Elite Business Magazine by webwax

APRIL 2013

Going for growth

Social enterprise: making money matter

Shaping up

Zaggora on making its rivals sweat

Renaissance mission

Wool is back in vogue

Bad boy done good Singing from his own hymn sheet once landed Levi Roots in jail. But it also led him to start his food business, now serving up ÂŁ60m sales a year

APRIL 2013 ÂŁ4.50

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CONTENTS

Inside this month... VOLUME 02 ISSUE 04 APR 2013

16 The Elite interview

Sales are very much on song for Levi Roots

09 Editor’s letter 10 Contributors 12 News in brief 13 Talking point 14 Book reviews 34 Keep your guard up

Protecting yourself from currency fluctuations is key to mitigating risks

39 A fair share

Distributing equity shrewdly can ensure a healthy enterprise from start-up to exit

50 That’s entertainment

23 One to watch

Zaggora’s Desi Bell talks Hot Pants and hotter profits

Socialising with clients is a great way to get them on board – and keep them there

54 Letters from the front

The old guard impart their wisdom to aspiring entrepreneurs

57 Missing in action

There could be a lot more to regular absenteeism than immediately meets the eye

61 Degree or not degree?

Is higher education always the right route for entrepreneurs?

64 Silver service

Delivering a sterling customer experience can make all the difference

27 A brighter future A new day is dawning for social enterprise

68 Tech for start-ups

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

73 Baby steps

The key to sustainable web development is taking it slow and steady

79 Arms race

Keeping abreast of changing threats to your network is vital

87 Selling like hot cakes

Crêpes aren’t just a pancake-lover’s best friend – they’re also ripe for global franchising

45 Craft works An age-old industry brings fresh opportunities

91 Ready for your close-up?

Preparing for an exit takes some careful prep work and taking your time can pay big

84 Franchise news 94 Classifieds 98 Start-up diary

April 2013 www.elitebusinessmagazine.co.uk

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EDITOR’S COMMENT

Scan this QR Code to register for your free copy of Elite Business Magazine

VOLUME 02 ISSUE 04 APR 2013 SALES Harrison Bloor – Account Manager E: harrison.bloor@cemedia.co.uk T: 01206 266859 Adam Reynolds – Account Manager E: adam.reynolds@cemedia.co.uk T: 01206 266843 Richard Smith – Account Manager E: richard.smith@cemedia.co.uk T: 01206 266844 EDITORIAL Hannah Prevett – Editor E: hannah.prevett@cemedia.co.uk Adam Pescod– Feature Writer E: adam.pescod@cemedia.co.uk Josh Russell – Feature Writer E: josh.russell@cemedia.co.uk Jon Card – Feature Writer E: jon.card@cemedia.co.uk Lindsey McWhinnie – Chief Sub-editor E: lindsey.mcwhinnie@cemedia.co.uk DESIGN/PRODUCTION Leona Connor – Designer E: leona.connor@cemedia.co.uk T: 01206 266845 Clare Bradbury – Designer E: clare.bradbury@cemedia.co.uk T: 01206 266845 Dan Lecount – Web Development Manager E: dan@cemedia.co.uk T: 01245 905805 CIRCULATION Malcolm Coleman – Circulation Manager E: malcolm.coleman@cemedia.co.uk ACCOUNTS Sally Stoker – Finance Manager E: sally.stoker@cemedia.co.uk T: 01206 266846 DIRECTOR Scott English – Managing Director E: scott.english@cemedia.co.uk Circulation/subscription UK £40, EUROPE £60, REST OF WORLD £95 Circulation enquiries: CE Media Limited T: 01206 266 842 Elite Business Magazine is published 12 times a year by CE Media Solutions Limited, Weston Business Centre, Hawkins Road, Colchester, Essex. CO2 8JX T: 01206 266 849

There is no such thing as a cookie-cutter for entrepreneurship Having now been writing about entrepreneurs for the best part of seven years, I am all too aware of how individual and unique they are. Whereas politics and often the boardrooms of the UK’s biggest companies are largely home to white, middle-aged men, entrepreneurs really do come in all shapes and sizes. Our cover star Levi Roots (p16), for example, is one of a kind. It’s not about race or age, but about a mindset. A mentality. Creating and selling his Reggae Reggae Sauce may have happened almost by accident, but he is a born entrepreneur. Just as he’s a born musician and a born entertainer. There is passion and zest in everything he does – from music to food and all that’s in between.

Entrepreneurs come in other forms, too. There are the social entrepreneurs such as Scott Leonard or Rob and Paul Forkan whose motivation for starting their own business was to make a difference to society, not to line their own pockets (p27). This is a relatively new category of business, but they’re making impressive headway and proving that the greed of yesteryear should be relegated to the history books. And then there are those entrepreneurs who are taking the antiquated old wool and crafts industries and giving them a shot in the arm. Read all about them on p45. We think we know entrepreneurs. We’ve all heard the stories about entrepreneurs overcoming adversity. And that is often the case. But my point is there is no cookie-cutter for entrepreneurship. SME owners are gloriously individual – as are their recipes for success. HANNAH PREVETT EDITOR

Copyright 2013. All rights reserved No part of Elite Business may be reproduced, stored in a retrieval system or transmitted in any form or by any means, without the prior written consent of the editor Elite Business magazine will make every effort to return picture material, but is 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 CE Media Limited cannot be held responsible for such variation. www.cemedia.co.uk

April 2013 www.elitebusinessmagazine.co.uk

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CONTRIBUTORS

Contributors Adam Pescod

Already labelled a ‘powerhouse’ and ‘copy machine’ by colleagues in the Elite Business office, our new features writer is the go-to guy for all of this month’s news stories. Having previously written about pubs, Pescod not only brings business insight, but equally a raft of ‘social drinking’ experience. We hope to keep him off the beer long enough to avoid losing his talents in the very first month.

David Hathiramani

Having previously joked that our tech columnist David Hathiramani’s brief hiatus was a result of him becoming an international man of mystery, it appears we were right. Well, sort of. At the end of March, Hathiramani and A Suit That Fits co-founder Warren Bennett announced their first studio was opening in the Big Apple. We hope you get the US market all sewn up, chaps.

Nicola Barron

Our start-up diarist Barron makes not one but two appearances in the magazine this month. Having penned her column on how she continues to reinvent her business to keep it fresh, she also contributed to our article about how craft is back in vogue. After hanging out with Barron at the exquisitely designed Homemade London HQ, we can confirm that she is indeed the Queen of Cool.

Freddie Jack Marsden

Seeing as the son of our superstar photographer Emilie Sandy has been present (kinda) during all of our cover shoots to date, we thought it prudent to let you know he entered the world at 11.18pm on March 21, weighing in at 7.5lbs. EB understands mother and baby are doing well. We can only hope Freddie inherited his mum’s creative skillz – the shots of cover star Levi Roots are the best yet.

www.elitebusinessmagazine.co.uk April 2013

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News IN BRIEF

There were a few snippets of good news for SMEs in George Osborne’s Budget, which he laid before Parliament on March 20 – a matter of minutes after the Evening Standard accidentally leaked its full details via an ill-timed tweet of its front page. Among the SME-friendly measures were a cut in corporation tax from 21% to 20% in 2015, an increase in the personal tax allowance to £10,000 a year ahead of schedule and, to the surprise and delight of many, a new Employment Allowance of £2,000 towards employer National Insurance contributions. Meanwhile, the prospect of a cheaper pint of beer was worth raising a glass to, whether you’re an entrepreneur or not.

SMEs are being promised further financial assistance after three lenders were allocated £30m of government funding from the small business tranche of the Business Finance Partnership (BFP). Market Invoice, URICA and Beechbrook Capital have committed to attracting additional funding from private sector investors, which could raise the amount of credit available to SMEs from the three lenders to more than £70m. Meanwhile, SMEs struggling as a result of late payments from customers were thrown a lifeline by Yorkshire Bank’s new £100m invoice finance fund.

WORDS: ADAM PESCOD

Google is on the hunt for Britain’s most innovative social entrepreneurs as part of a new £2m competition launched with the support of little-known business duo Sir Richard Branson and internet inventor Sir Tim Berners-Lee. The Global Impact Challenge contest will award £500k apiece to four not-for-profit organisations which make a life-changing use of technology. Entries are being taken at globalimpactchallenge.withgoogle.com.

The financial crisis in Cyprus seemed to be coming to a grisly end as European finance chiefs agreed to a €10bn bail-out deal which saw the wind-down of the country’s second

largest bank Laiki (Popular) Bank. It concluded an unsavoury week that saw banks across the island shut their doors and the Cypriot parliament vote against a proposed bank levy that had sparked anger among savers, including thousands of Brits. Business confidence is improving but growth is still expected to be modest, with GDP forecast to grow by 1.0% in 2013, according to the latest ICAEW Economic Forecast. The latest figures also show capital investment expectations on the rise with total real business investment forecast to grow by 1.9% this year, up from the 0.4% growth forecast in Q4 2012. Staff development budgets are also expected to increase by 1.5%, but pay growth will remain weak with average total earnings expected to grow by just 1.4% in 2013. Unemployment is expected to average at 8.0% in 2013. Major banks were left ruing their mistakes and the burden of regulation after seeing a recorded 45% rise in profits wiped out in 2012. A report from accountancy firm KPMG described it as a ‘dire year’ for the reputations of Barclays, HSBC, Lloyds Banking Group, RBS and Standard Chartered. “Banks have made progress,” said Bill Michael, EMA head of financial services at KPMG. “However, the necessary changes to address conduct and behavioural failings will have a significant cost.” The government was urged to back the high street as business groups and retailers put pressure on local government minister and minister for housing Mark Prisk to level the playing field between town centres and retail parks. Among the measures proposed were a reduction in parking charges and more flexibility in planning laws. It came after the Federation of Small Businesses (FSB) said, with the right action from government and local authorities, the ‘tide can be turned’ for the high street. Manufacturers expect output to accelerate sharply in the next three months, according to the CBI’s latest monthly Industrial Trends Survey. The survey of 398 firms found that output growth over the last three months remained steady but subdued. But the outlook is much brighter for the next quarter, as output volumes are expected to rise rapidly – the strongest expectations since April last year – with the anticipated pick-up particularly marked in the food, drink and tobacco, and mechanical engineering sectors.

EVENTs Successful Mentoring April 15 British Library, 96 Euston Road London, NW1 2DB Business Scene Birmingham Connections April 17 Regus Centre, One Victoria Square Birmingham, B1 1BD Prelude: Maximise Capital Value April 18 40 Portland Place London, W1B 1NB Business Scene Manchester Connections April 18 Regus Peter House, Oxford Street Manchester, M1 5AN Speed Networking Events April 19 Level 33 Citigroup Building 25 Canada Square, Canary Wharf London, E14 5LB Property Investor Show April 19-20 ExCeL London One Western Gateway, Royal Victoria Dock London, E16 1XL NDP Networking Event April 22 Natwest Bank, 204 High Street London, E11 7LL Internet World April 23 Earls Court 2, Warwick Road London, SW5 9TA Adobe Summit 2013: The Digital Marketing Conference April 24-25 ExCeL London, One Western Gateway, Royal Victoria Dock, London, E16 1XL Kent 20:20 Vision Live April 25 Kent Event Centre, Detling, Kent, ME14 3JF Prelude: Speaker Boutique April 25 The Office Group 1 Euston Square, 40 Melton Street London, NW1 2FD

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

www.elitebusinessmagazine.co.uk April 2013

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Talking Point

Budget 2013: a step in the right direction for the nation’s entrepreneurs? As usual, there was much discussion about this year’s Budget. But did the chancellor come up trumps for the UK’s SMEs in 2013?

ere at Elite Business, it is our default position not to take anything at face value. Nevertheless, we couldn’t help but think that some of the announcements made by George Osborne in the Budget did appear, at least on the surface, to be relatively attractive for SMEs. We’re talking about the new Employment Allowance of £2,000 for National Insurance contributions, the 1% cut in corporation tax in 2015, and the increase in personal tax allowance to £10,000 being brought forward by a year. Given the time of economic austerity during which these measures were revealed, it would be wry to assume that they will have a massively beneficial, or life-changing, impact for our country’s entrepreneurs and small businesses. That said, some of the chancellor’s rhetoric about his Budget being for the “aspiration nation” and those who “want to work hard to get on” shouldn’t simply be dismissed as well, rhetoric. Naturally, people on both sides of the SME coin had their bit to say about Osborne’s plan for economic recovery, and whether it recognised the value of start-ups to the financial future of the UK. So, was it a good budget for Britain’s SMEs and entrepreneurs?

WORDS: ADAM PESCOD

YES says Taavet Hinrikus, co-founder of TransferWise This year’s budget wasn’t a bad one for entrepreneurs. The ‘employment allowance’ was a big win for small firms keen to take on new staff. George Osborne took the first £2,000 off employers’ National Insurance bills. This will make it easier for small firms to increase the net salary of those on their payroll. The increase in the personal tax allowance to £10,000 being brought forward by a year is also good news since it’ll give employees a small boost in income without affecting businesses. The best aspect of the budget, however, was the government’s commitment to using non-bank providers to boost lending. The traditional banking system has been letting its customers and the country down for decades. It is over-ripe for disruption – not only are the banks not lending, they’re charging too much and making the whole process a bureaucratic nightmare. In channelling money to alternative lenders, the government goes some way to acknowledging this. Hopefully, the publicity this has generated will increase the uptake of non-bank solutions and have a knock-on effect for others in the financial technology industry.

No says Arpita Dutt, senior partner at law firm Brahams Dutt Badrick French Overall I think the Budget could have been a lot more supportive of SMEs, which are meant to be the engine for economic growth in this country. The National Insurance holiday was the most positive measure, but why do we have to wait until April 2014? The issue for SMEs is immediate and if we need to stimulate growth immediately, let’s do it now. Why wait until next year? An equally good measure was the cut in corporation tax, but for SMEs, why couldn’t it have been brought down to 15% or 10%? There should have been more focus on avenues of funding and finance for SMEs, which doesn’t seem to have been addressed at all by this Budget. I think it is still extremely hard to get lending from banks – they have very high funding requirements, personal guarantee requirements, collateral requirements, and as I understand it, lending and loans to SMEs decreased by £2.4bn in the last quarter of 2012. A business rate holiday would have also been a great boost for a lot of businesses. There is a lot that could have helped; there is a lot that still could help. Better next year, maybe?

April 2013 www.elitebusinessmagazine.co.uk

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BOOK REVIEWS

The Elite read Sidetracked; why our decisions get derailed, and how we can stick to the plan Francesca Gino

As human beings, we’re a pretty easily distracted bunch. Whether it’s polishing off a project, closing a deal or sending an email, a mere mention of last night’s episode of Homeland or an upcoming birthday party is often enough for us to get blown off course. In Sidetracked, Gino uses research (both her own and others’) to explain why we get so easily derailed. She separates the causes into three groups: forces from within, forces from our relationships and forces from the outside. The section in the book on forces from within includes insight on how we often have inaccurate, rather inflated views of ourselves and our skills. I think it’s fairly safe to assume that a large proportion of entrepreneurs are a teeny bit arrogant – if you don’t believe you can do something better than anyone else, what’s the point? There is also a chapter on what Gino terms ‘infectious emotions’. She describes, for

example, how the Yahoo founders turned down a generous $45bn offer to buy the company in early 2008. They said ‘no deal’ because they were too emotionally attached to the business and believed it was worth more, despite evidence to the contrary. By mid-2009, Yahoo’s market value had dropped to $22bn. Yahoo’s tale is a cautionary one: it just goes to show what catastrophic errors of judgment we can make when distracted – for whatever reason. With Gino’s book at hand, entrepreneurs can learn why and how they get sidetracked, which will go a long way toward them doing it less often. Laser-like focus ahoy, people. HP Sidetracked; why our decisions get derailed, and how we can stick to the plan, published by Harvard Business Review Press, is out now and retails at £16.99.

The Advantage: the 7 soft skills you need to stay one step ahead Emma-Sue Prince

It’s fair to say that few enterprises explore the full gamut of soft skills. Certain darlings of the corporate world, such as leadership, have received attention in so many tomes that as a subject it almost borders on cliché. Which is why it’s so refreshing to read a text like Emma-Sue Price’s The Advantage, a paean to the lesser-sung heroes of the enterprise skill set. Price doesn’t just cover skills more familiar to us, such as proactivity and critical thinking; she walks paths far less travelled, including a look at the importance of resilience and optimism. Certain areas

– for example, the chapter that discusses the value of empathy in advancing our careers – even present a manner of qualifying value that seem to have almost entirely disappeared from modern business. If you’re interested in differentiating yourself from the crowd, The Advantage definitely issues a challenge to cynical ideas of what makes a successful business person. JR The Advantage: The 7 soft skills you need to stay one step ahead, published by Pearson, is out now and retails at £12.99.

www.elitebusinessmagazine.co.uk April 2013

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the elite INTERVIEW

BUSINESS

WITH BITE Reggae Reggae Sauce went from Brixton Market to outselling Heinz’s Tomato Ketchup. But success didn’t always come easily to the reformed Levi Roots

WORDS: HANNAH PREVETT PHOTOGRAPHY: EMILIE SANDY

ressed in one of his many Ozwald Boateng suits, knuckles dusted with gold jewellery and displaying a vivaciousness and vitality that belies his age (nearer to 50 than 40), it is hard to believe that Levi Roots has ever been anything except a successful businessman and musician. He may now be one of the most famous entrepreneurs in the UK – no small thanks to an appearance on a certain BBC show – but things didn’t always go so smoothly for a younger Roots. Born Keith Valentine Graham Bilal Musa, Roots grew up in the small village of Content in the Clarendon area of Jamaica. “I was a very bad boy,” he laughs. “Nowadays when I go back to Jamaica, the old people from where I lived in Clarendon tell stories of what I used to be like as a little boy – I was a right tearaway.” It’s no surprise that he was a little unsettled: at five years old his parents left Jamaica for the UK where they would get jobs, buy a house and send for their children one at a time, with the aim of providing Roots and his four siblings a better standard of education. This left him in the care of his grandmother – to whom he accredits his eventual success. “She taught me everything about who I was, because my mum and dad weren’t there. Between the ages of five and 12, when I was in my grandmother’s care, that’s when you really start to become yourself, not just a child,” says Roots. Roots’ parents had been enticed by offers from the British government to come to the UK in search of a better life for their family. “They used to say there was gold dust on the floor to be picked up,” recalls Roots. “Then they piled over here and realised it was dog shit, not gold dust, and it was them that had to clean it.” While Roots and his brothers and sisters waited in the wings in Clarendon, his parents took two jobs each, and in time bought a house in south London big enough for the family. The children then moved across, one at a time. As the youngest, Roots was the last to relocate to the UK – a transition that was by no means easy. “You’ve got to remember, I’d never been outside of Clarendon. I never even went to Kingston,” he points out. “Then I came here to a world where I didn’t know my mum and dad, my brothers and sisters were now British and I didn’t understand a thing about them.” It was an extraordinary eye-opener for the young Jamaican, who had only ever seen a handful of white people in his life. “I’d never seen an abundance of another race before,” he adds. He also faced difficulty at school. As the youngest, money had dried up so he hadn't educated during his childhood in Jamaica. He wasn’t quite up to speed when he began his education in a London school.

www.elitebusinessmagazine.co.uk April 2013

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the elite INTERVIEW

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"I tried too hard to be the guy everybody loved and neglected the curriculum side of things” “Behind? I don’t think I could count to four. I couldn’t spell my own name at the age of 12,” he says. “It was one of the worst times of my life, that first year.” Acutely aware of his differences and because he was unable to rely on his academic prowess, Roots became the classroom joker in order to gain kudos from his newfound friends. “You’re either the smart one or you’re the fun guy in school,” he explains. “If you’re the smart one, usually people don’t want to know you because you’re a nerd, but if you’re the fun, country guy who can climb the tree quicker than anybody else, that’s quite cool.” Not that this was necessarily to his advantage, he admits. “I was popular to my detriment. I was trying to be cool because I couldn’t really catch up with the boys academically. I couldn’t spell and I couldn’t read and it was embarrassing. So I tried too hard to be the guy everybody loved and neglected the curriculum side of things.” Having witnessed her son’s behaviour deteriorating, Roots’ mum decided to take him out of school and educate her son at home. By the time his exams came at the age of 16, he was “nearly on a par” with his peers and passed with flying colours.

He puts being able to catch up so quickly down to an ability to remember facts and details. “I think part of the speed of my education was because I could always remember things and when I read stuff, it would stick with me.” This became more apparent with Roots’ first love: music. Thanks to a superb memory, he could hear a song or lyrics once and recall it perfectly. But part of this was a result of a true affinity with music. During the course of his brief spell in secondary school, his passion for beats and base became apparent. “Even though I bunked off every other lesson with the kids to go to the girls’ school in Norwood, and try to be the lad, when it came to music classes I was always the first one there.” After finishing his education, Roots’ parents were excited for his prospects as a bright future in engineering beckoned. But the teenager couldn’t shake his desire to perform. “I was an engineer for two years, but the music just came calling,” he smiles. “It said to me, ‘Levi, what the fuck are you doing with a lathe? You’re supposed to be performing.’” So the lathe (which is used to cut metal) went, and was replaced with a guitar. “I gave it up,” says Roots. “I wanted to sing. My grandmother was always singing, my mother also has a fantastic voice; it is in my blood.” Then, at 18, Roots spotted legendary reggae music producer Lloyd Coxson at Brixton Market, so he went over and started singing to him. “The most miraculous thing happened: he asked me to join the great Coxsone Sound System,” recalls Roots. “We were the people with big speaker boxes and turntables and we’d tour all over the country,” he said. “I was the mic person who would whip up the crowd.” Simultaneously, his solo career also began to gather steam and led him to decide he needed an image overhaul. He changed his name from Keith to Levi Roots for two reasons. Firstly, Keith didn’t really go with his new image. “I couldn’t be going on stage for them to introduce me as Keith,” he laughs. Secondly, it was a way of distancing himself from some of his earlier experiences of struggle and strife as a child. In his mind, ‘Keith’ was associated with wrestling with a new sense of self when he came to the UK, his difficulties learning and playing catch up with his peers. “When I am Levi Roots, when I’m on stage and I’ve got that mic in my hand, I love that side of me,” says Roots. “But when I look at the other side of me, the Keith side, I saw that as the troublesome side.” As he rose to prominence as a respected reggae artist, his inability to shake this more worrisome aspect of his personality did lead him to trouble. He had his first child at 19 – with six more to quickly follow. He toured with bands, singing and making the most of reggae’s rise to prominence, thanks to the surging popularity of artists such as Bob Marley. When the band was on the road, he would indulge his other passion: food. While the others were soundchecking, Roots was often in the dressing room rustling up some tasty grub for his pals. “We always had one of these burners that we took wherever we went in Europe,” he recalls. “I would always have what I called my ‘sunshine kit’, which was just a little bag I used to carry with scotch bonnet peppers and other spices in it.”

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the elite INTERVIEW

Yet the music remained his real passion and raison d’être. “The cooking was just this thing on the side, my second passion,” he says. “But I thought music would always be my life. I didn’t want to do anything else except write songs, play guitar and sing – either as part of a band or solo.” But his music career came crashing down around his ears when the youth club he ran was raided and he was arrested for possession of drugs – allegedly £250,000 of heroin. He was sentenced to nine years in prison, and served five. Prison was both the best and worst of times, says Roots. “I found the best of me when I was inside, because I had time to find who Levi Roots really was, and separate Levi from Keith,” he says, quietly. He credits a mentor for helping him define a strong sense of identity, once and for all. “She taught me how to be Levi, and how to not slip out of being him, and be true to myself. I think I found the best person I could be in prison.” After being released from prison in 1991, Roots moved back to Brixton where he opened a fashion boutique. “No record company would sign me and I didn’t have the money to start my own career again, so I went into fashion,” he explains. Then his mum came to him with a suggestion for his next business. “She said to me, ‘Why don’t you start cooking?’” So he did. With a friend, Tony Bailey, he set up a stall at the Notting Hill Carnival, which became known as the ‘rastaraunt’. It became very popular – not just because of the food, but also due to Roots’ connection with the music. “I would get the guitar out and start singing. That’s when I really started merging music and food together for the first time and trying not to separate the two,” says Roots. “That was the happiest time of our lives.” But Carnival comes but once a year, and for the remaining 363 days a year, Roots had to sustain himself. The reggae music business continued to struggle and, in 2004, the singer and cook reluctantly took a job in a plumber’s yard in Brixton. He didn’t forget about his scotch bonnets, though. “Every time someone had a birthday, the only thing I would like to give was something personal from me, so I would make up this sauce and give it to the customers or my colleagues.” Then, in January 2006, following an argument with one of his managers, he walked into the office and told the boss he was leaving. “I went home and called Joanne, my daughter who’s 19, and said, ‘Come round; we’re going to start making the sauce here in my flat.’” From that day onwards, Roots’ two-bedroom

flat in Brixton became a production line of making and filling bottles with the sauce the budding entrepreneur attributed to his grandmother. (It was later discovered it wasn’t his grandmother’s recipe at all, but he says it was more about her ‘spirit’ than an actual recipe.)

“I would always have what I called my ‘sunshine kit’, which was just a little bag I used to carry with scotch bonnet peppers and other spices in it” Once the bottles were filled, Roots would hop on his bicycle – he had had to sell his prized BMW to pay off mounting debts – and Joanne would fill a big brown bag with as many bottles as it could hold and he’d flog them at Brixton Market or to neighbouring record shops. “After a few weeks, we realised it was going really well and record shops were ordering it in advance. In a few months, one particular record shop in Brixton started to sell more sauce than music.” But Roots realised if he were going to reach a wider audience with his sauces, he’d need to leave Brixton. His first business mentor, Nadia, had some pearls of wisdom for him. “After three or four months of doing it, she spotted it wasn’t about the sauce. She said, ‘Don’t

concentrate on the sauce; it’s all about you. Get yourself out of Brixton,’” he says. She started sending him to music and food festivals all over the country: “Anywhere with a ‘shire’ at the end of it, she sent me there,” he says, laughing. “I’d go and it’d be all white people – there’d be no black people at all – and I’d be there with a guitar and everybody loved it.” But still, Roots wasn’t really selling enough of the sauce to make the trips worth his while. “I said to Nadia, ‘Look, it’s costing me £2,000 to book the space and I’m coming home with £400. It’s not really working out,’” says Roots. Nadia told him to be persistent and sent him away again, this time to the World Food Market at the ExCel Centre, London. As usual, he drew crowds to hear him sing and savour his sauce, but this time, there was an extra special audience member, too. “This woman came over and she said, ‘I think you’re fantastic, we’re from a programme called Dragons’ Den.’ I had no idea what that even was, so she left me her card and I carried on with the show.” Later, as another of his daughters, Charlene, unpacked the bag from the show she came across the BBC business card. Roots’ kids were hesitant about him appearing on the TV programme. “All of my kids said in unison, ‘Whatever you do, Dad, don’t do Dragons’ Den with a guitar and something called Reggae Reggae Sauce,’” he smiles. “They probably thought it was going to be the most embarrassing thing ever.”

Roots with Henry Matic, trombone player, and backing vocalists Nana Genesis, Jo-ann Ceeza and Valerie Skeet

April 2013 www.elitebusinessmagazine.co.uk

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28/03/2013 21:33

the elite INTERVIEW

But Roots was a hit. The Dragons loved the product, they loved the song, and most importantly, they loved Levi Roots. Peter Jones and Richard Farleigh offered the entrepreneur the £50,000 he wanted on the spot, albeit for a rather substantial 40% of the business. “It was what I’d always wanted: I wanted to make myself and the business successful,” says Roots. “I needed someone who has that experience and knows about business. If they’re white, or if they’re black, if they’re pink or if they’re brown, I don’t give a shit. I just wanted that help.” While Farleigh withdrew his investment after 18 months (having increased his money by a factor of ten), an unlikely friendship has blossomed between Roots and Jones. “I never expected this 6ft 7in white guy with no close black friends in his life to invest in me, and now we’ve become so close. When Peter sees me we’re hugging for, like, five minutes. Sometimes people see him on the TV and think he’s a bit cheesy, or that he’s a hard case. But he’s one of the loveliest people I’ve ever met,” beams Roots. It’s a good job they get on so well – Jones is

“This woman came over and she said, ‘I think you’re fantastic, we’re from a programme called Dragons’ Den.’ I had no idea what that even was” the only other major shareholder, with a 25% stake in the business that is now thought to generate in the region of £50m to £60m sales a year. That’s not to say that it’s been entirely smooth sailing since his Dragons’ Den appearance. Between 2010 and 2012 he was back in court fighting claims from former friend Tony Bailey that he had stolen the recipe for Reggae Reggae Sauce. When the first judge threw the case out, Bailey appealed, meaning the case only finally ended in November 2012. “I think the last two years have perhaps been the most trialling time of my life,” admits Roots. “I had been warned that someone might throw a spanner in the works, and that it often comes from someone close to you.” He suggests that it may be in part down to jealousy. “I think what happened to me may have been too much for some people. For someone to come from nowhere, to being all over the papers in Ozwald Boateng suits, was difficult to take. I think a lot of my friends at the time perhaps thought I’d gone away from them a little bit.”

Having won the case, Roots jetted off to Jamaica for Christmas with his family. It was also to avoid being quizzed by the media about the case, he says. “I flew straight out to Jamaica straight after the trial to avoid talking about it,” he explains. While in the Caribbean, Roots also started work on a new record. For him, it’s always been about the music. Food was secondary. But now the food has given him a platform by which he can reach a whole new audience with his music. “I don’t think people have ever had anything black in their homes the way Reggae Reggae Sauce is,” he says. “It’s used across the country by everyone.” This summer looks set to be a busy one for Roots. Not only will his first studio album be released, but his business will expand into hot drinks with a range of spicy teas, to add to a line that already includes crisps, soft drinks and ready meals. Spending time with Roots, one is immediately struck by a sense of contentedness – which is not to be confused with smugness. His success means he’s able to share his wealth with family and friends, and he’s happy to do so. It seems as though he may have once and for all put his demons to rest – yet while Levi Roots is ambling around Angel Recording Studios indulging his first love, playing the showman, the performer, there is still a whisper of a suggestion that Keith is not quite dead and buried. For Roots’ alter-ego sometimes rears his head when it comes to matters of self-improvement. Asked to give advice to budding entrepreneurs, he says, “Find the best you can be. It may sound as simple as that, but it has big meaning,” he explains. “If we all look at ourselves and be honest, we can do better. The dream is to be able to look at yourself honestly and say ‘I’m doing my best.’ That’s what we should all strive for.”

www.elitebusinessmagazine.co.uk April 2013

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The web domain for innovative ideas. Untitled-4 1

28/01/2013 12:23

ONE TO WATCH

z Company CV

Name: Zaggora Founded by: Dessi Bell, Malcolm Bell Founded in: 2011 Team: 32

In it for the long haul Dessi Bell, founder of sportswear brand Zaggora, on learning to build a brand that lasts

WORDS: HANNAH PREVETT

hat do corporate banking and entrepreneurialism have in common? Ostensibly, not that much. One requires following a well-trodden path in an environment burdened with regulation and red tape; the other hacking through the undergrowth to carve a new path of your own. But that isn’t to say there aren’t overlaps or lessons entrepreneurs can take from the banking industry, says Dessi Bell, founder of sportswear brand Zaggora. Bell worked at JP Morgan for five and a half years before setting up her company with husband Malcolm in 2011. “I think working at JP Morgan was one of the best things I’ve done,” she says emphatically. “There’s two reasons. Firstly, there’s just a tremendous amount of stuff I learned from colleagues, whether it’s a negotiation or the ability to execute deals. But the main thing I learned is not being put off by complex problems.”

“The main thing I learned is not being put off by complex problems” Dessi Bell, founder, Zaggora

April 2013 www.elitebusinessmagazine.co.uk

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ONE TO WATCH

“To work in that kind of environment you need to be very good at starting with a whole set of problems you need to solve for the client before breaking it down. Then you realise that everything is doable,” she explains. She has then been able to apply the same mantra to building her own business. “That’s exactly the kind of approach I’ve taken to building Zaggora: if you want to get from A to B, all you have to do to find a solution is to think about all of the steps you’re going to take in between.” The idea for Zaggora, which makes gym clothes that help you slim while you sweat, came to Bell when she was engrossed in her role at JP Morgan where she was part of the team that focused on raising and restructuring debts. There was frequent travel to Moscow, too: due in part to her Bulgarian heritage (Bell was born and raised in Bulgaria until she was 15) a large proportion of her designated clients resided in eastern Europe. By Bell’s own admission, it was a hectic lifestyle. In 2008, she was set to marry then-fiance Malcolm, who she had met at LSE (“which, along with running the Women In Business Society, was the only enjoyable part of the experience”). Alongside the challenges of a high-flying career in banking, and the travel the role entailed, the petite Bell also felt pressure to get shape for the impending nuptials. “I said, ‘I’m going to see these pictures for the rest of my life so I need to make sure I look great,’” recalls Bell. But as she submitted herself to gruelling gym sessions, she wondered if she could be getting more bang for her buck when it came to her tri-weekly workouts. Even after the wedding, she was thinking about how exercise could be more efficient. “I called my mum when I was on honeymoon and said, ‘Mum, if I can come up with a pair of pants that you just have to put on and then they help you get more out of your time, there must be other people who are going to want this.’”

“If you want to get from A to B, all you have to do to find a solution is to think about the steps you’re going to take in between”

In between work and jetting backwards and forwards to Moscow, Bell started doing bits of research. She found some research conducted in the UK as well as Japan and Australia, which was examining the link between heat and exercise, and how it could help improve circulation as well as calorie burn. “Heat has been used to treat obese patients in Japan for years,” she says. But it wasn’t until a couple of years later, in 2011, that Bell and her husband felt the idea was solid enough that they started to look into creating a protoype. The first item on the to-do list was finding a supplier. “We went through different product suppliers in the Far East; some were great and some weren’t, and we got some samples made,” says Bell. So, for the science bit. The Hot Pants (as they’re officially called, but banish any thoughts of buttock-skimming short shorts: they come in three lengths – cycling shorts, capri pants and full-length leggings) and workout tops are made with a multi-layered fabric that has a heating element on the inside. There’s also a bit of insulation, which means that the wearer won’t necessarily feel there’s anything going on while they’re wearing them, but when the shorts are removed, they’ll notice how much more work they’ve done. “What’s happening is that your body’s generating a bit more heat while you’re working out,” explains Bell. “That actually increases your calorie burn because your body’s working harder to cool down.” And if you don’t believe Bell, she’s got the pointy heads at universities to back her up. “We originally worked with University of Brighton here in the UK to test the product on people in order to be able to say this is what happens in numerical terms.” The products have also been tested at the University of Southern California.

www.elitebusinessmagazine.co.uk April 2013

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ONE TO WATCH

“The results are unanimous across the board: you do burn more calories while wearing Zaggora,” says Bell proudly. This can actually motivate the wearer to do more exercise, she says. “They feel that because they’re getting more out of their time they will actually invest more hours in being active.” It’s helpful that the slimming-boosting power of the pants has been verified by a university in the US, seeing as that’s where the biggest chunk of Zaggora’s customers are. Of the 550,000 items now shipped, around 51% have headed to the States, 14% to the UK and 13% to France. But wearers aren’t confined to north America and western Europe: there is a long tail of 120 countries where customers reside. The voracious appetite for Zaggora products has added up to an impressive £10.7m turnover in the financial year to June 2012, with a further hike in sales expected this year (although Bell is remaining tightlipped as to financial forecasts). All very impressive for a business that only launched in July 2011. The entrepreneur is adamant that the company’s focus on social media has been key to its meteoric growth. Back in the summer of 2011, Bell was thinking about ways to counteract the initial scepticism that people were likely to have about the product. “The only way we could think of was getting loads of positive feedback that was publicly out there for everybody to see,” she said. The Bells decided to

ZAGGORA’S EXPORTS

Zaggora’S turnover in the financial year to June 2012

(550,000 items)

of exports are shipped to the uk

51%

of exports are shipped to the United States

13%

“They feel that because they’re getting more out of their time, they’ll invest more hours in being active”

of exports are shipped to France

send out 500 pairs of Hot Pants to bloggers. “Maybe 300 wrote back on our Facebook page,” says Bell. “That’s how we started our Facebook following. “It’s probably the best thing we did in terms of decisions that we took strategically to grow the business because it gave us credibility straight away.” This isn’t to say that the sceptics were silenced immediately, she says. “A lot of people were still sceptical when we had 20,000 followers. It was clearly not a fad at the point when you have thousands of women posting comments, but it’s always very easy to be sceptical. I still have people saying, ‘This is nonsense, I don’t believe it.’” But there are plenty who do believe the products work. At the time of going to press, Zaggora’s Facebook page had more than 378,000 likes. One of the company’s strengths continues to be the way it engages and interacts with customers. For example, with new products, such as the Zaggora ‘Twisty’ top, coming online soon, fans get a say in which colours it’ll be available in. But, for Bell, the messaging has to be much more about disseminating information on health and fitness than just the products they’re trying to flog. “That is really our reason for being: we want to motivate women through tools and content to try to engage in as much activity as they can,” she explains. Ensuring the web tools were in place to enable the team to maximise its brand value online has been a focal point of late. The new website is due to go online in the next month, with updated features and snazzy new content. The strength of the brand is what makes the difference between customers buying a pair of Zaggora leggings or a pair of Nike leggings, says Bell. “The thing that differentiates who the customer is going to purchase from is who they have the most affinity with in terms of brand messaging. That is the intangible bit that is the most difficult – and most valuable – to build.”

April 2013 www.elitebusinessmagazine.co.uk

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28/03/2013 22:14

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Untitled-1 1

25/03/2013 18:08

ANALYSIS

Best of both worlds For a long time, business and social causes were seen as bitter rivals but we have begun to understand that when they come together, they can truly change the way the world works

WORDS: JOSH RUSSELL

here’s no arguing: what’s good for society is often good for business too. According to the Fightback Britain Report (2011) from Social Enterprise UK, the UK has more than 68,000 social enterprises. These contribute £24bn a year to the economy, which – just to put it into context – is more than a sixth of the UK’s current deficit target for the year. Right out of the gate, the idea that social enterprise is based purely on wide-eyed idealism is a misguided one and as a sector, even disregarding the social value it generates, it makes a huge contribution to the UK in very real and measurable terms. As Nick Temple, Social Enterprise UK’s director of business, puts it: “Even before we start talking about the fluffy stuff, these are significant economic contributors.” Obviously, then, it’s important for social enterprises to be clear and transparent about the way they are structured. Generally, there are two main paths that most social enterprises take. “If they are structured as a not-for-profit they are finding the means to sustain themselves financially in a variety of different ways,” explains Pamela Hartigan, director of the University of Oxford’s Skoll Centre for Social Entrepreneurship. Beyond the funds required to sustain their mission, everything they earn is invested in their social aims.

April 2013 www.elitebusinessmagazine.co.uk

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ANALYSIS

Key stats from SEUK’s Fightback Britain report (2011)

• More than 68,000 social enterprises in the UK alone • Contribute £24bn to the economy • 14% of all social enterprises are start-ups, less than two years old –more than three times the proportion of start-ups among mainstream SMEs • 39% of social enterprises work in 20% of the UK’s most deprived communities and create more jobs relative to turnover than mainstream SMEs • Social enterprises are outstripping SMEs for growth – 58% of social enterprises grew last year compared to 28% of SMEs • 86% of social enterprise leadership teams boast at least one female director. • 27% of leadership teams have directors from Black and Minority Ethnic communities and 7% have directors under the age of 24

“They use their profits as a means to an end, to continue to grow their social mission” Pamela Hartigan, director, University of Oxford’s Skoll Centre for Social Entrepreneurship

“And if they are for profit, it means they are bringing in profits but they are not profit-maximising,” she says. “They use their profits as a means to an end, to continue to grow their social mission.” However, this distinction is far from rigid and in reality it’s probably more important to focus on how an enterprise prioritises its social purpose, than how it would classify itself. Big Issue Invest is the investment wing of The Big Issue Foundation, aimed at investing and growing charities and social enterprises. It has recently teamed up with internet registry company Nominet Trust to deliver the Tech for Good scheme, which is making a £50,000 investment in tech start-ups that are working closely with young people. “As far as we’re concerned, actually what you ask is: ‘What is the social impact that business makes?’” says Nigel Kershaw, OBE, co-founder of The Big Issue and chief executive of the charity’s investment arm. He explains that when The Big Issue was first set up, it was designed as a business response to a social crisis that philanthropy was struggling to address alone and this is at the core of what defines a true social enterprise. “For us it is about how you find a business response to that crisis.” Temple also feels it’s more a case of approach. “We all have to make profits but it’s just what you do with them that’s different,” he says. Rather what defines a social enterprise is the extent that their values inform everything they do; they aren’t in business simply to make money, instead using financial growth to further serve their social aims, and this will permeate every level of their structure. “They

have their social purpose written into their DNA, into the governing documents of the organisation,” Temple says. This is where the real change of approach comes in. Up until the last few decades the social concerns of businesses have been fairly cynically managed; models of corporate social responsibility (CSR) may have contributed (even fairly significant) funds toward charitable causes yet this has been with a focus on mitigating social or reputational costs. “But I think there is a genuine shift in recognising that we can’t separate business out from social needs and community,” comments Dan Sutch, head of development research of Nominet Trust. “I wouldn’t say this a PR thing to improve a brand; I think it’s a genuine engagement.” Public perception of business practices is becoming increasingly astute. A public donation or ongoing charity work is not going to offset questionable business practice – customers expect a company’s values to be reflected in every practice they are involved in. “It’s not so much what do you do; it’s equally

www.elitebusinessmagazine.co.uk April 2013

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28/03/2013 22:18

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Untitled-1 1

25/03/2013 18:08

ANALYSIS

as much how you do what you do,” explains Scott Leonard, founder and creative director of the social enterprise The Champion Agency, which employs creative young talent and uses its work to engage with young people in urban communities. He draws on examples such as financial institutions implicated in risky or fraudulent practice and high-profile organisations that have avoided paying massive amounts of tax. None of these companies have lost customers because of a drop in the perceived value of their products – instead, people are switching off because they dislike the way they conduct their businesses. Leonard explains: “It’s nothing to do with the service; it’s to do with how they do what they do.” This changing attitude toward the responsibilities and abilities of enterprises operating in the social space doesn’t just apply to customers; in part the business community

“What we’re seeing is companies recognising that to recruit top talent they’re going to have to transform” Pamela Hartigan, director, University of Oxford’s Skoll Centre for Social Entrepreneurship

is simply naturally evolving in response to the changing demands of the working population. “What we’re seeing is companies recognising that to recruit top talent they’re going to have to transform,” says Hartigan. In her position, she has seen a huge change in what young people are expecting in their careers. Many more individuals are looking for ways to make a greater contribution to society within their careers, rather than seeing the two things as being at odds. “They’re saying, ‘I want to do something with my talents that’s going to drive meaning’,” she reports. In light of this need for a more meaningful way of making a living, it’s not hard to see why social enterprise is proving to be such an appealing model. “Being able to demonstrate the social value and the wider value such organisations create is becoming increasingly important,” says Temple. For a long time it has been the norm to view social and economic value as being two entirely separate, perhaps even diametrically opposed, outputs and this rigid view of things is giving way to a new view of profit and success. “It’s a broader sense of value that says you need to act in a way that’s more long-term, you need to think about what sustainability means beyond finance and you need to think about planet and people as well as profit,” he says.

Songs of innocence A desirable flip flop brand that’s been praised in the nation’s press, including being championed by Cosmopolitan and Heat. And two young men, orphaned in the 2004 tsunami, inspired by their experience to build an orphanage for Indian children who have lost their parents. These are two sides of the coin that is Gandys. “One of the major points myself and Paul both made is that through our negative experience, we wanted to make a positive out of it,” explains co-founder Rob Forkan. And they’ve certainly been doing that. The business has been steadily raising funds for the founders’ Orphans for Orphans programme, which aims to open its first Gandys orphanage on the tenth anniversary of the natural disaster. Additionally, 10% of the enterprise’s

profits are donated to the charity Mango Tree Goa, thus far providing the supplies and teaching for 100 Indian children for a full year. The remarkable social impact of the enterprise is just one element, however; the enterprise is also drawing an incredible amount of interest from experienced blue-chips amazed at the impact the firm is having back here on the domestic front. “They’re asking us: ‘How do you do it? Why is it that you’re getting so much recognition for it?’” says Forkan. In part, he explains the way the brand is catching public attention down to the fact that people can tell the enterprise has a genuine connection to its social aims. “We’re doing it because it comes naturally.”

“One of the major points myself and Paul both made is that through our negative experience, we wanted to make a positive out of it” Rob Forkan, co-founder, Gandys

www.elitebusinessmagazine.co.uk April 2013

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28/03/2013 22:18

Untitled-13 1

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ANALYSIS

Putting the heart back into advertising Advertising isn’t always considered to be the most ethical industry. But one social enterprise is disrupting that image and placing ethical marketing back at the heart of the community. The Champion Agency was born when founder and creative director Scott Leonard began to feel disenchanted by the way values were addressed in the advertising sector. Gradually, he began to realise he wanted to explore options with clients outside the expected avenues. “Primarily, I was chasing clients that had either a social edge or an innovative edge,” he says. Additionally, through the Google Digital Expert Programme, he spent some time mentoring a team that contained a couple of prison graduates. “Within five minutes, I’d decided I didn’t want to know which people were prison graduates,” he recalls. “What was important was you had 12 sparkling kids in the room.”

“Primarily, I was chasing clients that had either a social edge or an innovative edge” Scott Leonard, founder, The Champion Agency

This experience led to the founding of The Champion Agency, a design agency that trains and utilises young talent to help socially minded or disruptive businesses and organisations, whether they be Lloyds TSB, the car club Zipcar or more grassroots community projects. An excellent example of the latter is its work with Block Workout, the south London exercise project founded by ex-gang member Terroll Lewis, which uses exercise to help give young people alternatives to gangs. Its inspiring design, playing off and subverting the iconic Black Panthers art by Emorie Douglas, shows exactly why organisations like The Champion Agency are able to challenge the existing ideas of what commercial business should be. As Leonard explains: “The inspiration that the youth can bring, certainly from my perspective, when you give them a chance, is just phenomenal.”

“It’s such an interesting, almost unique time in history,” says Sutch. In light of the economic crisis he feels that individuals are beginning to question the bottom line as being the only measure of an enterprise’s value; there is an increasing need for those enterprises to once again recognise that they as much rely on the communities they exist in as those communities rely on them. “Businesses are rooted in community and rooted in the social value that they create; whether it’s intentional or not there’s always a social impact to what they do,” he says. “If we’re going to rebuild an economy then it has to be born on recognising business value and the social value, and how they can be combined.” In many ways, social enterprise can be a strongly disruptive force but the manner in which this disruption is playing out is very interesting indeed. Temple mentions one of Social Enterprise UK’s members, Divine Chocolate, the innovator that first introduced Fairtrade chocolate to our shores and is 40% owned by the Ghanian Cocoa Producing Co-operative. “What’s interesting about Divine is it’s partly pushing forward and proposing a totally new business model for how chocolate is made,” he says. “Now Kit Kat is Fairtrade, Cadbury’s Dairy Milk is Fairtrade, and actually the Fairtrade cocoa and chocolate market is £430m in the UK – despite the fact that Divine is only responsible for £10m.” These enterprises can help spur traditional business on, trialling and establishing better business practices that the corporate world can take on. Hartigan gives the example of the relationship between McDonalds and sustainable fishing advocates the Marine Stewardship Council. As a result the fast food outlet has approached every single one of its suppliers and facilitated their change to sustainability. “That’s the role of social entrepreneurship,” she says. “It’s to be a harbinger for new business models.” This is the significance of the change social enterprise is bringing. Big Issue Invest’s Kershaw recalls a recent event he attended to celebrate the life of Thomas Payne. “There was a quote which I believe is from Common Sense 1776 which I think is really great: ‘We have it in our power to begin the world over again’,” he says. In light of the economic crisis, the way we assess value has come into question and this is giving us a chance to introduce new value in the way we conduct business. “I really think there are these moments where you know that actually things move and change. And I think this is a time of seizing the opportunity.”

April 2013 www.elitebusinessmagazine.co.uk

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28/03/2013 22:19

FINANCE

Keeping it spinning When foreign exchange rates begin to wobble, it can cause a lot of worry for enterprises. Wouldn’t it be nice to know you can take your eye off the foreign exchange rate and know things will remain stable?

WORDS: JOSH RUSSELL

or any enterprise trading internationally, a sudden decline in the value of the pound is their worst nightmare. Unfortunately, we don’t need to look too far back to see a whole wealth of cases where currency fluctuations have ended up costing UK plc a lot of money on the international stage. Therefore, knowing how to protect yourself from the inequities of foreign exchange (Forex) becomes vital when trading around the world. Understanding how an enterprise can come a cropper when faced with fluctuations in Forex rates is relatively straightforward but it’s still worth approaching an expert to really get your head around just how big an impact it can have. “Imagine the company is buying from America,” says Chris Redfern, business client dealer at foreign exchange expert Moneycorp. “You have to buy dollars to pay your suppliers and variations in exchange rates will impact upon how much you pay.” He explains that the beginning of this year has seen a particularly severe devaluation of the pound to the dollar, with the latter falling from a rate of about 1.61 right down to approximately 1.48 by late last month. In layman’s terms this means an enterprise that had bought $161,000 at the beginning of the year would have secured it for £100,000; the same enterprise buying them now would have to pay £108,000. Obviously, this can have a huge impact on a business’s bottom line, particularly when it will not have budgeted around having to pay an additional £8,000 for the same quantity of stock. As Redfern explains: “Variations can have a huge impact on people’s costs if they haven’t protected themselves.”

“Variations can have a huge impact on people’s costs if they haven’t protected themselves” Chris Redfern, business client dealer, Moneycorp

www.elitebusinessmagazine.co.uk April 2013

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FINANCE

“You can have a guess at what you think you’re going to protect and then maybe just cover slightly less than that so you’re not overly committed” Chris Redfern, business client dealer, Moneycorp

As an example, this is relatively straightforward but, obviously, as one can tell by reading the daily news on global economics, the actual picture is far more blurred and much harder to preempt. Predicting what’s going to happen on the international markets is hard enough for Forex experts, so what hope do entrepreneurs have, particularly when they’re still overseeing every element of their business? Fortunately, there are some natty tools available that help protect businesses trading internationally. What most enterprises want is to know that the rates they’ve budgeted around can be relied upon. “Generally, what happens is people start the year with a rate they’ve budgeted at, pricing everything they do on a certain exchange rate,” says Redfern. This means the key to protecting oneself is being able to fix that rate at that point; the most popular method is something called a forward contract. Essentially, a business strikes a contract with a firm like Moneycorp, agreeing to buy a set value of currency over a specified period at the current rate. The enterprise doesn’t have to pay ahead of time; they simply make a commitment to that amount of currency. He continues: “Then they would just say they’re going to pre-buy all of that currency and ask us to fix a rate for those dollars for the next 12 months, using them as they need them.” As solutions go, it’s rather a neat one but, as with most things financial, it’s not quite as straightforward as it may appear on paper. One of the most obvious drawbacks is that businesses might not always know exactly how much currency they will need ahead of the time and entering a contract speculatively isn’t the most comfortable deal an entrepreneur can make. “In that case, you have two scenarios: you can have a guess at what you think you’re going to protect and then maybe just cover slightly less than that so you’re not overly committed,” says Redfern. “The other option is you do 50% protection for what you expect to need and leave the other 50% floating.” This allows an enterprise to hedge against fluctuations without committing themselves to currency deals that they may end up regretting. But the real elephant in the room when discussing entering fixed Forex rates is, of course, that not every fluctuation in a currency will go against you. Many traders make huge profits on the Forex markets and this is because for every loss there is a gain. This means protecting yourself against negative fluctuations also means that you won’t benefit from the positive ones. The option that seems preferable will often depend on the sort of personality that is at the helm. “Some entrepreneurs are gamblers by nature – they won’t hedge because if it gets better for them they’ll lose out,” explains Redfern. There are varying perspectives about forward contracts. Some individuals will see it as speculating and trying to profit from the

changes in currency; others will see those opening themselves up to the profit and loss as being the true speculators. “You can make an argument either way,” says Redfern. However, he is quick to qualify this, saying that more often than not entrepreneurs will side with safety over risk. He explains: “The phrase I probably hear the most is, ‘I’m not in business to make money from currency; I just don’t want to lose anything’.” Obviously, economic climate has a huge impact upon executives’ views on these forms of rate fixing. “A few years ago, at the start of the credit crisis, a lot of people had gotten a bit complacent,” says Redfern. The stability of the Eurozone, among other global economies, meant that people had begun to take their eye off exchange rates, assuming that they were relatively safe. The economic crisis that began in 2008 has brought variation currency rates firmly back into the public conscious. “All of a sudden it was a massive rude awakening and scared a lot of people,” he says. “Suddenly it became a priority. If you were a risk-taker, at that stage you could have easily gone out of business.” Managing your Forex transactions responsibly can be the difference between your company surviving tough times or going belly up every time a bubble pops in an international market. Whether you want to play it safe or you want to keep yourself open to potential profits, it’s clear that you ignore Forex fluctuations at your peril.

www.elitebusinessmagazine.co.uk April 2013

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FINANCE

Trading equity in their business for investment is a fact of life for most entrepreneurs. Unfortunately, sometimes they can get the raw end of the deal

WORDS: JOSH RUSSELL

etting the equity deal right can have huge long-term ramifications for an enterprise’s future. Give away too much and an entrepreneur can end up seeing their returns dwindle away to almost nothing. Which is why we approached a venture capital firm, an angel investor and an entrepreneur to ask, how can we make equity deals just a little more equitable? From an investment perspective, it is worth recognising that an investor is being asked to take on a high level of risk. “Investing in early-stage businesses is really risky,” says George Whitehead, venture partner manager at VC firm Octopus Investments. “When a company comes and it’s got a management

team that hasn’t worked together for very long, a product that isn’t proven, a technology that doesn’t work yet, no revenue and no customers, you look at the business and it’s risk on top of risk on top of risk.” But an investor isn’t just putting their money in a position of risk. They’re also bringing a whole wealth of support to the table. Around 18 months after he first founded online contact-lens retailer Lenstore, Mitesh Patel began to look for angel investment in his enterprise. But he was clear it was about more than just getting a cash injection – he also needed a great advisor, which he found in Keith Potts, angel investor and co-founder of Evenbase. “There was very much that dual

April 2013 www.elitebusinessmagazine.co.uk

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FINANCE

purpose in bringing Keith on board,” Patel “This guy signed up to explains. “I was really looking for an internet it but there wasn’t the entrepreneur and internet superstar if you like, who had been through the entire lifecycle of passion there; he became what I was hoping to go through.” a minority stakeholder of Obviously then, a large part of the equity deal recognises the value an investor is something he created” contributing. However, this doesn’t mean that sometimes investors don’t make demands Keith Potts, angel investor and cofounder of Evenbase above and beyond the value they’re contributing and end up damaging the business as a result. “One of the things that has happened in the past I think is angels and VCs have been too greedy, taking up too much in shares,” comments Whitehead. And while it may not occur to an investor, this can be cutting off their nose to spite their face. Equity distribution reflects what all parties are bringing to the business and if an investor strips too much equity away from an entrepreneur, it can be catastrophic as they are effectively stripping out the incentive the founder has to really grow the business. In his early days as an angel, Potts recalls a situation where he and his colleagues over-asked for equity. “This guy signed up to it but there wasn’t the passion there; he became a minority stakeholder of something he created,” he says. If an entrepreneur ends up feeling demotivated because they don’t stand to gain enough from their work, this minimises the end profit for all involved, meaning it becomes self-defeating. This is something that Potts

was adamant he wanted to avoid in his dealings with Lenstore. “Mitesh is the guy running the business day-to-day, building the business, building the relationships and it’s really the case that the more equity he can have, the more incentive he has,” he says. Additionally, founders and investors aren’t the only people involved in driving a business forward. If too much equity is removed early on, the chances of bringing in major executive talent diminishes. “In my experience, the really top-tier people won’t go to work for start-up companies unless they have a piece of the action,” says Whitehead. As few early-stage enterprises can afford to pay competitive salaries, the hires they make are going to expect to be compensated for their hard work in growing the business. “Having a puny share option scheme is just going to mean you’ll find it very hard to recruit A-grade people,” he says. Good advice when making equity deals can really pay dividends. As one of Lenstore’s principle investors, Potts has always had a stake in protecting both the company’s interests and those of its founder. One of the most significant contributions he has made to the company came when the firm was trying to attract other investors during its seed round and one of the parties involved was placing excessive conditions on his investment. “Keith very discretely advised me that I didn’t have to sign up to all of the conditions that the investor wanted,” says Patel. Potts recommended the entrepreneur simply walk away, saying they could make do without the additional investment. “All it would have done really is that it would have meant Mitesh sold out more equity than he had to,” he explains. “It wasn’t needed and the other investor was coming up with some quite unpalatable conditions for his investments.” This has had huge ramifications for the founder’s share and means he will be much better off if and when he decides to exit. Patel says: “The truth is that advice from Keith has saved me about £1m worth of equity.” But how does an entrepreneur work out what is reasonable? In part, keep looking toward the exit. “Have a good idea of how companies that are in your sector and space have been valued at exit,” comments Whitehead. This makes it much easier to calculate growth targets at each investment stage and work out exactly how much equity each party needs to profit from their hard work. He concludes: “This is how you will genuinely make money for everyone involved.”

www.elitebusinessmagazine.co.uk April 2013

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FINANCE

“The exemptions offered would allow micro businesses to prepare simpler balance sheets and profit and loss accounts” 42

Scrapping the paperwork

Change is afoot for the way micro-businesses report their finances. Guiding us through the regulatory minefield is Clive Lewis, head of enterprise at ICAEW

overnment is currently consulting on plans to change reporting regulations for the UK’s smallest businesses. There is, though, a lack of evidence at the moment that the benefits will outweigh the costs and some reporting rules actually help businesses clarify their financial position. Removing certain accounting requirements from the Companies House returns of micro-businesses sounds like a good idea until you consider the needs of other users – banks, other financiers, customers and suppliers. Banks lend out people’s savings amongst other things and therefore need to know a lot more about a business, including its trading record which can only be gleaned from the full accounts. So as always with proposed changes there may be

unintended consequences. Creating a simpler reporting system is actually just creating another lot of paperwork because the business community wants detail even if Companies House doesn’t. These proposals point at another tier of accounting requirements other than the existing ones called FRSSE. The Micro Entities proposals give less information than financiers need and means that a new business will need to change its entire financial reporting method as it grows to be a strong, successful organisation. The exemptions offered would allow microbusinesses to prepare simpler balance sheets and profit and loss accounts, and also reduce the amount of disclosures required. There would also be no requirement for these

businesses to file their accounts with Companies House. For many of the smallest businesses the proposed changes would be limited, but some will be impacted by it and we are also concerned that the mix of accruals and cash accounting proposed may cause confusion. There are several areas still being considered and the implications of the proposals are not clear, for example in relation to tax. ICAEW is a supporter of cutting unnecessary red tape to help small businesses but it is important that this does not have a negative impact on the usefulness of the financial statements produced by this group of very important businesses to the UK economy. The proposals may suit very small businesses with no ambitions to grow or any need to raise finance. However, given the extensive use of accounting software the savings even for these businesses are likely be very limited. ICAEW will be consulting some of its 140,000 members and formally responding to the minister’s proposals. Micro-businesses are defined by EU law as those meeting two of the following three requirements: net turnover of maximum €700,000, cross assets not exceeding €350,000 and no more than ten employees. Further details on the proposed changes, can be found on the Department for Business, Innovation and Skills’ website: www.bis.gov.uk

www.elitebusinessmagazine.co.uk April 2013

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SALES & MARKETING

All stitched up

It’s official: knitting and craft-making are cool again. And there are a bunch of savvy entrepreneurs blowing away the dust and making the industry cutting-edge once more

nce thought to be the preserve of grandmothers and fusty old aunties, knitting has been making a very steady comeback. Stitch by stitch, knitaholics have been switching books and iPads for needles, a ball of yarn and a pattern to wile away afternoons in the park, evenings in front of the fire or just ten-minute Tube journeys. The numbers certainly seem to back up anecdotal evidence that knitting is becoming cool again. In the past five years, sales of wool have soared 50% from £180m in 2007 to £270m last year. The UK’s wool mills have had to hit the accelerate button to keep up with demand: in 2011, British mills produced 40 million kilos of wool – up from 32 million just two years previously. And it’s not just denizens of the UK with a taste for our fibre: more than 70% of wool products made in the UK end up abroad.

WORDS: HANNAH PREVETT

April 2013 www.elitebusinessmagazine.co.uk

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SALES & MARKETING

There are a number of factors that have together bolstered the popularity of knitting. Firstly, love them or loathe them, celebrities do have an enormous effect on popular culture. And when knitting proponents reportedly include the likes of Hollywood actress Uma Thurman and Sex And The City star Sarah Jessica Parker – and even queen of cool herself Kate Moss is spotted with a ball of yarn – it’s only a matter of time before the craze catches on among us mere mortals. Even Prince Charles has raved about the benefits of wool and natural fibre. The royal heir is the patron of the Campaign for Wool, a five-year campaign to raise awareness of the industry in the UK. Now in its fourth year, the team behind Campaign for Wool works with designers and fashion labels, as well as the mills themselves, to hold events and run projects. Last year’s activity, for example,

Designs by Melanie Porter

“We want to try to appeal to people to get buying this fantastic fibre that’s all around us in this country. We’re lucky to have some of the best wool in the world, but it’s been long forgotten” Chris Tattersall, MD, The Wool Room

included Wool School, a project that saw 11 designers team up with 11 high street stores such as Hobbs, Jigsaw and Topshop to produce a range of limited edition jumpers to celebrate October’s Wool Week. Savvy businesses are only too happy to hop on the knitting bandwagon. The Wool Room, established in 2009, emerged out of established wool merchants H Dawson. The family-run business has been operating for about 125 years, buying and selling wool and matching the right fibres to the right purposes and businesses that require them. Current CEO Jo Dawson decided something needed to be done about the inertia in the wool trade. “He said, ‘Look, I’m so frustrated with the wool industry: it’s always looking backwards rather than forwards’,” explains The Wool Room’s MD, Chris Tattersall. The original plan for the spin-out was that it would be a business hub where companies could promote themselves and sell wool products. But when that failed to garner much interest, they instead opted to retail their own products. The Wool Room sells mainly bedding, including wool duvets, blankets, throws and pillows. They also do a roaring trade in babies’ blankets and associated paraphernalia. The business as a whole is going great guns: from a £300,000 business last year, this year The Wool Room is expected to turn over £1.3m. But Tattersall says the retailer’s raison d’etre isn’t merely to flog its wool products, but to educate people about the benefits of natural fibres. “We want to present wool as being fun and contemporary, not fuddy duddy, old-fashioned or itchy and scratchy,” he explains. “We want to try to appeal to people to get buying this fantastic fibre that’s all around us in this country. We’re lucky to have some of the best wool in the world, but it’s been long forgotten. A certain generation

has grown up with a disposable society of synthetics so we’re trying to get back to basics,” says Tattersall. He seems to have a point. The increased appetite for wool goods has been driven in part by a desire for more hardy products that will survive longer than a £5 jumper from one of the bargain retailers, but also an increased interest in sustainability and provenance. “People are really starting to care about where their product is coming from, where it’s sourced, how it’s made and the story behind the product,” says Jade Harwood, creative director and co-founder of Wool & The Gang, which sells high-fashion woollen garments, as well as DIY kits so customers can make their own clothes. “It’s no longer just about buying something off a Primark shelf.” For Wool & The Gang, the most successful part of its business is its DIY kits, which currently comprise about 80% of sales online and 50% in-store (they partner with a few hand-picked shops in order to maintain a retail presence). But Aurelie Nicod Popper, Harwood’s co-founder and co-creative

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director, says it remains important to have the high-fashion side of the business as it gives an aspirational feel to the brand. “I think it’s really important to establish ourselves as a fashion brand,” says Nicod Popper. “We want people to think, ‘I want to be like that girl. I can make it myself and be really cool,’” she says. One of the central tenets to Wool & The Gang’s business is being interactive with its community. So customers will post pictures to the company’s Instagram account of the items they’ve made. “You can see people are so proud of the piece they’ve made. It’s a feeling of accomplishment to say, ‘I’ve made this with my hands,’” says Harwood.

“They always say it’s such a stress-reliever to come here” Nicola Barron,

Homemade London

Nicod Popper says often it’s an outlet for creativity. “Lots of people don’t have very creative jobs, and they’ll say to us, ‘Thanks to Wool & The Gang, I’m creative’. It’s their ambition to make something,” the designer explains. This newfound appetite for creativity is benefitting entrepreneurial businesses above and beyond those in the wool trade. Nicola Barron’s Homemade London offers courses in all sorts of crafts, from lampshade-making to sewing classes. (The eagle-eyed readers among you will most likely recognise Barron from her Start-up Diaries column on the back page of EB.) Barron says the most common kind of customer at Homemade London is a female lawyer, closely followed by accountants. “They don’t have a creative outlet,” she agreed. “And they’ve got money, so they don’t want to be going to the village hall, or whatever. They always say it’s such a stress-reliever to come here,” she smiles. Whatever course or class undertaken by the customer, Barron’s team of designers and craft experts ensure that the Homemade London client finishes at least one item. “It gives them a sense of achievement,” says Barron. But the West End-based entrepreneur says that, despite the cost, there is more of a passion for hand-crafted items than ever before. “They’re never going to be cheap, but that’s the whole point. It’s a very slow process, which means you really earn it. It’s definitely not something you can acquire off the shelf. It’s personalisation, something different – all of those reactions against a throwaway culture.”

Melanie Porter

Designer and knitting extraordinaire Five years ago, Melanie Porter was a discontented designer working for upmarket fashion brand Pure Collection. “I started getting a bit frustrated with doing all of the designs, but not actually making anything,” she explains. So she embarked upon a side project and bought some chairs that needed a bit of TLC. She set out to upholster them herself, but couldn’t find any fabric she liked. “So I decided I would make my own fabric,” she says. But this wasn’t any old fabric: Porter knitted covers for the chairs. Her artistic flair and unusual designs captured the imagination of those who knew her and soon all of her spare time was spent with knitting needles and a bundle of wool. “I made a few while I was working and sold them to friends and friends of friends,” Porter explains. “In late 2008 to early 2009 I left fashion design and started doing interior pieces full time.” Full time and then some, by all accounts. “At the moment I’m extremely busy,” says the entrepreneur. “Knitting is taking over every single corner of our household.” Porter’s revenue is in two streams: firstly, bespoke furniture. Customers will often give her a chair or a sofa they’d like her to cover with her innovative designs. The second is the pret-a-porter collection (i.e. the stuff she’s already made). This includes chairs, sofas, lamps, cushions and even knitted wallpaper. It’s been a busy month, even by Porter’s standards, as she’s had a pop-up shop in Seven Dials, Covent Garden, London. A contact who she had worked with before offered her a space last year, and then this March she combined forces with another designer / maker Zoe Darlington to take a shop with two-floors for three weeks up to April 3. “One of the weekends it was snowing and I was looking outside and thinking, ‘I wouldn’t be shopping in this weather.’” Luckily, there were committed shoppers who were willing to brave the wintry conditions and Porter’s business continues to thrive. “Despite the terrible weather, it’s gone brilliantly,” Porter says. www.melanieporter.co.uk

www.elitebusinessmagazine.co.uk April 2013

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SALES & MARKETING

Making friends and influencing people WORDS: JOSH RUSSELL

Meeting new clients and maintaining relationships with old ones isn’t just a case of wining and dining, or boozing and schmoozing

urturing client relationships in a more social setting has certainly changed a lot in the last few decades. “Twenty years ago, it was all about relationships, it was all about going out in the social environment,” says Liz Hobbs, founder of production and event management company Liz Hobbs Group. “There were lots of business lunches, there was lots of getting to know people going on all the time.” However, she feels that over the last ten years or so things have changed significantly and few factors influenced this quite as much as technology, with the tendency increasing by the end of the 1990s and in the early 2000s for more and more of our professional lives to be

conducted via a monitor and mouse. “People stopped even picking up the phone, because they were sitting behind computers,” she says. But this is far from the only factor. Sales performance improvement experts Huthwaite International has spent a good deal of its 40 years in the industry building success models for sales scenarios, and an area it often used to get consulted on was that of corporate entertainment. “About 15 years ago, when the economy was very buoyant, people were doing a lot of corporate entertainment,” comments David Freedman, the firm’s associate director. However, often what happened is while the enterprises involved may have had a good idea of their overall aim – that of trying to establish

www.elitebusinessmagazine.co.uk April 2013

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SALES & MARKETING

“Never assume or pressure anybody into thinking that because they’ve enjoyed your hospitality that they owe you anything whatsoever” 52

David Freedman, associate director, Huthwaite International

new commercial relationships – often less thought would be given to how they might achieve this aim. “They never gave any thought to what they were going to say to them when they got there,” he says. “They just thought: ‘Our chairman will talk to their chairman, we’ll all get drunk together and that’ll be fine’.” Gradually, however, attitudes began to shift. In part, the rising trend toward using metrics and the need to track return on investment meant teams and enterprises became more conscious of exactly what they were investing in entertaining clients. “It was very expensive in terms of the actual cost and in terms of the opportunity costs taking people away from the business,” Freedman says. But it wasn’t just those throwing lavish events that began to feel the increased pressure to establish exactly what it was giving them; the guests as well were increasingly finding themselves dealing with KPIs of their own, and this meant taking time out of the office definitely needed a good reason behind it. “If they were swanning off to Ascot or the Test Match, even if it wasn’t costing them money, they’d probably need to justify going to it,” he says. Hobbs also feels it’s hard to justify the time and expense to entertain or meet with clients.

“It’s difficult to both justify and quantify – I’m the first person who will say we can’t afford a lot of money spent going out on boozy lunches,” she says. However, she does feel in the modern age we have gone too far the other way; often when someone has a business to run it can be difficult to realise the value that investing time in client relationships can have. “It’s about putting something back in their emotional bank,” she continues. “Developing relationships with clients is absolutely paramount to building a business.” Taking this into account, how can a company get the most bang for its entertainment buck and ensure it’s not just pouring resources into something that isn’t offering a return? Freedman recommends ascertaining ahead of time what you are trying to achieve with your clients and plan around this. First of all, it’s key to identify the relationship stage you are at with a client and how you need to invest in it. “We coined the phrases ‘social conversation’ and ‘purposeful conversation’,” he says. There are plenty of times, perhaps when you’re first entering a relationship, where a social conversation is all that’s needed – at other times, when deals are being struck, you will be siding much more with purposeful conversations. This then has huge ramifications for setting; the opera may be appropriate for a meet-and-greet but it’s not going to be a good place to close in on a deal. Lastly, it’s important to establish the people you need to make contact with and who will engage in the purposeful conversations. Freedman explains, “That’s all worked out in advance so you know how you’re going to use that time rather than just letting it drift around aimlessly.” When entertaining clients in this manner, however, it is worth taking into account the recent introduction of the Bribery Act 2010. “I think there has tended to be a little fear, uncertainty and doubt about the Bribery Act,” Freedman comments. However, it’s unlikely an enterprise would come undone as the result of these regulations as long as they do two things. Firstly, they must declare any

Liz Doogan-Hobbs, founder of events company Liz Hobbs Group

gifts or purchases made that amount to more than £50. “Secondly, never assume or pressure anybody into thinking that because they’ve enjoyed your hospitality that they owe you anything whatsoever,” he says. “It’s an opportunity to have a purposeful conversation in a relaxed setting – it is not part of a deal that says because you’ve bought them dinner they must agree.” However, this is no reason not to entertain clients. Not only can getting out and meeting people in these settings help build new professional relationships, but nurturing them in this manner is very important, even if it just involves meeting over a coffee in the office. “It builds better quality and longer-lasting relationships,” says Hobbs. It also gives your clients an important sense of who the person they’re working with is and allows you to really understand them in turn. “That way you get to know how you can better benefit their business and better benefit your own.”

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28/03/2013 21:04

SALES & MARKETING

Tales from the coalface 54

For many budding entrepreneurs, inspiration comes from the success stories of their peers – in other words, those people who have already “made it”. Therefore, what better place to start for our aspiring business tycoons than a browse of Dear Entrepreneur, a collection of letters from UK entrepreneurs. Here, we provide you with a flavour of what to expect from this latest business page-turner www.elitebusinessmagazine.co.uk April 2013

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I e wh ere m e to b d le e v a w t h no in g s th a m os t I k r, ss b u t ey le a rn epre n eu ble a cro re th e k tr a t… m n a r tu E th s te r t h it D ea h to is le s ta r t w in g th e y e noug wit h in th So le t’s over ta k e e n luck Co n ta in ed d sle ep s t tim e! I h a ve b n ir e a f a g re a t m e o ey g S n th o g y. la u n ch in e los t m it wro n to v a m tod a t a n o h g la I I p e th er e – ge in es wh b ec a us is ta kes o te n -s ta sim ply m a ke m a t d e term ere is n th to th d es s k re a a p m is ta ita ble 1. B e pre h th ese is is in ev rous, d ea l wit a th. Th r g la m o ow we h wro n g p ly p ot a ppea im n s y ut yo ur is a o h m It g s. s. Th rou aB a g, it busin es n eur. in ed g e re o n ep B t e tr e lik a rk a n en t th e m Eve n if, you a re ser vice. u do – a v e wh a d uct or t you h wh a t y o a ro e p v th ou d o n’t o r L % u . 0 o 2 y 10 t e b v but if y u ie o t el d a b o re a ve a h g to w e e b v le a t p h ill n ot h you h m e e t peo s you w id ea m ig in r ill u rg w o a Y u m o – y /n e t b ers journ ey s d g ross o ur n u m sin ess a ro f it a n s ta n d y le in bu f low, p h 3. Un d er s ca ny peop will ur a o t m y u b s d a n s on it h u n d ers ta co n n ec ti y d blog w a lua ble th e ea rl n ec t a n s. rk o f v ia lly in e e t, co n o ec M busin es tw p – e n es s a y, er el u th n o o y lo e e to b iv n n ly g 4. Lis te n n eur ca ill n ot o a nd e n trepre . Th is w ein g a n m hom e B you ca n e. n a ork f ro s w u , o b y jo d ay a lso ke ep ep your n in g, ke sily a n d e b eg in ea d a y s. th te t la A f ul by esca cos ts – success ts ca n 5. Lim it ot to b e in g . Cos g th y er d o th a t er ev to . g rn e ev eur n’t will in rd to ea trepre n outsourc a n re h e a e o u b N o took – f it will a n d if y g but it s win s”) a ny pro th e lin e terr if y in h o d a re n o s w a (“ f w s el k n De ris ut yours ra g o n s’ 6. Ta ke p a th. P or ted . D tio n s e ea sy b er 2 s expec ta m u n ta k in g th t o g ed th eir ’t ce n e ex v , a u h t level . cus to m er th e n yo ro n g . in th e n ex n d yo ur th in g w pu llin g in ess to Un d ers ta ot so m e g – t e ou n ts to n v m y b us a cc ce h a la it u p g o e m in y k g a co y a a m n e s a b n f ro m m h e n th ey 7. N ever s wh o ca th e m w er y th in g in oth er ev to g n n ry ri T te b – en a n d lis ita tio n s a nt rk in g th your lim e you w isn’t wo o n wh er 8. K n ow tic. If it s lis cu a o f re d ut b e r ted a n s a les, b you s ta b er wh y . m n e e m p p re a , h in a lly f un – F 9. H a ve to b e. ck , Good lu s tl e in aB a g K a te C a tor, Bog n d d irec a r to n Inve .co m g in a ba g www.bo

28/03/2013 21:54

SALES & MARKETING

“It is simply how we deal with these mistakes that determines whether you are an

Dea r Ent repreneur, If you have an idea for a business, there’s just one key thin g you need. One thin g tha t will turn tha t idea into a business. One thin g tha t sep ara tes those who have a busines s fro m those who don’t. Tha t thin g is… THE WILL! A driven person will do everything in their power to make their business work. Bei ng suc cessful is com plet ely diff eren t to having the drive to turn an idea into a business. There are plen ty of other skil ls tha t you will need to suc ceed . But if you’re driven and com mit ted, you will lear n wha t they are and train yoursel f accordin gly! And it’s hard. Much harder tha n you thin k it will be. Being driven to suc ceed is wha t keeps me goin g. There are so many sacrifi ces you need to make to sta rt your business, and to keep it goin g. I don’t mea n to sou nd all doo m and gloo m – sta rtin g my business was the bes t thin g I’ve ever don e – but toug h tim es always lie ahead and you need to be prepared for tha t. People tell you tha t having a bus iness is hard but it’s impossible to com pre hen d just wha t tha t mea ns unt il you’re doin g it yoursel f. The iron ic thin g is tha t I thin k I’m inherent ly lazy – I wan ted to sta rt my business bec aus e I don’t wan t to work! At leas t not beyond the age of 35 any way. Drive can help you to overcom e your wea kne sses! But drive can be men tally and physica lly tirin g. Therefore, have a long thin k about wha t you rea lly wan t. If you wan t it, I mea n rea lly, rea lly wan t it, then you will go for it, and not bec ause anyone tells you to. Only you and your drive can make you suc ceed. Bes t of luck guys! Vicky Novis Fou nder and man agin g dire ctor, Nuba Cocktails www.n uba cocktails.com

Dear Entrepreneur, compiled by Danny Bailey & Andrew Bailey and published by Brightword Publishing, retails at £10.99 and is available now. Please note, the second and third letters are abridged.

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entrepreneur” Kate Castle, inventor and director, BoginaBag

55 D ea r En trepre n eur, I wa s a colleg e s tud e n t prog ra m o f 20 y m in g a n ea rs old d two y a m il lio n , I k n ew ea rs la te m e m b ers n oth in g r, I own a bo u t a n d livin b eg in n in ed a we g. g my lif bsit e w e f ro m it h over In a wo it – a n d r ld wh e h a lf it ’s jus t re in for you ca n th e m a tio n lea r n a n is ra pid ly sh y th in g y m otiva te a red a n o u se t d a nd d d ea sily your m in ed ic a ted la ck in g ava il a ble d to, a s to k n owled w a , rd lo n g a s y o ur g o a g e in th n o lo n g e you s ta ls. If yo e a rea s r n e ed to y u th in k y o u w s o lea r n a n it for y you a re uld like ea rs b e d prog re to do b h in d a s usin ess ss a t a Th e b es ch ool d e in, you ve r y fa t th in g sk – y o s t p a ce to do is s tay in g u ca n n . to g e t s ow a t sch o ta o r l. Th a t’s ted wh il visio n a e ke epin wh a t I n d e ve n g y o ur d id wh il th oug h lea r n in g job or e I wa s I had no a n d ta lk in sch oo id ea h ow in g to p l – I had I wa s le to g o a rog ra m m a r n in g a a b out it, I ers. lot o f n we ek s, s ta r ted ew s tu f I had m f y e f irs t pro ve r y d a lot – I w y a nd a totype a s usin f ter a for m y g my sa th is f ir f ew we bsit e vin g s f s t proto . It d id n ro m ty m pe a llow ’t cos t y previo o f th in g me a ed m e to us s u m s. m er job g e t to k Th e n e x a nd n ow a lit t versio tl n e o f my w a bo u t a my m is ta e bsit e w lot kes a n d a s m uch I a m no m is ta ke b e t ter t th e ty s twice a p s . e A I o lea r n ed f ter th e f g uy w a g a in, a f ro m ho mak n d we co n e x t su es th e s m m er, I uld g e t a n d it n ame u se d m o so m e th in ever s to s t g o p b f p u ed prog could m il t th a t m y s av a ke a liv ressin g . in g s would b e m uch I s toppe in g out s till s tr b e t ter, o f b e in d s ug g lin g ch o o g l w a in n h e e n m n trepre I e nvisio y jour n e I k n ew n eur. Ev n th e re I y, so fa e n th ou st o f m r lif e h a gh I am y lif e to s been m b e u ch th Da ny Pe a t way b e t ter a nd lle tier too. Fou n d er, Fa ceFlow

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25/03/2013 18:35

PEOPLE

Treating the symptoms It’s worth realising that a pattern of absence can simply be a symptom of an underlying disorder

ith winter only just starting to recede, the coughs-and-sniffles season is probably still fresh in most employer’s minds, meaning a good deal of enterprises will be reviewing the efficacy of their current absence-management policies. It’s no overstatement that absences can have a massive impact on a business’s profitability. “Unexpected absences can affect business productivity and profits,” comments Lara Morgan, founder of business advice and frameworks resource Company Shortcuts. “If they become a regular occurrence they may affect morale and motivation.” It’s worth crunching the numbers and

WORDS: JOSH RUSSELL

April 2013 www.elitebusinessmagazine.co.uk

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PEOPLE

“Half of an effective absence-management policy is having a clear and consistent approach to managing absence and cracking down on those who might be taking advantage of sick pay policies” Dr Jill Miller, research adviser, CIPD

seeing just how much an empty desk can cost an employer. “If you’ve got somebody who’s off sick – let’s say the average salary in the UK is about £23,000 – that works out at about £100 a day,” says Andrew Noble, managing director of occupational health provider Health Management. “That’s the average cost.” Just having an employee off for a week can end up costing an enterprise £500 and this is why it’s worth being proactive and investing in addressing absence rather than taking the cost on the chin. Noble explains that establishing clear policies and making use of a service like Health Management’s might only cost a fraction of this and yet can help prevent weeks of costly absence due to poor management.

One of the first things to appreciate about absence is that, while you can’t prevent illness and unscheduled sick leave, you can minimise its negative impact. “Half of an effective absence-management policy is having a clear and consistent approach to managing absence and cracking down on those who might be taking advantage of sick-pay policies,” says Dr Jill Miller, research adviser at the Chartered Institute of Personnel and Development (CIPD). However, she’s quick to point out these non-genuine absences are receding. “This year, employers are saying they’ve seen a decrease in non-genuine absences, like the typical hangover days and duvet days, which is really reassuring.” Many businesses are wising up to the idea that data is their best friend but, while enterprises are often quick to use data to manage customer relationships, they might be slower to use the same approach to manage areas such as absence. “By implementing a common practice for recording sick days, you can glean key data,” comments Morgan. Looking at the days lost to sickness, frequency of individuals’ absences and absences by team and department can help build up a wider picture and identify any systemic problems. “This may help you detect and tackle any underlying issues such as workplace bullying.” This is where absences can actually prove to be a useful tool, as they can be symptomatic of deeper problems. “Illness is just one of 20 factors of why people go off sick,” Noble comments. “It’s not always why they go off sick but it’s the reason they use.” While it can be tempting to view repeated cases of absence in isolation from the wider business, looking at the broader picture can help to address root causes. “The way to distill out what’s going on is by using a clinician who specialises in occupational health to identify the underlying cause of absence,” he continues. Identifying these problems can be vital as the true extent of the problem can easily be masked. Last month, a survey by the mental health charity Mind revealed that almost a fifth of employees have taken time off due to stress – but 90% of those that did gave a different reason for their absence. The CIPD’s Miller explains that in the last few years, workplace stress has rapidly become the most common reason for individuals taking time off work. “Acute medical conditions like heart attacks, cancer and strokes used to be top of that list but now they’ve been knocked down,”

www.elitebusinessmagazine.co.uk April 2013

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PEOPLE

The percentage of employees taking time off due to stress who gave a different reason for their absence, in a survey by mental health charity Mind

she says. “Along with stress going up, mental ill health has also gone up the charts, which is very worrying.” Health Management has also seen a huge rise in the number of mental-health-related absences. The occupational provider looks after 1.8 million individuals, representing approximately 10% of the working population. “40% of cases that we deal with involve mental health,” Noble explains. “That is the predominant illness category and a lot of that is essentially disguised.” This means that the cases an employer is aware of could simply be the tip of the iceberg, with the true extent of the problem going unreported. He continues: “If there was one area in terms of wellness strategies and health promotion in the workplace one should focus on, it’s helping managers know how to recognise stress and deal with it appropriately.”

“From a business point of view, if they’re coming into work without having that down time, people are less productive”

Of course, illness isn’t just an issue when it’s causing empty desks – even when an employee is firmly installed at their station, it doesn’t mean their ill health isn’t causing problems. In the current economic climate, presenteeism has become a real issue, capturing its fair share of column inches and causing real costs for enterprises. “From a business point of view, if they’re coming into work without having that down time, people are less productive and research has shown that they are prone to making costly mistakes,” says Miller. Culturally, this can be as indicative of underlying problems as repeated or prolonged absence. She continues: “Again, presenteeism can also be an outward sign of something deeper, like anxiety or stress, and can contribute to mental-health problems.” “Essentially, presenteeism is people working under pressure, stressed, who are not working efficiently,” says Noble. Ultimately, a lot of the root causes of presenteeism and unauthorised absence can be one and the same – we have simply seen a shifting from one cultural response to another. Fortunately, this means that both issues can be, in part, tackled with a single, united approach. “If you’ve got positive engagement with staff, people are working in a trusted environment, you will have better productivity, better health and better attendance at work,” Noble says. Morgan also feels that management of the underlying issues offers an excellent way to deal with absence. “A strong and positive company culture is perhaps the single most powerful way to ensure minimal disruption through absenteeism,” she says. Staff who are dissatisfied or who don’t feel engaged are far more likely to feel higher levels of stress or have an increased rate of absence. “Creating a friendly environment, where staff feel valued as part of a team and where flexible, family-friendly policies are in place is likely to prove more effective at keeping attendance rates high. “A lot rests with the culture of the organisation and I think that’s something deeper to be addressed throughout the whole of the organisation,” says Miller. “You need a clear and coherent approach and clear communication from management as well as HR.” When viewed in this way, it becomes clear that dealing with absence on a case-bycase basis is meaningless if you are not also treating the body politic. As she concludes: “It’s a whole business issue.”

April 2013 www.elitebusinessmagazine.co.uk

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28/03/2013 22:07

12 November, 2013 London

Celebrating British Business Success

Entries open 6 March â&#x20AC;&#x201C; 24 May 2013

020 7234 8755 entries@nationalbusinessawards.co.uk nationalbusinessawards.co.uk

Supported by

Untitled-16 1

28/03/2013 21:06

PEOPLE

With education becoming an increasingly costly prospect, is a university degree really the only indicator of a bright future?

Degree of success

WORDS: JOSH RUSSELL

here are very few who would argue that educating future generations isn’t a positive thing. But in the face of spiralling costs and an increasingly crowded job market, the precise value of a degree has come into question. Much noise is being made at the moment about ensuring the next generation have the required skills and are ‘work-ready’, and sometimes it seems like this isn’t something that is currently being obtained in higher education. But does this mean a degree is no longer of value in building successful businesses? “I think people are becoming more convinced that you don’t necessarily need a degree to be successful,” says Matt McNeill, CEO and founder of email, mobile and social marketing solution Sign-Up.to. Particularly within the tech sector, McNeill feels that a lot of the skills enterprises will be looking for aren’t necessarily those that have been learned in an academic context. Moreover, a degree of autonomy and an ability to learn new things, is paramount. “For us it has aways been about looking for the attitude and people who are going to be able to learn the skills as they go along,” he says.

“I think people are becoming more convinced that you don’t necessarily need a degree to be successful” Matt McNeill, CEO and founder,

Sign-Up.to

April 2013 www.elitebusinessmagazine.co.uk

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PEOPLE

The cost factor can also hardly be ignored. Simon Dolan – the entrepreneur who appeared on the Sunday Times Rich List 2011, authored How to Make Millions Without a Degree and was rumoured to be a serious contender for a dragon spot on the next series of Dragons’ Den – feels that a degree has become too shaky an investment. “Young people are realising that they’re going to come out at the other end with £50,000 - £60,000 worth of debt,” he explains. “It is so expensive to go that the admission numbers in the last couple of years have fallen.” Susanna Simpson, founder and managing director of Limelight PR, feels that a university education needs to have a significant potential payoff to make the initial outlay worthwhile. “University today is such a huge financial investment,” she says. “For many individuals it is a choice that makes perfect sense to them both personally and career-wise, but from my experience, entrepreneurialism requires so much more than education can offer.” Dolan, in particular, is a strong advocate of the idea that there is no clear correlation between having a degree and success. “When I started on my journey, university really wasn’t an option so I went out and did other stuff, which is exactly what people should be doing now,” he says. In part, he feels the younger generation has been taught to overvalue degrees, regardless of whether it’s actually a suitable career move for them. He continues, “If you’re not academic, then go and get a job. Forget about uni.” However, it may not be a case of being suited or unsuited to university – even with the most academically minded individuals, sometimes it’s just a case that a better route to success presents itself. After achieving very high grades, McNeill easily secured a coveted place at Oxford, marking him out as one of the highest fliers in his schoolyear. But by this stage he had already started the venture that would one day act as the holding company for Sign-Up.to and he suddenly realised what an opportunity he had on his hands. “The internet boom was really kicking off the first time round and I kind of took the view that if I didn’t get in there and make something of it now, I’d probably miss the boat,” he explains. After taking a year out to focus on his enterprise, he rapidly realised the path he was on was leading to brighter things than academia could. He jokes: “I don’t think most of my teachers ever spoke to me again.” But does he think it has a value in setting an individual apart from the competition? “Frankly, it’s the last thing I look at on a CV,” says McNeill. “I don’t really use it as a

“It signalled to my prospective graduate employer that I was intelligent and willing to work hard” Olga Nuryaeva,

co-founder of business development, Lenstore

differentiator.” He does feel that in certain technical roles, where very specific skill sets are needed, it can help to set someone apart if they have related academic training. But it doesn’t necessarily carry the value of hands-on experience. “Not having that certainly wouldn’t rule someone out if they had experience.” However, Olga Nuryaeva, co-founder of business development at online contact lens retailer Lenstore, feels we shouldn’t be too quick to rule out a degree’s value in setting professional people apart. She feels that without the undergraduate degree she earned at Oxford, there’s not a chance she would be where she is now. “It signalled to my prospective graduate employer that I was intelligent and willing to work hard,” she says. She doesn’t feel that she needed the skills from her degree to carry out the requirements of her job but it definitely did get her foot in the door. “I don’t recall relying on my knowledge of formal logic or the ability to solve Lagrangians at any point during my two years in investment banking,” she says. “But without it, my employer had little evidence to go on when deciding whether I’d be willing to work 16-hour days and be able to learn quickly.” Ultimately, the measure of success is how you use the resources at your disposal – Dolan feels the focus needs to be on creating your own opportunities while you’re young. “It’s about going out and getting some experience in business and learning when to cut that and say: ‘I’m going to try it on my own’,” he says. Simpson also feels that, while qualifications are very useful, we certainly shouldn’t limit our definition of someone’s abilities solely on whether they have a diploma. “Today’s society provides ample opportunity for people from all walks of life, both in and outside of education,” she says. “It is up to the individual – not the letters next to their name – to create opportunities and make success happen.”

www.elitebusinessmagazine.co.uk April 2013

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28/03/2013 22:04

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PEOPLE

TEAM TRANSFORMER Martin Reed

Reed has been at the helm of psychometric testing company Thomas International since 2007, having been appointed chairman two years earlier. As well as penning this regular column for Elite Business, he is also a founding member of Buckingham Business First and a fellow of the Institute of Directors.

Just a quarter of businesses have a strategy for improving customer service. But mega customer experience should be at the heart of every business, says Martin Reed

f there was one guaranteed way to give your business a competitive advantage regardless of the size of your enterprise or the industry you operate in, it would surely make sense to ensure your company was focusing on and prioritising that idea, wouldn’t it? However, customer service – proven to be the single most important competitive advantage for businesses across all industries – is often something that is left to chance. According to the Econsultancy Multichannel Customer Experience Report, only 26% of companies have a well-developed strategy in place for improving customer experience, meaning 74% are simply crossing their

Can’t get no satisfaction fingers and hoping for the best. It’s entirely possible that this apparent disregard for the importance of customer service comes from the fact that many senior-level managers see themselves as removed from the day-today customer-facing part of the company. Yet in any organisation, the commitment to customer service has to begin at the top. Of course, the end result is how your company deals with customers and clients at the coalface, but the emphasis on the importance of outstanding customer service needs to be ingrained in company culture. In today’s consumer-driven society, competitive advantages derived from having a unique or cost-effective product tend to be

short-lived as your competitors are often able to duplicate what you offer, or offer it more cheaply, making customer service a vital differentiating factor. Most UK businesses believe that customer service has become increasingly important over the last year and will continue to be even more important in the future, so it makes sense to pay attention to how your company is performing in this area. Every employee must understand what is expected of them when interacting with customers and that ethos needs to be laid out by senior management. Companies need to be very clear about what ‘great service’ looks like for their particular business – what are the competencies you need to see your

www.elitebusinessmagazine.co.uk April 2013

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PEOPLE

The percentage of companies that have a well-developed strategy in place for improving customer experience

“Customer service – proven to be the single most important competitive advantage for businesses across all industries – is often something that is left to chance” staff demonstrating? For example, do you need them to use more initiative and take ownership of situations more regularly? Do you need them to work on building long-term relationships with clients? Do you need to see them integrate more fully with their team to ensure the group is working as a whole? One of the tools used by many companies when evaluating the experience they offer their customers is to bring in a mystery shopper but our experience in working with hundreds of companies highlights that this isn’t the best approach for everybody. While there are clearly benefits to using a mystery shopper, there are also drawbacks to auditing this way – namely the limitations

of the information collected. While mystery shopping highlights any specific flaws in an employee’s performance, a more in-depth method can help you discover the root cause of the issue and how to address the problem. Simply criticising behaviour rather than providing a more well-rounded view of a particular employee’s overall performance doesn’t encourage productive communication between manager and employee when addressing the issue and can demoralise employees. Instead, using a more focused assessment and looking into individual competencies, such as clear communication, customer focus or team work, allows you to pinpoint exactly which areas of the employees’

performance need improvement and create a development plan to address the issue head on. Our experience shows us that the most productive approach to assessing how well your company delivers customer service is to help your employees develop selfawareness about their interactions with other people and their impact on them. It’s not about finding fault, but about helping an employee understand how their perception of themselves compares to other people’s. Poor customer or client relations aren’t necessarily about bad performance or laziness on the part of an individual, but could simply be a lack of awareness of how they come across or a lack of understanding of what is expected of them. Using a tool like the Thomas 360, where you can decide which competencies to focus on, allows you to gather quantifiable data on soft skills and gives employees performance feedback from those they work with, enabling them to compare it with their own perception of their performance. Our approach allows employees to rate themselves on a set of competencies and then compare their ratings with those given by other people including their managers, peers, subordinates, customers and external suppliers to help them understand how they come across to other people. Instead of picking holes or finding fault, businesses we work with find helping employees increase their self-awareness has a greater positive impact on performance. As a leader, you need to be very aware of the standards you’re setting, and then take the time to assess how well your employees are meeting those standards with a fully rounded approach. Taking a holistic view of how far employees are meeting the company standards and the areas where further development is needed is a more productive approach than simply pointing out where they are failing. Whether you choose to utilise a tool like 360 or simply change your approach to customer service, being clear about what your customer service standards look like and taking an all-encompassing view of an employee’s performance in relation to those standards, highlighting the difference between how individuals see themselves and how others see them, has proven to be the best way to address any customer service performance issues. By addressing how your business provides customer service, its quality and its consistency, you can face the coming challenges, and the increasing importance of customer experience, with confidence.

April 2013 www.elitebusinessmagazine.co.uk

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TECHNOLOGY

Sometimes in the world of gadgets, you get fallow periods, points where the tech world pauses to gather its breath. And then there are months that are a veritable cornucopia, spilling over with an abundant growth of gizmos. This is one such month, motivating us to bring you a one-off gadget special, celebrating the cream of the technological crop and looking forward to the harvests still to come

WORDS: JOSH RUSSELL

Samsung Galaxy S4 Samsung is rapidly approaching bitter rival Apple in terms of the furore that builds up around the release of its new products. But does the Galaxy S4 live up to the hype? Seemingly, yes. It certainly packs a lot of innovation into a small package, whether that’s its hands-off ‘Air Gestures’ allowing you to control the device by swiping above the surface, or its Smart Pause feature that pauses video content whenever your eye leaves the screen. With more new software than you can shake a stick at, the S4 should certainly make a splash when it touches down later this quarter.

www.elitebusinessmagazine.co.uk April 2013

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TECHNOLOGY

This uber-smart armband

Myo interprets the electrical activity in your muscles

Watching Mark Hamill in Star and allows you to use Wars control distant objects at the slightest flick of his wrist left a hand gestures to control whole generation with an indelible your electronic devices fantasy that one day they might be able to do the same. Well, with Myo, we have taken one step closer to realising it. Available now for pre-order, this uber-smart armband interprets the electrical activity in your muscles and allows you to use hand gestures to control your electronic devices. The only worry now is that we’ll wake up and realise it was just a beautiful dream...

Chromebook Pixel There are some things that no longer surprise. High resolution? Nup. Touchscreen? Yawn. On a laptop? Now that, at least on a device that isn’t a tablet-hybrid, is still something of a rarity. The Chromebook Pixel is Google’s first touchscreen laptop, adding a new way to engage with professional content without sacrificing power or versatility. Ranking higher res than Apple’s Retina Macbook Pro at 236 ppi and packing plenty of punch in its steely, minimal case, the Chromebook Pixel is an interesting step forward for high-end laptops.

Pebble Smartwatches are finally securing some serious attention, aided in part by the recent buzz around Apple’s proposed iWatch. But for a lot of us, the fascination really started around the initial Kickstarter bid for Pebble. Now hitting the mat for some backers and available for pre-order, this programmable E-paper smartwatch is a beautiful option offering excellent smartphone integration and making checking texts, skipping through your music library or receiving Facebook alerts a breeze.

April 2013 www.elitebusinessmagazine.co.uk

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April 2013 www.elitebusinessmagazine.co.uk

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TECHNOLOGY

The Techspert David Hathiramani

He may be co-founder of trendy suit retailer A Suit That Fits, but Hathiramani is also something of a closet geek. And the Imperial College computing graduate is here to impart some of his wisdom about setting up an internet business.

Game on

Prioritising website development for both shortand long-term gains is the name of the game, says EB columnist David Hathiramani 73

n our online tailoring business, teams are always having to decide whether the focus should be on short-term results or long-term development. Although you would imagine that this is a debate confined to small businesses, friends in larger businesses are having the same discussions. Smaller companies often do not have the reserves of the bigger businesses, so they have to be more focused on short-term results simply to ensure survival. But you could argue that, as they are often run by the owners, there is an emotional interest to see the business succeed in the long term.

Should you be building the infrastructure for growth or should you be getting the growth? Whatever the reasons, it is always difficult to decide on where resource should be spent; should you be building the infrastructure for growth or should you be getting the growth? I donâ&#x20AC;&#x2122;t think that there is a right or wrong answer. Many businesses have developed a long-term platform, and been successful, and many businesses have incrementally improved and been equally successful. Although I canâ&#x20AC;&#x2122;t say what will be right in your situation, I can tell you where I believe the most common mistakes are made.

April 2013 www.elitebusinessmagazine.co.uk

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TECHNOLOGY

“Technology is very good at systematising an existing process but creating, refining and building a process for that system all at the same time is incredibly inefficient” Misstep one: ‘We need a system built to do this new thing’

Firstly, your business has decided to launch something (for example, a new invoicing process). You have decided to build a system for this invoicing process. From my experience working for years in IT, this project is almost certain to be doomed. It will take significantly longer to develop, and the development will also be very frustrating. Technology is very good at systematising an existing process but creating, refining and building a process for that system all at the same time is incredibly inefficient. The above statement should be broken down into two simple steps. First of all, do the new invoicing process manually. This will create manual work to begin with, but you can iron out any problems while it is on paper (or maybe in an existing system, like Excel). When the process has been ironed out, then it’s worth developing a system. Misstep two: ‘Let’s do an amazing new thing to increase conversions on our website’ (and forget about what we’ve already got)’

We all want to do something amazing and new. In fact, some of the most subtle projects can have the biggest effect on your business. Before moving on to the next big thing, confirm that there aren’t any big gains to be had in what you already have. What’s the point in launching a new project online to increase awareness of your business, when the shopping cart on your website is so confusing that no-one can

purchase? When you sort out the shopping cart first, you will have the biggest gain when you drive lots of business. Misstep three: ‘We’ve finished that now’

Often a brief is given by one team and the project is completed by the IT team. In fact, the project getting put live is actually the first step. Most of the learnings will come from observing how the project is performing live. For example, let’s say that we decided to fix the shopping cart in the above example. Now that it’s live, we should heavily observe and refine it until we are satisfied that no more obvious improvements can be made before moving on. Once we are happy that we have observed enough users on the system, it can be signed off as complete. In summary, when you have clear objectives, and your teams work together to achieve these, while taking the time to work on what you currently have in place, you’ll set your business up for the future while still growing at the same time.

www.elitebusinessmagazine.co.uk April 2013

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28/03/2013 21:17

TECHNOLOGY

One step ahead Ensuring your network is secure means keeping apace with your enemy

WORDS: JOSH RUSSELL

T security is constantly changing. Once upon a time, security breaches were about lone individuals overcoming security solutions for political reasons or bragging rights. But as the internet has become increasingly commercialised, security breaches have become more sophisticated, indirect and, above all, financially motivated. “What we’ve seen happen over the last few years for hackers is it’s a lot more about the financial game now,” comments John Dryden, CTO of IT support provider IT Lab. “It’s about what they can gain commercially from an attack.” However, it’s not just a case of an outsider busting in to swipe some credit card numbers.

While an etailer is obviously a sizeable target for any attacker, it pays not to forget one of the key tenets of the technological age: big data equals big bucks. “There’s obviously a huge black market for private information,” comments Dryden. The information stored in an enterprise’s database has a very real monetary value – whether it’s sold for illicit purposes such as data theft or merely passed on to marketing companies who may not be aware of the nature of the information they’re buying, it’s a given that the individual behind an attack will be able to profit from the information they access. “It’s not just credit cards,” he continues. “The size of a user database is almost more important.” Taking this into account, the importance of protecting against external attacks cannot be overstated. But ascertaining where the real weaknesses and holes in security are means understanding the methods a malicious party

April 2013 www.elitebusinessmagazine.co.uk

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TECHNOLOGY

uses to gain access, which are often incredibly insidious. “People don’t appreciate that the days of people trying to force their way into your network have gone,” says Dryden. Security breaches and attacks are in fact often very passive from the perspective of the perpetrator. “Most attacks are initiated from the inside,” says Dryden. This is something the public has begun to latch onto, with even the most technophobic individuals being fairly wise to the threat of trojans and spyware posing as legitimate software, but there are plenty of exploits that many still fail to consider. A common threat is a ‘drive-by attack’. “The user might visit an otherwise innocent website that had malicious code in it,” he says. Without them knowing it, their computer would execute the code and leave them vulnerable, while showing no sign that anything untoward had happened. While the more tech-savvy of us at this point might be tempted to roll our eyes and put this down to an ignorant individual not carrying out due diligence in avoiding untrustworthy

“You can set something up as best you can but without monitoring John Dryden, CTO, IT Lab and constant updating you can still be at risk” sites, it’s worth bearing in mind that it really isn’t all that straightforward. “In the old days, it was easy,” says Dryden. “You told people: ‘Don’t go to dodgy sites because you might get infected’.” But the game has changed and if a legitimate site has been compromised, it may be impossible for anyone to know until it’s far too late. One real world example he gives is the homepage of a high profile American football club; just a small piece of malicious code had been inserted without the administrator’s knowledge. As a result, all of the visitors who accessed it during that period were exposed. He explains: “There was nothing wrong with the website; you’d never dream of blocking people from going there, but no one knew the site had been compromised.” Obviously, for a business, this has huge ramifications. Better staff education and a ‘smart browsing’ policy alone aren’t enough to protect a network, as the exploits involved are becoming increasingly subtle. But there are plenty of things an enterprise can be doing to keep itself safe. “I’d always start with

a perimeter firewall and what we’d term as next-generation firewalls as an immediate solution,” advises Dryden. Modern firewalls do far more than merely monitor the perimeter and external sites; instead, they examine every incoming packet of data and ensure that anything suspicious is identified before it’s able to reach the network. Additionally, he recommends regular penetration tests are conducted, simulating known exploits and evaluating how well the network responds to malicious attacks. However, installing a few solutions and slipping back into complacency isn’t anywhere near enough. “You absolutely cannot be 100% protected,” says Dryden. “You can set something up as best you can but without monitoring and constant updating you can still be at risk.” Security needs to be managed and needs full-time attention. Any organisation that faces significant losses in the face of a data breach cannot expect to set up some tools in a single day and be covered from then on. He comments, “There isn’t a ‘set it and forget it’ answer to security. It’s never just going to look after itself.” Unfortunately, security is an arms race and new threats are constantly emerging. “There are several sites you can visit, where you can subscribe to see how many exploits there are and it’s just incredible how many don’t get publicised,” Dryden says. And what may have offered significant protection once, rapidly becomes obsolete as more advanced techniques arise. “Take your eye off it and tomorrow someone could come up with a new exploit,” he says. “I think the best you can do is do it once, do it really well but make sure you go back regularly and revisit.”

www.elitebusinessmagazine.co.uk April 2013

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FRANCHISING

Franchise news New face and franchises at Papa John’s

WORDS: ADAM PESCOD

The ever-expanding pizza franchise Papa John’s has appointed Anthony Round as its new business development manager to help existing franchisees expand their retail footprint and support new franchisees joining the company. Round has more than 20 years’ experience in the franchising industry, with previous senior roles at Dominos, Pizza Hut, Dwyer Group and most recently Cash Generators. The appointment comes as Papa John’s announced several new franchise opportunities in the South, including sites at Fareham, Reading and Eastleigh.

“We are focused on growing the number of franchised Papa John’s outlets throughout the UK,” explained Round. “These new opportunities represent an exciting chance for individuals to invest in a rapidly growing business, which is also the market leader in its field.” He added: “In addition, Papa John’s is currently running an incentive scheme to help new franchisees set up. For a limited period, deals are available on fees and equipment for new stores open during 2013, which really makes Papa John’s a tempting offer for potential franchisees.”

Clean sweep for Merry Maids duo The Sutton Coldfield franchise of domestic cleaning company Merry Maids has seen an impressive 100% leap in turnover in its first year of new ownership. Franchisees Helen Cook and Becky Hewitt took over the business in July 2011 after purchasing the franchise from Cook’s parents who joined Merry Maids in 1999. Since taking to the helm, Cook and Hewitt have trebled the number of customers and are planning to expand the business from its current customer base in Sutton Coldfield and Lichfield, to Tamworth and surrounding areas. “With the support and guidance from Merry Maids’ franchisor ServiceMaster, the 100% increase in turnover in our first year has surpassed the forecasts of our business plan and our wildest expectations,” said Cook. The pair are now looking to recruit two new members of staff to cope with the increase in demand for their services. Merry Maids was founded in 1979 in Omaha, Nebraska, United States and became part of the ServiceMaster family of brands in 1988 before arriving in the UK in 1990. It is the largest home cleaning franchise network in the world.

www.elitebusinessmagazine.co.uk April 2013

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FRANCHISING

Belvoir in growth joy across the border One of the UK’s leading lettings franchises, Belvoir, is enjoying further expansion in Scotland with Belvoir Inverness and Belvoir Falkirk completing successful acquisitions. Amjed Rasul, owner of Belvoir Inverness has acquired the residential lettings portfolio of a local agency and Mike Campbell of Belvoir Falkirk has bought out a local lettings business. “I am delighted that we have successfully completed the acquisition of a residential portfolio from a well-established local business,” said Amjed, who launched the Belvoir Inverness office five years ago. “We started negotiations in early January to establish compatibility of the residential portfolio for our business. With the help of the acquisition team at Belvoir’s Central Office we managed to complete the transaction in about a month.” Belvoir CEO Dorian Gonsalves added: “As part of Belvoir’s growth strategy we are now proactively targeting key competitors. Belvoir’s flotation onto the London stock market one year ago has enabled us to help franchise owners to acquire competitors within their territory, and if it is the right opportunity we can also provide assistance with funding.”

Fresh direction for transport recruiters Transport and logistics specialist recruiter, Driver Hire Wakefield, has been bought by entrepreneurial brothers Craig and Danny Shuttleworth. Driver Hire has a network of 100 offices nationwide. It provides temporary and permanent drivers and other logistics staff to organisations across the UK and helps out when customers need extra staff to deal with holidays, illness or business expansion. But there’s another string to their bow,

too: the company is also a leading provider of Driver Certificate of Professional Competence (Driver CPC) and other logistics training. “In my previous job I was responsible for transport and logistics, so I understand what clients are looking for when it comes to temps,” said Craig Shuttleworth. Meanwhile, Driver Hire Swansea has a new man at its helm in the shape of former business management teacher John Bevan.

Home Instead franchisee lands BFA position The British Franchise Association (BFA) has appointed Catharine Chalton, of Home Instead Senior Care, to its national board. Chalton runs the Wirral office of global franchise Home Instead, which specialises in providing care at home for the elderly, allowing them to remain in their own homes for longer than would otherwise be possible. “In my role with the BFA I am looking to promote the work of the BFA and also be a representative voice for all of the franchisees whom the association supports,” said Chalton. Home Instead was recently named Top Franchisor of the Year by the US Franchisee Business Review – the third year running it has scooped the award.

April 2013 www.elitebusinessmagazine.co.uk

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FRANCHISING

Franchise in the spotlight:

Crêpeaffaire With the right approach and an effective business strategy, crêpes translate into a tasty snack in any language

WORDS: JOSH RUSSELL

y rights, you can’t help but feel that dwelling somewhere behind a company selling crêpes should be a floppy white hat and a hackneyed French accent. Fortunately, life has little room for such narrative convention; rather than the gourmet of cliché, the creative drive behind Crêpeaffaire comes from an experienced business mind. “My background is very corporate,” says founder and managing director Daniel Spinath. Having worked in banking consultancy, an international role with Procter & Gamble, as a general manager at Heinz and a board director for Eurotunnel, Spinath certainly knows a thing or two about big business. “I lived and worked in nine different countries until early 2000 when I said, ‘This is the time for me to take my

corporate learning but do something myself’,” he explains. Crêpeaffaire was in part inspired when Spinath realised that crêpes hadn’t ever received this sort of professional treatment. “You’d associate crêpes a lot more with little stands with Nutella than with a branded, systematic business,” he says. Essentially, Spinath’s vision has been to build an effective model and brand around a fast food product but one that doesn’t come with the perceived negatives often attached to fast food. He draws comparisons to the familiar high street brands Wagamama and Yo! Sushi. “You take a product like noodles or sushi that originally were run by independents and basically brand it,” he says. “At the outset the idea was create a concept, rather than just a product, that can be scaled and have international potential.” Which is easier said than done. Building an effective understanding of a relatively untested product is far from easy and requires a good deal of knowledge about the market you’re intending to enter. “I did quite a bit of qualitative and quantitative research about how people perceive a product like this,” explains Spinath. “But research has to stop at some point.” Eventually, it becomes necessary to enter into the situation

April 2013 www.elitebusinessmagazine.co.uk

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FRANCHISING

and test things out in what Spinath dubs a ‘live laboratory’. And so Crêpeaffaire started as a single location in Hammersmith. He continues: “We looked at what worked and didn’t work, rectified what didn’t work and built on what does, and then expanded into the right locations.” This organic method of development has very much been a cornerstone of the Crêpeaffaire strategy. Spinath feels that going for seed funding just isn’t feasible for a venture without a tried and tested model and therefore a much more incremental finance strategy is required. “You start with one shop, see how it works and, initially, fund your new sites organically by cashflow from the previous sites,” he explains. This not only helped keep the business growing in a natural way but it has also helped iron out wrinkles in the overall model in a live situation. “We’ve learned what works, we’ve 88 82learned what doesn’t work, we’ve made our mistakes – we have enough confidence and enough experience now to say we understand what works and what doesn’t,” he remarks. “Now it makes sense, with proof of concept, to scale it.” And, of course, one of the forms this takes is franchising. Spinath is keen to stress that franchising is far from the only string to Crêpeaffaire’s bow; at its core, the fast food outlet is very much a corporate venture. “If you have a proven concept, you’d rather operate that yourself and reap the benefits,” he says. But he acknowledges that brand presence is a vital resource for any food outlet and franchising is a useful tool to ensure that a brand is able to occupy that space in the consumer’s mind. “It’s about having storefronts, having a marketing presence in different parts of the country and sometimes the most efficient way to supplement that is by means of franchising,” he says. But the Crêpeaffaire franchising strategy is atypical to say the least and amongst their current franchisees, it can count a large-scale, multi-billion dollar corporation. “We’re looking at really qualified individuals who have the potential in the right areas to look at cluster development, rather than just single franchises,” Spinath explains. Key to its franchising method is area development, wherever possible signing deals that require the opening of a set number of stores within a fixed contract term. While Crêpeaffaire has big plans on the home front, with a focused, London-centric expansion and an upcoming satellite outlet in Leeds offering a foothold for further development in the north, the enterprise also has designs on the international market, facilitated by the versatility of its product. A recent franchising deal is seeing the expansion of the business with a cluster focused on Greater Hamburg, but it’s not only the German palate that Spinath feels might have a partiality for the enterprise’s product. “By definition the food market is a multi-local market, where you have incredible differences from region to region,” he explains. But

“At the outset the idea was create a concept, rather than just a product, that can be scaled and have international potential”

the key to Crêpeaffaire’s expansion plans lies in recognising that the crêpe has many analogues in different cultures. Outside of Europe, Spinath has identified the MiddleEastern and East-Asian markets as having a particular cross-compatability. This multicultural approach is strongly reflected in the Crêpeaffaire menu, which features variations such as Thai or Mexican crêpes, and is something that has always been built into the nature of the product. “A crêpe is quite well known in different shapes and forms in different cultures; it really depends on what you put into it,” Spinath continues. “There is quite a bit of local adaptation possible with what we do.” This is the real strength of the Crêpeaffaire approach; it has a firmly established model built around an incredibly flexible product. “The business, in terms of its branding, its service and its culture, is very fixed,” Spinath says. “Anywhere we do it, you have that same style.” But within that safety net is a high level of cultural adaptability. As Spinath concludes: “You know the crêpe will work – you just have to adjust to local tastes.”

www.elitebusinessmagazine.co.uk April 2013

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LEGAL

WORDS: JOSH RUSSELL

Under the hammer

“It’s usually at that point where the parties commit to a period of exclusivity when they’re going to focus on that deal and that deal alone” James Waddell, partner,

Stevens & Bolton

When you’re so close to the hammer falling on a potential deal, it can be easy to miss out on key details. But a little preparation can prevent a lot of wasted time and revenue

iven that it’s often the culmination of all of their efforts, it’s unsurprising that entrepreneurs need to protect from any missteps that might occur during the exit process. One only needs to look at the fallout between HP and the former owners of its Autonomy purchase, after claims surfaced that the tech giant feels the business was overvalued, to see that it’s important to take the time to employ due diligence. After five years’, ten years’ or even a lifetime’s work, it’s not worth blowing an all-important deal or, even worse, be dragged through the courts as a result of being too hasty. The period of due diligence typically starts shortly after legal consultation begins on the deal and a lawyer has drawn up a non-binding heads of terms letter. “It’s usually at that point where the parties commit to a period of exclusivity when they’re going to focus on that deal and that deal alone,” explains James Waddell, partner at law firm Stevens & Bolton. “That gives the buyer some certainty that it’s going to start spending money and it’s not going to find the deal has been sold to someone else.” Typically, this is when enterprises engage in due diligence with the specifics of financial and legal elements of the business, ensuring that everything that may be of concern is taken into consideration. Often this is conducted jointly with legal and financial consultation, attempting to smooth out any hidden snags. “At a certain point the buyer will feel comfortable enough that they’ve got the information they need to start drafting contracts and see that process through to the finishing line,” Waddell says. Unfortunately, as with true love, the course of these things rarely runs smooth and expecting to just coast into a secure and binding deal is more than a little unrealistic. More often than not a lot of businesses would benefit from keeping their eye on smoothing the way for exit, long before they ever start

April 2013 www.elitebusinessmagazine.co.uk

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LEGAL

“Extended periods of due diligence don’t necessarily kill a deal, but they do significantly impact upon timing and cost” James Waddell, partner, Stevens & Bolton

attempting to engage with buyers. “Extended periods of due diligence don’t necessarily kill a deal, but they do significantly impact upon timing and cost,” says Waddell. “So there is no substitute for being well prepared in the run-up to the process.” First of all, one thing Waddell would suggest is that things need to be considered from the point of view of a potential buyer and specific attention needs to be paid to the areas that are likely to be of key interest. “Would it effectively just be buying your customers?” he says. “In which case, you need to focus on long-term customer contracts being very clear with regard to terms. Also, would they be buying key staff? In which case, focus on service agreements and restricted convernance. Or is it the property? Or the IP?” By first focusing on the areas that are going to carry the majority of the load, an enterprise can build a stable foundation for the later, more intricate details. Obviously, this begins to raise an issue with how much access you have to necessary data and information within your organisation. “Who are the gatekeepers for information?” Waddell asks. For the majority of enterprises, the fact that they are beginning to look towards an exit is considered to be on a strictly need-to-know basis but often these are the very people who will have access to the sort of information buyers will need to know. With this is mind, it’s necessary to consider how you handle information within the company. “You might want to start thinking about keeping key employment information in a format that you don’t have to ask for, doing your reporting in a way that you’ve got that information to hand,” he says. Another good reason to start addressing these things ahead of time is connected with conflicting interests in the run-up to a sale. While you and fellow equity holders might be willing to work every hour under the sun getting things watertight, ground- and middle-level staff aren’t so strongly incentivised. Unfortunately, here a bit of tact and a much longer run-up period to minimise excessively high workloads, are about the only solution that can cover everyone in the business. “There isn’t a silver bullet to it,” Waddell comments. “The reality is all you can do is be mindful of those issues as you go into a process and try and mitigate them as best you can.” But presuming you put in all the groundwork and both you and your buyer carry out significant periods of due diligence, what can you do in the rare situation that the proverbial does hit the fan post-sale? How can you navigate your way out of the aftermath? In theory, it’s simple. As long as every element of due diligence has been carried out, a company’s obligations should be covered by the contract. If it has

misled the buyer in its representation of what is being bought, it will be viewed as fraud and pursued through the courts. However, where it becomes more complicated is if the fraudulent representation is on the part of a party like an external financial controller. “Obviously, if it’s one of the principle contracting parties on the sales side, it’s pretty clear who’s at fault,” says Waddell. “If it’s somebody where it’s slightly less clear who’s responsible for that person, then it’s a bit harder to know where the liability will fall.” As with other areas of business, a little straight thinking, careful planning and consideration of issues ahead of time can prove to be the best defence an entrepreneur can employ against a golden deal turning sour. It just needs a little proactive management. As Waddell concludes: “You can make the process smoother, less disruptive for you as a businessperson, more certain to conclude in the right way and ultimately cheaper if you’ve done your homework right and prepped.”

www.elitebusinessmagazine.co.uk April 2013

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classifieds Statutory Compliance

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the START-UP DIARies

Keeping it fresh

Nicola Barron discovered that redesigning her company’s website is an excellent way to galvanise her plans for the future Nicola Barron Founder of Homemade London

www.homemadelondon.com

hen I first created the Homemade London website, ahead of my business’s launch in 2010, I made certain assumptions about what kind of business it would be – about our prospective customers and their imaginary spending habits. A few years on, some of those assumptions were right and others were proved wrong. The new site will help to refine our brand and grow the business in its most profitable areas. Creating it won’t be a cheap exercise – the development, design, photography and marketing costs will represent the biggest investment I’ve made since opening – but after nearly three years, it’s time for some reimagination. When I worked on the BBC science programme Tomorrow’s World, I remember speaking to a producer who had been working on the programme for well over a decade. The programme itself had been running for nearly four decades and she said to me, “The thing about Tomorrow’s World is that you’re continually reinventing yourself; always looking at ways to be fresh and attract new viewers without alienating those loyal to your brand.” Eventually, when the producers couldn’t think of any way to keep it contemporary, they pulled the plug. It’s a lesson I aim to learn. Reinvent or die.

So, how do you grow without ruining what you’ve built? How do you replenish and stay fresh, without alienating your existing customers? I think there are some key questions for any entrepreneur to ask: If someone bought my business tomorrow, what changes would they make?

This is a great exercise for focusing your mind and emotionally distancing yourself from your business. Are there some obvious things I’m missing? Am I being ruthless enough about things that aren’t working? What are the things I really should be doing but haven’t because the everyday pressures of running a business have been getting in the way? What are people really buying into?

If you understand the reasons people are buying your products, it’s easier to work out what other products and services to offer them. Do some customer research. Ask people open questions, not leading ones. What need or want are you meeting? The answer may not be what you were expecting. What is the single biggest opportunity open to me?

After three years, things are starting to calm down and at last I have a bit of time and

resource to start thinking about the longer term. And there are loads of things I could be doing. I’m lucky that I get approached by lots of interesting people with good ideas for partnerships. But, realistically, I can only make one big bet on the future. A new venue? A partnership? Something completely different? I’m going to focus on doing the thing that offers the biggest potential prize. There are things I’ve learned and customer relationships I’ve built along the way that could be applied in entirely new ways. I’m not going to get hung up on incremental change if there’s something more dramatic I can be doing. Will making that bet stop me from pouncing on any opportunities that open up?

Having said I want to think big, I also don’t want to tie up so much of my time and money that I can’t be nimble. Writing a book might be a great way to grow my brand, but it’s a huge commitment of time and I know from writing this column that deadlines can override everything else you need to do. Opening a second shop would use up all my money and prevent me from investing in marketing or creating new classes – maybe there are less capital intensive ways of expanding than committing to a long-term lease. One of the biggest business lessons I’ve learned in running Homemade London is the importance of flexibility and keeping fixed costs down. If physical expansion is the big opportunity, maybe pop-ups are the right way to do it. Is an expansion going to mean I lose focus on my core business? How do I ensure that standards don’t fall?

This question really boils down to whether I have the right people in place to run the day-to-day business. Start-ups are often the result of one person’s vision, passion and expertise. That can make it hard to scale up or experiment. Do I have to invest in recruitment or development before I do anything else? Am I up for it?

After three years of hard work, low pay and nerve-racking conversations with my accountant, do I really want to take new risks, rather than enjoy the fruits of my labour? Well, yes actually.

www.elitebusinessmagazine.co.uk April 2013

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28/02/2013 12:02

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