Elite Business Magazine December 2014 by Elite Business Magazine

DECEMBER 2014

AN UNSUNG HERO

DECEMBER 2014

Having sold her first business for £95m, Fiona Lowry has now created the Good Care Group, which is hoping to change the way care is delivered to old people £4.50

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CONTENTS

Handle with care

Fiona Lowryâ&#x20AC;&#x2122;s Good Care Group looks set to improve the the way care is delivered in the UK

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CONTENTS VOLUME 03 ISSUE 12 / 2014 REGULARS 11 12 14 17 18 98

Editor’s letter Contributors News & events Talking point Book reviews Start-up diaries

28 One to watch

Wake up and smell the future with Pact Coffee

34 Key change

Has the music industry finally caught up with consumer habits?

40 We’re not worthy

50 Going abroad

Are high profile investors all about the money?

Why are so many UK-based SMEs holding back with exports?

46 Rock enrol

56 Reality check

A guide to auto-enrolment pensions for SMEs

Swedish e-commerce platform Klarna is simplifying the checkout process

48 Avoiding winter woes

60 For what it’s worth

Cheap doesn’t necessarily mean cheerful when it comes to your bottom line

Clive Lewis tells us how SMEs can keep in check this holiday season

65 Just rewards

Keep employees motivated this Christmas with a little something extra

68 Fleeting flair

How can the UK solve its skills shortage problem?

74 Hail to the chief

Lyndsey Simpson on how to convert your followers into leaders

77 The hot list

The latest must-have gadgets, hardware and apps for forwardthinking small businesses

81 Protect and server

28 Contents.indd 2

The start-ups keeping your business safe from cyber attack

86 Dual dexterity

Why you need a combination of marketing and tech skills to get ahead

89 Hell to pay?

Overtime must count towards holiday pay but it’s not all doom and gloom

28/11/2014 19:18

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31/10/14 11:46 am 31/10/2014 18:54

EDITOR’S letter VOLUME 03 ISSUE 12 / 2014

Scan this QR Code to register for Elite Business Magazine SALES Harrison Bloor – Senior Account Manager harrison.bloor@cemedia.co.uk Darren Smith – Account Manager darren.smith@cemedia.co.uk Samuel Darcy – Account Manager samuel.darcy@cemedia.co.uk EDITORIAL Hannah Prevett – Editor hannah.prevett@cemedia.co.uk Josh Russell – Feature Writer josh.russell@cemedia.co.uk Ryan McChrystal – Feature Writer ryan.mcchrystal@cemedia.co.uk

Let’s celebrate true SME stars

DESIGN/PRODUCTION Leona Connor – Head Designer leona.connor@cemedia.co.uk Dan Lecount – Web Development Manager dan@cemedia.co.uk Marketing Kelly Dunworth - Head of Communications kelly.dunworth@cemedia.co.uk Claudia Laing - Marketing Manager claudia.laing@cemedia.co.uk Lucy Jones - Marketing Assistant lucy.jones@cemedia.co.uk CIRCULATION Malcolm Coleman – Circulation Manager malcolm.coleman@cemedia.co.uk ACCOUNTS Sally Stoker – Finance Manager sally.stoker@cemedia.co.uk Colin Munday - Management Accountant colin.munday@cemedia.co.uk ADMINISTRATION Daisy Jones – Administrator daisy.jones@cemedia.co.uk DIRECTOR Scott English – Managing Director scott.english@cemedia.co.uk

This month’s cover star, Fiona Lowry, founder and CEO of the Good Care Group, is understated. She shuns the limelight and is slow to take the credit for the success of her current venture or any of those that have gone before. But the reality is that Lowry and others like her are bastions of UK industry. She sold her first company for £95m. GCG turns over £5.6m and employs nearly 500 people. It’s companies like hers that are adding real value to the UK’s bottom line and providing muchneeded jobs. So much media attention (not to mention that of investors) is given to Silicon Roundabout and the companies that populate its offices and co-working spaces. But how many of them actually make money and employ people? Or is it often a case of a lot of hot air? If we scratch beneath the surface, we may find there’s not so much substance after all. Isn’t it about time we celebrated the entrepreneurs that are helping boost the economy? We think so. Fiona Lowry: I salute you.

HANNAH PREVETT EDITOR

Circulation/subscription UK £40, EUROPE £60, REST OF WORLD £95 Circulation enquiries: CE Media Limited Elite Business Magazine is published 12 times a year by CE Media Solutions Limited, 4th Floor, Victoria House, Victoria Road, Chelmsford, CM1 1JR Call: 01245 707 516 Copyright 2014. All rights reserved No part of Elite Business 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. Elite Business magazine will make every effort to return picture material, but this is at the owner’s risk. Due to the nature of the printing process, images can be subject to a variation of up to 15 per cent, therefore CE Media Limited cannot be held responsible for such variation.

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CONTRIBUTORS Lyndsey Simpson It’s been a busy few months at the Curve Group as Simpson and her team have been revamping their marketing strategy. Hence why she is so looking forward to decamping to the house of her very accommodating parents over Christmas – with her husband and in-laws in tow. In her last article of 2014, Simpson looks at turning your followers into leaders, which is a subject close to her heart. Having ditched a corporate career due to her reluctance to follow, she became an entrepreneur and showed off her leadership prowess.

Clive Lewis Christmas for Lewis will be spent at home and visiting family in south Wales. It’s then off for a short break on the south coast, perhaps Lyme Regis with its wondrous cathedral and town centre. For now, however, his attention is firmly placed on ICAEW’s autumn statement, which will be a treasure trove of good advice for SMEs. True to form, in his column this month he provides businesses with an invaluable checklist of what they need to do to stay on top of things this holiday season.

Leona Connor Our esteemed designer, Connor is really looking forward to the Elite Christmas party, where she promises to be on her best behaviour… for a change. And while the rest of the team are tucking into leftover turkey sandwiches on Boxing Day, she will be living out her very own Miracle on 34th Street as she trots through New York with her boyfriend, Alex. In between a spot of sightseeing, she will descend on the Museum of Modern Art (MoMa) to garner some inspiration.

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Josh Russell Our longest standing scribe and resident tech head, Russell is a fan of coffee, cats and cynicism, although he only tends to bring two out of the three to work with him. He penned this month’s feature on innovation and disruption in the music industry, looking at how streaming has come to rule over all. This seemed rather appropriate, given the fact that Russell spends most of his free time digging up obscure contemporary classical, nu-jazz and glitchy electronica tunes on the net. And dressing up like a techno-Santa.

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Taxi for Emil Michael! The VP of rideshare service Uber dominated the tech headlines at the end of last month for all the wrong reasons. He made some comments at a dinner in New York about the possibility of doing opposition research on reporters. He singled out journalist Sarah Lacy who had some less than flattering words to say in return. Uber CEO Travis Kalanick took to Twitter to apologise but the damage was done; customers were already hitting the uninstall button. Michael, who has since apologised for the remarks, is still employed despite calls to have him take a one way ride out of there.

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It’s bon voyage to Thomas Cook chief executive Harriet Green who has resigned with immediate effect in a move that will shock shareholders. Green has been credited for the turnaround at the travel company since taking to the helm two years ago with shares rising from just 14p each to 139.9p at the time of her departure. Speaking of her resignation, she said: “I always said that I would move on to another company with fresh challenges once my work was complete. That time is now.” How will her successor fare, stepping into such large shoes? We will soon see, as she will be replaced by chief operating officer, Peter Fankhauser.

Martin Good / Shutterstock.com

WORDS: Ryan McChrystal

Self-esteem may be low among businesses globally, but for UK SMEs confidence has reached a record high. According to the latest annual Business Growth survey by Santander Corporate and Commercial, businesses with an annual turnover of up to £20m are predicting growth of 33% a year on average, the highest number since the survey began three years ago. One fifth of business owners reported that their business has never been in better shape – a sharp increase from the 13% who said the same in 2013.

Denys Prykhodov / Shutterstock.com

JAN UAR Y

2015

The EU’s new VAT MOSS rule will cause a bit of #VATMESS, according to the UK’s small business owners. The regulation, due to come into force on January 1, could drastically slow sales of digital products in the 28-member state block and many have announced plans to halt the sale of digital products to avoid losing their VAT. The legislation is an attempt to curb web giants like Amazon and Google from funneling all EU sales through Luxembourg with its low-VAT rates. There is no threshold to exempt small businesses – including start-ups – who are much less equipped to deal with red tape.

JuliusKielaitis / Shutterstock.com

NEWS & EVENTS

Digital music service Spotify has come a very long way since its inception in 2008. Valued at $3bn, it now has over 50 million customers in 58 countries. In recently released figures, it revealed sales grew 73.6% last year to £592.9m. It also reported a fall in net losses from €86.7m in 2012 to €57.8m. Great, right? Not quite. Its operating losses, which are arguably a better indicator of performance, grew a considerable 16.4% to €93.1m. The figures have nothing to do with Taylor Swift pulling her music from the service last month. Probably.

28/11/2014 18:14

Christmas has come early for the businesses in the eurozone. European Commission president Jean-Claude Juncker has unveiled plans for a €315bn investment package aimed at stimulating growth in all member states. The package comes on top of investment plans made by individual countries and Juncker insists that governments must still press ahead with structural reforms. The five-year plan includes a €21bn seed-money fund, which is designed to encourage private investors to ‘pitch in’ the rest. £8bn of the figure comes from the EU budget itself. In his speech, Juncker has described the move as an “ambitious investment plan”.

Tech City is typically more associated with geeks than jocks but video sharing service, Grabyo is bucking the trend. Footballers Thierry Henry, Cesc Fabregas and Robin van Persie (above), along with NBA star Tony Parker, have joined a growing number of celebrities investing in tech by collectively pouring £1.25m into the British start-up. Grabyo, which partners with TV broadcasters to allow viewers to share real-time clips, recently snared the Most Innovative Business title at the O2 Smarta 100 awards. Check out page 38 where we’ve taken a look at the risks and benefits of taking on a high profile investor.

landmarkmedia / Shutterstock.com

Good tidings for retailers as sales on the high street remain resilient. Unsurprisingly, the pace of growth is expected to accelerate once again in anticipation of Santa Claus. This is according to the CBI’s latest quarterly Distributive Trades Survey. The survey of 130 firms also showed that employment growth remained robust, with the rise in headcount in the retail sector anticipated to be the fastest since May 2002 in the year to December. Investment intentions for the year ahead remained positive with respondents expecting a moderate improvement in their business situation over the next three months. Happy Christmas indeed.

“Britain is coming back,” George Osborne proudly declared back in April referring to the 0.8% growth in the economy in the first quarter. Odd then that seven months later prime minister David Cameron took to the pages of the Guardian to tell us about the ‘red warning lights’ on the dashboard of the global economy. Wherever Cameron looks he sees threats to the economy. Firstly, in Europe he fears a third recession in the eurozone will lead to deflation. Then there’s the slowdown in emerging markets which is giving the PM knots in his belly. No mention, however of the home-grown factors that might threaten the UK recovery, such as an over-reliance on a housing market that is now slowing. What a grinch.

Celso Pupo / Shutterstock.com

NEWS & EVENTS

UPCOMING EVENTS Introbiz Networking Breakfast December 9

PA Promotions Exhibition Augustus Suite, Celtic Manor Resort Newport, NP18 1HQ

Business Scene Networking Event December 10 3000 Cathedral Hill Guildford, GU2 7YB

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Business Junction Networking Lunch December 11 Grosvenor Casino Barracuda, 1 Baker Street, London, W1U 8ED

Introbiz Networking Event December 11 Thistle Cardiff City Centre, The Parc Park Place, Cardiff, CF10 3UD

Business Scene Networking Event December 11

Parkway Court, John Smith Drive, Oxford Business Park, Oxford, OX4 2JY

Business Scene Coffee & Connect December 12

Bowman House Business Centre Bowman Court, Whitehill Industrial Estate Royal Wootton Bassett SN4 7DB

Business Scene Christmas Networking Event December 16

The Clerkenwell Centre, 61 Lever Street London, EC1V 3AR

Introbiz Christmas Party December 18

Ten Mill Lane Mill Lane Cardiff, CF10 1FL

Business Junction – Christmas Networking Lunch December 18 Brewers’ Hall, Aldermanbury Square London, EC2V 7HR

A full event listing is available on our website: elitebusinessmagazine. co.uk/events

28/11/2014 18:15

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30/09/2014 17:02

TALKING POINT The American

Dream When tech start-ups are looking to go public, is the States their best option?

The US offers richer valuations

Mehdi Nayebi CEO, KweekWeek

Most European-based companies face the important choice of keeping their main base in the UK or moving to the US, the latter being a near unanimous decision. As the companies continue their growth, the funding environment in the US always offers richer valuations and when ready for a public offering no company thinks of crossing back the pond

for their listing. The UK’s main weakness at this stage is therefore a lack of sufficient funding sources during series A/B rounds to support promising start-ups with a strong proven concept. This problem is compounded by the relative lack of experience of UK based funds in taking companies global, something US VCs and specifically Valley based ones excel in. If the UK could create an ecosystem able to support tech firms from seed stage to series A/B/C and eventually IPO, we would certainly see a much higher number of promising start-ups keep their headquarters in the UK and float on British exchanges. It is therefore a gap in the support and funding environment for growing UK based start-ups that creates the need for the usual US 17 exodus and eventually deprives the UK from high profile IPOs. Once a company has made this move, the eventual successful ones have no reason to ever look back at a UK flotation.

WORDS:JOSH RUSSELL

t’s not always easy to decide the best route for a fast-growth company. Earlier this month, Bruce Aust, vice-chairman of the NASDAQ, recommended that UK tech firms looking to go public should float on his exchange rather than selling shares on a domestic exchange. Perhaps none too surprising. In other news, McDonald’s recommends people eat Big Macs. But does he have a point? The US investment ecosystem is undeniably more flush with capital than its Britain counterpart. There are more investment opportunities for later-stage enterprises in the States and naturally this has led to quite a few UK firms floating across the pond; Candy Crush Saga creators King and financial data company Markit are just a few recent examples of companies that have listed stateside. Conversely, there are plenty of firms who have found success on home turf. Former Elite Business ‘one to watch’ Fever-Tree floated on AIM, London’s junior stock exchange, at the beginning of November; its share price has risen from 134p to 180.5p at the time of writing. And Zoopla continues to go from strength following its listing on the London Stock Exchange this summer. Ultimately, enterprises will have to make the decision as to what is right for them. But given the fact that boosting the health of the UK entrepreneurial ecosystem will require more successes on the home front, can we afford to have many of our biggest businesses floating in the States? What’s going to be the best option for UK enterprise in the long run?

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The UK leads much of the world’s technology innovation The British digital economy is one of the fastest growing in the G20 with a record number of new businesses started in 2014. What’s more, the UK is one of the leading destinations for Gerard Grech CEO, Tech City UK digital entrepreneurs and from April 2015 it will have the joint lowest rate of corporation tax throughout the G20. This year the London Stock Exchange implemented new parameters designed to assist mid-sized European and UK companies that require access to capital and a public platform to help continue their growth. This includes the introduction of the ‘High Growth Segment’ [a new segment of the main market], the establishment of the Elite management training platform and an initiative working with the government to abolish investor stamp duty on traded AIM shares. In the first six months of 2014, London tech firms attracted a record $1bn of venture capital investment and fundraising in the sector is currently up over 30% on last year’s $719.3m. This is addition to $1.45bn in new funds that have been raised this year. The UK government has rolled out everything from new visas, to funding programs and tax relief on early stage investment to fast track the growth of digital businesses. With 11 of the world’s top universities based here, UK minds have led much of the world’s technology innovation, from early hardware and web breakthroughs to recent strides in big data and fintech. The UK was also recently named the most entrepreneurial nation in Europe in a GEI survey.

28/11/2014 18:15

BOOK REVIEWS

Solving the Strategy Delusion – Mobilizing people & realising distinct strategies Marc Stigter & Car Cooper

The Art of Social Media – Power tips for power users Guy Kawasaki and Peg Fitzpatrick

Publisher: Palgrave Macmillan Out: January 2015 RRP: £29.99

Publisher: Portfolio Penguin Out: 4 December 2014 RRP: £9.99





ntrepreneurs tend to have excellent vision and intuition. A heavy reliance on gut instinct means that strategy in the early days of running a start-up rarely tends to be a problem. Unfortunately, as an enterprise grows, habits start to form and people become set in their ways, meaning that a truly insightful strategy can become increasingly hard to formulate. This is precisely the issue that Solving the Strategy Delusion sets out to correct. Given the history of firms like Nokia or Blackberry, which focused on prioritising shoring up their existing model over finding new strategic direction, Stigter and Cooper urge leaders to make strategic decisions based on the needs of consumers and the market, rather than based short-term operational needs. They offer very practical insight into how this can be solved by embedding strategy into the heart of the everyday running of a business. It is not without its flaws however. The authors rely heavily on coining and defining new terminology; whilst not necessarily a bad thing in its own right, it can have the cumulative effect of leaving the reader lacking a simple scaffold upon which to build an understanding of the subject. This doesn’t mean the book is not thoroughly worthwhile but it does mean that imbibing its insight takes a little more effort. JR

Book reviews.indd 1

here is so much noise around the complexities of businesses and social media that it’s difficult to know who to take seriously and who to unfollow. Luckily, Kawasaki and Fitzpatrick have put their heads together and come up with the Art of Social Media, a succinct guide that covers everything from putting together your online profile to getting more from Twitter and Facebook. Think of this as a blueprint to get your business trending. It presents more than 100 tricks and insights for an effective bottom-up strategy, covering everything from the painfully obvious – use @mentions not hashtags when discussing a person or organisation – to much less clear cut, such as how to optimise live events for social media. Quotes from the likes of Douglas Adams and George Orwell make this a joy to read cover-to-cover. Alternatively you can dip into it as and when you need some solid gold nuggets of wisdom. The authors are no noobs, so you know you are in good hands. Kawasaki is a former tech evangelist for Apple and current chief evangelist of Canva, the design company. Social media strategist Fitzpatrick also has pedigree: now working for Kreussler Inc, she has previously spearheaded campaigns for the likes of Google, Virgin and Audi. The Art of Social Media will find permanent residency on the Elite Business bookshelf. RMC

28/11/2014 18:16

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A people’s champion Fiona Lowry is a successful entrepreneur by anyone’s reckoning – she sold her first business for £95m and is now on her third start-up. But she’s not about to take all the credit

WORDS: HANNAH PREVETT PHOTOGRAPHY: EMILIE SANDY

ome entrepreneurs like to shout their success from the rooftops. They clamour for column inches and flout their newfound riches driving fast cars, racking up enormous bar bills and generally enjoying the fruits of their labour. Fiona Lowry is the very antithesis of such behaviour. After all, she’d have every right to be boastful: having enjoyed a high-flying 11-year career at the BBC, she then sold her first company Merlin Communications for £95m and more recently set up the Good Care Group, which provides high-quality, in-home care to elderly people. But when faced with talking about her business prowess, she says: “I don’t like talking about that arrogant stuff.” Lowry has been successful in a myriad of industries. And although there is no immediately obvious link between Lowry’s first business in TV transmission support and the work of the Good Care Group, it doesn’t take long for a theme to emerge: people. She

and went through all the ups and downs of their lives with. He definitely created a sense of community, which is what I try to create too.” Although Lowry came to the start-up world later in life, she hailed from a family of entrepreneurs. Growing up in East Finchley, both of her grandmothers ran their own businesses, “which was quite unusual at that time”. Her maternal grandmother was a milliner, while her paternal grandmother took over the family precision engineering business making parts for the car industry after her husband died at an early age. Her father was next in line. “I loved going to the factory. It was very industrial – it had all these nooks and crannies and old cash registers,” says Lowry. “When I was very young I had this vision that he was a mint, that he actually made coins, because there was metal everywhere and at some point he must’ve said to me, ‘I make money’ and I took it quite literally.”

I don’t like talking about that arrogant stuff takes everybody with her on the journey. When she bought Merlin Communications from the BBC, it wasn’t just her and the management team who owned it – the employees did too. It’s a formula she’s repeated elsewhere: all employees at The Good Care Group were offered shares. Lowry retains 20%. “Ever since Merlin, any company I’ve worked with all the staff have shares; you’re in it together. That ownership is very important to me,” she says. Lowry learnt a thing or two about leadership from her father, who ran the family precision engineering business. “I learned the importance of staff and morale from him. He had a very fixed staff base that he looked after, listened to

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After her A-levels, Lowry went to university in Bristol. “I obviously had some engineering stuff in the DNA because I studied electronic engineering,” she jokes. One of just two women on a course of 100, Lowry flourished at university and met her husband, Jonathan, who is now an academic. “He studied civil engineering; we met at the back of a maths lecture.” It wasn’t all play, though. Lowry, who says she was a very diligent child, describes the course as “tough” and would often berate herself if she failed the odd exam. “It was terrible. I didn’t like failing. But it does make you not want to fail the next exam so you have slightly earlier

nights. It got tougher as the years went by, especially in engineering – about 35% of the course got chucked out so you did have to work quite hard.” After graduating in 1986, she joined the BBC as a graduate trainee in the engineering department. “It was a great time to work for the BBC because you learnt so much. And because I moved around a lot I got to work with a lot of different people: you learnt good management, you learnt bad management,” she says. As she rapidly scaled the ranks, she became a manager herself, heading a team of 60. “I learned management from a lady called Dorothy Grenfell Williams who was absolutely stunning. She was head of the African service and she was the most fantastic journalist and broadcaster and the most wonderful, inspirational woman. She never wanted to move into management but she did and she did a brilliant job.” She taught Lowry a valuable lesson. “She said to me, ‘Don’t ever think that management isn’t creative – it is the most creative job if you do it well’. And she’s absolutely right. That’s why I like medium-sized enterprises and starting companies: you’ve got a blank sheet and you’re in control of the culture, you recruit and you choose how to reward people.” When the government privatised transmission of the BBC World Service in 1997, Lowry led a management buy-out and created Merlin Communications. This meant she was able to sell services back to the BBC but were also able to enlist other broadcasters as well as clients in the defence sector. The £21m buy-out required private-equity backing – a whole new world for Lowry. “Learning about private equity was fascinating. It was the realisation that it really works: you don’t have to go out and get a load of debt as you do with a mortgage: people will actually put equity in and take a risk on the basis of the business plan. It was an amazing development couple of years for me.”

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In 2001, the company was sold to Vosper Thornycroft, the defence company, for a cool £95m. Having recently become a mother to James, now 14, Lowry went on to have the couple’s second son Sam, nearly 12. Until 2005, she spent time with her young family and became a magistrate. “I was doing stuff but it was very bitty and part time,” she says. When she went back to work full-time, she became part of the founding team of Oracle Care, which looked after “kids that had got into trouble. Most of them had at that point done something sexual, so it was those kind of behavioural issues.” Oracle was the first care group to marry care homes, school and psychotherapy. “We gave kids very intense care to try and reset some of their issues and get them back into the community,” Lowry explains. The “heartbreaking” nature of the work took its toll on the entrepreneur. “It was really difficult emotionally because our youngest son was six or seven and the youngest kid [cared for by Oracle] was about that age,” she says. “All that kept me going was the thought that I would rather this kid be with us at Oracle Care than any other care company because I know what a great job we do.” The company was eventually sold in 2012 for around £12m. But for some time before the sale, Lowry had been working on her next venture: the Good Care Group. Having seen the difference Oracle Care had made for children, she wanted to do the same for the elderly care sector. “I’d watched my grandmother go into a care home with slight dementia and seen her go downhill very, very quickly. I later discovered that this is very common amongst older people with dementia where all their familiar surroundings have just vanished because they’re in this institution.” It’s often not even a quality issue, says Lowry. “Even a nice care home is still an institution where you lose some of your independence and a lot of people feel they lose some of their dignity.” Lowry felt passionately that by providing topnotch care to people in their own homes, they would have far greater choice. “So my mother, my father,

anybody getting older, could choose to stay in their own homes as long as they wanted. And for some people that meant choosing to die in their own homes too.” To make her vision a reality, Lowry would need to create a workforce of capable and compassionate carers. The Good Care Group only recruits 5% of the carers that apply for roles. Lowry says the litmus test is asking whether or not she’d want this person to look after her own mother or father. “That’s quite a powerful thing because when you have a little doubt – not over whether they’re going to do anything awful but whether they’re of a Good Care Group standard – if the answer is ‘not sure’ then they don’t make it through.” After all, the senior care sector can be tricky to navigate. The BBC’s Panorama programme carried out undercover investigations in 2011 and 2014 and uncovered shocking cases of neglect and mistreatment. This means that creating trust between clients and carers is more important than ever, says Lowry. “I’m very mindful of that. You are dealing in people’s houses so you absolutely have to have everything in place to enable people to trust you. I’d say it’s the recruitment, the training and the retention that makes us different.”

I learned from him the importance of staff and morale

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A key difference between the Good Care Group and the many care agencies that operate up and down the country is that Lowry’s company employs its 450 carers full-time. “We’re incredibly diligent in terms of the checks before we hire someone. As an employer, we are highly regulated in a way that agencies don’t need to be.” Each client generally has two carers with whom they forge long-term relationships. This means that they are able to keep a close eye out for changes to that person’s health or emotional state. But it isn’t just clients of the Good Care Group that Lowry hopes will benefit from this new approach to in-home care: she’s on a long-term mission to change the way that care is dispatched to the UK’s senior citizens. “With this company, we’ve got a unique platform through which to actually change over the next ten years the way elderly care is funded and the options for elderly care.” So what does success look like? “It’s about looking after more clients the way we look after clients but it’s also about changing the economics of how it’s funded,” says Lowry. She hopes we will see government money allocated differently so that in-home care won’t need to be privately funded. “There’s the economics of keeping people in hospital too long, about health budgets. I don’t think we necessarily need more money but it needs to be allocated in a different way. That’s what I’d really like to try and be part of changing in the next ten years.” She’s definitely in it for the long-haul. While she doesn’t shy away from making money from the care sector, it is by no means a get-richquick scheme, she says. “All my companies are about long-term value. If it was about a quick buck you wouldn’t last very long in this sector.”

All my companies are about long-term value. If it was about a quick buck you wouldn’t last very long in this sector Lowry has form when it comes to building companies for the long term. The three companies that she’s founded have been profitable – but that’s almost secondary to ensuring customers receive a high-quality service. “There is a link between the companies I’ve been involved with: they’re always highquality critical services.” “In the world service it was delivering signals and information to people all around the world. At Oracle it was looking after kids and here at Good Care Group it’s elderly people. So it’s perhaps easy to see now why the widgets didn’t really do it for me in my father’s factory.”

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01/07/2014 19:54

ONE TO WATCH

BREWED AWAKENING Customers in the UK increasingly want to replicate the coffee shop experience at home and Pact Coffee is helping them do just that

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f you’re anything like us Elite Business journos, the day can’t begin without a cup of the black stuff. Along with millions of other Britons, coffee is part of our daily ritual but in a continent of connoisseurs the UK is barely scratching the surface when it comes to consuming the good stuff. Our market – a third the size of Germany’s – is still heavily saturated with instant. Pact Coffee is on a mission to change all that. “We want to get people drinking better coffee by making incredible, freshly roasted beans accessible to everyone,” says Stephen Rapaport, founder of Pact. Its world-class coffee is from dedicated farmers, roasted in small batches in Herefordshire and shipped within seven days. In 2012 – the same year the coffee market broke the £1bn barrier in the UK – Rapaport began the daily grind of selling coffee via post from his kitchen. “For the first six months, it was just me alone with a load of felt tip pens, sealing bags of coffee with hair straighteners,” he says. Not just a seasoned coffee drinker but a seasoned entrepreneur, Pact is Rapaport’s fourth business. His last business, Crashpadder sold to Airbnb but it wasn’t long before he was champing at the bit to launch another start-up. “It was never a question of whether I’d start another business but what and when,” he says. His wife encouraged him to take up life in the espresso lane by telling him: “stop thinking like a venture capitalist and do the thing that you love”. And Rapaport loves his coffee. A year and a half into his love affair, he moved out of his kitchen and took on his first employee. “It’s grown pretty quickly and

WORDS: RYAN MCCHRYSTAL

We want to get people drinking better coffee

ONE TO WATCH

we now have 35 full-time staff.” Central to success is head of coffee, Will Corby, who is an award-winning barista. Corby flies out to meet farmers around the world to compete for the best beans available. On his most recent trip, sitting across the table from a farmer in Brazil, he negotiated the sale of 45 tonnes of green, unroasted beans. “Coffee is very stable in that form,” explains Rapaport. Corby is so passionate about what he does that when he’s not jet-setting you can usually find him selling coffee at a market stall in his native Cardiff. It’s a common misconception that ‘good coffee’ is synonymous with ‘expensive coffee’. Pact sells its wares at reasonable rates and still guarantees farmers at least 125% of the fair trade rate; in fact, last year the company paid a whopping 149% average, which is more than what supermarkets pay. “The fair trade movement is terrific but it’s no longer something that an ethical business should aspire to. It’s a bit like the minimum wage; no one proudly says they pay it,” explains Rapaport. “What we’re doing is creating a new gold standard for ethical, sustainable sourcing in the coffee trade. If we can have a small impact on a corner of this enormous industry then I can die a happy man.” Pact also differs from the traditional supermarket brands in its roasting methods. “What you buy in a Tesco is commodity-grade coffee – a blend of all the different coffees that didn’t sell because of their low quality. It’s all roasted very dark because that ensures they have the same uniform taste month after month,” says Rapaport. Dark roasts are essentially burnt and Pact prefer to keep things light. “A light roast allows us to highlight the unique flavour characteristics of each coffee. Flavour is as much of an art

A great cup of coffee can change the way you approach the day COMPANY CV Name: Pact Coffee Founded by: Stephen Rapaport Founded in: 2012 Team: 35

form as painting or music and with coffee it’s as good as it gets,” he says. We’ve sampled some of Pact’s blends, including its delectable Finca San Luis bread and butter pudding and vanilla custard. It’s just one of many flavours Pact has to their name, which are rotated on a monthly basis. “The coffee that we sell is highly seasonal and we have six blends on offer at any one time,” says Rapaport. “A great cup of coffee can change the way you approach the day and the public are being robbed of a very beautiful experience and we want to stop that,” he adds. At the heart of what Rapaport and his team do are the customers. “A lot of businesses claim that to the extent it’s almost become white noise but our customers actually do tell us which coffees to buy and how to roast them,” he explains. When you buy Pact’s coffee, a member of the community team will call you to discuss your experience and offer advice on getting the most out of your coffee. All customer feedback is taken on board. With customers in mind again, Pact has a unique approach to subscriptions. “I look around and see a lot of people selling quality food and drink on a rigid subscription; you give them X amount of money per month and they give you Y amount of products. So many lazy entrepreneurs and naive investors see it as a source of recurrent revenue but customers hate subscriptions,” Rapaport says. “There’s an anxiety that when signed up to a subscription

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ONE TO WATCH

Lazy entrepreneurs see it as recurrent revenue but customers hate subscriptions it won’t be long before they’re paying for something they didn’t want and we’re not in the business doing that.” Pact has a much more flexible and customisable plan. There are two basic options: coffee delivered once a week or once a fortnight but this can be changed to as regular as you like. However, if a customer finds themselves low on beans they can hit a ‘panic button’ and receive some the next day and their regular delivery will be adjusted accordingly. What’s more, customers can delay a batch if they still have a decent supply left. “Our real challenge is to keep people in the sweet spot of 50-200g in their cupboards at all times, so whether you’re in central London or the Outer Hebrides, you never need be without,” says Rapaport. This is all down to Pact’s excellent web development team, which includes an artificial intelligence PhD, David Toth, who is Pact’s official data scientist. Toth has developed a multi-layered algorithm to learn customer palates. All the customer needs to do is input how they take their coffee, what their preferred method of brewing is and whether they liked or disliked their last batch. Rapaport guarantees that the customer will enjoy their next batch of coffee more than their last; customers don’t need to know that because they take milk in their coffee they probably wouldn’t like something highly acidic, which means avoiding anything from Tanzania – it’s all done automatically. “Technically, it’s sensationally difficult to pull off but I’m really proud of the fact we’ve done it,” Rapaport says. Another unique feature is on each pack of Pact coffee you can see when the beans have been roasted and packed, which is a real

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guarantee of freshness. It could be roasted on a Monday, packed on a Wednesday and be part of your breakfast on the Thursday. It really is no wonder why the brand is proving so popular – and investors have taken notice. “We raised half a million pounds seed capital shortly after launching and £2.2m series A early this year,” Rapaport explains. He has also recently been hosted at the House of Commons after winning the first ever Investec Food & Drink Entrepreneur of the Year award. “I also won the drinks category and came second in two others; we were the only business to

feature more than once, which has been a fantastic boost to morale for the team,” he says. But even with all this success, you won’t be seeing Pact on the supermarket shelves anytime soon. “We will remain postal because it allows us to get to know every one of our customers. Traditional retail removes you by one step from your customers and as soon as you’re on the shelf at Tesco, then the biggest and most important customer you have is Tesco,” says Rapaport. However, he isn’t dismissive of big players as a rule; it may be surprising to hear that he enjoys drinking in Starbucks. What may be less surprising is it’s their earl gray tea he’s a big fan of. “It’s become really fashionable to bash Starbucks but those that do ignore the company’s extraordinary achievements,” he says. Starbucks arrived on UK shores in 1998 and led to mainstream coffee shops proliferating on the UK high street. It provided customers with much tastier freshly ground coffee. “As an organisation I respect Starbucks enormously; 15 years ago they achieved what we are trying to achieve now – they upgraded everybody in the world’s coffee habits but they haven’t kept pace with consumer taste and I think there’s an opportunity to do that again.” With Pact, Rapaport wants to recreate this phenomenon. “We hope to upgrade everyone’s coffee taste.”

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ANALYSIS

Missing a beat The music industry has faced plenty of criticism for being slow to adopt new technology and adapt to consumption habits. But has it now finally caught up?

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ANALYSIS

WORDS: JOSH RUSSELL

here can be little doubt that technology has radically changed the way we consume music, with tech rapidly shifting and redefining people’s relationships with the artists they love. “We’ll look back on it as simply a transition in technology,” says Simon Cole, CEO of 7digital, the B2B digital music platform. The uptake of MP3 first on home computers and then on portable players cemented the idea of digital distribution. Whilst this originally centred around illegal downloads, new players like iTunes, Beatport and Bleep eventually gave consumers access to digital music for reasonable prices. Gradually services like YouTube helped pioneer the streaming revolution, paving the way for platforms like Spotify to irrevocably alter the way people access music. “It’s made it far more ubiquitous than it’s ever been,” Cole continues. “People can consume vast libraries of music wherever they are; that’s a very good thing for the industry.” However, while it can be tempting to focus purely on tech platforms, it’s important to remember that these changes have been as much down to shifting consumer habits as the availability of new services. “Millenials don’t consume things the same way that previous generations did,” says David Plans, co-founder and VP of product at BioBeats, the adaptive media company creating software that dynamically generates music from the user’s heartbeat. “We used to want to own stuff,” he says. “Millenials don’t. Millenials are used to consumption by sharing.” Ultimately anything that stood in the way of the easy discovery,

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access and sharing of consumer’s favourite tracks was destined to be disrupted. In light of this, the disruption seen in the music industry seems rather inevitable. And yet the music industry fought tooth and nail to prevent it. “The rights owners within the music industry did not embrace technology immediately; they were vey resistant,” says Paul Brindley, co-founder of Music Ally and the runner of IC tomorrow’s recent Music on the move contest. Instead of embracing the potential of new innovations, the more recalcitrant sections of the industry tried to block them by implementing copy protection and digital rights management, preventing it from capitalising on the disruption in quite the way it could have. This attitude has caused much frustration amongst innovators and consumers alike but it isn’t hard to understand why there was so much heel-dragging from the big players. “A lot of it comes down to the fact that it was almost excessively profitable at one stage and where there’s excess profit there’s going to be an unwillingness to change to a different model,” says Carl Thomas, founder and director of Audiowings, the internet-enabled headphones. Physical media represented lucrative margins; sacrificing this for an uncertain benefit down the line wasn’t a risk that many were willing to take. “When you look at record label executives, they’ve got maybe a three or four year mandate,” he continues. “The time it takes for technology to pay out is a lot longer than that.”

Ch-ch-ch-ch-changes

The industry has, of course, come round in recent years; when, like Spotify, a platform is offering access to 50 million active users it becomes much harder to ignore. This kind of instantaneous access has made it far easier for musicians to reach audiences but, given the huge amount of competition for consumers’ time, has it also made it harder to stand out? Not necessarily. Instead it may be that those that do have something unique to offer stand to gain more ground. “There’s been a genuine and significant democratisation, if you will, of music,” says Richard Cohen, founder and CEO of LoveLive, the music media company.

We used to want to own stuff. Millenials don’t. Millenials are used to consumption by sharing

David Plans, BioBeats

“It’s become more meritocratic.” When an artist creates great music that chimes a chord with consumers, technology can definitely help them spread their reach much further and fast than previously possible; one only need to look at New Zealand born singer-songwriter Lorde, who went from releasing her debut EP on Soundcloud to securing a US number one single in only six months. But, in actuality, this is also a sign that the market has become much more Darwinian; those that find their niche flourish whilst others simply founder. “Create great music and fans globally are going to want to engage with it,” Cohen continues. “Create rubbish music and the technology can be as great as you want, it’s still going to have limited appeal.” For those working in the start-up space, this evolutionary ecosystem may chime a chord; Plans believes the most successful musicians are those that embrace the principles extolled by Eric Ries’ book The Lean Startup. “They need to make experiments, test assumptions, build audiences that they can track, segment and analyse,” he says. A musician may believe they have the best material in the world but they can’t honestly expect to just become an overnight success – they need to spend time testing and developing their brand in their market. “You have to release little bits here and there, build an audience and make sure that audience has interactions that can go viral.”

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ANALYSIS

This means, however, that with artists increasingly promoting their own work and technology hugely simplifying distribution, the territory of labels is increasingly being encroached upon. “The music labels are feeling the squeeze,” says Matt Pfeil, co-founder & CCO of DataStax, the company that provides the database platform that Netflix, Spotify and Soundcloud use to store data on user activities. “They used to help you record your music and then distribute it; well recording it is cheaper than ever and – thanks to the internet – distribution is now trivial.” This represents a further squeeze on margins – if musicians can produce tracks at home and reach consumers themselves then there is less need to trade off their licensing rights and eventual income to labels. “The premium of what a lot of the labels used to offer is no longer so much of premium.” Money on my mind

This means that, inevitably, the industry has reached a turning point. Artists and labels are hugely excited by the potential opportunities that innovation represents but they worry about whether they can continue to make an equitable living from services that seem to be giving everything away for a fraction of its former cost. The question on everyone’s lips is ‘can I really make a living when I’m only getting paid from $0.006 and $0.0084 per play?’ While many pundits and figureheads, from Thom Yorke to Taylor Swift, have launched scathing attacks on the financial sustainability of streaming, many have failed to appreciate the true complexity of the economic shift the industry is undergoing. Part of the problem with criticisms of the equity of the new streaming model is that people often try to understand it in terms of the old model. Compare the payout an artist used to get for releasing a CD with monthly streaming royalties and it is true that streaming revenues don’t stack up against direct sales. But this doesn’t tell the full story. “The point is that once the albums were sold, that was the end of it,” says Cole. “With streaming, you’re talking about recurring revenues that go on for months and years.” Whilst streaming might not create as many overnight millionaires, it ensures artists will continue to get paid for years to come; rather than an egoflattering payout, musicians get a sustainable income stream. “It changes the economic model of the whole of the music industry,” Cole continues. This doesn’t mean that there hasn’t been a lot of high-profile protestation about the amount streaming pays artists. Taylor Swift’s recent decision to pull her back catalogue from Spotify has once again driven the issue into the public consciousness. However, whilst she has framed this as a general protest against streaming, this seems to be open to debate. “All of 7digital’s services are carrying Taylor Swift’s back catalogue and so is YouTube,” Cole says. “This is about Taylor Swift versus Spotify; there’s something going on between the two of them.” In fact, given that her daily YouTube views have doubled since removing her tracks from Spotify, one can’t help but wonder if this is a far more cynical consideration than it first appears.

Analysis.indd 3

Once albums were sold that was the end of it; with streaming, you’re talking about recurring revenues Simon Cole, 7digital

Learn to fly

Audiowings For Carl Thomas, founder of Audiowings, life has always been about two things: music and tech. When he was 13, his father set up his own internet service provider (ISP). “Instead of running around, getting drunk and chasing girls, I was running around setting up dial-up services and broadband services,” he recalls. Thomas was always interested in the way connectivity could help people discover and consume music, setting up his own internet radio station during his GCSEs at the tender age of 16. Thomas decided he wanted to learn more about the industry, going to university to study media and communications. But he gradually

became disillusioned and dropped out in his final year. “At the time, pretty much four companies controlled the entire industry,” he says. “It just didn’t really sit well with me.” He spent some time working for ISPs and for O2 but with the rise of mobile devices, he began to once again think about bringing together music and connectivity. “I started to think about about how you could have connected devices that played music content to us without having that human element there,” he says. “That’s how we got to connected headsets.” Audiowings are streaming headphones that function without the need for a smartphone. “We’re creating a connected pair of headphones,” Thomas explains. But the real potential of Audiowings is how they tailor the listening experience to a user’s tastes and activities. “They can distribute relevant audio based on where you are, who you’re with and biometrically on what you’re doing in real time.”

28/11/2014 18:17

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31/10/2014 01/08/2014 20:38 17:18

ANALYSIS

things that one actually wants to hear has become Regardless of how you feel about Swift’s decision, harder than ever. however, clearly questions about monetisation This means that the art of providing targeted demonstrate that the current model has far from recommendations has come into its own. “The reached its final iteration. There are still plenty best way to solve that is through recommendation of ways start-ups with new ideas can help hone engines that take into account past listening and refine the current model. “It hasn’t stabilised habits,” says Pfeil. Digital music carries hundreds yet,” says Matt Sansam, programme manager of of data points that can be used to analyse patterns IC tomorrow, the Innovate UK programme that in users’ listening habits; details from the speed stimulates digital innovation and growth. “If of a track in BPM to the emotional tone of a piece you’re a tech company or a start-up with an idea, can now be detected by data analysis companies. there are plenty of opportunities for disruption “Based on a user’s listening patterns, you can and innovation.” say ‘if this person listened to a bunch of songs It’s true that any budding brand that believes that happen to have acoustic guitar in them, let’s it’s going to take on Spotify in the streaming recommend some other songs that have acoustic market is likely setting itself up for a fall. “There’s guitar in them’.” always going to be the few platforms that are going Wearables are also providing huge opportunities to achieve a stranglehold,” says for tech start-ups working in the Cohen. But increasingly, innovation music space. Inevitably the rise is spreading into areas that are less of wearables and streaming has about delivery and more about gone hand in hand; with space finding new ways to unlock value increasingly at a premium and for artists. “When we look at connectivity gradually becoming declining recorded music income, more ubiquitous, it does seem like what had been seen previously as wearables and streaming are a maybe an ancillary revenue stream match made in heaven. But whilst is being relied upon ever more as a the focus on wearables thus far primary source of income,” he says. tends to just be focused on easy One way to unlock additional access to music on the go, their value is through the creation of true potential is their ability to more granular streaming services. drive smarter recommendations “There are lots of different types “We’re all creatures of habit of music consumers out there and the way in which we listen Matt Sansam, IC tomorrow and we need to develop services to music is very much based on that appeal to all those different subconscious patterns that we’re types of consumers,” says Brindley. He points probably not even aware of,” says Thomas. “Given to services like O2 Tracks and MTV Trax that you have devices that are worn 24/7 now and that present only the music in the top charts foregoing inherently understand us, they can recommend the regular subscription required by bigger music based on those patterns.” If wearables can services like Spotify; services that target specific recognise that someone is exercising or on their user demographics are just starting to come into morning commute, learning and serving up the their own. “Right through from the die-hards who music the user desires in that context is a relatively spend hundreds of pounds every year through simple step forward. to the more casual consumers, there’s still a lot The music industry has seen plenty of disruption more to be done within different segments of the and whilst things have certainly settled over the market,” he explains. last few years, it would be naive to believe that But creating a truly granular listening experience there’s no more room for the industry to grow. that focuses on delivering precisely what the user “We may be at the end of the beginning but we’re wants to hear isn’t all that straightforward. Whilst certainly not at the end,” concludes Ben Drury, consumers have access to more music than at any chief strategy officer of 7digital. “We’re far from other time in history, almost paradoxically finding finished; there’s lots still to happen.” Best foot forward

If you’re a tech company or a start-up with an idea, there are plenty of opportunities for disruption and innovation

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Music from the heart BioBeats

Recent winner of IC tomorrow’s Music on the Move contest, BioBeats is aimed at helping people to de-stress and improve all round health, with an app that creates music based on your heartbeat. But originally it had a focus on something a little more cerebral. “It first looked at brainwaves as opposed to cardiovascular data,” says David Plans, the company’s co-founder and VP of product. But its VC suggested a pivot and this ended up being a very serendipitous decision. “There is a lot of information in a heartbeat,” he explains. “It’s a more accurate way of looking at things like stress than just brainwaves, which are notoriously difficult to interpret.” BioBeats is an effective demonstration of the potential for cross-pollination between music and other disciplines, particularly in the healthcare sector. “There’s clinical evidence in psychiatry that sound is a much more important agent to memory and recall than anything else,” says Plans. Not only does this make it potentially effective for slowing the damage caused by degenerative disorders like Alzheimers and dementia, it can also be a great way to promote behaviours that support good neurological and physiological health. “Using sound is efficient because it is immediately emotional,” he says. BioBeats is now expanding beyond just the heart; its new app, Get On Up, uses information about people’s movement and gait to generate musical feedback. “It’s about getting people to pay attention to their health in a way that doesn’t necessarily involve charts and spreadsheets,” says Plans.

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31/10/2014 19:00 17:22

FINANCE

Friends in high places Aligning your business with a high-profile investor with bags of money and experience is a fantasy for many but choose wisely

WORDS: RYAN MCCHRYSTAL

Friends in high places.indd 1

ho wouldn’t want a lavish investor with money to burn and fame to boot? High-profile investors (HPIs) can potentially throw millions your way and bring the kind of recognition a new start-up could only dream of. However, some HPIs have more money than sense. While it’s often difficult to say no to an investment, it’s important to know the difference between good and bad investments. One major benefit of a HPI is that more investors tend to follow their lead. We’ve all seen Dragons’ Den when one Dragon gets behind the product, the others follow because they don’t want to miss out. “They’re like sheep,” says Michael Bruce, CEO of Purple Bricks, the online estate agents. “High-profile investors are more frightened of losing out on a deal than losing money; when they see something that’s good they all pile onto it,” adds Bruce. Purple Bricks has a wealth of high-profile backers. The company recently received a £7m investment from renowned fund manager Neil Woodford, ex-Capita boss Paul Pindar invested an undisclosed sum in the company and Anthony Gutman, co-head of investment banking at Goldman Sachs, is also a contributor of capital and counsel. The most obvious benefit to having a HPI on board is wealth but as Bruce explains it’s just as much about the investors’ wealth of experience. “They have the grey hair; their insights into finance, flotation, tech and all that other practical stuff is invaluable to us.” Having the right HPI on board can send your growth prospects through the roof. Started in 2006, bespoke suit company A Suit That Fits had yearly growth rates of around 20% during its primal years. In 2014 HPI’s Simon Calver,

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former CEO of Mothercare and LOVEFiLM, and company upscale at an epic rate. Fernando lives and breathes technology, Gi Fernando, an entrepreneurial engineer and which is indispensable in today’s fast-paced business world. recognised expert on social media, big data and Expertise in a certain field doesn’t have to come from entrepreneurs. Sport education, came on board and now the company Lobster, the sports social media platform, was launched in April 2013. In is aiming for 50-100% growth year-on-year. just over one year it reached the 1 million user mark; this was quicker than David Hathiramani, the company’s co-founder Twitter, Pinterest or Tumblr. Now the platform has more than 1.4 million said the big eye-opener was the level of ambition users in over 220 territories globally. Co-founder and CEO Andy Meikle Calver and Fernando brought with them. “In admits that having English footballer Michael Owen and Australian racing the day-to-day, our rather ambitious end goal driver Mark Webber on board as investors early on has been a real catalyst can get forgotten and having for success. people on board with all that While the company has since parted ways with knowledge and experience Webber, Owen is still involved and continues keeps us focused. Collectively to promote the company on social media and they have kept us committed attend events as an ambassador. “Having Owen to the bigger picture.” on board was a turning point for our business. For a young business, It instantly gave us a lot of credibility and some opening doors can be difficult people who would have put the phone down a but with a HPI those same lot earlier actually listened when they heard that doors are much more easily who was involved,” says Meikle. accessible. “When you have Sport Lobster recently signed deals with the someone with you who NFL and NBA as it prepares to open its first has been there and done it, office in New York. However, while HPIs have the conversation changes. been a guiding force, Meikle is confident that the High-profile investors know company would have been a success – regardless Michael Bruce, Purple Bricks how to sell your business and of who was investing. “We definitely would have people start listening more,” achieved success but it would have taken a little Hathiramani explains. longer for us to gain the traction that we did,” he says. There is no doubt that good experience is Celebrity investors come in two categories. On the one hand, you have invaluable and the great thing about having your Michael Owens who are experts in what they do. On the other, you multiple HPIs is the different expertise they have. have those celebrities who invest in something they have no previous Calver is the hardened businessman and helps in experience of and this can go one of two ways. Take George Foreman, all areas of business; he is currently helping the former world boxing champion who has fought and beaten the best.

HPIs are more frightened of losing out on a deal than losing money

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FINANCE

Never one for being down for the court, after his sporting career he went on to invest in and promote a household grill to great success. Then there’s Ashton Kutcher who doesn’t just play techies on screen; he has made a surprisingly smooth transition into the world of venture capital, investing in successful start-ups like Skype, Uber and Airbnb, mainly through his A-Grade investment fund. For the most part Kutcher’s smart investments in the start-up space has made a lot of other VC’s look like laymen. These are the exception rather than the rule. Spanish wineries, for example have a tendency to take on celebrity investors. Antonio Banderas, not known for being much of a sommelier, got involved with family-owned wine company Anta

Friends in high places.indd 3

Bodegas. Together they launched a campaign to get the wine on the menus of Michelin Star restaurants. Instead Banderas’ bottles of plonk are much more likely to end up in the spag bol according to some experts. For Bill Morrow, CEO of Angels Den, having the professional investor or anyone with expertise

They have kept us committed to the bigger picture David Hathiramani, A Suit That Fits

in a certain field can add a lot of value to a startup. “This is typically someone who has worked in a big company and made himself very rich,” he explains. “However, if the investors have nothing to do with the sector, a very confusing marketing message goes out and it leaves you worse off. Consumers will think ‘that’s a bit weird’.” Morrow has dealt with a lot of celebrity investors and for the most part it been less than encouraging. “What happens when celebrity X comes on board is: nothing,” says Morrow. “They may have 14 million followers on Twitter but when they tweet about this thing they’ve invested in it cheapens their brand and yours because people can see through this.” The fact is those people aren’t followers of that person for their supposed business prowess. “There is an assumption that having a celebrity investor will be amazing but we’ve monitored the results and that spike in website visits, for example, just doesn’t happen,” says Morrow. A dangerous precedent is set in taking on a sugar daddy with no grounding in a sector and has more money than they know what to do with. “Most entrepreneurs are so desperate for funding that they will take money from any source but it’s probably better to not have £100,000 than to have £100,000 from the wrong investor,” says Prof. Pablo Martin de Holan, vice-president of international executive education at EMLYON business school. De Holan’s major concern is the amount of power HPIs can have. “The investment can buy more than it should given the amount invested. If they buy 20% of the firm then the they should not be dictating,” he says. “However, because the HPI has more perceived power than the entrepreneur they can end up calling the shots.” Entrepreneurs should be wary that they have much more to lose than those guys with the big bucks. “HPIs invest because they want to have fun with a firm, unlike the entrepreneur for whom this is their life,” says de Holan. It is key for businesses to keep close relationships with the investors, just as is the case with A Suit That Fits, Purple Bricks and Sports Lobster. If you have that support you can grow and develop your business a lot quicker than you could with less long-in-the-tooth investors. But this isn’t always the case; sometimes the more high profile your investor, the less time they will have to actually sit down and talk business. The overriding lesson in all of this is if you align yourself with a professional who knows about your industry and isn’t in it as a marketing ploy or for the hell of it, the support they bring can help you on the way to rapid success. Negate the warnings however and you’re more likely to receive nothing more than an egotist and their entourage.

28/11/2014 18:19

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28/11/2014 19:49

FINANCE

Five-minute money masterclass

WORDS: RYAN MCCHRYSTAL

Getting to grips with auto-enrolment In order to enhance personal pension funding, the government has drastically changed the laws and regulations around pension provisions supplied by employers. Auto-enrolment (AE) should be viewed as a great opportunity for businesses to help support their employees. It is being staged out over a period of six years, which started with the largest employers in 2012. Following a fairly successful start amongst bigger firms, it will soon roll out to SMEs and in order to keep themselves right, they need to consider the following. Here’s the low-down

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Know your legal requirements Kirsty Wild, business development manager at Quartz Payroll has conducted research that suggests a lot more awareness must be raised surrounding AE. “Nearly two thirds of small businesses aren’t sure when they will need to comply with the new legislation.” By now most staff are likely to have heard about AE in the media but as an employer it’s your legal duty to make sure they know enough. If you haven’t already, now would be a good time to start raising awareness about how the changes will affect staff. You should also know that all employers are legally required to automatically enroll certain staff into a pension scheme and make contributions. The Pensions Regulator has already issued its first fines to employers for not meeting their duties so it’s important for SMEs to ensure that they are fully compliant with the law.

28/11/2014 18:21

FINANCE

Kirsty Wild, business development manager, Quartz Payroll

Neil Lagden, head, Bond Payroll Services

Get the staging date right For many companies, the staging date at which they are expected to enrol eligible employees is fast approaching. While it is being rolled out on a largest-companies-first basis, SMEs should find out theirs as soon as possible in order to keep themselves right. This is something that can be obtained easily from the Pensions Regulator website by entering your PAYE reference number. It is important not to miss your date as this could land you in trouble. “Non-compliance could lead to the regulator to issue fines up to £10,000 per day for the largest employers,” says Karen Bexley, director and head of employment law at MLP Law.

Karen Bexley,

director and head of employment law, MLP Law

Graham Wrightson,

pensions partner, Stephenson Harwood LLP

Plan ahead “The key to implementing auto-enrolment successfully lies in the planning,” says Graham Wrightson, pensions partner at international law firm Stephenson Harwood LLP. Employers have found they needed to start preparing up to a year before their staging date, so you should start making plans in good time. Although AE began in October of this year, it rolls out with bigger companies first, so there is still time for SMEs to get prepared. Before staging, find out who to enroll. You will need to assess all your staff for eligibility but you may not have to automatically enroll all of them. Communications to members are subject to prescriptive and detailed requirements and time is required to ensure they are fit-forpurpose. “At the end of the day, the legislation is complex and sets down strict timings and specific standards; experience has shown that it is easy to become non-compliant without even realising it and SMEs should take heed that the regulator is starting to flex its muscles to ensure compliance,” says Wrightson.

The key to implementing AE successfully is planning Graham Wrightson, Stephenson Harwood LLP

Have the appropriate scheme If you have an existing pension scheme for your workforce you should check with your provider to see if you’re able use it for AE. If you need to open a new scheme, make sure that you approach the provider in good time because they will be taking on thousands of employers in the coming months and there could be delays. It’s critical to find a partner that can not only support the AE process but also work with you to ensure that your employees are benefiting from the scheme. “Many providers have AE schemes available and if your business already has a workplace pension in place then your current pension provider or IFA should be your first port of call,” says Wild. If time is running short then it may be easier to approach one of the AE specialist pension providers like NEST.

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Manage resources AE is not just something that happens at your staging date – it is an ongoing process. SMEs need to check every payday to see whether any of the members of staff who weren’t automatically enrolled are now entitled to be put into the pension scheme. They also need to ensure they are properly resourced to deal with managing the potential risks around HR, payroll systems and communications. As some larger companies realised – perhaps a little late in the day – it is vital that HR and payroll systems operate smoothly, that proper data cleansing has occurred and that data transfer between systems is seamless. There are minimum contributions you must pay in order to comply with your duties. These are a percentage of earnings ranging 1-3%. To get an idea of how much you will need to pay as a regular contribution to each staff member, the Pensions Regulator has also developed a useful online calculator. Your employees may also pay pension contributions, which you will need to deduct and pay into the scheme on time. “Assign someone within the business as the person responsible for managing the AE implementation process, such as the office manager or financial controller,” says Neil Lagden, head of Bond Payroll Services. “This is not the time for things to fall through the cracks.”

28/11/2014 18:21

FINANCE

CLIVE LEWIS ICAEW

Brace yourself: winter is coming SMEs need to be prepared for Christmas and beyond 48

A not so merry Christmas

Many small businesses experience their highest sales during the festive period. However, experts are undecided on whether consumers will splash out this year so you will need to be prepared if your sales fall short. SMEs should compile a detailed cashflow forecast and make sure they have sufficient money for trading in early 2015; this is often a slack time for businesses. Try to plan your cashflow to be as flexible as possible and schedule deliveries from suppliers only when you need them. It would also be wise to secure the best finance. If you do need extra finance to cover shortfalls research the best deals to avoid unnecessary expense. A bank overdraft may be the most effective way to bridge potential lulls in trading.

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A taxing time of year

Remember that the tax deadline is January 31 and you will have to fill in the self-assessment form online to avoid a penalty. If you’re self-employed, have relatively simple tax affairs and your annual business turnover was below £81,000, you can use the short version of the self-employment supplementary pages when filing a tax return. If, however, you have more complex tax affairs and your annual business turnover was £81,000 or more, remember to use the full version of the self-employment supplementary page when filing a tax return. If you expect to miss a tax deadline, make sure you contact the authority concerned immediately as you may be able to get more time to pay or to make ad hoc or monthly payments. Business recovery planning

It has been a particularly mild year in terms of the weather but things can change very quickly. So how do small businesses avoid any unforeseen circumstances and what risks should they be concerned about? Continuity planning is not just about recovery from disaster such as flooding or fire but can also cover IT systems failure, the collapse of a key supplier or customer, fraud and even reputational damage. To start, businesses need to address all critical

operations and identify and prioritise risks. A checklist should include: 1. Plan actions following an incident, including who needs to be notified. Have a cascade plan for staff 2. Test systems for responding to fire, explosions, flooding, snow etc 3. Know how to get operations up and running as quickly as possible. 4. Talk to your insurance broker (if you have one) about what is covered by insurance 5. Protect management and financial information. Most businesses keep financial and management data electronically or “on the cloud”. It is vital that financial and other valuable information is protected and the business undertakes regular back-ups. 6. Protect IT which is vulnerable to attack, hackers, virus and spam as well as ISP and telecoms line failures.

businessadviceservice.com

o doubt your Christmas preparations are in full swing but while you’re decorating your tree it is also worth thinking about preparing your business for the holiday season and the new year ahead. The ICAEW has issued advice for SMEs as they face a possibly turbulent winter. With many having tax bills due for payment at the end of January 2015, businesses need to be prepared for any frostiness, especially if they experience poor Christmas sales. There is, however, a number of practical steps that businesses can take to ensure that they make it through the winter and start 2015 with all guns blazing.

28/11/2014 18:21

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21/08/2014 16:22

Made in

Britain 50

Demand for British products may be high but many SMEs aren’t taking the leap into exports. It needn’t be as complicated as business owners often think

WORDS: RYAN MCCHRYSTAL

rade is war and right now the battle is raging. You need look no further for examples of an escalation in tensions than Russia’s blanket ban on western meat and dairy products or Beijing’s attempts to undermine American business. But the west can give as good as it gets. The problem with British SMEs is that they don’t seem to be giving enough. In George Osborne’s 2012 budget, the chancellor set the UK’s export targets at £1tn by 2020 and aimed for 100,000 more UK companies to be exporting by that same year. However, this is not quite going to plan because the radical action needed is nowhere to be seen. British exports increased by just 0.5% in 2012 and by 2.1% in 2013 to £505.6bn. According to the British Chambers of Commerce, exports would have to grow by 10% a year in order to meet the targets the chancellor laid out. As it stands, double digit growth is completely out of reach. Traditionally, exporting is something we Brits excel at. UK exports have risen tenfold over the last decade; the problem is they’ve risen everywhere else too. There are also certain factors holding British companies back. First and foremost, those UK firms that survived the global recession and came out the other end still intact may be more inclined to play it safe and remain in the domestic market. There are also a severe lack of tax incentives to attract SMEs to take advantage of the huge growth potential offered by overseas markets. This is one area where the government really needs to do more if it wants to meet its 2020 targets. According to Matt Guffey, director of marketing for UK, Ireland and the Nordics at UPS, the main problem for British companies is their “island mentality”. British SMEs know they are good and to a large extent they are blowing their European counterparts out of the water, especially larger firms. However, one third of SMEs are still not making the leap into exports. “Paperwork is a major concern for SMEs; generally they want to see simplified regulation,” says Guffey. Whilst very few companies

Easy exports.indd 1

Paperwork is a major concern for SMEs

value of British exports 2013

of UK SMEs generate revenues outside of the EU

28/11/2014 18:22

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SALES & MARKETING

would call for complete deregulation, many would argue that some regulations were off-putting when it comes to exporting. Legal regimes can also be very complex. For example, for some businesses to export to China, they must first liaise with the tangled bureaucracy of the British Embassy and Chinese government representatives. In order to help SMEs overcome many of the problems associated for exporting, UPS has recently launched its Export Engagement Toolkit, which provides market insights and expert advice. “We’ve also put together case studies for SMEs to learn and understand what other successful companies have done,” says Guffey. “UPS wants to educate and raise awareness about the capabilities of SMEs.” Another area of concern for SMEs is the cultural and linguistic barriers associated with going overseas. But Guffey sees this as no more than an excuse. “Overcoming these challenges isn’t as difficult as people may think,” he says. “Most of these are just perceived barriers so what needs to happen is an education of SMEs to bring about an awareness.” Ian Monk, founder of Bathrooms.com, has first-hand experience of the difficulties presented by language barriers as his company now exports to France and Germany. “It presents some challenges, depending on what you’re trying to do. If you go to Europe or further afield to sell directly to distributors then potentially that might be more of a barrier,” he says. “However, in this sector, you’ll find those you are dealing with are much more likely to speak English.” This is where choosing the right country to export to is of utmost importance. “Currency, geographical location and language will

Easy exports.indd 2

make some markets more suitable than others, says Hazel O’Boyle, an international trade advisor for UK Trade & Investment (UKTI). “I always recommend people start small and focus on one or two countries then expand from there,” she added. UKTI recently launched a guide, ‘From Local to Global’, which acts as a signpost to the help available, including examples of small businesses which have made the market leap already. “Like any job, exporting needs to be broken down into achievable steps,” says O’Boyle. “To begin with, anyone considering selling overseas for the first time needs to understand the value of their product and be clear as to why it would be desirable abroad.” Exploring the various routes into a new market is vital for SMEs and they really must look at the bigger picture. “Having supported numerous small and medium sized businesses through these stages in the export journey, I know from experience that it is time to dispel old myths around the difficulty of exporting,” says O’Boyle. “I’d encourage all businesses who haven’t considered selling overseas to book a free appointment with an international trade adviser today to discover their potential for global growth.” With barriers being so evidently easy to overcome, it remains

Currency, geographical location and language will make some markets more suitable than others

28/11/2014 18:22

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30/05/2014 20:00

SALES & MARKETING

Bath time In addition to its main UK site offering European markets affordable design in the bathrooms space, bathrooms.com has begun exporting to France and Germany in the last 18 months. The company currently has more than 50,000 customers and employs more than 50 people across three countries. “We’ve been operating for just over ten years but started as a relatively small business with just myself and my wife,” says Monk. The company grew somewhere between 50-100% year-on-year for around seven years. Monk and his wife began exporting with limited ambitions. “It didn’t matter if it didn’t make profit from day one. By limiting risk and distraction this made the decision to go to Europe much easier,” he says.“When we moved into Europe we were probably £8m turnover and while we were still relatively small, it was quite a big leap.” “Exporting may appear difficult but in reality it is relatively simple. When we started exporting we looked at how we can test the market without spending too much time or money and if we’d seen some basic traction, then would have put more energy and scale behind it.”

If you don’t take advantage, one of your competitors will disappointing that there is still reluctance among SMEs to explore all options. According to a survey by KPMG and YouGov, small businesses are more the problem, with over one third having no interest in exploring overseas markets. According to another survey by Lloyd’s, it is medium-sized companies that are holding back Britain’s exporting ambitions. Wherever the reticence may be, the facts ramain only 17% of UK SMEs generate revenues outside of the EU compared to 25% in Germany and 30% in Italy. UK SMEs who don’t engage in exporting may be really missing out. “Businesses are much more likely to survive if they export,” says Monk. “If you don’t take advantage, one of your competitors will.” Monk is also concerned by the possibility of European companies taking up part of his market share. “For us, our medium- to longterm game is about having scale; if someone

Easy exports.indd 3

comes to the UK with scale than us then that’s a very serious threat.” He advises those SMEs still not convinced of their ability to export to have more confidence. “If you’re going through sustained growth in the UK, are beginning to reach saturation point and you can take on another distraction, exports are another growth channel. If it’s done right and doesn’t put too much pressure on the business, go for it.” Lara Morgan grew her own business Pacific Direct through exporting and sold it for £20m. Now as co-founder of Company Shortcuts, an agency dedicated to sales and business growth, she speaks and advises regularly on exporting. “There are hurdles; there are learning needs like logistics and financial understanding but all of these give greater scope and value to a company making staff more resilient, business more sustainable and companies that export more profitable,” she says. Morgan has experience in emerging markets hungry for new ideas. “Start with your market research; visit potential customers and competitors in the market and make sure above all that you can be wholly price competitive,” she advises. In order to reap the spoils of the trade war, those export-shy SMEs must focus more on competitiveness. They need to avoid the mindset of ‘this is too difficult’ and with the right planning and support, they too can benefit greatly.

28/11/2014 18:22

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28/11/2014 10:44

TAP OF A BUTTON Payments platform Klarna is single-handedly boosting conversion rates by creating a simple checkout process that doesn’t scrimp on security

says. And this was becoming an increasing concern as mobile commerce was in its nascence, meaning that filling in pages of information when you wanted to make a purchase was becoming increasingly unfit for purpose. onventional logic maintains things can be done fast or they can “During this time mobile was just impossible,” be done right and often this means we are encouraged online he continues. “Trying to pull up your credit to sacrifice security for simplicity. Fortunately e-commerce card number while on the subway pulling out payments platform Klarna is making it easy for online shoppers to have of the station wasn’t realistic.” the best of both worlds, enabling secure purchases with a couple of The solution they first hit upon was a novel mouse clicks. one. Rather than forcing consumers to submit Klarna co-founders Niklas Adalberth and Sebastian Siemiatkowski their payment details there and then, Kreditor first met at middle school in their home country of Sweden but even – as the service was then known – would sit in back then it was work that truly brought them together. “We started to between the consumer and e-commerce outlet, work part time in Burger King together in eighth grade, that’s when we using invoicing to take funds at a later date. really got to know each other behind the broiler, flipping patties on the “We thought ‘why not just use underwriting grill,” says Adalberth, who is also the company’s deputy CEO. “There’s technology for all purchases so that you as not much to do right? So we started talking.” This a consumer just get a buy was the beginning of a fast friendship that saw them button?’” says Adalberth. embarking on all manner of adventures, including a This removes the risk trip around the world where they eschewed air travel. of online shopping for It was when the entrepreneurs were 23 that they first all involved. “We are in started working on the idea that would one day become the middle, making the Klarna. E-commerce was a very well established transaction 100% safe for industry by 2005 but this didn’t mean that the Klarna both parties,” Adalberth founders didn’t notice some real pain points in the explains. Consumers not process of buying online. “First of all you don’t always only get a simpler shopping feel completely safe,” says Adalberth. “What happens experience but they can wait if your product doesn’t arrive? What happens if your for products to be delivered credit card number gets stolen?” At this time, plenty Niklas Adalberth, Klarna to ensure that they work and of people were getting burnt buying through online meet with their expectations marketplaces and finding a way of removing the risk before issuing payment. seemed a pressing concern. Conversely merchants are protected from the But it wasn’t just a desire for security that sparked the creation of the risk of defaulted payments as the transaction is Swedish start-up. The entrepreneurs also recognised that simplicity guaranteed and underwritten by Klarna. “We was of increasing importance to painless online shopping and so they assume all risk for the merchant; they get paid made it their priority to find a way to declutter the checkout experience. no matter what happens,” Adalberth continues. “It was such a hassle to sort out all the forms and fields,” Adalberth “And as a consumer you don’t need to transfer

WORDS: JOSH RUSSELL

TRYING TO PULL UP YOUR CREDIT CARD NUMBER WHILE ON THE SUBWAY ISN’T REALISTIC

SALES & MARKETING

until 14 days later.” However the one thing that can’t be ignored in this equation: capital. Underwriting transactions requires a large balance sheet to protect the business from unnecessary risk. Inevitably this meant investment was a necessity for Klarna. This has seen the company draw down some impressive funding rounds: one, in 2010, saw the start-up raise £10m from Sequoia Capital. A subsequent round in 2011 raised a whopping $144m injection for the company’s balance sheet. Adalberth’s keen to stress this isn’t about shoring up the firms P&L; undoubtedly the firm could have grown without it. “We didn’t need finance in order to make a profitable business because we’ve been profitable since year one,” he says. But any company lending significant amounts of capital is subject to significant regulatory requirements and this means having a hefty buffer to protect against any sudden holes that

Our focus is on it being ‘two clicks and you’re done’ Niklas Adalberth,

Klarna

might appear in the balance sheet. “Since we assume all of this risk, we’re basically working as a bank,” he says. “You need to have equity in the company in order to lend out all this money that we do.” When the company was only three years old when it began to expand internationally. And this was as much about demand as it was the ambitions of its founders. “We signed the biggest merchant in the entire Nordics: CDON,” Adalberth says. “They covered the entire Nordics and hence we needed to as well. It was very much customer driven.” It was at this point that the company began to look at a rebrand. Thus far the company had been localising its brand for each region it entered and this began to create something of an identity crisis. “It’s really cool to have a lot brand names; you feel really big and that you’ve created something fantastic,” Adalberth says. “But, on the other hand, to get real consumer penetration it’s super hard.” 57

SALES & MARKETING

It’s something of a truism that when a rock band has to pick a new name typically a titanic struggle ensues; one can certainly say the same of start-ups. “It took two years before we could agree on something that none of the founders disliked,” Adalberth recalls. It was the beginning of an endless round of workshops, company competitions and external consultations. And, as is often the way, the ideal solution was not finding a name that was everyone’s firm favourite but finding one that no one hated. “No one put in a veto for Klarna even though each one of us had other favourite names,” he says. “Now we all really like it.” The brand name isn’t the only thing that has changed over the years. As Klarna expanded internationally, its portfolio of products has expanded with it. Whilst the company’s e-commerce focus originally just centred on invoicing, it has come to embrace a more variegated approach. “It all transformed into Klarna Checkout,” says Adalberth.

No market is the same; payments are local 58

Niklas Adalberth, Klarna

Tap of a button.indd 3

The prime focus of Klarna Checkout has been to remove the obstacles that stand in the way of a hassle-free buying experience. “We don’t believe in registration, forms or loads of stuff to fill out,” he continues. “Our focus is on it being ‘two clicks and you’re done’.” However, while Klarna believes that the checkout process should be simply, it doesn’t have similar illusions about localisation. “No market is the same; payments are local,” Adalberth says. “We cannot just expand by copying the product. We need to make it very localised.” Learning about the market that one is translating an enterprise into is absolutely vital; for example, entering Germany requires knowledge of the eight common payment methods used, as well as the Trusted Shops and TÜV certifications required for trading. In comparison, entering the UK market has proven relatively simple for Klarna because the portfolio of payment methods used is relatively slim. “In the UK, it’s mainly Visa, Mastercard and American Express; you cover 99% of all the people and they are happy with that,” says Adalberth. But the opportunities represented by the UK market are immense. Retailers have a real and pressing need to boost conversion rates on their e-commerce platforms and it’s hard to overestimate just how big an impact simplifying the checkout process can make, particularly for smartphone users. “If you look at the conversion rate on smartphones among the top retailers, we’re talking about 3-5%,” Adalberth says. “We take that all the way up to 50% or 60%.” Reducing the checkout process to a few finger taps can massively impact upon the number of consumers who make it through to the end of their purchasing journey. It’s still early days for Klarna’s role in the UK but Adalberth has high hopes for the impact it will have on British online retail, as well as e-commerce the world over. “I would be really proud when someone can go online and buy a carpet from Pakistan with just a couple of clicks and without risk,” he says. When shoppers can order wares with a couple of clicks without risking exposing their payment details to third parties, he feels it will have a revolutionary effect. “That’s when we can enable really smooth and simple international shopping for real.”

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27/11/2014 21:46

SALES & MARKETING

Slash and burn

While discounting is having its day in the sun and big-ticket items are losing out to budget rivals, businesses need to recognise value for money is about more than just rockbottom prices

WORDS: JOSH RUSSELL

Slash and burn.indd 1

onsumers’ buying habits have changed radically since the financial crash. Pound shops have become ten a penny, while Aldi and Lidl are rapidly becoming the undisputed kings of convenience retail. In light of this, it can feel the only way to compete is to follow suit and engage in a race to the bottom in an attempt to win the pricing wars. However, it’s important to remember that trimming prices isn’t necessarily the best way to guarantee fatter profits. It’s certainly true that consumers are suckers for a bargain. “Everybody these days wants a deal,” says Steve Gales, sales director at Opia, the provider of risk managed sales promotions. “Particularly as the economy gets more difficult, people are more interested in how much money they’ve got in their bank account, and want to get a deal on whatever they can.” This is the case at both ends of the economy; whether shopping for Blu-Tack or a Bentley, people are looking to pinch pennies whenever and wherever possible. With this in mind, it’s understandable why companies, particularly retailers, can feel under pressure to bring prices down to ensure that stock turnover remains at a healthy level.

28/11/2014 18:23

SALES & MARKETING

“They have a very real need to drive sales,” says Mark Russell, CEO of Optimus Performance Marketing, the affiliate marketing company. Certain industries have specific time pressures that require them to get products moving; fashion and high street retail can’t risk being left with loads of Christmas lines left in their stockrooms when spring rolls round. “If you get to a certain point within a given quarter, you need to get that stock out of the door and over to the customers.” Unfortunately focusing on price-cutting can have some negative consequences for a business. “Slashing prices is the bluntest tool in the box,” says Gales. There will certainly be occasions when a business needs to get its product moving and cutting its sticker price is almost a guarantee that it will start flying off the shelves. However, it’s not such a sweet deal for the brand as it is for the consumer because the company is cannibalising its margins to bring in more sales. “It is likely to be the most expensive way for you to get a result.” Another issue comes from the fact that if customers become used to seeing products or services served up at bargain basement prices, it will influence the way they view the brand attached to them. “Basically you condition customer behaviour,” says Russell. “People will get to the point where they go ‘I’m not going to buy that unless I know that there is a discount forthcoming’, so you get in a kind of Mexican stand-off with the customer.” Gales has had first-hand experience of how offering a cut-rate price from the off can change people’s perceptions of the value of a product from a previous position working with computer company HP. “We’d procured

Slash and burn.indd 2

this product,” he recalls. “It was a laptop with a great price position and amazing specification and we thought that when we dropped that product into the market everybody was going to go crazy.” Unfortunately consumers didn’t have a sense of the value they were being given and merely saw another laptop entering the market with no idea of the bargain they were being given. “We knew that it was a brilliant deal,” he explains. “The consumer had no idea.” Fortunately there is no shortage of alternatives. One example Russell gives is sales promotions such as buy-one-get-one-free or three for two. Whilst customers get a feeling that they’re getting an excellent deal, a company isn’t devaluing either the perceived value of its lines or its end take. “You’re actually encouraging people to buy more rather than encouraging people to spend less on the one thing that they wanted,” he explains. “That can be perceived very differently to just giving 20% - 50% off.” If you fancy a subtler approach, it’s important to remember that not every discount means plastering ‘SALE!!!’ signs all over your windows or website. “There are ways of being very tactical and aiming a very good discount at a discrete group of users that doesn’t cause that kind of brand trashing,” Russell says. Brands increasingly retain more and more data on their customers and this means that very precise promotions can be targeted where they’ll have most impact. “Companies gain far more bang for their buck and also it remains completely unnoticed by the rest of the population,” he explains. “It kills two birds with one stone.” But there are also ways to increase the perceived value for money a consumer is getting without knocking even a penny off the asking price. Opia does a lot of work with tablets, phones and PCs and has found that there are great value-added features available that can win over floating voters. “One way to get a point of difference is to provide some content,” Gales says. Packaging in free music or movies can often help encourage consumers to part with more cash. “You’ve got a win-win because you’re kept your pricepoint high, you’ve kept the value high and you’ve moved the same inventory as if you were to do a £50 price drop.” Additionally, it’s important to remember that a high level of service can be a stronger differentiator than a low price. If you are trying to win customers over to try an unfamiliar product or service, they are more likely to be convinced by confidence in its value rather than a slashed price. “We might look there at a value-added feature that is much more strategic,” Gales says. “Something like a satisfaction guarantee – like ‘try this product; if you don’t love it, return it free within 90 days’.” In these circumstances, customers are more likely to take a chance with a more premium product or service because the brand has derisked the investment. Whilst blanket price reductions can have a definite impact on buying habits, it’s clear to see that there are plenty of ways to give good value for money that don’t damage a brand’s profits. So remember to consider your options before grabbing the pricing gun.

There are ways of aiming a very good discount that doesn’t cause that kind of brand trashing Mark Russell, Optimus Performance Marketing

28/11/2014 18:23

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31/10/2014 15:54 19:26 22/04/2014

PEOPLE

A time for giving This Christmas, take the opportunity to engage, recognise and thank employees for their hard work

WORDS: Ryan McChrystal

t’s that time of year again for shopping for presents, visiting family and friends and annual drunken karaoke session at the office party. Christmas can be a really distracting time of year when the attention of employees isn’t necessarily on work. This can lead to a real slump in performance and ultimately put a dent in your bottom line. “Research shows that the decline in productivity levels costs businesses almost £259m throughout the annual party season,” says Natalie Vescia, B2B marketing and client relationship manager at DIY retailer, Wickes. But before going full-on Scrooge and trying to ban Christmas, consider that it’s also a time for reviewing end of year targets and reviewing and recognising the efforts of employees over the previous 12 months, which can actually have a positive impact on business. “It is vital for businesses to keep their staff motivated in the run up to the festive season,” adds Vescia. “In order to keep momentum going with all these distractions going on, employers can look toward incentive schemes with attractive rewards.” Giving rewards throughout Christmas and Enabling into the new year is good route to keeping employees motivated in the final few weeks employees to of the year and into 2015 but rewards do not make a personal have to be confined to this time of year. How choice in the type often a business implements rewards comes down to the budget they set. Working out of reward they how much to spend also gives employers an receive delivers idea of what rewards they can make available. When deciding which rewards to offer, it is real impact important to realise that a ‘one size fits all’ policy is usually ineffective. A reward suited Natalie Vescia, Wickes to a student living at home with his parents – concert tickets, for example – may not be suited to a father of three – who may appreciate something more low-key like a meal voucher. “Enabling employees to make a personal choice in the type of reward they receive delivers real impact as it helps them to remember the gesture, their employer and how they earned the reward,” says Vescia. “Any failure to carry this out effectively can result in the reward being quickly forgotten and resources wasted.”

A time for giving.indd 1

28/11/2014 19:12

PEOPLE

Deborah Rees, director of consulting at Innecto Reward Consulting agrees that the personal touch is key to success when it comes to a rewards system. “If you give a bottle of wine to a non-drinker it sends the message ‘I’m not interested in you and I don’t care about you personally’,” she says. “A manager should take the time to find out what an employee would really appreciate.” In seeking the personal touch, it would also be useful to remember that in a multi-faith society, focusing too much on ‘Christmas’ bonus rather than the ‘end of the year’ or ‘holiday’ bonus may not feel inclusive to all. This is a time of year with a strong emphasis on socialising but the reason for doing so need not be tied so firmly to one particular tradition or culture. Acknowledging good work needn’t be expensive. If a budgetary constraints don’t allow for lavish gifts, don’t underestimate the power of a simple ‘thank you’. “Because everyone knows the boss in an SME, it’s often really nice if the boss writes the letter. Acknowledgement that they’ve been working really hard and you recognise the contribution that you’ve made,” says Rees. “Time off can also be relatively cheap to give away but also highly prized by employees,” she says. “Employers really just need to think outside the box for things that are cheap to give away but that the employees would genuinely actually value.” Money may make the world go around but when it comes to rewards it is surprisingly unpopular – especially in small amounts. This approach can also be costly for businesses. “Typically, try not to use cash, which will just end up going on the gas or credit card bill. Whereas if you actually give someone something they have to use to buy something, they will typically use it for something they really want but wouldn’t have previously prioritised,” says Rees. Vouchers provide a hassle free approach for both employer and employee which, in turn, leads to increased uptake of the reward programme and improved return on investment. Jo Manton, managing consultant at ASK Europe plc, also sees the merits of this approach. “Gift tokens and vouchers are often popular as staff can spend them in many different ways according to their own preferences,” she says. However, employers should be careful not to appear cheap. “Often a reward may fit a budget constraints but sends the wrong message, for example a £5 gift token may offend rather than flatter.

A time for giving.indd 2

Try not to use cash, which will just end up going on the gas or credit card bill Deborah Rees, Innecto Reward Consulting

Whatever the time of year, it is important to think long and hard about who you are rewarding. Obviously, rewarding everyone would defeat the purpose of raising production; it would become expected by employees regardless of performance. “Consider what behaviours or performance the system intended to encourage, and which are in line with the organisation’s business needs,” says Manton. “The best way to make sure staff do not become too focused on achieving the reward rather than the task is to make sure that the reward criteria are relevant.” It would also be useful for an employer to know what a bad rewards system looks like. “An employee of the week or month is a system in which just ends up being somebody’s turn and completely negates the point of a rewards system. It’s rigid, old fashioned and doesn’t work; it is far better to actually recognise an employee has done something right and reward them soon afterward,” says Rees. So as you’re feeling the pressure and you notice your staff are working hard to meet demand, remember to be generous with then this holiday season. It’ll pay off.

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28/11/2014 11:13

PEOPLE

Shoring up the skill shortage If UK enterprise is to address skills shortages, it will require a broad range of solutions. We take a look at some of the key approaches

WORDS: JOSH RUSSELL

he employment market is in rude health. “Statistics continue to point to the fact that employment is on the rise,” says David Rudick, VP of international markets at Indeed.com, the job site. He points to recent findings from the Office for National Statistics that reveal unemployment from July to September was down 115,000 on the previous quarter, bringing unemployment down to 1.96 million. However, reciprocally, as vacancies have increased, the war for talent has intensified and skills shortages are an inevitable byproduct. “According to the British Chambers of Commerce, 92% of UK companies identify a skills shortage among their workforce, with skills gaps showing most prominently in the areas of leadership, planning and computer literacy,” he continues. For this reason, skills shortages have once again come to dominate the headlines, with both the construction sector and the big data industry reporting over the last few months that they are having difficulty in filling skills gaps. But what lies behind these shortages and how can we begin to address them? Degree of difficulty One challenge comes from the fact that the way we have traditionally assessed fledgling talent is no longer fit for purpose. “Historically, it was very easy to identify the employee you wanted just by the type of degree they did and the university that they went to,” says Stuart Pedley-Smith, head of learning for Kaplan Financial, the provider of financial, accountancy and business training. Rather than focusing on the precise expertise a graduate had picked up, employers could afford to make generalisations; the foreign office might be satisfied with a high-end degree in the humanities from a red brick. “Then the first two to five years of working in the company are actually the ones in which they would teach you your trade.”

Shoring up the skill shortage.indd 1

There is global war for the best talent; the UK government needs to look at how the UK competes David Rudick, Indeed.com

28/11/2014 18:31

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28/11/2014 10:46

PEOPLE

But the output of the nation’s universities has changed substantially in the last two decades, with both the number of graduates and diversity of degrees obtained increasing hugely. This has forced employers to be far more selective when recruiting for roles and a degree is less of a catch-all qualification than it once was. “Given the broader catchment of people, employers can’t see so easily what they saw before,” Pedley-Smith says. “The ability then to actually judge the quality of the candidate through the degree they’ve done is actually very difficult because there’s very little standardisation.” One potential solution to this is to encourage more companies to have more direct oversight of degree content. “We should move more towards work-based, company-financed degrees,” Pedley-Smith says. He highlights the example set by Tesco and Loughborough University as being the ideal; Loughborough provides the academic content whilst Tesco covers all of the practical and up-to-date employment advice. “That’s a really good solution,” he continues. “If you’ve had somebody working with you for three years whilst working towards an academic qualification, you are observing them from many angles.” A world of difference One of the ironies of the current skills shortage is that there is a wealth of high-skilled talent from outside of Britain that is eager to find work within our borders. Rudick reveals that a recent study Indeed.com conducted found that there is a huge demand from external talent for positions within Britain. “The UK is the third most desirable labour market in the world, with one in ten job searches in the UK coming from international sources,” he says. “Yet this contrasts with the reality, which shows that cross-border movement from skilled workers is low.” Whilst immigration is something of a controversial subject, limitations placed on free movement evidently place additional pressure on industries trying to recruit the skills they require. “Job seekers are meeting barriers when trying to put their desire to seek an international job into practice,” says Rudick. If we are to plug the skills gap, he recommends that the government reassesses its visa and migration policies for skilled talent to allow better international workforce mobility. “There is global war for the best talent,” he says. “The government needs to look at how the UK competes globally in attracting the right talent at the right time.”

Shoring up the skill shortage.indd 2

We should move more towards work-based, companyfinanced degrees Stuart Pedley-Smith, Kaplan Financial

Soft focus It’s hardly surprising that in the modern climate of disruption and uncertainty that businesses are struggling to secure precisely the talent they need for certain roles. “Nowadays, with the world and technology changing so fast and the huge global competitiveness for jobs, the marketplace is a lot tougher,” says Michael Mercieca, CEO of Young Enterprise, the enterprise education charity. “Employers are more demanding; they need really good people because they’re after growth.” Inevitably the volatility of the market means that the kinds of skills a business will require in the long term are far harder to pin down. “This pace of change means that somebody with six months’ worth of new or niche digital experience could be seen as a leader in his or her field ahead of someone with ten years’ work experience,” says Adam Croxen, managing director of Future Platforms, the creative digital agency. In the tech space, new areas of focus such as user experience design for wearables or Apple’s new programming language Swift can quickly become essential. “This makes filling the skills gap problematic because employers are seeking talent from the same small pool of candidates,” he says.

28/11/2014 18:31

PEOPLE

Given that it’s harder to guarantee the skills that the talent of the future will require, it becomes more important for recruiters to focus on sourcing skills that are timeless, rather than concentrating on patching shortterm technical skills gaps. “You need designers, developers, advertisers and strategists who are flexible, adaptable and willing to evolve with the industry,” says Croxen. “It becomes less about a skills gap and more about evaluating potential candidates on their behaviours, aptitude and qualities.” Technical skills are going to be key to any business but it is true that standout candidates are almost certainly those that possess a portfolio of softer skills. “Aptitude and attitude are probably the most effective ways of picking people,” Pedley-Smith says. Whilst the current focus on increasing the priority of STEM subjects in the curriculum will certainly go some way toward addressing skills shortages, increasing young people’s adaptability, creativity and resilience will ultimately be the key to creating a more versatile workforce. “Once you have got those fundamental skills, then the technical content and the knowledge aspects are the much easier parts of the problem,” he explains.

It’s about evaluating potential candidates on their behaviours, aptitude and qualities Adam Croxen, Future Platforms

Getting hands on However, teaching these skills as a part of the education system is easier said than done. While technical and academic skills are fairly simple to measure in terms of academic results, knowing how one should structure education in soft skills isn’t all that straightforward. But it’s important to remember that soft skills aren’t something abstract developed in isolation; often they have plenty of influence to bear on other academic subjects. “We should be teaching them more conceptual skills like the ability to think or problem solve, embedded within the existing subjects,” comments Pedley-Smith. There are also more hands-on ways of

Shoring up the skill shortage.indd 3

imparting these kinds of skills. Young Enterprise’s 5 Skills Campaign has a mission to ensure that education imparts five key skills in young people to help them in the world of work: communication, resilience, problem solving, creativity and teamwork. But Mercieca is keen to stress that this is something that can’t just be learnt from a textbook; instead it needs to be taught through practical, experiential learning. Drawing on the organisation’s other schemes, such as Fiver – in which primary school students are pledged £5 to start their own business – he believes practical experiments and activities are the key to fostering these

kinds of skills. “They are learning by doing and that means learning from their mistakes,” Mercieca says. Actual experience can help children not only learn these kinds of soft skills but also how they can be applied in practice. “When you’re waiting for a supplier to deliver your product and you realise that you can’t sell for the price that you thought, that’s how you learn these softer skills.” But while the pressure exerted by skills shortages is certainly very real and immediate, no solution will be quick and easy. “There is a need for a long-term strategy,” says Mercieca. “We need a 20-year plan, you need cross-party and cross-parliament support – not one term.”

28/11/2014 18:32

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PEOPLE

Convert your followers into leaders A good entrepreneur understands that employees need opportunities to grow and advance. This month Lyndsey Simpson looks at bringing out the leader in the best of your lot 74

magine the scene – your business is thriving, your employees are feeling engaged and empowered and they’ve become ‘followers’ of your business values and ideals. There you are, leading them all on your pathway to success. Utopia right? Wrong. Let’s face it, we’re not going to be around forever, which means you’ll need others around you to help inspire, motivate and lead all of your followers in order for your business to reach its full potential. Last month I addressed ‘how to convert your employees into followers’, to become not just workers for your business but believers in it. Well this month I thought I’d take that a step further and look at how you can take these followers and make them into dynamic and passionate leaders for your business. We’ve all heard the saying ‘too many cooks spoil the broth’ and that couldn’t be more true than in a business environment. However, we all know too well how difficult things can be when the leaders of a group and their responsibilities are not clearly defined. The key is to find the happy medium, not only the right leaders but good leaders too. In this current age of business, structures are often seen as ‘flatter’, with many individuals looking for progression and more responsibilities. Furthermore, over the last decade we have seen a cultural shift that has changed the leader stereotype. No longer a supervisor’s role, a leader nowadays is often immersed within their team, making changes in a ‘hands-on’ manner. With this in mind, I wanted to first address the types of leaders you might come across within your business.

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What types of leaders are there?

A titular leader is often the most dangerous kind for your business. It is exactly what it says on the tin: a leader in name but not in nature. They are typically given a job title that reflects a management role, however do not deliver on the leadership responsibilities. As a result they can have a significant negative effect on group efficacy. So how do you convert your followers into titular leaders? Well, you wouldn’t want to. You should avoid this scenario by keeping the use of ‘artificial’ job titles to a minimum wherever possible. A formal leader is a leader in the truest sense of the word. They are appointed – be it by management or peers – into a position of responsibility. Formal leaders are likely to have respect and acceptance from their followers but their influence over them often lies solely on their position of authority. The process of converting these types of leaders will be business dependant and will often follow quite a smooth process of promotion. In order to truly maximise the effectiveness of formal leaders, a clear delineation of roles, responsibilities, and leader / follower boundaries should be developed. Last, but by no means least, you may find peer leaders within your business. These types of leaders are a different breed entirely but can turn out to be a business’s best friend. Often referred to as ‘cultural architects’, these will be the movers and shakers down on the ground, whom peers look to for guidance. A great way of finding out who may be the cultural architects in your business is to instigate some change and sit back to watch.

Once you’ve identified who these characters are, acknowledge them and bring them into your inner sanctum

28/11/2014 18:28

PEOPLE

Followers will look to their peer leaders for a signal on how to react, whether to accept or reject the change and whether to gauge it positively or negatively. The benefits of knowing who your peer leaders are and being able to work alongside them are significant. But the real question is: how do you convert your followers into peer leaders? A guide for conversion

The first step in any good programme is acceptance. If you’re able to accept early on that your business may be controlled by peer leaders over the leaders you appointed, even in some small part, then you’re on to something. Once you’ve identified who these characters are, acknowledge them and bring them into your inner sanctum. Share with them plans in advance, gain their input and support before rolling out communications or change and then you have the power of the ground-up motion of support. Through the process the peer leaders will become aware of their influence and the titular leaders will become aware of their lacking influence. Being the one to highlight this in both scenarios can be very advantageous and then help both groups find their place and role in your business with this identified. Once leaders are aware of their position and effectiveness within that position, they must take ownership of their responsibilities. For formal leaders, this is a likely to be something they already excel at, assuming they’re good at their jobs. However for peer leaders and titular leaders in particular, this will take a little more effort. You can assist leaders at this point to ensure they have total clarification over what they should be ‘owning’, be it the management of projects or other individuals or the responsibility of being a ‘voice’ for other people. As soon as they have a clarification of their accountabilities, they’ll be in a better position to act autonomously and ultimately more effectively. Much the same as learning how to ride a bike, it takes time and effort to become an effective leader. This is particularly true when making the transition from a follower to a leader. Allow your leaders to have some room for trial and error time, perhaps even shelter them during this time. Provide support and training and ensure you help them on their journey but also make time for regular feedback from you as to what’s going well and what needs to be worked on. Also, from their perspective, keep asking them what scenarios they find the trickiest and help them work through solutions and tactics to overcome them. Good luck with converting your followers to leaders and don’t forget to identify and utilise your peer leaders as one of the most effective routes to your teams.

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28/11/2014 18:28

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30/09/2014 14:27

TECHNOLOGY

How times flies when you’re having fun. Christmas is once more upon us and, knowing how busy you all are mastering your chosen markets, we thought you could use a little hand with your Yule shopping. Here’s our pick of the season’s most sensational devices and the best crowdfunded Crimble tech

Prizm

Any streaming device wanting to prove its mettle has to be capable of something pretty bloody spectacular. Prizm certainly manages this. Not only does the device stream music but its algorithm learns from your feedback, playing new music that will suit your tastes and ignoring the kind of stuff that doesn’t float your boat. But it doesn’t stop there. It pumps out livelier tracks to match the mood of a louder room. By tethering to smartphones, it can tell which householders are in the room and deliver tunes to everyone’s tastes. It can differentiate the music you prefer for Monday morning and what you like on Friday nights. Seriously clever streaming tech.

WORDS: JOSH RUSSELL

Jawbone UP3

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Whilst the market is flooded with wearable activity trackers, Jawbone is the undisputed king. The UP3 demonstrates precisely why. Now packing a range of bioimpedence sensors, the smart bracelet can track elements like heart rate and skin temperature. Its sleep tracking has gotten smarter, able to differentiate between light, deep and REM sleep as well as providing guidance on sleep patterns and featuring a smart alarm to wake you up at the perfect moment in your sleep cycle. Slated updates also include abilities to track stress and hydration, with an eye to eventually monitoring information such as stress and fatigue.

28/11/2014 19:20

FP AD PLACE.indd 1

31/10/2014 19:39

TECHNOLOGY

Muse

Flux

Mindfulness has gained plenty of currency in business circles in recent times, boosting mental health, increasing focus and awareness and reducing stress. However, technology has generally been seen more as a hindrance than a help to the pursuit of a clear mind. At least until now. The Muse Brain Sensing Headband uses an EEG to monitor brain signals, giving auditory and visual feedback as well as guided exercises to help users focus, concentrate and relax. Getting such a clear picture of how cluttered your mind is and the opportunity to practice more mindful habits will be a real boon to any techno meditator.

It’s fair to say that home crafting has captured the public’s imagination and inspired a whole new generation of design enterprises. However, while technologies like 3D printing are far cheaper than they once were, accessing a variety of kit is still prohibitively expensive for the amateur. Flux is an ingenious solution to this problem: with magnetic interchangeable heads the basic unit of modular device can 3D print, laser engrave and 3D scan, all for a wallet-friendly $679. Additionally, new modules are already under development: a dual extruder for multiple colours, a ceramics extruder and an extruder for chocolate and other edibles. A tasty piece of kit.

Samsung Galaxy Note Edge Inevitably, any attempt at a truly innovative smartphone design is going to divide opinion. However, Samsung’s Galaxy Note Edge seems to be one of the first attempts at redesigning the smartphone that actually has a chance of a decent uptake amongst users. The device’s eponymous edge – a curved screen that extends to one side of the phone – really improves the tactile experience of controlling the device and is definitely the first high-concept phone that makes a case for function trumping form. However, a shorter battery life and a high price tag might put off all but the most ardent of early-adopters.

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28/11/2014 19:20

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TECHNOLOGY

A secure future

WORDS: JOSH RUSSELL

Given the number of online security breaches facing SMEs, never has it been more important to keep businesses safe. We take a look at some of the most interesting innovations on the cyber-security market and the companies that created them

Access all areas OneLogin

Thomas and Christian Pederson hit upon the idea behind OneLogin when they were working for Zendesk, the cloud-based customer service platform. Through talking to some of the larger clientele, they identified that although cloud solutions were helping organisations to be more versatile and efficient, they weren’t without their flaws. “Whilst all of these technologies are helping organisations to be more productive than they ever have been in the past, there are some risks associated with this,” says Daniel Power, director of EMEA at OneLogin. One issue is that the more applications and services the average employee comes to rely

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upon, the more login details they are forced to remember. “When it comes to cloud services, you can end up with 100 different passwords for 100 different applications,” Power says. Another is the fact that it’s becoming increasingly hard to revoke access to services once an employee leaves the company. “When you let somebody go, you basically say ‘can I have your laptop back and can I have the keys to the offices back?’” he continues. “But obviously with the cloud, that’s much harder to address.” OneLogin helps address both of these issues. “Firstly, it’s a single sign-in platform so we basically allow users to have a single password to access all of these services,” explains Power. Rather than having to log-in multiple times, users simply sign in a single time and gain access to all their accounts. Secondly, it allows enterprises to

revoke access to applications as and when it is needed. “In laymen’s terms, OneLogin acts as a centralised killswitch,” he continues. “If somebody leaves your organisation, you can go to one place and revoke access to all of those services.” After raising seed money from Charles River Ventures and some Silicon Valley angels, the firm has grown significantly since 2011. It counts amongst its customers companies like Netflix, the American Automobile Association, News UK and Conde Nast. And its ascent looks set to continue: Power references stats that indicate 86% of new services being developed are now being delivered via the cloud. “This means almost every organisation in the world is going to need a service like ours to be able to manage all of those services,” he says. “So from our perspective it’s a very exciting opportunity.”

28/11/2014 19:21

TECHNOLOGY

A machine of one’s own Bromium

Rather than having to log-in multiple times, users simply sign in a single time and gain access to all their accounts Daniel Power, OneLogin

82 This means malicious code can never reach the vulnerable part of the system or access sensitive data Ian Pratt, Bromium

Passwords are the classic one that’s misused because although theoretically it’s very strong, 95% of the population don’t use them properly

Founded by the trio of Ian Pratt, Simon Crosby and Gaurav Banga, Bromium is an excellent example of just what can be achieved when British innovation meets Silicon Valley’s ambition. “Both Simon and myself are Brits; we both used to work at the University of Cambridge,” explains Pratt. “The funding came from Cupertino but the engineering heritage is very much from Cambridge.” A lot of cyber-security efforts are targeted at detecting threats online and terminating them before they can do any damage. “All of the existing products really rely on detection as the main means of trying to protect the system,” Pratt says. “But that of course relies on someone having seen it before and having created an appropriate signature to enable other machines to spot it.” And even once something has been identified, there is very little that stops an attacker tweaking their code so it once again evades detection. Bromium flips this on its head. Rather than running tasks in an unsecured environment and then shutting down malicious code when it arises, Bromium creates a virtual machine – essentially a simulated computer system – for each process the user conducts. “The effect is as though you’re unwrapping a brand new computer, using it just for that task and then, as soon as you’ve finished it, throwing it away,” Pratt explains. This means malicious code can never reach the vulnerable part of the system or access sensitive data. Already the firm has seen significant uptake amongst large organisations, from those in the intelligence community to many of the world’s top banks and insurance firms. But it has its eyes on a much broader market in the long run. “Right now we are really focusing on the people that really need it, the people that have a lot to lose,” says Pratt. “But we see this as something that will ultimately be a consumer product.”

Worth a thousand passwords PixelPin

The concept for PixelPin first came when co-founder and CEO Brian Taylor was doing some consultancy work the Metropolitan Police. “He was in the black and white van and all of the police’s laptops crashed,” explains Geoff Anderson, his fellow co-founder and COO. Out came the officers’ notebooks as all involved had to feverishly look up reams of passwords and login details to get all the kit back online. “It was just an off-the-cuff thought really; ‘there has got to be a better way’,” he says. “That’s how it all came about.” Part of the problem is passwords are often hard for people to remember but easy for machines to crack. “I always say 95% of people don’t really understand security, so giving them complexity isn’t helping them because they’ll just misuse it,” Anderson says. “Passwords are the classic one that’s misused because although theoretically it’s very strong, 95% of the population don’t use them properly.” PixelPin’s solution addresses this; users select four points on a picture, which makes it far easier to remember and yet very hard to crack. Having obtained an £100,000 like-for-like grant and secured investment through Telefonica’s Wayra, PixelPin has been developing the product with input from some large organisations. Inevitably it has seen particular interest from fintech firms as they have significant assets to protect. The firm is currently looking to raise again and expand it’s team to deal with the demand it’s seeing. “We have a big pipeline so it’s just a question of working through it,” says Anderson.

Geoff Anderson, PixelPin

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31/10/2014 19:29

TECHNOLOGY

DAN KIRBY TECHDEPT

Two heads are better than one

Solely having a marketing brain or a tech brain no longer cuts it. Marketing technologists bring the best of both worlds

o matter which way you look at it, the world is now run by the guys that control the tech. Google. Facebook. Apple. Amazon. And that’s not to mention the upstarts like taxi app Uber, rent-yourroom website Airbnb and messaging platform WhatsApp. These are real companies worth many billions. We’re currently going through a ‘third industrial revolution’ – think about cloud computing, big data, the internet of things. How we engage with the world is increasingly mediated by technology. This trend is most obviously seen in the world of marketing, which now requires a whole set of new skills. Knowledge of systems, platforms and social media is more important than knowing how to print a leaflet or book a Yellow Pages ad. The most successful modern marketing combines the skillsets of the marketing director and the IT director – what’s becoming known as a ‘marketing technologist’. Gartner analyst Laura McLellan recently predicted that by 2017, chief marketing officers will spend more on IT than their counterpart chief information officers. But how can you take advantage of the marketing technology tricks which will keep you one step ahead? Truly understand your audience

We’ll assume that you’re already quite active on social media – that you’re tweeting, posting and have a set of followers. But how much about them do you really know? A great tool for Twitter is Followerwonk, which lets you learn more about your followers with useful nuggets such as their identity, location and tweeting habits. This allows you to find any patterns and tailor your tweets accordingly. But perhaps its most interesting feature is that you can compare the followers of competitors to identify new audiences to engage with. Many people use Google Analytics, which

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28/11/2014 19:26

TECHNOLOGY

There is a great Chrome browser plugin that lets you share a web page directly into Buffer, so if you read a great article you can share it in a couple of clicks, adding it to your ‘queue’ with a comment. Their mobile app is also really slick, especially if posting to multiple accounts. When managing multiple feeds and message threads from your social media accounts, I recommend Hootsuite. This is an easy way to see what’s happening across all your social accounts really simply, using a tab and column system to let you flip between accounts and different streams of information. For Techdept, I check this twice a day – at 9am and 5pm – and can easily respond to any tweets in one dashboard. I also set up columns of search terms, such as blog titles that I have written, when I want to see if they have been shared and by whom. Treat failure like a scientist

A good marketing technologist will view failure in the same way that a scientist does undoubtedly gives you a good macro view of your web site visits. But given each one of those numbers and graphs represents a real person, how do you find the human behind the stats? Analytics software Kissmetrics aims to solve this problem. It puts a face to the figures by tracking who visits your site and – as soon as you have some identifying data – lets you see them as individuals. Kissmetrics is able to backdate its analysis, so you can see so if someone visits your site five times before signing up. This means that instead of having anonymous macro stats, you start to get a more qualitative picture of your web site traffic, providing texture and colour to an often impersonal picture. Take out the legwork

But even if you know the profile and social media habits of your audience, how do you effectively communicate with them without creating an admin headache? I face exactly this problem and use a tool called Buffer to post all my Twitter activity – it can also be used to manage Facebook and LinkedIn – for both my personal account and for my company, Techdept. Buffer works by reviewing your followers and then scheduling your tweets for when they are most likely to be read. So when the urge takes hold, you create your tweets and Buffer publishes them throughout the week. An in-app analytics feature shows your top tweets and it even suggests new posts to share based on your past activity. Simples.

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Modern marketers need to change how they see ‘success’ and ‘failure’. For too many people failure is the end of the road but a good marketing technologist will view failure in the same way that a scientist does. In a scientific experiment, a failed hypothesis means that you go back to the drawing board with data on what you know doesn’t work – it helps guide the next experiment. With this in mind you should invest in some simple – and now cost effective – tools to add some science to your web design. At Techdept, we have recently bought a Tobii Eye X Developer Kit, with which we test early web designs before they go to our clients. It fits on top of a screen and tracks eye movements as you look at that screen, so you can see how people actually look at a design before you write a single line of code. This lets you ‘fail fast’ in the design process – ditching ideas that just don’t work. And when a web site goes live, it’s important to build knowledge on how people truly engage with it – do they click on the things you want them to click on? How far do they scroll? We use a tool called Crazy Egg – heat mapping software which lets you see this information in detail, in a simple visual way. By installing some javascript on your web pages, Crazy Egg lets you see who’s clicked where in a simple visual overlay, you can even see from which search engine they have come from. This means you can test your web design with actual people – your site visitors – and adapt accordingly. With these tools and ways of approaching your marketing, you can stay one step ahead in this dynamic digital world – becoming your very own marketing technologist. Remember – the geeks have inherited the earth.

28/11/2014 19:26

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LEGAL

Calculate the

risk

The Employment Appeal Tribunal has ruled that overtime must count towards holiday pay but it’s not as bad as some are claiming for SMEs

WORDS: Ryan McChrystal

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hether you’re an employer or an employee, we’re sure you noticed the ruling last month that the calculation of holiday pay should include non-guaranteed overtime. The decision has been hailed a victory for workers, with Paul Kenny, GMB general secretary, saying: “This judgment ensures that workers are properly paid for holidays and is a good and welcome result.” However, with 400,000 UK firms expected to be affected, millions of employees will make backdated claims of overtime. While employers will need to be prepared to work out how much they could be liable for to avoid being caught out, it is highly unlikely to be a “timebomb” that will bring small businesses to the brink as the Institute of Directors warned. To give some context to the ruling, in the combined cases of Bear Scotland Ltd and others V Fulton and others, Hertel (UK) ltd v Mr K Woods and others and Amec Group

Ltd v Mr Law and others, the Employment Appeal Tribunal (EAT) ordered on November 4th that there is an intrinsic or direct link between the earnings and the work that the employee is required to carry out. “In a legal nutshell this means workers are entitled for any pay in respect of overtime to be included when calculating their holiday pay,” says Sarah Cooper, legal Advisor at Allianz Legal Protection. The British Chambers of Commerce warned that the ruling would leave firms “at risk of incurring significant financial losses, which could force them to close their doors altogether.” In response to such claims, Cooper believes that business leaders may be scaremongering over the effect this judgement will have. “In my experience from advising SMEs, some have always included overtime and commission payments in the calculation of holiday pay so this will not have a major impact on those who have always calculated using its employees' average actual pay and not their basic or normal salary.” Of course, the bigger your business, the more

28/11/2014 19:27

LEGAL

time consuming this ruling will be but for SMEs it will be much easier. For those businesses with workforce management solutions already in place it will be an administrative breeze. The greatest perceived threat to businesses with this ruling was that claims could go back to the implementation of the Working Time Regulations in 1998. However, the judgment limits claims for deductions where no more than three months has passed between any underpayments, so in reality it is likely employees will only be able to claim for deductions going back one leave year. “Of course leave to appeal has been granted so this position may change but in my opinion it is unlikely that the Court of Appeal will decide that employees can recover underpayments going back to 1998 as this would be a massive burden on businesses,” says Cooper. It is also important to note that the judgment only includes the four weeks paid holiday required by the Working Time Directive (WTD) of 2003 and not the additional 1.6 weeks provided for under UK law. “This will limit the financial burden on employers; however it could also create an administrative nightmare differentiating between the four weeks and the 1.6 weeks,” says Cooper. As 1.6 weeks of holiday need not include nonguaranteed overtime, it may be easier for employers to show a three month break between deductions. As Cooper points out, a three month break will prevent there being a series of deductions. The gap will also

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mean the worker will be out of time to present a claim to the employment tribunal in respect of this deduction. “The EAT gave leave for the parties to appeal to the Court of Appeal so the position may change,” she says. There have been a number of cases at the EU courts in the lead up to this decision. Most notable the European Court of Justice had determined in May 2014 in the case of Lock v British Gas Trading Limited that contractual commission, determined by sales achieved, should be included in the calculation of holiday pay. “The WTD is clear in its aim that employees are entitled to take paid holidays and there must be nothing, such as a financial loss, that deters them from doing so,” says Cooper. Cooper also highlights that earlier cases such as that of Stringer v Revenue and Customs Commissioners, although in relation to holiday pay, confirmed the position that the WTD’s purpose for paid leave is essentially to “put the worker in a position which is, as regards to remuneration, comparable to periods of work.” She advises that future calculations of holiday pay will need to include overtime payments and commission. “The key word here is “future”; there has been no guidance as to how this is to be calculated and I would suggest basing a calculation on hours of work and pay received in the 12 weeks prior to the taking of holiday.” However, she believes that as employees could abuse this process by purposely working more overtime prior to taking holiday, in this regard a calculation using the previous 12 months may be preferable. “Businesses now need to consider if they are going to start complying with the approach confirmed by the EAT from now and start calculating overtime in holiday payments or if they will continue to pay at the ‘old’ rate – without overtime or commission – until the final appeal has been heard as this decision could be overturned,” says Cooper. While it seems unlikely that it will be overturned given the amount of cases leading up to this decision and the interpretation of European law, if businesses start paying now and it is overturned then they would not be able to recover additional payments made to employees. “Indeed by making the payments they may have made this a contractual provision so may have to continue making the payments regardless,” says Cooper. Once the final decision is made, if employees start making claims for underpayments of holiday pay businesses could settle at this time. “In this regard businesses should consider putting funds aside from now to cover for this event,” she said.

Some SMEs have always included overtime in holiday pay

28/11/2014 19:28

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t: 07455 284 284 e: mail@nhr-business-coaching.com w: www.nhr-business-coaching.com

Contact: Patrick Shirley t: 08455 197 825 e: pshirley@whiterosefinance.com w: www.wrf-shirley.co.uk

Unlock Your Business Bespoke Coaching Programmes designed to help our clients to focus on achieving their personal, professional and business goals. Use the Power of Focus to achieve your entrepreneurial goals and enhance your business performance.

Digital Marketing * Web Design * Social Media Marketing * SEO * E-Newsletters * Online Advertising

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t: 0755 751 6996 e: info@abergower.com w: www.abergower.com

Our job is simple – we want to help your business to succeed online – enhancing your brand and reputation, driving traffic and increasing sales. We can help you engage with your customers and find out what they are saying about your business – you might be surprised to learn! But don’t just take our word for it – we pride ourselves on our account management, integrity and honesty – we love working with our clients.

t: 08433 832 732 e: info@thebrightclick.co.uk w: www.thebrightclick.co.uk

Want to turn up your brand volume? From brand creation to brand communication, Chillifish provides marketing solutions across traditional and online media. From brochures, adverts and direct mail campaigns to websites and email marketing campaigns, we create intelligent, effective and innovative communication solutions that make your brand shout louder. Whatever your requirements, big or small, call us today.

t: 01305 250055 e: info@chillifish.com w: www.chillifish.com

Franchise Opportunity

High Position is a digital marketing agency offering Paid Search, SEO, Interactive Content, Conversion Rate Optimisation, Social Media and design services. Established in 1997, the company is wholly based in the UK, employing 30+ staff at our Colchester offices. We are proud Google Partners and also hold Google Analytics Certified Partners status. We’re renowned for our technical/analytical approach and for our passion in delivering creative campaigns that produce great ROI.

t: 0844 245 66 77 e: sales@highposition.com w: www.highposition.com

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Set up your own home based bookkeeping practice with an award winning bookkeeping franchise. Join over 20 franchisees offering bookkeeping to businesses using cloud software such as xero, kashflow and sage. We provide vat returns, profit & loss, payroll and credit control etc from only £50pm. No qualifications are needed as full training is given. Franchise fee £15,000 plus vat.

t: 02031 372 878 e: mandy@cloudbookkeeping.co.uk w: www.cloudbookkeeping.co.uk

Exciting and rewarding franchise opportunity that exists in the Business Brokerage Industry. Imagine a career with unlimited potential for personal, professional and financial growth as well as comprehensive training with continual backup and support. Falcon Commercial offers a unique, low overhead and possible home based franchise opportunity where you also gain a professional qualification.

t: 01297 598080 e: malcolmwatkins@falconcommercial.co.uk w: www.falconcommercial.co.uk

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classifieds Insurance

Offering professional indemnity insurance policies for businesses in a quick, easy and stress free manner. Cavendish Munro are an established indemnity insurance broker with head offices in The City, London’s centre for insurance. The client is always put first with Cavendish Munro and a suitable policy is provided based upon individual requirements and circumstance. Whilst professional indemnity insurance is vital for all businesses, the process of acquiring it shouldn’t be; which is a key goal for Cavendish Munro. The aim is to keep this process as simple and straightforward as possible, therefore avoiding the use of complex, industry related jargon and offering clear forms to fill in to purchase the required insurance quickly and hassle free.

t: 020 7264 0545 e: enquiries@cavendishmunro.com w: www.cavendishmunro.com Legal Services

Mullis & Peake LLP Solicitors are one of the South East's largest and most respected law firms, with a team of specialists providing up-to-date, professional legal advice on all that matters to people and companies. Specialising in Employment, Legal Disputes, Partnerships and Commercial Property including Developments For advice and assistance call us today!

t: 01708 784000 e: office@mplaw.co.uk w: www.mplaw.co.uk Security

Invoice Factoring

IT Support

The Credit Management Bureau’s mission is to save you money and help you grow by getting you on the right commercial funding package to suit your business. We find you the right specialist commercial funding providers who will get you the best package tailored to your needs. Be it Invoice Factoring, Discounting, or any other type of asset based finance, we can get the right people in front of you; including your own personal business manager. Call us today to arrange your free business funding review.

A leading IT support company for London based businesses, offering a variety of services to meet specific needs. All types of business and a wide variety of systems are catered for thanks to the vast experience of the team at a client’s disposal and, with speedy onsite response time, an issue can be resolved in no time at all. Alongside the support services, Premier Computer Support also provide a number of bespoke managed services which enable a company to outsource the management of a complete IT infrastructure so confidence can be taken in the fact that a whole system is always in safe hands.

t: 01684 569262 e: factoring@creditmanagement.biz w: www.creditmanagement.biz

t: 020 7345 5139 e: enquiries@prem.co.uk w: www.prem.co.uk

Printing

Offering a wide range of printing services from envelopes through to display stands to meet your business needs. A long established, family run business, Envoprint offer a reliable and quick printing service to companies within the commercial sector. From envelopes to display stands, point of sale displays and presentation boxes, you’ll find a cost effective service that sees you supplied with products of the very highest quality. From the company’s formation in 1990, their skill set and services have extended over the years from specialist trade envelope printers to now be able to meet an abundance of printing and display needs.

t: 01246 561 506 e: keith@envoprint.co.uk w: www.envoprint.co.uk Staff Recruitment

Promotional items

Fob keyrings make it easier for your customers to contact you. Go to our website to request our FREE sample pack, so you can see for yourself how effective these can be. www.fobkeyrings.co.uk We offer FREE artwork, printed double sided, in full colour, with FREE delivery. x250 fob keyrings only £59 x500 fob keyrings only £95 x1000 fob keyrings only £145 An affordable way to stay in front of your customers. Go online now and request our FREE sample pack.

t: 0777 6287 501 e: info@fobkeyrings.co.uk w: www.fobkeyrings.co.uk Website Consultancy

Supplying an extensive range of security products to protect your premises and offer increased peace of mind over safety. Security solutions available from GSM include access control to enable full control over who comes and goes from a property, CCTV which utilises the latest technology to always keep an eye on your premises, burglar alarms to add as a visual and noise deterrent plus many more security products. The specific services offered include keyholding and alarm response, so issues can be dealt with swiftly, as well as monitoring so you can feel confident that someone is always looking over your site, day and night.

Magic Melon provides promotional staff, event staff, and entertainers for events all over the UK. Whether you are wanting sales experienced staff for an exhibition, staff to demonstrate a product, staff to hand out leaflets, or even a stilt walker to draw in the crowds. Magic Melon have the right staff for you. We always try and keep your costs down by ensuring we use the staff closest to the event location. Let us put the magic touch to your event. Get in touch today for a no obligation quote.

We make beautifully hand-crafted, thoughtfully designed, user-focused websites. It sounds a simple goal, but there is an incredible amount of work that goes into planning, wire-framing, designing and building a successful website. It's not just about pretty images or using the latest design trend, it's about creating websites that help you, and your users, achieve their goals. We can help build that solution.

t: 020 8374 7744 e: info@gsmsecurity.net w: www.gsmsecurity.net

t: 020 7078 4015 e: enquiries@magicmelon.co.uk w: www.magicmelon.co.uk

t: 0845 3631162 e: info@kc-webdesign.co.uk w: kc-webdesign.co.uk

Get in touch today - we’re friendly, easy to talk to and great to work with!

Web Design

Wouldn’t it be great if you knew why visitors were leaving your website?

Why they weren’t contacting you, buying your products/services, downloading that free e-Book you wrote! If your website could do all that then marketing it would be a breeze, right? Well that’s possible. As a consultancy we don’t build websites, we review and identify problems with the one you already have to help support your marketing strategy.

Friendly creative agency specialising in working with start-ups & Small-Medium businesses. Logo Design / Branding Web Design / Build Business Card Design Flyer / Leaflet / Brochure design Packaging Design & more

Webwax provide a full ‘in-house’ service for web design, ecommerce, web hosting, search engine optimisation, ad-words, email campaigns, graphic design, virtual brochures, copy writing, social media and photography.

Karen Peters t: 020 3701 7843

t: 01892 825015 e: info@smokescreencreative.co.uk w: www.smokescreencreative.co.uk

t: 07782 357686 e: info@webwax.co.uk w: www.webwax.co.uk

How awesome would that be, to turn your website so it not only attracted visitors but turned them into customers.

e: info@therightsite.net w: www.therightsite.net

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With a wide range of clients both locally and globally, Webwax believe in providing a Return on Investment in the projects we involve ourselves in. Whether you are after a simple website with a few pages or a full blown e-commerce site, we can help.

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Receive 6 issues of the UK’s best new franchise magazine for entrepreneurs for only £20*

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Get inspired by the many faces of entrepreneurship At Elite Business, we’re passionate about championing new business. Providing fresh perspectives and representing disruptive solutions, we’re interested in the new generation of business that is helping to drive Britain forward. Every issue covers up-to-the-minute content and presents a unique angle on the things enterprises need to know. We also gather the best and brightest voices in the community to share their experience. Whether it’s Holly Tucker conquering e-commerce with notonthehighstreet.com or Richard Moross revolutionising the print industry with moo.com, we profile the individuals reinventing enterprise.

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28/11/2014 20:27

the START-UP DIARies

Who you Know

Donna Kelly, co-founder, Dressipi

Given its recent growth, Dressipi is on a recruitment drive. But for co-founder Donna Kelly, relationships and not recruiters should always be the first port of call for a business looking for new staff

that when he completed his degree he came on board full time. Similarly, we met Pip, who manages our PR and marketing, through one of our previous interns. She came to us for work experience and, because we gelled and she had amazing potential, we asked her to stay. In fact, in four years we’ve only ever hired one person – Monique, our front-end designer – through a recruiter. The reason we’re careful to cultivate this personal, connected approach to hiring is that it removes some of the uncertainty that can creep in when you do it the conventional way. The interviewing process can be very limiting; some people are good at it whilst others aren’t and it is difficult to get a real feel for the character or motivation from the individual – from either sides of the table. Hiring someone, after all, is a two-way process and the fit has to work both ways because the cost of getting it wrong is huge. Finding someone, interviewing them, bringing them in and then getting them to the point where they can add real value to a business can take as long as six to nine months. The absolute last thing you want to happen is for someone to turn round after a short while and say: “you know what, I don’t think this is right for me”. In a previous company I recruited for a very senior role that was key to the growth of the business in the coming year. It took around seven months or so to go through the whole process before they could come onboard and within four weeks of starting they had resigned, clearly having

dressipi.com

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ressipi is like most start-ups in that whenever we need to hire someone it’s exceptionally rare for us to engage a recruiter. This is because that with a tight-knit team like ours, finding someone who is aligned with our values and culture is just as important as finding a person with the right skills and experience. Consequently we tend to recruit within our own network. And for good reason. If you’re never more than six degrees away from actor Kevin Bacon, then you’re never more than two or three people away from a great Ruby on Rails developer or a star stylist. It’s just a matter of applying some lateral thought, especially when it comes to those people you’ve worked with at all levels throughout your career. For example, one of our technical developers, Henry, is someone who came on board having previously worked with our CTO. Whilst he took a career break to do a master’s degree, we made sure to keep in touch with him and encouraged him to work for us during his holidays. He liked it so much here

The cost of getting recruitment wrong is huge accepted a new role before even walking through our door. This is wrong on so many levels and very costly to the business. We tend to find that tapping our personal networks is a good way of taking some of the risk out of this process. If we’re introduced to someone by a contact then it’s reasonable to assume that we’re on the same wavelength. Many companies recruit by competency and that is important. But for us, we hire people because we want to enhance our culture and we believe that we have an environment in which they can achieve their goals. Of course you can never take all the risk out of saying, “I do” to a new colleague. But when you find the right person, it’s awesome.

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