Talk Business Magazine March 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

March 2014 £4.50

‘The social

enterprise revolution’ Melody Hossaini on her passion for people and why kindness is the ultimate power

Going global SMEs can’t be lazy with language

Reward your staff

Increase salaries through tax perks

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20 Talk image 89 Improve your confidence Tips 90 Look the business: win a suit Fashion

iNSIDE 9 Editor’s letter 12 Letters 14 News & events

49 The branding column Rich With 51 Remember more Memory tips 52 It’s OK, everyone speaks English Don’t be lazy with language

TALK Success

55 Expanding overseas? Foreign exchange

19 Tell us what you think, and win a luxury stay Market research

57 Get the edge Market research tips

20 The social enterprise revolution Melody Hossaini, founder of InspirEnage 28 Take one company Living Word

61 Negotiation Adam Caplan 65 The sales doctor Solving your sales problems

talk MARKETING

31 Introducing… TB grills a young up-and-comer

67 The marketing column Kimberly Davis

32 Manchester Gateway for growth in the north west?

69 Ten steps of Twitter Step five: scheduling

35 Book reviews

73 The case for a multilingual website International expansion

37 League of extraordinary communicators Emails 130 He said/she said What are the entrepreneurs saying this month?

TALK strategy

talk MONEY 39 The funding expert Foreign language of finance 41 Is there really a funding crisis? SME funding 44 Increasing salaries without a pay rise Tax perks 47 A day in the life Diary of a Start-Up Loan recipient

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77 Blinky: print with personality Print offer

talk people 79 The people column Lee McQueen 81 Brought to you by Basepoint Top 10 recruitment tips 83 TUPE or not TUPE? HR Insight 84 Secret diary of an entrepreneur A week in the life of the founders of Moo Moo Youth Marketing 87 Language isn’t just semantics By Powwownow

94 Hot spots Locations for SMEs 97 We love Our favourites

talk technology 99 The Accelerator Jon Bradford, the tech expert 101 Loyalty, data and mobile payments Payment technoogy 102 The smart stadium Fan experience 104 Call for back up Telephone losses 107 I’ve got an app for that… Our fave business apps 108 Must-have gadgets for SMEs Business needs

TALK FRANCHISE 111 Franchise news 115 Spotlight RED driving school 117 The fran man Thinking of investing in a franchise? 119 Take one franchisee Alex Markov, Nationwide Cleaners 120 What can I expect? Franchisor support

talk aDVICE 122 FPG 124 KYOCERA 126 Home Instead 128 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

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

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.

Printed by

“Everyone speaks

English”

hat do you think when you hear that phrase: “Everyone speaks English”? Do you agree? Well, you’d be forgiven for thinking so; after all it is one of the predominant languages in the world, with an estimated 800 million people speaking it. On the contrary, it is not the most popular language in the world. As I’m sure you’ve heard, Chinese is, with more than 1.1 billion using it daily. Taking that into account, perhaps when you hear this phrase, instead of agreement you shake your head in distaste. It’s no secret that many people around the world, including people from the UK themselves, believe that in this part of the globe we are lazy when it comes to language. I myself agree. But apart from remembering limited French from school and attempting (often badly) to ask for a glass of wine while staring at a phrase book on holiday, have I done anything about it? No. However, language is not something businesses can ignore. The internet has made the world smaller – so even if you’re not actively taking your offering overseas, even the smallest companies are visible in any country. And if you haven’t considered expanding abroad, for many companies you are not just restricting your success, you could be slowly strangling your business. On page 52 we investigate why it is detrimental to be lazy with language. Melody Hossaini, our Face on the cover, speaks five

languages. Born amidst war in Iran, she came to England at age 13, and despite not being able to speak English fully, she immersed herself in establishing a leading democratic youth organisation. The former candidate of BBC’s Apprentice reveals on page 20 how she runs the successful international social enterprise, InspirEngage. Remember, it’s not only important to focus on learning other languages and cultures, it’s imperative we use our mother tongue in the most positive way. Turn to page 37 to find out why we often forget basic manners in emails. I’ll leave you with some of my limited French. Prendre soin de l’entreprise,

@TalkBusinessMag

talkbusinessmagazine.co.uk

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Contributors & LETTERS

Our regulars Lee McQueen won series four of BBC’s The Apprentice and now runs Raw Talent Academy, a recruitment company specialising in great sales people. It encourages organisations to look at the wider raw talent in the UK, not just graduates. Lee, who has more than 12 years’ experience working in recruitment and eight years as an employer of sales people, is passionate about giving job seekers an opportunity to earn a career. He’s a proud father of three daughters, and a Tottenham Hotspur supporter. Read his column on ironing out peaks and troughs on page 79.

Kimberly Davis is a highly accomplished marketing expert, author, business mentor, and speaker. She is founder of Sarsaparilla Marketing – the name comes from Kimberly’s fascination with the 1940’s; the music, the Hollywood glamour, the swinging dance moves and the optimism. It helps established businesses, SMEs, start-ups, business owners and employees, and has a very different approach to marketing. Strong opinions and a determination to restore credibility to an unregulated industry have earned Kimberly a reputation as “the antimarketing marketer”.

Jon Bradford is the managing director of Techstars in London, and our new tech columnist. Alongside this, he is also a co-founder of f6s, a global community of start-up founders, and also tech.eu, a tech blog dedicated to start-ups in Europe. Prior to this, Jon has helped to start 12 multi-company accelerators, from Montreal to Moscow, including founding Europe’s first bootcamp accelerator in 2009, The Difference Engine, and subsequently Springboard, based in Cambridge and London. In a previous life, Jon trained as an accountant with Arthur Andersen, and has worked in various start-ups and turnarounds.

Tony Morris is a sales trainer and co-founder of the Sales Doctor. He has 14 years’ experience in sales, both B2B and B2C, and has trained 1,500 sales professionals in a variety of industries. Alongside his business partner, Tony set up the Sales Doctor in May 2006. He started by cold calling to generate appointments, and within the first year. the Sales Doctor had 56 clients; this has continued to grow year-on-year. Tony’s ethos: you can sell any product or service with the right attitude and a well planned call structure. On page 65 he answers a tricky question about leaving your problems at the door.

Turn to page 67 to find out why Read the Accelerator’s Kimberly thinks the marketing introductory article on page 99. of Candy Crush is ingenious.

MARCH 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 how great the Gandys founders are, SME takeovers and the benefits of tax breaks

Leaving a legacy Dear editor, Reading about Rob and Paul Forkan the founders of Gandys flipflops [Face on the cover, February] was extremely moving and inspirational. I truly admire how they turned the ultimate negative into a positive. Leila Morrison Entrepreneur

R OF E T T E L MONTH THE

Bring back tax breaks It was recently reported in the media that the BVCA says re-introducing tax breaks, such as the Corporate Venturing Scheme (CVS) will encourage more investment. The scheme was done away with in 2010 because it was under-used, but £132 million was invested in almost 600 companies over a ten-year period. I agree with the BVCA that the scheme should be brought back. An investor

WhatFacebook

I enjoyed reading your article about takeovers [SMES selling big, February]. It was very topical, especially when Facebook bought WhatsApp. The messaging service is used by 465 million users around the world, so when it went down a few days after the takeover, there was a huge uproar. One worry about takeovers like this, is that the founders have built a personality that makes the product; if Facebook doesn’t keep that ethos – I think the product will fail. Beth Harding Tech analyst

Tweets 0F the month... @prthewriteway #Leeds United fan and #Kerseys #solicitor Ross Burkitt shares his views over recent events with @TalkBusinessMag : http://bit.ly/1d92NLt @GrowthAccel Study by @breatheHR reveals info of when, why and how often employees at UK #SMEs call in sick http://bit.ly/1bp8Lwj via @TalkBusinessMag @PortsmouthExpo Don’t forget to pick up your free copies of @TalkBusinessMag available at the Registration Desk and in the Cafe Area at #PBE14 on 20 March @liquidaccounts Great to be working with @TalkBusinessMag - see the our ad in this months issue @RealBizRescue @TalkBusinessMag looks great, we’ve created some awesome #inforgraphics of our own, but like this one @Basepoint_Cntrs @TalkBusinessMag great to see you @FranchiseShowUK 2014! @deeblick 30 minute break as yay my copy of @TalkBusinessMag has just arrived. Loving the Gandy flip flops story. Even the ads are relevant @cleankilluk Nice mention about being ‘green’ in @TalkBusinessMag on page 54. It has brightened up this very dark, wet day. http://fb.me/1bx7XP3Z9

MARCH 2014

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NEWS & EVENTS

Dates for the diary Business Junction Networking Events 5 March The Red Herring, St. Paul’s 13 March Rydges Kensington 18 March The British Museum, Bloomsbury businessjunction.co.uk

Internet Retailing Expo 26-27 March NEC Birmingham internetretailingexpo.com

Online Retail Conferences 16 September Royal Garden Hotel, Kensington orevents.com

Kent 2020 Vision Live 14 May Kent Event Centre, Maidstone kent2020live.co.uk

eCommerce Expo 1-2 October Olympia, London ecommerceexpo.co.uk

Sterling Integrity 7 March The Village Hotel, Coventry 28 March The Village Hotel, Cardiff 8 May Kingsholme Rugby Club, Gloucester sterlingintegrity.co.uk

The Business Show 2014 15-16 May ExCel London greatbritishbusinessshow.co.uk

Successful Selling Expo 16 October RICOH, Coventry sales-expo.co.uk

Thames Valley Expo 12 June Museum of the Great Western Railway, Swindon thamesvalleyexpo.co.uk

UK Government finances show £4.7bn surplus ACCORDING TO THE Office for National Statistics, Government finances for January showed a surplus of £4.7 billion. That was less than the £6 billion surplus recorded a year ago. For the financial year to date, Government borrowing was £90.7 billion, which was £4 billion lower than at the same point a year earlier. January usually records a surplus due to high tax receipts, but in most other months, the Government borrows more money than it receives. The total pile of Government debt now stands at £1.24 trillion, equivalent to 74.6% of the UK’s total economic output. The ONS figures are initial estimates and are subject to revision. They exclude the effect of bank bailouts. The £1.3bn fall in January’s surplus when comparing with a year earlier was

down to higher Government spending. Tax receipts from VAT and Stamp Duty were up slightly, but this was offset by a fall in receipts from income and corporation tax.

MARCH 2014

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Treasury committee announced inquiry into SME lending THE TREASURY COMMITTEE has announced that it will be conducting a short inquiry into SME lending. The inquiry will focus on three issues: access to finance for SMEs; the scope for opening up the sector to more competition; and the treatment of SMEs by banks. Commenting on the Committee’s inquiry, chairman of the Treasury Committee, Andrew Tyrie MP, said: ‘SMEs report that they are struggling to secure adequate access to finance, from banks and elsewhere. It is vital to a sustainable economic recovery in the UK that this market be restored to working order. ‘Like individual customers, SMEs have been badly treated by their banks. The mis-selling of interest rate swaps caused huge detriment. Although redress is currently being provided,

many firms suffered significant losses. ‘SMEs are viewed as sophisticated customers by regulators when, in reality, many are not. The Committee will look at whether the scope and

remit of the regulators provide adequate protection.’ The first evidence session took place on Tuesday 25 February at the House of Commons.

Government urged to offer tax breaks to SME investors THE BVCA, WHICH represents the venture capital and private equity industries, has urged the Government to offer tax breaks to SME investors.

It said in its submission, ahead of this year’s budget, that the Government could consider reviving the Corporate Venturing Scheme, which was scrapped in 2010. It also called for reforms to entrepreneurs’ relief, specifically scrapping the 5% threshold, the employment test, and the £10 million lifetime limit, “to send a clear message to entrepreneurs that if they make a success of their business in the UK, they deserve to keep the proceeds for them and their team.” The BVCA’s submission said: “The debate at present encourages us to choose between one aspect or another of our political economy – SMEs or large businesses, bank debt or equity finance, infrastructure investment or exporting. But actually we must look at all of these in the round. “We want SMEs to become large businesses, and we want large businesses to invest in small ones to foster innovation. A healthy mix of equity and debt is more important

than prioritising one over the other.” The report follows calls by the CBI and London mayor, Boris Johnson for small businesses to consider using more equity finance, rather than relying on bank debt for funding. The report added: “It is worth highlighting that 90% of businesses that private equity and venture capital invest in are SMEs. As with every single private equity investment, our goal is the same, to help them grow. These SMEs are therefore the ones with high growth potential – the ones that can create the jobs the UK economy needs.” It also called for the lifting of visa restrictions on non-EU migrants with a degree in STEM subjects and the introduction of a tax credit for apprentices. Simon Hames, BVCA director general, commented: ‘By improving the flow of financing, getting more multi-nationals to use corporate venture capital and by incentivising employers to take on apprentices, the UK can ensure this recovery is a sustainable one.’

MARCH 2014

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win a luxury stay e want to know what you think of Talk Business Magazine. Do we print the right stories? Would you like to see more articles on finance or marketing? Do you like the design of the magazine? Can we do more online? Talk Business is the magazine for the entrepreneur by the entrepreneur and we want to continue to support you on starting and growing your business the way you want. So, please take just a few minutes to tell us what you think. As a thank you to those who take part in our short online survey, we’ll enter you into a prize draw to win a luxury stay at a Classic Lodges hotel of your choice.

THE PRIZE Classic Lodges is an independent and nationwide collection of 15 unique hotels that vary from a 700-year old coaching Inn in the Cotswolds, to a Georgian mansion on the Scottish border. Each of the 15 properties has something different to offer, but all maintain a certain style and luxury – from the country houses set in acres of landscaped grounds to the city centre hotels

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FACE ON THE COVER

TALK SUCESS

‘The social enterprise

revolution’

Melody Hossaini is passionate about people, and this month her social enterprise InspirEngage International celebrates its fifth birthday. Dawn Murden meets the determined founder national newspaper once said Melody Hossaini must be 197years old to have done everything she has. You can perhaps forgive their accusing tone after a quick glance at her experience. Melody is a professional speaker, trainer and social entrepreneur who’s helped thousands of people get their life on the right track through her company, InspirEngage International. She was a candidate on series seven of The Apprentice and has received training from Al Gore and Archbishop Desmond Tutu. And that’s just a snippet of her success. Life didn’t get off to an easy start for Melody. She was born in war-stricken Iran, and moved to Turkey and Sweden, before settling in the UK at age 13. Despite not being able to speak English fully, she immersed herself in helping to set up the UK Youth Parliament. ‘I couldn’t understand why young people didn’t have a say

in things that affected their lives,’ she told me. ‘I felt an inherent sense of responsibility and had to do something.’ In 2005, she made history by becoming the first female, and ethic minority, to be elected chair of its board of trustees. Then in 2009, Melody set up the social enterprise, InspirEngage International, helping young people through skills development bootcamps all over the world. She set up the business with nothing but a Hotmail account. You may recognise Melody from BBC’s The Apprentice. She beat 75,000 applicants to become the first ever social entrepreneur on the show, where she displayed strong confidence that often lead to her being described as “ruthless” in the media. The press also accused her of “talking too much”. However, we were gripped and only happy to listen to everything Melody had to say. She is one confident, kind and inspirational entrepreneur.

WHAT DID YOU DO TO HELP ESTABLISH THE UK YOUTH PARLIAMENT? A group of volunteers and I collected thousands of signatures for a petition. I remember persuading the head teacher that the money from our next non-uniform day should go to the cause, when it did, it went in the local newspaper. I’d drag my mum to meetings on a Saturday. I think I drove everyone mad going on about it; however it soon got taken seriously when Tony Blair got involved.

It was working with the United Nations to support young people developing projects on climate change

YOU STARTED YOUR BUSINESS WITH £0 AND A HOTMAIL ACCOUNT – HOW? A product business needs funds, but a services business doesn’t. Instead, I had 10 years of experience in the youth sector. I worked from my bedroom with my email – I remember my email signature was “global youth sector consultant.” I didn’t really know I was a business at first. I was offering my services and experience contractually.

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TALK SUCESS FACE ON THE COVER

HOW DID YOU GET INTO THE YOUTH SECTOR? A talented group of people and I established a democratic youth organisation - I worked on that for 13 years. In 2005, I made history by becoming the first female and ethnic minority, to be elected chair of its board of trustees. I did this alongside my law degree. I thought I wanted to be a human rights lawyer. I got a place at law school but decided not to take it. I didn’t want to be a government puppet; I wanted to promote change on the ground.

Vital statistics: Company founded: March 2009, incorporated 2011 Start-up capital: £100 Current turnover? Still a growing company. Current Net profit? N/A Growth rate: We are the first social enterprise to be embedded into the national curriculum – in September 2013, our courses have landed in three pioneer colleges, and we are in talks with many others. Biggest achievement: Our “Startup & Stilettos” scheme. It helps vunerable women, who may have suffered domestic violence or other issues, to become economically active through social enterprise.

INSPIRENGAGE’S OBJECTIVE IS TO IMPROVE THE LIVES OF CHILDREN AND YOUNG PEOPLE THROUGH DEVELOPMENT BOOTCAMPS. WHAT INSPIRED YOU TO DO THIS? Partly my background. Struggle is a fine teacher, which not only makes you grateful for what you have, but also socially responsible in supporting others, Remember the riots in London? We watched 10-yearold boys steal televisions. However it’s not the boy’s fault, it’s our fault; it’s society’s fault. I’ve always felt a sense of responsibility, and had a passion for social justice. InspirEngage enables positive change by working with schools, colleges and universities, as well as businesses and communities. DID YOU REQUIRE ANY START-UP CASH? InspirEngage had never secured funding, until last year. The Department for Innovation & Skills recognised the value of what we are doing as a company, and their grant is helping us to expand. We would never stop doing what we’re doing due to lack of money, but, with this extra funding, it means we will be able to do much more, such as create employment for young people. There’s only so much you can do before you need more money. YOU’VE SURVIVED SOME PRETTY SCARY EXPERIENCES, SUCH AS BEING KIDNAPPED IN ABU DHABI. DO YOU THINK THESE EXPERIENCES HAVE MADE YOU STRONGER IN BUSINESS? To be honest, you just carry on. I keep calm and just do my best. I love what I do, but I encounter problems. None of us have all the answers, we continue to learn throughout our lives. The bad bits are just part of the

Photography: Paul Ward

I made history by becoming the first female, and ethnic minority, to be elected chair of its board of trustees

The first InspirEngage contract happened organically. I was meeting a contact and was introduced to their boss in the lobby. I asked what he was working on and he pulled out a pen and paper and drew a diagram. I said what I did and didn’t like, and he gave me the contract. Turns out it was working with the United Nations to support young people developing projects on climate change. You never know when your big break is going to come.

MARCH 2014

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TALK SUCESS FACE ON THE COVER

journey. It’s not about failure. I hate that word, it sounds so final. It’s about trial and error. HOW DID YOU GO ABOUT MARKETING THE BUSINESS? It grew organically through recommendations – I never knocked on a door or did mail-outs. Now, we’re huge social media fans, and we reach around 680,000 people through social channels. WHEN YOU CAME TO ENGLAND, YOUR ENGLISH WASN’T GREAT. NOW YOU CAN SPEAK FIVE LANGUAGES, DOES THIS HELP IN BUSINESS? An understanding of cultures is more important. We tailor our services to place. In Asia for example, it’s rude to point, stand up and take control of the room. It’s about getting the right

When I ran some training in the Middle East, the men thought I was just the person introducing the trainer

balance. Sometimes though, you have to impose your own rules. For example when I ran some training in the Middle East, the men thought I was just the person introducing the trainer. They also took a longer lunch, so I told them if they were late again they’d have to stand up and sing. After one person was forced to sing, they were never late again! WHAT WAS IT LIKE BEING TRAINED BY ARCHBISHOP DESMOND TUTU AND AL GORE? Al Gore needed people from various sectors, including the youth sector, to communicate the message from his An Inconvenient Truth documentary. I went for two days training. Alex Ferguson, the CEO of Shell, and Channel Four presenters were some of the other people there. I met Desmond Tutu at PeaceJam event. It’s an international education organisation whose mission is to create young leaders committed to positive change. I remember he stood up and said there were three things needed for peace. Then he said the first was sexy legs – he had a great sense of humour. WHAT WERE THE BEST AND WORST - ASPECTS

OF APPEARING ON THE APPRENTICE? The best thing was meeting my best friend, Felicity Jackson, and that I was the first social enterprise founder on the show. The worst was that it’s a TV show, edited, and portrays business as a dog-eat-dog world. WHAT WOULD BE YOUR ULTIMATE TIP TO FELLOW BUSINESS OWNERS? I love the Einstein quote: “Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will spend its whole life thinking it’s stupid.” There is no one way to be successful, you need to find your own path. I also think kindness is the ultimate power. WHAT’S THE FUTURE FOR THE BUSINESS? I want to take the social enterprise revolution to a new level. Last year we joined a committee and helped open the first ever vocational training institution for women in Saudi Arabia. Contact: inspirengage.com Twitter: @Melody_Hossaini

MARCH 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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30/01/2014 16:33

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

020 7870 1090 To download a compliant employment contract template with full guidance notes for free go to

http://www.deminos.co.uk/emp

114_115 TECHNOLOGY Social Media Law.ga.indd 41

30/01/2014 16:33

TALK SUCCESS TAKE ONE COMPANY

hink of some of the most memorable brands and slogans; like Nike’s “Just do it” or McDonald’s “I’m lovin’ it”. These brands are found all over the world, and an important part of going global is language. “I’m lovin’ it” is “ich liebe es” in German and “我就喜” in Chinese for example. Going global isn’t about sticking some content on Google translator and hoping for the best. There are professional translation companies out there on a mission to grow your following from country to county, like translation specialist, Living Word. ‘Translation requires the perfect balance,’ Katharine Marr, founder of Living Word, says. ‘You have to interpret the original message, and convey that in the target language, whilst also creating text that is culturally appropriate to the audience.’ Katharine thinks it’s often difficult to explain how important translation and the understanding of different

Word UP Dawn Murden meets Katharine Marr, the founder of Living Word, a small translation specialist, which has worked with big brands like Chevrolet and Adidas

I devised a good business plan and a cash flow forecast before I approached the bank for a loan.

Vital statistics

Company founded: February 2004 Start-up capital: £5,000 bank loan Turnover: N/A Profit: N/A Growth rate: Compared to last year we’ve had 30% increase in sales, the year before that it was 10%. Biggest achievement: Getting the company off the ground out of nothing. If I was to choose a tangible agreement, it would be our 10 year working relationship with Chevrolet.

cultures is in business. ‘Sometime people don’t value translators as much as they should,’ she says. ‘They have a specific set of skills. ‘It’s easier to sell our services in Europe, but in England we find people tend to take the cheapest option.’ Prior to setting up her own company, Living Word in 2004, Katharine studied linguistics and French and worked for various translation agencies. She found the agencies she was working for were quite old fashioned and found it difficult to move to new technology. ‘I always knew I wanted to run my own company,’ Katharine says. ‘I identified problems with the companies I worked at, with the way they managed staff and their strategies. ‘Some of them still operated using fax – they were in the dark ages. I knew I could make things better technologically.’ Katharine spent a long time building up the business before she physically set up shop. ‘I devised a good business plan and a cash flow forecast before I approached the bank for a loan. ‘I thought it would be harder, but I did my research. You have to prove you’re worth it.’ Katharine came from a project management background and admits in the beginning it was hard – as she

had to learn to do everything. She admits today they are still a small team in-house, with a huge pool of freelance translators. However, Living Word has worked for huge brands, like Chevrolet, ABRSM, ASDA, Nokia and Adidas. ‘We concentrate on good communication; we are small and adaptable,’ she says. ‘Proof reading comes as part of the service and we use an in-cloud management system.’ ‘Having freelancers is great. Other agencies where I worked would hire translators when they were busy and make them redundant when business was slow – it wasn’t sustainable.’ Another way in which progress was promoted within the company was through GrowthAccelerator, a service lead by growth specialists to help business owners find new connections, routes to investment and new strategy ideas. ‘I decided to use the service after my accountant recommended it,’ says Katharine. ‘My mentor, Andrew has been great. He helped us a lot with the Chevrolet contract. We were used to small and medium contracts, rather than one big one – so he helped us adapt our processes to handle this in the right way.’ ‘Having the final responsibility – if it goes wrong it’s all on me,’ she says.

MARCH 2014

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What would Katharine’s advice be to other business owners? ‘If your product is good, people will pay. We survived the recession. Ignore the economy.’ The future looks very positive for Living Word. ‘We can pick and choose the clients we like now, and we want to focus on creative translation, adaption and market research.’ Contact: livingword.co.uk

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I’m watching: I just finished Breaking Bad, now I’m watching the American adaptation of The Office I’m reading: The Psychopath Test, by Jon Ronson I’m listening: Lots of different music, at the moment I like German music from the 1960s and ‘70s, and business podcasts. I’m surfing: Cooking and running websites, LinkedIn and life hacks.

We concentrate on good communication, we are small and adaptable

28/02/2014 09:20

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19/02/2014 10:05

UP-AND-COMING

TALK SUCCESS

Introducing

Daniella Goodman

This month we interview Daniella Goodman, founder of Little Linguists Nursery School

ittle Linguists Nursery School is a French bilingual nursery in south London, providing flexible, affordable care and education for children. It follows the “one person, one language” approach, with French teachers only speaking French with the children. This is one of the most recognised ways of teaching young children another language.

WHERE DID THE IDEA COME FROM? Little Linguists is a combination of a decade of research into the learning capabilities of babies, with my passion for creating a unique opportunity for children to learn another language. I first encountered bilingualism studying Spanish in Barcelona. I was amazed by the fact that the only monolingual students were all English first language speakers, either from England or the USA. The majority of other students were multilingual, claiming their schooling systems promote language learning, and in some places it is compulsory.

WHAT’S YOUR ADVICE TO YOUNG ENTREPRENEURS TRYING TO GET AN IDEA OFF THE GROUND? Get a business mentor and never give up. It has taken me many years to get to where I am with my business. Do not let the word “no” discourage you. Work closely with your business mentor to find creative ways to achieve your goals. IF YOU WEREN’T AN ENTREPRENEUR, WHAT WOULD YOU BE DOING TODAY? Still working in multi-level marketing, which I believe is a great way to develop an additional income alongside a family or another job. WHAT’S BEEN YOUR WORST EVER JOB? The hardest job I had was working in a large baby store, which involved carrying a lot of heavy nappies. WHAT HAVE BEEN THE BIGGEST CHALLENGES YOU’VE FACED AS A YOUNG ENTREPRENEUR? Learning to deal with rejection.

The word “no” used to scare me, but I’ve learnt to embrace it and continue on to the next. WHAT GETS YOU OUT OF BED IN THE MORNING? The thought that I need to read my emails before my son wakes up. HOW MUCH DOES MONEY MOTIVATE YOU? I wouldn’t say I am motivated by money; however I do need it to remain sustainable. I am more motivated by my passion to make Little Linguists a success.

I never thought I would achieve my goal at the beginning of this year

WHAT’S BEEN YOUR PROUDEST MOMENT? The grand opening of my nursery. I never thought I would achieve my goal at the beginning of this year, and it was nice to share the finished product with my nearest and dearest. It was lovely to meet the Mayor of Wandsworth, who also came along to cut our big red ribbon. WHAT’S YOUR VISION FOR THE FUTURE? I would love to see Little Linguists go on to achieve its aim of introducing another language to young children, which carries with it many long term benefits. I also hope our bilingual parent and baby workshops will encourage parents to join in with their children’s learning and promote bilingualism. Contact: littlelinguistsnursery.co.uk

talkbusinessmagazine.co.uk

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27/02/2014 11:21

TALK TECHNOLOGY REGIONAL GROWTH

Manchester: gateway for growth in the North West? We look at the growth of Manchester’s MediaCityUK and The Landing, a business incubation hub

anchester. Birthplace of the first computer, graphene and John Dalton’s atomic theory. This northern city is a place full of excitement, innovation and, most of all, entrepreneurial spirit. Greater Manchester has seen the investment of big business and major economic development during the past few years, highlighted by the transformation of Salford Quays and the creation of MediaCityUK, which includes anchor tenant, BBC and more recently, ITV Studios. With 206,815 enterprises calling the north west home, the region’s SME population is

Highlighted by the transformation of Salford Quays and the creation of MediaCityUK

on the rise, with high-growth companies increasing by 19% in the last year alone. One of the biggest draws for media enterprises and SMEs is Salford Quays’ booming MediaCityUK, which now houses an eclectic mix of 200 businesses. At the 2013 Salford Media Festival, writer of The Simpsons, Josh Weinstein, said: ‘Manchester has the potential to take over Los Angeles as a media hub.’ At the centre of this media revolution is The Landing. Situated at the heart of MediaCityUK, the digital hub fosters partnerships with global enterprises, supports visionary

digital SMEs and helps them to succeed in today’s everchanging world. Incubation schemes and enterprise support hubs, such as The Landing, often fuel economic growth. They are integral to the future of the UK’s business economy. According to UKBI, businesses in incubator schemes have an average success rate of 98%, and a further 87% are surviving after five years. The Landing has created a unique business proposition for SMEs by attracting global media organisations, including interactive media designers, engineers, software specialists and content producers. Now

MARCH 2014

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The Landing has created a unique business proposition for SMEs by attracting global media organisation at full capacity, The Landing houses a rich variety of tenants which are all benefitting from the opportunity to work alongside large media and technology organisations to drive product efficiency and develop new ways of working. It is also home to the region’s only “usability rooms” for testing and analysing games and interactive technologies, along with the UK’s only “digital workflow centre”. Based in The Landing is KMS Solutions, a digital health company, which pioneered its wearable safety device prototype at the Consumer Electronics Show [CES] in Las Vegas this month. KMS

032_033 SUCCESS Manchester.ga.indd 41

director, Louis-James Davis, describes the importance of enterprise communities for new businesses: ‘Hubs and incubator programmes provide an essential safe environment for young businesses to develop and fast track ideas into a commercial-ready stage through advice, mentoring and encouragement, which are as important as are establishing resources and financial support. ‘Location is key and The Landing at MediaCityUK is ideally placed with access routes to the city and technology and business universities that have been vital to the development of projects, allowing us to stay on track for our market launch this month. ‘The prestige of an office facility, such as The Landing, allows us to present the best possible image when talking to potential national and international partners and customers.’ Mobbra, an interactive event technology company based at The Landing has experienced growth since moving to MediaCityUK. President and founder, Will Walters, also credits location as the key ingredient. ‘Manchester’s digital economy is on an exponential rise, mainly due to re-establishing itself on the world stage with MediaCityUK,

which is attracting not only big global enterprises, but also upand-coming SMEs. ‘Not all enterprise hubs are located on prime real estate, but The Landing has achieved that. It is located at the heart of Manchester’s media economy; it provides a low-cost working environments, whilst also fostering strategic partnerships and access to business support.’ Jon Corner, CEO of The Landing, commented on the role that The Landing plays in driving SME growth in the north west: ‘Digital is no longer a division. It is integral to everything we do. Media content production and distribution has dissolved into transformative and pervasive digital communication tech (all things data). ‘What Greater Manchester has, unlike many other city regions, is enormous capacity in both areas. MediaCityUK and The Landing will play a key role in bringing this under a single eco-system, by collaborating with universities and wider education innovations, such as emerging University Technical Colleges (UTCs). ‘The economic impact of a unified approach in areas such as health, retail and financial services will be profound.’ Contact: thelanding.org.uk

27/02/2014 11:23

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2014/02/05 4:02 PM

BOOK REVIEWS

Book reviews The PR Masterclass How to Develop a Public

The PR Masterclass is published by Wiley, priced at £16.99 in hardback and e-book.

Shopping and How Your Business Can Use Consumer Psychology to Succeed by Graham Jones

About the author: Graham Jones is a leading internet psychologist, based in the UK. He is also one of the first to investigate the way human behaviour has adapted to the online environment.

Our verdict:

We say: We think it’s great how Alex explains why most media campaigns fail. This book helps readers understand how to develop and pitch material that’s newsworthy, credible and rivals competitors.

Click.ology What Works in Online Our verdict:

Relations Strategy that Works! by Alex Singleton

About the author: Alex Singleton is a public relations strategist. Through consultancy, training and speaking, he helps organisations, large and small, all over the world. Companies such as Kellogg’s, Virgin Atlantic and FirstGroup, along with major charities and public bodies have turned to him for advice.

TALK SUCCESS

Beyond The Job Desciption How Managers and

We say: This book provides insights into what makes an online store really work. It’s packed with tips, guidance and real-life case studies – from online boutique beauty store, Bellabox, to the mighty Groupon. Click.ology is published by Notable Books, priced at £12.99 in paperback.

Employees can Navigate the True Demands of the Job by Jesse Sostrin Our verdict:

About the author: Jesse Sostrin is a consultant, writer and speaker. He is the founder of Sostrin Consulting, a leadership and organisation development practice. We say: This book is a must-read for those across all professional levels. It’s aimed at employees and managers – but will give business owners and managing directors good employee insight. It teaches employees and managers how to discover mutual agenda. Beyond The Job Description is published by Palgrave Macmillan, priced at £19.99 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!

talkbusinessmagazine.co.uk

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27/02/2014 16:21

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2014/02/26 9:46 AM

COMMUNICATION TALK SUCCESS

The league of

extraordinary communicators e teach our children to say “please”, “thank you”, “hello” and “goodbye”, so why, when we come to work, do the majority of us forget what we’ve been taught? The rise of email as the primary business communication medium over the last 20 years, combined with the amount of work we all have on our plates, is eroding the quality of our business relationships. Consider this. Lying in bed in the morning, you grab your smartphone and check your emails. Overnight you’ve had 60 emails and the first one you read is a terse request from one of your colleagues asking for something. It has no salutation. There are no “pleases” or “thank yous”. They haven’t even taken the time to sign it off with their name. Your first reaction is animosity. You don’t feel like helping this person but you know you have to. Annoyed you send a terse reply. What you don’t know is that the colleague who sent you the email got 100 emails overnight and is standing on a packed commuter train bashing out two-thumbed replies on his Blackberry while trying not to inhale the armpit of the man standing next to him. He’s annoyed. You’re annoyed. Your dialogue reflects it and the cycle of animosity continues.

James Cotton, founder of digital creative agency, Onespacemedia, explores why we forget our manners in emails The pace of technical change demands that we work faster

No one wants to communicate this way but the pace of technical change demands that we work faster and faster. Speeding up the way we communicate is an obvious way to claw back more time in our day. Communication and the way we use language evolves we’ve even invented emoticons to append to sentences when we don’t think that the recipient will understand what we meant. That’s just lazy. We can still be human. Ultimately, business is about relationships, and good relationships are founded on good communication. Let’s not allow another generation of time-poor business people to erode the importance of communication. It’s time to draw a line in the sand. Here are some tips to bear in mind before smashing out that twoword email with your thumbs.

BE RESPECTFUL We don’t answer a phone call by saying the name of the person who is calling, so why do we do it when we email? Use a friendly salutation and remember your manners. Your parents will be proud of you.

TAKE YOUR TIME There are too many distractions at work these days, but how you communicate is crucial. Think about how you want a conversation to develop and write your emails accordingly. This relationship is important so give it the time it deserves.

MAINTAIN LEVELS You’re sending friendly emails but others aren’t reciprocating. It’s too easy to feel animosity and respond in kind. Stick to your guns and stay friendly - know that you are doing everything you can to build a meaningful relationship.

BUILD A RELATIONSHIP Good business is founded on relationships. Maybe that email you’re writing doesn’t feel very important in the grand scheme of things, but it is. You are building a relationship that will lead to better business in the long run. READ IT BACK Poor grammar and spelling can completely alter the meaning of a sentence. You don’t have the time to write another email explaining yourself. Read your email back to yourself aloud before you send it.

talkbusinessmagazine.co.uk

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27/02/2014 11:39

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money

The foreign language of finance lthough many companies operate 100% within the UK from a demand and supply perspective, the chances are that the majority of businesses will have some exposure to overseas markets. This means dealing in different currencies. This is a good thing. A company exporting its products or services is likely to be selling more as it’s accessing additional geographic markets. This helps to grow its sales and potentially increase productivity (e.g. unit costs). The incentive to buy in certain elements of the supply chain is presumably driven by the existence of a cost advantage without compromising on product or service quality. However, any involvement with foreign currencies represents both an opportunity and a risk. Unfortunately, the opportunity is normally on the part of the bank or another financial intermediary to make a profit from the business, and the risk is on the part of the management that has to make a judgement either to allow the business to be exposed to the fluctuations in the currency, or to hedge out that risk by entering into an appropriate trade. In each situation, the problem can be broken down into two questions: what is the appropriate hedging strategy? And what is the cost of converting the overseas currency into the domestic currency? As an example, an exporter of UK boutique wines who

Our funding expert, Julian Smith talks currency and how to manage foreign exchange risks

What is the cost of converting the overseas currency into the domestic currency?

knows that it will be selling a certain number of cases for a given price to the US each year might chose to sell forward US dollars against sterling, because the company will know the price in GBP. The forward rate will be determined by the market and for a liquid market like US dollar/sterling, it should be fairly transparent. That said, it would be worth getting a couple of different prices or quotes to compare, as you would for an insurance policy. The reason that management teams choose to hedge foreign exchange exposures is to reduce the impact that any fluctuations will have on the business in that period. Hedging does not eliminate the risk, but simply delays the impact of those currency movements and provides more stability in the numbers. But let’s assume that the wine exporter did not want to hedge out that risk of movement, and waited until the invoices were paid, before converting the US dollars back to sterling. Obviously there would need to be a US dollar bank account to receive the invoiced amount, but then the company would need to convert the dollars to sterling to pay other costs. Again here, it is important to know what your bank might

charge you and how that compares against others. Look at all associated costs, including the rate, any commission and other “hidden” expenses. Historically, companies tended to keep all of these services with their relationship banks. More recently, increased focus on the cost of these services, reduced customer satisfaction, and a general mistrust of banks has led to companies, as well as consumers, shopping around. A quick glance at MoneySuperMarket’s business foreign exchange page will give you a sense for some of the different providers operating in this market. If you are dealing with foreign currencies, it is probably good news for your business. But make a conscious decision on how you are going to address any currency risks, and then make sure you are a smart user of financial services by benchmarking what you are being charged against alternative providers. Julian Smith offers 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

talkbusinessmagazine.co.uk

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e u q e h c e Th n i is ! t s o p t he Frustrated by sluggish cashflow? We can release the money you have tied up in your unpaid invoices. This gives you extra working capital to grow your business and means you can concentrate on making money instead of chasing it.

Call 0800 121 7757 or email info@ultimatefinance.co.uk www.ultimatefinance.co.uk Untitled-3 1

31/01/2014 11:22

FUNDING

TALK MONEY

Is there really a

funding crisis rom Government programmes to private sector initiatives – access to finance for small businesses is firmly on today’s economic agenda. New schemes continue to surface, promising to provide simpler, more transparent routes to funding, while existing schemes expand and mature. The Government, for example, has pledged to double funding provided by Start Up Loans to meet higher than expected demand, and refocus its Funding for Lending scheme towards vital small business lending, and away from mortgages. With a seemingly broad array of options, and more than 450,000 businesses starting up this year alone, is it really so difficult to access funding in the UK? In search of an answer, a recent survey examining how entrepreneurs source funding revealed that access to finance is the single greatest obstacle to starting a company. Rather than turning to traditional routes to finance, such as bank lending, entrepreneurs are opting instead to self-fund or approach family and friends for investment. Each entrepreneur’s needs may be different, but any growing business looking to

Sarah Shields, executive director & general manager at Dell UK, discusses the availability of funding for SMEs

more than 450,000 businesses starting up this year alone

for small business?

access capital from banks or Government is facing the challenge of navigating the often time consuming, complex application processes and red tape. In response, the Government has made significant moves to break down some of the barriers to capital for new business ventures, especially in the last few years. The same survey showed that close to half of the entrepreneurs surveyed feel that the Government has a better understanding of the problems facing small businesses than it has done in the past five years (48%). Chancellor, George Osborne’s 2013 Autumn Statement was testament to that shift, announcing extended small business relief and, to the surprise of many, a muchneeded boost to the British high street with a 50% business rate discount for occupying unused shops – a recognition of the huge expense premises and office space can represent for young businesses.

But interestingly, the two main reasons entrepreneurs seek finance are for initial set-up costs or for expansion, including staff hires and expansion into new markets. Both are essential for establishing a business, but also for scale and the critical first three years. What businesses aren’t seeking investment for is IT. According to analyst firm Quocirca, less than a third are using financing for IT – despite the fact that IT can require significant financial investment and is an essential tool for expansion. Whatever the specifics of a business’s finance needs, help is out there. Capturing the wisdom of established business owners, industry experts and some of our own customers, here are a few tips to get entrepreneurs started on their financial journeys: DEMAND TRANSPARENCY It’s hard enough running a business, let alone getting to grips with the various, time consuming forms and

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TALK MONEY FUNDING

application requirements for funding. It sounds obvious, but keep asking questions until you’re clear on what you need to provide. Even go so far as to ask for the contact details of a successful applicant. GET EDUCATED ON ALTERNATIVES Almost a third of those surveyed (32%), indicated they are interested in better understanding the alternatives than seeing bank funding improved. Angel investment and peer-to-peer lending schemes such as CrowdCube and Seedrs are great places to start.

Acc Qu ordin are ocirca g to a usi , les naly ng fin s than st firm anc ing a thir for d IT

ASK THE BANK FOR ADVICE Speaking at a think tank, Santander’s John Baldwin recommended small businesses don’t go for an overdraft right away. He recommends having a discussion with the bank about a business’s needs in exchange for advice on the best route with the best rates. TAP INTO BUSINESS NETWORKS During the same think tank on small business finance, Ariadne Capital founder, Julie Meyer, said ‘Entrepreneurs are generous people.’ And she’s right – there is no greater

resource than your peers. Entrepreneurs will often jump at the opportunity to help other business owners, since they have experienced first hand the value of this support. DON’T UNDERESTIMATE TECHNOLOGY Technology is at the heart of most businesses today. Whether you’re a high street shop with an online presence, or an exciting new app developer, you need secure tech solutions backing your business. IT can also make the all-important difference between you and the competition. The first recipient of the Dell Innovators

Credit Fund in the US, Current Motors, for example, was able to get to market six months faster than planned, ahead of its competition, thanks to technology funding. There’s no better time to be an entrepreneur in the UK. The nation is behind local businesses and that support is only set to strengthen. Businesses will continue to require funding in line with their growth ambitions, but it’s reassuring to know the money is out there. The challenge now is on making it easier for entrepreneurs to reach those all-important funds – at all stages of their growth to meet their evolving needs.

Survey distributed via email to Entrepreneur Country’s database of 35,000 members, with 204 surveys received within the timeframe of September 24 and October 11, 2013. Of the 43% who needed funding, 21.3% turned to family and friends, while 56% of the 57 who did not apply for bank funding, self-funded. Of the 43% who applied for funding, 41.4% used the funding for growth and 37% used the funding for set-up costs.

MARCH 2014

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e. info@quartzpayroll.co.uk 24/02/2014 10:45

Increasing salaries O Lesley Stalker, a tax partner at RJP LLP, outlines tax efficient options to give employees more for your money

More people will now be affected by the 40% tax rate because the point at which employees will be taxed is £32,011

ne of the difficult aspects of running a business today is having to make tough choices about salaries. It’s not uncommon to be faced with a requirement to cut employee pay levels or freeze them. According to the CIPD, more than 50% of companies have had to do just that. In addition to this, more people will now be affected by the 40% tax rate, because the point at which employees will be taxed is £32,011 for the 2013/2014 tax year, and will drop again to £31,866 for 2014/2015. This means even if you can offer staff a small salary increase, its impact may be minimal. Businesses need to find other ways to help their employees have more in their pay packets each month.

PERK 1: TAX-FREE LOANS One new Government-backed initiative is to allow employers to give staff tax efficient loans, which although not a new incentive, the amount available to borrow has just been increased. Starting from April 2014, employers can now give their staff a low- or no-interest loan to the value of £10,000 in any single tax year, without it being treated as a benefit in kind and taxed accordingly. No tax would be payable by the employee provided that the loan is ultimately re-paid in full. PERK 2: SALARY SACRIFICE SCHEMES Offering salary sacrifice schemes can be a good way

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TAX PERKS

TALK MONEY

without a pay rise to help employees have a bit more in their pay packets each month. Salary sacrifice works by allowing tax payers to purchase certain services (which are approved by HMRC), using their gross salary. This has the net effect of reducing the amount of income remaining that is taxable, and means the cost of the goods or services in real terms is slightly lower, since part of the cost would have included the tax paid up front. For higher rate tax payers especially, salary sacrifice can be a very cost effective way to access services, primarily as a result of the greater impact tax reduction has on the original purchase cost. WHAT TYPES OF SERVICES CAN BE BOUGHT WITH SALARY SACRIFICE? A good example of how to benefit from salary sacrifice is with childcare vouchers, used to pay for nursery fees or holiday club activities. This can mean a considerable cost saving, as each tax payer in the family could be eligible for £55 worth of childcare, paid for using gross earnings. Recently, the ability for higher rate tax payers to enter this scheme has been restricted, but all existing users remain unaffected and can continue to benefit from up to £440 a month of tax free childcare. Pension contributions and company car schemes are also benefits that can be offered through salary sacrifice. A note of caution to business owners is to review salary sacrifice schemes carefully before they are offered to employees. This is because, to be effective,

Offering salary sacrifice schemes can be a good way to help employees have a bit more in their pay packets each month

they require amendments to employee contracts and therefore employment law and minimum wage issues can arise. Another important consideration is whether using salary sacrifice has any implication on benefit entitlements, as it will have the effect of reducing taxable salary levels. This is something employees are not always immediately aware of. Before taking any steps towards introducing a salary sacrifice scheme, it is worth taking professional advice to ensure that all parties involved are fully aware of the implications. Due to the high levels of tax involved, company cars have fallen out of favour recently as an employee benefit. This isn’t always the case however, and it can be possible to have a relatively low benefit if the employee is provided with a vehicle that is classified as being environmentally friendly by HMRC. Currently, value in terms of a benefit in kind on a company car is determined by the list price of the car, combined with its CO2 emissions. For example, if the car has a zero emission level, there is a nil benefit in kind charge, and those cars with very low rates of emissions will attract a much lower tax charge. There are significant tax savings available to employers if they purchase zero or low emission vehicles for their employees, so the market and level of choice has expanded considerably, with the result that employees are being tempted

back by the type of cars available and the reduced tax costs. PERK 3: HOLIDAY BUYBACK Due to time pressures and workloads, employees can’t always manage to take their full holiday entitlement these days. To counter this, some companies have started to allow staff the option to carry forward their days. This can have a down side as it can mean an employee ends up with too many days to allocate for the following year, resulting in service issues. As an alternative, employers can offer to “buy back” any unused annual leave and give the employee the difference in their pay. Combining this with a salary sacrifice scheme can create another tax efficient route to making otherwise expensive benefits available to employees. Although holiday buyback will not be suitable for every company, it is a decent benefit and, in the right circumstances, can be made relatively tax efficient. Ultimately, what business owners need to understand from all this is that there are many ways to help an employee have access to more benefits and possibly even more disposable income, without having to give them an increase in pay. Due to the reduction in rate bands for the 40% tax rate, it may be more beneficial to consider alternatives, which mean more income in real terms because of lower taxes and a win-win for employers and employees. Contact: rjp.co.uk

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01/11/2013 10:54

START-UP LOANS

TALK MONEY

This month our Start Up Loan recipient, Lawson Cann reveals a typical day running his business, Soldier On Security

A day in The life DEAR DIARY, The alarm clock buzzes. A healthy mind requires a healthy body. This mantra is the start to my 30-minute daily routine of exercise. After this, I start getting ready to start the day. A healthy breakfast of oats sets me up for the day ahead.