Elite Business Magazine by webwax

AUGUST 2012

DIY Public Relations

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FERTILE GROUND

UK start-ups are flourishing

SURVIVING REDUNDANCY

Make sure your firm bounces back

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Meet Michael Acton Smith: the man behind global phenomenon Moshi Monsters and the UK’s answer to Walt Disney

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CONTENTS

Inside this month... ISSUE 01 AUG 2012

16 The Elite interview

Michael Acton Smith: from playing chess as a teenager to buying his own island

09 Editor’s letter 10 Contributors 12 News in brief 13 Talking point 14 Book reviews 22 One to watch

Meet Simon Procter, founder of Housebites. It’s like a takeaway only better

26 UK start-ups on fertile ground

Which businesses are doing well in today’s tough economic climate?

30 Doing things differently

38 Shout about your business Doing your own PR saves time and money – and puts you in the driving seat

Ian Sanders on why businesses shouldn’t be afraid to challenge the status quo

34 Finding the right finance

A refusal of a loan from the bank needn’t spell disaster for a start-up

42 ABC of brand building

RPM’s Hugh Robertson explains how to make your business stand out from the crowd

46 Keeping the wheels turning

Talking overseas strategies with the CEO of British stalwart Brompton Bikes

49 A match made in heaven?

Strong business partnerships can mean the difference between success and failure

54 Know recruits better

Thanks to a new trend you can find out what makes your employees tick

56 Keep people motivated

Redundancy: can it be business as usual once the dust has settled?

59 Tech for start-ups

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

65 Lessons from an ‘e-tailor’

The founder of aSuitThatFits on building a customer-centric website

69 Be a master of your own destiny

62 Driven by data

In this climate, getting to know your customer better is the key to survival

Master franchises represent a unique opportunity for entrepreneurs

72 Franchise in the spotlight

Italian family-run firm Lavazza is bringing chic coffee to the masses

77 Trouble in cyberspace

It can pay to take social networking seriously; get it wrong and you could end up in court

80 Classifieds 82 Start up diary

AUG 2012 | 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

ISSUE 01 AUG 2012 SALES Harrison Bloor – Account Manager E: harrison.bloor@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 Josh Russell – Feature Writer E: josh.russell@cemedia.co.uk Jon Card – Feature Writer E: jon.card@cemedia.co.uk Kia Ure-Reid – Researcher E: kia.ure-reid@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.lecount@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

Editor’s letter It’s been an important year for the UK: first we had the celebrations of The Queen’s Diamond Jubilee, followed by the excitement of the Olympics. It has also been a big year for enterprise. According to the Open University, new businesses are starting in the UK at the fastest rate since 1989. What’s more, small businesses are playing a huge role in picking up the pieces of the fragmented UK economy. Statistics from the Department for Business Innovation and Skills (BIS) show that nearly six out of 10 employees in the UK work for small and medium-sized enterprises (SMEs).

This is why SMEs and start-ups need all the support we can give them: be that from the Government, the banking sector, or publications such as Elite Business, which will endeavour to inform, educate and help enterprises in the UK as best can. We know times are tough - this is why we have produced a feature this month on DIY PR (page 38) and an article on how to recover if the worst has happened and you’ve needed to slash headcount (page 56). But there is also hope, which is why we wanted to shine a light on some of the best of British business, with our feature on what companies and sectors are flourishing (page 26) and our cover profile of entrepreneur and web tycoon Michael Acton Smith. His story is compelling – from a bedroom start-up with firebox.com to an international success story with Moshi Monsters, which competes with the likes of Disney. We hope that tales such as his will encourage others to reach for the stars - who knows what you may be able to achieve? HANNAH PREVETT EDITOR

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 Copyright 2012. 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

AUG 2012 | www.elitebusinessmagazine.co.uk

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CONTRIBUTORS

Contributors Ian Sanders

Passionate about capturing and communicating ideas, Sanders is the author of four business books, the latest being Mash-Up! (reviewed on page 14). A regular contributor to The Financial Times and Monocle 24, Ian aims to bust a few myths by looking at business differently. He thrives on great business ideas and even better coffee.

Emilie Sandy

St Martins graduate Sandy is now photographer to the stars, shooting icons of music, publishing, advertising and fashion. Having lived in London since 2000, she still likes to escape back home to the Cotswolds to relax properly. When in the Big Smoke, she settles for unwinding with a spot of yoga or hanging out with her two cats Charlie and Gracie.

Jon Card

Card is a writer and journalist specialising in small business and enterprise, and wrote our business partnerships feature. He works as a freelancer for The Guardian, John Brown Publishing and edits Birmingham Living magazine. His main hobby is sleeping through the night and lie-ins, which as the proud father of a toddler called Harry are rare treats indeed.

Nicola Barron

Barron wears many different hats: she runs her craft workshop business Homemade London, is mother to two small children and step-mum to another, and has still promised to find time to write Elite a column each month. The start-up diaries (found on page 82) will detail the various ups and downs of starting a business. They are plentiful.

www.elitebusinessmagazine.co.uk |AUG 2012

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News IN BRIEF

Just launched: StartUp High Street, the new initiative from StartUp Britain, is aimed at stimulating growth on our high streets. The scheme helps budding entrepreneurs set up pop-up stores in empty units, giving them muchneeded experience, landlords rent and consumers new outlets. As campaign co-founder Emma Jones puts it: “In StartUp High Street everyone benefits.” Exciting news for amateur investors and gadget-fanboys alike: US crowdfunding giant Kickstarter is coming to the UK this autumn. Projects in Blighty will for the first time be able to access Kickstarter’s extensive international network – a definite shot in the arm for fledgling businesses. In an attempt to reverse shareholder opinion following the rate-fixing debacle, Barclays has declared it is considering plans to delay bonus payouts for bankers until they retire. The hope is that knowing their rewards are tied up in the company will encourage staff to prioritise the health of the organisation over short-term gain. For the first time, the EU is due to hold a European SME assembly. Organisations, political figures and academics will be gathering in Cyprus from November 15-16 to discuss how small businesses can ‘go for growth’. As of October, employers will be required to automatically enrol staff in private pensions. The new plans from the Pensions

Steve Wozniak, who co-founded Apple with the late Steve Jobs, has publicly spoken out against cloud computing. As he was quoted saying in The Independent: “I really worry about everything going to the cloud ... I think there are going to be a lot of horrible problems in the next five years.” His concerns reflect similar fears among some of the tech community. In times of economic hardship young people feel the pinch the hardest, according to research by think tank the Resolution Foundation. Relative to inflation, 16 to 29-year-olds lost 6.4% of their pay in just seven years. They also are one the last group to feel the benefits of economic recovery. Vindication for the Government – the High Court has ruled that its unpaid back-to-work schemes do not infringe upon human rights. In the landmark case of Caitlin Reilly, an unemployed graduate placed with Poundland, the judge, Mr Justice Foskett, ruled that her treatment did not breach laws preventing forced labour. Perhaps kicking the Fox when its down, the Church of England has sold its £1.9m stake in Rupert Murdoch’s News Corp. The church’s Ethical Investment Advisory Board cited as explanation insufficient reforms in the wake of the News of the World scandal. Every cloud has a silver lining. While initial reports that job placements in the UK are down for the second month in a row seem bleak, statements from the Recruitment and Employment Confederation’s chief executive, Kevin Green, asserted that “there are some sectors that are

EVENTs

defying this month’s decline and continuing to experience significant demand for staff ”.

Tax for the Self Employed August 23 HBV Enterprise Centre London E8 3AZ

The new Funding for Lending scheme has finally launched, providing incentives for financial institutions that lend to businesses and households. Incentives are directly related to the amount leant – more lending equals more money for the banks.

Running a Successful Business August 29 HBV Enterprise Centre London, E8 3AZ P3M3 Maturity Assessments Training Workshops September 6 6 Avonmouth Street London, SE1 6NX

A T-Mobile survey has uncovered a rather troubling truth – your high-street business could be invisible to mobile users. Investigating the phenomenon of the ‘Hidden High-Street’, the mobile operator revealed that only 13% of business owners have made their sites mobile friendly.

The Franchise Show 2012 September 7 - 8 Earls Court London, SW6 1RX Forward Ladies Thinking of Joining September 10 Henry’s Cafe Bar Bromley, BR1 1HT

Facebook’s share price continues to tumble following its initial public offering. Despite the fact its like-for-like revenues were 32% AHMAD FAIZAL YAHYA / Shutterstock.com

Regulator, intended to address the pensions deficit that the younger generation will face at retirement age, will make all private pension schemes opt-out. A gradual roll-out will allow businesses the time to comply.

up on June last year, it made a net loss of $157m over the course of just three months. A seemingly confused approach to mobile advertising has been, in part, blamed for damaging faith in Facebook stock. Oddbins has sidestepped legal repercussions from its provocative ad campaign. Having a dig at marketing embargoes placed around the Olympics, messages such as: “We can’t mention the event. We can’t mention the city. We can’t even mention the year. At least they can’t stop us telling you about this,” were found by LOGOC not to breach the rules on unauthorised Olympics marketing.

Tax for the Self Employed September 11 HBV Enterprise Centre, London E8 3AZ Speed Networking Events September 14 Ena Salon, 5 Great Queen Street, London, WC2B 5DG Speed Networking Events September 14 MWB Business Exchange Canary Wharf, 25 Canada Square, London, E14 5AB The London Investment Network September 18 The Gable, 25 Moorgate, London, EC2R 6AR Opening Doors, Closing Sales September 17 - 18 Cavendish Conference Centre 22 Duchess Mews London, WIG 9DT Made Festival September 19 - 21 Sheffield City Hall Sheffield, S1 2JA

www.elitebusinessmagazine.co.uk | AUG 2012

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Talking Point

London 2012: Was it worth it for small businesses? YES

says Xavier Adam, founder of marketing and strategy agency AMC Network For us, the Olympics were brilliant. We do a lot of international business – our clients are spread across Western Europe and the US – so it was fantastic to have this massive business audience on our doorstep. I went to Barcelona in 1992, so I had an idea of the potential of the Olympics. A lot of the guys I work with were really negative and decided to leave London while the Games were on. But I took full advantage of the business opportunities, spending every day with at least two different delegations. I spent time with the Czechs, the Scots, Canadians, Swiss, Australians and I met all sorts of people: ambassadors, high commissioners, press, entrepreneurs, and people responsible for economic development in their countries. Through the Olympics we’ve been able to reinforce all these links with the rest of the world. I think sometimes the UK is quite inward-looking. I knew it would be an almighty event, not just for sport, but on the whole business and culture side. But it’s completely surpassed even the expectations I had.

NO says Kartina Tjandra, founder of Kooki, a loyalty card app The Olympics were a long time in the offing: since it was announced in July 2005 that the Games would be coming to London in 2012, headlines were dominated by their impending arrival. While the nation became gripped with Olympic fever, opinion among business owners was divided: would London 2012 be good for business? Some businesses gave a unanimous no. Even John Lewis, an Olympic sponsor, reported that sales at its flagship Oxford Street store fell 8.7% in the week to July 28, while Next said its London stores would “suffer” at the hands of the Olympics. For small and medium-sized enterprises (SMEs) that won valuable contracts, such as Rainbow Productions, a company that signed a licensing agreement to manufacture costumes and manage the personal appearances of the London 2012 mascots, Wenlock and Mandeville, it is easy to be more pro-Olympics.

We just launched five weeks ago and a big part of my role has been going to local retailers in London to sign them up to our loyalty card app. One of the things I’ve been asking them is how the Olympics has treated them, and I’ve been getting very mixed responses. Often, they’ve said there’s been no real change, or it’s actually been even quieter. One of the problems, I think, is because the Government advised people to leave London because it would be so crowded. So they have found that some of their regulars have gone on holiday. And even in areas popular with tourists, such as Covent Garden, footfall is down. One customer yesterday said they were looking forward to the Olympics being over. Perhaps overall the net amount of money brought into the UK by tourists is up, thanks to the Olympics. But the tourists are spending money on accommodation and food, not at small businesses. How many tourists would take the time to look up where is the most famous independent local coffee shop, for example? Not many, I suspect.

AUG 2012 | www.elitebusinessmagazine.co.uk

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08/08/2012 22:34

BOOK REVIEWS

The Elite read: our pick of the month Mash-up!

Ian Sanders & David Sloly Ever wished you could do more than one job? Perhaps you want to keep your consulting role, but set up a children’s clothing e-tailer on the side. You’re not alone. Sanders’ & Sloly’s book highlights the rising popularity of plurality in one’s working life. Easy on the eye, and packed to the brim with examples of professionals who are living ‘the multidimensional life’, this is an inspirational read. The idea of jettisoning the traditional mindset of career ladders and jobs for life, for cherry-picked projects based on the things we love doing, is an appealing one. In the authors’ words “when you get it right, mashing it up is like throwing paint around in your playroom.” Now where did I put those overalls? HP

Packed to the brim with examples of professionals who are living ‘the multidimensional life’

Mash-up! published by Kogan Page, is out now and retails at £14.99.

Brilliant Assertiveness Dannie Lu Carr

In this, the latest in the Brilliant series of guides from Pearson Books, Dannie Lu Carr presents her unique guide to assertiveness. At every step of the way Brilliant Assertiveness gives practical advice, helping you speak with confidence and hold your head up high in all situations. Easy to digest it provides insight into what we can do to actively cultivate the confidence we need to stand our ground. Packed as always with tips, examples, exercises and recaps, Brilliant Assertiveness is an invaluable guide to anyone who wishes wish they had the courage to say no. JR

Gives practical advice, helping you speak with confidence and hold your head up high

Brilliant Assertiveness, published by Pearson, is out now and retails at £10.99

www.elitebusinessmagazine.co.uk |AUG 2012

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04/08/2012 16:20 04/07/2012 10:20:23

THE ELITE INTERVIEW

A monster success M

ichael Acton Smith has hustle. Defined in his own words as someone with ‘that entrepreneurial magic’, he has it in spades. From selling his body to medical science to fund his first venture, to bringing current business Mindcandy back from near extinction, Smith’s got style and tenacity. He also has ambition. His own mother tells a story of how excited she was to hold her eldest child’s hand when he learned to stand and walk as a baby. Only she never got the chance, because as soon as he could stand, he began running. And he’s never stopped since. One of the first things you notice about Smith is his energy and enthusiasm. Both are infectious. Like the best of entrepreneurs, you leave him with a genuine interest in his endeavours, and a fervent desire for the business to succeed. Dressed head-to-toe in the black uniform that has become synonymous with the Silicon Roundabout residents (the Mindcandy office is in the old Tea building in Shoreditch, east London), Smith is unassuming, with just a few leering skull rings and his erratic mad-scientist hair giving a nod to his slightly more eccentric, creative side. By his own admission, Smith was a slightly odd child. “I was shy and introverted,” he says, reclining into a plush armchair in the library at London’s Soho House members’ club. He was

also chess-obsessed. “I would spend hours in my bedroom perfecting my technique, and then more hours travelling the country to play at chess tournaments,” he explains. Smith paints a picture of an idyllic childhood. He lived in Marlow with his father, a retired teacher, his mother a nurse, who latterly opened a chiropodiatry practice, and little sister Anna. “They were very supportive, encouraging parents,” he says fondly. “Not only would my dad test me on my times tables, but we also played board games together. And he’d read to me. He used to bring all these amazing books home from the library. The Hobbit. Dr Seuss. They filled my head with all these ideas, and I’d write little short stories about fantasy worlds.” But he was also showing early signs of entrepreneurial flair. “I used to drive my parents bonkers with all my little schemes,” he recalls. “I’d be forever trying to sell neighbours apples, and once I even held a BMX stunt show in my front garden.” Eventually, Smith left home to study geography at Birmingham University – an odd choice of subject for the creative teenager. But then it wasn’t a decision he took onerously. “Someone told me that geography had only four hours of study,” he says. “I was also told the best-looking girls did geography,” he adds, sheepishly. “They lied; they did psychology.”

WORDS: HANNAH PREVETT PHOTOGRAPHY: EMILIE SANDY

Michael Acton Smith has it all: a business with a nine-figure turnover, fame, respect, and is soon to be the proud owner of his own island. But life wasn’t always so good...

www.elitebusinessmagazine.co.uk |AUG 2012

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the ELITE INTERVIEW

“We looked at each other, picked the book up, and started reading through it. We’d heard a bit about this internet thing” AUG 2012 | www.elitebusinessmagazine.co.uk

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the elite INTERVIEW

For Smith, university wasn’t really about academia. In the first week he met Tom Boardman at the chess club, who went on to be one of his best friends and co-founder of Firebox.com, Smith’s first business. After university, Smith took the obligatory gap year and went travelling around the world, before getting a ‘sensible job’ on his return. “I decided I wanted to become an investment banker,” he says. So he took a job at a company car firm in his hometown of Marlow, working on the Goldman Sachs account. This meant he spent one day a week in the City at the bank’s offices. “It was all very exciting and glamorous,” he says. “But it didn’t satisfy my creative urges. I’d find myself doodling on my notebook all day, drawing logos for companies and coming up with ideas and drawing little characters.” About six months later, Smith was visiting Boardman in Cardiff, when the pair’s interest was piqued by a book in a shop. “It was called Doing Business on the Internet,” says Smith. “We looked at each other, picked the book up, and started reading through it. We’d heard a bit about this internet thing.” This was 1998, so the web was in its nascence. But the pair were absolutely gripped. “We started thinking that perhaps we should set up a business on the internet, that this could be the future. We pooled together all of our money – we had a tenner each – and bought this book we’d stumbled across. I took it home first and devoured it as if it was the bible – scribbling in it, highlighting things and pulling out pages. It was the most amazing thing,” he recalls, smiling. “I’ve still got it in my bedroom.” The two budding entrepreneurs decided they would sell things they’d like to buy themselves – gadgets, toys and games. And they bought the domain hotbox.co.uk – on the basis that the products were so hot, they were bursting out of the box. What they didn’t take into account, however, was that hotbox.com was one of the world’s largest porn sites. “We got all of this traffic coming to hotbox.co.uk that wouldn’t convert,” says Smith. “Worse still, my mum told her friends to go and check out ‘hotbox’ and they’d all go to the wrong site. It would cause all kinds of headaches.” And that wasn’t the only stumbling block: the pair soon realised they were going to need some cash. But the banks weren’t willing to give them the money they desperately needed for stock. “They said: ‘Internet? What on earth are you talking about?’ and wouldn’t give us any money,” Smith recalls. “So instead we signed ourselves up for some clinical drug trials, to earn £400 each. I told my mum what we’d done and she was so impressed that she gave us £1,000. We now had enough money to buy a computer, a printer and a little bit of stock.

“I’d find myself doodling on my notebook all day, drawing logos for companies and coming up with ideas and drawing little characters” We were away.” But it was hardly a flying start. Working from Boardman’s parents’ house in Cardiff, the business wasn’t gaining much traction. Despairing, the pair were ready to throw in the towel and headed to the pub to drown their sorrows.

It was there they conceived of ‘Shotglass Chess’. As the name suggests, the regular pieces on a chess board were replaced with shot glasses, and as the dominant player took more of his opponent’s positions, he would have to drink the shot in its place. “Think of it as an

www.elitebusinessmagazine.co.uk |AUG 2012

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the elite INTERVIEW

inbuilt handicap,” explains Smith. The game featured in the national press and the company “went from turning over £20 a month, to £20,000 a month.” Shortly afterwards, they managed to raise some investment, changed the name of the company to Firebox (as directed by their investors) and the rest is history. Firebox had its fair share of difficulties during the dot com crash, slashing headcount and temporarily moving into grimy windowless offices in Brixton. But it survived, and now turns over around £12m a year.

In 2004, Smith’s attention began to wane. He needed a new challenge. “I loved gadgets and toys, but my really big passion was video games.” He also spotted a gap in the market. “I always know the area where there’s opportunity,” he says. “Firebox was online retail – that was the really exciting thing in 1998. In 2004, as the web became more mainstream, I thought gaming was an exciting area. Now you could play games online, not just with friends, but with thousands of people.” Thus, under the company name Mindcandy, Smith and his team of developers created Perplex City. He buried £100,000 somewhere in the world, and clues were disseminated through various media as players tried to locate it. “I love The Matrix, I love Alice in Wonderland, I love the David Fincher’s film The Game, and I thought: ‘Can I create a real world version of this?’” Investors clearly thought so: he raised $10m from two of the world’s biggest venture capitalists: Accel and Index. The press coverage was overwhelmingly positive too, with Perplex City being hailed as the future of gaming, and Mindcandy swept the board at industry awards events. Yet Smith was having an increasing number of sleepless nights. “The world was telling us we were amazing, but I’d wake up at 4am every day thinking something just wasn’t right. As an entrepreneur, you’ve got this really good gut instinct. A sixth sense, almost.” Smith wasn’t happy with the game. “It was just too complicated. Not enough people were playing,” he says. So he was forced to make a difficult decision: “I decided to can it,” he explains. “I had a little less than £1m in the bank. I thought if I stop now and try something new I’ve got just about enough time to see if we can make something else work.” That something new was Moshi Monsters, the online world of adoptable pet monsters. “I felt that the next canvas on which to create incredible entertainment for kids, was going to be the Internet. Walt Disney had done it with animated movies back in the twenties and Jim Henson had done it with Muppets and TV shows. More recently, John Lasseter has done it with Pixar. So that’s when I decided to create Moshi Monsters.” It was a slow start. Moshi launched in 2008, but made no real impact at first. “Then in summer 2009, it just took off like a rocket,” says Smith. “We started adding one new sign up every second.” And the stratospheric growth shows no sign of slowing: Moshi can now boast a membership of more than 60 million kids

worldwide. And once the online concept was proven, it was time to see if the brand would work offline too. Smith and his team began to experiment with licencing – something that has proven incredibly lucrative for Moshi. “Licensing is a fascinating industry,” says Smith. “We’ve done about 120 deals with partners now. And last year we sold about $100m at retail just on physical products.” As anyone who has a Moshi-mad child in their life will know, it seems the little moshlings are everywhere – from adorning wrapping paper and magazine covers, to Moshi sweets, soft toys, books and music. So what’s next for the world’s newest kids’ entertainment brand? First, global expansion. Currently, the UK and the US are the two biggest markets, combined totalling about 60% of the Moshi audience. At the moment, the only other language Moshi is in is Spanish. But more will be on the way later this year. Secondly, is the team’s focus on mobile. “That is an unbelievable growth area,” says Smith. “The tablet is going to be the dominant entertainment device. Kids will watch movies on it, they will play games, they will do educational stuff and they will listen to music. We are betting massively on tablets.” Moshi Monsters already has a few apps in the marketplace now, but the biggest development on this front will come in a few months’ time, when a mobile version of the Moshi Monsters site is released. The third thing is adding some stablemates for the little moshlings. “We learnt so much with Moshi Monsters; we’ve got an incredible team and we’ve got respect. But what do we do after? Can we create other games, other experiences for kids? Disney didn’t just create Mickey Mouse, but Donald Duck, High School Musical and Mary Poppins,” says Smith. Smith is certainly ambitious. Spending just an hour in his company is long enough to assure you that he is capable of achieving whatever he puts his mind to. He talks big: he wants to be the Walt Disney of the internet age. When he was younger, one of his idols was Richard Branson. And now not only has he met Beardy, and talked on the same stage as him, but had a rather more personal conversation too. “We were talking about Necker Island, as I’m planning to buy an island too,” Smith reveals. So, is he capable of transforming the traditional children’s entertainment market? We’d put money on it.

“We learnt so much with Moshi Monsters; we’ve got an incredible team and we’ve got respect” AUG 2012 | www.elitebusinessmagazine.co.uk

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Take your Business to Rockstar Status

The ROCKSTAR MENTORING GROUP IS THE UK’S NUMBER ONE MENTORING ORGANISATION FOR BUSINESS OWNERS LOOKING TO GROW, OR RAISE FINANCE Since establishing in 2007, rockstar’s mission has been to help businesses at the SME, established and startup level, fast track their sales and profit growth by providing experienced and successful mentors on a one-to-one, face-to-face basis. With over 75 mentors to choose from nationwide and having helped over 400 uK businesses so far, their mentoring programmes are purely results driven and all of their members are committed to help you take your business to a completely new level! To book a free mentoring consultation please visit www.rockstargroup.co.uk or call 0845 6522905 and quote “elite business magazine’ To book on to one of our FREE NATIONWIDE SEMINARS on How to Drive Sales in Tough Times, in partnership with Regus, please visit drivingsales.eventbrite.com

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ONE TO WATCH

takeaway with a difference 22

Company CV Name: Housebites Founded by: Simon Prockter Founded in: 2010 Team: 11 office staff, 55 chefs

Housebites nearly didn’t get off the ground. But one small adaptation – or pivot – was all it took to revolutionise the business which is turning the traditional takeaway upside-down

WORDS: HANNAH PREVETT

e are all familiar with the nature/ nurture debate; similarly, most of us have heard it applied to entrepreneurship. “Are entrepreneurs born or made?” scream the titles of countless press releases. In other words, are certain people just naturally inclined to become entrepreneurs? “Entrepreneurship is in their DNA,” we are told. Broadly speaking, the jury’s still out as to whether this is the case, or whether we are shaped by our environment and the influences around us as we grow and develop. But every once in a while you meet an entrepreneur who makes the argument that some people are born to start businesses all the more compelling. Simon Prockter, founder of Housebites is one such character. Raised on the South London/Kent border

(“our address was a London postcode; our next-door neighbour’s was Kent”), Prockter was a precocious child. Instead of focusing on the three Rs, he had two jobs at the age of nine, completing a paper-round and then helping a local milkman with his deliveries. It’s no surprise then, that he wasn’t particularly academically minded. “I had no interest in being taught, so it was no surprise when I was thrown out at 16,” he says matter-of-factly. But this wasn’t quite the end of his academic career: when he was 22, Prockter returned to education as a mature student at Thames Polytechnic University. He lasted two days. “I think going to uni was partly just to prove I could, because I was such a failure at school,” he admits. What Prockter lacked in his ability to apply

himself academically he made up for with his entrepreneurial flair. He flogged tuck shop wares to at school, set up a mobile disco business at 14 (“the only customers were my parents”) and then in his early 20s started a student magazine for the University of Northumbria. Why Northumbria you ask? “They were the only institution to say yes,” he replies. Having had to shelve the magazine for financial reasons, his next venture was even more ambitious. Prockter had stumbled across a disused jazz club in Shad Thames, and embarked upon a venture to restore it as a restaurant and entertainment venue. The plan was was to franchise it out to big-name chefs for the first couple of years; they’d provide the food, and Prockter would find cabaret acts to

www.elitebusinessmagazine.co.uk |AUG 2012

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“I think that partly going to uni was just to prove I could, because I was such a failure at school”

entertain diners with magic tricks at their table, and dancers and singers performing on stage. “‘It would have been similar to the kind of thing you get now with trendy London clubs the Box and Burlesque,” he says. “But it was just too early. This was the early nineties.” It does seem as though Prockter has a good eye for emerging trends. The next opportunity he stumbled upon in 2002 was almost by accident. He’d heard about a new concept making waves in the US, predominantly among the Jewish population: speed-dating. He began making enquiries as to where he could find a similar singles event in London, and was shocked to discover there wasn’t an equivalent here in the UK. A call to a friend later, Prockter decided to set up his own UK-based speed-dating company called SpeedDater.

“It was a good example of a lean start-up,” says Prockter. “I just built a basic website. All it said was ‘Speed-dating coming to an area near you; contact us for further details’. Back then, it was very easy to manipulate Google and SEO, so within days I was getting hundreds of emails asking when we were starting, and people saying they wanted to do it,” he explains. Prockter says the idea was to see what take-up would be like, and then build from there. “We put a quick two-day business plan together, and that was it. We launched in a month.” SpeedDater grew exponentially, and was soon turning over in excess of £1m a year. By 2008, it was Europe’s leading singles events company. Before long, the eagle-eyed entrepreneur spotted another gap in the market – holidays for single people. Not necessarily as a dating platform, but for people who enjoyed adventure breaks, and didn’t want to go alone. It became obvious that running three separate businesses – holidays, online dating and speed-dating events – was too much of a juggling act, so Prockter sold SpeedDater in March 2008, retaining just the travel arm and rebranding it as Adventura. At first it went well, but as the downturn began to bite in November 2008, everything changed. “The graphs just stopped going up,” recalls Prockter. “The euro strengthened dramatically, so the holidays were costing us, on average, £150 to run. And we weren’t passing this on to the customer.” The business limped on until April 2010, when it was dealt the hammer blow. “The airline XL went bust, and we’d just booked a whole season of Turkey flights with them. We lost about £50k on the flights, but we lost more because we then had to rebook all of our customers’ flights – and pay for them.” It didn’t help that competitor airlines had seen an opportunity to make a quick buck, thus doubling or even tripling their prices in the wake of XL’s demise. Prockter was forced to fold the business in April 2010; a decision that was bittersweet in hindsight. “Although seeing what people subsequently wrote was horrible, it was a relief that it was over,” he admits. “It had been 15 months of struggling through and sleepless nights. On that day, I had the best night’s sleep I’d had in as long as I could remember.” But the relief didn’t last. “I didn’t feel good about what had happened, having to lay Adventura to rest,” Prockter continues. “Hanging around the network [of tech entrepreneurs] I could feel other people looking over and feeling sorry for me. There was a definite sense that you’re only as good as your last record.” Luckily for Prockter, he had another idea brewing. He’d been thinking for the past month or two about another form of singles

AUG 2012 | www.elitebusinessmagazine.co.uk

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event, but this time focusing on dinners. He had previously been tied into a non-compete arrangement following the sale of SpeedDater, but that had now expired. The new company would be called Housebites, and the premise was a bit like that of popular TV show Come Dine With Me – users of the site would be able to go to each other’s houses for dinner. There would still be an element of introduction to it, but it removed the word ‘single’ or, worse still, ‘dating’. “You need to have evangelists when you set up a business,” says Prockter. “They will spread the word on social media. The problem with dating is that it’s gated – no one wants to share that.” He decided to put everything he had into making sure Housebites was a success. He sold his home (“a beautiful riverside apartment in Limehouse”), and set the developers to work.

would be able to start producing food for the public if they got good feedback from other users of the service. That night, Prockter went home and ordered a takeaway. “It was late, it was delivered by a guy wearing a motorcycle helmet, who was already walking away as he handed it to me, and I suspected it had been reheated, rather than being made fresh,” he recalls. He made a list of all the problems with the current offers and wrote a plan for a new kind of takeaway business: the food would be cooked by local, professional chefs on their own premises, and then couriered to customers. “A day earlier I’d been making plans to go and grow old gracefully at a beach bar somewhere; now I was sending my new business plan to investors,” Prockter adds. And the reception from investors was

“A day earlier I’d been making plans to go and grow old gracefully at a beach bar somewhere; now I was sending my new business plan to investors” 24

Instead of taking two months as planned, the design and build of the site took 10 months. And even when it was finished, it was to a lukewarm reception. So much so, that over the Royal Wedding weekend Prockter decided to throw in the towel. He walked back to the office, and was looking at the business plan when something caught his eye. He’d incorporated an element whereby the chefs

rapturous; angels including long-time mentor and friend Paul Birch (of Bebo fame) clamoured to be involved with Housebites 2.0. With the help of a developer, (Mike Brittain, now CTO – “the best CTO in London,” according to Prockter) the site was built in four months. Over two rounds of seed capital, the last of which was closed four months ago, the current incarnation of Housebites has had a total of £1m investment. And investors aren’t the only ones lapping up Prockter’s latest offering: celebrities including Stephen Fry, Lily Allen and Fatboy Slim have been raving about Housebites on Twitter. But there’s a long slog ahead. As Prockter says himself, just because they’re getting the support on the social networks, it doesn’t necessarily translate into sales. “But what it has done is increase the trust,” he says. “By the time people get home after work, they’ve forgotten about us again because we’re so new. We have to be in front of people all the time.” The workload is relentless. And Prockter, a social butterfly, is well accustomed to the notion of burning the candle at both ends. “If I’ve worked a 12 or 13-hour day and there is something going on in the evening, I’ll go to that as well,” he explains. “I hate feeling like I’m being cheated.” And what of sleep? Prockter laughs in the face of getting his eight hours a night. “I figure I’ll catch up at some point,” he says, somewhat unconvincingly...

www.elitebusinessmagazine.co.uk |AUG 2012

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ANALYSIS

UK start-ups: on fertile ground?

The UK is often pitched against the US when it comes to entrepreneurship: California has Silicon Valley, London has Silicon Roundabout. Our tech start-ups are certainly flourishing. But in this challenging economic climate is any sector a safer bet than another?

WORDS: JOSH RUSSELL

tarting an enterprise can be fraught with difficulties. Ensuring a project won’t fall on barren soil requires incredible foresight, but sometimes it’s difficult to predict: a sector that may bear fruit one year may yield little the next. Is there any way to tell what may be fertile ground for growing a business? One approach is to echo the words of Deep Throat from All the President’s Men: “Follow the money”. Recently, a study by the think tank Demos showed over 3,000 firms employed an incredible 48,000 people in East London’s Silicon Roundabout cluster alone. It’s unsurprising then that technology is grabbing the attention of investors. In fact, many of the Venture Capital (VC) firms, such as Octopus Investments and Eden Ventures, cater exclusively to technological enterprise. So is it a case of those who can, tech? “Tech gets a lot of hype because of the potential returns available,” explains Raj

Ramandi, CEO of tech-focused seed firm #1Seed. As the technology sector’s ability to move rapidly can result in fast and efficient growth, it can lead to quick returns. However, competition is fierce. “The likelihood of [investors] picking the winners is very low,” says Ramandi. “Get it right, wow! Get it wrong, often.” The high-risk strategy isn’t for everyone – a lot of firms look to build a broad portfolio. Companies in as diverse areas as online gambling, such as Betfair, or fashion-designmeets-social-networking, like LOOKK, have received VC funding. Kevin Dixie, managing director of Fuelmywebsite, explains why VCs don’t like to put all their eggs in one basket. “The type of business [VCs] are looking for will vary ... they will invest if that business has traction, proof of concept and will bring them a return.” Another group of investors are attracting nearly as much attention as the businesses

www.elitebusinessmagazine.co.uk |AUG 2012

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ANALYSIS

“One of the great things about the small business landscape at the moment is that there are awards and programmes that are blossoming for every kind of sector” Emma Jones, founder of Enterprise Nation

they invest in: crowdfunders. Crowdfunding is peer-to-peer lending – instead of putting cash in the bank where it’ll earn little interest they can invest in small businesses. They’re a fussy bunch too; crowdfunders can have more discerning tastes than VCs. And if they like an idea, it’s likely to be a hit with punters. As Emma Jones, founder of Enterprise Nation, remarks: “I think it’s much more the populist ideas that are doing incredibly well.” Escape the City, the site for those looking to ‘do something different’ raised £600,000 with Crowdcube. Meanwhile, the Nifty MiniDrive achieved a staggering 2,950% of its £7,000 goal on Kickstarter, securing over £200,000. The lay of the entrepreneurial land can also be gauged by looking at awards. Given the success of SME awards such as the Smarta 100, Growing Business Awards and the Business Magazine SME of the Year, such accolades are a key indicator of a successful enterprise. But can your choice of industry limit access to

prizes? Jones thinks not. “One of the great things about the smallbusiness landscape at the moment is that there are awards and programmes that are blossoming for every kind of sector,” she says. No matter the industry, it will have an award to suit. “Things like Tech City and TechStars are brilliant for the tech community, but then likewise the kind of artisan and crafting community is being well met by the School for Creative Startups and Country Living’s Kitchen Table Talent Award.” A glance at even the non-industry-specific SME awards confirms this. Browsing through last year’s Smarta 100 list reveals just how variegated the enterprises were. The winner, Naked Wines, is a cross between a wine retailer and social network. Another shortlisted venture, Blottr, is a crowd-sourced journalism resource. The message is clear, whether you’re a concert-tracking site like Songkick or a creative recruitment agency like

Concept Cupboard, the key is standing out. And this cuts right to the heart of the matter. If choice of industry is a secondary concern, then more important is setting oneself apart. In Dixie’s words: “Don’t follow, lead.” Jones also praises the value of finding a niche, mentioning some of the key highlights from her business-forming workshop StartUp Saturday: yoga for businesspeople and a website targeted at scuba divers. “The thing that’s special about these ideas is that they’re very focused on what they offer to whom: they fill a niche gap in the market,” she says. Ultimately this is what it comes down to. Where you plant your seeds is important, but it is still a secondary concern; more vital is growing something that stands proud of its rivals. As Ramandi concludes: “With any business, the key is in the execution of strategy. Having an idea or thinking about the next big thing is important, but making it happen is the crucial part.”

AUG 2012 | www.elitebusinessmagazine.co.uk

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ANALYSIS

START-UPS THAT SIZZLE Case study 1

Greg Marsh

CEO and co-founder of onefinestay 28

Styling itself as the ‘world’s first unhotel’, onefinestay aims to bring an entirely new slant to city accommodation. CEO and co-founder Greg Marsh describes their unique service: “Our guests get to live like a local by staying in distinctive

private homes in London and New York ... [giving] guests the chance to ... really get under the skin of a city.” The idea for the business germinated on Marsh’s return from a trip to Pisa; realising his flat had lain empty while he was away and witnessing whole streets where the residents had done the same cemented onefinestay in his mind. “It dawned on me that there could hardly be a better way for visitors to the city to live like a local than by staying in a real home,” he says. The company’s growth over the last three years is testament to its hold on the market. In 2010, the team had six hosts – now there are over 500. “Early on we attracted investment from some of the foremost players in the travel and hospitality industry,” Marsh explains. Securing an

initial investment of $3.7m from Index Ventures, the company went on to net a further $12m from Canaan Partners. “We’ve ... focused on being highly innovative,” explains Marsh. “Setting onefinestay apart from both traditional hotels and other new accommodation options alike.”

It uses the sun’s rays to burn branding into wood. Stamp brands and logos into fresh snow. Create effective displays out of living moss. “CURB as a brand is fundamentally about innovation, creativity and sustainability, finding new ways to inspire people with communication,” Ganjou explains. “We choose to use nature because it is hands down the most powerful engagement tool available to the human race today. Our brains are hardwired to respond and emotionally react to nature, so as a means to stand out ... there is nothing more powerful.” And this is clearly having a

huge impact. Not only is the firm a member of the Cream 100 Top Innovators, but last year its first project in Canada was voted third best advert in North America by Forbes, and Entrepreneur ranked it as the best execution of the year. “It’s the kind of stuff that people will enjoy and want to share.” says Ganjou. “We capture the imagination because what we deliver is something fundamentally different.”

Case study 2 Anthony Ganjou CEO and founder of CURB

When using an out-of-home media company you want to know what it is that makes its advertising stand out. CURB has taken this to its logical extreme. Anthony Ganjou, the company’s founder and CEO, sums up its approach: “It might sound crazy, but we hate advertising and everything we do is designed to be the opposite of a piece of traditional media communication.” CURB’s media certainly stands out. Gigantic ‘rake ads’ have graced our beaches with colossal O2 slogans. ‘Clean ads’ pressure-washed onto discoloured pavings slabs advertise Waitrose and Wired.

“Everything we do is designed to be the opposite of a piece of traditional media communication”

www.elitebusinessmagazine.co.uk |AUG 2012

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A Directory Of Quality Members Buying Goods Or Services From Each Other Without Using Cash

EASY AS 1, 2, 3 Visit our website: www.BartaClub.com www.linkedin.com/company/BartaClub www.facebook.com/BartaClub www.twitter.com/BartaClub Untitled-2 1

04/08/2012 16:19

STRATEGY

REBEL WITH A CAUSE Ian Sanders

Ian Sanders is a marketing expert, writer and ‘ideas junkie’ who helps businesses communicate ideas. He’s passionate about entrepreneurship and doing things differently.

Breaking

the mould

Here the author, strategist and FT columnist Ian Sanders explains why sometimes it’s better to go your own way

wo years ago my co-author David Sloly and I stood in a convention centre in Austin, Texas and suggested to the audience of entrepreneurs that business plans were a waste of time. We were speaking at the South By Southwest Interactive festival unveiling ‘Unplan Your Business’, arguing that in a world of such flux it is pointless trying to guess the future. Whilst the room of entrepreneurs agreed with our thinking, others were less kind. Some people said on Twitter our thinking was dangerous, that we were crazy. And, to be honest, that’s when we realised we were onto something – when the naysayers came out of the woodwork. The problem with entrepreneurship is that there are established ways of doing things: you *must* have a five-year plan; you *must* have an exit strategy; you must only focus on one idea at a time; you need a proper office. I guess I never liked playing by the rules. Not just for the sake of it, but because you often getter better results by thinking about business differently.

The problem with a rigid set of rules is that it may not fit with how YOU want to do business. The rules may not reflect you, your personality and the way you like to do business. So - do you ‘sell out’, don a suit and brush up on PowerPoint or do you say “F*** it – this is how I do things!”? My answer is the latter. I’ve met, spoken to and followed a bunch of successful entrepreneurs who don’t play by the rules. People like David Heinemeier Hansson, partner in the software company 37signals who encourages employees to work from anywhere on the planet; Tina Roth Eisenberg, the entrepreneur who started multiple businesses as side projects, some by accident; Dave Stewart, founder of the Eurythmics who runs a multiple-discipline business built on ideas; Jack Dorsey a parallel entrepreneur who holds down senior roles in two businesses – Twitter and Square – at the same time. And what I’ve learnt is that you CAN adapt business to your style, your way of doing things.

www.elitebusinessmagazine.co.uk |AUG 2012

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STRATEGY

The problem with a rigid set of rules is that it may not fit with how YOU want to do business

Indeed, you should put your DNA at the very heart of your business. For instance, rather than hide away your personality, you need to compete on it: tell your story on your website, be the real you on Twitter, trade on your ideas. So as you proceed on your own entrepreneurial journey please be authentic to your own goals, style and personality. Here’s my own ten point manifesto to get you thinking: Do business *your* way

Every product or business needs a point of difference. Being authentic to your own way of doing things can make you and your products stand out from the crowd. Compete on your story

Put your personality at the heart of the business, tell customers why you started the business, what your backstory is, why you are so passionate. Ditch the fixed office

If you don’t have lots of employees, consider the merits of working wherever and however makes you productive.

Be multi-dimensional

Let your business activities reflect your multi-dimensional talents, embrace a mashed-up working life. Go with your gut

Forget focus groups, instinct should be your most important decision making tool.

Develop a side project

A side project can be your entrepreneurial playground, giving you the space to experiment and innovate. A side project could even become bigger than your core business. Seek inspiration in interesting places

Don’t just hang out at conferences and networking events, take inspiration from whatever and wherever makes you tick, whether cafes, art galleries or even a walk along the beach. Sell your ideas not your products

Don’t just sell customers your product benefits, tell them about the thinking behind the product, talk to them about your ideas. Unplan your business

Don’t have a fixed linear plan for your business; instead have goals, but remain open minded about how you might reach them.

Communicate YOUR way

Don’t use long winded copy if it’s not how you’d speak yourself; don’t do a PowerPoint presentation if you hate public speaking – find the currency that best works for you.

AUG 2012 | www.elitebusinessmagazine.co.uk

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FINANCE

Guide to ‘stressless’ filing of your tax return With many people thinking about summer holidays, the deadline for self-assessment in the depths of winter seems a long way off. But thinking about it now will help to avoid stress later 32

WORDS: CLIVE LEWIS

lthough the deadline for paper copies is in October, self-assessment tax returns must be filed online by 31 January 2013 or penalties will be incurred. Many see the tax return as a stressful chore and put it off for as long as possible. Saving it all until the last weekend will just cause more problems. Set yourself a series of small tasks instead of aiming to do the whole thing in one go. The busiest day for online returns was 31 January, when HMRC received nearly 445,000 returns. Apparently the ‘rush hour’ occurred between 4pm and 5pm on 31 January, when 37,460 returns (ten a second) were received by HMRC. To make sure that you are not one of those hurriedly trying to submit here are some practical tips. Not everyone has to do a self assessment tax return, but if HMRC has sent you one, or has sent you a notice to file, you must make a return. Even if you haven’t been asked for one, you may still need to file a tax return if you had a new source of income or capital gains in 2011/12 on which you need to pay tax. If this applies to you, tell HMRC right away. Spend five minutes registering online if you haven’t already done so. After you have registered, you will be given a User ID, but you will then have to wait around five to seven days for an activation pin to arrive through the post. Get your paperwork together. This will include details about your employment income, such

as your P60 and P11D, interest statements from banks and building societies, information on dividends from shares. Overseas income and mistakes on self-employed accounts often result in wrong submissions. Also, remember to claim any deductions such as gift aid donations and pension contributions. Fill in as much as you can on your return. The information you enter on each screen can be saved as you go along, allowing you to continue later. You can go back and correct figures at any time before you hit the final submit button. If there are significant changes to last year’s return, explain why in the section for further information, as the taxman will want to know. When filing online, you are told instantly how much tax you owe. You will have just over a week to ensure payment reaches HMRC on time. Filing late increases the chances of HMRC taking a closer look at your return, so make sure you file on time. Remember also that not everybody needs to file a self assessment tax return, but if you have been asked by HMRC to do so, you will have to file one. Those filing after 31 January will incur a fixed £100 penalty regardless of how much tax they owe. If the tax return is over three months late there is now a £10 daily charge which will be added for every further day it isn’t filed. This can mean a further penalty of up to £900. Save a copy of your final return and print a copy of the receipt you receive when you submit it.

You must keep records of all information used to complete your tax returns for 5 years and 10 months for those with a business or income from letting out property. There is a maximum penalty of up to £3,000 for each tax year for which records have not been kept. “These tips are for more straightforward cases but if you do need help, the ICAEW’s Business Advice Service (BAS) offers a free, straightforward discussion with an ICAEW Chartered Accountant. There’s no obligation after your first free session, just practical thinking to help with business and taxation advice.

Find your local ICAEW firm at www.businessadviceservice.com

www.elitebusinessmagazine.co.uk |AUG 2012

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09/08/2012 12:10

TALK TO US ABOUT WHATâ&#x20AC;&#x2122;S HOLDING YOUR BUSINESS BACK From cash flow and financing to tax and regulation, your business can now get expert advice from a local ICAEW Chartered Accountant to keep it moving forward.

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03/08/2012 15:21 14:31 19/07/2012

FINANCE

Mind the gap A decline in bank lending means small and medium-sized enterprises are struggling to secure the finance they need to start up and grow. But there are alternatives out there.

WORDS: HANNAH PREVETT

www.elitebusinessmagazine.co.uk |AUG 2012

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FINANCE

“S

mall businesses and entrepreneurs are the lifeblood of the British economy and I am determined that we, working with the private sector, do everything we can to help them to start up and to grow in 2012.” Some pretty big promises there from prime minister David Cameron at the beginning of this year. But if he was hoping for support from the banks, he can think again. He is right on at least one score: small businesses are crucial to the UK economy. Data from the Office for National Statistics has shown that small and medium-sized enterprises (SMEs) make up 99.9% of the total number of businesses in the UK, and collectively they employ nearly 60% of all private-sector workers. This equates to 48.7% of total private sector turnover in the whole of Blighty– a statistic not to be sniffed at, especially in these dicey economic times. But for these businesses to begin in the first place, and then to thrive, they need some start-up capital. And that financial support

Case study certainly doesn’t seem to be forthcoming from the banks: the latest figures show that lending has fallen again. Statistics released on July 30 2012 showed that bank lending to corporations has slumped to £489bn - more than 25% below a peak at the end of 2008. And lending to small businesses is similarly in decline. The credit headache doesn’t end there. For businesses that are lucky enough to secure a bank loan, interest is soaring: the rate paid by firms on bank loans has risen 0.16% – to 3.12% – since June of last year. This is, of course, well above the Bank of England’s benchmark interest rate of 0.5%. The rate on overdrafts has escalated too, rising to 3.79%. It’s not much of a surprise that small firms are struggling in this climate. Entrepreneur networking events are bulging at the seams with people telling their finance horror stories. Meanwhile, the start-up community is littered with the skeletons of unfortunate companies that have not managed to pull themselves back from the brink.

Going it alone When Chris Bishop founded digital media agency 7thingsmedia in April 2009, a few months after the collapse of Lehman Brothers, he knew getting his hands on some initial capital was going to be tricky. But he had a good relationship with his bank and a solid business plan - surely they’d be willing to give him a small business loan? “I saw my local branch manager at my bank and he basically said ‘good luck’ and that was that,” says Bishop. “I was passed upwards and the message was the same: ‘We wish you the best of luck.’ The best they could offer was a £5,000 overdraft,” he recalls. Bishop used his £10,000 savings to fund the business as he was reluctant to get investors on board and lose equity. In the first year, the company turned over £500,000; three years later revenue will reach £3m. But it hasn’t been straightforward achieving growth without a cash safety net. “I wanted to bring income into the business to guarantee employment, an office, that kind of thing,” says Bishop. “There’s a certain comfort and security of having money put aside for growth.” Bishop’s time and attention were also diverted. “In our second year, I spent my time micro-managing the pounds and pence rather than generating more revenue for the business. There’s no doubt that our inability to borrow money impeded our growth,” he explains. But the business has still grown impressively, with or without the support of his bank, and Bishop opened a New York office this year. There are benefits too of having started on a shoestring. “We are very frugal as a business,” he says. “We’ll never waste money. We are the business that has grown up in a recession.”

“In our second year I spent my time micro-managing the pounds and pence rather than generating more revenue for the business”

AUG 2012 | www.elitebusinessmagazine.co.uk

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FINANCE

“Every day we were reading in the papers about good businesses not being able to access finance”

The bank won’t give you a loan? There are other options.... Government grants. These differ

according to geography, your age and sector. Visit www.ukbusinessgrants.org and use the handy funding finder for an idea of what’s available to you.

One business currently fighting for its survival is Adam House, better known as Adam St private members’ club. Adam Street is an institution. Operating since the dot com boom in 1999, the club was formally set up to support entrepreneurs and freelancers in 2001. Along with its serviced offices, the company houses 30 different businesses and the club boasts in excess of 1,000 members. Adam House has gone into receivership and the businesses and properties are on the market. Despite James Minter, who runs the club, finding a £600m fund that is ready to buy the building at a market price, the agents chosen by the bank are focusing on trying to find a residential developer. This means a business that employs 40 people, contributes £700,000 a year to HMRC and, most importantly, is a hot-bed of entrepreneurial talent, may be turned into flats. It will be a dark day when Adam Street closes its doors for good, not just for entrepreneurship in London, but for enterprise in the whole of the UK. So what role are the banks playing in this saga? The bank in question has a duty to sell the assets for the maximum price, and has been advised (wrongly, says Minter) that residential development is the best way to guarantee this. But Minter says that banks should be thinking more strategically about the long-term future of the UK economy – not just reacting to immediate pressures. “Should the banks have a more intelligent view and think about the good of the economy, or just their short-term goals?” he asks. “The banks are now so big that it is pointless for them to say that they are just reacting to market forces ... they have been bailed out by us, the taxpayer – surely they have a duty to think more strategically.” Minter is not alone in his despair. But his situation, and hearing similar tales of woe from his members, inspired him to launch a series of lunches entitled Bypassing the Banks, at the end of last year. These introduce members to the concept of peer-to-peer lending, which Minter first came across eight years ago when a proponent gave a talk at Adam Street. Since launch, the lunches have been attended by some of the biggest crowdfunding companies in the UK: Zopa, Crowd Fund, Funding Circle and

Funding Knight. The sector is thriving – but isn’t without a few teething problems of its own, according to Minter. “The big challenge for all these guys is to grow to a profitable scale,” he explains. “They have a massive boost from the visceral hatred everyone has for banks, but they also have to confront issues of trust. The other big barrier to growth for the peer-to-peer lenders is that they can only lend to people with high credit ratings - and people with high credit ratings don’t need to borrow much money,” says Minter. Indeed, competition in the crowdfunding marketplace is hotting up. The phenomenon really came to the fore after Kickstarter was founded in the US in 2008 to fund a range of creative endeavours, such as indie flicks, music and video game development. And it didn’t take the UK long to follow suit. One of the biggest crowdfunders for small businesses in the UK is now Funding Circle, founded by Oxford graduates James Meekings, Samir Desai and Andrew Mullinger. “Every day we were reading in the papers about good businesses not being able to access finance. Then you’d look at individuals with money saying I want a return on it. We knew there must be a better way of connecting them,” recalls Meekings. The former consultant also has a few choice words to say about the banks as they currently operate. “I think the current model of bank finance is broken,” he says. Businesses will go to them because they always have done, but if we really want to improve the way companies access finance we really need to look at innovation to do that. And I don’t think banks are the answer to that.” But perhaps offerings like Funding Circle are? The Venture Capital community certainly seems to think so: Meekings and co have already raised £13.2m for their venture. And the figures speak for themselves – Funding Circle has already lent more than £37m to small businesses in the UK. One of the advantages Funding Circle and its peers in the crowdfunding market have is that they are small businesses themselves. They get it. As Meekings himself puts it: “We share the same vision – giving small businesses a better deal.”

Peer-to-peer lending. Some crowdfunders, like Funding Circle and Funding Knight, currently only lend to established small businesses. Look out for Kickstarter coming to the UK shortly. Alternate banks. Challenger banks

are springing up as alternatives to the traditional, staid financial services companies. One is Shawbrook Bank: it doesn’t operate a branch network, instead distributing lending products through brokers, leaving more room for agility.

Seed funds. There are lots of these about, usually with a specific interest in tech businesses. The biggest is Seedcamp, a European micro seed fund for internet technology companies, with newbies including #1 seed.

Startup accelerators. A type of start-up

incubator, but where investment is involved as well as (often) workspace and mentoring. Examples in the UK include Springboard and IP bootstrap.

www.elitebusinessmagazine.co.uk |AUG 2012

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SALES & MARKETING

DIY public

relations

At a time when entrepreneurs are trying to keep costs low, consulting the services of a PR agency may be out of the question. But you can still shout about your business

WORDS: HANNAH PREVETT

ntrepreneurs wear many different hats. And no, we’re not talking a preference for either a flat cap or a bowler. Running a new company will require a business owner to become an expert in disciplines they previously knew nothing about; from operations to accounting. PR is one domain where entrepreneurs are often ignorant initially. Writing a press release? Impossible. Picking up the phone to journalists? Terrifying. But, at a time when securing start-up capital is trickier than ever, more businesses are starting on a shoestring. And that sometimes means undertaking a little DIY PR... When initially considering PR options, business owners should consider three things, says Ella Gascoigne, who runs StartUp PR. The first to take into account is the all-important cost factor. “For a launch of

a business you will be looking at anything from £800 to in excess of £4,000. There’s no point trying to see what you can for just a few hundred pounds, as you are likely to be disappointed with the results,” she advises. “And if you go down the agency route, check approximately how many pieces of coverage you could expect to get for the money.” The second factor is time. “Ask yourself how much your time is worth and if you have any to spare. There is no point doing your own PR if you don’t have the time to do it properly,” says Gascoigne. And third: “Do you have the skills needed? Are you a strong writer and do you know how to structure a press release?” If not, she adds, help is at hand. “There are loads of books and online articles,” Gascoigne continues. “If you find writing isn’t your strong point, you can get an agency or freelancer to help you.”

www.elitebusinessmagazine.co.uk |AUG 2012

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SALES & MARKETING

“I think a lot of people are nervous about talking to journalists, but when they do it, it’s not usually as bad as they thought it would be”

What’s more, if entrepreneurs find themselves all at sea with their PR strategy, but don’t want to pay a PR firm a retainer, they can enrol in workshops to help equip them with the necessary skills. Gascoigne runs PR Toolbox, which offers clients monthly one-to-one sessions with an experienced PR professional to help them with their media relations. Paula Gardner has worked in the PR industry for two decades. Beginning her career in music PR in the early 1990s, she encountered clients including Sonia, George Michael and Bananarama, before moving into restaurants. Now Gardner works with small businesses, advising them on things including writing a press release, using social media and how to approach journalists. “I think a lot of people are nervous about talking to journalists, but when they do it, it’s not usually as bad as they thought it would be. There’s an image that journalists are going to snarl at you when they pick up the phone,” says Gardner. “The one thing I always try to instill, is don’t call to ask if they got the press release. Phone up with an idea because you’ve looked at their publication, and have come up with an idea that’s relevant.” Julie Woodward, however, founder of the Moroccan interiors company Maroque, knows what it’s like to be on the receiving end of the sharp tongue of a journalist. “A little while ago, I brought in some body products and I phoned beauty editors of magazines like Vogue. It was just like the Devil Wears Prada,” she recalls. But fortunately that hasn’t dissuaded her from carrying out her own PR, with support from Gardner. “Now I tend to do a product shot every month; so I’ll send

a lamp, a piece of crockery or a particularly pretty cushion,” she explains. At gadget e-tailer Prezzybox.com, PR has always been done in-house. “We knew that we could make a better job of it,” says Zak Edwards, the company’s founder. Edwards says that approaching journalists with not just relevant, but quirky, material is absolutely vital. “Try something a bit different,” he advises. Last Mother’s Day, for example, instead of doing a standard release about top 10 gifts, Edwards penned an article about ‘The value of mum’. “We found out that if you were to employ a mum to do all the jobs she does throughout the week, it would cost you about £90,000 a year,” says Edwards. He’s also launched viral campaigns, such as www. pleasedontcancelchristmas.co.uk, which featured a letter from the Department of Christmas about how festivities were due to be cancelled due to the financial downturn. Indeed, the internet is playing an increasingly important role in companies’ PR strategies. Launching viral campaigns, posting videos to YouTube and maintaining blogs are all relevant parts of a joined-up approach to getting your brand out there. And so too is social media: ignore it at your peril, says Mark Dye, MD at Press Express, a PR and social media agency. “Social media has actually been fantastic for SMEs, entrepreneurs and start-ups in giving them wider visibility, both locally and globally,” he asserts. Additionally, Dye believes that social media can enable small companies to look and feel much bigger than they actually are. “This means they can compete with larger competitors now on their own ground,” he says.

AUG 2012 | www.elitebusinessmagazine.co.uk

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SALES & MARKETING

Where then, should a social media virgin begin? Stop, look, listen, says Dye. “The important thing for these firms is to have a good listen to what’s happening around them in the first instance, and see who’s using what. This will help to give them a better idea of where to engage and who to engage with.” This means choosing your medium carefully. “Depending on which business you’re in, you might find that LinkedIn and Twitter may be more useful than Facebook and Pinterest.” Next: drop the hardcore sales act, advises Dye. “Post links to useful items, share news and be helpful to others where you can, whilst avoiding the hard-sell will put you on the right path. The occasional product push and bit of self-promotion is fine and more often than not, those within the SME and start-up community tend to help one another out.” Inevitably, as in all aspects of business, PR can go wrong. Edwards recalls a time when Prezzybox sent out a press release urging shoppers to buy online instead of heading for the high street - including a few lines about the outbreaks of violence in America on ‘Black Friday’, the biggest US shopping day. “We got absolutely slated by journalists on Twitter,” admits Edwards. So what should entrepreneurs do if they find themselves on the wrong side of the PR rumour mill? “Don’t panic,” says Gardner. “Look at what’s been written. If you do think they’re being unfair, rather than just writing a story, then consider what to do about it. But sometimes it’s best just to let these things die.” Dye agrees that sometimes it’s best not to “become embroiled in a debate.” However, he also says that entrepreneurs should be prepared to put their heads about the parapet, if and when it’s required. “Don’t shy away from handling the bad press by burying your head in the sand; that’s only going to make things worse,” he warns. “Social networks and consumers are very unforgiving of brands who do this. People will respect you more for honesty and an apology (where you can), so you should always look to respond to bad press as soon as possible.” Businesses should also take heart in the fact that today’s news is lining tomorrow’s wastepaper bins, says Gardner. “Most people won’t remember that you were in a not-sopositive story in Grazia; they’ll just remember you were in Grazia to begin with.” So the old adage that all PR is good PR may well be true...

Case study

Zak’s Top Five tips for Faultless PR

Zak Edwards

Founder, Prezzybox and getmonkeys When we were looking to grow the business we spoke to some agencies about them handling our PR. In my experience, the benefits are outweighed by the cost. And it’s stuff that, in essence, you can do yourself. We do a lot of product-focused PR, because obviously it’s good for us from a sales generation perspective if we can get a product featured in either a magazine, newspaper or TV show. We had an item on This Morning a couple of Christmases ago and we sold 1,000 of them in one day. We’ve also had products featured in Good Homes magazine which have then gone on to sell in their thousands. Our PR is done through our marketing team, and I like to be very involved too. After all, no one knows your brand better than you do. There are so many resources out there now that it’s easy to find the relevant information if you look hard enough. From Google Alerts, to paid-for services such as Gorkana and PR Newswire.

Phone people up. Build a relationship. People get scared of journalists. They think they’re this breed of untouchable people that you should never phone or pester. It’s a myth. Make everything as easy as possible for the journalist. If you’re asking them to feature a product, send them a highresolution image or a sample, as well as some copy including the price and any other salient points. Shout about your wins. Share everything internally. If we’re having a product featured on This Morning, we’ll let customer services know and make sure it’s featured on the homepage of the website. You’re a team, so work together. Be innovative. The press have seen everything a dozen times. If you can find something that elevates your brand or product above the noise, you’ll get more attention. Keep at it. Don’t be afraid of rejection, because it will happen. Pick yourself up, dust yourself off, and carry on.

www.elitebusinessmagazine.co.uk |AUG 2012

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SALES & MARKETING

THE MASTER MARKETEER Hugh Robertson

The former investment banker founded agency RPM in 1993 to help companies bring their brand to life through experiential marketing. Boasting a turnover in the millions, RPM now counts Diageo, Strongbow and Trident among its clients.

Creating an icon The advent of social media means brands can be built or broken in 140 characters. Elite Business’s brand new columnist Hugh Robertson explains how to establish your individuality

C. Penney’s claim that “a happy customer is your walking advertisement,” remains hugely relevant; however today an unhappy customer can destroy a business’s reputation in a single tweet. In order to survive in today’s ‘always on’ world, businesses must maintain an online presence to interact with customers looking for instant responses. What’s more, the power and importance of using social media to create positive brand advocacy is astounding. Once this is established, your advocates will do your marketing for you to help set the the business apart from the competition. Businesses must then approach marketing with confidence, creativity and dedication in order to make their business stand out from the crowd. Your customers are not the only advocates with the power to market your business. Your staff, your suppliers and any other

stakeholders involved can also contribute, but you must engage them correctly and give them the tools they need to speak passionately about your business. In order to instil consistent and positive brand advocacy across your business, you must define brand values and educate those around you on your mission, your point of difference and your business story. This way, you take your stakeholders on a business journey, and they gain an informed understanding of what makes you different. A brand story also gives them a narrative and a currency with which to speak genuinely about you, and staff should always be given a voice, empowering them with the ability to shape and contribute to your business model. What you create here is passion, dedication and motivation; ultimately, the more engaged your stakeholders are, the more likely they are to become positive business advocates.

www.elitebusinessmagazine.co.uk |AUG 2012

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SALES & MARKETING

You must define brand values and educate those around you on your mission, your point of difference

Businesses must also have a thorough understanding of their consumer, what motivates them and how they can connect emotionally to your business offering. This way, you can easily establish how your brand can suit the genuine needs of the consumer and market it accordingly. Start with the consumer journey, and monitor it along each and every touch-point, making sure that your business values and language are consistent over each and every consumer-to-brand interaction. If customer service plays a role, ensure it is the very best, make it memorable and, if appropriate, personal. Advocacy aside, there are very practical steps you can take too. If you’re marketing a specific product, try to do this creatively, adding in an element of surprise that will help create memorability or position your product in a new light. Unexpected stunts or guerrilla marketing are effective (although be aware of potential retaliations), as is surprising product placement. The agency BBDO, for instance, had retailers stock Campbell’s Chicken Noodle Soup among the cold and flu remedies – a simple but extremely effective strategy. Likewise, one of the most effective and costfree marketing tools is social media. Be sure to leverage your engagement and involvement in social media, and don’t underestimate the value of contributing to blogs (your own and commenting on others’) as well as Twitter, Google+, Flickr, YouTube and Pinterest if visual imagery is important. In order that your business appears first in searches, optimise your website for SEO and ensure your location for shops, offices and outlets are all identified by Google Places. Word of mouth is also hugely powerful. If a

customer likes you, they will tell one person; if they don’t like you, they will tell ten, so it can work positively or negatively for your business depending on how much advocacy is heroed and made a key focus of your marketing strategy. Utilising existing client or customer testimonials can lend weight to your marketing, so don’t be shy of asking for introductions. Word of mouth and personal recommendations from existing customers to friends and colleagues can be incredibly effective and is usually free. Taking a risk and challenging the status quo will allow your business to stand out, so in order to approach your market with a strategic and daring eye, brands should adopt a challenger brand mentality. Some of the most successful businesses today were built through following a vision, taking a risk and never giving up. Passion and self-belief are both hugely pervasive and persuasive in getting people to support your business, and without these, marketing your business becomes a sure set-up for failure. Equally, proactivity is key. Explore and engage with local networking events and, if appropriate, look to speak at conferences and seminars. Enter free industry awards and read, respond and raise awareness of your business in good old-fashioned press. Also remember that traditional press should not be ignored. Businesses must remember that marketing does not always have to cost money, but what it will require is creative thinking, energy and of course time. Get into the mind of your consumer, get networking and get building those connections to consumers, clients and the wider industry.

www.elitebusinessmagazine.co.uk |AUG 2012

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Graphic Design

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08/08/2012 11:02

SALES & MARKETING

Taking bicycles to the world... 46

Youâ&#x20AC;&#x2122;ve conquered the domestic market. What next? Here William Butler-Adams, the CEO of iconic British bicycle company Brompton, explains how to make the world fall in love with your business

verseas distribution is nothing new to Brompton; the company has exported a fair proportion of its output almost from the outset. First conceived by Andrew Ritchie in the mid-1970s, full-time production didnâ&#x20AC;&#x2122;t begin until 1987; yet by the turn of the decade Bromptons were being delivered to the Benelux and Germany, two markets that remain important to this day. As in the UK, where only the most intrepid of independent bike shops were taking on this ground-breaking (and unfashionable) product, these markets werenâ&#x20AC;&#x2122;t targeted by the company; entrepreneurial people approached Andrew in his railway arch in Brentford with a request to distribute this brilliantly-designed and manufactured bike in their countries. Fully engaged in the challenges of managing his nascent enterprise and in the further development of the bike, Andrew was happy to hand over distribution rights to people who convinced him they understood his priorities of product support and no-pressure sales. By the mid-90s, Brompton found itself with a small but growing network of distributors. The company had fallen into the distributor model for want of in-house overseas experience and a lack of time to engage in distribution. But it was also the best solution for the business then, and remains the superior approach in most markets today. Employing a distributor

www.elitebusinessmagazine.co.uk |AUG 2012

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SALES & MARKETING

to oversee the marketing and distribution of products in a territory comes at a cost of lost margin, but it also allows the business to benefit from the linguistic and cultural knowledge of the go-between, along with the business connections that person brings; generally-speaking it’s a lower-risk, lowermargin approach. As the Brompton brand has gained recognition, the need to employ distributors to oversee market development has declined and the company has replaced the distributor model with a dealer-direct approach in the Anglophone territories: USA, Canada,

other critical parts were shoddily produced and assembled. The JV came to an official end after ten years, though it had ceased to produce Bromptons in any meaningful quantities long before. At termination, the partners failed to return a number of drawings and jigs, articles subsequently employed to manufacture Brompton clones under a variety of names; this in turn forced Brompton to pursue a number of costly, if successful, law suits for copyright infringement. The experience taught their management the importance of retaining control over manufacturing know-how. Meanwhile,

The varied nature of global markets means that flexibility is a prerequisite for all exporters Ireland and Australia. But the decision is not straightforward. In the absence of a distributor, North American dealers are supported by two Brompton employees based in Portland and Oregon, in addition to receiving a large degree of support from the Brentford HQ in the form of management time and financial backing. And Australia – where the distributor withdrew – is a territory where they are keen to reintroduce distribution; it is too distant to be effectively managed from the UK and too small to warrant an agent. In most markets, therefore, the distributor model remains the superior conduit for the exports that now account for three quarters of Brompton’s output. This is particularly true of the Asian markets where the cultural, linguistic and economic differences are too great to manage without indigenous marketing, logistics and technical support. Japan had shown interest in the Brompton as far back as the early 1990s, prompting the company to embark on an ill-fated alternative distribution chain: a joint venture in Taiwan that manufactured Bromptons under licence and shipped direct to Asian distributors, starting with Japan. Unfortunately, no amount of training could prevent the partners from taking shortcuts with the manufacturing, resulting in products that bore a superficial resemblance to the Brentford Bromptons but whose hinges and

Japan, like the rest of Asia, was supplied from Brentford and has today become the company’s largest export market. The business now attracts more interest from prospective distributors than ever, and the appointment process is more organised; when a market is deemed ready, discussions with all collected named parties begin, often involving a market visit. Sometimes, as with the recent appointment of distributors for Brazil, Argentina and Chile, assistance is sought from UKTI to arrange further introductions or for the preparation of a market report. But the distributor model is being shunned in one market they’re about to enter; China. Uncertainties over the Chinese market have persuaded them to embrace a “third way”; namely a retail joint venture with trusted local contacts, resulting in a stake in a shop in Shanghai. It’s a long way from Andrew’s hands-off approach in the 1980s but the varied nature of global markets means that flexibility is a prerequisite for all exporters. It also reflects the fact that the business has achieved – after 25 years – a certain international standing, for which its distribution network may claim much of the credit.

website: www.brompton.co.uk

AUG 2012 | www.elitebusinessmagazine.co.uk

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PEOPLE

Finding your perfect match

Bitter disputes between senior management are emotionally painful, financially ruinous and to be avoided at all costs. We discuss how to select the right business partner and avoid divorce later on.

Words: Jon Card

usiness partnerships are the stuff upon which dreams are made or nightmares begin. There are many parallels between business partnerships and love matches: some marriages last for years, others end in a nasty and expensive divorce. The early days of a start-up company are exciting and fun, but soon the cold, hard reality of running a business seeps in. Revenue is the answer to most woes, although sometimes even that canâ&#x20AC;&#x2122;t be enough. A wounded ego or a big change in personal circumstances can often lead to a rift between

founders. The united team can turn into warring parties, the lawyers are drafted in and progress ends. Boardroom bust-ups make exciting headlines, but are traumatic for those involved. Mark Zuckerberg, founder and CEO of Facebook, might be the worldâ&#x20AC;&#x2122;s youngest billionaire, but his empire came close to crashing down before him due to an illconsidered early alliance with the Winklevoss twins. Some entrepreneurs go to the other extreme and try to do everything themselves. This too is laced with problems, as few business people can get very far by always flying solo.

AUG 2012 | www.elitebusinessmagazine.co.uk

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PEOPLE

“People who are similar will often share the same blind spots, but a company cannot afford to have too many of these” Penny Moyle,

CEO of OPP

However, entrepreneurs should think carefully about who they go into business with. Spending quality time with prospective partners at the outset can avoid lengthy and costly disputes later on. Some of the best business partnerships are created by people who have worked together before, and spent time getting to know each other’s strengths and weaknesses. The founders of Innocent Drinks (Richard Reed, Adam Balon and Jon Wright) all attended the same university, had worked together on various enterprises and spent six months on their smoothie project before starting trading. Their example also shows companies don’t have to have ‘a leader’; other types of management are possible. However, getting the leadership mix right is as much art as it is science. Love is blindness As in any relationship, business partnerships require the perfect mix of personalities. Husband-and-wife teams are common and often highly successful, probably because the two principals know each other so well. Yet entrepreneurs often make the mistake of entering a union, without the appropriate levels of courtship. Even if you know your business partner fairly well, spending extra time together before an agreement is made is a smart move. Yet it is also worth asking how well you know yourself, your own strengths and weaknesses, appetite for risk, business ethics and emotional drivers. A good business partner covers for your weaknesses, understands your blind spots, knows what makes you tick and vice versa.

Some entrepreneurs undertake personality tests to uncover their true identity and better understand their partners. Penny Moyle, CEO of business psychology consultancy OPP, works with businesses looking to bring in management level members. “We worked with an entrepreneur that was looking to bring in someone who they didn’t know at all,” she says. “We discussed with them the type of skills they wanted and also did a personality assessment. This helped them to both know who the other person was and to go into the deal with their eyes open.” Moyle says the partners in this case weren’t necessarily the types of people who would have been great friends. However their personalities, attributes complemented one another to form the basis of a strong partnership. The company in question went from start-up through to exit and they are now running a second business. “People who are similar will often share the same blind spots, but a company cannot afford to have too many of these,” says Moyle. Businesses need visionaries, but they also require someone who likes to do the details.” Future plans Thorough HR practices are a must when bringing in senior management or starting up with someone new. However, entrepreneurs must also think about further down the line and plan for eventualities they hope will never occur. An individual’s circumstances will change over time and so can relationships, business or otherwise. Key life events such as

births, marriages, deaths and serious illnesses can all potentially impact upon a business partner’s ability to perform and the priorities in their lives. You and your business partner may see eye-to-eye on all key matters now, but what about in 10 years’ time? Anne Hughes, a senior associate at law firm Fox, says it is essential for businesses to get key agreements or a ‘pre-nup’ in place before they start trading. “I advise businesses to get an agreement from day one, which covers all of the big issues,” she says. All too often Hughes meets

“I advise businesses to get an agreement from day one, which covers all of the big issues” Anne Hughes, senior associate, Fox

business owners after they have fallen out and the results can be financially ruinous. “Disputes are costly. Sometimes they are so expensive the bill is greater than the assets the business is left with,” she explains. Hughes says entrepreneurs must think about key decisions, which they might have to make several years into the future. “A lot of businesses make agreements and then put them in a drawer and forget about them. They

www.elitebusinessmagazine.co.uk |AUG 2012

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Case study Bringing in the boss Peter Grant CEO CloudApps

Peter Grant joined sustainability software management business CloudApps as its new chief executive. The company had been founded by four former colleagues, but although they were highly experienced in their respective fields, they required a leader to drive a customer-focused agenda. “It was their baby, but we had all worked together before,” says Grant. “I am much more aggressive on the sales side and they realised that they needed someone with energy and passion to provide a get-to-market strategy.” Grant’s weekly efforts to drive CloudApps forward begin at 8am on a Monday morning when he meets his

only pull them out when there’s a dispute,” she says. Nonetheless, it is better to have formal procedures in place, rather than paying for representation later. Marriage Entrepreneurs should think of business partnerships as if they were a celebrity marriage. You need to see the other as good for your career, someone who will support you and make you look good in public. However, should it all go wrong, there’s nothing better to have in your back pocket than a well-written pre-nuptial agreement crafted by an experienced lawyer. Get to know your partner well, discuss all relevant matters and be open and honest with one another. By doing this you will not only get to know them, but also yourself. Hopefully, it will be the start of a beautiful relationship and the paperwork can remain unused in the bottom drawer.

sales team. This is followed an hour later by an executive committee (ExCo) meeting where he and the four founders discuss the week ahead. “I will report to them what the deals are and what we need to do to bring them over the line,” Grant explains. “They will also report what’s happening in their departments.” Grant says the ExCo team are all very capable, however this means they have high standards and his decisions are often scrutinised. “When you work with A+ players they question everything you do,” he says. “I make the final decisions but because we will look at all the pros and cons of an issue, in effect I will go with the majority. But if someone doesn’t go with the decision they will always get behind it once it has been made. There’s no time for politics, you have to get on with making things work.”

Your Business Pre-Nup Anne Hughes, senior associate at Fox Lawyers, highlights some of the big questions entrepreneurs should consider before going into business with someone else. Preferably, it is better to get these agreements in writing, she says. 1 Can one partner/director veto a decision? Is unanimity ever required? 2 What are the rules about adding a new board member/key team member? 3 If a partner/director chooses to leave can they withdraw all their capital immediately? 4 Should the partners accept any restrictive covenants? 5 What happens if one of the team dies? Is there an inheritance issue?

AUG 2012 | www.elitebusinessmagazine.co.uk

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Business Coaching

Business Growth Strategies

Untitled-3 1

03/08/2012 14:11

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There are plenty of successful businesses out there. In fact, small and medium business enterprises are contributing more than £1bn to the UK’s economy each year, and account for over 50 per cent of employment.

Unlock your business potential 53

aving a successful SME can bring a range of new challenges everyday, testing both our resolve and our skills. Many of us will soon discover that there are areas of our business that we need more help with. We often don’t have the time to dedicate days in a classroom or reading weighty business books. But investing time into developing your business skills will ensure that your business goes from strength to strength. At Cetas Kinetic, we have developed a flexible solution that every small business needs to know about.

It’s flexible The beauty of our training is we have used a synchronous learning approach. It may sound fancy, but it is simple to use. It kicks off with a two-hour session online, with a real tutor and

other real students. There will never be more than 24 people in a session, meaning you get a chance to ask questions and talk to other participants. There is a follow up session a couple of weeks later to discuss your progress. We run each course at different times of the day, meaning you choose a time that best suits you and your business.

your fellow students for as long as you need.

It gives you the resources you need You get access to a range of practical resources aimed at helping you learn more. These take the form of videos, action plans, guides and information sheets. There is something to help you every step of the way.

It has it all covered We have developed a range of courses and continue to do so based on the feedback we have got from the businesses we work with. From customer relationships and sales, through to delegation and time management skills. If you don’t find the thing you are looking for, then make sure you get in touch.

It continues to work with you We don’t just deliver the training and run. We ensure you get continued advice and guidance in the form of our rapid learning modules. These little gems arrive in your inbox once a week for three whole months. They prompt you to try new approaches, give you new insight and build on your initial learning. We also have a moderated online networking space, meaning you continue to get support from both us, and

It’s affordable We know that in the current climate, there isn’t always lots of spare cash to spend on training. So we needed to make sure that the courses we offer are accessible to everyone, which is why we have set our price at just £97 +VAT

Don’t leave the success of your business to chance or limit it by the knowledge you currently have. For outstanding learning and business growth strategies, that will drive your business forward, contact us on 02083975556 or visit www.cetas-kinetic.com/online-learning

AUG 2012 | www.elitebusinessmagazine.co.uk

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THOMAS INTERNATIONAL Martin Reed CEO

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

A happy workforce is a productive one Psychometric testing can be one of the tools to help employers identify what makes staff tick – and then act on it

t has been a tough couple of years for UK plc. The economic crisis has had a significant impact on businesses across the UK and, it’s not just the bottom line that suffers, but all of their employees too. Employee engagement is at an all-time low with one in five employees planning to leave their job in the next 12 months (according to the CIPD Employee Outlook Survey), and it is a known fact that employees predominantly leave because of dissatisfaction with their managers. As the old adage goes, join a company, leave a manager. Employee dissatisfaction causes firms significant problems, as low engagement and lack of motivation can lead to loss of productivity and eventually result in staff leaving their roles, so it’s essential that companies – and specifically managers – learn how to engage and motivate their staff. When you consider that statistics show the cost of replacing an employee who makes the decision to leave in the first year is equal to their first year package, the benefits of maintaining a well balanced and satisfied work force become clear. Dealing with staff dissatisfaction is an

employer’s responsibility, so it’s vital to understand what employees want and what makes them tick in order to not only manage them more productively, but also to increase employee retention. Each employee is motivated by different things; some are goal orientated, some want to work in a stable environment which enables them to maintain the status quo, while some are ‘people people’ who thrive on interaction with others. Understanding how people behave at work and what drives them can help managers to unlock their staff ’s potential. Psychometric assessment is one way to gain valuable insight into each employee’s motivational make-up. According to research, the things that people find most motivating are a sense of achievement, recognition from colleagues for good work, enjoying aspects of the job itself, a sense of responsibility, a sense of career advancement and a feeling of personal growth. Employees need opportunities to learn new skills through work and be rewarded for the effort they put in and managers need to fully appreciate the benefits of regular

“Dealing with staff dissatisfaction is an employer’s responsibility, so it’s vital to understand what employees want and what makes them tick”

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communication with staff and make a conscious effort to support and encourage their people. Behavioural profiling can help managers learn the different motivations of their staff. Using psychometric assessment, behaviour in the workplace can be broken down into four different factors – dominance, influence, steadiness and compliance. These factors in combination identify an individuals prefered communcation style and method of working. Once you have determined what motivates an individual, inspiring and managing them becomes easier. One of our clients, Everything Office, which provides stationery and office supplies throughout the UK and Europe, successfully used Thomas International PPA assessments to reduce their staff attrition and support company growth. Everything Office is predominately a telesales operation which was struggling with a high churn rate among its telesales staff. They came to Thomas looking for help in reducing that rate and increasing employee satisfaction and they used the Thomas PPA

to profile their staff. Managing Director, Bob Taylor, commented that profiling ‘helped us to understand [employees] better; identify weaknesses and pinpoint training needs. Those in jobs that were less than a perfect fit were helped to modify their behaviour. We’ve seen a reduction in employee frustration and people who had challenges are now performing well. The tools facilitated the start of a two way communication and helped us cement a better working environment.” As a result of utilising Thomas assessments, Everything Office saw their churn rate reduced by 50%. Many employers already use behavioural profiling as part of their recruitment processes, but underestimate how valuable these tools can be during the rest of the ‘life span’ of an employee. As an employee progresses in a role, or as the role changes, there can be subtle changes in the profile, so using profiling tools as part of the ongoing HR process can ensure that managers are aware of how they can adapt their behaviour to accommodate this. Alternatively, or in addition to profiling their employees, managers themselves can

benefit greatly from insight into their own management style. By using a combination of assessments, a manager can gain an acute awareness of how their own behaviour might be interpreted by their team – an approach used by Willmott Dixon, the UK’s second largest privately owned construction, support services and development company. Rick Lee, group chief human resources officer explained: “We use a range of instruments that help us get to the heart of the manager’s skills and qualities and address any shortcomings. By helping managers understand themselves better and identify their strengths and limitations, we help them perform better.” A benefit, he goes on to say, that enhances both their own career and the company. With staff satisfaction, efficient teams and low staff turnover on the wishlist of every company in these challenging times, a more thorough understanding of motivations, strengths and limitations of all team members is in everybody’s interest to ensure a happier, more productive workforce, not to mention success for your company.

AUG 2012 | www.elitebusinessmagazine.co.uk

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Recovering after redundancy 56

In these tough times, lots of small businesses have had to face the inevitable and make cuts to headcount. Morale is bound to be affected, but how can growing businesses bounce back after the guillotine has fallen?

WORDS: HANNAH PREVETT

edundancies are an unfortunate reality of working life. But for employees the length and breadth of these bootstrapped shores, losing a job as a result of cutbacks has become increasingly likely. It seems hardly possible that it has been nearly four years since the Lehman Brothers collapse that precipitated the worst economic crisis in modern history. But still the ramifications of the downturn continue to be felt: according to the Office for National Statistics, in the three months to May 2012, 147,000 people were made redundant. This was actually down on the previous quarter, but still represented a rise of 4,000 from the same period in 2011. The effects of redundancy and downsizing on an organisation have been widely reported. Even once the ‘victims’ leave the company, the aftershocks can be felt within the organisation for months. Emotions among those who survived the restructuring can range from shock and anger, through to hurt, panic and a loss of motivation. And if the process isn’t managed effectively, organisations can eventually end up losing the staff they wanted to keep hold of. “It can be very damaging for an organisation if it’s hemorrhaging skills it wants to hang on to,” says Dr Ian Ashman, senior lecturer in HR management and leadership at the University of Central Lancashire (UCLan).

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“It can be very damaging for an organisation if it’s hemorrhaging skills it wants to hang on to” Dr Ian Ashman - Senior lecturer in HR management and leadership at UCLan

Case study Life after redundancy: a survival story

It is inevitable that staff are going to be feeling demotivated and stressed following redundancies. But how does a business ensure that it can pick up the pieces and move on? It is vital to ensure the process has been viewed as fair, not just by the victims, but also by those who are still employed. “The temptation is for people in an organisation to concentrate on the people who are losing their jobs, but the survivors also have to be considered; they’re usually picking up extra workload and they’ve probably been through a fairly uncertain period themselves,” says Ashman. The key to reducing uncertainty and retaining respect is to be as honest as possible, says John Taylor, CEO of HR advisory body ACAS. “Honest communication is the absolute golden rule,” he explains. “You give people as much notice as possible about what’s happening. Unless there’s a shock meltdown in the marketplace, or suddenly your product is no longer desirable, employers won’t be surprised by the fact they have to make redundancies. Where a lot of employers go wrong is they hang on and wait for something magical to come along. And it doesn’t.” Also of paramount importance is providing all staff with adequate support mechanisms, according to Ashman. “It’s likely to be much more difficult in small organisations than in larger ones, but it’s important that everybody

gets access to the support they need,” he says. And this is just as important for envoys – a term coined by Ashman to describe those delivering the bad news. “Envoys need someone to share their experiences with; someone to tell them: ‘it’s going to be tough, but this is how I dealt with it’,” he says. This role can often become even more difficult in smaller companies, because it’s more likely the person bearing bad news has a close relationship with those being made redundant, explains Ashman. “They will know about their children, their mortgage, and so will feel a much greater sense of responsibility,” he says. Once those who have been made redundant have left the company, it’s important to try to instill a sense of confidence. More often than not, the reason people join entrepreneurial young businesses is because they believe in the vision of the person at the helm. Ashman says they need to know the founder or CEO still believes: “They’ll be thinking: ‘If this guy or woman hasn’t got the confidence in the business, and they’ve got all of the information, what chance have we got?’” he explains. Keep a positive mindset and things can slowly, but surely, recover. The founder can concentrate on financial recovery and the team will take on a new identity. “The good times will return, they’ll just be a bit different to what they were,” concludes Taylor.

Alex Thomas ‘How I bounced back’

I was made redundant after seven years of working on the same magazine. It was very upsetting - no matter how many times someone tells you not to take it personally, you do. I subsequently spent six months not really doing anything, due to a total lack of enthusiasm for publishing. I did some freelancing for a magazine but I didn’t really like being at home. I missed being able to throw ideas around. Nevertheless, when my freelancing gig was coming to an end, I really started to panic about my options because all my redundancy money was gone. About that time, I received an email from a director at a PR agency saying there was a vacancy for an account manager. It was an interiors agency (the same area as I worked in as a journalist) so the knowledge of the products was there, and I’d previously been flirting with the idea of moving across to PR. I went for an interview and started a week later. I am now on my second agency, after having been offered a promotion. I love working in PR and I have never looked back. I wouldn’t have ever believed anyone who said redundancy was the best thing that ever happened to me. But despite the horrendous first six months, I think I can probably say it was.

AUG 2012 | www.elitebusinessmagazine.co.uk

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08/08/2012 11:16

TECHNOLOGY

the

Hot List

With more tech and apps coming out every day, trawling the net trying to stay ahead of the curve has become a bit of a chore. That’s why we’ve handpicked the freshest and finest for your delectation. So kick back. Put your feet up. And enjoy some of the loveliest business tech available

Everest

Raspberry Pi

Basecamp Next provides excellent hands-on project management. Aside, that is, when you’re more than twenty feet from a router. D’oh! Everest removes this little snag, allowing you to use Basecamp Next on the go. Its clean interface and decent connectivity means you’ll never again be more than a few finger swipes from your project.

We know what you’re thinking. ‘Isn’t Raspberry Pi a toy for school children?’ In a word: yes. In a few more words Raspberry Pi (featured here in the stunning Pibow case from Pimoroni) is also a micro-processor. It’s a budget programming dream. And it’s £29. Four times more powerful than the iPhone 4 and a tenth of the price. Development platform. Low-cost server. And no bigger than a credit card – truly your new flexible friend.

AUG 2012 | www.elitebusinessmagazine.co.uk

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TECHNOLOGY

Pride Pride, the latest iPhone app from Double Dutch, enters the crowded market of project management apps. Where it stands out from the crowd is its friendly social media feel, encouraging punchy status updates on current objectives. Incentivised leaderboards give a nice touch to collaborative work. And it’s also cute as a button.

Resumator Small company? Can’t justify a massive HR department? In steps Resumator. For a web based app, Resumator has absurdly good functionality. You can set up vacancies. Generate job sites for your organisation. Track and collaboratively view applicants. Store and search through CVs. It’s so slick soon you’ll be hiring and firing like Sir Alan himself.

Zapier Every business relies on at least a few web-based tools. Basecamp. Dropbox. Gmail. Trello. All great apps. But they don’t always play nice. Zapier is the family therapist of your web-based toolkit. It integrates your software, breaking down all those awkward boundaries and getting your apps to talk to each other. No surprises therefore, that it’s an absolute life-saver.

www.elitebusinessmagazine.co.uk |AUG 2012

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08/08/2012 22:06

No matter how amazing your website is, it cannot bring in new business if it cannot be found!

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04/08/2012 16:34

TECHNOLOGY

Active intelligence 62

Using data more efficiently can make better use of small businesses’ time – and lead to a healthier bottom line. What’s not to like?

WORDS: HANNAH PREVETT

n the midst of all of the excitement and hard work that goes hand-in-hand with setting up a new business, developing a strategy around data can be the last of a founder’s concerns. As long as the PCs in the office work, the printer prints and the website doesn’t fall over, IT and technology can slide down the agenda. The idea that big business decisions should be data driven isn’t a new one. Unlocking data and information can inform decisions around strategy, product and service to ensure businesses are finely attuned to customer needs. But with the amount of data generated by businesses these days dwarfing that of yesteryear – from bricks and mortar transactions to online interactions with customers – it’s easy to see how the task may appear overwhelming. For a founder who hasn’t put data at the centre of their business from the get-go, attempting to do so later on can seem a daunting task, says Paul Joyce, founder of hosted service board company Geckoboard. “We have a way to go as

www.elitebusinessmagazine.co.uk |AUG 2012

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TECHNOLOGY

an industry to make it easier to be more data driven,” he says. “At the moment it’s an incredibly intimidating process.” Products like Geckoboard certainly help make that transition a little smoother. The dashboard pulls in various bits of data from disparate sources – for example from web-based services such as Google Analytics and Salesforce – and then allows users to view them on a single screen. ‘The reason I came up with this was to make it easier for businesses to take their first steps to become more data driven,’ says Joyce. Geckoboard has received a rapturous response and has been embraced by companies of every shape and size. Originally intended for small to medium sized businesses, Geckoboard has been snapped up by larger companies too. “We’re seeing agencies taking it on, who are using it

to relay key stats to their clients. Also, there are lots of departments within large enterprises who are using Geckoboard instead of going through the typical procurement process, so in the sales department or the marketing dept of a large organisation. They’ll pick it up and they’ll put it on their own personal credit card and claim it back on expenses.” Why the sudden interest in data? It’s a new way of doing business, says Joyce. “Being able to measure everything, decide what’s important and then being able to relay it as a key stat.” One of the reasons it has taken so long for data to feature on the founder’s agenda is time – or lack thereof. “My feeling is that small businesses have a lot to do. They have a lot of balls to juggle,” explains Joyce. But SMEs need to make time, as instinct will only get them so far. “The received wisdom is that a good businessman with great intuition will always make great decisions, but we want to challenge that. Even a small amount of data can greatly improve your decision-making capabilities.” Online lending service firm On Deck is a fast-growing company, which uses Geckoboard to make sure it’s got complete visibility across the business. “Geckoboard helps us quantify and visualize the pulse of the business in an extremely digestible manner. It keeps teams focused on their own goals as well as establishes transparency across teams,” says Greg Lamp, product manager at On Deck Capital. Better insight into data can also help make far better use of a business owner’s time, says Glenn Shoosmith, founder of online booking and scheduling service BookingBug. “As a service business you have to manage it almost as if it’s an item you’re selling,” he says. “Especially in the current climate, it’s important for service businesses to be busy all hours of the day, every day of the week. If all your clients are booking on a Saturday, for example, but no-one books on a Tuesday, you may need to put prices up at the weekend, and offer deals on a Tuesday.” Using a tool like BookingBug, those kinds of small or micro service businesses can manage their time more effectively. But before they can get to grips with the data itself, they’ve got to become familiar with the concept. “I think there’s this significant educational curve, but more and more businesses are getting their heads around it.” And they need to, too, says Shoosmith. Ignore data at your peril. “This is becoming, especially in this economic climate, the difference between the success or failure of a small business – especially how they manage their time, manage their availability, manage their prices and market themselves.” “It could be the difference between staying in business and going out of business.’

“It could be the difference between staying in business and going out of business”

AUG 2012 | www.elitebusinessmagazine.co.uk

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04/08/2012 16:25

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.

A tailor -made business

Adapting is the name of the game if you’re to create a customer-centric website, says David Hathiramani

he story started in 2006 when I met up with my old school friend Warren Bennett for a drink and a catchup. It wasn’t long before I had to interrupt proceedings to ask about Warren’s suit. It was absolutely outstanding – cut beautifully and made in a lovely wool cloth. The trousers had huge flairs, which I thought looked pretty shocking, but were a wonderful reflection of Warren’s personality. It transpired that Warren had had the suit made for him in Nepal; he’d been teaching at a local school and staying with a tailoring family. Warren still had numerous bespoke suits from his travels, and he’d also kept the contact details of the tailor, for future orders and those of friends and family. Over a few more beers, we realised that the idea could be much bigger than just sourcing suits for loved-ones. And we began thinking about different style options, too.

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At the heart of our offering was the desire to take the hassle and fuss out of getting things tailored

Warren liked flairs; I didn’t. Warren liked three buttons on his jacket; I preferred just two on mine. This led to the simple idea of the online ‘style wizard’ to design a suit just how you want it. The idea of being able to create your own suit online was born, and our journey to revolutionise traditional tailoring using technology began... Choosing a name

We’d always wanted our offering to be the most accessible and customer friendly way of getting a bespoke suit tailored. While we wanted to sell quality products, we needed a name that would differentiate us from pricey Savile Row bespoke tailors, and make us really stand out from competitors. We started to brainstorm names, while checking availability of the domains. We were astonished to see that asuitthatfits.com was available, so we snapped it up immediately. We later found out just how valuable choosing the right name was for an internet retail startup, in terms of search engine optimisation. The name ‘A Suit That Fits’ proved very effective for search engine ranking terms like ‘Suit’ and ‘Suits’. Starting on a shoestring

Looking back, we were pretty naive in terms of how much investment it would take to create and maintain a good web system. Things would have been a lot easier if we’d had investment behind us, but we didn’t let that stand in our way. As with any online purchase, money is exchanged at the point of order; this was key to us being able to launch without investment. And in order to prise money from customers before they received the goods, they had to feel confident in our offering. This meant working hard on getting exactly the right balance between quality and value. By constantly learning and listening to our customers we

got the balance right, and the income from the suit sales was enough to fund the initial development of the platform.

desire to take the hassle and fuss out of getting things tailored.

Testing the water

Now we had a website, how were people going to find it? Back in 2006, Google Adwords was far less competitive. This was partly to do with the concept of online tailoring not existing, as well as online marketing being much less widely known about, and leveraged. We capitalised on this by bidding on keywords relevant to our offering, and refining our website using Google Analytics. Google Adwords and Analytics performance, which also allowed us to really get an insight into what our customers were searching for, as well as what they valued. This means we were continually learning and refining our offering.

Although we knew it was a good idea, we had no real idea if our concept had any legs at all. With Warren’s design skill, and my HTML knowledge, we managed to knock up a very basic black and white holding page on asuitthatfits.com, and commissioned a huge banner saying ‘aSuitThatFits.com’. Our initial concept was very much about online - however we knew that real people would still want some level of human interaction. So we set off to test the idea at Hampstead market. Armed with our banner, a sample suit (Warren’s), a tape measure, a printout of fabric colours, and two personable tailors (us) we were set to give it a go. We sold two suits within the first 20 minutes of opening. aSuitThatFits.com 1.0

I am a computing graduate, and Warren is an engineer – not your average tailors – but when combined with our mutual love of suits, our practical approach is what revolutionised tailoring: We felt that the task of setting up the online business could be summed up in three points: •Creating the style using the style wizard •Getting measurements correctly inputted – using the measuring wizard •Taking payment We therefore created a very simple website which gave instructions on how to do all of the above. It didn’t look particularly good, but it was very process driven and logical. Although we had no real experience in branding, looking back, a very simple instructional website did fit with our brand at the time, as at the heart of our offering was the

Marketing the website

Current day capers

We have progressed quite a bit as a company since those days, and now have more than 30 studios nationwide where customers can come for style advice and to get expertly measured. Our business is still 100% web based, with every one of the team using the style wizard we created at the start to help our customers choose from 40 billion styles and combinations. Customer feedback has always been at the heart of how we improve: from day one we had a UK telephone number and postal address on our website which was integral to our customers feeling that we were always within reach. Those early phone calls were incredibly important as it gave us a direct access to our customers. Even now, we continue to refine and improve our offering based on customer input. My advice to anyone starting now would be to do the same: talk to your customers. And explore all possible avenues to obtain feedback to make your product or service better. It’s certainly stood us in good stead.

www.elitebusinessmagazine.co.uk |AUG 2012

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08/08/2012 22:47

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08/08/2012 11:08

FRANCHISING

Mastering a Trade

Master franchises are a halfway house for entrepreneur-minded individuals who want to run a large business on a tried and tested model. But they have their pitfalls too...

WORDS: JOSH RUSSELL

ranchising is a fascinating avenue for an aspiring businessperson to explore. A master franchise can be the perfect solution for a prospective franchisee looking to break fresh ground. However sometimes the lack of risk, and the relative rigidity of the wholesale adoption of someone else’s model, can make it seem lacking in adventure. Master franchises generally do what they say on the tin. Cathryn Hayes, head of Franchising at HSBC, explains: “The master franchise relationship is where the franchisor obviously grants to a master franchisee the right to their name and their concept within that territory, but more importantly the right to be the franchisor in that territory.” The benefits of owning a master franchise are still the same as any other – you have access to a business model that has already proved its strength on the open market - but there are also added perks unavailable to ordinary franchisees. Aside from receiving greater financial renumeration, master franchisees can establish themselves as the head of a rapidly expanding business and will also have a greater chance to influence how the business model is applied in their territory. It can be a hugely rewarding process. One master franchisee which has had particular success of late is Home Instead Senior Care UK, winning awards at both the bfa HSBC

Franchisee and Franchisor of the Year Awards in 2011 and 2012 respectively. Their CEO Trevor Brocklebank, says: “Home Instead Senior Care were open and honest with us from the start and have provided superb training and support. We now have an award winning domiciliary care franchise with 120 UK franchisees who we in turn support and train and most importantly we are providing the highest quality care to more than 5,000 clients across the UK.” However there are also attendant risks. First

worth bearing in mind that, because of the significant investment involved, failure comes with heavy costs. Additionally a territory’s failure significantly affects the public image of that franchise, meaning that it will be much harder for the franchisor to reestablish a hold on the territory at a later date. “It damages their reputation and the brand is therefore a bit tarnished by the time it eventually gets off the ground.” Largely because of these risks franchisors are far more circumspect about master

“The master franchise relationship is where the franchisor obviously grants to a master franchisee the right to their name and their concept” of all, whilst standard franchises already have an established their brand in the minds of the consumer, in the majority of cases a master franchise is dealing with a blank canvas. A reputation still needs to be established. Hayes remarks: “Really there’s no shortcut other than actually opening the business.” Fortunately for the master franchisee the brand’s effectiveness has at least been tempered by its exposure to existing markets. Another risk involved in master franchising involves finance. As with any franchise any losses rest solely on your head. It’s

franchisees than they are about regular franchisees. They will want to know that master franchisees have the skills, experience and financial support to run a network of businesses. And often this translates as having an existing portfolio of businesses, meaning that master franchises are off limits to the inexperienced. Despite this master franchises are an increasingly important part of franchising and offer a great opportunity for an entrepreneur to stake a claim on a wide network of enterprises.

AUG 2012 | www.elitebusinessmagazine.co.uk

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03/08/2012 14:35

THE FRANCHISE SHOW

A future in franchising There are hundreds of ways to start a business. But buying a franchise is one route to business ownership you might not have considered, and it’s fast becoming a well-liked alternative to going it alone, offering a ready-made business to step into and a proven business model to work with. 70

ith much of the work already done for you – the brand building, the marketing strategy, the idea development – a large part of getting started is researching and selecting a franchise to suit your budget, character, and ambition. And that’s where The Franchise Show becomes a very useful platform. Happening at Earls Court, London on the 7th and 8th of September, the show offers visitors the chance to speak with hundreds of brands and franchise experts, facilitating in-depth research alongside genuine opportunities to walk away from the event having secured a future in franchising. The franchise industry has seen substantial growth in the recent years, in both accumulative turnover and the number of franchise systems operational within the UK. The fact that the industry continues to grow in earnest is largely unsurprising, but the record £12.4bn turnover has nonetheless come as a welcome boost to a faltering UK economy, which is banking on the robust franchise industry to lead to way in the country’s financial recovery. In fact, the current economic climate is proving fertile breeding ground for franchises of all shapes and sizes. Indeed, as a result of banks unwilling to loan to small businesses and swelling unemployment figures, the UK has seen a hike in operational franchises – and not just in coffee shops and fast food chains – with many looking to go it alone with a secure franchise business. The industry has proliferated, now encompassing a range of sectors – from maintenance and property to healthy eating and comedy brands

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– now ripe with opportunities for franchise first-timers hoping to get a foot on the business ladder, and also for hardened business owners looking to develop their portfolio. The Franchise Show is committed to representing the industry’s diversity to its fullest, offering visitors unmatched information, opportunities, and contacts – continually striving to deliver a show that offers more. Whether you are searching for the right franchise system, or you simply wish to find out more about the industry, The Franchise Show’s revamped conference schedule and new features have it covered. New feature, Day In The Life Of offers visitors the chance to meet the franchisees who’ve taken the plunge and bought into a franchise model. They will uncover the trials and tribulations associated with the process, and you’ll have the chance to ask them for the advice so crucial in the early stages of business. Franchise Espresso, another new feature at this September’s show, invites exhibitors to deliver a short, sharp 10-minute presentation on their franchise model, meaning you’ll learn about franchise concepts on and off your radar, without doing the painstaking research. And yes, there will be coffee – so all you need to do is turn up, sit back, and tune in. Helping visitors to access relevant information quickly and easily, the show has introduced Focus On – a series of 30-minute seminars delivered by the most respected and experienced professionals in the industry, each focusing on a different franchise sector. Starting with a brief introduction to franchising, each seminar will look at the characteristics of the market, invest-

ment levels, expected return, skills needed, the common pitfalls and the day-to-day operations. These sessions will cover the most up-to-date practical, legal, strategic, and financial issues, allowing visitors to get straight to the heart of what they want to know. High investment, high return opportunities are also available at The Franchise Show, putting visitors in front of those who have successfully established a master franchise. Attend a series of seminars and workshops presented by recognised experts in the field; and enjoy face-to-face meetings with organisations seeking to offer a master franchise opportunity, many of whom will be promoting their concept for the first time in the UK. To compliment a huge number of UK brands at the show, many international franchises will be present, each looking for willing franchisees to take the reins of concepts new to the UK. The most famous bar in the world, Coyote Ugly, innovative Brazillian chocolate brand, Fabrica Di Chocolate, and Italian healthy fast food outfit, Insalate Italiane – just three mouth-watering international brands from a wide range at this September’s show. Exhibitors at the show span almost every area of franchising conceivable, from world famous comedy brands to property-buying companies. It means that every type of visitor is catered for, regardless of experience, skill set, or budget. The Franchise Show will happen on the 7th and 8th of September at Earls Court, London tickets remain complete free. To find out more, and to order your free tickets, visit www.thefranchiseshow.co.uk

08/08/2012 23:42

FRANCHISING

Franchise in the Spotlight:

Lavazza Espression 72

For those who like their coffee Lavazza is a pretty familiar name. The coffee importer is one of the industry’s big players and given the fact it has been run by the Lavazza family for four generations now it is hardly mystifying how it has become a name synonymous with coffee supply. Its transition to retail cafe in the form of Lavazza Espression is a bit more of a surprise, albeit a welcome one

WORDS: JOSH RUSSELL

ou’d be forgiven for being unaware of Lavazza’s move toward the high street. Thus far its outlets are limited to a few select locations in the UK but if its international success is anything to go by, we could soon be seeing a lot more of them. China in particular has leapt upon the Espression phenomenon and already features fifteen stores across the country. With Espression Lavazza have identified a niche and seized it with both hands; establishing themselves as a provider of a more authentic cafe experience, orientated largely around espresso, actually gives them a distinct advantage over the more established coffee franchises like Costa and Starbucks. It’s a big package at a small price. Franchises with this much available territory rarely come with such a recognisable brand attached. And the branding has been exquisitely carried through every inch of its stores; its professional spiel that Lavazza Espression is “a place where genuine flavours, creativity and an eye for design converge” is no hyperbole. Its logo has informed everything, adorning the cups and influencing decor and furnishings. Dressing one wall, Lavazza’s famous calendar series hints at its heritage. Everything about the stores exudes

‘cool’, carefully targeted to appear both relaxed and yet knowingly chic. And this seems to have been excellently calculated; it was given the Grand Award for Restaurant Design by the Association of Retail Environments shortly after opening and was identified last year as one of the ‘UK coolest brands’ by CoolBrands. But what about the coffee? The coffee looks ... well ... it’s rare to hear this adjective in connection with coffee but it actually looks exquisite. A workplace challenge at Elite Business is seeing who can spend the longest looking at the Croccantino, a blend of sesame brittle, caramel, espresso and whipped cream, or the Espesso, a solid espresso labeled as the ‘first coffee you can eat’, without salivating profusely. A glance around Espression’s website isn’t merely informative – it’s actively enticing. Interactive flash animations show a visual breakdown of each product’s composition, making the drinks even more appetising. As a franchisor Lavazza Espression clearly knows what it’s doing. It’s still very early days for the UK’s newest coffee franchise; it has a lot of territory to gain to catch up with a franchising behemoth like Starbucks. But it’s also something that seems destined to grow. Not only does it have a lot

of expertise behind it but Lavazza Espression seems to be the first outlet to truly understand designer coffee; its approach to the end product is truly innovative and seems likely to raise the ceiling of what consumers expect from their beverages.

Franchises with this much available territory rarely come with such a recognisable brand attached Minimum investment: £50,000

www.elitebusinessmagazine.co.uk |AUG 2012

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Lloyds TSB can help you with your franchise plans. Whether you’re buying into a franchise or franchising your own business, it’s important to have the right kind of support and guidance before you take the next step. That’s why we have a team of specially trained franchise managers who have a wealth of knowledge, and can offer you practical support and guidance. To find out more call:

0800 681 6078 lloydstsb.com/franchising

Calls may be monitored or recorded. Lloyds TSB Commercial is a trading name of Lloyds TSB Bank plc and Lloyds TSB Scotland plc and serves customers with an annual turnover of up to £15m. Authorised and regulated by the Financial Services Authority under numbers 119278 and 191240 respectively.

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FRANCHISING

LLOYDS TSB Richard Holden

Richard Holden heads up the Lloyds Banking Group Franchise Unit and is an expert speaker at exhibitions and seminars.

Franchising:

A business option worth considering 75

The downturn has inspired a new generation of entrepreneurs – from people starting their own businesses, to those considering franchising as a means of making their fortunes. If you are thinking of investing in a franchise there are some key considerations that you need to make.

he initial consideration is whether franchising suits you. If you are someone with a strong entrepreneurial spirit or who wants to re-invent the wheel, then you may not be suited to franchising, as one of the main benefits will be to closely follow the proven system. Tried And Tested Investing in a franchise will reduce some of the risks in setting up a new business. The investor is buying a successful business model that has been developed and proven over the years; the franchisor has already made the mistakes in the early days and learnt from them before launching the franchise opportunity. This isn’t an absolute guarantee of success. As with any business, it is important to evaluate the strength of the brand and the long-term viability of the business. Unproven systems that have not operated a successful pilot scheme carry a significantly greater risk to the investor. There is no substitute for thorough research and investors should leave no stone unturned in assessing their options.

It is easy to eliminate the opportunities which are outside your price range, or those that won’t offer you the financial return you need. You will then need to scrutinise a range of franchises to see which is most suitable for you. It is sensible to begin your research with the British Franchise Association (bfa) member franchise brands as they will have passed a rigorous accreditation process. Another efficient way to research is to attend franchise exhibitions. Personal Strengths Consider what you are good at and what you enjoy doing. You don’t have to stay in your current industry, but you should be looking at franchises where you can use your existing skills and experience. Your family life and personal circumstances are another important consideration; ensure your loved ones are involved in the process from the outset. There are inevitably going to be lifestyle changes when starting a business, including working longer hours, added pressure and financial uncertainty, particularly in the early years. Running any business – whether it’s a

franchise or not – requires a good deal of self motivation and as rewarding as it can be, it can be challenging too. Coming Of Age Once the franchisee has survived the start-up stage, confidence should begin to grow as they establish their customer base. They will gradually become less reliant upon the franchisor for guidance on how to operate the business, although they have the comfort and security of knowing that advice is just a phone call away. Whilst franchising may not necessarily be the right choice for everyone, a proven franchise model can provide a business with a supportive framework, access to quality advice and reduced risk – an attractive combination for potential business owners.

Free tickets for the Franchise Show 2012 are available from the Lloyds TSB Franchise Unit by sending an email request with your name, postal address and number of tickets you require for the event to: franchising@lloydstsb.co.uk

www.elitebusinessmagazine.co.uk |AUG 2012

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07/08/2012 13:47

LEGAL

Courting Trouble:

Legal ramifications of social networking

WORDS: JOSH RUSSELL

Social networking is still an emergent technology; weâ&#x20AC;&#x2122;re only really starting to appreciate how it is changing our lives. The courts are perhaps the slowest to react. With a lack of firm legal frameworks, what can businesses do to prevent themselves from falling afoul of social networking? AUG 2012 | www.elitebusinessmagazine.co.uk

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08/08/2012 23:19

LEGAL

It pays to make sure you are on solid legal ground before taking action Employment status

You may be forgiven for believing the law is on your side if you sack an employee over a remark on Facebook. Despite the fact a UK tribunal ruled last year it was acceptable for Apple to fire Samuel Crisp for critical comments made on his private Facebook feed, there are other precedents suggesting employers don’t simply have carte blanche. Last year the US National Labour Relations Board found in favour of an employee whose contract was terminated after criticisms she had posted about management at the American Medical Response of Connecticut were drawn to the attention of her employers. Dawnmarie Souza’s comments concerned an investigation at the organisation, claiming her supervisor denied her access to union representation. As her comments were classed as “protected concerted activity”, and are therefore protected under the National Labor Relations Act, the NLRB found in her favour and the AMRC were forced to settle. It pays to make sure you are on solid legal ground before taking action. One way to protect yourself is to ensure employees’ contracts clearly state the ramifications of poor conduct on social media. Rupinder Bains, legal partner at Bains Cohen and specialist on social media law, supports this. “If their contracts allow for it ... where they’re being very critical of the company or of management in particular it would probably fall under gross misconduct and a breach of trust.” Screen capture

According to OPP, the provider of psychometric and training tools, at least 55% of businesses would class themselves as ‘somewhat likely’ to use social media to screen candidates. A lot of employers might feel they’re on safe ground doing the same. But OPP warn that making a decision based on the information found on the web could leave you on tricky legal ground. The main risk? Bias and discrimination claims. Using social networking to vet candidates can

inform interviewers of information such as race, religion and sexual orientation which aren’t supposed to influence decisions. It also allows you to misread information and mistake something innocent as inappropriate, which can potentially also open you up to claims that a decision has been made based on bias and subjective interpretation.

employment of that company ... it belongs to the company. There’s no two ways about it.” And with a lot of company’s social networking accounts, even those cultivated by a single employee, this is definitely the case. But the Kravitz case demonstrates how little it takes to murky the waters.

But is this something businesses need to worry about?

You may not think your employees are the voice of your brand but to the public they are as much your mouthpiece as is your CEO or advertising campaigns. Perhaps most important is what your employees are saying about your business through their social networking use. Regardless of whether they are operating in an official capacity or privately, in Bains’s eyes any slips in a public forum will be laid at your door. “With regards to the public as a whole it will come down on that company.” If as an employee you are entitled to use social media during work hours there is a chance that anything you say could be blamed on your employers as they have provided the platform. “Even doing something whilst in the course of your working day there are grey areas as to how much your employer will be liable for allowing that to take place.”

“It would be very difficult to sustain a claim that a candidate wasn’t offered a job based on discrimination. It’s one of the hardest things to prove unless it is evident.” Bains feels that employers are in the stronger position when it comes to vetting over social networks and the law is likely to find in their favour. “Candidates need to think about this beforehand and close down profiles if there’s something that shouldn’t be in the public domain.” On whose account?

The legal ownership of social networking accounts is a grey area. Whilst often social networking account may be set up for the sake of PR or furthering a company’s brand, the amount of networking involved means an employee might feel they are entitled to maintain the contacts they have established. Last year the high profile case of PhoneDog vs Noah Kravitz hit the media, wherein the US mobile review site sued their former employee for $370,000 for the Twitter followers he took with him when he left. Despite the fact that he wasn’t tasked with maintaining a Twitter account, setting the account up on his own initiative, the case has been complicated by the inclusion of PhoneDog’s name at the beginning of his original profile name: @Phonedog_Noah. Where does the law stand though?

Referring to similar cases she has dealt with involving blogs and other online intellectual property, Bains comments: “If they were written for the purpose of that company whilst in

Putting words in your mouth

checklist Formulate your social media policy Monitor what is done under your name Establish reporting procedure Make clear account ownership Create usage policy for workplace social networking

www.elitebusinessmagazine.co.uk |AUG 2012

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Training

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No matter how amazing your website is, it cannot bring in new business if it cannot be found! Search Engine Optimisation is the key to online business success, as top positions in search results can bring you thousands of new clients willing to buy exactly what you offer. Yet SEO is a many-sided process, which is effective only when run steadily and sensibly.

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AUG 2012 | www.elitebusinessmagazine.co.uk

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the START-UP DIARies

In the beginning, there was a business plan... Nicola Barron Founder of Homemade London

Each month entrepreneur Nicola Barron tells us stories from the coalface of running her craft workshop business, Homemade London

started Homemade London two years ago, to offer craft workshops to people who wanted a sophisticated, luxury experience. It was my first venture after taking redundancy from the BBC, where I had worked for more than a decade, and my answer to the question that must haunt everyone who takes redundancy without a job to go to: what do I do now? In the three years since I began to think about the business, I have made nearly every one of the mistakes common to firsttime entrepreneurs. That’s not because I hadn’t prepared: before I started, I enrolled on a business course, read every start-up guide I could get my hands on, spoke to every experienced business person who would give me the time of day and buried myself at the British Library’s Business and IP Centre for weeks on end. As a result, I felt I ‘knew’ what starting a business involved. But at the back of my mind, I also thought it would be different for me. I think that’s probably the natural state of the entrepreneur – otherwise we’d never put ourselves through the pain. Every new business is based on the belief that your company will offer something a little bit different. And if you’re different, then maybe none of those scare stories you hear about will happen to you. But they did. Homemade London enjoyed the classic start-up trajectory. Year 1: Loss, leading to doubt, leading to fear. Year 2: Signs of promise, leading to adjustment,

leading to hope. This column isn’t about how to avoid that journey, but how to deal with it. I was pretty proud of my business plan. I’d written and re-written it. I got my business loan from Lloyds TSB on the strength of it and, while it painted an optimistic picture, I was secretly pleased with myself over the restraint I

The balancing act to get right is to stay true to the essence of your original vision showed over my financial forecasting. But after two years, Homemade London the business looks nothing like Homemade London the business plan. That’s because I’ve had to adjust as I’ve gone along, doing more of what works and less of what doesn’t – tweaking prices, replacing courses, trying to build new revenue streams and abandoning activities that looked unlikely to pay off. The balancing act to get right is to stay completely faithful to the essence of your original vision but to be flexible about everything else – to strive for perfection, but never to wait for it. That’s the Beta Principle adopted by companies like Google, that are happy to launch early and let their customer base act as the ultimate feedback loop. For a business like mine that has to deliver a

wonderful customer experience every time and relies heavily on word of mouth, this suck-itand-see approach can’t apply to the workshops themselves, but it can to our business model. For example, when I first opened the shop, I imagined that the mainstay of the business would be evening classes, booked by individuals and small groups. While I waited for these classes to take off, I relied heavily on hen and birthday parties at weekends to keep us afloat. After about six months I realised that rather than parties being peripheral, it was actually our core business. For start-ups, time and money are at a premium, so I switched my focus to building up the party business and growing our corporate offering during the week when it was quieter. That decision proved fundamental and required a hundred other little changes to the business including a shift in mindset for myself and my team of teachers. A large proportion of our customers, be it for a corporate event or for a party, haven’t actually made the decision to take part in one of our workshops themselves so we’ve got a big job to do to win them over: more often than not it’s not what we’re offering our customers but how we offer it, that’s most important to them. In those first crucial months you need to be attuned to what your business is telling you – even if it contradicts the logic of your own business plan. The entrepreneur’s gut instinct never lets you down. website: www.homemadelondon.com

www.elitebusinessmagazine.co.uk |AUG 2012

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