, the value of British goods exported to the continent fell from £173.3bn in the year ending Q1 2019 to £168.5bn in the year ending Q3 2019, 32
according to the Lloyds Bank International Trade Index. Prior to this, the value of UK goods exported to the EU had grown consistently since 2016. The index, compiled in partnership with IHS Markit, showed the UK sold £177.1bn of goods to markets outside the EU in the year ending Q3 2019, up from £170.9bn in the year ending Q1 2019. Accounting for the trend, the report shows over the past three years, UK exports to Asia and the USA have grown at a compounded rate of 11.3% and 7.7% respectively, while new exports orders to the EU grew by just 6.9% per year. The value of British exports to the UK’s top ten markets in Asia grew over the same three-year period. Whisky and spirits exports grew rapidly, with sales to Vietnam and India increasing by 204% and 73% respectively. The Lloyds Bank International Trade Index also found economic contraction in Europe contrasted with the performance of countries outside the EU in the final quarter of 2019, highlighting further opportunities for UK exporters in far-away markets in 2020. Gwynne Master, Managing Director and Global Head of Trade for Lloyds Bank Global Transaction Banking, said: “It’s encouraging to see that UK exporters aren’t limiting
themselves to markets close to home. The fluctuating economic environment could prompt more businesses to take advantage of a diverse range of overseas markets, which in turn will hopefully enable increased sales and revenue for UK exporters. “Last year, tension between the world’s biggest economies undoubtably had an impact on global trade. Productive talks and a new deal between China and the US signed last month could represent the start of this tension dissipating, creating further opportunities for UK exporters.” According to IHS Markit PMI (economic indicators derived from monthly surveys of private sector companies) data, the economies of Germany and the Netherlands – two of the top five destinations for UK exports – softened for the first time in more than six years. Germany’s PMI for Q4 2019 was 49.7, down from 50.3 in Q3, while the Netherlands saw an index of 48.5 in Q4. Weaker economic conditions were also recorded in Italy, Austria, Poland and the Czech Republic (49.8, 46.8, 45.9, 44.8). A reading of above 50 indicates growth, while one below 50 signifies a decrease. Meanwhile, economic growth was measured in the USA (51.9) and China (52.6), and across Asia (51.1) between October and December.
March - April 2020
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REPORT
HOW TO LAUNCH YOUR BUSINESS IN
appr
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or our latest business trip feature, where we look at the UK’s most interesting export markets, Business Leader Magazine gives you an in-depth guide into everything you need to know about doing business in Japan.
The Land of the Rising Sun has for decades been one of the world’s leading economies and is currently third on that list, with only China and America boasting a larger GDP. In the past year, Britain has become a more prominent trade partner and a recent report by the Office for National Statistics (ONS) revealed an increase in trade with Japan, rising by 7.6%, from £13.8bn (2018) to £14.8bn (2019). Japan is already the UK’s 11th largest trading partner and one of the world’s fastest-growing markets. The government has made it public that one of its main goals post-Brexit is to strike a new Free Trade Agreement, which would solidify and expand the nations' business relationship. So, with a strong trade history and a public commitment to build on the partnership between the nations – is now the time to expand your company’s operation into Japan? 34
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The Britain-Japan relationship British businesses are currently benefitting from record levels of trade with Japan, with exports continually rising over the past three years. One of the thousands of companies that have found success in Japan is Londonbased Shadow Robot Company. The firm is Britain’s longest-running robot company and winners of the Queen's Award 2019 for Innovation. The company produces the world’s finest anthropomorphic dexterous robotic hands, which have been used as a testing tool for artificial intelligence and machine learning, as well as in research and development at Tokyo and Akita universities. Shadow Robot is currently participating in a development project with a Japanese corporation that has already brought in £500,000 and is expected to do the same over the next six months. Rich Walker, Managing Director of the Shadow Robot Company, said: “Japan is a key target market for us. There is a solid business culture and the country has a great respect for investing in exciting and cutting-edge technology, such as that used in our products. We have found the nation takes a very long-term view of business and it is refreshing to see how Japan is open to exporting innovation and expertise from abroad.
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“The business relationship between the UK and Japan is certainly strengthening, as both are leaders in the field of innovation and both recognise the importance of cooperation in providing innovative solutions to global problems. It’s a model of continuous development and needs ongoing commitment from both parties.” But it isn’t just recent opportunities that have made Japan a commercially viable nation to export to. Greg McDonald, Managing Director for Japan at TMF Group, comments: “The UK and Japan share a centuries-long business relationship that is supported by a strong political relationship. This has formed an excellent base for increased cooperation in recent years. "Both island nations, despite being relatively short on natural resources, have been able to propel themselves by creating economies based on knowledge and technology.” Why should you start working in Japan? Both nations have made it clear they are carrying on and developing their business relationship into the future. With political partners on both sides publicly promoting a bright future for trade, now is the time to break through the Brexit blues and set up a business function in the Far East. McDonald comments: “Japan is a mature March - April 2020
INTERNATIONAL TRADE
Rich Walker Shadow Robot Company
and stable economy with a strong rule of law. It is still the third largest economy in the world and there remains plenty of opportunities for this reason. It also has a high level of technology, a well-educated workforce and strong infrastructure to support business. "The government is also focused on improving the country as a destination for regional headquarters and hubs.”
"BOTH ISLAND NATIONS, DESPITE BEING RELATIVELY SHORT ON NATURAL RESOURCES, HAVE BEEN ABLE TO PROPEL THEMSELVES BY CREATING ECONOMIES BASED ON KNOWLEDGE AND TECHNOLOGY.” Greg McDonald
Business Leader - Inspire • Inform • Connect
Greg McDonald TMF Group
However, due to Japan’s position as one of the world’s top economies, British companies looking to navigate a way through the challenges can achieve incredible success.
country rather than approaching it alone.
Walker comments: “Companies looking to have operations in Japan can expect an exciting defining moment for their business, seeing as Japan is an innovation powerhouse. Japan is the world’s thirdlargest economy and, in the last year alone, trade between the UK and Japan was worth £29.5bn.
What sectors are most prevalent in Japan? Clearly tech is one of the most prominent sectors that comes to mind when thinking of Japan, but there are many other areas of Japanese business which could be fruitful for British companies looking to expand overseas.
“Overall, the nation takes a very long-term view of business and it is refreshing to see how Japan is open to exporting innovation and expertise from abroad.”
“Having said that, expect to market your product differently, geared towards Japanese customers considering the language and cultural differences. "It might be worth approaching this market through a sound collaboration with a company that is well established in the
Cont. 35
REPORT
INTERNATIONAL TRADE
According to Export to Japan and TMF Group, after technology, UK companies which have achieved the most success in Japan come from automotive, energy, manufacturing, aerospace, scientific, financial/professional services, media, retail, healthcare and food & drink sectors. Latest figures from ONS show Atlantic salmon exports to Japan were 1,060 tonnes, worth £8.7m in the 12 months to October 2019; an annual increase of over 71.8%. One business taking advantage of growing demand is The Scottish Salmon Company. The Edinburgh-based firm has recently secured a deal to supply Japanese sushi chain Genki Sushi with its brand, Tartan Salmon. Su Cox, Communications and New Business Development Director for The Scottish Salmon Company, said: "Japan and the Far East is a key market and demand for our salmon has helped drive a 25% increase in our exports to the region over the past year. We expect this to increase as more consumers discover this fine Scottish product and experience the "JAPAN AND THE great taste and provenance FAR EAST IS A KEY of our quality Tartan Salmon. Our recent success with MARKET AND DEMAND Genki Sushi is testament to FOR OUR SALMON this. We take great pride in our Scottish heritage, and this HAS HELPED DRIVE A 25% INCREASE IN is demonstrated through our commitment to bringing the OUR EXPORTS TO THE finest quality Scottish salmon REGION OVER THE to worldwide markets."
PAST YEAR.”
However, electronics and technology are still the main export opportunities for British businesses looking at expanding into Japan. What are the main challenges of working in Japan? Regardless of the success in its prominent sectors, Japan is in the midst of several economic and employment difficulties. McDonald comments: “Japan has a rapidly-aging society with a very high unemployment rate, which can make hiring a challenge, especially staff with strong English skills. There also exists several regulatory and licensing requirements, depending on the industry, that many companies may not face in their own jurisdictions. 36
Su Cox
Su Cox Scottish Salmon Company
"These headaches can be varied and complex – but are not insurmountable, so long as local expertise can be procured. For example, many legal and banking processes still rely on traditional methods such as seals, original certificates and hard copies of notarised documents, which adds to the administrative burden. An unwary foreign firm can find adaptation to these processes extremely difficult.”
Walker continues: “One of the main challenges for companies looking at doing business in Japan is that competition can be fierce, especially if your market is reasonably well served by other local providers. There are language, business and cultural challenges too but luckily for Shadow, we had support from our Japanese distributor, Nihon Binary, and the Department of International Trade (DIT) through various language, culture and distance barriers.” What does the future hold? Despite the positive business relationship and a commitment to strengthen trade
Dr Kerstin Braun Stenn Group
ties between the nations, there are many different challenges for British companies looking at expanding their operations into Japan. Following the news that Japan's economy shrunk at a 6.3% annual rate, and with the potential of the coronavirus to impact the prospect of a global economy, Dr Kerstin Braun, President of Stenn Group, comments: "The news that Japan's economy shrank by 6.3% in the last year is a worrying sign if you are looking for an indicator of the health of the global economy. Japan boasts the third largest economy in the world, so if it contracts again in the next quarter, they will be staring down the barrel of a recession. “Given the impact the coronavirus has had on the global economy, it is hard to see this being avoided. Already we are seeing Japanese supply chains being hamstrung across the automotive sector. "The Chinese are also a major driver of the global tourism market, contributing to 15% of global spend on tourism. Coronavirus has already led to clear evidence that the Chinese will be travelling less, and this will have a clear impact on the global economy in the months ahead."
March - April 2020
FEATURE PRODUCTIVITY
PRODUCTIVITY CRISIS IS THE UK’S ‘LOST DECADE’ AT AN END?
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n ‘unprecedented’ slowdown in UK productivity has stifled ambition and growth – and tackling the issue must be a priority for both industry and government, according to business leaders.
It’s been more than ten years since the global financial crash, but its effects are still being felt – not least, in the UK’s stagnant levels of productivity. "It has taken the UK a decade to deliver 2% growth, which historically was achieved in a single year,” says Richard Heys, Deputy Chief Economist at the Office for National Statistics (ONS). Experts say the slowdown has had an ‘unprecedented’ impact on the nation’s output – but is there any solution in sight for the UK’s ‘productivity puzzle’? What’s the problem? It’s difficult to overstate the importance of Business Leader - Inspire • Inform • Connect
productivity for a company, a sector, or even a nation. It’s a line oft-quoted, but Nobel Prizewinning economist Paul Krugman once said: “Productivity isn't everything, but in the long run it is almost everything. A country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.” Yet that is a challenge which has been firmly beyond the UK over the past decade. ONS data reveals labour productivity has been lower over the past ten years than at any time in the 20th century – but in truth, the UK’s ‘lost decade’ compares unfavourably with other eras from even beyond that timeframe. Nicholas Crafts, of the University of Sussex, and Terence Mills of Loughborough University, are two of the country’s leading economic historians, and their joint research reveals the current downtown is actually the worst the country has ever faced.
Their analysis compares today’s picture with past economic slumps, and reveals not only how much has been lost, but also casts light on the underlying reasons. They said: “We find the current productivity slowdown has resulted in productivity being 19.7% below the pre-2008 trend path in 2018.
"JUST ABOUT THE ONLY WAY TO IMPROVE THE UK’S STANDARD OF LIVING AND THEREBY CREATE THE KIND OF SOCIETY TO WHICH WE ALL ASPIRE IS BY RAISING THE LEVEL OF OUTPUT PER WORKER. THAT’S WHY WE MUST STRAIN EVERY SINEW TO INCREASE BRITISH PRODUCTIVITY.” Sir Richard Lambert, Chairman, British Museum
Cont. 37
FEATURE “This is nearly double the previous worst productivity shortfall ten years after the start of a downturn. “On this criterion the slowdown is unprecedented in the last 250 years. We conjecture that this reflects a combination of adverse circumstances, namely, a financial crisis, a weakening impact of ICT and impending Brexit.” With increased clarity on the Brexit issue, at least, there could be some encouragement looking forward. Most recent quarterly productivity scores show 0.3% growth – recovering the -0.2% and -0.1% losses of the previous two quarters. But Heys said: “UK productivity has moved very little over the past 18 months, with quarterly fluctuations broadly cancelling each other out. “Over the longer term, growth in productivity remains much slower than before the economic downturn of 20082009.” What’s needed? Where to start? Courage, impetus and investment from both public and private sectors will all be needed to inject fresh momentum – but none of this comes easy. However, the reward for remedying this issue is huge, according to Alex Tuckett, Senior Economist at global accountancy firm PricewaterhouseCoopers. He said: “Evidence suggests this productivity shortfall is due to low levels of investment and R&D spending and a longer tail of companies and workers with relatively low productivity and skills.
“The economic prize would be significant if the UK were to close the per-worker gap to German levels, for example. This could see the UK economy grow £180bn per year larger – £5,800 for each worker in the UK.” PwC Partner Phillippa O’Connor says this requires action from all levels of business. She said: “We believe leadership and management practices play a central role in unlocking this puzzle. But equally important is the impact of the individual; their engagement, wellbeing, digital literacy, and their interaction with the workplace environment. “Combined, these enable individuals to be their most productive self. “Even simple changes can make a material impact. It’s not an easy task, but business has much to gain from getting it right.” Government influence While businesses can certainly shape their own destiny, momentum to positively impact productivity on a national level arguably begins with government – a view shared by many within the business community.
Suren Thiru, Head of Economics at British Chambers of Commerce, acknowledges productivity problems run deep, but says the government must accept responsibility for finding solutions. He said: “Tackling the UK’s low productivity growth means addressing the deep-rooted problems in our economy. “Critical skills shortages, underinvestment in our infrastructure and a challenging domestic business environment continue to hold back growth. “Alongside clarity on the future trading relationship with the EU and partners across the world, the government has an important opportunity to improve the business environment here at home.” The imminent Budget – the first by Boris Johnson’s government since the December election – will be vital, says Thiru. He continued: “The Budget should include a moratorium on new upfront costs and initiate a long-awaited review of the broken business rates system to help companies manage their cashflow and invest in growing their businesses and the wider economy. Extending the current £1m Annual Investment Allowance for a further two years would give firms the confidence to push ahead with investments and boost productivity. “Investment in infrastructure should also continue apace. The commitment to get on with HS2 is welcome, and we now look forward to seeing it delivered in its entirety alongside other key regional rail projects to connect businesses with customers, supply chains and labour markets.”
“The UK has the third lowest investment rate in the entire OECD and low R&D spending – at just 1.7% of GDP it is below the EU average of 2.1%, behind France and Germany and barely half the level of Sweden.
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March - April 2020
PRODUCTIVITY Tej Parikh, Chief Economist at the Institute of Directors, agrees. He said: “Productivity growth remains a weak point. The UK economy ended 2019 in a funk, and despite a recent rise in optimism, businesses will be looking for a significant boost from the Chancellor. “Firms entered 2020 with more of a spring in their step. Confidence has shot up, while hiring plans and investment intentions have also risen a notch, but the post-election bounce may tail off. “Uncertainty from the next stage of Brexit negotiations will increasingly play on the minds of business leaders. Meanwhile, ongoing hiccups in global growth, including the fallout from coronavirus, could eat into the economy if global financial markets and trade slow. “This makes the Budget a crucial moment to get the economy moving. The Chancellor must clear the way for entrepreneurs to create jobs and drive up productivity, by unleashing investment in start-ups, slashing business rates, and revamping our skills system. “The Budget must focus on providing business investment incentives and boosting skills across the country if productivity is to pick up any time soon.” Mike Cherry, National Chairman of the Federation of Small Businesses, says the Budget is an opportunity to deliver long-overdue clarity and support for UK business. He said: “Small firms have been desperate for certainty for years and will look to the upcoming Budget as an opportunity to help them grow and succeed. “After years in the doldrums, the new Chancellor must illustrate his support for the small businesses that form the backbone of the British economy. “It’s vital that the cost of doing business, specifically when it comes to business rates, protecting incentives to grow, and accelerating the delivery of key infrastructure commitments, are delivered sooner rather than later.” Business Leader - Inspire • Inform • Connect
And it is that delivery of infrastructure which is viewed as key to ensuring any upturn in productivity impacts nationally, instead of being concentrated in certain regions. Parikh said: “The chasm in productivity across the UK’s regions and nations is holding back our economy. “The Prime Minister has talked about ‘levelling up’ the regions. Longoverdue upgrades to broadband, rail and roads will be crucial, but the government also needs to create the conditions for companies to take risks and innovate today to raise our game on productivity and sustainability. Boosting investment in new and growing firms is key, as is ensuring they have the skills they need to thrive. “Without significant investment outside London and the South East, the rest of the country will continue to lag behind, eating into the UK’s overall potential. “More funding should go toward developing our regional skills systems, and enhancing the role our world-class universities play in local economies can be starting point. Upgrading local road and rail links and our digital infrastructure must be a priority, alongside enhancing connections between our towns and cities. “(But) the benefits of big-ticket infrastructure improvements, although crucial, won’t be felt immediately. We need greater regional investment incentives for new and growing firms to help catalyse innovation and jobs growth in the here and now.” What next? “Lingering uncertainty and domestic cost pressures are likely to limit longerterm investments in new machinery or technology,” warns Thiru. “With business investment expected to remain weak, UK productivity is set to remain sluggish over the near term.” And that view is broadly shared by the Bank
of England’s Monetary Policy Committee (MPC), which is predicting growth at last – albeit on a moderate scale, while Brexit details are still to be finalised. It predicts a 0.75% growth for the coming year, rising to 1% by 2021 – an encouraging step in the right direction, though still well short of the 2.25% experienced pre-crisis. The committee said: “The MPC judges that productivity growth will pick up a little over the forecast period, but will remain well below its pre-crisis pace. That limits the rate at which the economy can grow without putting upward pressure on inflation. “The MPC’s projection of subdued productivity growth reflects a continuation of the post-crisis trend, recent weakness in business investment and the reduction in openness that occurs as the UK economy adjusts to its new trading arrangements with the EU.” 39
PROPERTY FEATURE
HOW HAVE MIXED-USE DEVELOPMENTS CHANGED UK CITIES?
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ixed-use developments are becoming prominent and increasingly iconic parts of cities across the UK – but how are they different? Are they having a positive impact and what does the future hold for them? Business Leader investigates.
Wapping Wharf - Bristol Wood Wharf - London
With ongoing issues affecting the high street, affordable housing and the environment – could mixed-use developments provide solutions to these challenges? In the UK, these developments are creating ‘destinations’, improving the local economy and repurposing abandoned or disused areas into urban, multi-purpose districts. What are mixed-use developments? The idea can be summarised as destinations predominantly found outside city centres, where retail, working and housing environments are all set within the same development. However, an increasing number of these are regenerating city centres too. With the hyper-competitive clamour for premium development spaces across the country, mixed-use has been hailed as the perfect alternative to purely retail or housing developments – and with the ongoing difficulties each industry is facing, this type of development can create an ecosystem where retail, working spaces and housing can support each other.
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As demand grows for space in cities across the UK, local government, developers and retailers are working together to create the future of urban developments. The residential aspect of mixed-use developments is the main value driver. By getting the right mix of retail, restaurants and repurposed land, the value of properties can be drastically increased. When compared to traditional city centres and high streets, where retail-heavy areas are going through major challenges, a mixed-use development provides an experiential environment for people to live, work and be entertained. Stuart Hatton is the Managing Director of Umberslade, the developer behind Bristol’s Wapping Wharf, a mixed-use regeneration scheme that has transformed the harbourside area in the city. He said: “Residentially-led mixed-use development is all about creating places people want to be. At Wapping Wharf, it’s been integral to our approach in creating this thriving new neighbourhood of homes, shops, eateries and other businesses. In the early stages, I sat down and thought: If I lived here, what would I want on my doorstep?” Many developers have also turned mixeduse into a way of not only getting planning permission for larger or higher quality homes – but also a way to increase the value of them and the surrounding area. What benefits do they provide? It is the experiential factor that has really led to the explosion of developments across the UK – as the modern retail consumer demands more from their shopping experience.
"RESIDENTIALLY-LED MIXED-USE DEVELOPMENT IS ALL ABOUT CREATING PLACES PEOPLE WANT TO BE. AT WAPPING WHARF, IT’S BEEN INTEGRAL TO OUR APPROACH IN CREATING THIS THRIVING NEW NEIGHBOURHOOD OF HOMES, SHOPS, EATERIES AND OTHER BUSINESSES." Stuart Hatton
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In any business, if you are not providing the market with what it wants then you won’t last long. This can be seen happening on many high streets, where retail premises that are not fit for purpose are either vacant or are being repurposed for uses other than retail such as offices and residential.
can strengthen the overall economies and health of town centres. Town centres with strong economies, services and activities can be attractive for multiple generations and more appealing for people to live, work and spend their leisure time within central locations.
People still like shopping, but rather than simply making a purchase, they want to have an overall shopping experience that is enjoyable and engaging from start to finish. Therefore, a welcoming retail environment is essential.
“In order to have a future place in the shopping hierarchy, many traditional retail destinations will need to become multipurpose destinations that combine retail, leisure and eating out into their tenant lineups in order to attract additional customers and achieve sustainable economic growth. These trends confirm that diversification and the attraction of a mix of uses (in addition to retail) are necessary if traditional town centres are to achieve a viable and sustainable future.”
Nick Turk, Director in the Retail Agency Out-of-Town team at Colliers International, comments: “People don’t want a shopping trip that begins with having to pay to park somewhere that feels overpriced, dingy and threatening. They want to be able to shop in a place where they can also have a decent coffee and good food, or take the kids to a soft play, or have aspirational experiences such as sampling perfumes in a stylish cosmetics area. “Mixed-use is repurposing retail for the modern market, and is offering a more experiential way of shopping that appeals to today’s consumer. Mixed-use meets the desire of modern shoppers to go beyond the transactional to the experiential.” However, the benefits are not just limited to the desires of the experiential shopper. Chris Pickup, Associate Director at national planning and development consultancy Turley, comments: “The benefits of encouraging the diversification of uses in town centres is that they can help to bring residential uses back into centres, provide development land in sustainable and accessible locations particularly around transport hubs, they can be multi-generational and healthy places to live and can also be the focal point for public and private sector investment. “Mixed-use centres benefit from increased footfall and expenditure, which create consumer markets for retail, services, food and beverage and leisure activities which
And the positive environmental impact of mixed-use has created a strong desire from developers and local government to make these destinations more commonplace in the UK. Yuli Cadney-Toh, Architect Director at international architectural firm BDP, comments: “Mixed-use also has the potential to drastically reduce our reliance on transport, because you can live, work, learn, shop and enjoy your leisure time all within your neighbourhood or within walking or cycling distance. In simplest terms, mixed-use gives agency back to people – they can have far greater influence over purpose of urban space, which in turn is opening up new design possibilities and ultimately will transform the look and feel of our towns and country.” Impact on retail It is clear that mixed-use developments are filling a gap left in the wake of the current housing and high street struggles. However they are also providing solutions to some of the UK’s wider societal issues. Turk comments: “Mixed-use is solving many issues because there is too much retail space in the UK – especially in high streets and shopping centres. In order to attract shoppers it is vital to move beyond purely retail space and instead create desirable destinations which have attractions other than just retail. Cont. 41
FEATURE
“Mixed-use centres will provide some solutions to these problems. Some properties are simply not suitable but can be re-purposed to other uses. This is especially true of retail warehouses which – despite being the most resilient retail sector given their ability to work well with online shopping and free parking etc – can be attractive for residential and last-mile delivery uses because they are well located and easy to repurpose.” Once, a trip to the city centre was all about shopping, but as e-commerce continues to grow and retailers reassess their use of space, city centres are offering a more diverse mix of amenities that better cater for modern urban lifestyles.
"MIXED-USE IS REPURPOSING RETAIL FOR THE MODERN MARKET, AND IS OFFERING A MORE EXPERIENTIAL WAY OF SHOPPING THAT APPEALS TO TODAY’S CONSUMER." Nick Turk
In the past few years, many British retail institutions have gone out of business – with plenty more in deep financial troubles. However, this has opened the door for fresh offerings from local and smaller businesses. Rebirth of the high street This rejuvenation of city centres and disused areas has had the knock-on affect of giving a new lease of life to the high street. Also, with retail habits evolving and the influence of millennials wanting destinations to live, work and be entertained – the future looks a lot brighter. Also, as smart city applications become increasingly desired it will become easier to analyse and implement technologies to make our immediate environment more appealing to residents and increase footfall to the area. Mixed-use developments are under construction across all major cities throughout the UK – and are already complementing the current developments open to the public – meaning many regions have seen a rebirth. However, more needs to be done.
Pickup comments: “The state of the existing retail market stresses the importance of being able to find new ways of retailing and alternative land uses to be developed within town centres to keep them vital and viable destinations. Planning policy can move at a slow pace and often takes a while to react to changing market conditions. Some councils have policies in place which prevent the loss of A1 retail floorspace and restrict alternative mixed-uses from being the focus within town centres – this needs to change in order for centres to adapt to what is happening in the market. “In order to attract more shoppers and generate additional footfall, it has become necessary for operators and owners of town centre assets to provide a more interesting and varied experience so that consumers can enjoy a full day out or a shopping trip extended by leisure and dining. "Increasingly, it has become necessary to incorporate broader leisure facilities to act as additional attractions and backfill space left vacant by failed retailers. This has led to a growth in facilities such as cinemas, bowling alleys, trampoline centres, mini-golf and 24-hour gyms, and other varied leisure activities within town centre locations, which previously would have been occupied solely by traditional retail operators.” Refashioning areas of independent retail or housing to city neighbourhoods will transform housing, leisure and working environments for the better – as it meets the needs for the modern person living in a city.
"MIXED-USE DEMAND HAS COME OUT OF THE PEOPLE EXERCISING GREATER AGENCY TO INFLUENCE, BUT THIS IS A CHALLENGE FOR THE INDUSTRY TO DELIVER, WHICH IS WHERE TECHNOLOGY COMES IN." Yuli Cadney-Toh
Circle Square - Manchester
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MIXED-USE DEVELOPMENT
Simon Peacock, Lead Director at real estate advisors JLL in the South West, comments: "The location of old department stores and large shops are often ideal for other uses such as much-needed homes, offices, hotels, restaurants, cafes or bars. "Our city and town centres need to become places for people to live, work, shop, eat and relax, adding diversity and bringing people in. A mixed-use approach is the direction of travel, signifying the end of an era where urban areas were zoned according to use.” What does the future hold? In the future, town centres will be tech-rich destinations for mixed-use purposes, that reinvent transport and retail hubs.
MIXED-USE DEVELOPMENTS AROUND THE COUNTRY
woodwharf.com Having already created one of the largest business districts in Europe, Canary Wharf Group is continuing to evolve London’s former docks site by redeveloping a 23-acre site into five million sq ft of mixed-use space. A sense of community, education and culture are at the heart of these plans, which include two million sq ft dedicated to fast-growth businesses. Wood Wharf will attract a larger number of tech jobs than the entire city of Cambridge.
By delivering an ‘experience’ rather than having these diverse components acting alone – as well as new creative uses for mis-used spaces – cities can flourish in a modern world. Cadney-Toh comments: “The problem-solving potential of mixed-use is actually much wider than the property and retail industry – helping cities and towns to transform, in everything from more homes, to community building, to placemaking and meaning for the new high street, and addressing climate change by multiuse of buildings to reducing our reliance on cars. “Mixed-use demand has come out of the people exercising greater agency to influence, but this is a challenge for the industry to deliver, which is where technology comes in. We are in a period of generational transition. Societies and cities that embrace this flexible, dynamic-based model will have the edge over those that are slower to change.”
wappingwharf.co.uk Based on the harbourside in the city centre, Wapping Wharf is built on a former shipyard and dry dock. However, in 2003, Umberslade purchased it and kicked off the revitalisation of the entire area of the city. Home to its famous eateries and independent retailers – built in old shipping containers – as well as luxury retail and office space, this area has become a new focal point for Bristol.
Pickup concludes: “If you invest in mixeduse town centre development, councils and developers are going to get more benefits than the initial investment in terms of spin-off benefits generated for local businesses and town centres as a whole. “The model quantifies additional expenditure generated by occupants, visitors and workers of mixed uses, including residential development, hotels, office and retail and leisure floorspace and calculates positive economic impacts. The outputs include jobs, wages, locally-available expenditure and discretionary spend to support existing or new town centre businesses.”
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circlesquaremanchester.com Circle Square is a new neighbourhood that will stand in the place of the former BBC site at the heart of Manchester. It will be delivered in three phases, with nearly two thirds in place by the end of 2020, including over 1,000 new homes, 400,000 sq ft offices, multi-storey car park, hotel, shops, restaurants, bars and more.
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LEADERSHIP
CEO IN FOCUS:
JUDITH TOTTEN Judith Totten launched Upstream Working Capital in 2011, and has enjoyed strong growth since then, expanding operations from Northern Ireland to support businesses across the UK with loans of up to £2.5m. BLM talked to Judith about her journey from ‘taking a punt’ in the early days, to her passion for supporting business – and why she’s learned she’s ‘a bit of a rottweiler’ at times…
CAN YOU TELL US ABOUT UPSTREAM WORKING CAPITAL? I started the business after a career in banking in about 2011, with nothing. I had no cash, no customers, no staff, but I knew there was an opportunity because the banking crisis was at its height and I realised a lot of SME companies were going to struggle for working capital. So I went out and raised some money from friends, family and fools, as they call it, and I remortgaged the house and frankly took a punt. Today we have over 100 clients, we 44
have over £100m out the door, and I have 12 full-time staff. WAS THERE A ‘LIGHTBULB’ MOMENT WHICH CONVINCED YOU TO LEAVE MAINSTREAM EMPLOYMENT? I guess not a lightbulb moment, it was more a big birthday! Turning 40 made me realise that if I didn’t try something different – maybe I never would. I was also seeing a looming bank crisis impacting my ability to help customers do what they wanted and required in order to progress – I know I would have struggled with that.
HOW BIG WERE YOUR AMBITIONS AT THAT TIME? Honestly, I had no concept of what I was going to do, what I wanted to achieve and even whether I could actually do it. I just felt instinctively that I could do things differently and make some small difference to business owners. HOW HARD WAS IT TO GET OTHERS TO BUY INTO YOUR VISION? Once they got over the initial surprise of me leaving a secure job in the bank, I got nothing but support and help from everyone March - April 2020
CEO IN FOCUS
"DON’T BE AFRAID OF FAILURE; IF YOU’VE GOT THE FIRE IN YOUR BELLY AND YOU’VE GOT A DREAM, FOLLOW IT, DO IT – AND IF IT DOESN’T WORK, DO IT AGAIN."
had good, solid trading businesses but had hit some stormy waters – I listened and felt they needed a chance to rebuild and regroup. So, I’m not sure it was as much confidence, it was more faith in the business population that they would show their customary resilience and make it out the other side. I wanted to help them do that – and also by this time I had a wonderful team of amazing people around me, who had all left secure roles to be with me, so I just get the head down and work hard. Simple really. WHAT HAS THIS TAUGHT YOU ABOUT YOURSELF? The journey for me was transformational. In my banking days, I would have been an individual who, if they had asked me to change desks, I would have to think about it for a few months. When you become selfemployed and you start to run a business and start to employ people and make decisions, you realise that actually you can do it. I think the one thing I learned about myself was that I’m a bit of a rottweiler in some respects; when I see something and I have a dream, I’ll go for it, and while it’s a windy road sometimes to get you to that end point, you’ve just got to be tenacious and learn not to take no for an answer.
I asked. The hardest part was finding a funder to back me on day one. Eventually after presenting to many potential providers – some of whom I had never even heard of in those days – the last one said yes! And it only takes one, after all. WHAT WAS IT THAT GAVE YOU SUCH CONFIDENCE YOU WOULD ULTIMATELY SUCCEED? The market I started in was challenged and constrained as a direct result of the banking crisis, and the customers approaching me needed my help. Many business owners Business Leader - Inspire • Inform • Connect
HOW HAVE YOU FOUND IT AS A FEMALE CEO IN A TRADITIONALLY MALEDOMINATED SECTOR – AND WHAT ADVICE WOULD YOU OFFER TO OTHER WOMEN LOOKING TO BREAK THROUGH IN FINANCE? I’ve never really suffered any prejudice and having always worked in predominantly male teams, I can ‘hold my own’ as the saying goes. Sometimes it can be daunting to be the only female in a room of ‘suits’, but ultimately, I respect honesty, integrity and professional behaviours regardless of gender or anything else and that is mostly reciprocated. I would say to a woman starting out on an entrepreneurial journey: Do it. Go for it. Don’t be afraid. When you’re starting out there are lots and lots of people who will give you advice, and there will be doubters
and people who will say to stay where you are, don’t change. But don’t be afraid of failure; if you’ve got the fire in your belly and you’ve got a dream, follow it, do it – and if it doesn’t work, do it again. CAN YOU GIVE EXAMPLES OF BUSINESSES YOU’VE BEEN ABLE TO HELP WHICH HAVE GIVEN YOU PARTICULAR PRIDE OR SATISFACTION? I can’t name names of course, but certainly many of the clients who came to us in the early days are still here, and often they will say ‘if it wasn’t for you guys, we wouldn’t be here today’. The businesses who have come to us as new starts or restructures, and who then flourish, fly and succeed are the most rewarding. But if I were to pick one standout example, I have one guy, a man in his late 60s who came to me in great distress. He had a successful business which had got into some difficulties through the property collapse, and his home bank was refusing to support him through a restructure. He had been in business for 40 years, had great pride and integrity and he was broken. This poor man cried in a coffee shop as he told me his story and no-one should ever feel that way – he was worried for his staff and his family and at no point did he ever bemoan his own fate, which really struck a chord with me. Long story short? I took on his business, restructured his debt and six years later, he is back and exceeding his previous successes. He is one of my strongest advocates in the marketplace and he and I are firm friends. It really wasn’t that hard to listen, care and take action. WHAT IS YOUR AMBITION NOW? WHERE DO YOU SEE YOURSELF AND YOUR BUSINESS IN TEN YEARS’ TIME? We have recently bought out our original funders and brought in new debt and equity partners who are ambitious for us to scale across the UK and Ireland. I am excited to see what the next few years bring as we plan to diversify and widen our product and sectoral range to bring new, innovative and exciting structures across the market. Watch this space.
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HR REVIEW
IMMIGRATION LAW CHANGE
WHY ‘GETTING IT RIGHT IS CRITICAL FOR ECONOMIC GROWTH’
R
adical new rules on immigration and overseas talent recruitment are on the way – but how will they work and what are the implications for business? BLM investigates…
Government efforts to limit immigration and end the UK’s reliance on ‘cheap, low-skilled labour coming into the country’ mean new legislation is on the horizon for 2021. A points-based immigration system, akin to that of Australia, will be adopted in the wake of Brexit, with would-be workers judged
on credentials including skills, qualifications and salaries prior to UK entry being granted. Home Secretary Priti Patel described the new legislation as ‘a historic moment for the whole country’. She said: “We’re ending free movement, taking back control of our borders and delivering on the people’s priorities by introducing a new UK points-based immigration system, which will bring overall migration numbers down.
“We will attract the brightest and the best from around the globe, boosting the economy and our communities, and unleash this country’s full potential.” Initial response from business organisations suggests the move has been well-received – in most cases. However, there are some sectors which are likely to be impacted more severely, while assurances are still being sought on other key details. The new rules So, what’s changed? The new system ends free movement, and will see EU and non-EU citizens judged equally when assessing residency applications. Workers will need to meet a wide range of criteria relating to skills, qualifications and the ability to speak English, to be able to work in the UK – and must have a job offer for a role earning a minimum of £25,600 in place prior to entry. Around 70% of EU workers currently in the UK would fall short of the benchmark. Are businesses happy? Generally speaking, they seem to be – providing rules don’t restrict access to skills and labour – help is available to navigate the new laws, and implementation doesn’t prove too expensive. There are caveats, though. A Forum of Small Business survey says 59% of firms harbour concerns about being able to access workers with the skills they need postBrexit, while 95% have zero experience of navigating immigration laws and want help to do so.
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March - April 2020
IMMIGRATION
With UK productivity stagnant for a decade, and key sectors already facing a skills shortage, the government is being warned it must not place further barriers in the way of progress and growth for the nation’s businesses. Carolyn Fairbairn, Director-General of the Confederation of British Industry, said: “Getting a new immigration system right on day one will be critical for economic growth and the UK’s global reputation as it forges a new path outside the EU. “Firms recognise and accept that freedom of movement is ending, and have sought a system that is both open and controlled, valuing people’s contribution beyond their salary while retaining public confidence.” And Mike Cherry, National Chairman of the Federation of Small Business (FSB), warned business needs must be considered when implementing change. He said: “For many small businesses, a fair and flexible immigration system is just as, if not more, important than securing our trading future. “One in five small employers in the UK have at least one staff member from the EU. These firms rely on talent from outside the UK to plug current skill gaps, grow their businesses and contribute to the wider economy. From graphic design studios, to farms, to care homes, to engineering firms – tighter immigration restrictions will hurt businesses across all sectors and all skill levels. "It is critical that workers, that are vital to unleashing the UK’s growth potential, are not locked out by a system that doesn’t meet the needs of the UK’s business community.” The FSB warned that 13% of small UK firms would consider moving their business abroad and 8% may close the business if there were additional barriers to recruiting EU workers. Which sectors will suffer? While some skills are prized enough to warrant special dispensation, other sectors will find their recruitment ambitions face significant challenges. Although the reduction in the minimum salary level – from the previous benchmark of £30,000 – will open doors to some, it will still prove prohibitive to others. This is part of a deliberate government attempt to halt the influx of low-skilled Business Leader - Inspire • Inform • Connect
Mike Cherry
Jonathan Beech
workers, but will have an inevitable impact on certain types of business and employment. Fairbairn said: “Several aspects of the new system will be welcomed by business, particularly abolishing the cap on skilled visas, introducing a new post-study work visa for overseas students, and reducing the minimum salary threshold. “Nonetheless, in some sectors firms will be left wondering how they will recruit the people needed to run their businesses. With already low unemployment, firms in care, construction, hospitality, food and drink could be most affected.” Law firm Migrate UK specialises in immigration law. Its founder Jonathan Beech has worked in the sector for 20 years and has consulted on immigration for the UK Border Agency. He warns the hospitality sector in particular will suffer. Beech said: “There are certainly particular sectors that will be more winners and more losers.
Lex Butler
“On the other side, the hospitality sector will be hit hardest due to the qualifying salary threshold still remaining high at £25,600 and there being no regional variation.” Lex Butler, Chair of events and hospitality association HBAA warns the new rules will have a far-reaching impact on the sector. He said: “The government’s post Brexit immigration plans will put at risk the UK’s position as a world-class destination for business and leisure tourism.
“The industry is working hard to recruit more UK-based talent to build careers in this industry but we shall not be able to replace all the migrant workers by the time the "GETTING A NEW regulations come into place.
IMMIGRATION SYSTEM RIGHT ON DAY ONE WILL BE CRITICAL FOR ECONOMIC GROWTH AND THE UK’S GLOBAL REPUTATION AS IT FORGES A NEW PATH OUTSIDE THE EU."
“The construction industry has been given a major boost after the MAC suggested adding a list of construction jobs, including carpenters and joiners, glaziers, window fabricators and fitters to the proposed plan to lower the skill level for vacancies. This could be a major advantage to the construction sector, worried that their vacancies were being phased out as ‘lowskilled’.
“Once again, being relatively low-paid is immediately equated with low-skilled, even though in this industry many staff with high levels of responsibility and skill fall below this financial threshold.”
Social care is another sector where the impact is expected to be significant. Care roles typically pay around £16,000, and at present 17% of people working in the sector are non-British nationals.
Carolyn Fairbairn
Yet one in every 11 roles – 122,000 – in the sector is already vacant, placing the sector at crisis level.
Cont. 47
REVIEW IMMIGRATION
Ben Gershlick, Senior Economist at independent charity The Health Foundation, said: “The government’s new immigration system looks set to make our social care crisis even worse. “Migrants are a crucial part of the social care workforce. Without any specific migration route for social care workers, these proposals will make it almost impossible for people from overseas to come and work in most jobs in this sector. “Social care needs investment and reform to address the underlying causes of staff shortages. As it stands, the government’s new immigration policy will only make existing problems worse.” Global Talent visa There are some key fields which will be exempt from these new rules, however. The new Global Talent scheme – operating since late February – will ensure a fast-track route into the UK for experts in science, maths and research. The scheme does not cap the number of people coming into the UK under this initiative, nor limit the length of their stay. Patel cites the initiative as proof science, research and innovation sit at the top of the national business agenda. She said: “The UK is a world leader in science, with research and innovation that changes lives being undertaken every day in this country.
Ben Gershlick
Julia Buckingham
“To keep the UK at the forefront of innovation, we are taking decisive action to maximise the number of individuals using the Global Talent route including worldclass scientists and top researchers who can benefit from fast-tracked entry into the UK.” Professor Julia Buckingham, President of Universities UK and Vice-Chancellor of Brunel University London, describes the move as a ‘positive step’. She said: “The Global Talent visa will help to ensure that universities can attract the brightest scientists and researchers to the UK with minimal barriers. “Universities are globally connected and this announcement signals that the UK remains open to talent from around the world. “Our universities carry out life-changing research and our knowledge base, economy, and wider society will benefit from the international staff we can attract through this visa route.” Warning for government With a new system now in the pipeline, a smooth transition will be sitting at the top of most companies’ wish list. Making the rules simple, transparent and effective will be crucial, says Cherry.
Edwin Morgan
“We see the benefits of a points-based model, so long as it’s one that’s easy to use and affordable for small businesses – almost all of which have no experience of using our current immigration system. “Against a backdrop of stifling skills shortages, sluggish economic growth and an ageing population, it’s critical that we get this right, particularly as the timeframes are so short.” And Edwin Morgan, Director of Policy at the Institute of Directors, said: “The overriding concern for business is bureaucracy. The government must ensure firms aren’t faced with a Byzantine system when they need talent to grow. “Implementing a new system and adapting to it will be a race against the clock for both government and businesses.” And Fairbairn added: “Firms know that hiring from overseas and investing in the skills of their workforce and new technologies is not an ‘either or’ choice, both are needed to drive the economy forward. So careful implementation across all UK nations and regions will be required. "A regularly reviewed shortage occupations list, with promises of further flexibility, will be vital for the effectiveness of the new system. “Above all, the government must work with employers and employees – especially smaller firms – to ensure they have the time to adapt to new policies and practices.”
He said: “Ultimately, small firms want a responsive immigration system that is alive to the skills shortages – at all levels – that are holding them back. 48
March - April 2020
TAKE CONTROL OF YOUR SUPPLY CHAIN. RIGHT DOWN TO THE LAST DETAIL. Platinum Sage X3 Partner Northgate House, Bath 0122 561 4470 www.synergerp.com
Business Leader - Inspire • Inform • Connect
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FEATURE
What does the rise of the robots mean for UK jobs?
R
obots were long the realm of science fiction writers – but with Industrial Revolution 4.0 delivering incredible advancements in technology and artificial intelligence, robots are making the leap from fantasy to reality. What does this mean for human employment? Business Leader investigates. “The problem for the UK labour market and our economy is not that we have too many robots in the workplace, but that we have too few,” says a new government study analysing industrial automation.
“The risk we face is not a robot takeover of our workplaces, but that our lack of adoption and the reluctance of businesses and the government to lead the way in the Fourth Industrial Revolution means other countries will seize the initiative and take the advantage of new technologies – not least the growth and jobs they bring – while we are left behind. “If we fall further behind in productivity and the adoption of new technologies, then future investment decisions will not follow. Businesses, investment and jobs will move overseas.”
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March - April 2020
FUTURE OF WORK
This stark warning comes from the crossparty Business, Energy and Industrial Strategy (BEIS) Committee’s new report 'Automation And The Future Of Work', which makes it clear British industry needs to rise to the challenge of automation – and do it quickly.
not only reduce false diagnoses, but also mean cancer can be spotted earlier, when it is harder to detect – but potentially more treatable. And while a human bedside manner is one of the most valued elements of medical care, BRL has made real progress in this area too.
But which sectors are embracing robot technology? And what are the implications for the nation’s human workforce?
Scientists have created the world's first socially intelligent humanoid fitness coach, which offers motivational voice prompts and gestures to guide people through personalised exercise regimes. It tells jokes, shows sympathy, uses human-style body language and even changes its eye colour to express different emotions.
Why do we need robots? From robot waiters to driverless cars, robot tech is infiltrating day-to-day life at an unprecedented rate. Companies embracing automation are doing so for a variety of reasons: tasks can be too complex for humans; too mundane and repetitive for people to want them; risks could make jobs too dangerous; robotic output may far outstrip a human’s; or employers may wish to trim their wage bill. UK firm Bots.co.uk, a leading authority on robots as a service, believes safety is often the driver. However, it says many industries have seen major growth in robot application, ranging from nuclear site cleaning to cow herding, and from oil pipeline inspections to firefighting. A Bots.co.uk spokesperson said: “Robots as workers are really taking off to fill dangerous jobs people can’t find employees for. As the market develops, we see more dangerous jobs – from emergency rescue to protecting environmental sites – as being ideally suited to robots. “(But) it isn't just safety where bots are excelling, because in many ways they also offer a new level of accuracy and efficiency in completing tricky tasks.” Indeed, efficiency and intricacy are big motivators for transferring tasks from human hands to metal ones.
Dr Susan Bieller
Its experts are working with North Bristol NHS Trust (NBT) to roll out robots in hospitals; as a result, Southmead Hospital is now one of the most technologically advanced in Europe, with robots conducting cancer operations, dispensing medicines and analysing blood samples. Robotic surgeries are rated as ‘more accurate and less invasive’ than procedures by humans and reduce both blood loss and the length of hospital stays, while automated vehicles transport food, linen and medicine around the hospital 24/7. Professor Praminda CalebSolly, leading research in Assistive Robotics and Intelligent Health Technologies at BRL, said: “Robotics can enable a more effective use of the workforce, allowing humans to give the human contact and robots to be used as smart tools to support and complement their work.”
And NBT Clinical Director Tim Whittlestone added: “Robots can help us do some of the more mundane, repeatable tasks and free up staff to do what they do best – listening, thinking and caring.”
“New technological solutions pave the way for more flexibility in production.”
Google Health made headlines recently after unveiling tech which can identify breast cancer more accurately than radiologists.
Business Leader - Inspire • Inform • Connect
In December, the BBC used computers to write its general election news coverage. Machine-generated stories – in both English and Welsh – were published for every constituency, albeit they were checked by a human editor prior to going live. Respected publications such as the New York Times and Reuters use articles created by AI too, while the Press Association produces up to 30,000 stories a month in this way.
"IF WE FALL FURTHER BEHIND IN PRODUCTIVITY AND THE ADOPTION OF NEW TECHNOLOGIES, THEN FUTURE INVESTMENT DECISIONS WILL NOT FOLLOW. BUSINESSES, INVESTMENT AND JOBS WILL MOVE OVERSEAS."
“Smart robotics and automation are vital to deal with new consumer trends, demand for product variety or challenges from trade barriers,” says Dr Susanne Bieller, General Secretary of the International Federation of Robotics.
Real-world innovation Bristol Robotics Laboratory (BRL) at the University of the West of England is home to many of the nation’s robotics pioneers.
Even creative industries, where a human touch has long been rated vital, is seeing artificial intelligence (AI) emerge as a force.
The company's UK lead Dominic King said the ‘really exciting’ breakthrough would
AI writers are not restricted to formulaic or data-driven works, either – they are now producing poetry and novels too. What roles are at risk? While it’s clear some roles will be rendered obsolete, it’s not as clear-cut as pointing at specific industries or roles, as there are plenty of other factors in play.
Age, gender, location and education are all important, according to the Office for National Statistics (ONS). Jobs rated a high risk of being lost to automation are held by women in 70% of cases – which compares unfavourably with the 42% of females in roles considered low risk. Cont.
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FEATURE
FUTURE OF WORK alternative ways of performing tasks for which they have a shortage of staff – robot automation being an obvious solution.” What comes next? “The onset of new technological advances – artificial intelligence, automation and robotics – are already creating vast opportunities for new jobs,” according to the United Nations General Assembly. “Yet, those who lose their jobs as result of new technologies may be less equipped to seize new opportunities and may be added to the ranks of the long-term unemployed.
Simon Howes
Mike Wilson
Part-time roles are substantially more at risk than full-time jobs, while people aged 20-24 are most likely to be usurped by robot labour. Location is a significant barometer too. Roles in London and the South East are mostly rated low risk, but there are highconcentration pockets of ‘at risk’ roles in other regions, especially poor, former industrial areas. However, education emerges as arguably the most important differential. People with a degree look to be safest by some margin, accounting for 87% of the ‘low risk’ category – and none of the ‘high risk’ section. Altogether, the ONS says 7.4% of the 19.9 million jobs in England are in sectors at high risk of automation – a total of 1.5 million jobs. How is the UK performing? It’s fair to say the UK has significant work to do to become a genuine force in robotics – yet doing so could have an immediate and much-needed impact. The country has been in the grip of a productivity crisis for more than ten years, with manufacturing recently recording its worst quarterly performance in a decade. Simon Howes, Managing Director of the South West Manufacturing Advisory Service, says just 18% of manufacturing firms in the region have introduced robots 52
“Global dependence on technology means skills in demand today will not match the jobs of tomorrow. Skills acquisition and lifelong learning will be required for workers to remain agile and employable.”
into their business – which he believes is limiting their success. He said: “Although the UK ranks as the eighth largest industrial nation, we are 22nd in the global league of robot adoption – we must ask why that is. “Finding technological solutions is increasingly important. There is an opportunity to do more with robots: you can see this in the continuing drive to increase productivity, and the need to find new ways to operate with fewer staff.” This need to cope with smaller teams is another key reason to accelerate tech adoption, according to Mike Wilson, Chairman of the British Automation and Robot Association. He warns: “The United Kingdom has been adding robot automation at a lower rate than our main competitors in all manufacturing sectors outside of automotive.
“Over many years, the UK has attracted workers from other countries, with businesses preferring to hire people rather than invest in capital equipment. The "ALTHOUGH THE UK consequences of the Brexit RANKS AS THE EIGHTH vote and subsequent political LARGEST INDUSTRIAL developments are leading to reduced labour availability as NATION, WE ARE many workers who have come 22ND IN THE GLOBAL over from Eastern Europe are LEAGUE OF ROBOT starting to return home.
ADOPTION – WE MUST ASK WHY THAT IS."
Simon Howes
“As a result, businesses have to ensure they use their workforce effectively and find
And that is crucial, it seems. Ensuring human workers are supported rather than displaced – and advances improve quality of life for human workers, rather than leaving them redundant – must be the focus. That will require strong leadership from both public and private sectors, according to BEIS. It concludes: “Rather than massunemployment or the end of work, we are convinced well-managed automation is likely to improve the quality of work, create new jobs and boost UK productivity. “Historically, large industrial transitions have seen changes to work but, rather than causing long-term job losses, they have resulted in more of the population in work than before and the quality of work improving. “If managed well, the transition to a more automated British workplace should make businesses more productive, improve the supply of high-quality jobs and support working people to have more leisure time. “It this transition is managed badly, entire groups and regions could be left behind, British businesses could find themselves uncompetitive and SMEs will continue to form a long trail of unproductive businesses. “The government needs to take more seriously the opportunities and risks of automation. It should collaborate with all those who want to harness automation to boost productivity and living standards – and it should not delay in doing so.”
March - April 2020
5 TIPS FOR FAST GROWTH
1. Have a clear vision and share it Too often, Founders and CEOs of businesses will think about the people that they need for the next stage of growth before they have clarified their vision and where they’re trying to go. It won’t be the first time that somebody has set off for Bali and arrived in Amsterdam. It is absolutely imperative that your vision is fine-tuned, your ambitions clear, and your goals set before you start moving people around or recruiting new people. 2. Evaluate you team for skill gaps When you’re clear about your strategy, vision and goals, take the time to evaluate your current team in order to truly understand what you have and what you need. Different journeys call for different skills, behaviours and even people. We suggest that before you set off, you take a thorough look in the kit bag.
3. Structure your business for the future, not for today Once the destination is clear and you understand what you have in your team, look to build a structure that is fit for two or three steps ahead of where you are now. Growth often comes quickly and it is critical that your structure is capable of supporting the business through the peaks and troughs of accelerated growth. 4. Recruit with the future in mind Just as you should build a structure that is fit for growth, you should also recruit ahead of your growth curve. By doing this, you will ensure you have people that are capable, not only of achieving next year’s financial goals but the full three-year plan. This may seem expensive at the time but experience is invaluable and costs soon turn into profits if your new team hit your plan ahead of time.
5. Find the people who fit When recruiting, build on your culture and find people that absolutely fit. Too often, companies rush to recruit because they have a vacancy and sacrifice either the cultural or technical fit. Rarely does this work and it is the key reason why a significant number of recruits fail. We have developed a system that guarantees fit and we advise our clients to focus on this to ensure that they recruit people who propel their growth, not hold them back. About ORESA ORESA transforms businesses from the top down. For over a decade we’ve put leading executive talent into digital, retail, fashion and consumer organisations that have delivered exceptional growth. But we’re more than executive search – we’re growth strategists. We propel companies to growth by bringing together strategy, leadership advisory and executive search.
Get in touch with our CEO Orlando Martins to hear how we can help your business grow. Tel: +44 (0)20 3675 1459 Email: orlando@oresa.co.uk Business Leader - Inspire • Inform • Connect
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LATEST NEWS
OakNorth Bank completes £4.4m loan to Kolte-Patil Limited OakNorth Bank has completed a £4.4m loan to Kolte-Patil Limited, to fund the developer’s first projects in the UK. Kolte-Patil Group, which boasts over 25 years’ experience in the real estate and property development market, will use the bespoke facility from OakNorth Bank to develop a three-storey residential building in Kenley, Surrey and a seven-storey mixed-use scheme in Greenwich. The Kenley development will offer nine apartments, including seven two-bedroom and two three-bedroom units, as well as several parking spaces. The site is within walking distance of various bars and restaurants and only 19 miles away from Gatwick Airport. The Greenwich development will consist of six twobedroom luxury apartments across the upper floors and a commercial space on the ground floor. Darshan Thakkar, Head of UK Operations at Kolte-Patil, said: “As we look to the year ahead, we hope to once again partner with the OakNorth Bank team to help us with our ambitious expansion plans in the UK.”
London overtaken by New York as ‘world’s pre-eminent financial hub’ London’s long-term status as the world’s pre-eminent financial hub has been lost amid the past three years of Brexit uncertainty, a new report has found. The UK capital has long been regarded as the foremost global financial hub, but has fallen substantially over the past two years and has now been overtaken by New York. The latest Global Regulatory Outlook (GRO) report, released by global advisor Duff & Phelps, surveyed senior financial professionals from around the
world, and showed confidence in London as the world’s leading financial hub had fallen sharply. The survey found that only 33% currently see London as the foremost global financial hub, a reduction of more than 20% over the last two years. Meanwhile, New York gained momentum this year, with the majority of respondents (56%) now regarding it as the world’s most important financial centre, a 33% increase over the last two years.
Praetura Ventures leads £3m funding round for Patchwork Health
(L-R) Dr Jing Ouyang and Dr Anas Nader, Patchwork
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A rapidly-growing healthtech start-up on a mission to solve the NHS staffing crisis and bring flexible working to thousands of clinicians has secured £3m in a funding round led by Praetura Ventures.
the expensive agency middle man.
Patchwork was founded by NHS doctors Anas Nader and Jing Ouyang in 2016 to help hospitals fill vacant shifts more cost-effectively and to stem the tide of clinicians leaving the health service due to poor work-life balance. Its technology focuses on transforming the power of NHS Trusts to recruit temporary staff, cutting out
“Jing and I both struggled to maintain a healthy work-life balance as junior doctors, and we watched countless colleagues step away from full-time practice and into the world of locum agencies as a result of the daily pressures faced by medics. We felt there must be a better way of doing things.”
Anas Nader, co-founder of Patchwork, said: “Those best placed to solve the challenges facing our healthcare system are the people who have worked on the frontline.
March - April 2020
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REGIONAL SPOTLIGHT
Brighton: A ‘collaborative city with no shortage of talent’
W
ell-educated, tech-savvy, creative, tolerant and talented… positive adjectives for Brighton and its inhabitants trip readily off the tongue from experts keen to wax lyrical about its many strengths.
In the latest feature in Business Leader’s city spotlight series, we learn more about why Brighton is a city which has entered the new decade bursting with confidence and ‘speaking with its own unique voice’…
What is unique about Brighton as a place to do business? Gavin Stewart, Executive Director of Brighton & Hove Economic Partnership, said: “Nestled between the South Downs and sea, Brighton & Hove has long been a place of escape. In fact, anecdotally, it’s known as the place where 30-somethings come to retire. Not from work I might add, but from the rat race. “Brighton & Hove has one of the highest business start-ups per capita in the country (second only to London according to the 56
most recent Centre for Cities report). It also has a relative failure rate, but that only serves to exemplify the feeling of freedom that many entrepreneurs have here; freedom to experiment, freedom to disrupt and the freedom to dream. “If you are looking for a well-educated workforce, you’ll also find them here because we are in the top ten UK cities with the highest number of residents with NVQ4 or above.
continues to attract people to the city – with one of the most diverse arts calendars in the country (Brighton Fringe Festival is one of the three largest in the world) to sports events (one football team in the Premier League) as well as live music, conferencing, indi-retail, and of course Pride. “There are many places that would bite off Brighton & Hove’s arm for just a handful of the riches on offer to nourish and embolden even the most tentative entrepreneur.”
“But it’s what’s on offer outside of work that March - April 2020
BRIGHTON
Gavin Stewart
Amy Lishman
people who make things happen here is what makes Brighton one of the best places in the UK to run a business.” Olga Hopton, Managing Director of Brighton’s new innovation hub Plus X Brighton at Preston Barracks, said: “Brighton & Hove is an exciting and vibrant city, with two excellent universities and plenty of talented people, making it the perfect place for us to open Plus X Brighton, an innovation hub and centre of collaboration for entrepreneurs, start-ups, scale-ups and corporations across a range of industry sectors.
Amy Lishman, Head of Member Engagement at Brighton & Hove Chamber of Commerce, said: “There are more than 16,000 businesses in Brighton according to the latest data from Brighton & Hove Economic Strategy, with more and more new businesses emerging each year. It’s no wonder that Brighton consistently features on lists of the best places to start and develop a business. “The unique combination of an active business support ecosystem, the culture of collaboration and connections, and the Business Leader - Inspire • Inform • Connect
“We recently held the Plus X Brighton Disruptors competition, looking for talented eco-inventors working on concepts that drive sustainability. The winner, Lucy Hughes – who also won the James Dyson Award – will be developing her alternative to single use plastic, Marinatex at Plus X Brighton, making her one of our exciting first founder members.”
"IF YOU ARE LOOKING FOR A WELL-EDUCATED WORKFORCE, YOU’LL ALSO FIND THEM HERE BECAUSE WE ARE IN THE TOP TEN UK CITIES WITH THE HIGHEST NUMBER OF RESIDENTS WITH NVQ4 OR ABOVE." Gavin Stewart
Olga Hopton
Richard Upton, Director and Chief Development Officer at U+I, a firm charged with redeveloping major parts of Brighton, said: “The city is unique in the way that Brighton & Hove City Council is open to working with private sector partners in creative ways to unlock land and deliver homes, jobs and community facilities. Public/private partnerships are so fundamental to successful urban regeneration and Brighton is a shining example of how this can be done well.” What are the strengths and weaknesses of the city from a business perspective? Lishman: “Entrepreneurship is alive and well in Brighton. It might be the sea air, or the progressive, open-mindedness of the city that allows ideas and innovation to flourish. There are some impressive entrepreneurs making waves in Brighton and they are leading the way so that others can start up and grow. “Brighton is a collaborative city. If you’re looking for people to work with, there is no shortage of talent to help you with whatever you need to see your business grow, whether it’s digital marketing, designers or finance support. “Businesses here are well-served by a comprehensive ecosystem of support, whether you’re a start-up, an established company or looking to scale.
Cont. 57
REGIONAL SPOTLIGHT
“Organisations like Brighton Chamber provide networking and learning opportunities, including the popular Catch the Wave support series. Wired Sussex supports businesses in the digital and tech sector, while Barclays Eagle Labs and the Sussex Innovation Centre offer workspace and support to encourage growth. “Networking plays a big role in connecting people with each other across the city with over 40 different networking groups in the area. Making connections is essential for any business to thrive, whether it be for peer support, getting new business or simply keeping up with what’s happening in Brighton. “The emergence of innovative co-working spaces has nurtured this collaborative spirit. From PLATFR9M who opened their third space in Hove Town Hall in 2018, to the brand-new Plus X opening in 2020 on Lewes Road, there is no shortage of fun, creative spaces to meet and share business ideas.” Stewart: “One of the major strengths of the city is its diversity. Through a business lens, it’s inspiring to see the collaborations that are possible between sectors. In Brighton, the CDIT Sector (Creative, Digital & IT) has grown by over 40% in the last five years. Given that this sector didn’t even exist ten
years ago, it’s even more impressive to hear that it now stands almost shoulder to shoulder with the tourism sector in the city, which has been our bread and butter for centuries. “But it’s the ability for individuals to easily collaborate here that really shows the possibilities for that disruptive, experimental spirit. Brighton’s 5G testbed at the Fusebox is one of the only places where digital entrepreneurs (not academics) can test out the tech, ready to be at the vanguard of fourth industrial revolution.” Upton: “Brighton is a fantastic example of a city with ‘the four Ts’: top talent, steady tourism, good transport links and tolerance for diversity. These are the major drivers of economic growth that we look for wherever we do business.” Hopton: “Brighton is full of exciting businesses, but the right kind of workspace is hard to find. We hope Plus X Brighton, opening in March, will offer a truly original innovation hub and inspiring work space. Our unique formula drives innovation and prosperity through world-class architectural design, product-making workshop and facilities, expert business support, strong partnerships through curated collaboration and a building designed for positive productivity, wellness and wellbeing.”
Richard Upton
Which sectors are traditionally strong in Brighton – and how has that changed in more recent years? In which industries is future growth expected? Stewart: “The largest sector in the city (by far) is still the public sector, followed by the financial sector, then tourism. With the burgeoning CDIT sector, we are expecting to see significant growth over the coming years, but also around life sciences and engineering, driven by the two universities. Given the importance of the financial sector in the city, it will be interesting to see if there will be any impact here from decisions over the next 11 months which may affect the city of London.” Lishman: “While Brighton is known for its digital, tech, IT and creative industries, other sectors like food and drink are on the rise, with brands like Brighton Gin and Bird & Blend Tea Co thriving in Brighton and beyond.”
Artists impression of Plus X, Brighton
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Hopton: “The digital sector has been strong for at least a decade in Brighton, but we are seeing a rise in innovative product design and some really exciting ideas to address our effect on the environment. We expect March - April 2020
BRIGHTON
Brighton Pavilion
this trend to continue and would like to see Brighton become a world leader in terms of creating environmental solutions for the future of planet Earth.” Upton: “Brighton has an incredibly diverse appeal, but in recent years we have seen a real boom in demand for SMEs looking for inspiring workspaces. This is why we will soon be opening the first Plus X innovation hub at Preston Barracks. Going beyond the offer of mainstream co-working providers, Plus X provides state-of-the-art workshops, biolabs and digital media studios, with leading technology and equipment to enable residents to develop concepts and create product prototypes. “These spaces will be fundamental to supporting Brighton’s entrepreneurs, startups and scale-ups, and putting the city at the forefront of the tech industry.” Business Leader - Inspire • Inform • Connect
What are the main challenges and opportunities when it comes to evolving Brighton from an economic perspective? Stewart: “Unequivocally space. Brighton & Hove is a popular place. People want to come here. The city gets over 11 million visitors a year, so for a city with only 290,000-plus residents, it swells to quite unrecognisable levels at times.
"PUBLIC/PRIVATE PARTNERSHIPS ARE SO FUNDAMENTAL TO SUCCESSFUL URBAN REGENERATION AND BRIGHTON IS A SHINING EXAMPLE OF HOW THIS CAN BE DONE WELL." Richard Upton
“House prices are unaffordable for most locals, and a lack of brownfield sites means there is inevitably a viability battle between much-needed office accommodation over creating places to live. The latter of course, giving the developer much more bang for their buck. “This is partly why the city has worked with neighbouring authorities to develop the Greater Brighton Economic Board to help deliver the infrastructure needed to grow and develop. So far, it has brought in £150m to support local communities and its ambitions don’t stop there, with more investment planned in infrastructure and transport, as well as the creation of a region-wide Inward Investment Desk to sell the whole area and help spread out some of the success that Brighton & Hove has experienced.” Cont. 59
REGIONAL SPOTLIGHT
BRIGHTON
Preston Barracks
"IN 2018 BRIGHTON WAS VOTED THE BEST PLACE TO START A SMALL BUSINESS AND I THINK THAT TREND IS SET TO CONTINUE, IF THE NUMBER OF BUSINESSES JOINING THE CHAMBER IN 2019 IS ANYTHING TO GO BY!"
Artists impression of Plus X, Brighton
Amy Lishman
Hopton: “World-class workspace for local businesses is in short supply, and the city has in the past lost some great businesses because of it. We need better space, support and facilities for a whole range of current and developing business enterprises from start-ups to scale-ups.” What does the future hold for the city? What developments are planned and how will they impact the area? Upton: “At both Preston Barracks and Circus Street, we’re creating new neighbourhoods that will inject even more life into Brighton. As one of the city’s largest regeneration projects, Preston Barracks will create thriving space for local businesses, creating over 1,500 jobs and generating over £280m for the local economy. “But equally as important, it will be home to hundreds of people, whether couples, families or students – creating a complete new neighbourhood.
"WORLD-CLASS WORKSPACE FOR LOCAL BUSINESSES IS IN SHORT SUPPLY, AND THE CITY HAS IN THE PAST LOST SOME GREAT BUSINESSES BECAUSE OF IT." Olga Hopton
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“At Circus Street, we’re transforming the derelict municipal market into an innovation quarter with homes, student accommodation, offices, workshops and arts space. By doing so, we’re forming a sustainable, productive, healthy model of city life with great public spaces, a lively, creative atmosphere and a real sense of community.” Lishman: “In 2018 Brighton was voted the best place to start a small business and I think that trend is set to continue, if the number of businesses joining the Chamber in 2019 is anything to go by!” Stewart: “With major redevelopments already under way, like the Royal Sussex County Hospital, Preston Barracks, Circus Street, University of Brighton and Edward Street Quarter, there’s already a huge investment in health, the arts and our intellectual capital, as well as muchneeded housing and business space. “The redevelopment of the Brighton Centre, to secure our long-term future as a conferencing centre of the future, also sits on the horizon. There is a new confidence in Brighton & Hove, a city speaking with its own unique voice, ready to enter the next decade with an aspirational attitude whilst still remembering how to let its hair down.”
BRIGHTON BUSINESS FACT FILE • Brighton & Hove is home to 16,000 businesses and 140,000 jobs – with 2,700 of those businesses launched since 2012 and 14,300 jobs created since 2011. • Around 57,000 Brighton jobs – or 41% of the total workforce – are based within the knowledge economy. • ICT and digital business is growing fast. The sector is home to around 1,500 businesses and 6,800 jobs – numbers that have grown by 40% in five years. • The city is one of the UK’s strongest for exports. Its export earnings amount to £12,000 per job, beaten only by London and Edinburgh. • Not everything is rosy. Productivity of £65,000 is lower than competitor cities like Reading, Milton Keynes and Cambridge, while unemployment levels are above average, with youth unemployment a particular issue at 16%.
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