Covisory Connect - Quarter 3, 2018

QUARTER 3 I 2018

Sheryl Sandberg: turning startups into giants Some tips and tricks to maximise your business value Jay Flatley: creating the future of medicine SMEs targeted by ransomware find themselves helpless Debra Cafaro: leveraging consistent growth Finding time is an entrepreneur's most important skill

For accounting that is far more than a numbers game Covisory C&A LP is a specialist accountancy firm offering a little more in services than most. We don’t believe in the minimum compliance regime. We offer full service, growth orientated advice and options that help you run your business more effectively. We take timely care of background details so you can focus on what matters most.

We also pride ourselves on being small, responsive, highly specialist and boutique in our approach.

Amanda Davies amanda@covisory.com +64 9 222 2642

www.covisory.com/accountancy

When expertise counts Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help: • One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability.

When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital.

0800 86 34 36

fifocapital.co.nz

About

The Covisory Group solve people’s problems.

We are specialists in International and Domestic Tax Services, Trust Management, Succession Planning, Structuring, Strategic and Business Planning, Accounting Services and Business Valuations.

Now in its 12th year, Covisory’s services reflect our core values of: Trust, Accessibility, Transparency, Accountability and Responsiveness. We build strong relationships with our clients and we aim to own the cracks. Our solutions are tailored to each client, drawing on the latest cloud-based technology together with our up-to-date specialist knowledge and years of experience providing one-on-one expert advice.

Covisory clients are owners of family businesses, operating both in New Zealand and globally. Our specialists work either oneon-one or alongside our clients’ team of professional advisers to develop appropriate short and long-term solutions.

advising on better business Covisory Partners offers expert external reviews of business processes with the explicit aim of improving performance. We work with you to review your company’s operational systems to identify where change, enhancements, or smarter operations could positively affect the bottom line. We help you to work smarter.

NIGEL SMITH nigel@covisory.com +64 9 307 1777

www.covisory.com/contact-us

Wealth | Tax | Business

Welcome

Welcome to this quarter’s issue of Covisory Connect.

Getting your house in Order

Recently I was asked to address a group of chartered accountants about selling their practices. Initially I declined as while I knew both them and the topic, that was also the problem, that I may offend them telling them a few good, honest home truths.

The key point I made when I did speak to them was that when we sell our home we spend a lot of time making sure it is immaculately presented and de-cluttered. There is a concerted plan and timeline to achieve this, often driven by our wives who don't want a single item out of place (although it never ceases to amaze me how the house gets sold to the couple that comes and views the house when it is untidy).

When we come to sell our businesses, whether it's a planned sale or otherwise, we need to act as if we were selling our homes and prepare and plan accordingly. Sadly, all my accounting colleagues were simply to busy to do this for themselves, so they were, by analogy, selling a messy, cluttered and ill prepared home. They then questioned why they did not get top dollar from the market. We talk more about this in this month’s issue.

This issue marks a transition for the Covisory family. While we are 4 separate business units, we are working more closely as a single unit and will make some subtle but important changes in how we work and communicate with you over the next few months. Our aim is to not only improve our service to you, but to add value to you from our relationship. We have planned several new business and social events. These will provide technical and commercial information, as well as the chance to network with other like-minded clients socially. We will be in touch over the next month with more information.

As always, our aim at Covisory remains to be your trusted advisor in relation to your business, investment and family matters and we thank you for that opportunity. We look forward to seeing you soon.

I hope you enjoy this issue of Covisory Connect.

Best regards, N igel Smith Covisory Partners Limited

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Sheryl Sandberg: turning startups into giants Some tips and tricks to maximise your business value Finding time is an entrepreneur’s most important skill Surviving success: startups need to be strategic about growth Jay Flatley: creating the future of medicine Businesses need to reward and retain top performers Debra Cafaro: leveraging consistent growth SMEs targeted by ransomware find themselves helpless

Published by Fifo Capital International Ltd. Covisory Connect magazine is published four times a year.

Copyright Š 2016 by Fifo Capital International Ltd. Email info@fifocapital.com.

Visit www.fifocapital.com. All rights reserved.

Contents

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Sheryl Sandberg: turning startups into giants Frequently we credit the entrepreneurs that founded successful startups with most or all of the success that those businesses enjoy. While that’s fair in some cases, this simplistic attitude often leaves us ignorant of the most important business people of our time. The perfect example of this is Sheryl Sandberg, who is arguably responsible for the staggering success of Facebook in the past decade.

“We hold ourselves back in ways both big and small, by lacking self-confidence, by not raising our hands, and by pulling back when we should be leaning in.”

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Over the course of her career, she was an instrumental player in the growth and success of Google, and later Facebook, before founding the Lean In Foundation, through which she facilitates the establishment of women in leadership roles. In that time, she has built up a net worth of $1.61 billion, and been named to the boards of Facebook, The Walt Disney Company, Women for Women International, Center for Global Development, V-Day, and Survey Monkey.

“ If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on.”

Early career After a short stint as a management consultant, Sandberg took a job as Chief of Staff for US Secretary of the Treasury Lawrence Summers. From there, she moved on in 2001 to join Google, initially with the somewhat vague title of “Business Unit General Manager”. While interviewing for the job, Sandberg famously told Google CEO Eric Schmidt that she had no idea what the scope of the job really was, as Google actually had no business units to manage at the time. However, this did not stop her from using her position to help propel Google through its astronomical growth phase in the early and mid 2000s. Serving as Vice President of Global Online Sales and Operations, she grew Google’s Ad and Sales team from 4, to over 4,000 people over the course of 7 years with the company.

In 2007 she met Mark Zuckerberg, who considered her an ideal candidate for COO of Facebook, a role he wasn’t formally recruiting for at the time. She joined the company in March of 2008.

Monetising Facebook Before Sandberg joined, Facebook was primarily focused on creating an excellent user experience, assuming that profits would result naturally.

Sandberg did not agree with this attitude, and set about turning the social media network into the incredibly profitable business that it is today. Upon her arrival she proceeded to convince the business’ leadership to rely on advertising for its revenue, and to begin discreetly displaying ads.

Two years later, Facebook became profitable for the first time. Since then, Facebook’s revenue growth has been nearly exponential, going from $1.97 billion USD in 2010, to breaking $40 billion in 2017.

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hasn’t set about launching her own startups. Instead, she joined promising businesses, and set about facilitating their success with extreme prejudice. Her personal success in this speaks for itself.

Business issues are social issues As a woman in the business world, gender equity is an issue that’s far too obvious and pervasive to ignore, particularly in the tech industry and in leadership. Not only does it poison the company culture in many businesses, it also impairs the innovative potential of a business. Rather than simply pushing through on her own and demanding that others find their own way, Sandberg has launched a movement to change the game for those who come after. She is using her position and her experience to directly change the world.

Leanin.org In 2013, Sandberg published her first book, Lean in: Women, Work, and the Will to Lead, in which she discusses issues surrounding the lack of women in leadership positions in government and business. Its look at workplace sexism, harassment, discrimination, and the more subtle impacts of cultural assumptions about gender roles provides an insightful and much-needed perspective on the ongoing challenges that women face in the professional world.

To begin to actively address the issues she discusses in her book, Sandberg founded the Lean In Foundation, a non profit organisation designed to help women organise into peer groups, called circles, that support each other in the pursuit of professional success in various fields.

Currently the Lean In Community has nearly 400,000 members in

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157 countries, organised into over 34,000 circles. As an organisation, Leanin.org has worked to address gender equity issues on a broad scale, conducting studies such as the Women in the Workplace Study, which sought to draw attention to the causes of the underrepresentation of women in leadership roles.

“ For many men, the fundamental assumption is that they can have both a successful professional life and a fulfilling

What we can learn

personal life. For many

There is a lot that business owners can take away from Sandberg’s story. While many highly successful entrepreneurs launch non-profits and advocate for social issues, her career blends business success with social activism in a way that we don’t see elsewhere. Moreover, her career shows how business leadership doesn’t always have to mean entrepreneurship or business ownership. Despite having a net worth of over $1.6 billion, Sandberg

women, the assumption is that trying to do both is difficult at best and impossible at worst.”

advising on better business Covisory Partners offers expert external reviews of business processes with the explicit aim of improving performance. We work with you to review your company’s operational systems to identify where change, enhancements, or smarter operations could positively affect the bottom line. We help you to work smarter.

NIGEL SMITH nigel@covisory.com +64 9 307 1777

www.covisory.com/contact-us

Wealth | Tax | Business

Some tips and tricks to maximise your business value Whether yours is a planned or an unplanned business sale, there are several tips and tricks that can be used to maximise value for a vendor. Naturally every business is different, but the aim is always the same; to present the business in the best possible way to a potential purchaser.

It is basically the same as what we do when we want to sell our home. That normally extends to: • Touching up or repainting • Cleaning the carpets • Getting the grounds in order • De-cluttering So what can we do to potentially improve the return on a business by comparison?

1 Go through all items of stock.

Identify what is slow moving or obsolete stock and get it sold. A purchaser will pay you little or nothing for these items. The other alternative is to exclude it from the sale process, or to have the purchaser pay value for it if and when it is sold in the future.

While both options may work, they are messy. Its simply easier for the vendor to sell it pre-sale if possible.

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2 Get your debtors in order. Start this at least 6 months before you go to market to have time to collect those hard to collect debtors. Even if the purchaser does not end up buying your debtors, you are in effect collecting your own money faster. It also pays to review your terms of trade and get a lawyer to run their eye over them to ensure they are all up to date.

3 When dealing with large company accounts, personal guarantees are often obtained from the company owner. Any smart purchaser will want to see these documents so make sure you have them available and easy to find for all your major customers.

4 Finally, write off any bad uncollectable or doubtful debts before the sale process. These are a

Planning is the key and natural cost of business and are an area which any purchaser will look at.

It does not stop you trying to still collect them however.

the purchaser also gets to depreciate the assets at what is typically a higher market value than the asset book values, so they gain also.

typically will result in a

5 Plant, Machinery and other fixed assets should also be reviewed. It never ceases to amaze me how businesses will have either excess or unused plant and machinery. The purchaser will pay you nothing more for this so sell it before the sale process starts, or at least clearly identify it and exclude it from the sale process.

11 An asset sale is typically easier to document, and sees the vendor providing a lot less warranties.

However, there is also a lot more administration involved in an asset sale as contracts need to be assigned, asset ownership changed and employee (etc) will need new contracts.

price.

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For service organisations or those with large IT investments, make sure that all equipment is properly licensed and that you can clearly demonstrate this.

7 Revenue recognition has become an area that we increasingly need to check on these transactions. Often for vendors it is necessary to identify if billing is in advance of services being delivered. Sadly, too often no one is sure of what period a bill relates to. More often, billing in advance is not treated as a liability in the balance sheet and taken straight to the profit and loss. This has the tendency to both overstate profits and to overstate working capital; both of which lead to disputes with purchasers.

8 Staff are key to the success of any business and potential purchasers will want to see up to date employment agreements that reflect the current pay, job descriptions and benefits. These should be signed.

9 Fringe benefits are also a typical problem. Purchasers will check whether you have been paying the correct amount and that the appropriate paperwork is on file.

10 Be clear about not only what you are selling, but how you are selling it; is it to be an asset sale or share sale?

There are advantages and disadvantages to each. For an assets sale deal, there will be the potential of depreciation recovered for the vendor which is a cash cost. However,

12 Many vendors of businesses see little separation or difference between their personal cheque book and that for the business. This can lead to a proliferation of private or semi-private expenditure being lost or buried in the financial statements of the business. While it may seem smart to make a few costs tax deductible, this can cause 2 real problems when contemplating a sale:

a If these are not genuine business costs, then the purchaser will be seeking an indemnity and warranty for taxes under a share sale in case the taxman should ever come calling; and b Much more importantly is that on sale of these costs are not identified and normalised (added back as non-recurring costs that the purchaser will not incur in the future), then the vendor is losing out big time. Consider a simple $100 private cost, buried in the company's books. The tax saving is $28. However, if the business is sold for 4 x EBITDA, the vendor saves $28 (plus any GST) but loses $400 which would be a tax-free receipt. The key is to minimise all expenses to maximise sale value.

13 For larger businesses, particularly where the value is over $10m or buyers may be international, it is well worth considering having the financials audited for at least the 2 years prior to sale. While there is a cost to this, there should be an increase in price as a result. It also makes the due diligence process typically easier.

business that is more saleable and at a higher

14 The final point we will name is that of not only post sale support by the vendor, but its ultimate extension being an earn out provision where part of the purchase price is dependent on what the purchaser earns post acquisition. The principal advantage of an earn out is that it de-risks the transaction for the purchaser, who should then pay 0.5 to 1.0 times higher on a price earnings basis for the business.

15 Usually we would expect the vendor to continue to run the business during the earn out period.

There does need to be some legal guidance put in the sale and purchase agreement about this, and the new costs that the purchaser can charge the business. However, an earn out can see a significant premium for a vendor. In some cases, the vendor may continue to work for the purchaser after the earn out period, although this is not common.

We recommend that for anyone contemplating a sale of their business, that they start planning it at least 2 years before actually going to market. Planning is the key and typically will result in a business that is more saleable and at a higher price.

At Covisory we have helped many owners sell many different businesses. We approach each sale process as a unique situation and work with the vendor to maximise the value of their business based on its unique and special characteristics.

Selling can be stressful, but with appropriate planning and attention to detail, the stress can be both managed and reworded.

In next Covisory Connect issue we will look at the sales process itself.

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Finding time is

an entrepreneur’s most important skill Time is the most precious, and most limited, resource that small business owners have. There are never enough hours in the day to tackle all the responsibilities an entrepreneur needs to stay on top of.

Early on in a business’ life, businesses don’t have dedicated teams to deal with payroll, sales, marketing, legal issues, production, or management. Instead, business owners find themselves trying to do all these jobs to varying extents.

Nearly all startups are forced to go through a phase like this, and those businesses who manage to come out the other side do so because of entrepreneurs who learned to make time for that other all-important job, growing their business.

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Many entrepreneurs fail in their first year because they simply can’t find the time to do more than just survive.

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Prioritise jobs that benefit your entire business

Every aspect of your business feels important, and many that actually are still aren’t worth your time as a business owner. A business owner’s responsibility is to create and oversee their company as a whole and to structure it in a way that makes it sustainable and robust. For startups, that means getting established in your market, and strategising exactly how you can lead your business to the growth it needs to sustain itself.

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Don’t get too involved in production

Successful entrepreneurs are often those who can identify tasks that don’t require their personal attention, and delegate them to other employees or contractors in order to free themselves up for more critical tasks. While it’s good to understand how your business’ deliverables are made, spending significant time helping to drive production can be an enormous waste of your time.

Since production work is most closely linked to generating revenue, affording employees for production is much more feasible than for other, more support-oriented jobs.

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Outsource marketing tasks

It makes sense that business owners want to involve themselves in branding and marketing activities.

After all, no one cares more about how your business is presented to the world than you do. However, many marketing tasks, such as creating a website, writing content, publishing press releases, and handling your social media presence is a fulltime job for even a modest-sized business. Outsourcing this task to a contractor or employee, and limiting your involvement to providing initial instructions and, later, detailed feedback, can save you several hundreds of hours per year.

These activities consume a majority of many entrepreneurs’ time.

By vastly cutting down on the amount of focus spent on them, they can free up the time they need to focus on their business as a whole, and to strategically pursue innovation and growth.

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Stabilise your receivables

More than almost any other issue, cash flow management dominates the time of entrepreneurs. The average business owner in Australia spends 8 hours every week just chasing down late payments from clients. That doesn’t include the time spent negotiating for financing to make up shortfalls, or managing accounts to make ends meet on a limited budget. To free up the time needed to lead your business to growth and success, you need to find solutions to stabilise cash flow without consuming enormous portions of your very limited time.

Business payment plans A great way to end the tyranny of unpredictable client payments is to disconnect your business’ revenues from the whims of your clients.

Offering business payment plans to clients is convenient both for them, and for your business’ bottom line.

When a customer makes a purchase, most of the payment is made to your business up front. The customer then makes payments directly to your financial institution, who will also handle any late payment issues.

When payments are made, the remaining revenues are paid out. This makes revenues utterly predictable, and allows businesses to plan expenditures with confidence.

Invoice financing Of course, payment plans aren’t an option for all kinds of businesses, and some customers may simply not be interested in using them. Fortunately, invoice financing provides a similar level of stability in a different way.

Instead of establishing a relationship with your client through your financial institution, you can simply finance your outstanding invoices, trading them in for most of their value whenever you need the payment.

Most of the value of the invoice will be paid out immediately, and your financial institution will collect on the invoice when it comes due. Not only does this lift the burden of chasing down late paying clients, it also greatly reduces the chance that a client will even attempt to delay payment. When the payment is received, the remaining balance is paid out, less a small predetermined fee.

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Surviving success: startups need to be strategic about growth The greatest risk of failure for new businesses has largely been found to be in their first year. Considering that many of these businesses are launched by first-time entrepreneurs without significant experience and limited funds, this isn’t necessarily surprising. What may come as a shock is that the next most dangerous time for a small business is several years later, after it has already established itself and proven its viability to potential investors.

Approximately 4 years after launching, many entrepreneurs start looking to realise the growth potential of their now stable business. Unfortunately, expansion is risky and expensive, and business owners who don’t approach it with the planning and foresight it requires frequently find themselves sitting in the ruins of what used to be a promising enterprise.

Create a feasible growth plan Many inexperienced entrepreneurs start businesses without a thorough business plan. More experienced startup owners, on the other hand, often plan out the launch of their business, but then fail to create a thorough growth plan for when it’s time to scale their business up.

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Attempting to do this is like flying blind, and can very easily lead to catastrophic problems.

Entrepreneurs need to take the time to sit down with experts in their organisation and from their financial institution to create a thorough and realistic plan for their business’ future, and to determine the feasibility of that plan. Before you can start to grow, you need a clear picture of exactly how you’ll grow your business, what it will cost at what times, and how long it will take to recover your investment.

Deal with the cost of growth Expansion is expensive, and often takes months or years to pay for itself. A successful startup might be able to dedicate a large budget to growth, and have access to significant additional financing, but still be vulnerable to financial destabilisation during their big growth phase.

Don’t overextend your business One of the most common mistakes that business owners make is to set unrealistic expectations for revenue growth, often without making any contingency plans for when those expectations aren’t met. When projected revenues

Growth isn’t just the natural result of a well-run business.

Scaling up requires just as much care and foresight as getting a business into a position where expansion is possible.

don’t materialise, those businesses find themselves overextended and unable to cover their costs. Even those who aren’t forced into bankruptcy over it might still be forced to make painful and damaging cuts to stay afloat, compromising the longer term stability of their business.

Actively manage your cash flow Even businesses that grow strategically, while avoiding unnecessary risk, face a wide range of potentially destabilising financial hurdles. Funds that are being funneled towards growth are necessarily not available to smooth over everyday cash flow issues like late client payments, equipment breakages, and countless other types of unexpected expenses. To deal with these businesses need to turn to other solutions. A good way to handle this is to use short term financing tools like invoice financing,supply chain finance, and unsecured business loans to free up additional funds nearly instantly. This allows business owners to focus on executing their growth plan without spending huge amounts of time and effort chasing late payments and keeping their working capital stable from one day to the next.

Keep an eye on your credit A very serious issue that business owners don’t tend to be aware of until it happens to them is a growth-related plunging business credit score. After a few years in

business, small enterprises have generally established themselves and had enough time to build up a great credit rating. However, when it’s time to grow, they shop around at a variety of financial institutions to come up with the financing they need to fund their newly minted growth plan, often submitting applications at each institution.

This is dangerous, because each of these institutions then performs a credit check on the business, negatively affecting their credit score. This depresses the score of an otherwise financially strong business, and makes it more difficult for them to access financing going forward.

Worse, this credit slump would be most pronounced while the business is executing its growth plan, and is most vulnerable to unexpected financial disruptions. Businesses who can’t get the financing they need to deal with such disruptions might find themselves unable to pay off other financing, leading to further credit enquiries, and an even more depressed credit score.

Growth isn’t just the natural result of a well-run business.

Scaling up requires just as much care and foresight as getting a business into a position where expansion is possible. By devoting the time and resources to develop a thorough growth plan, and taking steps to keep finances stable and financing accessible during your growth phase, businesses can help to make sure that they don’t become just another statistic.

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Jay Flatley: creating the future of medicine

“We absolutely believe that sequencing will become mainstream, and it will be commonplace in the management of human health because it will be so inexpensive to do.”

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Unlike many of the big name CEOs we’ve talked about, the average person is unlikely to have heard of Jay Flatley. He isn’t staggeringly wealthy like Jeff Bezos or Elon Musk, doesn’t give lengthy interviews about his ideas or business philosophy like many of the US’ great tech entrepreneurs, and doesn’t write books. Despite all this, it’s very likely that the work he and his business, Illumina, have done in the past 20 years will have a more significant and personal impact on our lives than any of the other business leaders we’ve covered.

Bringing experience to innovation Unlike most major figures in the tech industry, Flatley didn’t launch his career during the economic boom of the 90s. In 1993, a year before Amazon was founded, Flatley was leading another business he

co-founded, Molecular Dynamics, to its first public offering. There he helped to launch 15 different instrumentation systems, including the first capillary-based DNA sequencer, before the company was acquired by Amersham Pharmacia Biotech.

Before his tenure there, Flatley was Vice President of Engineering and Strategic Planning for Plexus Computers, Executive Vice President for Manning Technologies and held a number of different positions at Spectra Physics. By the time he joined Illumina in 1999, he had decades of technical knowledge and business experience to back him up.

While other tech startups of the era experimented with innovative new management ideas and business philosophies, Flatley competently and quietly lead Illumina to stunning success using what he had already learned.

Building a gene sequencing empire As just one of many fresh-faced startups in the year 2000, Illumina generated a moderately respectable $1.3 million in revenue. Just one and a half decades later, before Flatley stepped down from his position as CEO in 2016, Illumina’s annual sales figures stood at a staggering $2.2 billion.

While Flatley led Illumina, the business grew at a rapid, nearly exponential rate, and in doing so, transformed what’s possible in medicine. In 2007 it cost approximately $1 million to sequence an entire human genome. By 2014, Illumina’s machines brought the cost down to a very manageable $1000.

This transformed gene sequencing from a scientific pursuit into a commercially accessible service, and has made Illumina the undisputed leader in its industry.

Pursuing a passion When asked about his success, Flatley doesn’t talk about the business’ growth, its success, or what he has personally gained.

Instead, he discusses the goals he has for his work, and the potential he sees in the future of his industry.

He imagines a future where gene sequencing is cheap and routine, and where genomic diseases like cancer can be detected and successfully treated before they ever pose a threat. More importantly, he envisions a medical system where physicians can use genomic data to help make diagnoses, detect potential illnesses, and to create individually personalised medications. Genomic data would become a cornerstone of medicine in the 21st century, and open up new ways to study and begin to fight diseases and agerelated disorders that aren’t currently considered treatable.

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" Something that’s been distinct about [Illumina] is that most of the senior Back in 2012, Matthew Ferber, director of the Molecular Genetic Laboratory at the Mayo Clinic, described the incoming (current) generation of gene sequencing tools as “akin to landing on the moon”.

Continuing to drive progress Flatley is passionate about realising his vision in creating the medical system of the future. Since stepping down as CEO at Illumina, he has continued to drive progress both there and at other businesses. At Illumina, Flatley continues to serve as the executive chairman of the board of directors.

Additionally, he also holds a number of other important positions that make him one of the most influential people in medical technology in the world. He chairs the board of directors for Illumina subsidiary, Helix, while acting as an advisory board member for UC San Diego’s Moore Cancer Center, sitting on the Board of Trustees of the Salk Institute, and also serving on the Boards of Directors at Coherent, Denali, and Juno Therapeutics. These

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businesses focus on genomics, medical technologies, and gene therapies for cancer treatment.

What we can learn Jay Flatley shows that world-changing startup success doesn’t necessarily have to rely on charismatic silicon valley entrepreneurs with celebrity status. What it does take is the dedicated and innovative pursuit of a world-changing idea. More importantly, his story shows us that experience matters.

Flatley’s decades spent in startup development, leadership, and tech allowed him to lead Illumina on a very efficient and strategic growth trajectory, while many of the other big-name entrepreneurs of the early 2000s had to find their way one step at a time.

By strategically targeting gene sequencing technology, and drastically reducing its cost, Flatley deliberately created a wide range of new possibilities for the medical industry, and turned his business into the lynchpin of an entire new industry.

leadership of our company has a strong technology background.

That’s distinct from somebody from a very large company who claims to be a great manager but really doesn’t know anything about the products or how they’re developed or what the technology tradeoffs are or what actually happens in the marketplace.”

When expertise counts Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help: • One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability.

When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital on 0800 86 34 36

Businesses need to reward and retain top performers

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Small businesses face an uphill climb when it comes to finding and retaining top performing talent. Experienced and talented workers often tend to aim for jobs with high rates of pay, excellent employee benefits, and job security with a clear path for advancement. Unfortunately, all of these are difficult for startups and small businesses to provide, particularly compared to what larger competitors can offer.

Retention is essential Startups often find themselves working with relatively young and inexperienced employees, because these tend to be the most affordable to hire. This means that small business owners are often forced to spend a lot of resources training new workers and helping them to develop the experience they need to be successful. Unfortunately, they then often can’t offer the pay and employee benefits needed to retain the most competent and ambitious of those workers, who will often simply leave to find a more lucrative job once they’ve gained the experience they need.

Even if small businesses had the funds, they generally don’t have the team size and depth of talent to continue operating effectively if key employees were to simply go on vacation for a few weeks at a time.

As a result, it’s very common to lose your best employees just as they develop to the point where they’re most valuable to your business.

In light of this, entrepreneurs and small business owners need to come up with other solutions to help them reward and retain valuable employees.

Offer equity To keep quality employees around, business owners need to ensure that they feel valued, and that they become invested in the business’ success. The simplest way to do this is to ensure that they’re

literally invested. By giving key employees equity, the success of the business becomes much more personally valuable to them. While a larger competitor might offer competitive bonuses, helping to make your business a success could revolutionise their career.

Best of all, the reward is proportional to your business’ success, and doesn’t cut into your working capital.

Your employees’ equity will be worth whatever your business collectively makes it worth. This promotes greater loyalty to your business without any upfront cost.

Provide flexible working arrangements Many businesses now allow flexible working arrangements to some degree or another, but large traditional corporations still lag behind. This is an advantage for small businesses. Allowing some employees to work irregular hours, or to work remotely at need, can empower them significantly. The ability to schedule work around other tasks, to travel, or to simply stay home for a day if the weather or traffic aren’t cooperative that day is invaluable. It allows some workers to save hours of commuting time every week, while enabling others to better manage family lives or to manage other responsibilities.

What’s important about flexible working is that it allows workers to build personal routines that work for them on their own terms. Leaving to take on another job at a company without this kind of benefit would cost them time and opportunity that they otherwise get to keep for themselves. Even if your business can’t offer the most competitive salary in the industry, that time comes with its own value.

Time and mentoring Entrepreneurs traditionally work with younger and less experienced employees than larger and better established businesses, and something that‘s difficult to come

Small business owners are forced to develop a very wide range of competencies, and to build a large network, making them uniquely well suited to helping their younger employees to establish themselves.

by for younger employees in any profession is quality mentors.

Success in any field requires a wide range of skills, a sizeable professional network, and a respected advocate.

Small business owners are forced to develop a very wide range of competencies, and to build a large network, making them uniquely well suited to helping their younger employees to establish themselves.

By taking the most promising employees under your wing directly, you can offer them something that they may not be able to find anywhere else.

Top level leaders in large businesses tend to work with each other, and with middle managers, effectively separating themselves from the average worker. Small business owners, on the other hand, often work very closely with employees at every level of their organisation.

By helping to show employees their greater role in your industry, by providing them with guidance, and by networking them with other relevant professionals, you can make them more effective and more loyal to your business. As a further consideration, it makes them more valuable to your business as employees, and as professional contacts in the event that they do eventually move on to another employer. Ultimately, taking these steps to reward and retain top quality talent allows business owners to build more competent teams, to reduce employee turnover, and to build a greater sense of loyalty in the workplace.

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Debra Cafaro: leveraging consistent growth When she joined Ventas in 1999, Debra Cafaro found herself at the head of a business on the verge of financial collapse. Just 10 years later, the company was named the most successful publicly traded company in the first decade of the new millennium.

Among many other awards and recognitions, she has been ranked among the top 50 CEOs in the world for 3 years in a row by Harvard Business Review, named as one of the World’s Top 100 Most Powerful Women by Forbes, and one of the Top 50 Women in Business by the Financial Times.

In the past 19 years, she oversaw and implemented a strategy that brought the company’s market capitalisation from $200 million to over $24 billion.

Unlike many more famous CEOs and major business leaders, Cafaro didn’t rely on some major disruptive insight, or a particular revolutionary product to drive her success. Rather, she built Ventas’ stunning success through her astute leadership skills and the management of Ventas’ consistent, unstoppable growth.

Saving Ventas In 1999, Cafaro was brought on as the new CEO of Ventas specifically to rescue the company from impending collapse. The business she found

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herself leading was drowning in debt, and facing a whistleblower scandal over Medicare fraud. For a company that was heavily reliant on Medicare payments for much of its revenue, this turned out to be particularly problematic. Cafaro, however, was not deterred. In her first few years, she restructured the business’ debt, settled the whistleblower suit with the US Department of Justice, and lead a restructuring effort designed to put Ventas’ bankrupt primary tenant, Vencor, back on its feet.

In 2002, Ventas initiated its new growth strategy and began to expand. Over the next several years, the company acquired a number of competitors of various sizes, consolidating the healthcare real estate industry significantly. By 2007, Cafaro had grown the company’s assets to over 500 properties. Just four years later that number would grow to 1400, and by 2014 Ventas began to expand into the UK market.

Cafaro’s secret to long term success Since 2000, and now going for over 18 years, Ventas has consistently maintained an annual growth rate above 27 per cent. This rapid and consistent growth has made the company a safe and lucrative business to invest in, providing incredibly steady returns to shareholders. That investor confidence, in turn, has kept the business well-funded, strong, and able to continue its growth.

famous Silicon Valley startup giants that many entrepreneurs strive to emulate.

By pursuing steady growth over rapid disruption and global dominance, Cafaro has been able to create immense shareholder value for decades, with no signs of slowing.

What this means is that Ventas can provide something that startups so often can’t offer investors: reliability.

As a result, Cafaro has been widely recognised as one of the world’s top businesspeople. Among many other awards and recognitions, she has been ranked among the top 50 CEOs in the world for 3 years in a row by Harvard Business Review, named as one of the World’s Top 100 Most Powerful Women by Forbes, and one of the Top 50 Women in Business by the Financial Times.

What SMEs can learn Every small business owner wants to make it big. Growth, ideally disruptive growth, is the most common goal.

Debra Cafaro shows us that this isn’t always the best way, and that it can be just as important to control that

growth as it is to plan and drive it in the first place.

The angel investors that often fund the launch of major explosive startups stand to benefit very greatly from sudden and massive growth.

This tends to work very well for a few years, but causes problems in the longer term. After all, the larger a business is, the more it needs to grow to maintain its proportional annual growth. Eventually, it simply runs out of room, where even modest proportional growth would require creating more value than some national economies. At this point, investors have more to gain by backing smaller businesses whose growth phase is ahead of them.

Cafaro’s approach, on the other hand, has promised steady future returns for new investors at every stage.

There are many great business leaders for business owners to emulate, but Cafaro offers us a unique insight in this respect. Her focus on serving shareholders reliably in the long term elevated Ventas from near-collapse, and has served to underpin the business’ financial security ever since.

In reference to this steady growth, Cafaro stresses the importance of preventing the business from “blowing up.” Most entrepreneurs work toward and hope for their business’ major disruptive event, where they break into public consciousness and balloon into a giant like Google, Uber, or Airbnb did in the 2000s. It’s worth noting, however, that Ventas was named the most successful publicly traded company of the same decade that gave us the majority of these world

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SMEs targeted by ransomware find themselves helpless

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Data security is a big issue for small businesses and all over the world. Attacks on businesses result in the loss of millions of business’ and private individuals’ personal data, making them vulnerable to identity theft. However, this isn’t the only threat that small businesses are forced to deal with when their sensitive data is compromised. Some fraudsters won’t go to the trouble of using the data to hack into accounts and steal money, and instead will pressure businesses into simply paying them.

They do this by installing ransomware on the victim’s devices, which blocks the victim’s access to their own data, and holds it hostage against payment.

Businesses who don’t pay risk losing the data, which often seriously interferes with their ability to operate, particularly if they don’t have backups.

Business owners don’t feel that they have good options The trouble with ransomware is that SMEs are particularly vulnerable to it. Targeted businesses often don’t want to let clients know that their data has been compromised, which discourages them from seeking professional help. However, they also can’t afford to lose the data that fraudsters have blocked access from. Because of this, nearly half of targeted businesses will opt to pay the demanded ransom, even without any guarantee that their data will actually be returned.

Of course, fraudsters have a strong incentive to return access. Businesses who successfully recover their data by paying the ransom are relatively likely to do so again if they’re targeted at a later date. This is why 87% of businesses who did pay ransoms reported recovering access to their data. With businesses willingly paying ransoms and still not seriously protecting themselves from such attacks, fraudsters have a powerful incentive to continue their attacks.

Protecting your business from Ransomware Ransomware will only continue to grow as an expensive parasitic threat to businesses the longer this is allowed to continue. Unfortunately, business owners generally don’t take significant steps to protect their data, and many don’t believe that they could actually prevent hackers from accessing their files. This simply isn’t true, and businesses ultimately need to step up to begin to address the issue on a larger scale.

Talk to a professional Unsurprisingly, the first and most significant thing business owners can to do is talk to a data security professional. Of course, business owners are usually reluctant to spend money on a professional to prevent a problem that might not even occur. This is exactly why so many businesses are vulnerable to data breaches in the first place. It’s important to understand that the cost of a data breach is, on average, astronomically higher than the cost of prevention at just over $2.5 million per breach.

Using professional help, there are a lot of safety measures that a business can take to encrypt and secure data on their electronic devices, and to prevent most intrusions from ever happening.

Back up your data Businesses who aren’t willing to invest in professional security measures can still greatly limit the damage that cybercriminals can inflict on their business through relatively simple means.

Since ransomware works by preventing businesses from accessing their data files, businesses can easily protect themselves by simply creating regular backups. If their systems are breached and blocked, they can simply format the entire system, and then populate it with the data from their most recent backup. Done well, this effectively turns a ransomware event from a hostage situation into a relatively minor technical problem.

Limit the amount of sensitive data kept online Data breaches are serious problems regardless of whether or not criminals use ransomware to prevent victims from later accessing their data again. The exposed information can be used to commit crimes against the business being attacked, and any individuals whose sensitive data might be included.

To limit the scope of the damage, it’s important to keep any information that isn’t currently valuable out of the reach of hackers, either in a non-electronic format, or just disconnected from the internet.

Overall, getting used to regularly backing up data and removing it from any online access greatly diminishes the power any potential cybercriminal has over your business. A business that does this successfully, and doesn’t need to pay off any cybercriminals that do strike, however, is still legally required to report the data breach to the authorities.

This allows the government to take measures to fight cybercrime on a broader scale, and gives private individuals who might have been affected the opportunity to defend themselves as well.

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