OCTOBER 2012
HEAD FOR HEALTH
The wealth in workers’ wellbeing
LENDING A HAND
Bypassing the banks with Funding Circle
BREAKING NEW GROUND
How to take the States by storm
THE
EXPORT FACTOR
OCTOBER 2012 £4.50
Ella’s Kitchen founder Paul Lindley shares his recipe for international success and explains why now’s the best time to be British
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CONTENTS
Inside this month... ISSUE 03 OCTOBER 2012
16 The Elite Interview
Paul Lindley on cooking up an internationally acclaimed children’s food brand
09 Editor’s letter 10 Contributors 12 News in brief 13 Talking point 14 Book reviews 34 Banking but better
Peer-to-peer lending pioneers Funding Circle on filling the finance gap
39 Paying the price
How to ensure late payments don’t take their toll on your business
49 Not just a pretty face
24 One to watch
Home comforts meet haute accommodation at Greg Marsh’s onefinestay
Using your brand aesthetic to forge a meaningful connection with the customer
55 Inside and out
Making the most of introverts and extroverts to build a balanced team
59 Making an executive decision There’s no time like the present when it comes to hiring a non-exec
62 Saving pennies, saving people
Trimming the fat doesn’t necessarily mean giving employees the elbow
67 Tech for start-ups
28 A terrible thing to waste
Valuing mental wellbeing is the key to a happy workforce – and a healthier bottom line
The latest must-have gadgets, hardware and apps for forward-thinking small businesses
70 Vanity fair?
Vanity metrics may make your business sound attractive but all they do is hide the wrinkles
73 Know your outsource options
David Hathiramani on ironing out the kinks in offshoring his project at A Suit That Fits
77 Searching for a solution
Improving you company’s visibility online with SEO is a must
82 Agreeing to disagree
45 The land of opportunity How an entrepreneur can live the dream and crack the elusive US market
If you’ve got a strong franchise agreement in place, it can prevent arguments down the line
85 Franchise in the spotlight
Interior designers can make a house a home at Dulux Design Service
91 Making pensions pay
How the new auto-enrolment legislation could prove costly for small firms
94 Classifieds 98 Start-up diary
October 2012 www.elitebusinessmagazine.co.uk
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EDITOR’S COMMENT
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ISSUE 03 OCTOBER 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 Lindsey McWhinnie – Chief Sub-editor E: lindsey.mcwhinnie@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@cemedia.co.uk T: 01245 905805 CIRCULATION Malcolm Coleman – Circulation Manager E: malcolm.coleman@cemedia.co.uk ACCOUNTS Sally Stoker – Finance Manager E: sally.stoker@cemedia.co.uk T: 01206 266846 DIRECTOR Scott English – Managing Director E: scott.english@cemedia.co.uk Circulation/subscription UK £40, EUROPE £60, REST OF WORLD £95 Circulation enquiries: CE Media Limited T: 01206 266 842 Elite Business Magazine is published 12 times a year by CE Media Solutions Limited Weston Business Centre, Hawkins Road Colchester, Essex. CO2 8JX T: 01206 266 849 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.
There are lessons to be learned from across the pond – but we have plenty to be proud of too Entrepreneurs in the UK cannot escape comparisons with their American peers. From the inevitable parallels drawn between Silicon Valley and Silicon Roundabout to the implicit suggestion that we are trying to keep up with our transatlantic cousins, the constant comparisons can be tiresome. It is undeniable that there are lessons to be learned from the way businesses are started and grown across the pond. Often the characteristic us Brits can lack is ambition – the same trait Americans have in spades. Whereas we in the UK may consider an entrepreneur to have ‘made it’ with a £3m turnover, the same business in the States could be seen to be a failure until it had hit $50m or $100m revenue. Of course, one of the advantages the US has is its sheer size. It’s no surprise that UK entrepreneurs head across the Atlantic in droves to see if they can crack the American market. It’s the true test of any business. As Alicia Keys sang a couple of years back: “If I can make it here, I can make it anywhere.” But even the business elite need a bit of help, which is why we put together our feature on taking the States by storm (p45). The US is just one export market cracked by Ella’s Kitchen, whose founder, Paul Lindley, is this month’s cover feature (p16). His baby food brand is now sold in 12 countries and overseas sales account for an impressive 44% of the company’s £41m turnover. But we have plenty to shout about here in Blighty, too. We are spawning groundbreaking start-ups such as onefinestay (our One to Watch, p24) and Funding Circle (profiled on p34). What’s more, we are brimming with confidence. Last month MADE: the entrepreneur festival celebrated the best of UK enterprise and there was a genuine excitement among delegates and speakers alike about the future of small business in this country. It’s a passion shared by us here at Elite Business. We want nothing more than for you to start and grow companies that become the powerhouses behind UK plc. And we will support you every step of the way. HANNAH PREVETT EDITOR
www.cemedia.co.uk
October 2012 www.elitebusinessmagazine.co.uk
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CONTRIBUTORS
Contributors GEORGINA-KATE ADAMS
Adams got her head around the topic of non-executive directors in this month’s issue – and now feels she’d quite like one to help her through life. Starting her career on a refugee camp in Ghana, G-K has interviewed everyone from Branson to the president of the Maldives (before he was ousted by military coup). When she’s not writing, she’s working on The Seed, Africa, her crowdfunding project to change the world.
CLIVE LEWIS
Aside from sharing his name with Narnia author C. S. Lewis, our talking head and regular columnist is the ICAEW’s head of enterprise, as well as being a lead contributor to publications such as the Daily Telegraph Business Club. This issue, Lewis tells us how to get shot of your business but Elite Business is certainly never going to want to be shot of him – we’re rather enjoying the benefit of his first-class expertise.
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LINDSEY MCWHINNIE
Perfecting copy is pretty much freelance sub-editor and full-time punctuation pedant McWhinnie’s raison d’être and, having worked at such diverse publications as the NME, Marie Claire and Wired, she’s our go-to girl when deadlines are looming and articles need to be knocked into shape. Cooking is her other passion, and one day she intends to be the new Delia – although without the Norwich City football scarf.
LEONA CONNOR
Meticulously working from cover-to-cover, head designer Connor is the talented soul who ensures every inch of Elite Business is pitch perfect. When she’s not chained to her desk, she’s off screen-printing scarves in her attractive apron at former head of Liberty of London Prints Ann Jarvis’s Clovelly Silk and procrastinating about her gym commitments.
www.elitebusinessmagazine.co.uk October 2012
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NEWS IN BRIEF
The London 2012 legacy lives on – through the working practices of UK employees. According to research commissioned by Citrix, almost half of businesses that introduced flexible working to avoid disruption during the Games plan to adopt the changes permanently. The YouGov survey, which polled more than 500 senior decision-makers in London-based businesses with fewer than 250 employees, also found that 56% of firms believe flexible working is important to attract and retain the best staff.
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A growing number of the UK’s affluent under-40s are considering starting a new life abroad, according to financial services consultancy group DeVere. In the third quarter of this year, 36% more people under 40 sought advice with the firm about moving overseas compared to the same period last year. DeVere chief exec Nigel Green warned: “How many of these people will actually leave remains to be seen, but if a significant number of this demographic does, it’ll be a major step backwards for the UK’s already fragile economy.” UKTI has won a £13m investment from the Government to help
www.elitebusinessmagazine.co.uk October 2012
boost exports. It is hoped the cash will help double UK exports by 2020. Around £9m will go towards supporting SMEs attending foreign trade shows by expanding the Tradeshow Access Programme, as well as offering them discounts on the Overseas Market Introduction Service (OMIS), which helps small firms build their contacts books overseas. An additional £2.5m will be used to help businesses access “highvalue” global opportunities as identified by UKTI, and a further £1.5m will be used in projects aimed at attracting vital inward investment. The number of UK SMEs facing late payments has reached more than a million, with total debt of almost £36.4bn. This is equivalent to an average debt per SME of £36,000 – which is even worse news when 35% of small firms said that late payment debts of £20,000 would be enough to put them out of business. The survey by Bacs Payment Schemes showed that six out of 10 UK businesses experience late payments with the average company having to wait 43.4 days beyond payment terms for their invoices to be paid. A report from the Federation of Small Businesses (FSB) has reiterated how important small firms are in the UK’s ongoing battle with unemployment. According to its findings, each year SMEs take on around 1.3 million unemployed and disadvantaged people – a stark contrast with large firms (more than 250 employees), which hire less than 130,000 on average. But the report’s findings also showed
that small companies are still struggling with red tape, with 50% of FSB members complaining that tax administration is one of the most complex areas for compliance. Apple found itself in the unusual position of having to apologise after its switch to a new maps system left users enraged. The iPhone 5 comes with the new iOS6 software, which replaces its Google-powered maps app with Apple’s own software that relies on licensed navigation data. Problems with the new software were reported to include satellite maps that only show cloud cover, towns located in the wrong place and incorrectly spelled place-names, not to mention bizarrely rendered 3D images that made the Eiffel Tower look flat. Zut alors. Two of the senior management team at security firm G4S have quit in the aftermath of the bungled Olympics contract. Armed forces had to be drafted in when G4S failed to hire enough staff for the London Games, putting the company’s bids for further government contracts on shaky ground. The resignations of David Taylor-Smith, chief operating officer, and Ian Horseman Sewell, a managing director, have been welcomed by MPs on the Home Affairs Select Committee, which last week called for the company to hand back the £57m management fee it received. CEO Nick Buckles has managed to hold on to his job. For now. An independent audit of Spain’s banks has found the country will require an injection of €59.3bn – equivalent to about £47.3bn – to shore up its battered financial services sector. The majority of the cash is expected to come from the eurozone rescue funds, the current EFSF and the future ESM. The bailout request will come as a surprise to few: Spain said in July that it would need support from the eurozone for its banks after it never fully recovered from the financial crisis of 2008.
EVENTS Speed Networking Events October 5 De Vere Gorse Hill Hook Heath Road Woking, GU22 0QH Business Growth Show – Coventry October 5 Holiday Inn, Hinckley Road Coventry, CV2 2HP School for Startups – Windows of Opportunity October 11 Nottingham Playhouse Wellington Circus Nottingham, NG1 5AF School for Startups – Windows of Opportunity October 12 Sheffield City Hall, Barkers Pool Sheffield, S1 2JA School for Startups – Windows of Opportunity October 16 West Yorkshire Playhouse Playhouse Square, Quarry Hill Leeds, LS2 7UP Manchester Connections October 17 The Studio Manchester, M1 1FN 4Business Expo October 18 Doncaster Race Course Doncaster, DN2 6BB Liverpool Connections October 18 Newz Bar Liverpool, L2 8TD Speed Networking Events “Ladies Only” - October 19 Ena Salon, 5 Great Queen Street London, WC2B 5DG Business Growth Show – York October 26 National Rail Museum Leeman Road York, YO26 4XJ Opening Doors Closing Sales October 29 Great Newport Street London, WC2H 7JB Business Growth Show – Bristol October 31 Future Inns, Bind Street South Bristol, BS1 3EN
TALKING POINT
Do Vince Cable’s plans for the British Business Bank lack ambition? The business secretary has announced new plans that will help to reduce the banks’ stranglehold on the SME community. But will the British Business Bank just be just scratching the surface?
F
ormally announced in late September, Vince Cable’s new lending initiative for enterprise – tentatively dubbed the British Business Bank – has dominated the business headlines of late. Faith in the big banks is at an all-time low and, given their failure to open the coffers to lend to struggling business, the time seems ripe for a new way of securing lending. Increased lending to businesses isn’t something many would turn their noses up at. Indeed, injecting £1bn into industries that need it is a very laudable aim, especially given the importance of our manufacturing and export industries. Cable also asserts that it will be supported by an additional £1bn of private sector money and that the initiative, when
“Long term, it’s a positive development” Clive Lewis Head of enterprise, ICAEW
We have to be cautious about expecting too much too soon. It’s not going to have an impact for a little while yet: it may be 18 months or two years until we see any real progress. But long term, it’s a positive development. There’s a bit of a dichotomy about what’s been said regarding where the money will go and where the biggest gap is. All the emphasis I’ve seen has been on long-term funding. Yet the biggest problem at the moment is for start-ups and early-stage businesses that simply don’t have the track record. Maybe they don’t have much by way of assets and can’t give the bank confidence that they’re going to survive and grow and that the bank will get its money back. This is where the biggest gap is. That gap is currently being filled with all kind of innovative solutions, including peer-to-peer lending and crowdfunding solutions, as well as companies offering working capital finance, particularly factoring and discounting over the web.
fully up and running, will support lending of approximately £10bn. But, unfortunately, the bank isn’t exactly just digging into its pockets and giving hand-outs directly to our impoverished start-ups. Instead, the funds are going through so-called ‘challenger’ banks – the Co-operative, Handelsbanken, Aldermore and their ilk. What’s more, seeing as this isn’t going to be live for at least 18 months, the more cynical among us could suggest this is Vince Cable’s stab at a legacy. Against a backdrop of an economy of more than £1.5trillion, the amounts discussed may seem more of a trickle when we really need the business secretary to turn on the money hose. But is it at least a good start?
“It’s a bit of a drop in the ocean” Simon Dixon Founder, banktothefuture.com I’m a supporter of what Vince has been doing. He’s got the right intentions, but I don’t think the Business Bank is going to have much of an impact. It’s a bit of a drop in the ocean – £10bn is little compared to the estimated bank lending market to SMEs, which is worth about £44bn. Also, the scheme is an interesting injection, but is it still an incentive to force banks to engage in a business that they don’t want to be involved in? We’ve got this whole alternative sector that wants to lend to small business, so I think we should stop trying to make the banks do things they don’t want to do. Having said that, the money does need to be redistributed. If the property market is stimulated again, then property becomes unaffordable. If the credit markets open again to consumers, all we’re doing is stimulating over-indebtedness. But businesses can use that money to create growth. It’s the only true form of economic growth you can have.
October 2012 www.elitebusinessmagazine.co.uk
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BOOK REVIEWS
The Elite read How to Solve Almost Any Problem Alan Barker
Normally, titles that offer systematic resolutions to problems rarely provide anything of the sort. Which is why How to Solve Almost Any Problem comes as a such pleasant surprise. No wand waving or lazy self-actualisation here – instead Barker delves deep into the heart of the matter, deconstructing what our problems are and how they work. Building his principles from concrete neurobiological and psychological models, Barker displays refreshing insight into how we unconsciously define and create our problems and the modes and models we use to resolve them. Perhaps the most pleasing thing about How to Solve Almost Any Problem is how effortless it feels. Even without intending to, you begin to catch yourself reframing life’s
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puzzles using its simple, naturalistic models, and this shows how practical and genuine its promises are. The book also conveys its message with a pleasing balance; for the most logical thinkers the text contains plenty of nourishing details, while for the more visual and practical of us there are plenty of diagrams and well-thought out activities. How to Solve Almost Any Problem is not only an interesting way to begin to recontextualise daily challenges – it also simultaneously manages to be an incredibly engaging read. Pick it up and become the owner of all your problems. JR How to Solve Almost Any Problem, published by Pearson, is out now and retails at £10.99
Brand You: Turn Your Unique Talents Into a Winning Formula John Purkiss and David Royston-Lee
“A strong brand will transform your career. This book will show you how to do it.” Bold claims indeed from Purkiss and RoystonLee. Brand You certainly gives it its best shot. Divvied up into short digestible chapters and with exercises to boot, this book is a whistlestop tour of everything one could wish to know about building their personal brand. From why it’s important in the first place – the employment landscape has changed irrevocably; we need to stand out from the crowd – to how tweeting and
www.elitebusinessmagazine.co.uk October 2012
Google+ can help raise your profile. There is some useful stuff here, for example about how making better use of one’s network can enhance career prospects, or how boosting a personal brand can help give your earning power a nudge in the right direction. Now there’s a language we understand. HP Brand You, published by Pearson, is out now and retails at £12.99
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THE ELITE INTERVIEW
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THE EXPORT FACTOR Paul Lindley is a man with his eye on the prize – going from two products in one UK supermarket to 76 products in 12 countries in just six years, kids’ food brand Ella’s Kitchen is no one hit wonder
B
oosting exports is very much at the top of the agenda. Speaking at MADE: the entrepreneur festival last month, business secretary Vince Cable said a renewed focus on exports may be just the thing to drag the UK from the doldrums and subsequently announced £13m in funding had been awarded to help SMEs with exactly this task. What’s more, a reinvigorated appetite for all things British, thanks to London 2012, means there has never been a better time for a UK business to flog its wares to the world. This is a sentiment shared by Paul Lindley, the man behind international success story Ella’s Kitchen. Lindley has never been one for standing still. As a child, he had an appetite for adventure. His childhood was split between the UK and Zambia, after his civil servant father was seconded to the African country. “During school holidays in Zambia, it was all about being outdoors and exploring,” he recalls. At the age of 11 he moved back to the UK
www.elitebusinessmagazine.co.uk October 2012
THE ELITE INTERVIEW
WORDS: HANNAH PREVETT
“I knew I could create a brand of food for kids that brought together health, convenience and fun”
to attend a boarding school in Derbyshire, returning to visit his parents in Zambia during school holidays. He was bright and, unlike most people who find find it easier to engage either the creative or logical part of their brain, Lindley was good at both art and the sciences. He plumped for the sciences when choosing his A-levels and then, once again, when he applied for university, enrolling on a cellular pathology degree at Bristol University. “Only about three universities did cellular pathology then,” says Lindley. “I was good at biology and I like doing things that are different.” But it was soon clear that this bet hadn’t paid off. “A week in, I was asking myself, ‘What have I done?’” He quit the course after one term and instead read politics and economics, subjects that appealed to the creative in him. But the extra year it took for him to graduate cost him dearly in the rat race to secure a job. “I left university in 1989 in the midst of the recession,” he says. “My friends had all applied for jobs in 1988 and had had no problem, but when I came to apply for jobs in 1989 there were none left.” Without a job to go to, Lindley decided the best course of action would be to further his education, so he embarked upon the training to become a chartered accountant – eventually leading to a job at KPMG. “I didn’t really enjoy it at the time, to be honest,” he admits. “But 15 years later, when I set up my business, it proved absolutely invaluable.” After four years at KPMG in London, Lindley married his university sweetheart, Alison, and they went on a six-month honeymoon, before relocating to LA for a year. On his return to the UK, Lindley was on the look-out for a new challenge, and became financial controller at kids’ TV station Nickelodeon in 1995. “It was great,” Lindley says. “I had a bright coloured office, filled with big toys.
October 2012 www.elitebusinessmagazine.co.uk
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THE ELITE INTERVIEW
“I understood kids – how they develop, how a boy and a girl are different, how an eight-year-old and a three-year-old are different, and how they respond to parents, siblings, friends and brands”
www.elitebusinessmagazine.co.uk October 2012
This is when kids’ multi-channel TV was brand new so it was a very exciting time.” What’s more, Nickelodeon had a buzz unlike anything Lindley had ever experienced before – due in part to its young management team. “It felt entrepreneurial,” he recalls. “It was creative and I loved it.” His progressed quickly through the ranks, joining in a purely financial role and leaving nine years later as general manager in the UK. This also meant that his knowledge of running a business deepened – it was no longer just about the numbers, but sales and marketing too. “I really understood kids – how they develop, how a boy and a girl are different, how an eight-year-old and a three-year-old are different, and how they respond to parents, siblings, friends and brands.” Around the same time, the children’s TV channels were coming under fire for not doing more to help problems around infant obesity. And the challenges associated with raising healthy, happy children were prevalent in his home life too: Lindley became father to a daughter, Ella, in 1999 and a son Paddy in 2001. “I was a really active father,” he says. “I was really interested in how they were developing and wanted to form close bonds early on.”
One of the ways in which this manifested itself was becoming really involved in his children’s diets, ensuring they were trying always new foods. “We would use games to make Ella try new things,” he recalls. In 2003, ahead of a camping holiday, the Lindleys were browsing supermarket shelves looking for kids’ food that was healthy but convenient – and found the cupboards were bare. This obvious gap in the market, combined with Lindley’s experience of marketing to kids, as well as an astute awareness of increasing childhood obesity, cemented the idea of Ella’s Kitchen in his mind. “I knew I could create a brand of food for kids that brought together health, convenience and fun,” he says. After doing some non-scientific research among other parents, six months later Lindley left Nickelodeon to focus his attention on Ella’s Kitchen. “I knew I’d regret it if I didn’t do it,” he recalls. He gave himself two years to make a success of the business. “I was at the stage in life where if we didn’t go on holiday or go out to eat, we could afford to survive for a couple of years without a regular income.” Meanwhile, Lindley had discovered squeezable pouch packaging in France that would be great for both the brand and practical use. “People said, ‘You can’t do that. You need to put it inside a glass jar so everyone can see the contents.’ But I ignored them. I thought that there was something very convenient about being able to put the cap back on and store it in a bag for later,” he says. “It’s also a better experience for the child. They could hold it and own it, and feed themselves with it as they got a little bit older.” And with that, the entrepreneur went off to pitch the concept for his children’s food to UK supermarkets with a trick up his sleeve: he had a written agreement that would pique the interest of the supermarket buyers. “I went to all the kids’ TV channels and said ‘I know you don’t always sell all of your advertising all year round, because I used to sit where you’re sitting now. And I also know you’re being blamed for
THE ELITE INTERVIEW
“No entrepreneur should start a business just because they’re trying to make money – because you won’t if you’re not really passionate about it” obesity in children because they’re sitting there watching bad ads. So how about you give me some of the airtime you’re not going to sell and I’ll give you some revenue?’ And my old employer Nickelodeon said yes.” The potent marketing plan meant for the first six months after launch, two-thirds of the under-four-year-olds in the country would see an advert for Ella’s Kitchen. This was enough to persuade supermarket stalwart Sainsbury’s to take a punt on the fledgling idea. The pressure for Lindley was now really on: “With the retailers, if it doesn’t work after a 12- to 24-week-period, they throw you out,” he explains. He’d put £20,000 aside for the project, but now faced with having to supply one of the biggest supermarkets in the country, it was clear this wouldn’t be enough cash to get the project off the ground. His wife agreed to remortgaging their house for £200,000 and Ella’s Kitchen launched in Sainsbury’s on January 22, 2006 with two products. The UK’s appetite for good-quality children’s food was even more fierce
than Lindley had anticipated. For the first five years, the company’s revenues more than doubled each year and last year £65m of family household budgets was spent on Ella’s Kitchen products. Removing retail margins and so on, this equates to £41m in turnover for the Henley-upon-Thames-based company. But while heady growth is great for the bottom line, it can be difficult to manage. It is not unheard of for young businesses to be victims of their own success and end up hitting the runners because they run out of cash. But Lindley’s background in accountancy stood him in good stead when it came to managing cashflow. “When companies fail during fast growth, they usually fail because they run out of cash. They grow so fast that they forget they need more stock and marketing to support that. With my background as a chartered accountant I worked that out very early.” Lindley was a man on a mission: for him, it was personal. As a father
and as someone involved in industries selling to children, he felt an overwhelming desire for Ella’s Kitchen to have an effect on the children’s eating habits and attitudes towards food. The business is focused on ethics and making a difference – and not just on the bottom line. “No entrepreneur should start a business just because they’re trying to make money – because you won’t if you’re not really passionate about it.” Another pillar of the business that has been fundamental to its success has been its roaring trade overseas. Ella’s Kitchen is currently sold in 12 territories worldwide including the USA, Norway, Sweden, Estonia, Australia and South Africa, with 44% of total revenues (£18m) last year coming from overseas sales. Lindley hopes his story of exporting triumph will spur on other entrepreneurs and growing businesses to look at international expansion too. “There’s never been a better time to go international,” he urges. “And that’s regardless of size: it applies equally whether you’re a start-up, an SME or a large company.” This is largely down to two factors, says the entrepreneur. “We live in a time and place where free trade is the dominant form of economics,” he argues. “It wasn’t always like that. And it means that as part of the European Union we can trade with 26 other countries as if it were the UK – there are no tariffs.” We have further advantages thanks to our status as English speakers. Lindley also points to the BRIC economies (Brazil, Russia, India and China) as potential markets, due to their staggering capacity for growth. “There are a whole load of markets that are growing really, really fast, whereas, generally, we’re stagnating as an economy – although there are pockets that are growing within it.” What’s more, right now the spotlight is on Britain and British organisations. After London was put under the microscope with the Olympic Games this summer, never has there been a better time to be British, says Lindley. “The rest of the world saw us as winners. And they saw us humble and with humanity at the Paralympics. They saw creativity with the opening and closing ceremonies, and they saw humour with the Queen jumping out of that helicopter. All that stuff has built up a brand Britain.” ‘Team GB’ was no accident, says Lindley. It’s now a global brand – and one that entrepreneurs must take full advantage of. “It’s an own goal if we don’t go out and try to ride on the back of that.” he concludes. “The world is watching.”
October 2012 www.elitebusinessmagazine.co.uk
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THE BUSINESS SHOW
Starting or growing a business? 21
Starting or growing a business will never be a walk in the park. Far from it. But with free resources on everything from business planning to clever marketing, all packed into events like The Business Show, has there ever been a better time to be in business?
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elieve it or not, amidst a recession, banking crisis, and global instability, businesses are popping up all over the place. And those already trading are moving into bigger premises, investing more in marketing, and growing into new sectors. The age of the entrepreneur is well and truly upon us, and there has never been more information or better advice accessible to today’s small business owners. The Business Show has long equipped start-ups and SMEs with everything needed to start and grow a business – from access to the latest ground-breaking products, to
October 2012 www.elitebusinessmagazine.co.uk
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innovative ideas for revolutionising sales – all completely free, and all under one roof. Last May saw 20,000+ visitors walk through the doors, all searching for ways to start, improve, or grow their business. The next event is fast approaching, taking place at Olympia London, November 22 and 23, and it’s gearing up to deliver more than ever for the country’s growing population of eager entrepreneurs. What’s on at November’s Business Show?
The Business Show organisers are regularly thinking up new ways to help ideas get off the ground and businesses to reach their potential – be it a workshop on a gamechanging piece of software or some fresh advice to reenergize your marketing strategy. You’ll find more helpful networking features, innovative exhibitors, educational workshops, all-new speakers, and lots more at November’s Business Show. So, if you have aspirations of becoming the next James Caan, go and see him speak in the Keynote Hall. If you have designs on boosting your online presence, go to an internet marketing workshop delivered by the experts. If you want to find out about the latest technologies and business tools available, talk to a specialist exhibitor. Put simply, everything to start or grow your business is at The Business Show. Over the last 12 years the event has become a hotbed of entrepreneurial activity, and in that time it has welcomed more people through its doors than any other business show in the UK. Today the event is more ambitious than ever, determined to help drive your business, whatever your industry.
22
Book your place
Most aspects of the show require you to pre-book (except seminars – you can just turn up for these) and everything tends to book up pretty quickly, so best to act quickly to avoid disappointment. Book online here: www.bstartup.com If you’re starting or growing a business, The Business Show is the must-attend event. The Show will be held at Olympia London, 22/23 November. Tickets are completely free and available at www.bstartup.com (for those starting a business) and www.greatbritishbusinessshow.co.uk
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www.elitebusinessmagazine.co.uk October 2012
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29/09/2012 15:45
ONE TO WATCH St Pancras Chambers 2
WORDS: HANNAH PREVETT
24
HOME sweet home Travelling is a reality of most people’s lives nowadays. But that needn’t mean being holed up in hotel rooms while frantically Googling ‘things to do’. Not if Greg Marsh has anything to do with it
www.elitebusinessmagazine.co.uk October 2012
ONE TO WATCH
‘H
z Company CV
Name: onefinestay Founded by: Greg Marsh, Demetrios Zoppos & Tim Davey Founded in: 2009 Team: 100 full-time, plus up to 150 agency staff
ome is where the heart is’, or so the old adage goes. Yet, from time-to-time occasion demands that we leave our slice of sanctum and head out to the big wide world, either for business or pleasure. Often that will entail checking into a hotel, which, however impressive, is by its very nature impersonal. It can take days to make yourself at home and you begin to feel you’re getting under the feet of the concierge team with your questions about things to do, places to eat and attractions to visit. London-headquartered onefinestay alleviates this pain. For less than £500 a night (which is considerably less than what a suite at one of the capital’s top hotels would set you back) customers can luxuriate in the surroundings of someone else’s opulent home with all the frills of a high-end hotel experience – luxury linens and toiletries, a 24/7 concierge service and even an iPhone to use for the duration of their stay. “I always describe it as being halfway between a boutique hotel and a holiday letting business,” says Greg Marsh, co-founder and CEO of onefinestay. The premium accommodation is booked online, meaning technology is an absolutely key enabler of the business – something the company’s CEO has always had a keen interest in. The son of two lawyers, Marsh describes his childhood as rather uneventful. “Unfortunately, it was fairly prosaic, as much as I wish there was a great overarching narrative of overcoming adversity,” he jokes. In fact, the investor-turned-entrepreneur says the most interesting theme of his childhood was the keen interest he took in technology. “At the age of seven my dad brought home a computer,” he recalls. “It was just simply the most incredible thing in the universe and I fell headlong in love with computing at that stage and started programming on my own.” His passion for technology lasted throughout his early teens and he jokes that had he not discovered girls, he may well have lived out a career as a developer. But thanks to “a succession of charismatic English teachers” he was “lured” away from technology for a short period to read english and philosophy at Christ’s College, University of Cambridge. After university Marsh’s
interested in tech wizardry was reignited when he spent time at tech-focused private equity group Apax Partners, before going to work at GF-X, a trading exchange for airfreight capacity. With the company’s focus on tech and co-founder Demetrios Zoppos’s background as a consultant for McKinsey & Co, Marsh felt as though the opportunity perfectly balanced entrepreneurial flair and enthusiasm with a culture built on a professional services background. In 2004, after four years of working at GF-X, Marsh went off to Harvard Business School in Boston to complete a two-year residential MBA. “I’d jumped pretty much into an entrepreneurial culture straight after university so I felt a little bit self conscious about never having had a more conventional training background – perhaps a blue chip company or a large professional services firm for example,” Marsh explains. For him, studying an MBA gave him the theory around the practical skills he’d learned thus far in his career. “I wanted a way of framing and contextualising the very hands-on management experience I’d had quite early in my career.” He was also gaining more practical experience: in the summer of 2005 he worked in the London offices of technology-focused VC firm Index Ventures, joining full-time in 2006 after completing his MBA. But Marsh was never set on a permanent career in investment: while it was a stimulating experience, he yearned to be on the other side of the table. “I was looking to investment as a way to learn and understand the start-up community better so I could take a leap into starting my own business as soon as I found the right combination of team, timing and opportunity,” he explains. That opportunity came in 2009 when a trip to Pisa left Marsh with a slightly bitter taste in his mouth. “I had a great holiday, but the hotel was terrible,” he recalls. Luckily a friend of a friend hailed from Pisa and gave some advice on things to see and do. But this got Marsh thinking about how local knowledge was always superior, and then upon returning home was mulling over the fact that his apartment had lain vacant while he was away. Perhaps he could build a business that would marry the two: homeowners could get an extra revenue stream from their unoccupied properties, and visitors would get the unique experience of living like a local. But it wasn’t just the idea that was the focal point for Marsh – it would be all about execution. “In investment there is a saying that ‘ideas are cheap’. And there is some truth in
October 2012 www.elitebusinessmagazine.co.uk
25
ONE TO WATCH
that: there are lots of ideas for businesses. What there aren’t is people who want to go and make those things happen, and are willing to devote their lives to it. For me I wasn’t just looking for a clever idea, I was looking for an idea that made sense, that solved a need I’d experienced and that I had some ability to execute.” Next on the to-do list was building a strong founding team; Marsh asked DF-X’s Zoppos to join him at the helm, as well as Tim Davey, co-founder of SnapTalent – one of of Index’s portfolio companies in California. Marsh left Index Ventures in mid-2009 to work on onefinestay full-time. In its early incarnation, the business ran on very little money. The founders were keen not to take VC cash too early, so ran a friends and family round at the end of 2009 raising around £250,000 from 25 of their nearest and dearest.
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“I was looking for an idea that made sense, that solved a need I’d experienced and that I had some ability to execute” This was enough to set the wheels in motion and a prototype of the site launched in May 2010. It gained traction quickly, says Marsh. “We had just enough early success from that launch to prove the business model worked.” And that proof was enough to stir interest among the VC community too. “It gave us a very difficult decision to make: do we grow this company in a cashflow-positive sure-and-steady way or grow it aggressively, raise a lot of money and do a deal with the devil?” Marsh explains. They plumped for the East End Avenue, New York money. “We decided this partly because I did have a background in finance and I felt comfortable that I knew what the risks were.” Zoppos had a lot of experience in raising finance too: DF-X raised over £50m during its growth. Signed, sealed and delivered, onefinestay’s series-A funding round was closed in September 2011: $3.7m from Index
www.elitebusinessmagazine.co.uk October 2012
Partners. And in 2012 it raised a further $12m in a round led by New York based firm Canaan Partners but including more cash from Index. Yet Marsh says it wasn’t too bizarre an experience raising money from the firm that had previously 4th Avenue, New York employed him. “I wouldn’t have taken their money if I didn’t think they were fundamentally a very decent group of people and have entrepreneurs’ interests at heart,” he explains. What’s more, VC options are limited in Europe. “There aren’t many really good investment firms in Europe. It’s not like Silicon Valley where there are three or four dozen firms you’d feel delighted to have sitting on your board and pumping your company full of risk capital. In Europe there are only really a handful of investment firms in that league – of which Index is one.” Raising capital, while a complicated and arduous process, was just the beginning. Stark lessons around logistics, and quality of customer service were to follow. “It’s a deceptively complicated business,” says Marsh. “There is of course a website, and that website has to look good and function well, but fundamentally, the hard part of this is all about the infrastructure and the service delivery,” he continues. “What we’ve learned as we’ve got bigger and practiced is how hugely important it is to set the right expectation and then deliver on that promise.” And onefinestay does set the bar high. When guests arrive at the property they’ve selected they are met by a member of staff who checks
their documents and hands over keys, important information and an iPhone for free local calls and containing information and recommendations from the owner. There’s no doubt it’s an attractive offering for the consumer, but what of the homeowner? “No-one with this beautiful a home is going to do this for themselves – they don’t have the time or the inclination. They’re busy people and they travel a lot. In fact, the people with the nicest homes tend to travel the most. Fournier Street
These are busy people with complicated lives and they don’t want to deal with this hassle,” Marsh explains. “What we have to do as a company is make their participation in onefinestay incredibly easy.” It’s an approach that seems to be working: onefinestay rolled out in New York in May this year and the company now has more than 750 exquisite homes across its two cities, with further expansion on the horizon. But success comes at a price. “I knew it was going to be brutally hard work and it has been,” Marsh admits. “I’m still working very long hours and I know that’s not going to end any time soon. I think it does rather take over your life for a few years. And you see very little of your friends and family. It’s hard, but it’s a decision you make. If you want to create something unique and exciting, and you want to create a great business and to change the world, there’s a price to pay.”
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Analysis Mental Health(L).indd 1
30/09/2012 14:53
ANALYSIS
With one in six workers experiencing stress, anxiety and depression, there’s no denying mental illness affects the workplace. But there are plenty of things businesses can do to keep mental health at the heart of matters
At the front
of mind
WORDS: JOSH RUSSELL
P
eople tend to think about mental health in rather black and white terms: this person is mentally ill, that person isn’t. But this flies in the face of an incredible amount of scientific research. “We all have mental health, the same as we have our physical health,” Emma Mamo, policy and campaigns manager at mental health charity Mind, explains. “We’re somewhere on a spectrum from good to bad and we move up and down it for a variety of reasons.” All of us are susceptible to mental illness if we are exposed to harmful conditions or aren’t given the appropriate help when we need it. Which is why the benefits of creating a mentally positive workplace cannot be underestimated. There is a strong case for employers taking the mental wellbeing of their employees seriously. Mamo elaborates: “Each year £26bn is lost from the UK economy because of this issue, which works out at about £1,000 per employee.” This isn’t just down to obvious factors such as sickness and absence. In fact, increased staff turnover due to clinical stress and issues such as presenteeism – where employees still come to work even though, due to fatigue or illness, they are unable to work at full-capacity – have at least as big an effect. “It’s a huge problem, but a bit more of a hidden one,” comments Mamo. But taking care of your employees’ mental health needn’t be driven solely by the threat of negative repercussions. “I think it is good to talk
29
about the business case for it but I think also what’s important is to talk about the positive benefits of being proactive,” she says. One of the key benefits is a workplace where employees feel they can be more open and relaxed, where managers and staff have relationships that support genuine and open communication. “Having those relationships, having regular catch-ups and asking people how they’re doing means that you create the space for people to talk about these issues.” Mindful Employers is a voluntary charter and support network that helps businesses actively engage with addressing mental health in the workplace. Richard Frost, lead for the initiative and vocational advisor for Workways, a part of Devon Partnership NHS Trust, agrees that a focus on openness is vital. “A lot of it is about improving understanding in communication,” he comments. Not only does this have benefits for employees’ morale but it also makes it easier for employers to engage with staff they feel might need some additional help. He elaborates: “If they have concerns about a particular individual, maybe they’ve noticed a change in their behaviour, it just gives them some openings as to how they might begin to approach the conversation in a supportive way.” And these openings are vital, particularly when dealing with a subject that is still viewed by many as ‘something you don’t talk about’.
October 2012 www.elitebusinessmagazine.co.uk
Analysis Mental Health(L).indd 2
30/09/2012 13:40
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ANALYSIS
Stigma around mental health issues can be a huge problem. “We all know that mental health is still seen as a taboo subject – there still is a lot of stigma around it,” remarks Mamo. One of the things that makes it so insidious is that unlike racism, sexism or other forms of discrimination it is rarely explicit; the stigma of mental illness is far more likely to be implied than expressed. “Experiencing mental health problems is often lumped in with poor performance at work; it can be a factor at times but that then drives additional stigma around people’s capabilities,” Mamo comments. Outwardly expressing that you are struggling can be viewed as unprofessional. It’s only when this is transposed onto ideas of physical health that we see how ludicrous it is; a colleague complaining of lumbar pain is unlikely to attract much of a value judgement. But for the co-worker who admits he can no longer handle the stress of his job things are very different. Yet there’s quite a leap between understanding
stigma and doing something to fight it. Obviously the bluntest end of the wedge is outlining a zero-tolerance stance; it should be clear to staff that mental health is covered by the harassment policy and will be dealt with through the same channels. But the subtler work lies in engineering a culture shift. Mamo feels that it starts with being direct when addressing the subject, making it clear to everyone that mental health is a spectrum. “You can ask, ‘What can we do to stay down the better end? What behaviours can we follow?’” she offers. “Having that kind of proactive conversation will mean that people hopefully feel that it is a safe space to talk if they are experiencing a problem – as well as highlighting that experiencing problems is a part of human nature.” Additionally, being open and honest, when appropriate, about your own experiences of mental health can serve to weaken the feeling that the subject is taboo.
“You can ask, ‘What can we do to stay down the better end? What behaviours can we follow?’” Emma Mamo, policy and campaigns manager at mental health charity Mind
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The mind of equilibrium There’s a huge amount of support for mindfulness practice and meditation helping with certain mental health disorders. Statistics from the Mental Health Foundation quote research that demonstrates mindfulness meditation can cut the relapse rates of recurrent depression by up to half. “The benefits of mindfulness, you’re probably aware, are staggering,” comments Richard Latham, producer of Be Mindful Online, the online mindfulness training resource. “The research puts it head and shoulders above anything else.”
Mindfulness meditation can cut the relapse rates of recurrent depression by up to half Mindfulness can help us to become more aware of the patterns our thoughts take – by developing a more intuitive understanding of our cognitive processes we can learn to introduce ways of thinking that are more constructive or beneficial to us. While practice can be viewed as a form of exercise, enabling us to keep fit mentally as well as physically, the results can have a huge affect on a person’s ability to cope with unexpected pressures. “It
gives you the tools to come into the present moment at any time,” Latham comments. “When you focus purely on the present moment your concentration is better; you also feel more relaxed and in control.” But what is mindfulness? Despite its popularity in mental health circles, to the layperson it can seem like a bit of a nebulous term. “It’s about developing your awareness,” explains Latham. “Generally, it’s about being aware of how your body feels, what thoughts are running through your mind and then expanding them out into being aware of your surroundings and other people.” Given the press it receives, hearing how basic the practice is almost makes it seem like something of an anti-climax. But this would undermine the very real and palpable impact it has. “The effects are strong because usually you’re not in the present moment for the majority of your waking day,” Latham comments. How can an employer use this to breed the most mentally positive workplace they can? It really is a case of leading by example. “Entrepreneurs and CEOs are really where the action is for mindfulness,” Latham explains. “That really is where it should start.” The last thing a company should do is roll it out as a sort of ‘productivity tool’, akin to a mandatory
session of tai chi for company employees before the morning meeting. “We’ve seen issues where, when it’s deployed in a sort of motivational type, positive-thinking rollout, which employees are quite used to, it really misses the point,” he comments. While it will help an employee cope better with the pressures of workplace, it’s not just a stress-reduction gimmick. “Mindfulness is for your whole life,” Latham concludes.
October 2012 www.elitebusinessmagazine.co.uk
Analysis Mental Health(L).indd 3
30/09/2012 13:40
ANALYSIS
There’s a real value in sharing your experience with your staff, showing that the environment is one in which these issues can be openly discussed
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“We’ve certainly had organisations where one of the more senior members of management has spoken quite openly to groups about their own experiences,” comments Mindful Employers’ Frost. “It increases the understanding that actually more and more people experience these kinds of issues and that it’s okay to talk about them.” Mamo also feels there’s a real value in showing you are unabashed about your own mental health problems. “Leading by example is important. You can talk about how you experienced a difficult period, how you got over it, what you learned.” There’s a real value in sharing your experience with your staff, showing that the environment is one in which these issues can be openly discussed as well as demonstrating that there are others who have been through the same experience. “I think when I’ve worked with different managers, people who’ve been honest and authentic, those are the people that do inspire their employees,” she explains. “So I think that can be really powerful.”
recognise when she’s feeling under pressure and do things to help her feel supported, even if it’s just a case of inviting her for a chat. “When my manager spots those signs she’ll say: ‘Emma, do you want to have a chat about anything? How are you coping? Is everything okay?’” But it’s not all about such formal procedures. “There are other really basic, cost-effective things that an employer can do,” she says. One of the most important is ensuring staff have a reasonable work-life balance – even if overtime and late hours become a necessary expedient, making sure staff take back time can make a huge difference. “Another thing is ensuring people take a lunch break,” comments Mamo. “It sounds counterintuitive if you’ve got loads of work but actually taking that hour to get away from a desk gives you perspective.” Research from BUPA has demonstrated that working through lunch
breaks, far from increasing productivity, actually significantly lowers it and costs businesses somewhere in the region of £50m a day – adding this to the impact on employees’ mental health makes the 30 minutes saved seem like a rather poor trade-off. Admittedly, committing oneself to these principles and actually putting them into practice are two radically different things. But the business world is hardly lacking in examples of companies that are taking huge strides in addressing the issue of mental health. One only has to take a brief look at the work of Mindful Employer itself to see that attitudes toward mental health in business are changing radically. Since 2004, nearly a thousand employers have signed up to its charter including EDF Energy and AXA PPP Healthcare; something that is made even more impressive given the fact it’s not compulsory. “It’s something that’s completely voluntary for employers to become involved in and make use of in the way that best suits their business,” Frost remarks. Not only that, but it also shows how UK businesses are throwing themselves behind fighting mental-health stigma and making their support for sufferers public. As Frost concludes: “It’s a public and tangible statement that this employer is seeking to understand and support people with mental health problems.”
Research from BUPA has demonstrated that working through lunch breaks, far from increasing productivity, actually significantly lowers it There are also practical procedures employers can put in place that have a marked impact on protecting their employees. Something that has helped a lot of employers is the ‘wellness action recovery plan’, which has been adapted from the healthcare world to assist organisations in recognising the warning signs and intervening to reduce employees distress. “It’s a tool that someone would normally work through with their mental health professional and it talks about the impact of their mental health condition,” says Mamo. “What are the early warning signs, what are the early triggers, what’s helpful to do, what’s not helpful to do.” Everybody at Mind has completed one of these assessments; Mamo says it helps her superiors
www.elitebusinessmagazine.co.uk October 2012
Analysis Mental Health(L).indd 4
30/09/2012 14:48
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Squaring the circle
34
Despite rumours of recovery, small businesses continue to have difficulties obtaining vital funding from UK banks. So it’s fallen to peer-to-peer lenders such as Funding Circle to help bridge the gap. And they are doing a sterling job
WORDS: HANNAH PREVETT
I
t’s no secret that banks are failing to adequately support the small business community. Indeed, last month at MADE: the entrepreneur festival, business secretary Vince Cable acknowledged the difficulties businesses were having in raising funding. “It is a difficult environment and we in government are trying to help… We need more competition. We need more banks,” he said. But perhaps it isn’t banks we need at all. For the gap that the financial services sector has left yawning open is rapidly being filled by alternative financiers. From crowdfunders, where experienced investors inject cash into start-ups in return for equity, to peer-to-peer lending, which caters to more established businesses, the market is abuzz with innovative new finance solutions. Funding Circle falls into the latter category. Founded in August 2010 by University of Oxford graduates Samir Desai, James Meekings and Andrew Mullinger, Funding Circle matches investors with small- and medium-sized enterprises that need to borrow money. At the time of going to press, Funding Circle had lent close to £52m to around 1,000 businesses in the
UK. And the average age of a business on the site is 10 years old – these are no whippersnappers. Growth has been rapid from the beginning, but has really begun to ramp up in recent months,
“I think people are starting to ask, ‘Where else can I put my money now outside the bank?’” especially among investors, says co-founder James Meekings: “We’ve had a big uptake in the number of people who are joining to lend to businesses possibly as a result of some of the issues with the banks, whether it’s the Libor scandals, the IT glitches, or other problems,” he explains. “I think people are starting to ask, ‘Where else can I put my money now outside the bank?’” That was certainly one of the questions going through the mind of marketing executive and Funding Circle investor Daniela Sheppard in late 2010. “I have a portfolio which is made up of various products and services,” she explains. “I like to be hands-on with where my money goes and try to make the most of is. This can be
www.elitebusinessmagazine.co.uk October 2012
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a challenge because the market hasn’t been good to us investors in the past few years.” Sheppard began her Funding Circle investment career with just a few hundred pounds, but gradually increased the amount and her current investment in the platform stands at around £10,000. This is a pattern Meekings has seen replicated many times. “Once someone joins and puts a small amount of money in, they usually increase their subsequent lending,” he says. This behaviour is often as a result of increased trust on the part of the investor, says Meekings. “I think it helps to have people who have been fully paid back,” he admits. But he also says it’s important that potential investors appreciate the risks before parting with their cash: “I also think it helps to have businesses that haven’t paid back because people can actually see the risk and understand it, rather than us just explaining that they can expect some bad debts and giving them our rate, which is about 1%. They need to be able to quantify the risk.” It goes without saying that a huge amount of work goes into assessing each company and giving them a risk grade, with ‘A’ being the lowest risk. The process can be a little intimidating – but nowhere near as arduous as dealing with a bank, says Richard Curtis of independent coffee shop Ground Coffee, which borrowed £40,000 in 2011 and another £50,000 in 2012.“We had to provide P&L statements, balance sheets and so on. Then they gave us our risk assessment grade, which was presented to the lenders on the website,” Curtis explains. Ground Coffee’s first request was fulfilled in just eight hours, with the second loan taking a couple of weeks. The company was also subjected to a slightly more rigorous line of questioning the second time round, too. “The first time no-one really asked us any questions using the Q&A facility on the site, but the second time around they had loads. It was quite challenging actually, because you’ve got really serious investors on there asking accountancy questions, which could be quite tricky to answer,” he explains. “There were other operational queries that we were more familiar and comfortable with about how the business is run. It was a good balance.” Meekings says that it is often the case that investors are a little more inquisitive
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“The process can be a little intimidating – but nowhere near as arduous as dealing with a bank” Richard Curtis, founder Ground Coffee shop
October 2012 www.elitebusinessmagazine.co.uk
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FINANCE
if a company goes back for a second round of investment. He also says that as the platform has developed, there is now a greater level of engagement between investors and businesses. Which can be good for all involved: “Some of the businesses have said it’s been really helpful getting the questions from investors because it’s made them think about some of their business issues,” he says. As time-consuming as answering questions from investors may be, it always pays off: not a single business that’s listed on Funding Circle has failed to raise the finance it required. And not only is it cheaper to borrow through Funding Circle, with substantially lower interest rates than the banks, the set-up fees are a fraction of the charges associated with borrowing from a bank – Funding Circle charges 1% commission. But it’s not just the lower costs. It is also speed – a bank loan can take four months to process – and an overall shift in mindset that makes peer-to-peer lending an attractive option. “In terms of lending to the SME market, the banks are still stuck where they were 50 years ago and they haven’t learned they need to change,” says Jeff Pert, general manager of
the Cashmere Centre (see case study). Funding Circle’s model also allows for flexibility in a way that the staid old banking model of yesteryear is unable to. Meekings says that 50% of applications are made on Funding Circle’s website outside of office hours. “That would tell me that they don’t want to go into a bank and would rather do it in the evenings, maybe after they’ve had dinner or put the kids to bed,” he adds. This isn’t to say that banking won’t recover to some degree, and over the next few years the banks are likely to develop new takes on old investment products. Though it may be a case of too little too late, says Meekings. “What’ll happen over that period is that people will start to use alternatives, and they will start to enjoy those different processes and won’t want to go back to the bank.” He may well be right. And on the flipside, perhaps by the time banks feel they have recovered adequately to ramp up their lending to small businesses once more, their services will no longer be required. The market will have changed irrevocably. You snooze you lose, as they say.
Case study Jeff Pert general manager The Cashmere Centre Two years ago we were looking for finance to fund our stock for the peak season. With my background as a commercial banker for Lloyds TSB, I knew how to put together a business plan, which we then submitted to five high-street banks. All five of them said yes, they liked the plan and wanted to help. We had initial meetings with the account managers who came out to see of us. Of those five, we never had any further contact with two of them, despite chasing them. They just didn’t want to respond. Two of the others came back and said, we’ll offer you finance, but it’s subject to directors’ guarantees supported by their houses. At that time, one of the shareholders was living in Spain and didn’t have property in the UK, so all of the responsibility would have fallen on the other shareholder. And we weren’t prepared to do that. Around this time, I read about Funding Circle in an article and decided to go down that route. It took me a day to put together the information they needed and it was on the site within a couple of days. Within 14 days we had the £40,000 loan we’d requested.
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“For commercial lending, I think more and more people will go to peer-to-peer lenders such as Funding Circle” The banks are still stuffed full of toxic loans, so effectively they don’t want to loan. One issue is they’re still geared up to the 1950s when the branch manager only dealt with local businesses. Also, in my opinion, taking a director’s house for security is the wrong way to go nowadays. It may have been appropriate 50 years ago but it isn’t now. The banks don’t see how outmoded they are, or that they need to change. For commercial lending, I think more and more people will go to peer-to-peer lenders such as Funding Circle.
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FINANCE
Buy now, pay late
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While it may be far from your mind when signing that exciting new deal, having a concrete plan in place really pays when your customers don’t
WORDS: JOSH RUSSELL
C
hasing up missed payments can be a trying process at the best of times. But during an economic period where most businesses’ cashflow is little more than a trickle, getting hold of what you’re owed has never been more important. A recent survey from PKF accountants and business advisers revealed that a quarter of surveyed businesses felt delays had caused cashflow problems and four out of five said they were having to spend more time chasing debt than in the same period 12 months earlier. Protecting oneself from missed payment has never been more important. So what’s the first step a business can take? In the case of late payment, prevention is most definitely the best cure. As Dennis Horner, partner at PKF, says: “It’s about having a good understanding of the organisation’s profile so you know the risks and you know their history.” When working with an unfamiliar
October 2012 www.elitebusinessmagazine.co.uk
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customer or client, make sure you’re aware of their reputation. “Have you done a credit check on them recently?” asks Horner. “You may have dealt with them for years but are they near their credit limit? Have you checked that they’re not in any difficulties so you understand the risk?” Knowing who you’re working with is important but it offers little protection if you aren’t clear on terms before making the agreement. If your contract clearly stipulates how you will proceed in response to late payments, it makes things unambiguous. “If people are having cashflow problems or want to be difficult, they can use any excuse to hold up payments,” Horner remarks. “So it’s worth trying to ensure that you haven’t got things in the way.” If the client or customer is made fully aware of all of the terms then this means there aren’t any loose threads to the deal that can be tugged to unsettle the arrangement when it comes to payment. “They can’t then say, ‘But I’ve got a query around that’, ‘I haven’t seen this’ or ‘You didn’t give me enough information’,” says Horner. Once the work is completed, it is vital you invoice right away. The clock starts ticking from whichever comes latest – the completion of the work or the arrival of the invoice – so make sure you’re prompt in invoicing. Make sure you clearly stipulate how long the client has to pay – the standard payment period is 30 days and while this is negotiable you are under no obligation to accept the client dictating the terms. “If you’ve got a long history with them and you’ve feel the risk is low, you might say, ‘Okay I’m happy to do that because they give me business’,” Horner comments. “It’s a matter of being clear as to which organisation is asking for credit and why.” So an invoice has been issued. The date for payment comes and goes. But no cheque appears on the mat. What then? How does one proceed? Don’t be afraid to chase things up. Even in this digital age it’s incredibly easy for things to slip off the radar. More often than not there will be no malicious intent involved. “It could be they’ve got a temporary problem and they just need a little more time,” explains Horner. Rather than spending days fuming
over a missed payment it is far easier to simply deal with the situation as soon as it arises. Sending a written ‘statement of account’ is probably the most official way of letting someone know their payment is overdue. For each invoice a statement of account needs to include the date, invoice number, a brief description of the rendered service and the amount invoiced for. Always include a separate ‘total figure owed’ at the bottom of the statement, even if only referring to one invoice. Obviously it’s vital you retain a copy of this for your own records. While you are entitled to claim for compensation and interest on the balance as soon as a client breaches the 30 day deadline, it’s customary to allow a grace period of approximately two weeks for them to pay. According to the Late Payment of Commercial Debt (Interest) Act (1998), you are allowed to issue a penalty of £40 for a debt of up to £1,000, £70 for up to £9,999 and £100 for any amount above that. When you invoice for this additional cost, fill out a separate invoice for the compensation and interest and attach a new statement of account, listing both the
The clock starts ticking from whichever comes latest – the completion of the work or the arrival of the invoice – so make sure you’re prompt in invoicing
original fee and this new figure. It’s rather unlikely that many clients will let things get past this point. For those that do, the next step, regrettably, involves taking legal action. “It is a bit of a nuclear option,” explains Horner. There’s very little chance after initiating court proceedings of recovering any sort of working relationship down the line so with key customers options such as mediation might be a preferable alternative. But, continues Horner: “If it’s a customer with whom you don’t really want to do business in the future and you’ve exhausted all other avenues then there could well be a situation that you’ve got to go to court.” This is all reasonably straightforward in theory but, in practice, particularly when you’re invoicing scores of businesses each month, things get a little more complicated. So how can an entrepreneur make it easier on themselves? “It’s about trying to have a granular focus on the different businesses,” says Horner. “Rather than looking at all of them as a crowd and saying ‘they’re all going to take an extra five days to pay’, it’s understanding which ones are and why.” The most important thing is recognising that different clients need radically different approaches. “It might be that some you do grant more time and others you say that actually you want to keep them under a bit of a tighter reign,” Horner concludes.
www.elitebusinessmagazine.co.uk October 2012
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A sharp exit
You’ve seen your business through the recession, but now perhaps fancy a new challenge. Clive Lewis, ICAEW’s head of enterprise, is here to offer advice on how to get shot of your business 42
T
he recession has forced many businesses to cut costs, refocus on core markets and to maximise efficiency. As a result they are lean and mean – and ready for the upturn. What many business owners don’t realise is that this process is similar to the grooming that they will need to put their company through prior to a sale. For those who want to sell they need to plan their exit well in advance. Many business owners are great at building a business but have no idea about handing it on. There is a bewildering array of options and each has its challenges: • keep the business in the family – you will need a suitable successor. • sell the business to the management team – are they capable and can they raise the finance? • bring in new management from outside – but you would still own the business and retain ultimate control of how it is run. • a trade sale to another business. Perhaps the most common method of exiting a business but it can be time-consuming and disruptive, and involves disclosing confidential information to competitors. • close it down and sell off the assets. Employees would lose their jobs and your reputation could suffer. A management buyout can sometimes save a business in this position. Once you’ve decided on the best route of sale, you need to plan carefully for the
transition to a new management team. This process could start as much as 15 years before the business owner intends stepping down. The succession plan should be communicated to the management team as well as any family involved in the business to help prevent misunderstandings and future conflict. It’s useful to have a written succession plan, which should contain: • the key goals • a timetable of the transition – from identifying a successor to the staged, and then full, transfer of responsibilities • contingency plans in case the intended successor declines the role or you realise they are not suitable
Careful planning will help ensure that you get the sale and handover that you want The plan should cover how the successor is to be introduced and trained. This could be a mixture of on-the-job and/or more formal training. It should also include time for the development of business and leadership skills. It may include gaining experience in other businesses so they can bring fresh skills and ideas to the business. It could also be a structured programme within your business so they spend time working in each area of the business.
A major consideration is how to phase your departure. This can be achieved by gradually transferring some key responsibilities to your successor or by reducing the number of days you work in the business. One of the most important things during a sale is netting the highest possible asking price. There is a lot of confusion about sale prices: while owners generally overestimate the value of their firm at six to seven times net profit, buyers tended to aim for two to three times net profit (plus asset value). The latter is the most likely final price. However, businesses with unique assets and/or intellectual property, or on the leading edge of an under-exploited area, could command higher selling prices. It follows that an under-performing business is likely to attract a lower valuation. This can be damaging because potential purchasers are wary of an undervalued business. In some business sales the owner of the firm remains for some time post-transfer, to ease the transition. This is a more common scenario than the purchaser working in the business pre-transfer, and mostly applies to specialist niche businesses rather than straightforward, generic firms. Due to the current state of the economy, many will take this opportunity to reassess both their business and their work/life balance overall. Careful planning will help ensure that you get the sale and handover that you want so that you can relax in the next stage of your ‘career’.
www.elitebusinessmagazine.co.uk October 2012
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The American dream Successfully crossing the pond is the ultimate measure of success. If an entrepreneur can flog their wares to the American market, respect and riches beckon
WORDS: HANNAH PREVETT
“The trick is finding the right people, not necessarily throwing cash at it. You need to spend time in the market and find business partners, which means kissing lots of frogs”
F
rom the likes of popstrel Adele to a London-based software company, successfully leveraging the American market is the ultimate litmus test of staying power. With its status as the world’s number one superpower (for now at least), not to mention its spending power, it’s still perceived to be the pinnacle of success. Get it right and the roads will be paved with gold. But get it wrong and you’ll be limping back to the UK with your tail between your legs. For Adam Hildreth, CEO and founder of online community management software company Crisp Thinking, there was never a question as to whether the US was a suitable market. “It’s a niche market that uses our technology and most of those companies are based out there,” he says. “It was natural for us to go to the US.” In fact, Crisp Thinking’s first client was American company Sony. Crisp Thinking is exactly the kind of business that is taking the US market by storm. According to Allyson Stewart-Allen, an American and director at International Marketing Partners, as well as tech companies, media content businesses are doing really well across the pond. “The creative industries sector is phenomenal here; it really is
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world-class and world-beating,” she says. But operating in a booming sector does not guarantee success in the States. It costs time and money to expand internationally. “I think any kind of expansion is going to take a lot more money than you expect,” warns Hildreth. But Stewart-Allen says talent is even more important than spare dollars. “The trick is finding the right people, not necessarily throwing cash at it,” she explains. “You need to spend time in the market and find business partners, which means kissing lots of frogs.” One of the other challenges of expanding to another country is understanding the cultural differences. Speaking on a panel at MADE: the entrepreneur festival, Stewart-Allen pointed out that just because there is no language barrier, there may still be misunderstandings. “SMEs find it especially challenging because there’s an assumption we speak the same version of English – which we don’t – and that the business culture is quite similar to the UK so not much is needed to adapt. But actually it’s quite different in terms of how we do business.” This presents management challenges, too, as there is a very different working culture in the US to the UK. “It’s an interesting dynamic when you’ve got US and UK employees working
October 2012 www.elitebusinessmagazine.co.uk
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“I think Americans envy the European business culture where you get to go home at 6 o’clock or you’re not expected to be on a conference call at 10 o’clock at night because it’s interrupting your family time”
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together on projects,” explains Hildreth. “The guy in the US may ask why his UK counterpart isn’t in the office to find out it’s actually a bank holiday in Britain.” Although the cultures may appear to be conflicting, it is possible to create a harmonious working environment as long as it’s seen to be fair, says Stewart-Allen. “I don’t think it’s easy,” she admits. “I think Americans envy the European business culture where you get to go home at 6 o’clock or you’re not expected to be on a conference call at 10 o’clock at night because it’s interrupting your family time. Therefore often the best thing to do is to apply the British rules,” she suggests. Not everyone manages to get the balance right. M&S is an example of a brilliant British brand that failed spectacularly at the task of breaking the States. Speaking at MADE,
Stewart-Allen gave her perspective on the UK stalwart’s disappointing performance in the US. “I think one of the things about M&S’s US foray was there wasn’t a readiness at management level to adapt. Regardless of how big or small the organisation is – you could be a one person start-up or a mega corporate – you need to be listening. And M&S wasn’t listening.” But there are success stories too. Last month’s one to watch here in Elite Business was Hailo, the taxi app company that began its days in East London and is now taking the States by storm. At Ella’s Kitchen, whose CEO Paul Lindley is this month’s cover star, exports accounted for 44% of sales last year. And at Crisp Thinking a whopping 60-70% of revenues come from US sales. One thing’s for certain: get it right and a slice of American pie is more than worth the hassle.
Survive in America Focus on business first. Americans are transaction- rather than relationshipbased. We do deals and then build the relationship. Educate Americans, don’t just assume they’re being arrogant. We’re very insular in the US and are therefore slightly suspicious of approaches to business we’re not familiar with. Quantify wherever possible. We speak in numbers. Be precise and don’t speak in innuendo. We’re really explicit communicators. For example, if an American asks you a question and you reply, “I couldn’t possibly comment”, in Britain that might be taken as a subtle “yes”. To an American it means you’ve signed a non-disclosure agreement and aren’t allowed to comment. Do it now. Don’t deliberate. We’re very action-oriented in the States. We don’t sit around debating the merits of something, we just do it. Allyson Stewart-Allen, director at International Marketing Partners
www.elitebusinessmagazine.co.uk October 2012
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For most entrepreneurs, brand considerations start early on. But what is it that sets a striking brand apart from a glorified logo?
A brand new
WORDS: JOSH RUSSELL
aesthetic
W
hether we think about it or not, our lives are dominated by brands. They’re ubiquitous. We’re all familiar with the apocryphal idea that you’re never more than 20ft from a rat. Well, you’re probably never more than a few inches from a brand, whether it be your iPhone, your Casio or your Visa. So, brands have their work cut out if they’re going to make an impact. But the key isn’t necessarily investing millions of
pounds in advertising – it’s down to creating something that makes a visual connection. The incontestable champion in terms of brand aesthetic is, of course, Apple. Among detractors, the amount of time and consideration that Apple gives to aesthetic choices is sometimes used as a way of dismissing the value of its products, as though branding and product design choices are at the one end of a spectrum with
October 2012 www.elitebusinessmagazine.co.uk
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technical function at the other. But this of course misses the point. The two aren’t mutually exclusive; even the most technically excellent products flop without an aesthetic that helps a consumer identify with them. And it is this that makes Apple one of the most successful global brands. Perhaps the clearest way of measuring the effectiveness of a brand comes from the American marketing communications agency and brand experts Young & Rubicam. Their Brand Asset Valuator deconstructs the power of a brand based on four criteria: differentiation, relevance, esteem and knowledge. Differentiation refers to a brand’s most key characteristics and the factors that set it apart from its competitors. Relevance is an assessment of how appropriate the brand is for a given consumer. Esteem and knowledge could be viewed as two sides of the same coin – knowledge is based on consumer awareness and understanding of a brand; esteem relates to their evaluative response to it. Obviously, while the distinctiveness of your aesthetic will impact upon the way customers differentiate you from your competitors, the main effect of a strong brand aesthetic is building customer esteem. It’s hard to build an emotional connection between the consumer and your brand but once you have it can be stronger and more valuable than any other resource at your disposal. An apt example here is that of Paperchase. For a lot of people Paperchase isn’t a shop; it’s an experience. Walking through the doors, it’s hard not to be swept up by the novelties of its product design and the variety of its stock. There’s a real identity to the products and this is what makes it unique as a stationer. The brand not only makes stationery desirable but makes it actively exciting – rather than being a case of supplying staple but bland products, the store deals in potential. It has found a way to create a brand aesthetic that is far more about beauty and emotional appreciation than it is about fulfilling a simple function. And this is precisely why Paperchase has become a powerful high street presence. Obviously the online marketplace is an entirely different world. There isn’t a store or physical space to build connection and esteem; here the imagination plays an even more vital role than with any other brand. Moo, the producer of custom business cards, understand this more than most. Not only are its product options unique and distinctive – its MiniCards, at half the usual height, offer a strikingly different end product – but the UI and customisation process allow the consumer
Even the most technically excellent products flop without an aesthetic that helps a consumer identify with them
to get a direct sense of the impact the product will produce. Again this creates contact between the brand and the customer. The brands that really stick in our heads are more than those that advertise the most or that fulfil a novel function. They’re the ones that find a way to personally resonate with us, that we can envisage setting the tone of our lives. It’s something of a cliché that advertising is about selling an idealised lifestyle – there are a vast number of brands on the market that attempt to pitch a glamorous way of life to us but completely fail to hit home. And this comes down to not fully appreciating your demographic’s aesthetic sensibilities. But that’s a charge that can hardly be levelled at boutique and luxury hotel specialists Mr & Mrs Smith. It knows its audience: hardworking but discerning professional couples who need somewhere to slip away for a incomparably stylish weekend break. Its destinations are invariably stunning – each boutique hotel is personally visited and reviewed by a member of its team in a first-person travelogue that places the customer right at the centre of their travel experience. But Mr & Mrs Smith isn’t just about serving up a memorable holiday. Every element of the brand follows through on this initial promise. Even the brochures themselves are highly desirable; sumptuously bound editions that can be bought by customers wanting attractive coffee-table books that promise a hint of boutique style. Introducing something with aesthetic value serves a real function, above and beyond simply making your logo look pretty. It enables your customer to feel like your brand is in keeping with their own sensibilities and forms a bond that runs deeper than simple product satisfaction. Ultimately a brand should be like a piece of art. If it doesn’t engage your customer and encourage them to invest – both figuratively and literally – in the idea it represents, it fails to serve its purpose.
www.elitebusinessmagazine.co.uk October 2012
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“We regularly receive great feedback regarding the branding; it’s good our customers appreciate it” 52
Building a glam brand from the ground up Emi & Ben Ronke Ige The biggest motivation for me when developing Emi & Ben was to create a skincare brand that championed the West African skincare beauty secret, unrefined shea butter, and used it as a main ingredient in a product range. Since my early twenties I had aspired to create a business that had synergy with my country of origin, Nigeria, so once I had the shea butter business as an idea, this was a great catalyst. The striking design came from the aspirations I had initially set myself for the brand. As the product in question was a natural skincare product, it was important for me that this shone through. I remember drafting the brief for the designer, using words such as clean, fresh, fun, young, approachable and honest within the document, highlighting that the concept developed had to communicate all of these words. We regularly receive great feedback regarding the branding; it’s a good feeling our customers appreciate what has been developed. Naming the product after my daughter Emi and my nephew Ben was a decision I came to quite quickly and easily. The body butter idea was inspired by the forthcoming arrival of my daughter – I was using raw shea butter as a full body moisturiser on a consistent basis, as I was well aware of the brilliant results it provided and how gentle and natural it would be on my daughter. The Emi & Ben identity definitely forms a strong part of my brand, as it sets the tone of the story behind why the company was originally formed.
From the beginning Emi & Ben set out to support women in Nigeria who harvest the shea nuts into raw shea butter. This encouraged me when developing the brand, as I wanted a business that, while being successful, was able to ‘do good’ and support others in need. At present we support local women from a village in Nigeria by purchasing our raw shea butter in bulk. In the mid- to long-term, we envisage buying land to establish an ongoing farm part-owned by the local women who harvest the nuts, enabling them to not only sell unrefined shea butter to Emi & Ben for skincare purposes but to other companies leveraging the other commercial properties that Shea butter plant/nut possesses. My brand influences the day-to-day running of my business, from things like striving for consistency in everything, to the brand’s tone of voice and personality.
www.elitebusinessmagazine.co.uk October 2012
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A personal touch Sometimes it can seem like the world of business has no room for personality. People need to match the job description rather than the other way round. But is there a way we can work according to who our employees really are?
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WORDS: JOSH RUSSELL
O
ne of the most appreciable measurements we have of an individual’s character is also one of the oldest. Dating back to Carl Jung’s work on the personality, the idea of extroversion and introversion are firmly established in our culture. And yet it’s something of which the majority of us have a poor understanding, despite the fact that our place on the spectrum between introversion and extroversion almost certainly dominates a huge part of our daily lives. Author of the recent analysis of the relationship between introversion and extroversion, Quiet, Susan Cain is something of an expert on introversion-extroversion research. A significant portion of Cain’s book is dedicated to the business world, an arena often unfairly stacked in favour of extroverts. We only have to think of a stereotypical City financier to be greeted with images of someone brash and confident. Again commonly received logic would have that the most ebullient characters are best suited to the demands of the boardroom. But this really isn’t the case; often a firm but receptive hand on the tiller can win more respect from employees and partners than a brash and overconfident one.
October 2012 www.elitebusinessmagazine.co.uk
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PEOPLE
“Introverts are better at managing proactive employees because they’re more likely to let them run with their ideas, to implement new and creative ideas” Susan Cain, author of Quiet
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Perhaps the most interesting piece of research Cain highlights in Quiet relates to a study conducted by management professor Adam Grant at Wharton University of Pennsylvania. The findings, contrary to expectation, showed that introverts are the best people to lead extroverts and vice versa. Cain explains why this would be. “Introverts are better at managing proactive employees because they’re more likely to let them run with their ideas, to implement new and creative ideas,” she says. While with their natural enthusiasm and drive, extroverts may often seem ideal to lead a project forward, this very nature can sometimes cause them to unconsciously pass over others’ contributions and not make the most of the talent they’re working with. However, if you have a group of introverts, a manager who can be stimulating and confident can make all the difference. “On the other hand, when employees need rousing, when they need inspiration, extroverts tend to be the better leaders,” says Cain. There are all manner of other techniques used to measure and categorise personality, many of which build directly on Jung’s ideas. But few of them have gained as much ground in the workplace as the Myers Briggs Type Indicator. Myers Briggs evaluates an individual in terms of their place upon four spectrums: introversion–extroversion, sensing–intuition, thinking–feeling and perceiving–judging. By assessing which poles of the spectrum are more dominant in a person, this provides a theoretical model of how they respond to and process the world around them, summarised in a four letter ‘type’ that details their most dominant characteristics – for example ESTP. Think Training & Development is one of the country’s most prominent providers of Myers Briggs workplace training and its managing director, Gavin Aubrey, is clear on how it can help us to better understand one another.
“Before I did Myers Briggs I got on really well with about a third of people,” he recalls. “A third I had to work harder with. And then a third I just thought were completely odd.” Aubrey explains how he, like the most of us, assumed that people thought about and saw the world the way he did. When people acted in ways he didn’t understand, it was a more natural leap in logic to assume they were a deviation from the norm. It wasn’t until he began to engage in Myers Briggs that he realised that these people weren’t ‘abnormal’; they just processed things differently. “It’s strange that it took me so long to work out
that actually people think differently,” he says. How does understanding this help someone work better with a team? Aubrey gives an example, explaining that he falls very firmly on the thinking side of the thinkingfeeling spectrum. “I have no feelings,” he jokes. “I’m cold and dark inside.” Obviously, this isn’t true but it highlights how valuable it can be to have individuals around for whom emotional empathy is more natural. “Sometimes I can forget the values and the appreciation within the group,” he explains. “Quite often I use more emotionally astute people within the
www.elitebusinessmagazine.co.uk October 2012
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PEOPLE
team to make sure the team’s values align properly and that we’re doing the right thing by everyone.” But working with personality isn’t just about making up for your own deficiencies. It’s also about recognising what your team needs. Aubrey offers an example: “Something that irritates a lot of judging people is people who, like me, are very last-minute – all over the place,” he says. “It just makes them stressed; they think it’s wrong and it causes a lot of friction.” Cain also thinks there’s huge value in recognising the needs of your team. One of the major differences between introverts and extroverts is the amount of stimulation they require – introverts are easily over-stimulated and need time to wind down, extroverts can easily find themselves becoming understimulated and slipping into boredom and lethargy. There are ways to respond to this though. “Smart employers will allow employees to choose the level of stimulation they need at any given time,” she observes. “For example, by designing offices that have shared, socially active spaces but also quiet nooks and crannies.” This is a very important observation, as it highlights that learning about different personalities not only teaches us how to better work with those personalities but can also aid all of us in adopting a range of working practices, providing suitable solutions for different types of situation. Aubrey gives an example where even a team full of extroverts may benefit from an introverted approach. “If we’re all talking too much, we can just put up a hand and say that we’re extroverting far too much,” he says. “And because it’s about Myers Briggs nobody takes it personally; they understand it will be of benefit to have a bit of quiet time.” On paper it all sounds very simple. But in
“If you were to spend all week just doing very logical stuff, without doing any people-based stuff, usually that would induce stress” Gavin Aubrey, managing director
Think Training & Development
practice one can imagine how it would be far more complex. There are all manner of other factors that make up someone’s personality; your natural tendencies won’t necessarily always be in the perfect position to complement that of your team. So, what if a manager finds their own natural character isn’t well suited to deal with a specific situation or member of staff? Do they need to pretend to be someone they aren’t? “We all do best when we draw on our own natural strengths,” remarks Cain. But she also refers to the work of Professor Brian Little, whose idea of ‘free traits’ shows that while personality sets a framework for us we all have capacity to act in accordance with these trends or against them, depending on the requirements of the situation. As Cain elucidates: “All of us need sometimes to ‘act out of character’ for the sake of work or people we love.” However, it’s worth noting that acting outside our normal framework is far more tiring than acting within it. “The key is to step out of character on an as-needed basis,” Cain explains. “If you’re doing it all of the time or even most of the time, you’ll burn out quickly.” This is a sentiment echoed by Aubrey. He emphasises an idea that is prevalent in Cain’s book, that character type doesn’t dictate what we can and can’t do – rather it is about our capacity for operating in certain modes. He offers an example of someone for whom thinking is their weakest trait. “If you were to spend all week just doing very logical stuff, without doing any people-based stuff, usually that would induce stress,” he says. While awareness of your personality type can allow you to be flexible with your index, trying to push yourself too far and for too long will simply cause too much pressure. “If you spent too much time trying to get good at it you’ll probably just induce stress.” This hits the nail on the head. Plenty of introverts can display great social skills and be incredibly engaging speakers – the aforementioned Professor Little, despite being a ‘classic introvert’, is renowned for his energetic and passionate lectures. It is simply the case that the terms ‘introvert’ and ‘extrovert’ encapsulate which state we find to be most natural. Operating in the other mode is entirely possible – it just takes a little more effort than the individual’s default state. And this means that there is a huge value in trying to understand who your employees are and how they work. Because with a little work we can find a way to make the workplace fit our employees’ strengths – rather than the other way round.
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October 2012 www.elitebusinessmagazine.co.uk
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Business Coaching
Business Growth Strategies
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03/08/2012 14:11
PEOPLE
Building your boardroom family The ideal non-executive director should be like a friendly uncle – he can put his arm around you while giving you a good bollocking. Read on for the lowdown on why you need one, and when and how to get the relationship right
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WORDS: Georgina-Kate Adams
B
oardrooms don’t have the best reputation. Images of besuited golfing buddies bringing down the hammer abound. But if you’re considering taking on a non-executive director (NED), repaint that picture. “At the very early stage of a company, a board member at their best is largely a mentor,” says Doug Richard, founder of School for Startups. The former Dragon should know, having helped cloud accounting firm Brightpearl shoot from seedling to fast-growth business in the last five years. Indeed, a good NED will work with, not against, you – helping your business reach sunnier climes than you could access on your own. Many start-ups make the mistake of thinking they’re not ready for an NED, but on the contrary, it’s at the early stages that they
October 2012 www.elitebusinessmagazine.co.uk
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“We believed strongly that, as young entrepreneurs, we needed to surround ourselves with a team of experienced advisers”
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can make the largest contribution. However, it’s worth turning the spotlight on yourself first and identifying where your weaknesses are. Lesley Stephenson, publisher of The Financial Times’ Non-Executive Directors’ Club, says, “If you’re wanting to expand into China, that’s a good time to bring in an NED who has experience in China. It’s very much horses for courses.” A typical rate for an NED is between £500 and £1,000 a day, for around two days a month. However, Chris Spencer-Phillips, MD of NED headhunter First Flight, believes NEDs should invest in the businesses they join, to align their interests with those of the shareholders – “not being paid until certain milestones are achieved.” Shares or options are also commonly offered in lieu of payment. However, if you’re expecting additional help, for example with a merger or acquiring finance, it is important to set this out in your letter of appointment. That way, both their time and your financial commitment are agreed in advance. Now you know you want one, where do you find non-execs for hire? The FT’s NED Club offers free advertising to firms, however most entrepreneurs use their own networks to find the right candidate. Having an acquaintance in common is a great way to check out a potential NED’s credibility, so tell people you’re looking. However, as ever, take recommendations with a pinch of salt. “The only way you ever know if you work well with someone, is to work with them. Invest a bit of time to see how well it works,” says Richard. If you’d prefer a little more reassurance, last year the FT launched a rigorous six-month accreditation scheme for NEDs, and has 170 students so far. The curriculum includes dealing with conflict, although course director and serial NED Murray Steele says, “You don’t get many conflicts in small companies. It’s more like, ‘I know someone who can help’.” If, for any reason, the union doesn’t work out, you’ll have to fulfil your contractual obligations, but NEDs have no legal rights to claim unfair dismissal. By contrast, they are as liable as the executive directors if anything goes wrong – so it’s in their interest to do their best by you.
Case study Spoonfed Media co-founder Alexander Will and NED Eric Lawson-Smith Alexander Will: “When Henry Erskine Crum and I started Spoonfed, we believed strongly that, as young entrepreneurs, we needed to surround ourselves with a team of experienced advisers. We brought Eric on board after we raised our first significant round of angel investment (£400,000) in 2008 (one year into the business). As a start-up, I think it’s tough to use an agency for such a role. We met Eric because Henry met one of his colleagues, who mentioned Eric’s experience within the digital space. We discussed appropriate remuneration for such a role in relation to the time commitments, looked at industry benchmarks and came up with an NED equity package. Eric fundamentally understands the space and has so much experience that it was clear we were going to have a positive working relationship. Since Eric joined we’ve raised a further £1.5m, secured an EFG loan from Natwest and launched event-marketing platform Evently, which has a team of 25. All this has been achieved during a rough economic climate. Having someone like Eric on board has helped us navigate those challenges.”
Eric Lawson-Smith: “In the early days, I tried to give as much time as possible between board meetings, to help Alex and Henry formulate their objectives and think about financing in an integrated way. We have a great, open and frank dialogue. Some months back I was pushing hard to go faster into self-serve. This was a case of my having a view beyond my remit – quite rightfully overturned. They have grown swiftly and easily into leadership roles and my contribution now focuses primarily on board discussions.” Getting it right Alexander Will shares his tips for recruiting a non-executive director – and ensuring they’re the right one: 1. Always be on the look-out. You never know when you might meet your next NED. 2. Take the time to get to know each other. See it as a two-way hiring process. 3. Be very clear what you are looking for from them: both in terms of timecommitment and the role itself. 4. Make sure you can have tough conversations with each other. Ultimately, that’s what they’re there for.
www.elitebusinessmagazine.co.uk October 2012
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04/08/2012 16:32
PEOPLE
TEAM TRANSFORMER 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.
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CUT COSTS,
NOT INVESTMENT
IN STAFF
In difficult economic times, all SMEs walk a tightrope between cutting costs and investing in the future of their business, says Martin Reed
C
utting spending when things get rough is one of the most obvious ways for a small business to keep its head above water. But making cuts at the expense of training and employee development is, in my opinion, a false economy. When budgets are tight, employers tend to spend less on developing talent within their company. But cutting back on employee training is only cost effective in the short term. Looking further down the line, your business won’t be sustainable if the people within it aren’t capable of carrying out the roles they could potentially fulfil in future, and in the long run you may find you don’t have the talent available to make your company
www.elitebusinessmagazine.co.uk October 2012
successful. While sales might have slowed, your employees’ need for learning and development opportunities won’t have changed. In fact, you may find the requirement for training actually increases as markets change more quickly. Yet, at the same time, I appreciate the position SMEs find themselves in with little money and a need to use the funds available in the most effective way. So, if cutting training and development isn’t the answer, but the need to cut back on spending is pressing, how can you balance the two? The answer, I believe, is to create a coherent talent management programme – one that will make the most of your employee training budget and equip your
PEOPLE
Make the most of your employee training budget and equip your business with the talent it needs to stay strong
business with the talent it needs to stay strong in years to come. Consideration of the following points will help you achieve a coherent talent programme within your business that will help you buck the downturn and develop firm foundations for the future. The first step in achieving an effective and cost-efficient talent programme is to add some structure to the process – don’t just throw development and training at people; analyse what’s needed, source it, then use assessments to check whether it’s worked. Secondly, make sure you have a good grasp of what talent is present in your company already. It seems obvious, but how can you know what you’re missing and what you need to find if you don’t know what you’ve got? When change is fast-paced, it’s hard to keep track of who can do what and how well. A good appraisal system can make this task easier. Using simple behaviour and skills assessments and recording the results can give you a detailed ‘x-ray’ of the range of skills you have – and those you need. Pay attention to ‘soft skills’. Leadership skills, the ability to bind teams together and address problems are just as important as knowledge of
nuclear physics or the ability to analyse a market for example. Forgetting to look at these personal attributes can lead to the creation of a group of individuals with all the talent to create a groundbreaking product and sell it, but who lack the ability to function in a professional situation. Although academic qualifications are often used as shorthand for the level of ability an employee possesses, SMEs need to bear in mind that the structure and content of our education system has been changing for decades, adapted by successive governments, the result of which is that employers can no longer rely on school and college qualifications as a reliable indicator of an individual’s skills, knowledge and aptitude. As a result, businesses are left to find out for themselves, often through trial and error, whether an employee is capable of fulfilling their role in a company. In difficult economic times, this ‘trial and error’ approach is clearly not efficient, which puts the onus on business owners to use appropriate assessments to double-check a candidate’s skills and knowledge and make their own judgements about their potential career progression. In particular, when thinking about an employee’s future in your business, you need to make sure you’re thinking far enough ahead and linking talent planning to your targets and strategy. You may have the skills you need for this year but what are you planning next year or in three years time? SMEs that enjoy long-term success are those that incorporate talent and skills planning into their forecasting and forward planning – and this will help increase the efficiency of your talent management programme. New people and people in new jobs take time to become effective so you need to include a time dimension into your talent planning: business owners need to ask themselves, ‘Do we need this skill now or in five years time?’ Rather than just throwing training at employees and keeping your fingers crossed, thinking ahead, analysing what talent your company needs and creating a structured talent programme will give your company the best possible opportunity of future success.
October 2012 www.elitebusinessmagazine.co.uk
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TECHNOLOGY
ROK espresso maker We like coffee here at Elite. The same way that cats like warm laps and indiscriminate violence. Which is why the idea of making first-class espresso with nothing more than a kettle and a little elbow grease is so appealing. As well as making first-rate coffee, the ROK espresso maker is the prettiest kitchen gadget we’ve seen in a long time.
iPhone 5
WORDS: JOSH RUSSELL
Sometimes Apple products are placed in the unenviable position of having to compete with their own hype. Fortunately the iPhone 5 delivers. It’s thinner and lighter yet still has room for a larger screen. It’s faster, more powerful and, whilst there’s currently few apps on the market that’ll make it break a sweat, it’s a phone with an eye on the future.
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There have been some big developments in the tech world since last month’s hot list. The Wii U has opened for pre-order. EE has announced the official launch of its 4G network. But obviously the colossal 4”-retina-displayed, A6-chipped elephant in the room is Apple’s iPhone 5. And for that you will need to read on October 2012 www.elitebusinessmagazine.co.uk
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TECHNOLOGY
The Mu A modern dichotomy: you’re always on the go but the average smartphone has a 14-minute battery life. Either you heave around a laptop just to juice your mobile or you carry around clunky adapters. In steps the Mu. A USB / plug adapter that folds away to a neat pinless package, the Mu happily fits into a pocket. We guarantee this little chap will save your life.
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Infogr.am Infographics are a beautiful way to get your point across. They’re also usually pretty labour intensive. Not anymore. Whether producing graphics to dazzle your boss or to wow thousands of consumers on your website, Infogr.am offers a free solution for producing amazing visual data. With Infogr.am a picture is definitely worth a thousand words.
Quora Q&A service Quora is far from a new arrival on the scene. But that doesn’t mean its port to Android isn’t rather welcome news. Bridging the gap between knowledge resource and social network, Quora aims to put you in touch with the people who can provide you with everything you need to know. And now it’s hit the Android market, it’s just that little bit easier to answer those burning questions wherever you are.
www.elitebusinessmagazine.co.uk October 2012
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28/08/2012 12:43
TECHNOLOGY
All is
vanity
WORDS: JOSH RUSSELL
Being able to measure a company’s position in the market is a vital part of managing any business. But the best data isn’t necessarily the data that flatters your ego
www.elitebusinessmagazine.co.uk October 2012
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TECHNOLOGY
The pressure can be on for individuals to boost their figures to add a patina of credibility that they haven’t actually earned
A
nalytics and metrics are almost like a currency in their own right. Marketing departments for companies across the scale are as likely to mention the amount of traffic they receive as they are their turnover. When a project manager reels off the stats for their latest campaign, it’s very easy to get carried along by the wave of website hits, download figures and virality statistics. But even though the numbers may sound impressive, they aren’t necessarily a measure of success. Vanity metrics are exactly what they sound like; figures that paint a wonderfully attractive picture of a business without actually presenting anything of real substance. There’s nothing wrong with wanting to monitor your data. Without accurate tracking of the results of campaigns and your company’s growth, you’re left flying blind. Moreover, this sort of data is needed by investors and clients if they’re going to have any trust in your business. Unfortunately the temptation to take data out of context is often far too strong. Many businesses, upon seeing a leap in user figures, can’t wait to share the information; it’s less common for people to question what those increased user figures actually mean. Has there been a reciprocal increase in sales or has it led to increased revenue for your advertisers? While these figures don’t sound anywhere near as exciting, they have a concrete, measurable impact on your business and demonstrate that your increasing user base is resulting in more conversions. Another classic example is that of raw page views. With the rise of blogging and the increased ease of building websites, the majority of people are aware now that the number of hits your website receives is relatively meaningless. Even looking at the number of unique hits from new IP addresses is misleading; it doesn’t take into account the multiple devices people use and doesn’t even come close to differentiating
between meaningful activity and first-time visits that failed to convert to any long-term loyalty or results. So what about social media analytics? Obviously social media isn’t to be underestimated. It’s a powerful way to grow brand awareness and build your product up in the eyes of the customer. These days social media forms a vital part of a lot of businesses’ marketing strategy. And companies, understandably, want to be able to monitor the results, which, at first glance, seems to be pretty straightforward. There is hardly a lack of data to work from – not only do you have the cruder metrics such as Facebook page likes or Twitter followers, but networks themselves are wising up to the value of detailed analytics. Facebook, for example, provides ‘insights’, allowing businesses not only to see the total available market, the number of friends their fans have, but also their ‘reach’ – the number of people who saw content related to their business. Reach can even be broken down into content spread organically, virally and by paid-for initiatives. With a whole wealth of aesthetically pleasing charts, the insights provide lots of meeting-friendly data to demonstrate the effect of your various campaigns. You can see why it’s so appealing from a marketing perspective; everything is conveniently broken down into charts that show the demonstrable growth of your network. But, unfortunately, it isn’t all that straightforward. The use of these analytics to monitor the relative success of your business misses out on one key point – a growing network doesn’t directly translate to increased conversions. In fact, it’s perfectly possible for an increase in @mentions or ‘people talking about’ your page to actually be generated by incredibly negative publicity. One only needs to look at the disastrously provocative article recently published by Newsweek on Ayaan Hirsi Ali’s escape from ‘Muslim rage’ – reaction to the article undoubtedly caused the publication’s
@mentions to rocket. Unfortunately a cursory look at the hashtag #muslimrage demonstrates that increased activity on Twitter isn’t necessarily always a great marketing boon. The maxim that ‘all publicity is good publicity’ doesn’t hold if the increased activity is reducing your brand to a laughing stock. Metrics are also, unfortunately, not above manipulation. Given how seriously a lot of organisations take analytics, the pressure can be on for individuals to boost their figures to add a patina of credibility that they haven’t actually earned. Followers and fans can easily be bought in the same way that suspect SEO technics can increase an organisation’s Google ranking, something that further undermines these analytics as a genuine measure of a company’s influence. This is the key issue with vanity metrics. It can often be tempting to focus on completely on the wrong issue. For example, you may be seeing rapturous responses to your social media campaign – a competition to win an iPhone 5 might see your page likes rocket – but how many of these new fans will actually buy one of your products? Does taking the five seconds it takes to click a single link because they want to win a gadget necessarily mean that they will buy £500-worth of eyeliner, shower gel or condoms? What can a business do to avoid slipping into the trap of analytical narcissism? Don’t expect your metrics to tell you more than they are able. Your total number of followers or how much traffic your website receives are useful metrics to know – but they can’t be used to represent the success of your business as a whole. Instead look to the more nourishing data to assess how people are making use of your services: the number of daily active users will tell an enterprise far more about their functional user base than the amount of activity on their social networks will. And don’t assume that more likes amount to more lucre.
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October 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.
Outsourcing: finding your own way
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Outsourcing IT projects may bring cost benefits, but it has its challenges too, says Elite columnist David Hathiramani
T
he A Suit That Fits story started over in Nepal, where my friend and soon-to-be co-founder Warren Bennett was volunteering. He met a family of tailors who made him a natty three-piece suit; fast-forward seven years and we now have a team of more than 100 amazingly talented people we work with to support the local community. So it’s safe to say we’re huge fans of working with skilled people from all over the world. My passion has always been in IT; I started playing with computers when I was about seven years old (annoying my entire family by writing a small program that blocked anyone entering the old BBC computer without the password that only I knew). With this in mind, I wanted to tell you a little story about our IT journey at A Suit That Fits… Back in 2006, we started with a really neat concept; we wanted to make bespoke tailoring
accessible in the UK by bringing it online. We were a little naive in thinking that we could establish all aspects of it ourselves – including the IT platform – on a shoestring budget. Although my skill level has never been anywhere near as good as that of an experienced programmer, I did have a clear vision of what I wanted it to look like. I had a good idea of the system that we wanted to create on the website, and started by downloading an open source (free) web platform. We then began tweaking and perfecting it – with a few good friends also pitching in along the way. We managed to create something completely unique to the tailoring industry (a gizmo we now call our ‘suit wizard’). It enabled customers to design a suit by going through all the options – from the number of buttons on their cuff to the colour of their lining. We worked out that there were more than 40 billion different style combinations. Once the customer had
October 2012 www.elitebusinessmagazine.co.uk
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TECHNOLOGY
made those style decisions, they could then input their measurements, and the site would take payment. The business model revolutionised the tailoring industry – we were the world’s first online bespoke tailoring company. These core elements are still critical to our business today, even in our studios manned by our style advisors – of which there are now more than 30 across the UK. Once the concept started to gain momentum, our IT had to keep pace with it. We couldn’t just leave it as it was – instead, it had to adapt to our constantly evolving business model. I was too busy trying to manage the business to spend my time programming. At the start, we were producing lots of tailored garments, but had to watch every penny: we could only justify working on things that we knew would give an immediate return on investment so
there was also no way of affording anyone UK-based to do the programming. With our experience in outsourcing tailoring production, we started to look all over the world for programmers to provide value-for-money projects and enhance our web platform. There are lots of websites that you can post projects on and freelance programmers from all over the world will apply. We tested the water by putting up a couple of these adverts. There were quite a few applicants – the stand-out candidates had good feedback on their records, were sensible with the estimated timings of the project, and were reasonably priced. We took the plunge and started with a programmer based in Thailand for our first mini project. Rather than go into the detail of the project, I’ll just highlight a few of the challenges:
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“The fact that English was not the native language meant that things tended to go back and forth – almost to breaking point”
1
Communication Even if language skills seemed proficient over email or chat, once a specification was written and questions needed to be answered, the fact that English was not the native language meant that things tended to go back and forth – almost to breaking point.
2
Culture It’s really difficult to write a specification that does not require the programmer to make assumptions. When you’re working with a local programmer, you can be confident that the assumptions will be in line with what you meant. However, with a programmer from a different culture, they will invariably assume something totally different. This means that specifications have to be very comprehensive. Our first few specifications were not comprehensive, and we spent many hours redoing entire projects time and time again.
3
Trust It’s very difficult (and verging on irresponsible) to trust a freelancer with your data; as a result, we could only commission discreet projects with no effect on our current system – we just wouldn’t have felt comfortable otherwise.
4
Priority levels Unless a company is working on your projects, the individual can go on holiday when they like, get a more important project, or just have a lie-in. In short, you’re not always top priority.
We delivered a few projects in such a way, but it would have been impossible to complete a single one of them without my IT knowledge. All of the projects were lower cost, but resulted in much more effort and stress than delivering the projects in the UK. This was our first foray into programming internationally, and it almost completely put us off. Nevertheless, we kept on trying, and have been through some different styles of working with an international programming team. We have found that hiring a local CTO, coupled with an international team, works best for us. We now have the benefit of a fantastic team of international programmers, and the local peace of mind, to support our fast growth. It’s win-win.
www.elitebusinessmagazine.co.uk October 2012
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29/09/2012 12:12
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25/09/2012 09:13
TECHNOLOGY
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WORDS: HANNAH PREVETT
The
ABCs of SEO
SEO is one of the cornerstones of an online business in the 21st century. How do small businesses make sure that they are as visible online as they are offline?
W
elcome to the information age, the era in which data is everywhere. Anyone can find the answer to all their queries at the tap of a keyboard and the click of a mouse. And as search engines provide the window onto the online world, taking steps to ensure SMEs’ websites are listed on the Google search results is vital to their online success. Right? Sort of. There has been a lot of debate recently on forums and blog posts written by those in the know around whether or not SEO
October 2012 www.elitebusinessmagazine.co.uk
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TECHNOLOGY
If you want to be doing SEO well and you want to be making an impact, it’s essentially a full-time job
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is ‘dead’. The basic premise seems to be that the people who were calling themselves SEO experts, are now calling themselves social media experts, and the entire profession has lost any degree of authority – and the social networks are full of noisy, useless content. Thusly, sceptics argue that SEO should be part of the job of an internal evangelist, rather than an outside agency or ‘consultant’. But what about those small firms that can’t afford to take on a search specialist? With more than 80% of web traffic being driven by search engines, this isn’t a party to which SMEs can afford to not RSVP. So how do they ensure they have the relevant experience without the cost of hiring an extra body? Marty Wightman is an account director at digital marketing agency and SEO specialist iProspect. He says that enlisting the help of an agency is one way of ensuring that small businesses have the prerequisite levels of knowledge about digital marketing, without having the cost of taking on a dedicated person in-house. “If you want to be doing SEO well and you want to be making an impact, it’s essentially a full-time job,” says Wightman. Aside from obvious cost-saving benefits, an agency will also bring a breadth of experience – not just across small businesses in general, but in different verticals. An SEO specialist in the retail sector may give slightly different advice to one who works predominantly with technology companies, for example. Having the experience of someone such as Ben Spray, head of key accounts at digital marketing firm Adtrak, can also prevent small businesses making silly mistakes. “I’ve seen lots of emails offering SEO for £99; if it’s cheap and offering a quick service, it’s probably not going to offer you a good deal in the long run,” he explains. “I’d go more for a reputable company that has a track record for proving what they can do, because the last thing you want is to get short-term gains to later be penalised.” He is referring to self-styled ‘SEO gurus’ who may provide bad-quality links and spam users of businesses’ websites with keywords. This could be potentially disastrous for SMEs, as Google’s algorithms have become more sophisticated and are able to pick up on suspicious links and content. “Quality content is king,” says Spray.
Elite’s six steps to sparkling SEO Use Google Adwords research
tool. This is essentially a piece of technology where you can find out what your target market are typing into Google, because everybody starts a search with a key word or a key phrase. The best thing about it? It’s free.
Optimise your site for the right
keywords. That’s about doing some on-site optimisation towards the terms your target market is searching for. And you only chase the keywords that your market is going to be typing in. Nobody is going to be fooled by you advertising your website as something it’s not. It will just make customers go away from the website and never come back.
Get set up on Google
Webmasters and Analytics. These are two free pieces of software that Google gives you. And if you get set up on Google Analytics, you will learn loads about the visitors who are coming on to your website. It’s almost like doing instant market research: you know what keywords people type in to Google, you know which keywords are converted on if it’s a sign-up to an event or if they are buying something from a retail site.
Webmasters is about learning all about your actual websites – and not the customer. How quickly Google can find your website, for example. It’s almost like a diagnostics tool.
Hang out where your target
market hangs out. Make sure you’re visible. Either online or offline if you’re doing marketing, it’s all about link building – all the time bear in mind that you should be making sure you’re getting a link back to your website.
Don’t forget about localised
marketing. SMEs need to make sure they’ve got local touch points within Google. Setting up accounts on Google Plus and Google Places – and being active on those – is a good place to start.
Get social. Everyone’s on
Facebook, some people are on Twitter and others are on Pinterest. It’s not just about sending out posts about your latest product or the newest sale that you’re running. It’s about starting and leading conversations that your consumers are wanting you to talk about. It’s about tapping into their passion points because if they’re on a social platform they’re looking to be in a social mood. They want to be engaged, they want to be brought to life with a conversation.
www.elitebusinessmagazine.co.uk October 2012
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School for Startups.indd 1
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Franchise master 59555:Franchise master 59555
13/1/11
17:11
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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:
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Untitled-5 1
08/08/2012 10:57
Andrew Borrill: I felt I was seeking the impossible…. After twenty-two years working for the same company, Andrew Borrill from Weybridge in Surrey decided to make 2010 the year for change. As the New Business Development Director for a leading national office supplies company Andrew frequently worked 70-hour weeks. His role meant that he was constantly travelling around the country giving him little time to spend with his wife and step-son. Meeting business owners through the course of his job gave Andrew the idea of working for himself. But nagging doubts about whether he could build a profitable business on his own that would provide him with the level of income he required meant that Andrew needed to find the confidence, and the right opportunity, to take the next step. An article about Platinum Property Partners appearing in the Sunday Times prompted Andrew to get in touch to understand more about how a Franchise works and if it could be
Andrew Borrill
right for him. Andrew recalls, “I needed to find something I could initially run alongside my day job as a part-time opportunity until I was confident the income I needed was there and giving me the security to be able to walk away from my current position. I didn’t want the new venture to be a huge drain on my time either, so it felt that I was seeking the impossible.”
THE FIGURES
Following a PPP Discovery Day and copious amounts of due diligence and research
Total Portfolio Value:
circa £650,000
(“I read everything I could lay my hands on whenever I had a spare moment, which meant
Annual Rental Income:
decision made itself. “I saw how people younger than me had achieved financial freedom
I learned all I know now whilst waiting for trains and on the move!” laughs Andrew) the
£102,000
and built up credible and profitable businesses in a relatively short period of time, simply by following the PPP methodology to the letter. I was able to speak to those Franchise
Annual Operating Profit:
Partners and ask them first-hand how they had done it, and they all explained that they
£47, 244
had just followed PPP’s tried, tested and proven advice.” Andrew joined PPP in 2010 and within six months had purchased and refurbished two properties, which he quickly fully-let. Having clearly tapped into an area of high demand in Lincolnshire, Andrew proved to himself that the strategy was the right one. Following
I totally attribute my success to the fact that I had the support of the PPP team, which gave me the right start. Without PPP I would not have achieved the exceptional results I’ve managed in such a short time.
PPP’s proven systems, further investment into a third property again proved successful and within a few weeks’ of finishing the refurbishment that too was let. But what does Andrew feel is the most valuable lesson he’s learned? “Always listen to the experts and surround yourself with specialist knowledge. You may think that you can build a profitable property portfolio yourself, and PPP do make it look easy, but property is an expensive asset class and you can lose your shirt, and everything else, if you get it wrong.”
BE MORE - DO MORE - HAVE MORE - GIVE MORE Find out how you can realise the true potential in bricks and mortar, ask us about our Discovery Days Head Office: 5 Lansdowne Place, 17 Holdenhurst Road, Bournemouth, BH8 8EW T: 01202 652100 F: 01202 559419 E: info@platinumpropertypartners.co.uk www.platinumpropertypartners.co.uk Platinum Property Partners.indd 1
28/09/2012 09:01
FRANCHISING
Agreeable terms Striking a franchise deal is always an exciting prospect but it pays to keep your head. Knowing the ins-and-outs of the franchise agreement will ensure you have a happy partnership for years to come
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WORDS: JOSH RUSSELL
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hether you’re a franchisee or a franchisor, by the time you sit down for an agreement often all that’s on your mind is closing the deal. At this point, without legal guidance, it can be all too easy to be tripped up by a loophole and end up in a lot of trouble. Fortunately, Nicola Broadhurst, partner at Stevens & Bolton, is here with a needle and thread to sew up any gaps in your agreement.
www.elitebusinessmagazine.co.uk October 2012
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30/09/2012 15:43
FRANCHISING
Franchisee
For the franchisee, preparing for the deal starts long before you even sit down at the table. “First and foremost see whether the franchisor is a member of the British Franchise Association (BFA),” advises Broadhurst, “because if they are then you know they’ve gone through some level of accreditation process.” Whilst the BFA isn’t able to scrutinise absolutely every element of the agreement it will at least have given feedback and closed up some of the glaring loopholes that may have crept in. Broadhurst also feels it’s worth doing some digging and contacting members of the franchisee network. “Many franchisors just give cherrypicked lists of ones they know are going to say nice things about them,” she explains. “It’s quite hard sometimes for franchisees to find out if a franchise concept is good or not.” Whilst legal advice can seem pricey, finding you’ve signed an agreement which doesn’t really represent your interests will hit your pockets much harder. As Broadhurst explains: “Getting some legal advice then can be very useful to make sure that you don’t put yourself in a position afterwards that you’ve lost a lot of money.” It’s rare you’ll need representation until it comes to the agreement itself but there are some cases where it’s worth seeking consultation a little sooner. Broadhurst elaborates: “If a potential franchisee is paying a deposit, it’s worth getting legal advice right at that stage because they need to know if the deposit will be refunded or, if it won’t, why it won’t.” Franchise agreements can be a bit of a shock to those who aren’t used to them. “The main thing that a franchisee needs to understand is the fact that it is not an evenhanded agreement,” Broadhurst states. “It will be weighted very heavily in favour of the franchisor for the obvious reason: the franchisor has got more to lose and they’ve got a network to protect.” Because of this the franchisee is locked into the given term and this is very rarely, if ever, negotiable. “Unless the franchisor is in fundamental breach, franchisees need to be aware that there is no get-out-quick clause,” she says. Additionally, you aren’t entitled to a payout just because you’ve built up the business; choosing not to renew without selling on the franchise means a franchisee can’t expect a return on their equity. As Broadhurst comments: “They will walk away with nothing for their investment.” The final thing to consider is that if you fail to meet the franchisor’s terms and they need to end your contract, you are potentially
liable for the lost earnings up until the end of the contracted term. “The franchisor can sue for damages,” Broadhurst warns. “That tends to come as a huge shock to a franchisee that they might have to compensate the franchisor.”
“If a potential franchisee is paying a deposit, it’s worth getting legal advice right at that stage because they need to know if the deposit will be refunded”
Franchisor
For a franchisor perhaps the biggest risk is over-eagerness. With the first few franchisees it’s rather easy to get carried away. “Rushing in is not a good idea but most people make that mistake,” says Broadhurst. Having a proper selection process is absolutely vital so having things like an application form and a focused profile that outlines the qualities you require in a franchisee can really help. “You’ll look for the financial credibility,” she remarks. “You’ll also ask whether they’ve got any criminal convictions, bearing in mind obviously under the Rehabilitation of Offenders Act 1974 you don’t have to declare spent convictions.” Additionally a Criminal Records Bureau (CRB) check will be vital in some positions, particularly those dealing with children. “If possible I would also recommend you actually go and interview the franchisee in their home,” Broadhurst says. “You’ll see whether they’ve got the support of their family or other half, what their actual living circumstances are like and you’ll get an idea of what they’re like character-wise.” Some of the more legally minded franchisors at this point might fancy forgoing a lawyer and drawing up an agreement themselves. But is this advisable? “It depends on how cavalier your attitude is towards your IP,” Broadhurst responds. Templates are available on the internet for around £50 which a person can use for the basics, but these aren’t without fairly significant drawbacks. “The problem with those is that they’re either not up to date with the law and sometimes even statutes, so the references will be wrong,” she explains. You’d also be missing out on the actual working experience of a franchise lawyer, who has seen what works and where the riskiest ground lies – when court judgements change the boundaries or highlight areas your agreements might be lacking, a lawyer would redraft your agreement to ensure you’re covered as much as possible. “It’s that extra know-how and experience that a professional lawyer will bring,” Broadhurst explains. What happens when the best laid plans go awry though? How do you handle a breach of contract? “For a breach your starting point is going to be a claim for damages,” comments Broadhurst. “As long as you’ve drafted the specific losses you’re going to be indemnified for, because an indemnity is a stronger protection, you’re allowed to recover the losses that you’ve suffered.” However, despite the additional protection afforded in their agreements, if a franchisee lets them down it’s still hard for a franchisor to recoup the true costs involved. “I’ve got a client whose franchisee has run off to China,” she relates. “I don’t think they’ve got a hope in hades of getting that money back unless they pursue it in China and that in itself is expensive. Which is why I’d suggest franchisors get legal expenses insurance as back-up.”
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“If possible I would also recommend you actually go and interview the franchisee in their home”
October 2012 www.elitebusinessmagazine.co.uk
Legalities.indd 2
30/09/2012 15:43
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28/09/2012 17:54
FRANCHISING
Franchise in the spotlight: Dulux Design Service Interior design isn’t exactly the easiest industry to make headway in. It can take years to build up a reputable brand, making the Dulux Design Service a worthwhile avenue for designers wanting to build their profile
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WORDS: JOSH RUSSELL
A
nyone who has ever watched The Renovation Game has probably fancied a go at interior design. However, even for those with the required training it can be hard to find opportunities that are backed by a very strong brand. Well for the budding Kirsty Allsopp a franchise opportunity could spell the answer. The Dulux Design Service is the innovative enterprise that trades on the paint manufacturer’s extensive market presence, bringing affordable interior design to the UK homeowner. The official Grand Interiors sponsor of the Grand Designs Live show two years running – at which they exhibit some of their most striking room sets – Dulux Design Service’s designers aren’t your average franchisees. Boasting some impressive qualifications and expertise, they’re hardly the cast of Changing Rooms; there are no ghastly MDF creations in their designs. Those connected are often respected authorities in their own right – design director Marianne Shillingford has presented on home and lifestyle show Our House, as well as working with publications Prima Magazine and Ideal Home Magazine.
October 2012 www.elitebusinessmagazine.co.uk
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30/09/2012 17:28
FRANCHISING
Dulux’s exclusive franchisee network offers a bolster to your reputation provided by very few franchise opportunities
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Taking on a diverse range of projects, the designers have built up impressive portfolios under the Dulux brand. Offerings range from Claire Cipollone’s warm touches made to the Shottermill Junior School to Elaine Cater’s striking work transforming a gym into Tees Valley Leisure Centre’s ultramodern new cafe. Even the work on simple apartment spaces can be truly stunning; Steve Lait’s duplex apartment is enough to excite anyone’s palette. But how does it all work? What does the Dulux designer do to help their client? The whole process is designed to match the franchisee’s training and experience with the customer’s vision. For the customer the first step is a free of charge consultation, which acts primarily as a chance for them to meet their designer. Once the customer has outlined their vision for the space, the designer will be able to tell them about the services and options that best complement their requirements. Depending on their needs the customer can then select from one of three packages. Focusing on teasing out the customer’s ideas and fleshing out their desires into a fully rounded design scheme, the Inspirational Design package is an opportunity for the designer to flex their creative muscles. Their job is to provide advice on everything from furniture and fabric swatches to colour and carpeting, helping the client create a carefully tailored plan for their design.
It’s the franchisees role to identify the best products, inspect their quality and make contact with suppliers The rather self-explanatory Source & Buy service helps to take the hassle out of requisitioning all the products a client’s remodel needs. Whether they only need help with a couple of items or enough to deck out a maisonette, it’s the franchisee’s role to identify the best products, inspect their quality and make contact with suppliers. Working closely
with the client and tailoring the purchases to their tastes and budgets, Either of the previous two services are available as pick’n’mix options, allowing customers as much time hands-on or hands-off the project as they like. For the busiest or most gun-shy interior designers, the Complete Scheme Management offers total project management and gives the franchisee the chance to get their teeth into the real work of renovating. From laying out the room and sourcing products to managing tradesmen and placing the last objet d’art, everything falls under their domain. Unusually for a franchise however, franchisees’ influence isn’t entirely limited to their territory. Regions that don’t yet have designers aren’t simply left out in the cold – customers in these territories are able to use an online design service, linking them to designers in other areas. Via email, post and phone contact they can still liaise with designers to produce mood boards, featuring their tailored design choices. This allows flexible options for the customer and means franchisees will still from time to time be able to assist those who still aren’t in assigned territories, giving them a template which takes them one step closer to realising their refit fantasies. For most people with the required design know-how, this might not be the first option that would occur but the combination of a strong brand with the autonomy of a franchise make it a very intriguing proposition. Additionally, Dulux’s exclusive franchisee network offers a bolster to your reputation provided by very few franchise opportunities. Finally, the support of their systems makes securing clients easy, as their network puts customers in direct contact with the designers operating in their area. With the hassle removed you can focus on getting out there and splashing some paint around. Minimum investment: £55,000
www.elitebusinessmagazine.co.uk October 2012
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Bob Welfare FP.indd 1
28/09/2012 17:04
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28/09/2012 19:21
LEGAL
The cost of auto-enrolment
91
The Government’s latest wheeze to help plug the pensions gap may be beneficial for UK workers – not to mention its own coffers. But what will be the ramifications for small businesses?
WORDS: HANNAH PREVETT
P
ensions have rarely been out of the headlines in recent years. From the rather unsuccessful introduction of stakeholder pension schemes in 2001 to the procession of companies opting to close their gold-plated final salary schemes in favour of cheaper options, it’s fair to say there’s been a reasonable amount of upheaval. Now, the Government is at it again, updating pension regulations, and to a typically mixed response. Its auto-enrolment scheme, as announced in September, will mean that any company employing one person or more will have to provide and contribute to a pension for their staff. Any employee aged 22 or over earning more than £8,105 who
has been employed for three months or more will qualify for the scheme, which will be phased in over five years from October 2012. It is expected the rollout will begin with the UK’s biggest companies, gradually filtering through to SMEs and micro businesses with just a few members of staff. As with any new pension scheme, the rules and regulation are complicated, but understanding them is vital for any business as non-compliance could result in fines – or worse. Elite Business consulted one of the pension industry’s leading experts, Jennie Kreser, partner at Silverman Sherliker, to explain the ramifications for small businesses in the UK.
October 2012 www.elitebusinessmagazine.co.uk
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30/09/2012 14:16
LEGAL
Elite Business: What effect will the auto-enrolment scheme have on businesses in the UK? Jennie Kreser: The downside for many employers is, at a time of financial constraint, they’re going to have to look at their salary overheads and account for the new pension contributions. They’re going to have to pay a minimum, ultimately, of 3% of the worker’s salary. There are also additional administrative costs that running a pension scheme can involve.
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“It is a criminal offence if an employer does anything that can be construed as encouraging their members – their employees – to opt out of the pension scheme”
EB: Is the Government introducing any measures to help businesses get to grips with the new system? JK: The Government has introduced the National Employment Savings Trust (NEST), which will be the default option if employers do nothing else. The problem with NEST is that, although administratively it’s relatively simple, it does come with certain constraints, including a cap as to how much employees and employers can pay into it. Also, once you’re in it you can’t transfer to another pension scheme. But there are now other organisations jumping on the bandwagon and saying they can do as well as NEST in terms of the annual management fee, but won’t be constrained by some of these limits that NEST is. They could be more flexible. EB: Are these companies a viable option for SMEs? JK: It can be quite attractive for employers because some of those companies are also offering an admin service and the rules around eligibility will be an administrative nightmare, especially for small employers. EB: Do you think the type of autoenrolment package offered could serve as a differentiator when employees are considering employment options? JK: I’m not really sure that it will. If companies were offering a good final salary scheme, with significant contributions going in both from the employer and the employee, I think you might sometimes find some people who, if they’re offered two jobs, one that’s got a really good final pension scheme and one that’s only got a very basic auto-enrolment scheme or NEST, all other things being equal, will consider taking the one with the better pension scheme. But I think that’s a slightly old-fashioned approach now; I really don’t think people think that way any more.
EB: What’s the worst-case scenario for non-compliance? JK: One would hope that the pension regulator would take a rather flexible and understanding approach to the complexities of auto-enrolment, particularly with smaller employers. And there are many: if someone had sat down and said to the DWP, we want you to come up with the most complicated and difficult process to manage auto-enrolment that you possibly can, they couldn’t have done a better job. It is appalling. Personally, I’ve fully supported the principle of auto-enrolment. I have no problem with that at all. I do have a problem with the way it’s been implemented. The Government doesn’t want to make it easy for people to opt out, so it is a criminal offence if an employer does anything that can be construed as encouraging their members – their
employees – to opt out of the pension scheme. They can’t even send the opt-out form to employees if requested to do so. Although, how that’s going to be applied in practice, we will have to wait and see. The price for non-compliance will be fines. One would hope that initially they would start by way of warning notices. I don’t think that large organisations will get quite so much leeway, as they will be expected to be the early pioneers. But I still don’t think anybody should be sitting back, folding their arms and thinking it’s going to go away. Even those who have got a 2014 or 2015 staging date have to start thinking about it now, if they haven’t already done so. Jennie Kreser is partner at Silverman Sherliker Visit: www.silvermansherliker.co.uk
www.elitebusinessmagazine.co.uk October 2012
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Accountants
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BRANDING/WEB DESIGN/BROCHURE DESIGN/ DIRECT MAIL/PACKAGING/POINT OF SALE/ LARGE FORMAT PRINT/PHOTOGRAPHY/ Swoon are a creative design and communications agency. From fully developed brands to simple promotions we have the knowledge and expertise on hand to deliver. +44 (0) 1564 792098 info@swoonmarketing.com www.swoonmarketing.com
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Franchise Opportunity
Dor-2-Dor (Aylesbury): Reliable leaflet, menu, magazine distribution in Leighton Buzzard, Dunstable and Aylesbury. A local business who are committed to enable local business owners to market effectively and directly to prospective customers. Let us help you to create a new sales pipeline, repeat business and customer referrals. Contact us for special offers.
SCREEN WIZZARD: Ever wanted to wave a magic wand and change your life? This is your fantastic opportunity to market and sell the latest LED technology writing screens. With this business, there is a very wide target audience. With no restrictions on territory or area, you can operate anywhere in the UK. With a small investment for this great business, it can be an entrepreneurs dream business.
CAFE MOODS FRANCHISE: The Cafe Moods concept is like no other, positioned in prime business hotspots such as MediaCityUK, targeting primarily the business and professional customer. Cafe Moods attracts and retains the influential, from Company Director to Office Professional. Customers can grab a sandwich from one of the efficient and cost efficient Pod sites situated in an office block or business centre. We are looking to expand our Cafe Moods brand and are looking for franchisees to run zones under licence.
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www.elitebusinessmagazine.co.uk October 2012
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Graphic Design
3 Question to ask yourself.. 1. Is my family living the quality of life we want to live? 2. Need extra income? 3. Who would like to change their lifestyle? If so call Elizabeth on the number below
County Hog Roasts Limited: With over 14 years of experience and having cooked over 1000 Hog Roasts, we have a proven track-record to guide you through the various stages of owning your own successful catering business with this exciting opportunity. With a growing market where “Your Customers Just Love What You Do” taste the difference with this exciting franchise opportunity. To book your place on one of our FREE Seminars and for your FREE Hog Roast Lunch. Contact:
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Cactus Patch Design Limited: Cactus Patch Design
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So Wicked Designs: Our aim is to impress you! At So Wicked Designs we offer affordable graphic design solutions for your business. Along with logo design and Stationery; including Wedding stationery.
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Health & Safety
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October 2012 www.elitebusinessmagazine.co.uk
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NETWORK RAIL: Network Rail property is the largest provider of commercial business space for small to medium sized businesses in the UK offering a wide choice of properties in great locations, affordable rents, flexible terms and a supportive service across London and UK.
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www.elitebusinessmagazine.co.uk October 2012
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THE START-UP DIARIES
Sorry shouldn’t be the hardest word Nicola Barron Founder of Homemade London
Customers don’t expect businesses to be infallible. But when mistakes are made, an apology may be all that’s needed to avert disaster
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few weeks ago I was sitting in a restaurant with my three sisters – we can be loud and intimidating and we’d not been together in over a year so we were more raucous than usual. Our waitress seemed incredibly nervous, wobbling her way over to us with a tray of drinks, only to spill the entire contents across our table, showering us in a cocktail of Latte and Pinot Grigio. She looked mortified and swiftly disappeared as her colleagues rushed to clear up the mess. We assumed that she’d run off to the loos for a good cry, but a few minutes later she returned with a new tray of drinks and apologised, adding that it was her first day in the job and it couldn’t have gone worse. Spontaneously, we let out a collective “ahh”, immediately empathising and although we hadn’t had impeccable service we left her a confidence-boosting tip at the end of the meal. At the risk of sounding like Carrie Bradshaw in Sex and the City, it got me thinking how customers don’t necessarily expect you to be perfect, it’s how you respond to your fallibility that’s important. Whenever I get together with fellow business owners, it’s the stories of disgruntled customers we swap. It’s often these people who keep us awake at night, wondering whether we’ve got it wrong, whether it’s the start of a backlash against our livelihoods. The rational part of our brain can understand that we’re unlikely to please all the people all the time, but with a new business, it’s hard not to take it personally when people offer up criticism. When I first started Homemade London, I received an email from someone who complained that she ate too much cheese at one of our workshops, which was particularly annoying because it was complimentary wine and cheese we were offering. However
www.elitebusinessmagazine.co.uk October 2012
ridiculous it sounds, this dominated my thoughts for weeks and got in the way of making productive business decisions, particularly because my team had to listen to me rant about it for at least 15 minutes a day . Despite resenting this email at the time, it is always interesting to get people’s takes on your business and their experience. Two years on, I realise that if a customer sends me a plaintive email (luckily a rare occurrence), part of me feels I should thank them. Not only is it a perfect opportunity to address any issues you may not have previously been aware of, hopefully it means that they’ve not taken their criticism online. In my last column, I wrote about how brilliant social media is for growing your
and any niggling worries I previously had about the business and our service were suddenly magnified. It also made me feel angry and incredibly protective towards my staff disparaged by those harsh words. My innerself wanted to react with a cattiness equivalent to this vitriolic review, but thankfully the more rational side of my brain reasoned that it’s never wise to lock horns publicly. I responded swiftly and succinctly, answering key points (which I later learnt is TripAdvisor’s recommended course of action – keep it friendly and don’t have a go or sound too defensive. Most importantly, don’t say anything that will encourage them to retaliate.) Part of building your business’s profile is learning to cope with feeling personally
“Part of building your business’s profile is learning to cope with feeling personally exposed” business and interacting with existing and potential customers. The flipside is that it’s also very easy for people to criticise you, whether justified or not. It’s something we’re all too aware of at Homemade London where, on Trip Advisor, we’re currently ranked 35 out of 423 Shopping Experiences in London, sandwiched between Oxford Street and the Whitechapel Gallery. And while I should be ecstatic, I frankly have trouble visiting the site to check out a hotel at the moment because I know that nestled among the 5-star reviews lies a toxic ‘single star’ comment on my business. When I came across our first negative online review, irrationally, it felt as though we were the subject of a tabloid hatchet job rather than having a bad review on a travel website. It consumed my thoughts for weeks
exposed: public criticism of your business does feel personal. In his ‘Song for Phil Daoust’, Tim Minchin channels this rage towards a Guardian journalist who’d given him a negative review, urging him to “eat his own face meat”. And while I don’t feel quite that strongly, I know where he’s coming from. A couple of weeks ago, a prospective customer came to check us out. She happened to mention that she’d seen our reviews on TripAdvisor. My heart and my face immediately sank. “Oh, so you’ve seen the negative review then?” I ventured. “Yes, but there was only one of them and I thought the way you responded was really good”. Which brings me back to my original point: customers don’t expect you to be perfect; it’s how you handle your fallibility that’s the important thing.
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