Good governance in a company will appeal to investors, who want to know their investment will be secure, as Oliver Woolley discusses in this TV show.

Investors and good governance

One of the main criteria for finding a successful investment is normally down to the quality of their management team, and you’ll get a lot of investors that will say the three most important things are management, management and management.  And certainly we’ve had some very successful businesses, which are still yet to exit, but it’s usually because they’ve got a very, very good strong dynamic experienced CEO, as well as a complete Board and a Board that’s adding value and can help steer the business through to exit.

Keep browsing shows on Inside Finance TV for more expert discussion on business investment and good governance.

Artificial intelligence and cognitive computing is the latest in a series of technological developments that have affected the value of human ability. Graeme Codrington discusses the development in this video.

Computers have the advantage

About 100 years ago if you wanted to be quite successful in the world it would have been very clever for you to be quite physically fit. Because in the industrial age, as before that in the agrarian age, in the age of farming the people who either owned the land or owned the factories or worked on the land or worked in the factories, they were the people who were in charge. Those were your assets, physical ability. What we’ve done over the last 100 years is replaced peoples’ physical, the physical needs in terms of what we need from them physically with machines, you know, the combined harvester and the container and the robots in factories. And then for the last 50 years we have ploughed our resources, as human beings we’ve become clever by being clever. We have moved into the information age where your mental ability is what sets you apart from other people. Now, somebody who was gifted at birth, not by my choice, but was gifted with a reasonable intelligence and a nice IQ and a middle class family that could get me through university, that’s been brilliant. Because I’ve been able to use my brain to make money, but unfortunately right now computers are about to do to me what robots and machines did to my farm working, factory working uncles and grandparents. They’re about to make me redundant because they can think faster than I can. They can think more than I can. They don’t need to take a break to eat or sleep or all the other things I like to do. Inside Finance TV has more fantastic video by Graeme Codrington and other experts on the future of business.

Business strategy models have to adaptable to future disruptions and developments. In this TV show Keith Coats of TomorrowToday discusses strategic thinking for leaders.

Business strategy models in an unpredictable world

Leaders have to be future-focused. Levi right now have a great slogan, which says ‘the future has left, so go forth’. Jim Data is a retired futurist and he articulated that past thinking amongst futurists was something like this … I might have some of the percentages slightly wrong but the rough ratios is 80% of our tomorrows would be built on what futurists call continuations, so if you want to understand tomorrow, look at the DNA of today, 80%. 15% would be cycles – economic, political social cycles – and 5% would be novelties. Now, in the futurist language a novelty is the curve ball, the unexpected, the 9/11, the thing that very few people could foresee. I’ll preface that with past thinking. Current thinking amongst futurists has inverted that table, turned it on its head. They are telling us that up to 80% of our tomorrow is what they call novelty, we simply do not know. Now, even if they’re half correct I wouldn’t go to war over those percentages, it’s the trend here we’re looking at, that the bulk of our tomorrows is going to be a surprise, going to be the unexpected, the unpredictable. The question then becomes how do you build continuity in that? What does the organisation that learns how to build planes in the air, as it were, look like in that context? For one thing it renders redundant strategic planning, you cannot plan your way into that kind of uncertainty. We need companies today who understand the emphasis needs to be on strategic thinking and at all levels of the organisation, this is a leadership agenda.

Inside Finance is very interested in business strategy models and the future business world. Browse our video player for related content.

Corporate governance issues arising from boardroom structure includes how much each member should be paid for what they are expected to do, as Rob Wirszycz discusses in this TV show.

Corporate governance issues - Defining roles

Remuneration is a really sticky area in a sense.  Actually, if I’m a Non-Executive Director I don’t expect to own any shares.  My belief is that a Non-Executive Director is there to be completely objective.  And I’ve been in many Board meetings where effectively the Board meeting is a meeting of the shareholders.  Self-interest always wins in those meetings.  So if I’m a Non-Executive Director in a meeting and I’m there, my job, I’ll accept a retain, a relatively small retainer, depending on what they want me to do.  If they do anything away, outside of the brief, my belief is that that should be paid for separately.  But so just to be a Non-Executive Director, I would like to be paid for the very clear, clearly-defined, but I don’t want, expect any shares. As a Chairman it’s different.  Now the Chairman, I’m acting on behalf of the shareholders, so I actually have to have alignment with them, so what I always ask for when I’m Chairman is again a retainer, which is a small amount of money, relatively small amount of money, but I want to be able to earn shares based on the achievement of the plan.  So if we achieve the plan, which I’m owning, then I believe that I should be aligned with the shareholders’ interests and I should be able to earn in shares into the business.

If you are interested corporate governance issues take a look at our briefings on director's remuneration and board effectiveness.

 

Entrepreneurial spirit cannot be taught. There comes a point when you need to stop moaning and start doing things your way. In this video Simon La Fosse explains why he became an entrepreneur.

Entrepreneurial spirit finds a better way to do business

I was getting a bit bored actually.  I think partly boredom, partly you I kind of felt I’d reached a certain part, a time in my life when I was, I had enough evidence about working in a certain way being a really effective way to work and a pleasurable way to work and I’d seen too many organisations that I’d worked for just, I’m not saying it, it sounds a little bit arrogant but not quite seeming to get that.  And so there comes a point where you’ve got to stop whinging and you’ve got to put your money where your mouth is and say “Actually, I think there’s a better way to do business and that’s what we’re going to stand for as a firm” and that was, I took a gulp,  remortgaged the house, as far as the bank was concerned to build an extension, which is yet to be built, and took the dive.

Inside Finance will continue to bring you inspirational success stories from those with entrepreneurial spirit.

Business communication between company leaders, shareholders and the workforce explaining the reasoning of a director's pay could help satisfy everyone. Caroline Newsholme explains further in this TV show.

Business communication is vital

A lot of shareholders probably feel dissatisfied and feel that director’s remuneration is more and more out of kilter, in some instances, with reality. When you look at what some directors are being paid it does feel a very long way from the average wage of a shareholder or a member of the workforce of that particular organisation, so there is bound to be increasing focus on what directors are being paid and how they are being rewarded. I think people just want to understand that they’re worth it and that it is justified.  

For more about business communication and related issues, browse all Inside Finance videos.

Informed financial planning is essential when it comes to investments. Investment managers should be well informed of tax rules so that no errors are made. Michael Pagliari explains further in this business TV show.

Informed financial planning and investments

There are different categories of planning, so for resident domicile UK clients the principles are pretty well-established, there are certain types of securities that should and can sit perfectly well in portfolios and there are other types of securities that shouldn’t. So, to give an example, there are some tax efficiencies through using fixed income securities which trade at which trade at discounts, there’s advantages in using OECs but there are some other instruments which effectively take a capital gains tax charge and transform it into an income tax charge at, you know, a much higher rate. And then if you move on to the sort of res non-dom world, that’s a very sort of … a much more complicated area with much more potential for error. So for example it’s very important that income and capital are separated, managed in separate buckets; if those are mixed there can be very severe tax consequences. So it’s really basic housekeeping-type issues but extremely important that the investment manager has a good handle on them. Investment does involve risk. The value of investments can go down as well as up. This video contains information believed to be reliable but no guarantee is given. See Video for full disclaimer.

Interested in informed financial planning? Why not explore more TV shows on Inside Finance?

Dynamic boards are now using expertise form generation y to inform their business development. In this TV show Peter Klauber discusses this change.

Modern thinking in dynamic boards

I think Y generation has a lot to answer for. I think it is fantastic. Ideas come from everywhere in an organisation not just the board. I think most switched on companies will enable everyone to add some opinion to the process of business development. We now have very dynamic boards with all ages, looking for expertise to help and there's no fear in using it.

If you want to hear more about dynamic boards, the role of directors and generation Y, keep browsing Inside Finance TV.

Business strategy development is the job of the board. In this TV show Rob Wirszycz discusses how they can get these decisions right.

Deciding on strategy development

Boards, I believe, are where decisions are made.  And, you know, while you want the Chief Executive and their team to make other decisions, you know, ask forgiveness rather than permission sometimes, but the decisions are in my view, what I call an irrevocable allocation of resources. So, if we make a decision at a Board, we don’t go back and relitigate, unless the facts materially change.  I mean I think there’s a quote from John Maynard-Kings, who sort of said, you know, “when the facts change I change my opinion” and that’s the truth, you know, you shouldn’t hold on to something when the facts are materially different.  But the Board makes those irrevocable decisions, they write them down, everybody has to agree, so you can’t come out of a Board meeting saying “Well, I know they said that then but I’m doing this”.  Decisions are really important in Boards, and that’s the role of the Non-Executives, be they Directors or Chairmen, is to ensure that the decision is taken in a proper context and it’s not because “We would think that way because we’re all in our 40s and 50s and male”.

Keep browsing Inside Finance TV for more expert insight into strategy development processes. Why not watch the full briefing From the top - Being an effective board director

In this video Bruce Dickinson, lead singer of Iron Maiden and Airline Entrepreneur, shares one of his business strategy models

Business strategy models for all industries

I have taken an interest in several types of business including aviation, retail, filmmaking and writing. A creative approach works in all industries even the technical ones. If you found this video about business strategy models interesting why not watch more TV shows on Inside Finance?

When embarking on merger and acquisition deals, it is worth seeking the best advice you can. In this TV show John Paleomylites discusses lessons won from selling to the market leader, twice.

Negotiating merger and acquisition deals

The most important lesson I think that the entrepreneur really needs to learn and understand is to negotiate the best deal that you can possibly get. There is always the temptation to accept what you are offered and to accept terms that you are offered. BeatThatQuote management together with our lawyers, really negotiated the best deal that we could possibly get. But you need to look at what you have, the value of what you have to the acquirer. Not necessarily the value of what you have to you. Look to see what else is in the market and what else that they could acquire if they wanted to, or what it would cost them to develop what we have developed, both in terms of direct costs as well as opportunity cost, and the time that it would take to get them there. When you factor all of those things in, you kind of get somewhere to a price that makes sense, and to terms that would make sense. As I say, getting an experienced M&A firm with a great lawyer to represent you is extraordinarily useful. I think one key lesson is not to loo to skimp on the advisors. If you get bad advisors, you will get bad advice. You get good advisors you get good advice. I think getting the right legal advice is essential to maximising the value of you business.

Continue browsing Inside Finance for more great TV shows on merger and acquisition deals.

 

The attitude to risk form those in high risk environments is to exercise caution as Michael Pagliari explains in this TV show.

A cautious attitude to risk

I actually have a few clients that have done exactly that and I’ve actually found that there I’m on the more cautious of our clients.  So their business risk, if you like, is very high and they’re well aware of it and the last thing they want to do is suffer losses under their financial asset portfolio, so I’ve tended to find those people the most cautious of all the clients that I manage money for. Investment does involve risk. The value of investments can go down as well as up. This video contains information believed to be reliable but no guarantee is given. See Video for full disclaimer.

Keep visiting Inside Finance for more great videos on attitudes to risk and similar subjects.

Business strategy models will involve pre-empting business disruptions and being ready to deal with them. Some issues will be more sensitive than others. In this TV show Matthew Haswell discusses sick pay policy.

Good business strategy models pre-empt difficult situations

The pure cost in terms of sick pay to be paid to someone who is off long term sick is very much reliant on the sick pay policy that the employer has, if they only pay statutory sick pay that’s obviously going to be a fairly low cost, if they have a promise to maintain that individuals salary for say three months, six months, obviously the cost will be higher. What we are finding, particularly in smaller companies is that some employers only tend to think about these kind of strategies when the event occurs. Now it’s very difficult if you don’t actually have a sick pay policy to suddenly try and make one up when someone goes off sick and it’s also very difficult to just say ‘Right we’re going to stop paying you full pay after a month’ if that’s not in contracts of employment or that’s not something that’s been communicated to staff prior to the event of sickness.

Keep watching Inside Finance for more expert insight into good business strategy models and similar subjects.

Business assets valuations are needed for commercial and tax purposes. It is a complex process. In this TV show John Rugman explains the art & science of valuations.

Business assets valuations are an art

Valuations need to be done well because the value of any business or asset is really dependent on the future performance of that business. So it’s less about the past and more about the future and that’s quite judgemental, it’s not a matter of fact, it’s a matter of opinion and analysis. So valuations are as much an art as they are a science and it’s important to get that judgement right. To do a proper valuation we really need to understand about the prospects for a business, so we really need to understand what the prognosis is, what the future performance of that business might be and the sorts of risks that might affect that performance. All valuations are very different, doing a valuation for tax purposes is a very different exercise to doing a valuation for commercial purposes. We use a variety of different approaches and techniques to make sure that any conclusion we reach is one which we’re comfortable with. Keep browsing videos on Inside Finance TV for more expert insight into business assets valuations, risks to the assets, and legislations that must be followed.

Most good Board meetings, the preparation is done for a couple of days beforehand.  You make calls and you find out, you know, what’s on the agenda, so you should receive the agenda at least two days beforehand, you should be able to have read the pack as soon as you get it and you should get on the phone to ask questions if you don’t understand stuff.  I’ve seen too many people actually read Board packs actually in the meeting and then the meeting becomes a boring sort of thing of people literally reading and catching up.  So that to me is inexcusable. But in terms of new sort o, so the thing is about preparation, you’ve got to be prepped, so you’ve got to know your stuff, you should know your numbers, you should have your questions ready.

Business assets that are allocated correctly can potentially contribute 90% return to a portfolio, as Michael Pagliari discusses in this TV show.

Spending time allocating business assets

One of my pet hates is seeing, you know, proposals sent out to clients that are very deterministic in nature, in other words coming up with a particular solution to a client’s investment problems. I think, you know, it’s much more complex than that and really the whole question about risk and asset allocation is absolutely key, and I think there have been plenty of studies which have been done which show that asset allocation, good asset allocation, contributes about 90% of the total return to a portfolio.  So it’s really, really important that a lot of time is spent at the beginning and during the course of a relationship focusing on getting that asset allocation as good as you possibly can.

Keep browsing Inside Finance for more expert insight into investment processes, business risk, and dealing with business assets.

Informed financial planning will help businesses avoid mistakes but can be rushed in initial set up. In this TV show Stephen Drew discusses common mistakes that foreign businesses make.

Informed financial planning takes time

The sort of mistakes you see from inbound businesses is often around either misconceptions in terms of what the market opportunity really is, or just trying to do things in the wrong order. So like all investment programmes, whether it’s in your host country or whether it’s in a new market, it’s all about planning, you need to make sure you’ve thought about what the opportunities are, you’ve carried out your market appraisals, you’ve worked out what resources you need, you’ve carried out your readiness assessment. So all the initial phases of any sort of investment decision need to be made, regardless of where you’re going to make that investment. And for me, when people are struggling to get the sort of traction they’re looking for as quickly as they would like, it’s often because they just haven’t properly thought-through and properly planned their approach to the market on arrival.

If you are running a business or just want to know more about informed financial planning, keep and eye out for similar shows on Inside Finance.

 

Business risk assessment can be approached in a number of different ways, and there are popular theories and methods to follow. In this TV show Michael Pagliari explains why he thinks it's better to look at risk in context.

Business risk assessment methods

I actually think that risk is something that has to be thought about carefully and over a sort of reasonable period of time. I don’t think there’s any deterministic method of establishing risk. So for example a lot of institutions use a Markowitz-type model to diversify assets and it really hangs on measurement of risk by a single defining number and I think this can be quite misleading and it’s really better to look at risk in a holistic sense and in the context of what the client’s trying to achieve. Well if for example, let’s assume that you own a business, you may well have a lot of risk as such within your own business and you put aside some cash savings for the future, well you would certainly want to take into account the risk that you own as an individual outside of the assets that you, the financial assets that you own, and that may be business risk, it might be real estate risk, and you would like to make sure that there aren’t too many overlaps or things or assets in the financial portfolio that could actually add to your overall risk. Investment does involve risk. The value of investments can go down as well as up. This video contains information believed to be reliable but no guarantee is given. See Video for full disclaimer.

Inside Finance is following the issues that make a difference to business. We will bring you more TV shows discussing business risk and related subjects.

 

In this business growth show Colin Stevens explains how BetterBathrooms responded to customer needs in a way the industry had never done before.

Business growth show: Improving the industry standard

Predominantly the bathroom industry was Monday to Friday 9-5, you know, when everyone was at work, it seems madness looking back. So we included weekend opening hours, Saturday and Sunday, we did that from day one, seven days from when we opened the door. But what we did about three years ago, we changed the operating hours to ten o’clock at night in the week. So that’s sales, over the phone, showrooms, customer service, and again that has grown our sales quite tremendously. But were the first people to do that in the industry. Obviously the National Business Awards recognise that as being quite disruptive in the marketplace and that’s one of the other things. Another thing is transport system. We deliver nationwide so were are dealing with lots of logistics people all over the country, we found that we couldn’t keep full control of that so we’ve actually, in the north-west started our own transport network internally, so we’ve created a load more jobs, got a load of better bathrooms vans on the road. Service has increased dramatically because of it, for instance satisfaction rating went from, on our own transport vehicles, it went from 8.2 out of 1o to 9.9 out of 10 in the north-west. So its amazing when you listen to the customer and you think, actually this makes sense. It ramps your business. If you found this business growth TV show interesting why not watch more shows on Inside Finance?

In this business growth show Paul Garwood explains how Smith & Williamson's recruitment strategy ensures a high quality service for its clients.

Business growth show: Smith and Williamson

We’ve a very, very fussy recruitment policy. So we’d like to think that the people that we recruit are the best advisors available on the market. We also have a training programme which ensures that individuals are trained to chartered financial planner level. I think it’s fair to say that the majority of our advisors are now trained to chartered financial planner level and that certainly gives me comfort that they have the technical knowledge and understanding to be able to lead clients along the correct path when they’re advising them.

There are more business growth TV shows on Inside Finance.

In this business growth show Charlie Mullins of Pimlico Plumbers discusses employing the best apprentices and tradespeople.

Business growth show: Staffing

It’s important to us to make sure that we employ the right people and as far as apprentices go we actually go to the local colleges and we pick the best of the class that’s there. We’ve got that arrangement with the college, they let us know whose really doing well and who would suite us. So in the company we have the pick of the best apprentices. When move on to tradesmen I think our reputation has been out there quite a while now and people know that we’re at the top of the game. Therefore we tend to attract the better tradespersons. We pay the highest rate there is in London, you know if you work as a plumber for Pimlico plumbers you can earn between £75,000 and £125,000. So by employing the best we are the best, and by paying the best we get the best. If you enjoyed this business growth show then please browse more videos on Inside Finance TV.  

A business development role has implications for larger society. In this TV show Julie Meyer discusses the creation of social contracts.

Business development role - The social contract

We see cracks all over the place, right. We see it all over the place but you have to see the cracks. What we’re trying to do is design the system, but not ourselves, we’re saying here’s what we think. We think, you know, entrepreneurs who go to entrepreneur country every day have a sense of how society should work, right? They’re dealing with the headwinds way at the cockpit of the train, so let’s design society, right? And we just think that the process of building a new social contract is being done. But it’s a very long process, you know. It was 13 years for the United States from whatever to whatever before we had a constitution. And Iraq, you can see a new country, gosh it’s whatever, 13 years. You know, probably at the beginning of the United Kingdom lots of years to get that. It takes a lot of time for people to convene and to say, we are going to live a certain way. After the end of World War 2, Europe, you know, probably, you know, the fifties were all about how are we going to live now that we’ve got all the bad stuff behind us. And so that social contract which was created after the war I think is shattered. What’s not clear is what’s the next social contract. But some of us really care about that. Some of us really care about what that social contract is.

The business development role and other key factors of our changing economy will be discussed in further Inside Finance TV shows.

Technology infrastructure is something all businesses should consider updating. In this TV show Nigel Huddleston explains that investment into digital technology isn't that expensive.

Technology infrastructure to fit a digital world

One of the key things is, is experiment. That’s one of the messages that I have to many players in the sector at the moment. It doesn’t cost a fortune to experiment with a YouTube channel or a Google Plus or indeed any social platform. It doesn’t cost a fortune to try out maybe new mobile devices, what the look and feel of your mobile site is, and invest in mobile optimised sites. These things are not massive in terms of the expenditure compared to say refurbishing a hotel. Yet there has historically been a reluctance on the side of many to invest in it. I would say given today’s consumer is incredibly connected, it’s really important to be very technologically aware and make sure that what the users are doing in terms of their behaviour is at the absolute heart of your strategy and your IT investment decisions. And if it’s not you’re probably going to fall behind.

If you enjoyed this video and want to hear more about investing in technology infrastructure, please browse more TV shows on Inside Finance.

Merger business advantage should be the first consideration when joining with another company. Giles Murphy of Smith & Williamson looks at quantifying the business benefits of a potential merger.

Merger business advantage of joining with a friend

I think the question of what are the advantages of a merger is actually the first question we will often raise with clients when we’re talking to them because quite often people will end up in conversations with other firms simply because there is a relationship there and somebody believed it was a good idea.

Bearing in mind the pitfalls and the downsides, and the costs involved in a merger, I think it’s very important that right up front people fully understand what the benefits are and can articulate them, and actually also put a monetary sum against them so they can actually quantify what the opportunity is.

There are more TV shows with Giles Murphy on Inside Finance TV and plenty more discussion about merger business advantage for you to explore.

Restructuring by merging is now an accepted survival strategy in the financial industry marketplace, as Giles Murphy discusses in this TV show.

Restructuring firms across industry

I think there's an acceptance in the marketplace that there is an oversupply of particularly lawyers, but also all professional advisors to a market that at best is flat, in some areas may well be contracting, and therefore there’s simply a question of surviving the next few years. While we might be entering a more benign economic environment, clearly there are still some firms that are struggling, and one of the only options they will have is to find a larger party with which to merge to give them some sort of strength to actually really stand a chance of surviving over the next few years.

If you found this video about restructuring in the finance industry interesting, why not follow @InsideFinanceTV on Twitter?

Merger and acquisition can involve any sized firm but, as Giles Murphy discusses in this TV show, is more likely to involve a big and a small party.

Merger and acquisition - The big with the small

I think it’s much harder these days to actually execute a merger where you’ve got two similar sized firms. The reason for that is inevitably there’s a level of compromise that has to be achieved and therefore both firms often feel like they’re giving something away. So what we’re increasingly seeing is mergers taking place where there is a much more dominant party, which essentially acquires the much smaller firm. As a result of that, a lot of the difficult decisions that have to be taken post-merger can be executed in a much simpler way. ________________________________________________ If you found this video about mergers and acquisitions, why not browse more TV shows on Inside Finance TV.  

Analysing data from sales can be the first step in further research and, as John Halpin discusses in this TV show, this can be done using digital technology.

Analysing data and customer feedback

Well in terms of, you know, myself at the bank, we’ve got a lot of products and we launch products, products what people know, like mortgages for example, and we’re going to be launching that. And we’ve got general insurance products and savings products and credit cards. People know about that. But in terms of maybe the next product or enhancement of the product, it’s quite interesting. You can use some of the data in terms of, you know, what do people think? So that moves what I do into more of a research, so with the colleagues that I deal with in terms of, well let’s speak to these people. Let’s create a piece of research based on their cross product holding or what they have now. If someone’s recently bought travel insurance, for example, from the organisation and I might want to tweak that product. I might want to offer it slightly different. I will speak to the person, find out what was his customer journey like, what would he think if he bought that again, maybe at a higher price but different features? So you can use this kind of information that’s held within a marketing database to drive that. And that will help in sort of the product insight. So it’s linking some of that with some of the other research that you can get widely available from the research agencies in the UK. But talking to your customers and again, back to channels and the power of what we do I mean traditionally you could commission a piece of research. You can go outside into a shopping centre and ask people. You can phone people up. But you know, nowadays email, internet, social media again, these channels can potentially be used. And that helps back more to another point you recently made about how quick you can do that. So if you know someone bought a product as of yesterday, how impressive would it be if that company got back to you and actually said to you, “Well how was your customer journey? How do you think?" You bought this product. They actually tell you what product that they bought. And then do that within a week back to your buyer, that’s quite impressive. You know, and it sounds relatively straightforward, and companies should be doing that. But again, because of technology and systems and integration and that kind of thing, not a lot of companies can do that. ______________________________________________________________________ Analysing data is just one of the subjects covered on Inside Finance TV.

The governance model in an organisation affects how it operates. In this TV show, Smith & Williamson's Philip Quigley explains how going public necessitates greater accountability.

Governance model of a public company

The main thing I suppose is that they have to appoint non exec directors which means that you give up some measure of control on a day-to-day basis of your business. So you’re sort of answerable to non-execs and to the nomad.  And you have to put out announcements to the market on a regular basis.  You have to publish your accounts more widely than you do as a private company. You’re just generally under more scrutiny.  And that the more institutional your client or your shareholder base, the more scrutiny you are likely to come under. You might end up having to do roadshows, and results announcements and you know, generally being accountable to your shareholders. _______________________________________________________________________________________ Check back for more TV shows looking at governance model issues.

The age of big data is a new and exciting time for business. In this TV show John Halpin shares his thoughts and experiences of data.

The age of big data creates unknown territory

Big data is basically saying, it’s not just all about big brands and big systems and the back office of big head offices, it’s about social media and Facebook and online and Twitter and that’s all data. It’s about blogs.  It’s about, videos.  It’s about news. It’s all this information being captured somewhere.  How can you use that from a company perspective? And the answer is, we don’t really quite know.  It’s very new. Rather than get quite excited about big data and all this additional information and terabytes of new data going into organisations, and basically being quite pleased with yourself that you’ve actually got it.  To me, it’s just like well, there’s always been lots of data. I’ve been involved in lots of data for many years.  It’s how you have it and use it.  If I was going down the route of beginning, doing something in data, rather than get quite excited about big data and how it’s used and how it’s interact. First of all, understand your customers, know what they are, have the information on them.  Can you speak to them? There’s laws in this country about, speaking to customers.  You might have all the information, you’ve got to legally be able to speak to them and say, if your customers are a prospect, all that kind of thing. There’s regulation around the financial services, which is even tighter as well.  But big data is quite exciting in terms of a phrase I used before, is dealing with the fact. If I can prove something on the data that I have now, it helps me very much to go back to my directors or people who are on the budgets and say, “Right, to move us into the realms of big data and transactional behavioural information via social media, I’ll need some software to do that. I’ll need some money.  And the reason why I need money, because I’ve just proved something with you with the data I have already. The age of big data is another exciting aspect of the connected economy. We will continue to bring you expert insight into the impact of social media and digital innovations.

Digital innovation is what Robert Scoble spends his time studying. So much time that he has been called the Roger Federer of the Internet. He discusses his work in this Inside Finance TV show.

The digital innovation game

So if you want to understand what’s going to happen to your business you’d better understand the innovators who are changing your business. Rackspace pays me to go study the future so I visit lots of different companies, mostly start-ups because that’s mostly where the innovation is. For instance the reason I was wearing these ugly airwave goggles is inside here is a little wearable computer and it tells you when you’re skiing it tells you how fast you’re going, it shows you where your kids are on the mountain and where you are on the mountain and all sorts of fun stuff. So I’ve interviewed the start-up that makes the compute package in here, Recon Instruments, and I also interviewed Oakley about these and then I go over and talk to Google about Google Glass and talk to lots of start-ups that you’ve never heard of about what’s coming. That’s different, it’s no longer the kind of software Bill Gates wrote for Windows and this is a new era where we know who you’re with, where you are, what your intent is and what’s on your calendar and what have you bought? They have to be scared they’re going to be put out of business. Paranoid. Andy Grove at Intel said ‘only the paranoid survive’, you’d better be paranoid. ______________________________________________________________________________________ Digital innovation has huge implications for all businesses, keep watching Inside Finance to hear more.

Social trends are a new issue for corporate businesses. John Halpin discusses how corporate organizations might become social and take advantage of our increasingly connected economy.

Social trends in business - The paradox

The real paradox for me are the interesting elements of that, how you link that into a business. And I don’t think anyone’s quite worked that one out in terms of social media conversations, it’s basically people speaking to each other about anything. So where does the big blue business come into that? Where does the brand advocacy come into that? You might see people twittering like, oh, I like Tesco Bank because this product’s great, it’s quite interesting. But does that mean they’re advocate, they’re loyal, can we sell them something else? How can we use that piece of information? I don’t quite know. And you don’t see a lot of advertising at all within the social media space because it’s peoples’ downtime. They’re not really in work, it’s that kind of thing. So I think a lot of organisations, they understand that it’s interesting, big data again, having this information, the linking it, using it. You can see some trends in there, you know. You have to be on the ball as well because they can spiral in terms of a viral, completely snowball in terms of if someone doesn’t like you and they tell a lot of other people they don’t like you. There’s going to be a lot of text coming in to say there’s thousands of people that have read that message. But how you use that in terms of sort of selling stuff or in terms of trade, I think it’s quite difficult. It just might be sort of a monitoring exercise and trying your best to interact with those customers. ______________________________________________________________________ Inside Finance TV will continue to follow ideas about social trends in business and we have more videos from John Halpin.

Digital retail is the future, and retailers have to embrace it says Henderson's Alice Breheny in this Inside Finance TV interview.

Digital retail or decline

Oh, I mean the ramifications, it’s terrible really, I mean I think, you know, if you don’t embrace it then you know, you’re on a slippery slope really into decline, whether you’re a retailer or a property owner.

I think you can defend yourself against it and keep your head above water.

But those that are going to thrive are those that really embrace it and seek every opportunity to exploit it.

But you know, we certainly see locations becoming unviable eventually, you know, there’ll be very little reason for people to visit them.

Retailers that, if they don’t up their game, you know, the competition out there is really fierce at the moment and certain asset types that just won’t be relevant in the future.

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Inside Finance will continue to look at digital retail and the affects of digital technology on other industries.

UK economic growth is not returning as quickly as growth in emerging markets like Asia, as Roger Bootle discusses in this TV show

UK Economic growth- The serious legacy of the financial crash

Well, the essential problem since the financial crash of 2008, is that the countries of the developed West haven’t really recovered from it.

It’s a different story in the emerging market world, particularly Asia, those countries have just soared ahead, dramatic rises in output since the financial crash of 2008.

In many countries in the west we still haven’t got back to the level we were at in 2008.  Now, that’s true of Britain for instance, output here is around about four percent lower than it was at the beginning of 2008.

I think the worrying thing at the moment is the weakness of the financial system and its dependence on growth, without there being much sign of decent growth on the horizon.

As and when growth appears then the very serious financial problems that do exist in the world, we can overcome them.  But if we don’t get a return to decent rates of economic growth then we’ll be in serious trouble.

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Inside Finance TV will continue to look at how changes in UK economic growth will affect business.

Inez Anderson: "We’re seeing legislation coming in to really encourage share ownership and participation in smaller businesses.  So that’s the one everybody would like but not everybody can qualify for because of the huge tax advantages.  We can then go to larger schemes like...schemes you may see in larger companies, that are called Save as You Earn or share incentive plans.  And they’re all employee schemes; you’ve got to invite all your employees to join.  And it’s schemes like that, that over the years have hit the headlines when we have seen things like, you know, Asda or Tesco employees taking home so many thousands of pounds through the share scheme, it’s been an all employee share plan.  The bad news about these headlines is lots of companies think these are only good if I’ve got tens of thousands of employees.  And that’s not always the case.  You can very much look at that as an incentive arrangement for all sizes of organisations.  And I think it would be good for more employers to be thinking about them and how they might fit in to their overall reward package.  There’s one other revenue approved scheme I’ve not mentioned which is called a CSOP – Company share Ownership Plan.  You award somebody an option over shares, but it’s not nearly as tax efficient or can you give shares over ... options over as many shares as you can under an EMI scheme.  So CSOPs are normally looked at if you don’t qualify for an EMI.  But again, very tax efficient, and companies should be making, I think, more use of them."

Business communication methods can be approached with a process.  Bob Barker takes us through the journey:

Business communication methods need adapting on several levels

We look at a journey that all companies have got to go on. So at the first level they need to understand, they need to think about the internet, they need to think how the internet works, so there’s a cultural thing. They need to start understanding that the digital world is going to impact them and it’s going to affect their culture, it’s going to affect how they do business. They’ve then got to have a look at how they operate online. So Cloud is really affecting the cost of IT, it’s affecting the capability of IT, you know, sensors that are providing data. There’s a whole sort of revolution there. Then there’s a revolution in the way you collaborate, so how you operate internally. There are lots of these systems that now help us to operate much more collaboratively within the company. People need to look at that area too and how they might use technology to cut down the amount of email people use and to do more video conferencing and all that kind of stuff, and use collaborative applications. Then we get into marketing, which is where we’re trying to use content and trying to get inbound marketing because people are interested in the people that are in your organisation and the content that you’ve got. So you’re trying to attract people inbound. And then finally there’s the area of community, so the new way of leading is forming around community as you know. Based on your own contact as individual because people are following you because you’re well known about what you do, or because the organisation has built a community and you’re trying to get people to join that community and become part of that community, and you’re trying to nurture those people in there. And they will do the marketing for you, and there's examples of people doing the servicing for you, and you’re trying to create a community around what you do. That’s a whole journey that companies have got to go on and it takes time. Hear more about business communication methods onInside Finance TV, where we also have more from Bob Barker.  

Geo-targeting is a stronger marketing strategy than ever before. Nigel Huddleston discusses how the hospitality sector is personalising offers.

Geo-targeting advances with technology

We’re in a really exciting phase of the hospitality sector when it comes to technology and the use of the mobile devices. There’s a whole host of opportunities that weren’t there before in terms of getting your messages out to the consumer. You can know for example if somebody’s getting off a plane at say Heathrow Airport. We can now target them and know that they’re at Heathrow Airport. We can probably put an offer to them that’s very relevant, you know, discount, 30% off for the hotel that’s just three miles away. So really using that geo-targeting in a way that was never possible before. We will be sharing more ideas about geo-targeting and marketing strategies on Inside Finance.

We are now in a digital connection economy. Keith Coates discusses the changes that have lead us here:

Transitions to the digital connection economy

Ralph Jenson talks about various economies through which we’ve transitioned, it’s a very general, very broad framework but it’s really good to help us understand our current context, ‘cause leadership is always context-specific.  So, very quickly, he talks about the hunter-gatherer era, it was an economy in which there was competitive advantage that was forged through a sense of focus.

The interesting thing in the story is that technology is the disruption, so technology changes the rules of the game.  In this particular case the technology that did that, the plough, the ability to harness animals, so we moved into the agrarian society.  From there we moved into the industrial era.  So each of these are economies in which we look at what created a competitive advantage.

The industrial era is interesting because competitive advantage in this particular set of circumstances was created through business efficiencies, that’s where the science of management was birthed.  Frederick Taylor and others – if you can’t measure it, you can’t manage it.  If it isn’t broken, don’t fix it.  So the legacy of that era remains today.

I still meet companies and leaders who think that their competitive advantage will be forged through greater business efficiency.  Business efficiency is a hygiene factor now.  So, we moved from then to what was called the information-based economy, where it was how we utilised data and from there we moved into the connection economy.

There are more videos discussing the digital connection economy on Inside Finance.

Business strategy models need to be looked at in a different way. Dean Van Leeuwen has six key questions your business needs to ask:

Business strategy models during turbulent times

I think it’s not about throwing the baby out of the bathwater. There are a number of things that are important that will still work. Most of the things that have worked in the past… Well, there’s two aspects to this. And just because you’ve succeeded in the… in the past doing something in a particular way it doesn’t mean that you’re going to succeed going into the future. I think Peter Drucker said the danger during times of turbulences is not the… the turbulence itself, it’s acting with yesterday’s logic. So I think the surest way to fail in the world that is changing is just to continue doing the same things over and over again because they seem to work in the past. What we need to recognise is that the rules for success are changing. And when the rules of success have changed we need to change as well. So Jack Welch said that if the pace of change outside is faster than the pace of change inside you’re going to become a dinosaur. So what do need to be doing to be successful? And I think there are six or seven things that business leaders really need to be looking at differently. Kind of let’s call them six new competencies for your… your business. Leaders need to be asking questions and analysing storytelling. What’s the story the business is telling? What’s the higher calling? What’s the quest? How do you collaborate? How do you build collaborative communities within your business and… and the communities that are important to you? What does risk and reward mean for your organisation because those are changing dramatically? Innovation, intelligence are… are two important aspects. People, both people inside your business and… and outside your business, especially with shifting and changing generations. So those are… are key things. And how do you build passionate tribes of… of people? And then trust and transparency are… are really important. And I think those kind of six core areas or focus areas that businesses need to be analysing, questioning and understanding the impact for their business and how they can build competitive advantage around that. And once they start getting those six competencies… together, we find that then strategic intuition improves and you can actually start delivering strategy at speed. We will continue to discuss business strategy models on Inside Finance, where you can also hear more from Dean Van Leeuwen

The first step is to work with an organisation like Smith & Williamson to really understand your needs and requirements around FRS 102.

So this is when we would bring our people to talk to you and your key finance function people just to get a sense of what needs to be done.

From that we would put together a bespoke proposal that addresses the key things that are going to be important to your organisation as you move forward with designing the solution and assessing the options and implementing the changes.

 

We’ve developed a really client friendly simple way of looking at FRS 102 and how to implement it.  It’s a simple four phased approach.

We start off phase one, which is assessing the options.  So we look at what the potential impact of FRS 102 is for your organisation, we do a readiness assessment, an impact assessment, look at some of the accounting options and the tax treatment.

And we look at whether your organisation from a resource point of view is ready to implement and execute the changes.  So phase one is all about understanding.

Phase two is designing the solution.  So this is when we work with our clients to put the programme of activity together, the project management, the governance, the resource requirements, the training, the communication with the variety of stakeholders within your organisation.

So this is all about having the plan and the model and the framework to implement FRS 102, which leads us on to phase three, which is all about implementing the changes.  So this is working with you, bringing the resource to make sure that everything that has been designed and that we said we need to do actually happens, working with your organisation, with the people in your organisation to implement every aspect of the FRS 102 requirements.

And then finally phase four is around assuring the outcomes.  So this is to give you independent and objective assurance that what is being done is accurate and correct, reporting to the board and reporting to other stakeholders about what has been done, providing that assurance around the outcomes of FRS 102.

 

Simply, I don’t think they are.  I think most organisations are aware of it.

The standard itself is a pretty weighty tome, it’s very complex and is difficult to understand.

And so inevitably I think, most organisations recognise they need to do something but haven’t really explored the full impact and effect it will have on both them as an individual, but the finance team that they’re part of and the organisation that they’re part of.

So people, I don’t think have really yet grasped the potential impact of what this could mean.

 

I think first of all they need to work through the standard and identify all those areas that are going to impact their accounts, the profit and loss account or the balance sheet.  They need to analyse each section of the FRS to pick out which are going to be relevant to them. Then I think they need to do a test run on their balance sheet or P&L asset stands at the moment and really present and say, “Well what would this look like?”  And then identify where they’re going to have to start communicating with shareholders. There's going to need to be training within the finance team to be able to actually apply this. And there needs to be communication with all stakeholders, whether that’s bankers where you’ve got loan covenants that are relevant or shareholders looking to maximise the value of their investment.

if you’re better governed you become more efficient. Secondly, that once you’re better governed and you’ve got all of those systems into place, that you are enjoying stronger stakeholder support for what you’re seeking to achieve, and that’s very important. But that said, we are acknowledged globally as one of the leaders, one of the proponents of good practice, governance. And that’s good feedback for us because we want to know that we are getting somewhere. However we still continue to encounter organisational collapse. We still continue to encounter cases of value destruction. And that tells us that we can’t be complacent about the systems we are putting into place. But certainly as far as the financial sector is concerned, despite the fact that we’ve had a double recession and people even talking about a third recession after that, most of our corporate world have survived intact and continues to perform well. And we will put that down to the fact that our companies are well run and well governed.

Cyber risk has become hugely topical now really because governments are starting to understand the importance of it. Someone said to me recently there are only two types of companies, those who know that they’ve had a cyber attack and those that don’t. But everybody’s had them in some form or other. It has become a very important to governments, including the UK government and it really needs to now come onto the agenda of boards. Boards need to be looking at it but it’s not just an IT issue. People have thought about it as an IT issue having a cyber attack. But it’s much more complex now and the old idea of corporate espionage, for want of a better term has moved into this space. Companies are very much at risk now of having their information stolen effectively, and that can be corporate secrets of any kind. So the risks are much higher than they ever were, and it’s not just corporates, we see it in other areas such as the forces, the concerns are growing there. But it’s certainly raising … the profiling of this is growing. It’s becoming more and more important and government is certainly concerned that this is where everybody’s at risk.

Anthony Hilton, Financial Editor, The London Evening Standard on how the cautious business environment is not helping progress

I think there are a variety of things, one is my earlier point that not many people in business now have actually been through this process before.  I think the second one is that the whole thrust of shareholder value and the, you know, the financial economic engineering that there is mitigates against that kind of risk taking for the long term.

I don’t want to get into a short termism kind of rant.

But there is a definite prejudice against taking those kind of long term risks.

And I think the third thing is as well that the media, the politicians are pretty bad at suggesting we’re ever going to get out of this, you know, they’re almost making a meal of the gloom.

And so even if you are a businessman who has an optimistic streak about your own business, it’s very difficult to be optimistic about the wider economy because every time you turn on the television or pick up a newspaper, you know, you get slapped in the face, I think it’s bad news.

I’m not an IT expert. But there are certainly small changes that companies can do and there are specialist organisations out there that can help them to do that. There are a number of small changes companies can make that will effectively stop 80% of them. And that is an incredibly cost effective way to go. You can never stop it completely. The world of IT is such as we all know with computer viruses, as soon as you close one loophole or close one avenue then another one opens. So this is an ongoing struggle. People who are working in this area are developing new ways all the time. And like I say, sort of 80% of it can be dealt with in a very cost effective way which leaves you 20% exposed, which is probably always going to be the case. What is being stolen from companies can be as serious as their future strategy, detail, you know, through details of their customer base, all that kind of intelligence that is so important to companies in this competitive environment. If a competitor can get hold of it then obviously that’s very damaging for a company. But we’re not talking about competitors within the UK, this is a worldwide problem and the most cyber attacks are coming from overseas.

Dr Stephanie Hussels, Lecturer in Entrepreneurship, Cranfield University on the current climate for entrepreneurial business

I would say yes it's a tough environment to be in but I think if you, as an entrepreneur, understand your business, focus on what is core.

I would say love your customers, really understand how they tick so you can retain them.  You get referrals from them, you have a passion, you hire the best people possible.

Understand your financials, I always say cash is king, we all know that but also communicate.  It's not only about sales, it's about profit.

Also this area at this current time also gives opportunities because hiring people, there are some great people maybe at the moment available who you can bring in your business.

But it's not only important to bring them in but also to grow them and to offer them a path within the company.  I could give you some more examples, I think what we do at Cranfield in terms of tips and why is it a tough climate, is you need to be decisive.

I always say we all have a lot of pet projects, especially entrepreneurs, so we call this drowning the puppy.  So in the current climate you can't afford to have a lot of pet projects so you need to identify those which are core to the business and drown the other puppies so to move forward.

Colin Stevens, Founder & Leader, BetterBathrooms.com on developing the right team

It's quite straightforward, you can't do it without them and I've been lucky from day one.  My original first ever member of staff, my assistant, sales assistant, he become assistant manager, the manager of the Wigan store.  Then he become the area manager, he's now in control of about 32 people and large turnover.

But if you can imagine from where he was to where he is now he's a completely different individual and one of the cultures that we've got in BetterBathrooms is you've got to innovate, you've got to come up with new ideas.

You've got to test the boundaries.  Obviously a lot of these things get signed off and we've got this idea it's... and they bring it to my table and we say okay well what do you think about this, what do you think about that?  But if it's bad they're not fearful, ie, I'm saying bad, if it doesn't work, some companies would go, well he's terrible or we have to get rid of him but we're not like that.

We allow people to make mistakes and the thing we don't allow is for when it starts and the project hits and it starts to actually have a negative, we just cut it fast.  So as long as you can reverse engineer that whole process what you've just done.  So I'd say all the team, the management team, even some of the guys down on the floor level, they come up with ideas and without their ideas and without their input you can't make it work.

And I mean we've done some amazing things recently, we flew the ex vice president of Disney World Florida over, a guy named Lee Cockerell.  And the whole success of Disney World from a people side and the culture side has really been down to Lee.  So it wasn’t that long ago we flew him over, he spent a couple of days with the staff, I still get regular emails off him every day, he's a little bit of a mentor to me.   So we've done that investment there and then we've got a training strategy for the managers where okay we've got a concept, this is how we want to operate.

But they then have individual mentors and one to one trainers and managers and they then guide them individually throughout the process.  Because obviously everybody's got their own problems and some people are good at statistics, other people can't create story out of statistics so it's helping them on those things.

Other people really... we've got some managers who have... are not outgoing as a people so they have to work on the people side to make sure that they're motivating.  Some people find it hard to say hello when they walk into work, I'm one of those people.

Usually I want to get from my front door to my desk as quick as I can do to work as fast as I can do.

So I've had to learn the skill of saying hello and smiling, so we all work on it together, we're all learning every day.  But I can't do it without them and to be honest it's a lot more about them than it is about me now because I've moved up to sort of CEO level and I'm mentoring people who are 15 years older than me in management levels as well in some cases. So it's a bit strange at times but it's good.

Dr Stephanie Hussels, Lecturer in Entrepreneurship, Cranfield University the importance of financials, growth and vision

For me the other one I think is be really aware of your financials.  It's not only from... it's a dash point that you know at each point in time what your financials look like but then also making clear that your key staff understand key financials.

And don't be scared of communicating that with your key staff.  Another one I think is growth, we see a lot of businesses that immediately are incentivised of diversifying in terms of products and new markets very quickly.

We always say stick with the knitting, sell more to your existing customer base and a term at Cranfield we use, is like squeezing the lemon.

So if you think about a fridge, you want to get as much lemon out and not end up with a half-rotten lemon at the end of the week.

I think that is another important lesson to hand out and I think if I had the last possible one to squeeze in, it would be, I think, think about what you want to be as an entrepreneur.

What role do you want to play, where do you see yourself in a few years time?

And so make sure that you build a succession that will allow you to do the things you're best at and not be the hero or the meddler but be the one who works on the business and rather in the business.

Henry Shinners, Partner - Restructuring & Recovery Services, Smith & Williamson on measures directors can take to avoid business failure

The number one thing they can do is take advice from a professional insolvency practitioner ideally. At the very least they should see their accountants or their lawyer. Other things that they can do which are more internal things is they should take a very close look at their costs. The costs of the business, cut them where they can, make sure that they control cash, prepare short and medium term forecasts of profit and cash and make sure that those show that the company is able to carry on. If it can't they need to take advice rather urgently.

Dr Stephanie Hussels, Lecturer in Entrepreneurship, Cranfield University on the qualities of a successful entrepreneur

I think there is some intuition there, I think entrepreneurs are very good at spotting an opportunity, identifying it.

But I think what's important... and I think luck comes to the hard working.  I think what's really important is to make a plan.

So for entrepreneurs I always say as a recommendation is you need to have a clear vision and a purpose which you communicated to your staff.

Planning helps, we've done some research on that aspect as well showing that those entrepreneurs who plan actually grow in terms of number of staff and turnover.

So I would say if you can do some planning go ahead do so, intuition will take you so far but in order to specially scale the business and have sustainable growth you need to have processed as people and your leadership style into place that will sustain that in the longer term.

So you're not only the one horse pony who has one great veer but can sustain that in the long term.

Dr Stephanie Hussels, Lecturer in Entrepreneurship, Cranfield University on balancing research and practice in a rapidly changing world

The challenge of the world is moving very fast.  I think academia in some ways needs to keep up with it and I think that's the nice thing about Cranfield because we're so closely linked to the business world.

So research and practice is very entwined.  At Cranfield we say knowledge into action is very much the ethos of the university.  So yeah, we are on our toes and we try to keep up and hopefully inform the business world of good ways and practices to move forward as well.

But I think it's very much a joint... it's a synergy so we only do research which is very relevant for industry and we work closely with industry to make it relevant for them as well.

Henry Shinners, Partner - Restructuring & Recovery Services, Smith & Williamson on how Acting early can avoid failure

Often, as I said earlier, directors leave it too late, come to us when they have to pay the wages at the end of the week and don't have any money to do so and in those circumstances it's often very difficult for us to do anything other than advise them to commence an insolvency process.

If they come to us earlier, there are ways in which their working capital facilities can be restructured or the business can be restructured so that they can avoid an insolvency process.  But the key thing is for management to spot the problems early, come and seek advice and we can help them.

Dani Glover, Director - Director - Personal Financial Planning, Smith & Williamson on financial planning.

Sometimes it can take a while to work out what somebody has but I think one of the first meetings that you have with the client is really important because you understand just them talking through what they think they have.

It gives you an idea of where they want to go and it gives them an opportunity to work out where they want to go, what's important.

The lovely thing about financial planning, you can't walk up to a cash point and press a button and it tells you what you should do, it's all very personal.

We all have different hopes and aspirations and dates that we think we're going to retire or what we want to do with our money.

So it's wonderful, you get to know your client very well.

Anthony Hilton, Financial Editor, The London Evening Standard on coping with the economic recovery.

The interesting thing about the UK economy is that because we had such a long period of uninterrupted growth from 1993 through to 2008, basically a whole generation grew up who had never seen a downturn. Nobody under 35, probably nobody under 40 had ever seen a downturn. So when it came they didn’t know how to react. And similarly now we’re in recovery they don’t know how to react, they don’t know what to expect. And they somehow expect, you know, suddenly there will be green shoots everywhere and life will be rosy, and of course it’s not like that. And so I think the most interesting thing is how badly most businesses are coping with the recovery. And I say business loosely of course, but the same thing could apply, particularly to the political class and indeed to the media. I mean I think the media’s approach to this economic crisis has been naïve beyond belief and probably completely unhelpful.

Dani Glover, Director - Personal Financial Planning, Smith & Williamson on the money maze.

It varies hugely, some people are fantastic, they come in with spreadsheets, others literally have no idea at all which, for me personally, I would find incredibly frightening not to know how much my pension would be worth when I come to retirement.

So it varies hugely but I think actually a really valuable bi-product of what we do is that we organise the administration of somebody's life.  People often collect lots and lots of pension plans throughout their working career.

People collect life policies, in fact I've just come out of a meeting where somebody's said I took this out years ago, I don't know what it is, what is it?  So we can put some sort of structure to people's financial plan.

And it's when people understand it that it works better for them.  We can plug the gaps or even get rid of things that aren’t needed anymore.  People take out lots of life cover, for example, when their children are young but do they necessarily need it when the children have grown up and left. So there's a lot of administration in it but it is valuable.  The other thing that's really valuable is people book an hour or so to see me and it's an hour out of their busy lives that is devoted to themselves rather than their work. So it's a time that really I just help people through the personal financial planning maze.

Anthony Hilton, Financial Editor, The London Evening Standard on investing for the upturn.

A key thing I put forward as an investment, I mean that history shows that the companies that do well in the upturn are those that manage to maintain their investment and their marketing and basically the fabric of the business intact so that when the upturn came they could take advantage of it.

Those that as it were waited until it was obvious missed the boat.

And yet if you look at the levels of investment, the levels of marketing and all these indicators in the UK economy, it’s clear that for the most part people are cutting back.

And so they’re not actually looking through the current difficult times so that when the good times do come an awful lot of them aren’t going to be ready and so they’ll miss the markets.

Inez Anderson: "What we’re talking about just now is something that would come under maybe that global title of flexible benefit scheme, where what an employer would be saying is, “You can have a package to the value of so much.  And here are some of the things you can choose.”  I’ve not yet come across any employer that will let employee give up all their cash salary for benefits.  And I don’t think that would really be advisable to do it.  But the kind of things you get in the other ones, most people have heard about are perhaps the ones that are most tax efficient, like give up some salary and the company might put some money into your pension scheme.  And there can be a national insurance saving for both the company and the individual doing that rather than the individual putting money into the pension scheme, give up some salary and get childcare vouchers and that can be tax and national insurance efficient.  The same with cycle to work schemes that have been around.  But there are many, many other things that can happen, like dental, like private medical and sometimes you find that employers may be encouraging the most senior people, part of the arrangement is they have to have a medical every one or every two years.  They have to be part of a private medical arrangement.  And that’s part of the package.  But for more junior people, they may be able to give up some salary and join the private medical scheme.  And there’s just an enormous range, people can give up salaries to get company cars.  Company cars went down in popularity.  They’ve come back up because CO2 efficient and electric cars can be quite low taxable benefits if it’s all structured in the right way.  So this is, I think about an employer knowing their workforce, what it is that’s going to tick the boxes and giving people the opportunity to have those things.  There is a cost to an employer and I think that you can never forget that.  The more choice there is, potentially the greater the cost, the administration round it.  But it’s how... you’ve got to weigh that up with how much more are you going to incentivise your employees?  How much more are they going to see you as their employer of choice and want to stay with you and remain with you?  And that all has to get put into the melting pot."

Guy Rigby: "We’ve done it with lots of businesses and we’ve encouraged businesses to come to us and at a very early stage we involve different team members who may not be relevant to them for two, three, four, five years in the future.  So when we take on a new client we often get our corporate finance guys involved, because there might be an exit proposed five years down the track.  We get them involved at the beginning. We follow the principle of beginning at the end, wherever the entrepreneur wants to end it, we try to get that embedded at the outset and we know exactly then how to work backwards to help him achieve his goals."

Laurence Bard: "The definition of R&D and some of the costs there are necessarily grey areas in the tax legislation.  What we will do with clients is actually understand their business, understand what they will do and explain how that might interpret into a claim.  And therefore by understanding your business, your activities, what your people do, we can translate that into a claim or what is a reasonable claim based on a number of uncertainties.  So we help people interpret what is otherwise quite difficult to interpret.  A lot of people start off thinking I don’t do R&D at all.  You talk to them, they discover, yes they do, but how much.  You talk to them further and you develop an agreed idea of what it is reasonable to say is R&D.  And that’s our prime function.  A lot of people don’t know too much about it.  They might know about it in principle.  But our prime function is to translate somebody’s business into claims that can help them."

Ian Luck: "The first thing to do is to look at the existing scheme.  Is it going to be appropriate for your needs as an employer post auto-enrolment, just because you have a scheme.  That’s the first thing, that’s a good thing because it means that you’ve actually been at least rewarding staff in the past through the use of a pension arrangement.  But is that scheme going to be appropriate for the wider employee numbers that you have once you need to auto enrol them?  It’s easy to look towards your existing scheme as being the end profit, the end use.  But that may not be appropriate.  By introducing a whole range of workforce who didn’t want to be in the pension plan in the first place, you might actually end up watering down the quality of the scheme that you already have in place.  It is very much a horses for courses.  And whilst your existing scheme might be appropriate, if you’ve got a large number of your employees already in it, if you’ve got a vast number of your employees who are not engaged in the pension process then that will need a different response altogether. There are a number of alternatives out there as you’d imagine.  But...and part of the problem or part of the help that we can give is to actually source the right response for the right company, whether that be Nest or one of the other alternatives or one of the more traditional pension providers."

Peter Maher: "I think I am by no means a technophile, I’m probably more likely be a technophobe but I have seen the requirements of auto-enrolment and that is that, you know, you must enrol a member of staff within three months of him joining your firm.  He may choose to opt out once you’ve enrolled him.  He can do that within a month or at a later date.  He can’t do via his employee.  He must come to an adviser or the insurer.  But three years later or three years after the date at which the firm auto enrolled its first member of staff, he has to be auto enrolled again and put back in.  So you will have people joining and leaving automatically.  And if you missed those dates, you’re in breach.  The only way you can do that is through technology.  There will be human error if you try and do it by man or woman and the amount of men and women it will take to do it will be huge.  So technology will save you an awful lot of money in manpower and it will save you the pain of making a mistake which may ultimately cost you by way of penalty."

Ian Luck: "I mean I would say engage an adviser to actually help them, at least by doing so you’ll get an idea about what stages you need to go through.  Whether you use that adviser for all of the stages through the project implementation, that’s down to the client, but at least know what it is that you need to have in place and when you need to have it in place by, is the way which I’d actually start.  We want people to actually come and start to have dialogue with us.  It’s not ... that may not be that we need to do a piece of business now but at least, you know, speak to us now whilst you can.  There will be something like 120,000 employers per month reaching their staging date.  Now there isn’t the capacity within the market to actually deal with all of those, even a fraction of those, so you’ll be on your own, you’ll be able to do it but it won’t be easy."  

Ian Luck: "We get the most cost effective range of benefits for the corporate entity.  But also for the members themselves so they actually get something that is appropriate for them in a tax efficient way.  I think the flip-side of that is if you get it wrong then you have a benefits package that nobody really appreciates, everybody becomes a bit, you know, fed up with what’s available, they become a bit lethargic in terms of the benefits, they’re just there, we don’t really pay too much attention.  And if they’re not paying attention they don’t really value what you’re spending on them.  So what we can do is deliver or help the company to deliver something that everybody appreciates."

Ian Luck: "What we’re trying to do is actually get something that’s relevant to each and every company.  So there will be a different requirement for each different workforce.  And we try and marry what is available within the marketplace to actually what the company is trying to achieve within its benefits package in the most tax efficient way both for the company and for the employees themselves. Fundamentally it’s about recruitment and retention of the right quality staff.  So nowadays in order to compete within the marketplace you need to be offering a wide range of benefits.  We’re seeing more of those companies look towards flexible benefit arrangements, that’s enabling the employees to choose what’s most appropriate for them rather than being dictated to by the company themselves.  So it still comes back down to fundamentally giving the broadest possible range of benefits to the members, the employees so that they want to come and work for you."

Peter Maher: "From October 2012 it became compulsory for all employers to install a pension scheme and make contributions and automatically enrol their staff.  If they haven’t done that to date and they should have done, or if they don’t do it in the future, then yes, there are financial penalties on the employer and on the Directors of the firm and they can be significant.  Realistically, when will they be administered?  It would probably take a few years for that to be policed properly because we’re still in the rollout stage.  But yes, it will be, if what we’re given to believe is the case, it will be critical stuff.  Prepare for auto-enrolment, communicate it and embrace technology.  If you don’t do any of those three or one of those three, it could quite possibly fall down and it will be a wasted spend but those are the three critical pieces."

Peter Maher: "The core would be pensions, life assurance and permanent health insurance.  That is to say that you’d have your basic salary and attached to that, three core benefits, you would want your employer to be sponsoring a pension for you which you could compliment because after all, pension is only salary in retirement.  You’d want life insurance to protect your family in the interim while you’re employed and that would typically be four times your salary.  And then you’d want some sort of income should you not be able to work and that’s the third of the core.  Overriding all of that would be a technology piece.  If the firm is big enough, we would install technology so that we could put the benefits on top of it and release more benefits year-on-year.  It makes for a centralised database for the employer and it makes it much easier to administer the benefits."

Guy Rigby: "We think that there’s a gap in the market for entrepreneurs these days. You know, we’re the eighth largest accountancy firm in the UK and we feel that all of those above us and indeed around us aren’t giving this community the attention it needs.  We want to be the all round adviser to entrepreneurs, helping them achieve their goals, you know, getting their ball across whichever line they want to get it across. Okay.  So most accountancy firms do audits and tax.  What they don’t really do is get underneath the skin of the business.  What we try to do is to work for the entrepreneur and then the business.  So effectively what we’re trying to do is to help the entrepreneur get his particular ball across the line, whatever that may be.  It might be to grow a 10 million pound turnover business, it might be to pass it on to his family, it might be to sell it, whatever they want, our job is to help them achieve that.  That’s unusual, you know, it goes beyond doing an audit and a tax computation."

Guy Rigby: "First of all we want to be known, so you know, Smith & Williamson is a quiet brand and we’re trying to get it out and dust it off a bit and you know, make sure that people know who we are.  Secondly, we really believe in this entrepreneur community, which is why we’re sponsoring this particular award.  And around us in the accountancy profession, you know there are some other big firms but most of them are focused on doing audits, doing tax and working for larger corporates.  And we find that the opportunity to work for these up and coming firms is very exciting, very interesting, and we think a natural spot for us."

Mark Webb: "I basically look after companies so that within the law they pay the right amount of tax.  And so what I do is make sure that they’re applying every applicable relief they can.  I look at everything on the margins to help them make sure they’re looking after their function.  And that way they get the most cash flow in their business so they don’t worry about the tax side, they’re worrying about running their businesses.  We will look within the confines of the law always.  That will be the starting point and then we’ll look at the commercial organisation, what it actually does.  And therefore within that what tax relief that supports.  A lot of companies or a lot of the presses around, there have been very large planning ideas.  That’s not what we do. What we do is make sure that all of the small parts that are very, very straightforward are all maximised and therefore they all add up to a good saving for companies.  So it’s making sure the detail is looked after."

Laurence Bard: "Well, actually the government wants to play a certain game.  It wants the UK to be competitive.  It knows that companies can set up intellectual property owning companies in tax havens, so what does it do?  It says, “You don’t need to do that, you just need to own your patents within a UK company and we will give you a lower rate of tax, and that low rate of tax is 10% instead of the normal 20%.”  If you own patents which you can exploit in your business from a UK registered company, which is going to pay UK tax or is paying UK tax, then there’s a 10% tax rate on offer. And it’s a method of calculating the profits attributable to or in some way linked to patents that you own in your company and you carve out an element of your profits and you say, “That’s not taxed at 20 something percent, that’s taxed at 10%.”  And it’s a very generously carved relief because the example that’s given is that if you have a Land Rover and there’s a patent on the wing mirror, the whole Land Rover, because you sell a Land Rover as a unit, because there’s a patent on a wing mirror the whole thing qualifies.  Of course on a Land Rover there’ll be lots of other things that are patented.  But that’s the extreme example, you sell a product, a bit of it’s patented, you’re in the Patent Box for the full price of your Land Rover.  I think there are going to be a lot of companies taking advantage of it.  And I think the government is also hoping that a lot of companies that would otherwise locate themselves in the Netherlands or Portugal or the Cayman Islands will say, “Ideally I would like to be in the UK anyway, let’s stick with the UK, it’s got a good tax rate, or let’s even come to the UK, which we hadn’t thought of before”, because it’s a competitive world."

Laurence Bard: "If someone has an idea and it involves some sort of scientific or technological development, the question is are they able to develop it simply or does it actually involve questions such as I don’t know whether I’m going to get there? Or I don’t know how I’m going to get there, either of those and if those are in a technological or scientific field then the answer is likely to be there is R&D.  And it doesn’t matter if somebody else has done it, if it’s not public knowledge, if let’s say you know, Google have developed a wonderful search engine and you want to build a search engine to compete with them, but they’re not going to tell you how to do it, you might just as well be doing R&D, even if you end up with something that is maybe even in theory at a Google’s product.  So it’s to do with technological or scientific uncertainty and it’s in the view of somebody who is competent professional working in the field, that’s one of the definitions.  So if you’re the Chief Technical Officer of a company and you say, “This is technologically uncertain”, then it is technologically uncertain.  But you might want guidance as to what that means as well.  But that’s as far as the definitions go.  We have a document that’s five or six pages long which defines what is R&D, but those are the key points in it."

Laurence Bard: "You normally get a straightforward tax deduction for a business expense.  You spend a pound you get a tax deduction of one pound.  If you are, what can be actually almost quite a large company, instead of getting a one pound tax deduction you get a two pounds 25 pence tax deduction.  So you’re getting an extra 125% deduction coming off your tax bill.  So you know you might make profits before your extra R&D tax credit, with that uplift you start to breakeven or make losses.  And if you make losses and a lot of start-up companies do make losses here because they’re spending so much money on R&D, they can actually get a refund.  They can get a 25% refund.  Let’s say they spend £100 on R&D, and they lose at least £100 over the year, they’ll get a £25 refund for tax they’ve never even paid, they’ll get a subsidy of £25 from the revenue.  So that is a very ... again, for the innovative loss making developer that is a wonderful shot in the arm.  What they’re often very short of is cash funding.  They’re big on ideas and they’re big on how to spend the money, they’re not quite so good at getting it in, 25% subsidy is very useful."

Laurence Bard: "One of the aspects that Smith & Williamson focuses on is corporate tax.  I’m primarily a corporation tax adviser.  But I have a significant specialism which is about research and development, about companies that do research and development for which there are wonderful tax breaks in the UK.  And my job is largely to identify and help companies claim their proper research and development tax credits, which is wonderful for some smaller innovative loss making type of companies.  It’s one of the focuses that the government wishes to encourage, they’d love to have more.  I see a great deal in all sorts of areas.  There is probably no industry that I’ve ever looked at that doesn’t have some form of significant R&D.  However basic and traditional it might be they’re always doing something innovative, often with the internet and with software. For example an old industry will be automating.  There is a lot of R&D about.  And the government wants there to be more of it.  The UK is a relatively high cost economy of the world.  And it’s got to have a competitive advantage.  It sees this advantage in a well educated workforce that can provide competitive advantage to the world.  R&D is a natural industry that it can measure on with a significantly educated workforce."

Inez Anderson: "Do they need to be on top of it?  And I’d say the answer is yes.  I think the current marketplace we’re in is an ideal time to be looking at using shares as reward.  A lot of companies have seen their share price go down, so it could be that hopefully businesses are going to grow again, they’ll see their shares prices increasing. And their employees will get more advantage if the awards are made when the prices are lower.  So I think it is important to stay on top of it because employees, I think, are beginning to demand it.  I think in some of the high tech businesses and fast moving businesses, employees want it, it’s almost like part of it’s an accepted part of their reward package.  We will join this new business but we want to share going forward. And then I think you’ve got the more established businesses where it is very much seen as being part of the ongoing reward arrangements.  So they have to stay on top of it there as well.  So I think all businesses should make themselves aware, should think how can they build it into their reward package, is good for recruiting, it’s good for motivating, and it’s good for retaining.  People feel part of the business and can see they work hard, the business is growing, the value of the business is growing, they are part of it."

Mark Webb: "If someone feels they’re not getting enough from their current advisers they should just speak to someone else.  Start a dialogue, everybody is very, very keen in organisations to have a conversation with people, I certainly am, to find out what people ... is happening in the market for those individuals, what that individual is doing in their business.  And consequently what people are planning for that individual or that business.  Once you start to have that dialogue, quite often you will identify some areas where there might be opportunity for there to be either a better capital structure, a better reward structure, some form of tax relief. And when you start to join all these pieces together, all this menu of ideas, the actual global change to the business could be quite profound."

Business is no longer linear and you have to adapt your thinking to suit. Julie Meyer explains further in this TV show.

Business strategy models - Networks

If you are still, in any way shape or form thinking linear or hierarchical, you need to update your thinking to a network orientation. That's much more important than just the Facebook as a phenomena or LinkedIn as a phenomena. Everything has moved to a world of interdependency and multiple dependencies in that.