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High Net World Magazine
March 2014 Issue
www.hnwmagazine.co.uk
The E-Spark Impact Jude Cook’s ShareIn 2014 Business Budget Angels Den Clear Returns Time Saving Apps Rookie Oven High Growth Company Leaders Rich vs King ESIF & Totseat Crimea Who? VC Market Tech Bubble Investor Anxiety
Discovering the Leader in You… LINKING ENTREPRENEURS WITH INVESTORS & ADVISERS UK-WIDE
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Tech in Trouble?
First Word
Tech bubble, bubble, we’re all in trouble? The bubble that they want you to see… …and what’s actually there… We’re nowhere near the 1999/00 bubble stage as suggested by the chart above…call it “poetic data license”. The charts to the right provide a truer picture of the tech and internet IPOs on the NYSE and Nasdaq in volume and dollar terms, revealing that the difference between “then” and “now” is pretty staggering. The message? Market bubble merchants go home! P.3
Steel’s View P.8
Contents
With Great Thanks to our Distribution Partners & Supporters
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First Word Angels & Infographic Investors Quick Hits Entrepreneurs Wealth & HEAT Money Practical Business Page 3
Page 18
Page 16
Page 6
Page 28
Page 45
Haines Watts Page 2 ASAM Page 7 Angels Den Page 9 ShareIn Page 11 WSLF Page 13 Par Equity Page 17 Martin Cook Acct - Page 20 Gecko New Media - Page 26 LINC - Page 38 Thrive Business Page 43 NVT Group Page 47 Kiltr - Page 48
Page 40
Page 34
Mike Williams
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Contents Main Feature:The Principles of Great Leadership
By Ed Emerson
Page 21 Page 18
ShareIn’s Jude Cook on Crowdfunding BUDGET 2 0 1 4
Page 44
Page 28 HNW’s High Growth Co. Leaders Programme Page 45
The views expressed in HNW Magazine are those of invited contributors and not necessarily those of HNW Magazine Ltd. HNW Magazine Ltd does not endorse any goods or services advertised or any claims or representations made in any advertisement in HNW Magazine, and accepts no liability to any person for loss or damage suffered as a consequence of their responding to, or reliance on, any claim or representation made in advertisements appearing in HNW Magazine. By responding or placing reliance, readers accept that they do so at their own risk. ©HNW Magazine Ltd. Reproduction in whole or part is forbidden without the written consent of the editor.
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Quick Hits
Investor Anxiety & Market Crash Secrets
Investor’s Anxiety Index It’s a country whose GDP is 40% smaller than that of Greece yet its new lofty position as posterchild for market Armageddon makes it appear to punch well above its economic weight class. Ukraine, despite Russia’s gunpoint politics and the obvious distress its citizens must be feeling, does not and can not hold the global financial system to ransom. The suggestion is beyond unrealistic and yet headline writers would have you believe the opposite. Perhaps there’s an Investor Anxiety Index to which only a select few have access, that records and ranks the thoughts that trouble millions of investors prior to that day’s trading. More likely, the crush to always have a reason for the market’s daily ups and downs necessitates a ready supply of monsters in the closet, regardless of their ability to bite.
The Secrets of Market Crashes From “Downtown” Joshua Brown’s The Reformed Broker: The economist Hyman Minsky’s work on market crashes has become very popular in recent years now that everyone is on bubble n’ crash watch. The BBC looks at five of his most important ideas this week in an excellent primer for the uninitiated. First up – the idea that nothing is more dangerous than a market that fears nothing: Minsky’s main idea is so simple that it could fit on a T-shirt, with just three words: “Stability is destabilising.” Most macroeconomists work with what they call “equilibrium models” – the idea is that a modern market economy is fundamentally stable. That is not to say nothing ever changes but it grows in a steady way. To generate an economic crisis or a sudden boom some sort of external shock has to occur – whether that be a rise in oil prices, a war or the invention of the internet. Minsky disagreed. He thought that the system itself could generate shocks through its own internal dynamics. He believed that during periods of economic stability, banks, firms and other economic agents become complacent. They assume that the good times will keep on going and begin to take ever greater risks in pursuit of profit. So the seeds of the next crisis are sown in the good time.
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AL
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Quick Hits
Bull Market & Worries
Three Things Worth Worrying About What should we actually be worrying about? There are oh so many options, so many little winters of our discontent – that’s a phrase quite succinctly rumbled to its truly positive meaning by Josh Brown in his re: Winter of Our Discontent. How about Global Warming and the debate between ice core samples suggesting hot and cold cycles “just happen” and scientists’ continued grant funding depending upon mankind’s activities revealing an “inconvenient truth”. Or maybe the 12 ounces of cocaine packed into 14 condoms intercepted at Leipzig airport that was bound for The Vatican deserves a fret? There’s also Janet Yellen’s unscripted comment that the Fed may only wait six months after bond buying ends to raise interest rates, the Ukraine blues, or any investment fund with the word “China” in it….yada yada yada….the ongoing market trading range, worrying about where the top and bottom actually is… Consider Alan Steel’s lament on the Death of Long-Term Thinking and Common Sense…now there’s a cause for concern. And the Motley Fool’s Morgan Housel makes a case for what might be worth your furrowed brow when he writes: “I’m an optimist because most of the things we worry about self-correct and recover in due time. I don’t worry about stock market crashes. I don’t worry about whether profit margins are too high or if earnings are about to fall. Most of these issues are overblown. And even when they do become problems, they are short-term problems. I worry about problems that can cause permanent damage to businesses and the economy. They’re really the only things we should worry about because they’re the only things we will probably look back on 50 years from now and think, man, I wish we did something about that.” These “things” include: the long-term unemployed, the correlation between parents’ success and that of their siblings. Oh, and short-term thinking. Now these guys might be on to something.
See the Bull Market Run, Run Bull Run Europe’s market for initial public offerings (IPOs) on the stock exchanges in Q1 2014 has raised over $12 billion, topping America’s circa $9 billion during the same period, according to leading financial analysis platform Dealogic. The UK, Denmark, the Netherlands and the oftfinancially-slated Spain have reversed a five year post-recession IPO drought by raising approximately 10 times as much as was done during Q1 2013. Why? The long-awaited return of investor confidence in equities is finally happening, and private equity firms are eager to cash out of investments in this new IPO window. Globally some $40 billion of IPO money has been raised, nearly double that at this same point last year.
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Quick Hits
Startups & Online Training
Traction vs Growth: Three Phases of the Startup
Broadly speaking, a startup goes through three phases of growing: traction, transition and growth. The goals, metrics, channels, focus, team structure, everything evolves and changes as you move through these three phases. Knowing where you are in this path helps you understand what you should be spending your time on. Focusing on the right tactics at the right time helps move you through this path efficiently and successfully. I’m going to take some very broad strokes to help you understand the differences of each phase, but understand this can vary depending on your type of business.
Kauffman’s Online Video Curriculum for Entrepreneurs There’s always a worry that these types of rapid fire video resources will unwind into a series of woolly platitudes spoken by earnest looking academics, even from a entrepreneurial giant like the Kauffman Foundation. But the genius in this series of resources is the quick to crystallise gems that fall out of this compilation of “a-minuteor-two” presentations that could well reemerge at some point in your business journey and help save your product, your service, or even your marriage. See YoungUpstarts.com
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Quick Hits Secret App: Honesty Without Consequence
If you ever worried about the ramifications of posting something that friends, colleagues, your boss, or even significant other(s) might disapprove of, the Secret App has got your back. It’s a route to online honesty without consequence, a social media Holy Grail of sorts where anonymity is becoming an increasingly prized possession. Akin to the more established Whisper App, Secret is free-to-use, allows for image and text posts, but is anonymous; it shows you posts from your contacts who are also using the app, and, under certain conditions, secrets from friends of those contacts and beyond. Heart icons indicate you ‘love’ one of your connection’s secrets and is sent on to their contacts…and thus how the ‘loving’ spreads through each secret comment in the user group. From Forbes: “Secret has entrenched itself enough that it has already threatened to break news: (a recent post read), “I work at Evernote and we’re about to be acquired,” which led the company’s CEO Phil Libin to take to Twitter to immediately deny the rumour. There has been plenty of other dishing about bosses, co-workers, startup founders — personal and professional.” So, Secret has quickly vested itself in the “breaking news” social media footprint. But does it make money? Nope, but it has raised $8.6 million in VC funding and the 52-day-old company has become a hit within Silicon Valley circles, particularly for employees letting off steam about the technology companies they work for. Uhh…by the way. Did you know that folks have now figured out a way to save SnapChat messages/photos from disappearing forever….I’m just sayin’.
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Secret App & Reverse Entrepreneuring
Reverse Entrepreneuring?
A few weeks ago I attended an Angel Investors Masterclass put on by Angels Den Regional Director Raymond McLennan and RBS corporate and entrepreneurial honchos Gordon Merrylees and Darren Pirie, respectively. The incomparable Nelson Gray and sharp-witted Paul Delahunty tutored approximately a dozen attendees, investors who ranged from the novice to the accomplished.
“Leaders of large corporate companies are gathering to speak to groups of entrepreneurs about the innovations they need from new and established startup businesses. A sort of Reverse Entrepreneuring?” A few points of note: ● Some 55% of angel-funded entrepreneurs fail within 12 months ● Based on the above success/failure rate and the tax benefits available, the formula still works with minimal risk, but we need to get better at it…a lot better… ● In terms of this investment market, the Angels Den reported more deals funded in the first two months of 2014 (January & February) than in all of 2013 – in other words the funding market is moving at pace Nelson Gray noted a growing trend in the US and said he would be attending an event in Washington DC later this year, where leaders of large corporate companies will gather and speak to an equally significant audience of entrepreneurs about the innovations THEY need from new and established startup businesses. The message: Build your business with your future suitors in mind. Reverse Entrepreneuring, indeed!
Quick Hits
VC Market, Oculus & Boardrooms
Global VC Market Rising: America & Europe Up, China Down The global venture capital industry had a decent year in 2013, a nice reversal from 2012, and while investment levels may only have risen 2% overall to $48.5 billion, Q4 alone saw gains of 10% in investments and investment rounds, respectively. That’s a nice upward trend rolling into 2014. The US, riding a galloping oil and gas revolution and home to 68% of global VC activity, remained relatively flat in growth terms. Europe however, which accounts for only 15% of global VC activity, saw a 19% rise in capital invested and a 6% rise in the number of deals. Perhaps the closure of the domestic stock exchanges in China, normally married to Europe’s VC trends saw its global investment tally fall from 11% down to 7% from 2012 to 2013.
Rose-Coloured Glasses Well, at least this company has generated some revenue. Mark Zuckerberg, now claiming his company buying spree will not continue at its current pace, has announced Facebook will buy California-based virtual reality product business Oculus VR for approximately $2 billion. By comparison to WhatsApp this is a bargain buy, as Oculus has managed to sell some 75,000 products at circa $300 a go. Ok, so it’s not exactly a traditional two-to-three times revenue valuation (hey, what happened to that old chestnut anyway) but the “immersive” goggles-required headset for video games company, funded through Kickstarter, has Mr Zuckerberg believing Oculus’ technologies could “change the way we work, play and communicate”.
Leadership: Decisions Aren’t Made in the Boardroom Mark Suster provides three ways to go about making boardroom decisions happen. The process starts long before you actually get round the table, and the glue that secures them is applied after you leave. He writes: “There is an old saying in poker that if you don’t know who the sucker at the table is – it’s you. The same can be said of critical decisions in a board meeting or frankly any other meeting where major decisions are ratified. If you’re turning up to important meetings hoping to persuade the critical people who attend of a decision you’re trying to make and having already “counted your votes” you are sub-optimizing results. This is a classic mistake many entrepreneurs make…”
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Crowdfunding & Markets
Quick Hits Crowdfunding: The Good the Bad, and the Ugly These are golden times for the UK crowdfunding space. In December, innovation charity NESTA reported alternative finance intermediaries raised approximately £939 million in 2012, up 91% from the previous year’s total of £492 million.
That report, in collaboration with Cambridge University and the University of Berkley, also revealed equity crowdfunding platforms enjoyed circa 620% growth in business volume, as peer-to-peer lending sites saw the value of deals rise well over 200%. But how do you get the pitch and the project right? Well, last year’s “Menurkey” crowdfunding effort www.menurkey.com raised $48,345.00 through 820 backers, against a target of just twenty-five grand. But just what, you might ask, is a “Menurkey”? Well, it’s a ceramic menorah shaped like a turkey designed specifically to celebrate a once in an eternity event that occurred on 28th November 2013, when the Hanukkah & Thanksgiving holidays overlapped. Oh, and it was the brain child of a 9 year old fourth-grader from New York City. See the full article in this issue.
New All Time Highs and the Gambler’s Fallacy Despite the media negativity, the tapering, the Russia/Crimea “elections” and North Korea in general, the S&P 500 has made new all time highs, the Dow Jones is in a 16,000 plus trading range – albeit on the up, and the markets have moved on from 2008. That said, it’s not pessimism but human nature to seek out the negatives when things start look ing up, and vice versa. The human condition is a balancing act driven by DNA; that vested genetic instruction that says survival means success. It’s been with us since fire was a new technology and “a good day at the office” was the difference between eating and getting eaten…still true on Wall Street though. Reformed Broker Joshua Brown wrote it best in New all-time Highs: “Just reading or hearing the term itself engenders a certain kind of hysteria in people. It suggests that things are about to tip the other way any second, as we all carry within ourselves a cognitive defect known as the Gambler’s Fallacy. We innately believe that random occurrences are meant to balance out over short periods of time. That ten straight coin flips landing on heads virtually assures that a tails flip will be next – despite the fact that the next flip is its own event and nothing that came before it matters. That the roulette wheel “shouldn’t” be able to land on black or red more than five or six times straight – despite the fact that it most certainly can and will.” Let’s try to enjoy, and capitalise on, the good times.
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B2B Social Media
Infographic
Social Media Index ● LinkedIn has moved from second place to joint first with Facebook as the most preferred B2B social network… ● Spending on native social media advertising in the U.S. was $2.4 billion in 2013, up 71.4% on the previous year… ● The top seven reasons why B2B businesses need social media, including brand awareness, lead generation, thought leadership, customer retention, acquire supporters, increase trust and deliver effective out bound marketing…
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Angels & Investors Crowdfunding… …Five Signs it’s a Bad Pitch
Crowdfunding Holoxica pursued a £60,000 fundraising target and currently sits at 128% of requirement. The technology is both credible and incredible, the marketplace end-users are clear and Holoxica’s product value is easily measurable. And the man behind the business is committed beyond reproach. Outside ShareIn, and for those of you as yet unenlightened, last year’s “Menurkey” crowdfunding effort www.menurkey.com raised $48,345.00 through 820 backers, against a target of just twenty-five grand. And what, you might ask, is a “Menurkey”? (Pictured right)
By Jude Cook What makes for a successful equity crowdfunding pitch? Does it need to be compelling and enticing, credible and seductive, focused and even fun? Perhaps it’s all of those things together, and even a bit more. And therein lies the difficulty; be it a new or even mature funding “marketplace for the masses”, the success criteria is constantly evolving and each fund-winning project opens itself to examination, benchmarking and thereafter, imitation. These are golden times for the UK crowdfunding space. In December, innovation charity NESTA reported alternative finance intermediaries raised approximately £939 million in 2012, up 91% from the previous year’s total of £492 million. That report, in collaboration with Cambridge University and the University of Berkley, also revealed equity crowdfunding platforms enjoyed circa 620% growth in business volume, as peer-to-peer lending sites saw the value of deals rise well over 200%. Thus the importance of capitalising now on the market’s growth and the opportunities on offer, as it slowly moves from beneath the umbrella of ‘alternative finance’ and into the mainstream view as an accessible funding solution for startups and established businesses alike. So how best to do so? Is there a secret, a single adjective or unique product example by which to mark progress… or even a trail? ShareIn has already had its share of early successes, most recently with Javid Khan’s 3D holographic solutions business Holoxica (pictured right), which easily exceeded its revenue objective on our tech and healthcare focused equity crowdfunding platform.
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Well, it’s a ceramic menorah (pictured above) shaped like a turkey designed specifically to celebrate a once in an eternity event that occurred on 28th November 2013, when the Hanukkah & Thanksgiving holidays overlapped. Eh? That’s right, this entertaining commemorative TurkeyMenorah was both crowd funded and fun for the crowd, representing a 75,000 year milestone since (official) Turkey Day and the Tabernacle last crossed paths. It was an opportunity for some cross cultural learning and education community-to-community, all of which emerged as the brain child of young Asher Weintraub, a nine year old fourth-grader from New York City. L’Shanah Tovah, Indeed. These initiatives, while vastly different offer neat benchmarks against which to measure other fundraisings; jointly they offer the fun and the fantastic, compelling propositions, culture, creativity and originality (in the latter case, shackled to a once-in-a-lifetime event), and the type of credibility that seduces a marketplace into spikes of generosity. And the results speak volumes. In both cases the fundraising did exactly what it was supposed to do; deliver money and help make the goals of the projects possible…and then some!
Crowdfunding
Angels & Investors
The objectives were crystal clear, the stories were slightly fascinating, the type of which you could retell in most any circle, and they delivered a level of authenticity that builds crucial bonds amongst supporters. In short, there was value received well beyond the coupon, voucher, or in this case, menurkey statuette and holographic imagery. In setting out your next crowdfunding stall, you might be best placed to draw ideas from Holoxica’s success, as well as carve out a bit of Menurkey in your planning. I’ve also set out (below) 5 key signposts for investors and companies alike to help avoid the pitfalls in the business crowdfunding process, which are as follows:
Five Pitfalls to Avoid 1) Tax Breaks Advice for Companies: You haven’t even bothered to look into the amazing tax breaks that are available to UK companies in the form of SEIS and EIS. This is an unforgivable error. Advice for Investors: If you’re going to be investing in an unlisted high risk investment – you should be looking at companies that have obtained advanced approval from HRMC for SEIS/EIS. They are incredibly beneficial and they are open to ordinary people who have paid income tax. For wealthy investors they can totally mitigate any downside risk. 2) Stupid Valuation: Advice for Companies: Valuations based on a multiple of projected future cash flows/revenues at some point in the future are all very well, but if your company is very early stage they are a fiction. There are two sensible starting points for a valuation; first, how much would it cost to replicate your company, and second, how much have you spent in money and your time? Advice for Investors: Beware the stupid valuation. A company may have the best idea in the world but if you’re really in this for a financial return you should look closely at the valuation. A valuation based on a multiple of a projected future cash flow or revenue at some point in the future is an interesting number but whether that’s going to be achieved is a totally different story, and the likelihood of that needs to be factored in. Remember most earlystage companies fail. There are two sensible starting points for a valuation’; first, how much would it cost to replicate the company, and second, how much have they actually spent in money and their time so far? 3) Jargon and Waffle Advice for Companies: Don’t presume people know anything about your industry. Using jargon doesn’t make it sound technical it turns people off. Be clear what problem your company solves, what your solution is, your market, your competition, your team and how you will make money. You need to be really clear how you plan for your investors to make a return – what’s their exit?!
Jude Cook, Founder Director, ShareIn
Advice for Investors: Don’t be impressed with jargon. If it’s taken a few minutes of your attention and you still don’t understand what a company does this isn’t a good sign. If you don’t understand how they plan to make money and deliver a return on your investment – don’t do it. 4) The Team Doesn’t Stack Up Advice for Companies: People will want to know about your team – who they are what they’ve done. Having a LinkedIn profile is fairly essential nowadays. Don’t be tempted to include every man and his dog in your team because people will wonder how the company can support them all. Be clear how much time the different team members dedicate to your company. Advice for Investors: You should want to know who you are investing in – so look them up on LinkedIn or google them. If a company is very early stage and has a large team you need to know how much time these people actually spend on this company. Is it a hobby or a bit of fun outside of their 9 to 5, or can they dedicate a serious amount of time to it. If the team is really thin then the company needs to be really clear on where they plan to get future help. Who in the team really cares about making the company a success and what have they committed to doing it? 5) It’s a Lifestyle Business Advice for Companies: If your company isn’t either capable of scalable growth or have the potential to deliver very high profits, why would someone wish to invest? Just because a company could provide your team with a reasonably living doesn’t make it an attractive investment. Most early stage companies fail, so investors need to be compensated and generate big returns on the ones that succeed. Advice for Investors: Investment in early stage companies is very high risk as most will fail. In order to cover your losses on the failures you need the ones that succeed to really fly. If a company isn’t capable of scalable growth or very high profits you have to think long and hard about the risk/reward involved. An expected return of 2 or 3 times that which you get in a savings account in the bank might sound tempting, but if there’s a big chance of losing all your investment – it’s probably not enough.
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Leadership Feature
Angels & Investors
The Principles of….
….Great Leadership Courtesy: www.funnysalescartoons.com
By Mark Douglas ‘”Now
swers and solutions, these are the views of a group of leaders in a nation of over 5 million people in a world that is forever changing…
see the wood for the trees…” So what is great Leadership?
Context After spending the last six months interviewing a number of senior leaders across Scotland about their views and experiences on leadership, here are the insights and themes that came to light.
We are in a global race where we must compete against the best and most talented companies if we are to win the prizes of investment, growth and success. There is a direct link between the leadership of the organisation and business success.
These leaders worked in a broad range of sectors and had experienced a variety of companies and cultures during their careers.
So what are the top 3 leadership attributes you need to have to be a successful leader working in a world class Company?
Their currently held senior roles have exposed them to a multitude of cultures and climates in diverse organisations ranging from multinational companies to family owned businesses.
The number one leadership attribute is the ability 'to develop and communicate a strong vision' while at the same time staying awake and alert to other possibilities. Their personal belief and passion for the company, its brand and its product was very important as it enables others to engage and buy into their vision and the goals and aspirations for the company. Communicating the
These are the leaders collective views on leadership to provoke personal reflection and debate rather than an
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Angels & Investors direction of travel of the business and their proposed plan enables colleagues within the organisation to understand how the vision would be achieved and potentially how their role and team could help deliver it. The leaders ability to communicate and deliver this vision was just as important as the ability to develop it, therefore the supporting skills of business acumen, goal setting, benchmarking and learning from others outside the organisation or its sector were all viewed as important enablers. Secondly, the leader’s ability 'to engage people' and motivate and drive team and personal performance was seen as the next most important leadership attribute. The ability to blend both soft and hard leadership skills was viewed as being key, as either on their own will not always work. The softer leadership skills of active listening, building trust, treating people with respect, honesty and collaboration were all viewed as being important and they go hand in hand with the hard skills of making tough decisions, surrounding yourself with a team that can agree and deliver stretching yet achievable goals, personal resilience and driving individual performance.
Leadership Feature
effort and therefore at its most fundamental it is about helping people deal with ambiguity and uncertainty. Leadership starts with awareness, moves through options & choices to action & focus. The key is that leadership is a conscious process and we need to watch the trap of 'groundhog leadership' where we continue to do what we have always done but still expect a different result. Many variables impact and influence the development of our approach to leadership; from peers and line managers to formal training courses and seminars to our life experiences and personal reflection. In general, our leaders learnt more about leadership from peers and line managers who encouraged them to reflect on how they were impacting on others; these line managers and peers were good coaches who gave balanced feedback and had the ability to ask some really searching questions. They also learned from line managers and peers by watching them in action learning from both what they did well and what they did not do as well. In fact observing
“Leadership does not have to be complex …at its most fundamental it is about helping people By Ed Emerson deal with ambiguity and uncertainty.” And finally, the leader needs to be 'flexible in their approach' to leadership. A one dimensional leadership style will not work in all climates or scenarios and a leader’s ability to use both push and pull approaches sometimes in the same situation is important. Leadership is a continual learning experience and you can never assume you know it all; reflecting and learning from experiences both good and bad and a willingness to try new approaches are all part of being a great leader. To quote Churchill, “Success is not final, failure is not fatal: it is the courage to continue that counts…”. There are many different leadership theories, books and approaches, all of which claim to have the answer to how best to be a leader. Business leaders have looked in the past to the military and more recently our sporting icons for inspiration on how best to be a leader.
and learning from others was the second biggest influence on our leaders and interestingly, they learnt more about what not to do rather than what to do. Formal training courses also had an influence where new ideas were learnt and support networks built. Mentors and networks were often seen as being key areas for learning for the leaders in the most senior roles. The interviewees upbringing and family were mentioned occasionally and when this surfaced the leaders’ parents tended to have a negative influence (e.g. raising self doubts) whereas, the leaders’ own experience of parenthood had typically been viewed as having a positive influence on their approach to leadership. However, all this learning and development was only achieved because our leaders had a desire and drive for self-development and improvement.
However, according to our interviewees the best leaders blend a variety of approaches from the North American theoretical models and delivery focus, to the Far Eastern ideas on mindfulness and inner focus to the European ideals of cooperation and engagement.
A leader’s ability to reflect on their personal experiences, be curious about others’ approaches, ask questions and take a different approach next time enabled the learning and development to happen in the first place. Many of the leaders talked about being interested in understanding more about why people do what they do.
The key to success is to link your approach to the culture and climate of the organisation and the scenario you are dealing with. Leadership does not have to be complex and it is really about tapping into people’s discretionary
Every year there are new books, theories and approaches to leadership, as we continually try to find the 'holy grail' of leadership. Many of these new ideas have come
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STEEL’S VIEW Leadership Feature
and gone while others have been more regularly adopted and become part of a leader’s toolkit. So why is it that some leadership approaches or theories do not work or are less effective in practice? Our leaders were able to list many approaches that had not worked in practice however, the key insight was that it was not so much that the approach is flawed; it was more about not using it in the appropriate situation/scenario. In other words, when an approach or theory has been less effective it is more about the inappropriate use of the approach or poor implementation, rather than the approach not being effective or useful. For example, coaching people when clear direction is needed, wanting the team to make a decision when it needs to be the leader, or too much transparency and honesty which can drive more uncertainty and ambiguity. The best leaders avoid these issues by reflecting on their planned approach, making sure it is appropriate for the organisation, the operating context and culture. In addition there were certain personal behaviours that our leaders almost universally suggested were counter productive and these included aggression, shouting, bullying, being autocratic and having a lack of listening ability. Our interviewees were asked to rate 10 leadership attributes in order of importance.
Angels & Investors Interestingly there was quite a variation in their answers, with no-one placing any of the collective top 5 attributes last in their individual rankings and there was a significant gap between the top 5 and bottom 5 attributes when all the individual rankings were collected together. This also revealed that the top 3 attributes match the leaders earlier views of which top 3 leadership attributes make the biggest difference. The top 5 attributes also support the earlier beliefs that leadership does not have to be complex, that it is really just about tapping into peoples’ discretionary effort and at its most fundamental it is about helping people deal with ambiguity and uncertainty. Our interviewees were also asked if there were any attr
The Brunette
ibutes that they felt were missing and these are listed below. None of them would have made it into the top 10 attribute list: - Ability to deal with ambiguity - Ability to lead and manage change - Honesty - say it as it is. - Business acumen/ sector specific expertise. The culture of any country, community or business can impact on its people’s beliefs and values. It has already been suggested that successful leaders link their approach to the culture and climate of the organisation and the scenario they are dealing with. Within the Scottish culture are there any self limiting beliefs that we need to be aware of that could impact our approach to leadership? This is a very interesting area
Leadership Attribute Ranking 80 70 60 50 40 30 20 10 0
Leadership Attribute Ranking
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Angels & Investors for debate and discussion which has been discussed in many forums over the years, the interviewees had a variety of differing views but three common themes emerged.
tends to cascade down through the middle management ranks and onto the shop floor. Interestingly, again, culture was seen to have a bigger positive influence than formal leadership or management development programmes.
A 'fear of failure' was generally accepted to exist, with many individuals having self doubts and not believing enough in themselves. The expression often used was sometimes it feels 'just too hard' which impacts on people’s motivation and self-esteem.
Are we doing enough? Is my team good enough?
Self-confidence for many individuals seems to develop later in life, once they have tried something out rather than believing in the first place that they could achieve it. There is a general belief that as a nation the Scots do not like to 'sing or shout their own praise' and that they believe 'doing a good job is what I am meant to do'.
If we believe that there is a direct link between our business success and the development of our next generation of leaders what more should we be doing to best prepare this next generation?
Within the Scot's language there is a tendency to use the 'we' word instead of 'I' and local expressions like 'you're getting too big for your boots' and 'who do you think you are' probably do not help. Do the Scots feel happier with glorious defeat and supporting the heroes that fail or do not quite achieve? One interviewee summed it up quite nicely saying 'we are a proud nation but not necessarily proud individuals'. However, some of the interviewees believed that with many foreign companies being based in Scotland, business or company culture impacts more than the Scottish culture.
Everybody thinks their leadership team is strong in times of success. However, the one unchangeable certainty is that nothing is certain or unchangeable.
The common themes here typically fall into either being internal Company opportunities or external opportunities that would involve greater collaboration between a variety of sectors, organisations and government. The internal opportunities included better mentoring and coaching, more structured 'induction into role' and creating a more balanced workforce with less of a divide between leadership and the shop floor. Overall the internal opportunities could be summarised by creating a culture which is seen as non-threatening, where people’s sense of security is strong and at the same time individuals are stretched and continually learn, creating more confident leaders of the future.
Overall, most of the interviewed Leaders believed the Scottish Culture of not wanting to stand out and the tendency to have quite a degree of self-doubt impacts on our approach to leadership.
The external opportunities include working closer with colleges and universities to better prepare the graduates of tomorrow for the workplace and the leadership roles they will typically take on.
And looking to the future… The future success of any company is linked to its ability to develop, retain or attract its leaders of the future. So how do the companies that our leaders work for develop their next generation of leaders?
Another theme was to make the sharing of resources and opportunities across companies and sectors easier to achieve through expanding the role of organisations like the Trade Associations.
The traditional HR based tools of succession planning and talent reviews were typically the starting point with Leaders highlighting again that it is the day to day working of the tool that is key, rather than the tool itself. This next generation of identified leaders would then be developed through both 'on the job development' and more formal training delivered through courses and seminars. The on the job development focused on giving people extra responsibility and opportunities, supported by additional mentoring and coaching and ad hoc on the job training. Whereas, the ‘off the job’ training was typically delivered through training courses, with the vast majority of these being provided by external suppliers. The quality of the senior leadership embedded in the company culture was also seen as a major influence, as people often behave as they are done to. In other words, if the identification and nurturing of future talent is a day to day activity of the senior team then this
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Leadership Feature
One particular area that a number of Leaders highlighted is how to encourage more women into senior leadership roles. Here we need to look at how we support them from a business and personal point of view. Is it right that the burden falls mainly on their immediate family? How do we help women deal with the perceived guilt factor and tension of being both a CEO and a mother? And finally, as a wider nation we need to look at creating a culture of lifelong learning where people naturally want to learn new skills and improve themselves. After all, who 10 years ago had heard of social media managers, app developers and ‘big data’ analysts?
Mark Douglas is a Change & Leadership Specialist and Director of Blue Ptarmigan
STEEL’S VIEW
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Angels & Investors
Fast Funding
Delivering “Award winning entrepreneur Vicky Brock scooped a top innovation accolade and crowdfunded almost £50k in just 24 incredible hours.” Founder and CEO of Clear Returns Vicky Brock was named Innovator of the Year at the recent 2014 FDM everywoman in Technology Awards.
About Vicky Brock
On the same day, she raised £46k for her business when she launched her crowdfunding pitch on Angels Den. Brock said: “When the crowdfunding pitch went live it was incredibly exciting to see more than £46k of pledges come in on the first day. And at the exact same time, I was named Technology Innovator of the Year at the Everywoman Awards. So an award, investment and really positive exposure for Clear Returns all in one day. Fantastic!” Clear Returns is a Glasgow-based technology company that helps retailers cut the cost of online returns through predictive analytics software. Having already raised 92% of their funding target from 5 investors online, Brock hopes to raise the full £50,000 before the pitch closes on Monday, March 24. Brock added: “I was keen for Clear Returns to work with Angels Den, having pitched at Tech Club and found it a really constructive experience. So when they suggested the crowdfunding platform to me, it seemed like an ideal way to bring together a lot of positive interest.”
Vicky began her career in direct marketing, including working on Tesco Clubcard, one of the pioneers of retail intelligence. She co-founded award winning digital insight agency Highland Business Research, running the company for 7 years and leading the company to become Scotland’s first Google Analytics Certified Partner and first Google Analytics Authorised Trainer outside the US. She recently served 4 years on Board of the US-based Digital Analytics Association & speaks internationally on analytics. Vicky previously worked with HP, creating their initial pan-EMEA analytics programme.
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Entrepreneurs
E-Spark
Entrepreneuring Impact “I met Entrepreneurial Spark founder and former Strathclyde Police sergeant Jim Duffy in a Glasgow café in 2011, four months before he launched what is now considered to be Scotland’s leading business incubator. At the time he spoke in terms of an innovation renaissance, one born in Scotland and designed to eventually spread out across the UK, and beyond. With the release this month of the organisation’s 2013 Annual Impact Report all indicators suggest Jim Duffy and his co-founder Brian McGuire are well on their way to achieving that dream.”
Ed Emerson, Editor, HNW
“ESpark Speak” How are the results? Since opening the first “Hatchery” for the “Chiclets” (that’s “ESpark speak” for; the initial Glasgow Gorbals-based accelerator housed in Lord Haughey’s City Refrigeration offices south of the city, and the entrepreneurs granted free office space and support to help grow their businesses, respectively) some 280 startups (up from 139 in 2012) with a combined turnover of over £15 million, have created 520 new jobs, and delivered 259 patents, trademarks and franchises. Now with additional locations in Edinburgh and Ayrshire ESpark is one of only six UK accelerators chosen for the UKTI's (UK Trade & Investment) Sirius programme which places international start-up teams within British business incubators. Mr Duffy & Co.’s accomplishments are impressive, as are his supporters who include entrepreneurial savants like Sir Tom Hunter and Dr Ann Gloag, and renowned corporate sector bankers Gordon Merrylees and Darren Pirie of RBS. The Entrepreneurial Spark’s project model for business mentoring and advice adapted the principles employed by the US-based MassChallenge, the world’s largest
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startup accelerator and competition, and became the first UK-based accelerator to do so. In this programme new businesses are “hot-housed” (more ESpark speak) in one of three hatcheries over a five month period receiving often daily support as they go.
"Obviously, the report outlines the overall numbers of all businesses within ESpark, but we must acknowledge the individual entrepreneurs that have pushed themselves and their businesses to new heights. Their commitment, passion and drive is out of this world and each and every one of them has played a massive role in the collective success of ESpark." A more recently established progression platform called ‘Nest’ offers an additional 12-month incubator to help
E-Spark
Entrepreneurs
businesses become more resilient and opportunity hungry while focusing on more complex issues such as finance, debt and recruitment. And it works. The 340% plus increase in total Chiclet turnover from 2012, the 214% increase in funding (up to £8 million) and a doubling of job creation in the same period points to a galloping social enterprise delivering rousing results well beyond the ‘social’ space. In fact, the Spark has gone all Hollywood. Following a BBC documentary in 2013 entitled The Entrepreneurs which followed a group of Scots trying to start their own business, the organisation has released its own movie Entrepreneuring Is which follows eleven budding entrepreneurs on their five-month journey through the ESpark hatchery programme. It is a compilation of the jubilant highs and stressful lows of businesses striving for startup success in everything from apps to underwear and food to football. Of the recent Impact Report Jim Duffy was quoted as saying: "Obviously, the report outlines the overall numbers of all businesses within ESpark, but we must acknowledge the individual entrepreneurs that have pushed themselves and their businesses to new heights. Their commitment, passion and drive is out of this world and each and every one of them has played a massive role in the collective success of ESpark." Film and TV coverage, impressive impact reports and rising starts like Kevin Harvie’s Hectares Crisps business, which has just launched a new range of sweet potatobased crisps, have helped raise the Hatchery’s profile to attract the next intake of Chiclet’s. RBS’s head of business banking, Gordon Merrylees, said: “It is extremely encouraging to see the impact that
ESpark has had in such a short space of time and we very much look forward to being part of the future success of the hatcheries and of course the new ‘Nest’ high growth model too.” In any high-profile entrepreneurial undertaking what’s sometimes lost in all of the hype is the bottom line performance, like too many tech sector businesses of late tabbed with $billion stockmarket valuations without generating any real earnings. The Spark’s quantifiable performance reminds us what, as per the recent movie title, Entrepreneuring Is; a quantifiable testament to the effort, enthusiasm and relentless pursuit of success that has earned Jim Duffy, Brian McGuire and all those who have helped the Entrepreneurial Spark along the way to earn its position as Scotland’s leading business incubator. Entrepreneurial Spark® is a business accelerator for early stage and growing ventures. Working in a collaborative office environment suitable for building teams, businesses will receive free IT & wifi, access to business advice and support with a pool of over 50 specialised mentors, networking opportunities, workshops, pitch practice and more. Packed in up to 18 months of a support programme, aimed at making businesses more investable – the focus will be on the individual, developing entrepreneurial mindsets and behaviours to enable acceleration and growth #GoDo. We welcome applicants from idea, early stage businesses and to those who have been trading up to 5 years and/or have a £1 million turnover. Located across 3 spaces in Glasgow, Edinburgh and Ayrshire – Our vision is to develop an entrepreneurial revival in and from Scotland.
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Entrepreneurs
Time Management
6 Time Saving Apps for Busy Marketeers
By Mike Octigan If you work in marketing and never seem to have enough hours in the day to do all the things you need to, don’t worry! We’re here to help. There’s a veritable feast of time saving apps available nowadays, but being the nice people that we are, we’ve handpicked six of the best to help make your working life a little easier.
Add a task and start timing - simple as that. It takes two seconds to get going and will save you trying to remember what you did and how long it took come the end of each day. There’s a free trial and all the features are available for a measly $5 per user per month. Bargain! Discover more at https://www.toggl.com/
In no particular order, here are some of our favourite time saving tools we’re sure you’ll love too:
1) Toggl “Toggl kills timesheets” is the proud boast when you go to homepage. If you’re looking for an incredibly easy way to track how much time you spend on each task you do during the day, then Toggl is most definitely right up your street.
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2) GoToMeeting Screen sharing and face-to-face meetings via Mac, PC, phone or tablet is a piece of cake with GoToMeeting. You can’t be in two places at once as much as people may expect it from you! And with this handy tool, you don’t have to try the impossible. One of the many other great features is you can record the audio of your online meeting so you can listen in later i
Entrepreneurs
Time Management
f you need more detail. There’s a 30 day free trial so jump in and don’t let location be a barrier to having a meeting with colleagues, clients or suppliers.
30/30 is completely free to download and use. And it really helps focus your attention on the task at hand. Don’t just take our word for it - try it out for yourself http://3030.binaryhammer.com/
It’s time to go to www.gotomeeting.com
6) CamCard 3) Pocket Too busy to read articles or watch videos online during your working day? Pocket solves that problem. This description from Pocket sums it up perfectly: “When you find something on the web that you want to view later, put it in Pocket. It automatically syncs to your phone, tablet, or computer so you can view it any time, even without an internet connection.” We’ve used Pocket on the train home from work to catch up on articles we’ve seen during the day but haven’t had the chance to read properly. It’s free to use so https://getpocket.com/
take
a
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look:
4) Google Keep Google what? I hear you ask. Yes, exactly. Despite the lack of fanfare and ceremony before, during and after its launch, Google Keep is actually very useful. If you use Google Drive and are on the go a lot, you can record voice notes, make written notes, add ‘to do’ lists and pictures and have them sync effortlessly with Google
We may be firmly entrenched in the digital age but business cards are still used in most industries. CamCard eliminates the need to store all the business cards you’re given by allowing you to take a photo of them on your phone and have all the details scanned into secure cloud storage. As soon as you’ve left a meeting you can have all the details of the person you met at your fingertips synced across all your devices for easy access wherever you are. We’ve only scratched the surface with our summary get the full lowdown on CamCard here https://www.camcard.com/ So there you go - 6 time saving tools to make your busy working life that little bit easier.
Mike Octigan, Managing Director Gecko New Media
Drive. You can also colour code your notes and set reminders for tasks. It’s free to use and it a great time saving tool. For example, if you’re in a rush between meetings, you can quickly record voice notes to come back to later. Take a peek at Google Keep https://drive.google.com/keep/
5) 30/30 This handy task tracking iOS app was founded on the principle of splitting each hour into 30 minutes of work and a 30 minute break. Of course, that’s not really practical in the working world for the vast majority of us, so you can tailor it to select your own time slots for tasks and breaks (we recommend at least a 5 minute break per hour to make you more productive).
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Entrepreneurs
Startup Scotland
Scotland’s Startup Community and Crowdfunding By Michael Hayes
Recently Kickstarter announced the had facilitated $1 billion in pledges to projects from startups to charities in over 224 countries around the world. So I thought it would be a good idea to highlight some of the Scottish based companies using the platform to kickstart their products and what else is happening in the crowdfunding space in Scotland.
Lupo The Lupo ‘smart tag’ is a piece of wearable tech that has several useful use cases. Out the box Lupo along with it’s companion app on smartphones will allow you to track and locate the Lupo tag with the classic example being finding your keys. Lupo is empowered through an SDK open to developers to extend the functionality of the device. Some proposed use cases of the SDK are using the Lupo as a motion controller for games and media or using it to auto lock computers when you step away from them. The team behind Lupo are based in Glasgow in the Strathclyde University Incubator and founder says “We are confident that the benefits of the Lupo extend far
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beyond simple ‘lost and found’ as it has significant feature and performance advantages over Bluetooth item finders. The combined range of features offered by the Lupo in one single device coupled with the SDK option makes it a very compelling proposition both for consumers and developers and we look forward to introducing it first to the Kickstarter community.” At the time of writing Lupo had exceeded its Kickstarter crowdfunding goal of £20,000 by over £7,000.00.
Cycle Hack Founder of the well known service design consultancy Snook based in Glasgow, Sarah Drummond along with Johanna Holton is organising a hack event which is focused around one of their hobbies – cycling. As hack events go it’s largely the same as most, get a ticket (priced at at £10), go on the Friday for a pitch, get fed and watered as you power through the weekend and display your product on the Sunday night. Where the Cycle Hack differs is with what Sarah and Johanna are doing with Kickstarter. The crowdfund is being used to fund an ‘Open Source Catalogue’. This open
Startup Scotland
source catalogue is envisioned to empower cyclists around the world by providing 2D and 3D renders, 3d printing models, code, documentation and other outputs of the hack. The funding goal for Cycle Hack on Kickstarter is £5,000 and at the time of writing there is well over a month remaining to lend your support.
ShareIn So Kickstarter is without doubt the largest crowdfunding platform out there just now but there are plenty more, Indiegogo, Crowdcube etc but there are also some local services such as BloomVC and the recently launched ShareIn. ShareIn is baed in Edinburgh and is focused on crowdfunding for British technology and health focussed companies. Billed as “TED with an invest button” as it specifically aims to provide equity investment from £40,000 to £1m for inspirational UK companies looking to change the world through innovation, engineering and science.
Entrepreneurs
Unlike other equity crowdfunding platforms, ShareIn offers investors a best-of-breed share structure, where every share carries voting rights and establishes professional, fair legal arrangements between the shareholder and the investee company, without forcing the use of a middle-man and the associated fees. ShareIn also sets itself apart by focussing closely on company valuations, asking companies to justify their valuation to potential investors in an extensive section containing data on actual money spent to date and the estimated costs to replicate the company to its current state. In addition, ShareIn provides investors with a secondary market for their shares, providing a bulletin board to allow investors to sell their shares. Avenues such as Kickstarter and ShareIn give Scottish startups the ability to raise capital outside of traditional methods. This is allowing idea’s perceived as too niche or perhaps to risky to shine and reach not only audience but also advocates. It’s a strong proposition. Have you backed a crowdfund project? Maybe now is the right time to start.
Michael Hayes, Founder, RookieOven
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Wealth & Money
Budget
The 2014 Budget: Calm Down, Calm Down By Steven Forbes
I have never seen a Budget announcement that has generated as much excitement as the one made last week. A couple of months ago I was invited out to lunch on the day of the Budget. For as long as I can remember I have kept the Budget free in my diary and have always tried to ensure that I either listened to it on the radio or watched it on the telly. However, as recent Budgets have been so heavily leaked in advance they have contained no surprises I decided that it would be safe enough to accept the invitation. It was a very pleasant affair, and truth be told I did have a couple of drinks, but when I got back into the office and started reading the news, I assumed I must have drunk more than I thought. Most of the reporting on the announcement made it seem as if up until last Wednesday we were all stuck with having to buy an annuity with our pension funds, but thanks to St. George slaying the annuity "dragon" we were now free to use our funds any way we wanted. Had I been advising clients wrongly for the last twenty years? Had I entered some sort of time warp and been transported back to the mid 90's? Err, no. The truth of the matter is that the compulsion to buy an annuity at retirement was removed twenty years ago with the introduction of Income Drawdown, the rules of which have gradually been extended and made more attractive by successive governments since then. The only real difference between the world of pensions before I left for lunch and now is that the amount of guaranteed income needed to qualify for Flexible Drawdown, whereby you can take whatever you want from your pension fund subject to tax has been reduced to £12,000 from £20,000, and it is PROPOSED that from 2015 there will be no Minimum Income Requirement.
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I think the thing everyone is forgetting is that the latter proposal, the one that has generated the most headlines, is only a Consultative Document and may well be changed in the next few months. In fact, only a few years ago the plan for residential property to be included in a SIPP was overturned only days before it was due to become law.
Fifteen years ago we wrote an article in The Herald suggesting that the government follow Ireland's lead and simplify how they could take benefits from their pensions. Frankly I hope it is changed and that, at the very least, the new £12,000 minimum income figure is retained. My reasoning is simple. Without putting too fine a point on it, I feel that some people need saving from themselves. The average value of a pension fund at retiral in the UK is only £40,000 so if the legislation is passed as proposed it is easy to foresee the majority of people taking this out in one go. Now, if they are sensible and do not pay higher rate tax on this lump sum and put it an ISA to provide them with tax free income, then that would be reasonable planning. However, can you really see that happening? Not me. We are in the "live for today" era and I reckon
Budget
Wealth &Money “Most of the reporting on the announcement made it seem as if up until last Wednesday we were all stuck with having to buy an annuity with our pension funds, but thanks to St. George slaying the annuity "dragon" we were now free to use our funds any way we wanted.”
holidays, cars etc. would be bought, with the result that a significant number of people will be left with the State Pension as their only source of income in retirement. Not ideal for their, or the country's, long term financial health I would suggest.
Annuities still have a place in pension planning. Not everyone is in a position to accept, or would even want, the risk that their future income will be dependent on investment returns. Buying an annuity that will give them a fixed guaranteed income for the rest of their lives still gives a number of people the stress free retirement that they aspire to. Also, a number of older policies still have very valuable guaranteed annuity rates applying to them and I fear that some people will come out of these plans to go into the new drawdown arrangements as a result of bad advice or misinformation. Fifteen years ago we wrote an article in The Herald suggesting that the government follow Ireland's lead and simplify how they could take benefits from their pensions. We suggested that after the 25% tax free lump sum had been taken that subject to having a minimum level of guaranteed income, in Ireland at that time it was £10,000, which is £15,000 in today's money, the remainder of the pension fund could be withdrawn as you saw fit subject to Income Tax. In the hope that it does not take a further 15 years for the government to pay attention to any suggestions we make now, how about these changes to pensions legislation?
Remove the ludicrous Lifetime Allowance which limits the amount a pension fund can grow to before being subject to tax and is a disincentive to investment and is now unnecessary given the maximum that can be contributed is reducing to £40,000 each year from April. Retain at the very least the £12,000 Minimum Income Requirement before being able to qualify for Flexible Drawdown. Reduce the tax on a pension fund on death under drawdown or after age 75 to 40% from the current 55% level (St. George did say the government are looking at possibly doing this in his speech). Confirm that the 25% tax free lump sum will not be altered which will prevent the annual scare stories that emanate around every Budget and undoubtedly has resulted in some people accessing their pensions earlier than they intended. Increase the age limit on making pension contributions to 80.
Lastly, and by far most importantly, please, please, please state for the record that NO MORE CHANGES will be made to the rules regarding pensions for at least ten years. I think we could all do with a break from the constant changing of legislation and be able to start making proper long term planning without worrying if this will be blown out of the water on a whim.
Steven Forbes, Managing Director, Alan Steel Asset Management
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Wealth & Money
International
Crimea Who? Like it or not, the world is going to keep on ticking. Crimea while significant to some, will not interrupt the corporate focus which has been so globally diligent after the '08-'09 collapse. One can only yell at the moon for so long while ignoring improvement in multiple areas. We have just begun to see results and those effects should continue to expand‌.
Of course, there will be spots for pause; the weather will provide for glitches in the pipeline and (important to shortterm thinkers) generally provide an opportunity for longterm thinking to prevail. And the latter approach, the long-term, is the only way I know of whereby investing truly succeeds.
So, After Crimea?
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By Mike Williams
As we enter the sixth year of the great equity bull market, it is understandable that many worry about the next bear market. Nothing goes on forever, to be sure. But as the data suggest, there is still no sign of impending recession. The Great Recession was devastating, and many parts of the world - particularly the developed nations of Europe - have yet to recover the losses they suffered.
Well, first we can safely assume that as soon as Crimea tires in the media headline storm, there will be a newer, bigger and more effective monster to fear.
Yet, there is still plenty of idle capacity in the global economy, so we could still be due for at least several more years of recovery before there are any physical constraints on further growth.
While others concern themselves with that, let's use whatever the reactions to these 'monsters' are to our advantage.
The more vital data we should be counting on includes some of the latest charts of interest (courtesy of Scott Grannis)
International
Wealth &Money
We should all know by now that the first few months of 2014 have been a bit on the slow side in most parts of the world, but a global expansion such as we have enjoyed for the past five years is not something that tends to collapse from its own weight - it takes some big shocks (e.g., very tight monetary and fiscal policy, spikes in energy prices) that we have yet to see. A pile of snow surely won't do it. Despite the worst winter weather in decades, February U.S. industrial production exceeded expectations (+0.6% vs. +0.2%) and posted a 2.1% gain over the previous 12 months, reaching a new all-time high. The Eurozone sovereign default crisis took a tremendous toll on its economy, but industrial production there has been recovering for the past year.
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Business angels More than just money Millions of ÂŁs, Thousands of jobs, Hundreds of deals, One Network...
LINC Scotland is the national association and representative body for the business angel community in Scotland, and was a founder member of the European Business Angels Network (EBAN). Since our establishment in 1993 our members have made investments in hundreds of companies.
EUROPE & SCOTLAND European Regional Development Fund Investing in your Future
of millions of their own risk capital, on average levering three times more from other sources. Just as importantly they have invested their own skills and experience in the next generation of SMEs. The companies supported have created thousands of high quality jobs in the Scottish economy.
www.lincscot.co.uk
International
Wealth &Money
U.S. production of business equipment increased 2.8% in the past year, reaching a new all-time high. It has been a slow recovery, but the important thing is that conditions continue to improve on the margin.
German industrial production reached a new post-recession high in January, and will likely continue to expand.
Japanese industrial production is still more than 10% below its pre-recession highs, but it posted an impressive gain of 10.4% in the 12 months ending in January. Global economic activity could be a lot better, but at least it is still improving on the margin. Profits are at record levels - even if flattening out a bit as we swallow the effects of bad weather and soft spots in the globe. Cash flows that continue to expand and liquidity, both corporate and personal, are also at record levels. The good news is that right under the surface, we have a significant and beneficial support in place; continuing, deep-seeded, high levels of fear.
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PRACTICAL BUSINESS HNW Magazine’s Practical Business section looks at key areas of business needs across legal, accountancy, marketing, finance, leadership, strategy, research and other areas of support.
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EAST OF SCOTLAND INVESTMENT FUND Funding Totseat: For Babies Who Lunch Rich vs King The Importance of Patience & Persistence
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BUDGET: FREEDOMMM…OR GRAVEHEART? Alan Steel, Alan Steel Asset Management
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THE 2014 BUDGET & YOUR BUSINESS Darren Holdway,Terri Halstead - Haines Watts
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HNW’S HIGH GROWTH PROGRAMME Bill Morrow, Angels Den
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Totseat, Rich vs King, Persistence
Practical Business
ESIF Supports Totseat, for babies who lunch!
Totseat Ltd, an innovative and growing company based in Edinburgh, received support from the East of Scotland Investment Fund to support their expansion which will see them double their employee numbers whilst developing new products and markets. Totseat Ltd is home of the washable, squashable highchair – for babies who lunch. This innovative and award winning travel product is currently exported to more than 40 countries. The Company was recently awarded an ESIF loan for working capital and according to founder Rachel Jones, “Having access to the ESIF has been a great help in a climate where funding is hugely difficult to come by. It has allowed us bring another award-winning product to market, www.totseat.com/oobicoo, and will ensure we are able to explore and develop our new international markets.” For further information on the company visit www.totseat.com
Rich vs King….You Have to Choose More than a few years ago Noam Wasserman wrote up a distinction, or rather a ‘decision’, most every entrepreneur must face…and usually does so too late. The choice to be made sits somewhere between; maintaining control of your company (equity), or relinquishing some/most/all of that control in return for wealth…faster. Unfortunately, many founder ceos find that decision is made for them at some point further down the line. He or she should have considered which route was more preferable while the business was still in nappies. From Entrepreneurship.org, Taylor Brown writes: “You’re the founder of your business. Then, the big question: Do you want to be rich or do you want to be king? What? You want to be both? Well, it may surprise you to learn that very few founders have been able to do that, including the likes of Bill Gates, Steve Jobs, and Richard Branson. As a venture ages, the founder becomes less likely to remain the CEO. Look just four years into the life of businesses, and almost 50 percent of founding CEOs have been replaced–and 75 percent of those are fired. Jack Dorsey, founding CEO of Twitter, said the experience of being asked to step down was like “being punched in the stomach.”
The Importance of Patience & Persistence Both Sides of the Table’s Mark Suster writes: “One of the hardest things for most entrepreneurs to know is how hard to push in situations where people tell you ‘no’. But then again most entrepreneurs fail. There is that rare breed that doesn’t accept ‘no’ for an answer. It is impossible advice to give because there is such a fine line between being persistent and being annoying and it’s something you probably can’t teach. I often describe “chutzpah” as being able to skate right up to the line of acceptability without crossing over it. And being persistent I believe is the most important attribute for success in an entrepreneur (assuming of course that you have all the other requisite skills). Years ago I started using the term “politely persistent” to remind people that you still need to be likable even if you have gumption.”
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Practical Business
Budget
Freeedommm…or Graveheart?
By Alan Steel So the UK Budget is hailed as a success for retirees. Freeedommm…, they cry! but what happened to Wallace in Braveheart when he shouted that? Drawn and quartered. that’s what.
every time markets get a kicking or News At Ten covers their latest cure for constipation….?
The idea of living below your means has become a lost art these days. We live in the land of Chocolate rather than Broccoli; instant gratification, and damn the consequences. Or as Fat Boy Slim put it …it’s … “Right here Right Now…”
Keep your accumulated pension fund protected until 75, drawing a lower taxed income so that if you pop your clogs before 75, HMRC gets nothing and your loved ones pick up a tax free bonanza …..?
And now our esteemed Chancellor who, unlike the vast majority of us (because Governments renege on promises) incidentally qualifies for full pension benefits without cap or restrictions, has spotted how to win votes and pocket vastly increased taxes…by sleight of hand.
Only you can take your freeedommm!!!
And all thanks to a hysterical campaign orchestrated by folk without any experience or worthwhile savings, we all know that Rip Off Annuities have become more dangerous than Global Warming. So would you rather have a guaranteed income paid to you every month in retirement, designed for you and your family, no matter what horrors happen…market crashes…corporate scandals…failing banks….? Or Freedom to manage your own money in retirement, paying big slugs of tax, coping with rollercoasters of emotion
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Or -
From “A Dozen Predictions for 2014” by Tren Griffin, former US Private Equity Investor: "Economists will continue to make assertions about the economy without actually talking to anyone who runs a business. They will continue to talk extensively with each other in small warring cabals with the profession being careful to exclude anyone who is not ‘empirical’ ( the ultimate insult ) from the conversation. The crew of economists who believe: 1) The economy is composed of perfectly informed rational agents, and 2) The hard version of the Efficient Market Hypothesis ….will continue to live in their fantasy world.”
Practical Business The 2014
Budget &
Budget - 7 Key Points
their fund in retirement may now want to reconsider.
4) Exporting
By Darren Holdway & Terri Halstead, Haines Watts
Your Business “Against the backdrop of a recovering economy, the Chancellor has attempted to incentivise business whilst acknowledging the need to continue to control costs and build a resilient recovery.” Earlier today the Chancellor, George Osborne delivered his 2014 Budget speech stating he was backing businesses that invest, export and build. But did he do enough to help UK owner managed businesses? Below are the key points from today’s Budget speech and what they mean for UK business.
1) Annual Investment Allowance Great news for companies looking to invest in capital equipment with 100% tax relief on capital investment up to £500,000 per year from next month. This is a rise from £25,000 only a year ago! Companies will need to plan their expenditure carefully to maximise the amount they claim.
2) Research & Development (R & D) For those small companies undertaking Research & Development in excess of their profits, the rate of repayment for loss making companies increases from 11% to 14.5%.
3) Pensions A major surprise on pensions with restrictions removed and flexibility given on unlocking the value of pension funds. The Chancellor announced “no caps, no drawdown limit and no annuity”. The proposed changes allow you to unlock the whole of your pension fund, provided you satisfy the reduced annual income requirements of £12,000. It is likely this will create significant planning opportunities now that the punitive 55% tax rate on drawdown has been replaced. Owner managers, who have historically shied away from investing in pensions due to the restrictions on accessing
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The Chancellor announced he wanted to support a “Britain that builds”, aimed at encouraging owner managed businesses who export. Export finance loans were doubled to £3bn and the interest rates on them were cut by one third – this means the UK will have the most competitive export finance in the world. Changes will also be made to Air Passenger Duty to level tax rates on long haul flights to encourage exports around the world. To improve links across the UK to foreign markets, the Chancellor also announced start-up support for new routes from regional airports.
5) Employers The grant funding for apprenticeships is to be doubled and extended to potentially include graduate apprenticeships, with the aim of creating an additional 100,000 apprenticeships. There was a reminder in the Budget about the employment allowance, giving £2,000 reduction in employers National Insurance bill. From 6 April 2015 every employer with employees under the age of 21 will not be required to pay employers NIC on those employees. Whilst these new measures help to reduce the cost of employment, the red tape in administering them may add costs.
6) Energy & fuel costs A £7bn energy fund was announced aimed at reducing energy bills for British manufacturers, predicted to save mid sized manufacturers £50,000 on their energy bill. Businesses buying designated plant & machinery, which is energy efficient, reduces water use or improves water quality may qualify for enhanced capital allowances. Fuel duty rises planned for later this year, have once again been scrapped giving help to those businesses with high fuel bills.
7) Tax avoidance A major shift in policy was announced today with the introduction of accelerated payments for disputed tax schemes. This is a requirement for taxpayers to pay up front any tax under enquiry. Many taxpayers will be concerned with the use of retrospective legislation to cover arrangements they entered into many years ago, believing them to be perfectly legitimate tax planning. This could lead to taxpayers facing significant tax bills with relatively little time to raise the funds.
High Growth Company Leaders HNW’S HEAT High Growth Company Leaders A Good Reason
● Accountancy matters of funding, taxation and strategy
HNW Magazine’s HEAT 500: High Growth Co. Leaders programme launched in 2012 in response to a problem in the market. And that problem involves two audience groups.
● Wealth Management of personal finances and corporate earnings
The High Growth Entrepreneurs The first group comprises established high growth entrepreneurs, a highly valuable market segment facing the irony of its own success; once their businesses have succeeded through the startup stage, they find themselves suddenly isolated from the myriad incubators, accelerators, university networks and Government programmes that helped support their progression into a scalable revenue generating business. Additionally, as that bank of startup stage advisory support disappears these company leaders become wary of unfamiliar organisations offering commercial assistance, despite knowing their future growth may depend on upgrading the startup stage legal, accountancy, banking, personnel, funding, training and wealth management relationships they’ve since outgrown.
The Professional Advisers The second group comprises those businesses who offer these more sophisticated layers of assistance, including support on: ● Helping the business to Internationalise its product/service offering ● Legal advice on company struc ture, corporate activity, and intellectual property
● Marketing & Sales, an all too common Achilles heel in most businesses ● The dynamics of Leadership and personnel management, and how that delivers growth ● Staffing and Personnel, particularly for senior level positions, and ● Business and personal Banking options, and growth Funding.
But advisers often struggle to gain traction due to two barriers of their own: 1. They have difficulty in first identifying these newly disenfranchised high growth company leaders and their businesses, and 2. Once identified, they lack a strong route to introduction, one that develops immediate trust and creates the foundation for a relationship.
One – One = None Any business with experience in the innovation space will know both the value of building these connections, on both sides of the equation, and the inherent challenges in doing so. Gathering entrepreneurs together can be akin to herding cats, and finding the right advisors, equally so.
HEAT is HNW Magazine’s UK & Ireland-wide high growth company leaders programme for exceptional individuals running exceptional businesses. P.45
High Growth Company Leaders HNW’S HEAT High Growth Company Leaders HEAT The HEAT High Growth Co. Leaders programme brings these two audiences together. HEAT is a route to enhance the odds of high growth business survival from its current 55% failure rate – worse odds than flipping a coin, and that figure is for businesses who have already received angel funding.
“Over 500 company leaders based throughout the four regions of Scotland, London, North West and Ireland….” HNW’s HEAT programme helps by: ● Delivering a peer group support network for high growth entrepreneurs throughout the UK & Ireland ● Providing regional events in London, Ireland, North West and Scotland that focus specifically on the most common barriers to high growth ● Growth guidance, through editorial and communication channels unique to HNW, only for members and supporters of the HEAT programme, and
● Promotional and editorial support for all members of the HEAT High Growth Co. Leaders programme through the pages of HNW and via its significant digital and social media platforms. HEAT brings together the leaders of over 500 high growth scalable businesses based in London, the North West (Manchester), Ireland (Dublin), and Scotland with the types of speakers and commentators who can help these companies through the barriers on the road ahead and help improve the business survival rate across the UK & Ireland.
HEAT 2014 / 15 HNW will operate the HEAT programme event series in four areas in 2014: ● ● ● ●
Scotland (Edinburgh & Glasgow) The North West (Manchester) London & Surrounding (London city) Ireland (Dublin)
Events HNW will hold 4 events in each of the above 4 areas, a total of 16 events across the UK and Ireland, comprising HEAT programme members from each respective geography, with expected audiences sizes of between 10 and 30 attendees at each event. HNW will produce HEAT Scotland, HEAT London, HEAT North West, and HEAT Ireland publications and members-only website areas.
Contact editorial@hnwscotland.co.uk for further information
“HEAT is a route to enhance the odds of high growth business survival from the current 55% failure rate – worse odds than flipping a coin, and that figure is for businesses who have already received angel funding.” P.46
Aye Cloud
New Technologies New Economy New Scotland
To find out more visit nvtgroup.co.uk Tel. (+44) 08453-893-300 NVT Group