Talk Business Magazine February 2014 by Talk Business

W W W . T A L K B U S I N E S S M A G A Z I N E . C O . U K

FOR THE ENTREPRENEUR

BY THE ENTREPRENEUR

February 2014 ÂŁ4.50

The

eco issue

LEADING A LEGACY Rob and Paul Forkan lost their parents to the 2004 tsunami. The brothers tell us how they launched Gandys Flip-Flops in their memory, a social enterprise helping orphans around the world

Being green How can SMEs boost their eco credentials?

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Weather the storm More than 185,000 commercial properties are at risk of flooding in the UK

Fixing the future The founder of Sugru reveals how she created the self-setting rubber

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SPONSORED ARTICLE

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TALK strategy

iNSIDE

53 The branding column Rich With 54 Going green Eco & ethical issues 59 Thinking inside the box Patent law

75 Talk image 95 Create the right first impression Image

63 How to value a business Sales and mergers

96 Look the business: ecowarrior wear Fashion

64 SMEs selling big Exits

98 Hot spots Locations for SMEs

69 The five A’s of sales Adam Caplan

talk technology

14 News & Events

73 The sales doctor Solving your sales problems

101 Our man in the valley David Richards’ tech column

TALK Success

75 Are you in a danger zone? Climate change

103 Moto X: the review Brand new product

18 Goody two-shoes Rob and Paul Forkan, Gandys flip-flops

talk MARKETING

105 Does your SME website look dodgy? Website security

11 Editor’s letter 13 Letters

24 Take one company Belu bottled water 27 Introducing… TB grills a young up-and-comer 29 Electrifying the world BBOXX 35 Book reviews 138 He said/she said What are the entrepreneurs saying this month?

talk MONEY 37 The funding expert Money matters 39 The importance of integration M&A 42 Bank on SME lending 45 A done deal? Informal agreements 47 Be prepared: come rain or shine Insurance

77 The marketing column Kimberly Davis 79 Ten steps of Twitter Step four: website click through

106 Playing the cloud computing game Rob Law on the cloud

81 Why go green? How to be eco-friendly

109 Virtual meetings Video collaboration

82 Five steps to save time Public relations

111 I’ve got an app for that… Our fave business apps

talk people

112 Six energy saving gadgets Business needs

85 The people column Lee McQueen

TALK FRANCHISE

86 Secret diary of an entrepreneur A week in the life of the founder of Oorla Jewellery 89 Fixing the world Sugru Q&A 91 Key changes for employers in 2014 HR Insight 93 HR headaches Human resources

117 Franchise news 119 Reaching agreement Franchise law 121 Spotlight Southern Fried Chicken 123 The fran man Can franchising be good for the planet? 125 Take one franchisee The Creation Station

talk aDVICE 127 Ultimate finance 130 Accountz

49 Before you sign on the dotted line… Increasing value

132 123 Reg 134 Century 21

51 A day in the life Diary of a Start-Up Loan recipient

136 Talk Business Directory

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editor’s letter

Scan this QR code to subscribe to Talk Business

EDITOR

Dawn Murden dawn.murden@astongreenlake.com

DESIGN

Paul Christopher Daniels paul.daniels@astongreenlake.com Heather Rugeley heather.rugeley@astongreenlake.com

INTERN

Christian Muhika

WEB DEVELOPMENT MANAGER Mitchell Finlay mitchell.finlay@astongreenlake.com

SALES & MARKETING MANAGER Scott Hartley scott.hartley@astongreenlake.com

SENIOR ACCOUNT MANAGER Trystan Hurley trystan.hurley@astongreenlake.com

ACCOUNT MANAGER

Aaron Whelan aaron.whelan@astongreenlake.com

MANAGING DIRECTOR Stuart McCreery

Circulation/subscriptions: UK £40, EUROPE £60, REST OF WORLD £95 Circulation enquiries: Aston Greenlake Publishing Ltd T: 0203 617 4680 Talk Business is published 12 times a year by Aston Greenlake Publishing Limited William Robinson Buildings, 3 Woodfield Terrace, Stansted Mountfitchet, Essex, CM24 8AJ © Copyright 2014. All rights reserved. No part of Talk Business may be reproduced, stored in a retrieval system or transmitted in any form or by any means, without the prior written consent of the editor. Talk Business will make every effort to return picture material, but it is sent at owner’s risk. Due to the nature of the printing process, images can be subject to a variation of up to 15 per cent, therefore Aston Greenlake Publishing Limited cannot be held responsible for such variation.

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A fair trade P [head]

reserving the planet’s resources, protecting human rights and living sustainably are such huge issues that they sometimes seem impossible to tackle. But they shouldn’t be ignored. I don’t want to preach, but according to the Global Footprint Network the earth is in the red with resources. Approximately 780 million people lack access to clean water, and the UK is falling behind in meeting the legallybinding European renewable energy targets set for 2020. But that’s only the tip of the iceberg. As an entrepreneur, you have a lot to think about. With a todo list longer than your arm, eco-issues can get bumped down the list of priorities. What are other SME owners doing? Turn to page 54 to read our investigation into how other businesses are improving their eco credentials, and setting realistic targets for the future. For many businesses these issues are at the very heart of what they do. Take our Face on the cover, on page 18 for example. Rob and Paul Forkan tragically lost their parents in the 2004 tsunami in Sri Lanka, while they were travelling. The brothers founded Gandys flip-flops, and 10% of the profits fund their Orphans for Orphans initiative funding education, healthcare and support for orphans in developing countries. Our Take one company, Belu bottled water has saved more than 20,000 lives with clean water projects. Despite

accruing loses of £1.9 million in its first five years, the company is sustainable and all its profits go to the charity, WaterAid. On page 24 CEO, Karen Lynch reveals how she turned its fortunes around. If you didn’t initially build your company on these values, it can be hard to implement them. After all, where do you begin? Remember small differences can make a big change. We all have to start from somewhere. On page 89 we speak to Jane ni Dhulchaointigh, creator of Sugru, the colourful mouldable silicone that can fix almost anything. Rather than accepting our throwaway society, she’s encouraging a community of fixers. Plus we reveal the six energy and money saving gadgets your business needs on page 112. It is time to be eco-friendly and ethical, because in the long run it won’t just preserve the planet, it will help your bottom line. Take care of business for now.

Dawn Murden, editor

@TalkBusinessMag

talkbusinessmagazine.co.uk

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Contributors & LETTERS

Our ecochampions

Aad Dekkers is the EMEA director of marketing at EVault. He has extensive expertise in the IT industry and more than 20 years’ experience as a marketer. In his role at EVault, he is responsible for developing and executing integrated marketing programmes across the EMEA region. Before joining EVault, he served as chief marketing officer at MTI Europe, where he was responsible for marketing, business development, strategy, and acquisitions in Europe. Previously he held director and manager roles at NetApp, Sun Microsystems and Tulip Computers.

Dee Blick is a multi award-winning Fellow of the Chartered Institute of Marketing with 30 years marketing experience. She is an international bestselling business author, and runs her own company, The Marketing Gym. Dee’s third book The 15 Essential Marketing Masterclasses For Your Small Business was one of Talk Business Magazine’s six Best Business Books of 2013, which featured in the December issue. You can find her tweeting at @deeblick

Polly Gowers OBE is CEO and founder of Everyclick Ltd., a technology company that is helping charities stay in step with the way we live our lives online. Everyclick’s flagship product is Give as you Live, which enables online shoppers to raise money for charity without putting their hand deeper in their pocket. For each Give as you Live purchase, the retailer pays a commission, a proportion of which is donated to the shopper’s chosen charity. The technology is free to any UK charity. In 2012, Polly was awarded the OBE for Services to Philanthropy, and in 2013 Computer Weekly named Polly as one of the most influential women in UK IT.

Rob Law MBE is the founder and creator of Trunki, the much-loved children’s rideon suitcase. His company is dedicated to the invention and distribution of iconic, yet attainable products for tots on the go. All its creations are designed in England and distributed worldwide; including the unique Trunki ride-on and BoostApak, the innovative booster seat that doubles as a backpack. You may recognise Rob Law from his failed appearance on Dragons’ Den; since then Trunki has grown worldwide and sold more than two million cases.

Read his article on climate change and cloud disaster recovery on page 75.

Turn to page 81 to read what she has to say about being eco-friendly and going green.

Find out what she had to say about preserving the planet, human rights and sustainability on page 54.

Rob Law reveals how switching to the cloud gave his business a huge boost on page 106.

FEBRUARY 2014

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MAILBOX

If you’d like to send us your thoughts about Talk Business, or anything else that’s happening on the SME scene, just get in touch: email: dawn.murden@astongreenlake.com snail mail: Aston Greenlake Publishing Limited, William Robinson Buildings, 3 Woodfield Terrace, Stansted Mountfitchet, Essex, CM24 8AJ

This month our readers are talking about starting businesses, how to approach the banks and tweeting about our Best Business Books of 2013

Face your fears Dear editor, I really enjoyed reading about Stephen Fear last month in the Face on the cover feature. For a long time I’ve wanted to launch my own business. My product is great, but leaving my job has just seemed like too much of a risk. However, after reading Stephen’s story I have jumped ship and pursued my dream. I should have done it years ago, like Stephen did. Now I am. Thanks!

R OF E T T E L MONTH THE

A new entrepreneur

Following on Twitter The articles in your Ten steps of Twitter series are great so far. I like reading about how to improve mine, but then seeing what you have physically done. It makes it easy to follow and copy. Regards, Dan Martin Founder of Marketeers

Learning to loan

Banks are conservative in their lending, and I do believe they could lend to more SMEs. However, I think SME owners should do more to ensure they understand the whole process, and get all those relevant figures ready before they even consider asking for a loan. Some SMEs don’t prepare and then wonder why they’ve been let down. Bank manager, At one of the big five

Tweets 0F the month... @TheBusinessShow Massive congrats to our #TB2014 keynote @deeblick whose new book is one of @TalkBusinessMag Best Business Books of 2013 @Midas_UK Useful advice about online business as featured in @TalkBusinessMag @jamescaan @TalkBusinessMag Thanks very much, it’s a great honour! @TalkBusinessMag Delighted to hear that @jamescaan is in #LinkedIn’s top 10 most #followed #bloggers – one of only three Brits! @Fasthosts Get an insight into how our customers view their @Fasthosts #webhosting in the January issue of @TalkBusinessMag @Gandysflipflops @TalkBusinessMag Nice to meet you too, you’re welcome anytime! @cocoalocochoc @deeblick @TalkBusinessMag Delighted to hear that you loved our chocolate! @deeblick Reading @TalkBusinessMag Enjoying the news on my book being their best biz book & @bradburton arguing the case for casual clobber @Intercity_UK Read “Five Misconceptions About 4G” in @TalkBusinessMag – answering some commonly asked questions

talkbusinessmagazine.co.uk

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NEWS & EVENTS

Dates for the diary Sterling Integrity 13 February The Future Inn, Bristol 7 March The Village Hotel, Coventry 28 March The Village Hotel, Cardiff sterlingintegrity.co.uk

The HR Business Summit & Awards 4-5 February ICC, Birmingham hrevent.com The Ideas Factory 6 February RADA Studios, London 3 April RADA Studios, London theideasfactory.com Business Junction Networking Events 13 February Henry’s, Canary Wharf 19 February The Royal College of Surgeons of England, London businessjunction.co.uk

The Franchise Show 14-15 February ExCel, London thefranchiseshow.co.uk Sales Job Expo 22 February London salesjobs-expo.com

Internet Retailing Expo 26-27 March NEC, Birmingham internetretailingexpo.com The Business Show 2014 15-16 May ExCel London greatbritishbusinessshow.co.uk Online Retail Conferences 16 September Royal Garden Hotel, Kensington orevents.com

Watchdog warns Dragons’ Den star about advert THE ADVERTISING STANDARDS Authority has warned Bannatyne Fitness about a misleading ad on one of its websites. The company has been ordered not to use the promotion after ad adjudication upheld a complaint about closing times. The online advert for one of the entrepreneur’s clubs stated closing times were 11pm Monday to Friday and 10:30pm at weekends. The complainant said this was misleading because members were expected to get changed half an hour earlier. Bannatyne claimed it was a private club and, as part of the terms and conditions, members were expected to stop using exercise equipment half an hour before closing. The adjudication said: ‘The information appeared on Bannatyne Fitness’ own website and was

accessible to all consumers whether or not they were already members. ‘The information that the facilities would close 30 minutes prior to the stated opening times constituted a significant limitation to the stated opening hours, which should have been included in the ad. ‘Because it was not, we concluded the ad breached the code.’

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Small business battling for funding, shows Bank of England data DESPITE ATTEMPTS BY the Bank of England to boost finance, business lending fell towards the end of last year as banks continued to squeeze funding to SMEs. Lending figures from the Bank of England show that businesses paid back £4.3 billion more than they borrowed in the three months to the end of November. The worst affected by the brake on lending were small businesses. This trend has persisted despite the Bank adapting its Funding for Lending scheme last April in favour of smaller businesses. Government Ministers are likely to be disappointed by the figures, which show a deteriorating trend after net credit contracted by £3.7 billion in November. Banks have increased their lending in the mortgage market, which has rocketed recently, but it appears they

have failed to expand the credit going into the corporate sector. Large companies have access to the growing market for debt financing in the bond market, while small businesses are limited to, and often reliant on, the high street banks, which since the 2008 crash have become more conservative with lending. Small firms consistently report credit is either refused or offered at high prices. The average net monthly flow of lending was only slightly less negative in 2013 through to November than it had been in 2012. The Public Accounts Committee of MPs criticised Government departments for running a series of ad hoc schemes to boost lending, but failing to build them into a coherent plan. ‘There is no common understanding about which parts of

the SME sector are generating the most growth and where Government support would do most good,’ the chair of the Committee, Margaret Hodge, told the Guardian newspaper. ‘[The business department] intends to give nearly £3 billion of financial support to SMEs between 2011-12 and 2014-15 through its six main schemes. It helped nearly 6,000 firms during the last financial year, but more could have been helped if the department had done more to ensure that SMEs are aware of the potential financing options available to them.’ Many SME owners are now seeking alternative forms of funding, such as crowdfunding, pension funding and trade credit from suppliers, instead of relying on the bank. This has sparked a growth in the popularity of alternative funding.

Most popular password online is “123456” ACCORDING TO AN annual survey by mobile software developer, SplashData the most popular password is “123456”. SplashData has collated a list of the most popular passwords used online from the data revealed by high profile hacks in 2013. The main source for this year’s list was the cyberattack that hit Adobe in October, thought to have targeted 38 million customers.

This year, “adobe123” and “photoshop” make their first appearance on the list. “Password” was relegated to second place, followed by “12345678” in third, and “qwerty” in fourth place. Other favourites that also appeared included “abc123”, “letmein” and “111111”. There was also a brand new entry at number 24, “trustno1”.

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FACE ON THE COVER

TALK SUCESS

Goody two-shoes

The 2004 tsunami claimed the lives of 230,000 people, including Paul and Rob Forkan’s parents. The brothers tell Dawn Murden why they started Gandys flip-flops, a social venture helping orphans in developing countries

ave you heard of Gandys flip-flops? Well, I can assure you once you’ve read this article, you won’t forget them quickly. Attending music festivals, travelling the world and wearing flips-flops, brothers Rob and Paul Forkan are not typical suitwearing businessman. They are not governed by profits for their pockets, because there is so much more to what they’re doing. The brothers embarked on an education in the “university of life” when they were 13 and 11-years old, with their family. Their parents, Kevin and Sandra took them out of school for the trip of a lifetime; travelling India and parts of the sub continent. After years of volunteering in India, they went to Sri Lanka to spend Christmas in a fishing village. But the day after, one of the most deadly natural disasters ever recorded struck, the 2004 tsunami. Rob, Paul, and their younger brother and sister managed to hitchhike 125 miles to the national airport, but their parent’s were tragically claimed by the tsunami. Their lives changed forever. Rob and Paul returned to England, but they could not shake the travel bug. When they got older, they paid tribute to their parents by visiting everywhere from Australia to Thailand and Bali, learning a lot about misfortune in the world. During that time, the idea for

Gandys flip-flops was born while Rob was at a festival in London. ‘One of my friends woke up claiming he had a mouth like “Gandhi’s flip-flop”, which gave me the idea,’ Rob told me. ‘We decided on flip-flops because most people own a pair – they’re the most worn shoe on the planet!’ The brothers knew this would be the perfect way to create something sustainable, and a brand based on the their beliefs. 10% of the profits from sales would go to their Orphans for Orphans initiative, and fund education, healthcare and support for orphans in developing countries. Back in London, the brothers pursued their dream. For a long period they went at it alone, but once they’d gained good reception from retailers, consumers and the media, they organised their Dragons’ Denstyle investor meetings. They “unsettled the suits” in a cool bar wearing shorts and flip-flops to find an investor who had the same values as them. They chose Dominic List, who appeared on Channel Four’s Secret Millionaire. He had worked with charitable causes and had a passion for social enterprise, like the brothers. Gandys is gaining momentum. Its flip-flops can already be found in Selfridges, and it is working on collaborations with retailers like Accessorize and Monsoon. Money has already started

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TALK SUCESS FACE ON THE COVER

going to orphanages too. ‘A girls’ orphanage in India doesn’t have to worry about money for three years now,’ Rob told me. Their plans are big; by the end of this year, the brothers want to open their own orphanage in memory of their parents. The opening of the first orphanage will mark the 10th anniversary of the tsunami. Their ultimate goal is to have Gandys orphanages all over the world. Rob and Paul have turned the biggest tragedy of their lives into something positive. Meeting them, I could see their passion and dedication to Gandys is not only unwavering, it’s infectious. They are a dynamic and fun duo, governed by doing good. DID YOU ALWAYS KNOW THAT YOU’D WANT TO DO SOMETHING AS A RESULT OF YOUR EXPERIENCES WHEN YOU GOT OLDER? Paul: Our parents always wanted us to know how other children lived around the

tics Vital Statais ny was

Date the comp ary 2012 founded? Janu r? £1.2m Current turnove rofit? n/a Current Net p Rob (left) and Paul Forkan (right)

There has been a range of activities and events, from celebrating International Flip Flop day with Richard Branson

world, which was why they took us travelling at a young age. They definitely taught us the importance of making a difference in other people’s lives. I think we always knew we wanted to do something that created a positive impact on the world. Rob: I think we probably got our ambition to become entrepreneurs from our parents too – our dad set up his own business and then a social enterprise, so I think he gave us that desire to succeed in business. HOW DID YOU GET YOUR START-UP CASH? Paul: Initially we used money that we had saved up from working, and then we interviewed potential investors on why they should be allowed to get involved in what we were creating! We set up our very own Gandys den in a beach bar. WHAT WERE THE BIGGEST STRUGGLES AND CHALLENGES YOU FACED AS A NEW BUSINESS? Paul: One big challenge was definitely other people not believing in our idea. We had a lot of friends and family telling us that we were crazy to start a flip-flop company in the UK! It’s really important to stick to your beliefs and keep going. I was lucky as I had Rob to carry me through, and I did

the same with him. I would definitely recommend any new entrepreneurs to have a business partner. Rob: Another big challenge was not having many resources. At the beginning, we didn’t have much money and it was just the two of us trying to do everything, so it was pretty tough competing against big brands. When we started, we were in our flat in Brixton with one of us on the sofa. We did our first product shots on our iPhones with the bath as a backdrop. It just goes to show that if you have a good idea and lots of determination, you can still achieve great things though. Paul: We’re both pretty determined so giving up didn’t really cross our minds – then the dream really started to become real when we signed up the likes of House of Fraser and Selfridges at the end of 2011. HOW DID YOU GO ABOUT MARKETING THE BUSINESS? Paul: There has been a range of activities and events, from celebrating International FlipFlop Day with Richard Branson and the whole Virgin brand in our “Necker reds” to attending some of the summer’s greatest British festivals. We’ve also had pop-up stores and grown our dedicated student following because Rob and I

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TALK SUCESS FACE ON THE COVER

often give talks at universities, schools and colleges across the UK to inspire young people to follow their dreams and set up their own businesses. WHAT’S THE BEST THING ABOUT BEING AN ENTREPRENEUR? AND THE WORST? Rob: The best thing would be that no two days are the same! As we run the business, we have a lot of room to be really creative and come up with crazy ideas.

Paul: Never being able to switch off can get annoying. The best thing is being able to see what has been achieved and knowing that you made it happen.

This year is the 10th anniversary of the 2004 tsunami, so our goal for the end of this year is to build our first children’s home

WHAT WOULD YOUR ADVICE BE TO FIRST TIME BUSINESSES EXPERIENCING DIFFICULTIES IN THE CURRENT CLIMATE? Paul: One of the reasons why we have got where we are today is because we never take ‘No’ as a final answer. We always tell our team a “NO today is not a NO tomorrow” – if someone gives you a rejection, then that doesn’t mean that your idea or business is wrong, it just means that it is not for them at that point in time.

Rob: And if you go to someone else with your idea, and they say “No”, then it might be that your idea or business just needs a small adaption to make it successful. AS WELL AS YOUR ORPHANS FOR ORPHANS SIDE OF THE BUSINESS, DO YOU ENSURE OTHER ASPECTS OF YOUR BUSINESS ARE DRIVEN BY ECO-FRIENDLY, ETHICAL AND SUSTAINABLE REASONS? Paul: Our flip-flops are produced sustainably at the moment – they’re 100% FSCcertified rubber, which means that the rubber is from a sustainable source and they’re completely recyclable. WHAT DOES THE FUTURE HOLD FOR THE BUSINESS? Paul: This year is the 10th anniversary of the 2004 tsunami, so our goal for the end of this year is to build our first children’s home. We’re really looking forward to the milestone – it’s going to be so rewarding to see that all of our hard work paid off by helping thousands of children who need support. Rob: Plus this year is the international launch of our brand, which is really exciting for us! This spring, we are launching into over 30 new countries across the world, from Germany and the USA to China and the Philippines. Eventually, our goal for the business is to make it a household name and through doing so, be able to start projects all over the world. Contact: gandysflipflops.com

FEBRUARY 2014

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TALK SUCCESS TAKE ONE COMPANY

TURNING THE elu was founded in 2004 by filmmaker Reed Paget as an environmentally friendly bottled water business. Investors included The Body Shop founder, Gordon Roddick. It was a simple idea – that there was a better way to do business by reducing environmental impact and using all profits to fund clean water projects. Despite sales growing, Belu’s profitability was disrupted by the banking sector collapse. By 2009 the company had accrued losses of £1.9 million; change needed to happen, and fast. Based on its history, Belu wasn’t viable; it was losing money. Belu needed ongoing funding for survival, but it had already had dozens of rounds of funding, there was no more money. If Belu couldn’t be selfsustaining and make profit, enough was enough – the investors were out. Enter Karen Lynch. She saw an advert for a marketing director role at Belu in a newspaper, and applied. ‘I joined in August 2009 and ended up writing a business plan, which outlined a new beginning as a viable business. By the following spring, I was the CEO,’ Karen says. ‘The business as we know it now started in 2010.’ Karen took the idea and essence of Belu, and turned it

TIDE

Dawn Murden meets Karen Lynch, the CEO who turned around the fortunes of bottled water company Belu, and helped it save more than 20,000 lives

The company had accrued losses of £1.9 million; change needed to happen, and fast

into a true social enterprise. It operates as a limited company on a triple bottom line, fulfilling social aims while remaining financially sustainable. Karen had worked for big brands like Barclays, and left as head of merchandising at Audi UK to join Belu. What attracted her to the company? ‘I thought about the wasted resources and materials in the world, and had a lightbulb moment in my head – I wanted to make a difference with my business skills,’ Karen says. ‘A charity didn’t feel right for me. Belu was a small business with a great idea, but it hadn’t been executed well.’

She believed everything from the branding to the communication hadn’t been done in the best way, and the increase of interest rates hadn’t helped. Belu used to sell directly to customers, but this was one of the first things Karen changed. ‘A successful water business should deal with wholesalers. ‘In order to compete with other water businesses, Belu needed to be smart, flexible and more creative with a small budget,’ Karen says. ‘I came from big brands that spent more in a day than Belu did in a year.’ Karen changed the model from direct selling, to selling via wholesalers. She changed the branding too. Before she joined, the Belu message was “Penguin approved, no global warming”, and now the message is “Water with ethics.” ‘We had to create a product with a clear message. Consumers were missing the point,’ she says. She also agreed a deal with WaterAid, an international charity that transforms lives by improving access to safe water, hygiene and sanitation. Belu is

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Vital statistics Company founded: 2004, restructured in 2010. Start-up capital: Dozens of rounds of funding from original investors. Turnover: £4 million Profit: £400,000 Growth rate: Now trading as a limited company. Annual revenue growth rate of 30%. Biggest achievement: Belu is talked about as a shining example of a social enterprise, and as a water business. We seriously compete in the market of water, and inspire models in every sector. its exclusive partner. This was a huge turning point for the bottled water company. ‘We signed a three-year agreement to give at least £100,000 a year. It was a big promise because Belu had never made money. ‘Consumers want you to prove how you’re being ethical, and WaterAid gave us those credentials.’ Karen admits coming to Belu was a struggle. ‘We didn’t have the luxury of time. The investors wouldn’t hold on for long,’ Karen says. People had to go, suppliers had to change – there were a lot of changes to implement. And there were only three people in the business to make it all happen. Even now, although over 14.5 million units sold last year, there are only seven people. ‘People have the impression we are huge, but we’re only small,’ Karen says. How did Karen keep going? ‘When there was a bad day, I got out that original plan and read why the business made

sense and why it was going to work,’ she says. ‘For a long time, we kept our head down and worked, we didn’t do any public speaking or PR – we wanted to make the company something we could truly be proud of first.’ Belu became a premium brand. ‘It will never be the cheapest, but it has the added value of the social projects,’ Karen says. It is stocked at Sainsbury’s, Café Rouge, Jamie’s Italian, and Leon, just to name a few. The brand is very strong in London. ‘Now we are proud, we are happy to tell our story,’ Karen says. All of Belu’s profits go to WaterAid, and they have now signed an agreement until 2020. ‘For us it’s a forever partnership,’ she says. They have produced a very detailed 2013 social impact report, which covers a wide range of issues. On a social level, they have created 30 jobs, and have transformed the lives of more than 20,000 people with WaterAid.

We signed a three-year agreement, to give at least £100,000 a year

They also use 50% recycled plastic in their bottles, and are the first UK bottled water company to be 100% carbon neutral. They do not export or import products, keeping miles and emissions down. This is only a snapshot – the report is 11 pages long and covers every aspect of the business. It is specialised stuff, but Karen believes it should become the norm. On top of this, Belu has launched an ethical glass business, which will sell to its competitors. Karen’s advice to business owners is to keep ideas simple, and don’t get bored. ‘Some people don’t start a business because they can’t think of something new, but bottled water isn’t new. ‘Try and find something eco/ ethical to help with, then focus on that in business, using your best skills. Knowing you’re doing good in the world makes you happy, and happy people deliver great results.’ Karen changed the fortunes of Belu and has helped the company make waves. She says she has the best job in the world. ‘I get to put my money where my mouth is, and do something I’m passionate about,’ she says. One day, Belu hopes, all bottled water companies will be socially motivated, like it is. Contact: belu.org

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UP-AND-COMING

TALK SUCCESS

Introducing Henry Patterson This month we interview Henry Patterson, one of Britain’s youngest entrepreneurs, aged just nine, about his sweet company called the adventures of Sherb and Pip (published in March). I got all my ideas from my grandma and parents. I realised that the way children buy sweets and play these days is totally different from the olden days and I wanted to bring it all back.

enry Patterson founded Not Before Tea, a confectionary company, which sells creative jars of sweets and accessories like aprons, bags and jewellery.

HOW DID YOU GET THE IDEA FOR YOUR BUSINESS? My business is called Not Before Tea because that is what my Grandma used to say when I asked for sweets! All products are themed on a story I wrote about a mouse and an owl

The hardest pitch I had to do was to Sainsbury’s

WHAT’S YOUR ADVICE TO YOUNG ENTREPRENEURS TRYING TO GET AN IDEA OFF THE GROUND? Have a stall at a car boot sale or a fete to get some basic business experience. Once you know how to display things, pricing, calculating money and how to talk to customers, you can get started on your business. I’VE HEARD YOU’RE GOOD AT PITCHES - HOW DID YOU LEARN YOUR SKILLS AT SUCH A YOUNG AGE? My singing teacher at school always tells me to look at the back of the room and project my voice; that helped me when I had to speak at a conference. I also use postcards with my pitch on. I write down the facts and talk around them. I tend to sound like a robot if I read a script. The hardest pitch I had to do was to Sainsbury’s. I had to talk for 20 minutes (on my own) to a panel of four people and then watch them try my edible Mud and Worms. It was nerve

wracking waiting to find out if they liked them, but they did. IS THERE A ROLE MODEL WHO INSPIRES YOU? I love David Walliams. Business wise, I think Alan Sugar is very funny. I also love Peter Jones and Deborah Meaden. WHAT’S AT THE TOP OF YOUR TO-DO LIST? To publish my book, and to prepare for my first trade show at the Spring Fair 2014 in February. WHAT HAVE BEEN THE BIGGEST CHALLENGES YOU’VE FACED? Being handed the microphone on stage, when I collected my award at the Great British Entrepreneur Awards. No one else had been invited to speak so it totally took me by surprise. WHAT’S BEEN YOUR PROUDEST MOMENT? At the awards! I spoke about how the Government needs to provide more support for young entrepreneurs and the media dubbed it quote of the night! WHAT’S YOUR VISION FOR THE FUTURE? I want to bring the Not Before Tea shop to life. It will be one of a kind and children will love it. Contact: sherbetpip.co.uk

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BBOXX

ansoor Hamayun, Laurent Van Houcke and Christopher Baker-Brian, met while studying electronics engineering at Imperial College London. All three had travelled and recognised the lack of electricity in the developing world. In response, the trio founded the student-led charity e.quinox, through which they began to develop and distribute solar-powered battery packs to off-grid locations. After this success, the trio founded BBOXX, a for-profit organisation with the same aim, equipped with the business and finance resources to achieve results faster.

TALK SUCESS

WHY WAS SETTING UP A COMPANY THAT HELPED DEVELOPING COUNTRIES IMPORTANT TO YOU? There are currently 1.4 billion people without access to electricity. Being an engineer, I always had that problemsolving mentality. I believe that engineering and science can improve human life. I’m originally from Pakistan – I saw people living without electricity there. The other founders have slightly different backgrounds, but are also driven by engineering and how it can help people. WHAT GAVE YOU THE IDEA FOR A FOR-PROFIT ORGANISATION? I was chairman of e.quinox. I’m no longer an active member but still get involved time to time.

Electrifying the world Dawn Murden spoke to Mansoor Hamayun, CEO of BBOXX, a profitable company bringing electricity to the developing world The charity is great but if you want to scale up, it has to make sense economically. Having a capitalistic business solution is the only sustainable way to give people access to essential quality of life with electricity, quickly. BBOXX has brought electricity to 150,000 people in 30 countries, including Congo, Uganda, and Kenya. WHY WAS CHOOSING TO EXPAND THROUGH A FRANCHISE MODEL IMPORTANT? Partnering with local businesses helps us get into the markets, which can often be difficult. It helps us reach our full potential.

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TALK SUCCESS BBOXX

HOW MANY PEOPLE DO YOU NOW EMPLOY? We have 22 UK-based employees, eight in China and around 150 in other countries.

WHAT WOULD BE YOUR BEST BIT OF ADVICE TO ANY BUDDING ENTREPRENEUR? Entrepreneurs are not conforming. They take huge personal risks but failure is key. You have to fail, you have to try and learn from it. That’s the learning cycle. You get better. You need to be humble, understanding and open. These are far better qualities than being aggressive and arrogant.

first ded: een the ny foun Compa – 2007, betw rsity. e x e.quino nd year of univ graduation. o c re e s fo , be and – 2010 0 BBOXX apital: c 200,00 Start up – we raised $ x e.quino 122,000) tudents £ ith 45 s d w , g in (aroun fundrais ur through n it. o put all o working £5,000, we – BBOXX gether. to million. money ver: £2 ke even. o n r tu t Curren et profit: Bro tN Curren

istics t a t s l a vit

HOW DO YOU ENSURE YOUR COMPANY IS ECO-FRIENDLY, ETHICAL AND SUSTAINABLE? We spend a lot of time and money on training. From shopkeepers to technicians, to factory workers in China. We are parading a new industry, so prior experience is rare, and we need to ensure everyone we work with is aligned with our vision. They all go through the same material – why are we doing what we are doing? What are our principles? What morals do we need to uphold?

Contact: bboxx.co.uk

FEBRUARY 2014

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Holidays, Bank Holidays and Part Timers confusion and calculation. It’s a frequent question to our HR team, with many variations: • What is the holiday entitlement for a part timer? • How do we calculate bank holidays for someone who works two days a week? • What happens with holidays and the long term sick?

et’s start with the most recent change in the law around holidays: 1st October 2007 was the date when the Working Time Regulations (1998/1833) came into force. This gives 28 days (or 5.6 weeks) leave to people working 5 days per week.

As I’ve already said, there is no statutory right to take time off on a bank/ public holiday. The change that came into effect on 1.10.2007 means that all holiday calculations take place around the minimum 28 days leave (which includes the 8 public holidays).

It may come as a surprise, but there is no statutory right to have bank holidays off. So, these 28 days INCLUDE the 8 (occasionally more) bank holidays each year.

Let’s say your employee handbook states: ‘You are entitled to 28 days’ paid holiday in each complete holiday year inclusive of bank and public holidays’

The main issue managers have is calculating holiday entitlement for people who work part time. The full entitlement of 28 days per year is for 5 day/ week workers. So it is a simple calculation for different working patterns, see the table below:

A full time worker gets 28 days leave per year. If your holiday year starts on 1st January and they take off 1st January (bank holiday) and 2nd January (not usually a bank holiday in England and Wales) then they will have 26 days holiday left.

Days worked/ week

Days holiday per year

1 2 3 4

5.6 11.2 16.8 22.4

Another way of looking at this is that employees get 5.6 weeks of holiday during the year, whatever their normal working week is. So if they work 3 days per week they get 5.6 weeks of their normal working week (3 days per week) paid leave per year.

If that same worker used their remaining 26 days prior to Christmas and Boxing Day then they would not be entitled to take those days as paid leave. They would have to agree to work them, or take them as unpaid leave. Employers that are closed on Christmas/ Boxing Day should always give notice to employees that they have to take holidays on these days. Holiday requests should be refused if that would result in insufficient leave for those two days.

Sick Leave: Holiday leave accrues while an employee is off sick. If an employee is off for a full holiday year then they will have accrued 28 days of leave. That brings me on to my final point: Creating an annual leave policy that works for the business, is fair to employees, is applied equally and is legally compliant. There are a lot of factors to take into account. Examples include: • What has gone before (Custom and Practice) • Any changes that result in workers being worse off must be consulted on. • If policies are not applied equally to all workers then problems will follow. • Should leave be carried from one holiday year to the next? For how long? • Who grants holiday requests? • How do you deal with everyone in a team wanting the same days off? • Does holiday entitlement increase with length of service? I have only scratched the surface of this subject (our internal notes stretch to 34 pages of guidance!), So you can see there is a lot to consider over and above the legal minimum.

Hope that’s clear!

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Get FREE employment contract template Download now, valued at ÂŁ200 with detailed notes . Every employee needs their own written employment contract within 12 weeks of starting a job. It is the law. The penalty is a 25% uplift in any employment tribunal payouts. Ensure you are compliant by downloading our employment contract template. It comes with all the notes you need to fill in job titles, salary and all of the other legal requirements. Ensure you are compliant - download your copy now.

Author: Neil Atkinson has twenty years experience starting and growing businesses. He started Deminos in 2007 with his (CIPD Fellow) wife, Louise. The Deminos team now provide practical HR and Employment law advice & support to hundreds of businesses of all sizes from just one employee to thousands. For guidance on holidays or any other employee issues call us on

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BOOK REVIEWS

Book reviews

About the author: Fergus O’Connell has a first in mathematical physics from University College, Cork. His company ETP, and his project management method has influenced a generation of project managers. In 2003, this method was used to plan the Special Olympics World Games.

Our verdict:

About the author: Andrew Reynolds is a former Surrey Business Person of the Year who originally started out with an idea for a business that he could run from his spare room at home. He has since won an award for Best Small Business of the Year.

Copy This Idea is published by Capstone, priced at £9.99 in paperback and e-book.

The Power of Doing Less by Fergus O’Connell Our verdict:

Copy This Idea by Andrew Reynolds

We say: We don’t want to sound greedy but any book with chapter one named The First Million, intrigues us. Andrew flatly admits he’s nothing special, but this book can start any wannabe entrepreneur on their journey.

TALK SUCCESS

Have A Crap Day The Service Revolution

We say: At the end of every day, do you feel exhausted? The author teaches you how to forget that endless to-do list and just do the important stuff. A good read if your time management needs shaping. The Power Of Doing Less is published by Capstone, priced at £9.99 in paperback and e-book.

Begins… by Jez Rose Our verdict:

About the author: Jez Rose has worked worldwide as a behaviour change consultant for ten years, representing clients such as the BBC, Lloyds, Vodafone and Kraft. He teaches organisations how to get the most out of people through behaviour changes. We say: The author boldly states; ‘If you have customers – you need this book.’ Award-winning entrepreneur, Jez Rose talks about saving customer service from the evil grip of clingers, the Floatatron and Doctor Moodio Bitchio. A useful, entertaining read. Have a Crap Day is published by Gent, priced at £12.99 in paperback.

We’ve got one of each book to give away FREE. Be the first to follow and tweet us, quoting the book name @TalkBusinessMag & we’ll send you a free copy!

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money

Money ver the last ten years, we’ve seen the emergence of the social enterprise. Like the for-profit company in many ways, except it has a clear social, environmental or ethical mission and some or all of its profits are reinvested towards that mission. Think Elvis and Kresse, which started making bags, belts and wallets from decommissioned fire hoses and donate 50% of its profits to the London Fire Brigade, or Divine Chocolate, the highly successful fair trade chocolate company, 45% owned by cocoa farmers sharing in the profits. The rise of the social enterprise tracks the evolution of the consumer, which is no longer solely focused on the price tag of an item. Having seen numerous food scandals and read horrific stories of exploitation in emerging markets, the conscientious consumer is prevailing over the conspicuous consumer. This trend supports the social enterprises doing good through their actions and having sustainable financial models that do not rely on financial donations. Alongside the growth in social enterprise, we have seen the emergence of a new asset class in social investment funds being deployed by those who assess potential investment opportunities based on a different set of criteria, including the social impact of

matters

This month our funding expert, Julian Smith talks about the rise of the social enterprise

Investment opportunities based on a different set of criteria, including the social impact of the enterprise

the enterprise, as well as the financial returns. Ethical companies who address the conscientious consumer can make themselves highly desirable to larger branded groups looking to add younger, innovative and fastgrowing brands to their stable. One of the earliest examples was Green & Blacks – the organic chocolate company – that was sold to Cadbury Schweppes for £20 million in 2005. Between 2009 and 2013, the founders of Innocent smoothies sold their interest in the company to Coca-Cola in different tranches for an aggregate value thought to be well in excess of £100 million, leaving them free to spend more time on the charitable arm of the business. A social enterprise must live by a stricter set of rules, where everything about the company must be coherent with the company’s social mission. Without this, the company would expose itself to criticism of hypocrisy. However, the flip side of that coin is a powerful motivating factor, which can foster a very loyal customer following and attract and retain talent who share company values, which

makes it easier to preserve that unique culture. If you’re not a social enterprise, it doesn’t mean that your company cannot “give back” or adopt some of the behaviours. There is evidence to support the thesis that brands, where some of the profits are donated to a charitable cause, do better. In the 16 years since Yoplait (a General Mills company) has been running its Save Lids to Save Lives and other programmes, it has donated more than $34 million (about £20 million) to the cause. Business is always about the money or else you won’t have a sustainable future, but on the journey it’s very important to consider how the money should be allocated between stakeholders (or causes), shareholders and other providers of finance. Julian Smith is The Funding Expert, offering workshops, consultations and public speaking on finance. He has been advising companies for more than 18 years on how to position themselves for investors, raising finance, mergers and acquisitions. Contact: thefundingexpert.co.uk Twitter: @lefundingexpert

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M&A

TALK MONEY

The importance of Integration Stuart Crowther, managing director of Specific People, a consulting services company, talks us through the integration of an acquisition rowing evidence of a sustained economic recovery in the UK has many business leaders focusing their attention on acquisitions and mergers as a route for growth. Although there are still some good bargains to be had, finding the right target for an acquisition is only half the story. Ensuring the new business is integrated quickly and efficiently is the true measure of a successful acquisition. It’s important to remember that the decisions taken at the beginning of any integration project will determine its success or otherwise. Responsibility for the project must reside at the top of the business, because: • Significant decisions will be made by department heads, and these must be shared at executive level. • Many cross-departmental issues will need resolving and the CEO can chair these meetings. • The integration project will generate reasons to communicate to employee groups, and these messages

need to be prioritised and agreed at board level. • Ultimately, these streams transition into day-to-day management, and this board will be home to any outstanding actions. The board can start designing and delivering the project, but must recognise that energetic team leaders will want to begin building their enlarged departments. However, their energy must be channelled to ensure a consistent pace of change across all departments. The next step is building a plan that fully describes all the activities necessary to complete the integration and deliver the desired benefits. The plan shares understanding of all the required actions and encourages buy-in from those responsible for delivering the project successfully. PUTTING PEOPLE FIRST Integration must follow the same stages across all departments: people; propositions; process and systems. This ensures the critical and most difficult

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TALK MONEY M&A

element - the people is addressed first. Typically, the people aspect of any integration yields the highest synergy savings through reduced head count costs. Failure to get this right from the start burdens the new business with this extra cost. Adopting a consistent approach to departmental plans will ensure firm-wide initiatives are distilled from the plans, namely: • Building an organisational structure that really works for all departments. • Communicating to stakeholders and most importantly, employees. • Implementing new business processes, which can be a point of tension, like adopting a single document management system. • Integrating IT systems – a significant project in its own right. Departmental plans need validating by someone with experience of having successfully managed integration projects before. This ensures the plans will deliver the expected synergy savings and achieve successful integration. ALLOCATE EXTRA TIME Creating a single organisational structure takes time, and merging two businesses will always throw up complications, particularly when comparing roles and experience across both businesses. It is quite surprising how two businesses in the same industry can take radically different approaches to similar business activities. It also takes time to rationalise terms and conditions across complicated and contrasting businesses. It must be done in the first phase of the integration, with easily understood and comparable pay scales developed.

If it takes longer than a couple of weeks for the individual departmental plans to be finalised, the project sponsor should worry. A project review cycle is imperative to identify blockages preventing progress, interdepartmental issues and threats to the expected synergy savings. This regular, often weekly, review helps integration, thanks to the competitive nature of departments, with leaders wanting to deliver against set targets and deadlines, rather than be seen failing to do so. A project’s pace matches that of the slowest department. If any department lags, it will delay announcement of the new organisational structure; problems will surface and multiply. EXPLAIN IT CAREFULLY With plans finalised and the acquisition ready to be announced, the following points must be addressed with a consistent, structured approach, and in this order: • Staff – senior managers must visit staff at all the offices, make presentations and leave something that explains in more detail, what is happening and why. This offers everyone the chance to read through the plans when they are over the initial shock. • Customers – key clients should be told in person or on the phone, with an email to all others. • Suppliers – key suppliers should be told in person or on the phone, with an email to all others. • Everyone else – web sites for all impacted businesses should have updates, prepared in advance, ready to go once initial contacts have been made. Acquisition and integration can be unsettling, and the senior

board must listen carefully to employees’ fears and understand their issues. Employees will feel a loss of control - and decisive action with clear communication will be needed to put their collective minds at rest about the future. Some individuals will choose to leave the business, but the majority will stay if they understand what benefits the future of the integrated business holds for them personally. A comprehensive communication presentation can be made to all employees, but typically the only slide remembered is the one displaying the employee’s name – it’s best practice to hand out copies of all slide material.

The senior board must listen carefully to employees’ fears and understand their issues

SIGNS TO LOOK FOR Lack of communication is the most commonly voiced failing of integration projects, with gossip and misunderstanding filtering back to the management team – true for both internal and external communications, with each causing its own set of issues. Unexpected attrition rates amongst employees, and a lessening of interest from those responsible for delivering integration indicates the project is failing. SEEKING ADVICE Many businesses might consider integration as just another internal project, but a growing number are seeking external expertise, recognising the benefits this delivers. External integration project managers have no aspirations of career longevity within the business, enabling tough performance-based decisions to be made that challenge long held views and opinions. Contact: specific-people.co.uk

FEBRUARY 2014

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30/01/2014 16:42

TALK MONEY SME LENDING

here has been a lot of negative press about the lack of lending to SMEs by the banks, but recent articles in the national press suggest the fault could lie on both sides. SMEs and banks need to better understand one another’s position; it often seems dialogue is lost in translation. Some SMEs don’t appreciate the risks the banks take, or fully understand the loan process, and banks are often not clear about their processes. However, some SMEs and banks are achieving harmonious dialogue and building good professional relationships. Four entrepreneurs – with businesses old and new, big and small – tell us how they secured loans with Lloyds Bank Commercial Banking, and the growth it’s injecting into their ventures.

Bank on Four SMEs tell us how they found funding on the high street to grow their business

HARRY’S RESTAURANT A restaurant founded in 1993 by the Pound family. Samantha Pound took over the restaurant in 2004 from her parents. Did you look into other funding before Lloyds? Yes. Why did you approach Lloyds? I was introduced to Lloyds through my accountants, Kirk Hills Chartered Accountants. How did Lloyds help? They

BAYBERRY HOLLOW A café, and home interiors and crafts shop, founded in 2013 by Marie Race and Joanne Connolly. Did you look into other funding before Lloyds? Yes. Why did you approach Lloyds? The previous bank we had applied to took too long, so we approached Lloyds and had a quick response. How did Lloyds help? Provided a six-figure

provided finance for business independence. I agreed the decision to get a commercial mortgage was the best option and it means I don’t have to worry about security in the future. My lease was rapidly running out, but now I have the mortgage I can continue to grow the business. I have the freedom to make changes and develop the business further.

commercial loan to purchase and renovate the new premises. We approached our relationship manager from Lloyds Bank Commercial Banking with our business plan, and he just got it straight away. He was able to agree the funding within a few hours and has truly believed in our business and supported us from day one, which has been a huge boost for us.

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SME LENDING

THE ACCOUNTANCY AND TAX CENTRE An accountancy firm that provides accountancy tax services to SMEs and individuals, founded in 2006 by Jackie Bligh. Did you look into other funding before Lloyds? Yes. Why did you approach Lloyds? Another bank refused my application as I didn’t have the 30% deposit. Lloyds Bank Commercial Banking was prepared to take a risk and it turns out that they made a good bet. Had it not been for Lloyds, I wouldn’t have built my little empire.

How did Lloyds help? They provided the initial funding, two expansion loans, and then the most recent loan to allow me business independence from the franchise I was originally in. This is my fourth loan from Lloyds Bank Commercial Banking. Without the bank’s help I would not have been able to grow my businesses to where they are today. My relationship manager is a great contact and was instrumental to my success. I know he is always at the end of the phone if I have any questions or worries.

DANSCI DANCE STUDIO DanSci Dance Studio offers amateur and professional dance classes, for babies to retired people in Exeter, Devon. It aims to promote the health benefits of dance participation as well as being a hub for health information for local dance practitioners. It was founded by Ava Barron Thomas in 2013. Did you look into other funding before Lloyds? No. Why did you approach Lloyds? A franchise of Babyballet Ltd was set up with the support of Lloyds Bank Commercial Banking. I had approached a different bank in 2010 but chose Lloyds Bank

Ian Thompson, relationship manager for Lloyds Bank Commercial Banking in Durham, comments on his client, Bayberry Hollow: ‘It is both a well-run business and a great place to visit, and the thought and care that Marie and Joanne have put into it really shines through when you walk through the door. ‘Their combined previous experience and well-researched business plan enabled me to put

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Commercial Banking due to its fast customer service. My husband and I also had previous personal accounts with Lloyds Banking Group. How did Lloyds help? Lloyds Bank Commercial Banking provided the loan and walked me through the steps up to being accepted. I have continued support from my relationship manager. To own a dance studio is a dream come true. Without the loan from Lloyds Bank Commercial Banking, I wouldn’t have been able pay for a 10 year lease on the property. My relationship team has been very supportive.

in place the funding required to help them, and the initial results have demonstrated that they have created a business that really resonates with their customers. ‘Small businesses like Bayberry Hollow play a vital role in driving local economies, and as part of our commitment to supporting SMEs, we have supported 65,000 start-ups since January 2013 and we approve eight out of ten loan and overdraft requests.’

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INFORMAL AGREEMENTS

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contract, in whatever shape it might present itself, is a legally enforceable agreement. Although we might traditionally think of a contract as a written document, in which two parties or more agree to a set of terms by signing along a dotted line, contrary to common misconceptions, they do not always have to exist in this form (except in certain limited circumstances, for example with the sale of land). In fact, there are many “informal” agreements confirmed over the phone, by email and text that, unbeknown to you, can be considered legally binding contracts. Of course, having a point of reference in a formal written layout does have its advantages – namely that it provides very clear evidence as to what exactly was originally agreed, leaving little room for ambiguity in the case of a fall out between the parties involved. The key word above is “evidence”. It is this that will determine what the terms of the informal contract are, when these have come into question. Clearly, in the absence of a “traditional” or “formal” contract, a written agreement of some (or any) sort is preferable. This can include anything from email trails to messages sent via networking sites or social media – even a series of text messages will be useful! Presenting any of these in court will allow the judge to form a decision based on solid evidence of what has been agreed under the terms of the informal contract. When there is no written proof available, it is also possible to refer to permanently recorded evidence, whether a taped telephone conversation or video. While considerably trickier, it is even possible to enforce the terms of an informal contract

A done deal? Joseph Long, a commercial solicitor at QualitySolicitors Clapham & Collinge, discusses what makes an informal agreement binding

We might traditionally think of a contract as a written document

when no permanent recording – verbal or written – exists at all. However, this can be difficult, not to mention time-consuming, and situations can easily deteriorate in to a “he said, she said” scenario. Under these circumstances, the judge will usually look at the parties’ actions or “conduct” after the agreement was made – i.e. what each party did under their understanding of the terms of the contract – and base their decision on this. In any event, whether the contract, or its terms, are in writing or not, it is important to bear in mind that, for an agreement to be legally binding, it must have the following characteristics: 1. There needs to be an offer. For example, I will pay you £X to do Y. 2. There needs to be an acceptance. The other person confirms, either verbally, in writing, or by their conduct, that they will do what was asked. 3. There needs to be “consideration”. I.e. “payment” for what was

asked for. This can be money or “money’s worth”, such as goods or other services – anything that has a value – even as low as £1. 4. There has to be an intention to create legal relations. This will depend on the facts of each individual case, but there has to be some kind of intention that the agreement will be legally enforceable. You can imagine, in the case where a father tells his son he will give him pocket money to clean his car, that there is unlikely to be such a legal intention! 5. Certainty of terms. The major terms of the agreement have to be sufficiently certain. If a judge cannot work out what has been agreed or there are simply too many “blanks” that haven’t been filled in, then there can be no contract. So long as the above characteristics are met, and you have sufficient evidence to prove this, then the terms of the contract can be enforced. Contact: qualitysolicitors.com/ clapham-collinge

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INSURANCE

ccording to statistics, SMEs account for 99.9% of private sector businesses in the UK, with many being run from commercial premises. Last year’s St Jude storm and the continued bad the weather at the start of this year highlights the importance of having the right insurance to cope with unforeseen circumstances, including energy service interruptions, floods and other forms of damage. Most homeowners understand the importance of having home and contents insurance, with protecting personal property and possessions often a primary concern, and mortgage providers only keen to lend to those with adequate cover. It is equally important for SMEs to get insurance that looks after their interests with the right cover. For most SMEs, being unable to trade for an extended period of time or suffering damage to stock and equipment can have serious consequences. Here are a few tips to help you avoid disaster:

TALK TO AN EXPERT Every year, SMEs across the UK are left out of pocket through having inadequate cover. Specialist commercial insurance brokers will take time to understand exactly what you need to protect your livelihood. Often, they will be able to negotiate a good rate with some of the UK’s biggest insurers, so there’s nothing to lose. BUSINESS INTERRUPTION INSURANCE This isn’t always offered as a standalone product, but is usually available with commercial premises or public liability insurance. In the event of a SME being unable to trade due to

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Be prepared:

come rain or shine Andrew Jackson, director of retail broking at One Insurance Solution, gives tips for protecting your business against the elements

unforeseen circumstances, it provides two options; either you will be found alternative premises or you will be reimbursed your loss of profit. It’s important to note that this type of cover is most suitable for medium- to long-term business shutdowns, with most policies taking 48-hours to activate.

Every year, SMEs across the UK are left out of pocket through having inadequate cover

STOCK AND CONTENTS COVER This is particularly useful for small retail operations. Again, this type of cover can be added to premises insurance, and protects damage to, and theft of stock and equipment. FREEZER AND FRIDGE COVER Hospitality, food and beverage businesses rely on their ability to freeze and refrigerate perishable materials and ingredients. If a storm were to cause a power failure, it could mean that thousands of pounds worth of stock can no longer be used. Setting up business insurance to cover any such

eventuality means that there’s less need to be scared when the lights go out. CALCULATING LOSS It’s important that business owners are well versed in calculating loss. There are two methods that can be used; topdown and bottom-up. Top-down takes lost sales and subtracts the expenses saved during the time of loss, whereas the bottom-up method works in reverse by taking the loss period’s net income and adding expenses through the loss period. Although the bottomup method is more complex to calculate, it is much more accurate and therefore gives a realistic idea of the level of cover you can expect to gain. Taking the time to get all the insurance that you need shouldn’t ever be too much trouble, it could be the best investment that an SME makes all year. Contact: oneinsurancesolution.co.uk

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CAREFUL CONTRACTS TALK MONEY

Before you sign on the dotted line…

hen an asset is not being managed properly, it can easily become a liability. By considering the value of your business and changing a few habits, you are more likely to do asset-generating activities and increase the value of your business in the long term. Here are four easy habits to cultivate a higher value for your business and make your investment in it even more worthwhile.

1. HAVE A CLEAR VISION AND STRATEGY During World War II, Winston Churchill said; ‘He who fails to plan is planning to fail.’ If you don’t have a realistic vision of your business, then you may get sidelined with irrelevant actions, make decisions that do not add value to your business, or worse, diminish its value. A clear business strategy allows you to see what is really important and the actions required to achieve the vision. The Strategy-on-a-Page video series by Business Growth International is a useful free tool to plan and hold you accountable to your strategy, track your growth and allow you to see potential gaps in advance.

NaviStar Legal founder, Jo Rogers lists four habits that will increase the investment value of your business

Before taking on any finance, get guidance from a lawyer or accountant on tax breaks (SEIS or EIS), personal tax options, finance options (http://bit. ly/1lZgLWW) and available grants in your industry (http:// granttree.co.uk/) to ensure that you are making sensible choices.

A clear business 2. GET EXPERT WISDOM strategy allows We find many people decide to take on external finances without you to see what is really giving any thought to their finance options, their tax position important and worse, the approximate value of their business. Many businesses find themselves stuck with finance providers who have significant equity stakes but do not understand or share the longterm vision or strategy of the business and end up costing more money than they invest. Getting expert advice is essential and can help you build a better business from the start.

3. KEEP YOUR BUSINESS IN GOOD WORKING ORDER A well maintained business is more valuable to potential buyers and investors. Some ideas for maintenance: Make sure that all employees, consultants or contractors have signed a formal written agreement to comply with the law, and ensure that your relationship is clear. Deal with complaints, disputes and any threatened litigation early to avoid wasting valuable time, money and energy. Ensure that you have appropriate insurance to cover products or services.

Know relevant legal requirements, such as dealing with consumers or data protection (http://bit.ly/18640li). Keep your financial books up to date and know your key performance indicators to ensure you are on top of your cash. 4. KEEP ADDING EVEN MORE VALUE A good way to increase the value of your business may be by investing some additional funds in key areas, such as intellectual property. Registering appropriate patents, trademarks or other valuable intellectual property may increase its value if you get advice on how this can be achieved.

Jo Rogers is an in-house lawyer for SMEs. Her vision is to create a tribe of next generation lawyers that provide affordable wisdom to businesses. Contact: navistarlegal.com

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START-UP LOANS

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A day in The life

DEAR DIARY My phone alarm rings every morning at this time. As I turn it off, I have a quick look through Banhmi11’s social media pages to check messages from our friends and followers, and comments about our food and services. We are a very interactive brand, so I want to make sure we are as responsive and engaging as possible.