Becoming an entrepreneur allows you to be more in control of your future, as Mike Bacon explains in this video.

Becoming an entrepreneur will always involve taking risks. In this video David Spencer-Percival explains why he went for it.

Leaders will make many strategic decisions during the development of a business to ensure growth. In this video Martyn Dawes discusses how this can effect the exit process.

In this video Richard Alberg explores the dynamic between a company leader and management team when a business is sold.

In this TV show Martyn Dawes discusses a successful exit he has made and has advice on what entrepreneurs should consider when exiting their business.

In this video Richard Alberg discusses the two triggers of a business sale and compares the strategic planning process for each and explains why selling a business isn't easy.

Strategic planning process for a business exit

It’s not easy. It can be easy but often if it is easy you are leaving money on the table. In our experience there are two triggers for an exit. The first is, someone comes to you and asks, would you be interested in selling? You suddenly scratch your head and think maybe I would. Then you need to decide whether you are going appoint advisors and go towards an auction process where you offer the company to others. The second alternative is where you decide in the very beginning that now is the time to come to market and indeed you actions over the preceding year, two years, have all been about insuring you are ready to come to market, that means anticipation of a due diligence process, so everything being in order, that means having a management team in place so that any acquirer knows that if they buy the business and you, with your pockets full of money decide to go off into the sunset, the still have a business that is going to be effective. So all of that thinking has to take place before hand. Then when you do go out to market, then it’s nerve wracking, then it’s the big stakes outcome, so your meeting people who can transform your life through their decision to buy your company and buy it at a value that you’ll like. That process can take months and months, if you are running an auction, there is going to be a little bit of brinksmanship between the different participants, you’re going to want to push for maximum value, that means at time you’re going to risk the deal itself. So all of these elements are nerve wracking on top of the day job of running a company. And then, at least in my case, the day I sold the business, the day I went to my lawyers office to sign the paperwork, it was a very odd day. On the one hand this was everything I had worked towards, on the other hand it was also selling my baby, and that was a very emotional process to go through. It was the right thing to do but it wasn’t an easy thing to do.

If you are interested in the strategic planning process for exits, you can watch the full briefing here - The Exit – Preparing your business for sale

Strategy development for investment was what Envestors was created to teach. Founding Director Oliver Woolley discusses the importance of preparing for investment in this TV show.

Investment strategy development

One of the reasons we set up Envestors is that we thought there was a bit of education needed on both the investor and entrepreneur side. So we provide training for investors. We produce a guide to how to invest as a business angel and we do a seminars for investors. So our idea is to educate both the investor and the entrepreneur and try and get them close enough so that we can get good deals done. So we find that a lot of companies aren't particularly well prepared so we run an investment readiness briefing on a Tuesday morning every two weeks, which is free. It is essentially a two hour seminar about the practicalities and realities and the obligations of raising external equity finance. We find that at the end of that, that the company has though a lot about their business plan but they haven't though enough about it from an investment perspective. So we will then work with a company to make sure that there is a full and detailed investment proposal.

If you are interested in strategy development for investment then take a look at the full briefing Cashed Up - How to attract business funding.

In this business growth show David Spencer-Percival explains why it is hard to get investment without a track record.

Business growth show - Investment

You need to have a track record of what you have been doing, I think to get investment. I think it is awfully hard to get investment for something that is a completely new idea. The thing about investment is, getting the money is only half the trick, the other bit is actually using that money to create value. So I think you can go and get investment for something, but you have to deliver on it, it’s too hales to one piece. There’s no magic trick but if you’re good at something, I am sure you can convince somebody to give you money to do it again. It’s just how you, what you do with that money. Keep browsing Inside Finance for more business growth shows, and why not take a look at the full Cashed Up briefing on attracting business funding.

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.

In order to meet your financial objectives through investment you will need to ensure your business is in the right place and get professional advice on the right investors, as Martin Dawes explains in this TV show.

Investment financial objectives

To find significant investors, first of all you have got to get your proposition right, you have got to have a compelling proposition. It’s a very crowded market place. There is no shortage of money out there. There is a wall of money, there’s a ton of money, but it’s for good businesses, it’s for the good propositions. So the first thing is to really be confident that actually we have got something that really, you know we’re on fire. It’s gotta be there. We have gotta have evidence that people are buying it, that they are coming back, that they are happy to pay whatever you are charging, that it’s a large market, that you can scale up, and that you have got the right people to do it, in terms of your team. So you have got to get that right first. So the next stage would then be to attract, to get the right people to help you to find the investors, so that would be advisors. So in our case, we attracted, you know, a top firm of city lawyers, corporate finance lawyers, and also corporate finance advisors/ accountants. Both of those firms had worked, in fact both of the partners in both of those firms had worked with my chairman previously, so that gave a great sense of assurance to them. They then met me, they could see the passion they could see the evidence, the results that we got, and so on. So that team came together, and it was then those advisors that then looked at the business, and based upon the shape of the business, the stage if the development that we were at, were able to say ok we think that these are the types of investors we should go and meet.

Keep browsing Inside Finance for more videos on financial objectives and investment, and why not take a look at the full Cashed Up briefing on attracting business funding.

In this business growth show Alistair Brew discusses the financial industry supporting entrepreneurial businesses.

Business growth show - Finance support for entrepreneurs

There’s absolutely no shortage of entrepreneurial talent in the UK, lots of fantastic ideas, I think it’s been about those, those ideas, those businesses now being picked up by the financial community and supported on the journey through its the different levels of expansion.  It’s taking, I think it’s getting better and people are more joined-up and hopefully we can support some businesses from the very early stage right through to the giants.  The Americans have traditionally done this very well, we want to be able to do that in the UK as well now.

If you found this business growth show interesting , why not follow Inside Finance on Twitter @InsideFinanceTV and let us know what you think.

 

Exit-planning can never be given too much emphasis according to Oliver Woolley, who discuses investor attitudes to exits in this TV show.

 Investors and exit-planning

Most of our investors, we say they walk into the room backwards. In other words the moment they go in they’re looking for how they’re going to get their money out. And one of the biggest challenges for our investors is the fact they’ve got a lot of money tied up in illiquid stock, ie private, unquoted companies. And so what we focus on is exit-planning for companies, almost from you know, within the first six months of putting the investment in. And under EIS the investment has to be in there for a minimum of three years, so we’re typically looking for businesses to exit within the three to five year period.

Inside Finance will continue to follow ideas around exit-planning and related subjects.

Good governance means having great people at the top looking out for the company. But how much should a company pay for a good director? In this TV show Caroline Newsholme discusses pay vs performance.

Good governance comes at a price

You should certainly pay for talent.  And good directors come at a price.  But there’s a feeling that directors remuneration is slightly out of kilter with the real world.  It’s certainly being increasing, notwithstanding the fact that we are in a recession, there’s been a quite substantial upwards trend

And obviously a lot of companies have struggled and may not have performed as well.  So there there’s an inconsistency between actually the wellbeing of the company and what the directors are being paid.

But I think certainly directors are alive to the concerns that have been voiced by investors and the business world generally.  I don’t think they are blasé about the position, they recognise that there has to be a proper link between pay and performance and we can’t continue to see excess packages which are not really justified.  Whether we’ll get change at the rate we need change is another question.

But there’s a lot of impetus in the corporate world to increase transparency and to change what’s gone before.

If you are interested in discussions around good governance take a look at our briefings on director's remuneration and board effectiveness.

 

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.

Corporate governance issues include the relationship between management and staff. In this TV show Rob Wirszycz discusses managing expectations between directors & employees.

Corporate governance issues - Directors vs employees

I think there’s something to be said  for the European Works Council idea, even the Mittelstand in Germany has a Works Council, you know, which is almost like this sort of body that sits below, or even above some, in some cases a Board of Directors.  I think there’s a real case for that.  The UK’s doing okay.  It’s quite public, you know, the data you have to disclose on Companies House and all that kind of stuff and, as I say, with public social media and other stuff, there’s much more disclosure now than there ever was.  So I it’s not a bad place to do business but I think I think there’s still a an us and them between Directors and, if you like, staff, and I think, you know, we should, Directors should explain their role in the business a lot better. I try and for example, tomorrow one of my businesses has got to kick off and what I’m going to be doing is explaining what I do as Chairman.  You know, it will be about two minutes, but I’m just going to explain what I do and how they can use me, or abuse me, I suppose, but I mean  it’s quite important that I make sure that it’s very clear, the role that I’ve got and my expectations of everybody else as well.

Inside Finance TV will continue to follow ideas around corporate governance issues. Follow @InsideFinanceTV for more discussion. Watch the full briefing From the top – Ensuring board effectiveness as a director

 

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

Business risk can come from many unknown variables. When working with an investment manager people should be clear about how much risk they are prepared to take, as Michael Pagliari explains in this TV show.

Investment & business risk

I think that you know individuals sometimes tend to give misleading answers when asked about the amount of risk that they want to take. So for example a typical response that you get from an entrepreneur is ‘oh, I don’t really want too much risk but you know I’d like to make 10% returns’. Now in the current sort of environment that we exist, where interest rates are at zero, 10% is a very ambitious rate of return, so the statement is actually pretty incoherent. So at that point I think you need to dig deeper and find out exactly what the client needs as a minimum requirement and make sure that it is coherent with his underlying thought process. They understand risk very well in their own business, in the context of managing financial assets my experience has been that that knowledge is of the same type of thought process does not necessarily transfer itself well to their financial assets. And that can mean, that can mean that either they take on too much risk in their financial assets or they take on too little. Ideally, I actually think that it takes about a couple of years until you really understand a client’s risk profile and as you get to know him you make some adjustments. So my personal suggestion or my personal methodology is to start with a relatively conservative risk profile until I feel that I really understand and know the client better. 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?

   

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?

Financial objectives need to be met for success as an entrepreneur. Those with a good idea will still need to prove it works in order to secure further funding, as David Spencer-Percival explains in this video.

Financial Objectives: Funding

You need to have a track record of what you have been doing, I think to get investment. I think it is awfully hard to get investment for something that is a completely new idea. The thing about investment is getting the money is only half the trick. The other bit is actually using that money to create value. So I think you can go and get investment for something, but you have to deliver on it. It's two halves to one piece, so there's no magic trick, but if you are good at something I am sure you can convince somebody to give you money to do it again. It's just what you do with that money.

Continue browsing Inside Finance to find out more about how businesses are achieving their financial objectives.

Having the right business assets can make you a lot of money if an interested acquirer gets in touch. In this TV show BeatThatQuote.com’s John Paleomylites discusses selling to Google.

The right business assets

There wasn't anything specifically that we did with a view to selling it to Google. Google approached us. I the year to Jan '11 revenues of the company were around 14m, with a reasonable profit. Subsequently as the company would have grown probably in the subsequent year probably around 20m. So there was still a fair amount of growth in the business. I think there was probably a few reasons why it was BeatThatQuote.com. In e of them would be down to the technology choices that we made, I think it would be accurate to say that BeatThatQoute of all of the UK comparison sites was the only one that used open source technologies to deliver it's service. I think one of the other reasons is that BeatThatQoute never really developed a brand. Our route to market was through direct marketing and through white label, which is essentially putting our content into other people's brands. Whereas pretty much all of the other aggregators were branded, and given that Google really has the best brand in the industry there was no need for them to pay over the odds to acquire a branded comparison site. the most important lesson I think that any entrepreneur really needs to learn and to understand is to negotiate the best deal that they can possibly get. Keep exploring Inside Finance for more TV shows about business assets and similar subjects.

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.

 

Pimlico Plumbers has grown dramatically since 1979. In this business growth show Charlie Mullins discusses his business's growth.

Entrepreneurial business growth show

We're London's largest independent plumbing company, we employ 200 people, have 150 vehicles on the road and we 24/7 deal with 80,000 jobs per year. I started business in 1979, I was an apprentice plumber then became self employed. then started Pimlico Plumbers. we grew gradually for about 10 years and in the last 20 years things have expanded even more and even more so in the last five years, we have really sort of come to the front of the industry.

If you enjoyed this business growth show then keep browsing Inside Finance for more business success stories.

MarketInvoice's business model innovation means that new business can get funding without going through a bank. In this TV show Anil Stocker explains how the company use a digital platform to connect people to funds.

Business model innovation from MarketInvoice

We’re not a bank, we don’t have a large pot of money which we’re lending out through MarketInvoice’s platform to businesses, what we have is we have, you know, over 150 registered funders, and these are high net worths, sophisticated investors, investment professionals, hedge funds, family offices, people who are sitting on a lot of cash but have never had a way of channelling this money to SMEs directly. And our technology on the investors’ side allows them to put money onto the platform and set what their return and risk profiles they want and our system pulls that money straight in to fund the companies’ invoices. And what’s interesting is that we’ve done no marketing to funders and yet we have a huge backlog, wait list of people who want to put money into the platform. At any given point in time there’s a backlog of £20m, and that shows that, you know, these people are really gagging to put money to work and they don’t have to go through the banking infrastructure to do it.

Inside Finance will continue to bring you fantastic examples of business model innovation in the digital world.

Business innovation skills need to be harnessed in the right environment. In this TV show Simon La Fosse discusses government helping entrepreneurs grow.

Entrepreneurial business innovation skills are valuable

The heat you see on the west coast of America that is leading to massive salary inflation and people moving all too frequently to try to be able to build these businesses, mean that you’re seeing west coast US businesses saying “We should be setting up in, not setting up a peripheral business in London but maybe we should be setting up in London”.  The same with some of the Nordic countries, so there’s some really exciting stuff happening, that I think has proper momentum and, you know, I’m not a great fan of government intervention, I don’t know whether you call it government intervention or just enabling things to happen, but I think they should be credited with creating an environment that is much more conducive to the growth of entrepreneurialism in a time in our lives which is so exciting, this is, you know, akin to the industrial revolution, it’s just the digital revolution, and I feel lucky to be a part of it and I’m hanging on, I’m trying to keep up with what’s going on.

Inside Finance will continue to produce great TV shows about entrepreneurial business and business innovation skills.

 

Legal sector had a change in the types of case brought to them when the economic downturn disrupted businesses across the globe. In this TV show Doug Hall discusses the increase in breach of contract cases.

Legal Sector: The impact of the recession on commercial disputes

Very simply, it may be a cliché but the recession meant that pretty much overnight in some sectors the world changed and the example of the ship building is a prime example of that, in 2007 manufacturers in the far east can’t make enough ships, in 2008 suddenly people operating ships don’t want to buy them anymore, so suddenly the world changes overnight. That creates an impetus for all kinds of breaches to take place, because the world has changed simply. So what we saw after the recession or after the recession started was a big increase in the number of breaches of contract cases, we’ve seen a higher incidence of shareholder disputes and that’s simply there may be longstanding issues between shareholders but when there’s strife, when you’re operating in a difficult environment, maybe those tensions are amplified and they fall out, the same with partnerships, including professional partnerships. We’ve seen actions against professionals which for example arise out of insolvency, so a company goes down because times are tough, and in the lead up to the company going down there’s been issues with what advisors, professionals, auditors have done, there may have been issues with what the directors had done, they were doing their best to save the company but maybe they end up committing a breach of fiduciary duty or selling assets at under value, or getting confused about what’s their money and what’s the companies. Keep browsing the fantastic TV shows on Inside Finance to hear more about how the legal sector deal with business disputes. Look out for more form Doug Hall.

Informed financial planning within wealthy families involves having good advisors and passing on knowledge early. In this TV show Charles Gowlland gives his advice for managing familial wealth.

Informed financial planning around the kitchen table

One of the most important things we feel for families, that not only came out of the results of this survey but is a continuing view of ours is that they need first and foremost to surround themselves with good advisors. Second to recognise the combination of education within the family is both a mixture of the formal, so with family meetings, and the informal, which is if you like the sort of gatherings around the breakfast table or the lunch meal or whenever, when the family are sort of mixing together. And in the latter informal category you might discuss things like the sort of family history and what the wealth means to the family and what the sort of characteristics are that are associated with that money. And once that kind of dynamic around the money is understood by the younger members of the family, they will be better equipped to understand how they in turn should use that money during their own lifetime and what is expected of them and to what degree, if you like the money is theirs to do with as they will and to what extent it if you like belongs to the wider family and they are merely tenants in their own lifetime. There are no rights or wrongs about any of this. Its really up to the family to decide, but equally advisors can help guide families and particularly we find with newer generation wealth, many of them like Warren Buffet and some other famous people in the news like that, they want to leave a lot of money to charities when they die, they don’t want to leave huge amounts of money to their children, others feel completely differently and they would rather leave, they feel that it’s family money and they should leave it to their children and who should enjoy it. So it’s entirely horses for courses. Inside Finance will continue to follow issues around informed financial planning. Look out for more great videos from our Smith & Williamson experts.

Informed financial planning advisors pass on their wisdom to clients. If a company fails they will naturally look at back at this advice. In this TV show Doug Hall discuses throwing the spotlight on professional advice.

Informed financial planning advisors

For example auditors, we are dealing with a number of cases, where a company has failed, and if the company had not failed there wouldn’t be an issue. But in the company going into administration for example, major creditors had lost and they may say that they have relied for example on audited accounts to make decisions, to lend money or to support the company and in the cold light of day the company having failed, that’s an example where you may go back and look at what the auditor said in earlier years.  So we have situations arising from insolvent companies where the spotlight is thrown onto a whole range of professional advice that they were given before the company failed. Which never would have come under that spotlight if the company hadn’t gone into administration for example.  It's not an area that we get involved in but valuers have seen a big increase in the number of actions against them very simple because the banks relied on valuations of properties for example, and then when the company has gone into administration and the bank has lost out, they then go back and look again at the professional opinions that they relied upon, in making their original lending decisions.

Inside Finance will continue to produce great videos on informed financial planning advisors and similar subjects.

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.

Strategy development is necessary when starting a business in a new environment. In this TV show Stephen Drew discusses typical issues for entrepreneurs who move into the UK.

International strategy development

I think what’s quite interesting is we see a lot of business coming in from a variety of different countries arriving in the UK and often the mind set is understanding their own markets and how things operate, and there can be a bit of an adjustment to understand what they need to do in a new country like the UK. For somebody that’s used to operating and running a business in the UK they often don’t think about some of the smaller detail, because it’s quite easy to deal with and they know where the answers are, but for an inbound business that can actually be quite daunting and quite difficult to deal with. So an example would be you’re bringing in some workers from your host country to get the business up and running and established and you need to put them on the payroll, but how do you get somebody a National Insurance number so they can be properly registered to go through the UK payroll system? Now, again, when you know the answer that’s relatively easy to deal with, when you don’t know the answer you need to know where to go to to be able to make that happen, so that you don’t fall into compliance holes, you don’t create difficulties with the authorities, and actually you can just deal with that level of detail efficiently and actually focus on the prime reason for being there and for growing the business.

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There is a financial impact in the form of compensation payments for directors who trade past insolvency, as Henry Shinners discusses in this TV show.

Failure's financial impact

If a director behaves in a way that he or she shouldn’t, either trades a business for longer than they should when it is insolvent or causes themselves to be preferred. Then the penalties really are compensatory rather than penal. So the courts will often rule that the director should pay in to the insolvent estate, the amount equivalent to which they have denied it, by either worsening the company’s position through trading on while insolvent, or causing some kind of preference in their own favour.

If you found this TV show interesting and want to hear more about the role of directors and issues that have a financial impact then browse our videos and follow @InsideFinanceTV on Twitter.

Business strategy models will depend on the size and maturity of the business. In a new business focus can be the difference between mediocre and world class, as Peter Janes explains in this video.

Focused business strategy models

Focus, really. The internet's a big pie and I think with the first business we tried to own, well tried to establish ourselves in many different areas and became mediocre at all of them. Rather than being world class at one. And I think that’s where this business has changed, my philosophy of it, being just world class at something and evolving it from that, rather than, yeah trying to pick of many different markets and many different industries. Yeah I think focus is probably the biggest thing. Keep browsing Inside Finance TV for more shows on business strategy models.  

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.

 

High net worth families will have to make the decision of when is the best time to involve the younger generations and transfer wealth to them, as Charles Gowlland discusses in this TV show.

High net worth family responsibilities

I think our experience has shown us that there are no rights or wrongs, every family is different, clearly one can see the problems about handing over wealth too early, but equally there are problems about handing it over too late as well, and it is for a combination of the advisors and the family to decide what the best policy is and that policy will often differ within individuals members of the family as well. So the process needs to be relatively flexible. Our survey demonstrated this, if there was a consensus around the subject it was probably that the most important thing was for the younger generation to be involved fairly early, and I mean certainly much earlier than perhaps their parents in turn had started to be involved. So that might be inviting them to be part of the family meeting for example, not the whole thing probably, but from a relatively early stage, to let’s say a part of it, to give them an insight. And then over time building up that knowledge. Building up the knowledge within a family business or getting them some outside experience in the commercial world or within the same industry or getting a professional qualification like accountancy or law, all of those sorts of things were thought to be very useful. But as I say if there was a consensus it was probably that the thirties was the right age to hand it on. And in particular if children appeared, all of a sudden as any parent will know, the mind set changes and suddenly you begin to become more conscious of your own duties and responsibilities and so again the appearance of children was thought to be quite an important aspect.

If you enjoyed this video about high net worth families, then why not watch more TV shows on Inside Finance?

   

Personal planning to resolve personal issues is the common approach by high net worth families. In this TV show Charles Gowlland discusses the frequency & nature of family conflict.

Matters for personal planning

We asked about conflicts in general and the great majority of our respondents said that they were rare or very rare. When asked how they would deal with them when they did occur, the great majority, over 70% said that they would deal with them internally and we took a great amount of comfort from that in that our families felt strong enough to be able to manage these things internally. But equally we need to recognise that there are serious situations where individuals are dealing with severe family or personal problems that can have an impact on the wider family and in those instances outside help is definitely needed, and it may not necessarily be financial services but other forms of help and support and it’s important to identify these and to recognise, when outside help is required.

Inside Finance will continue to share great free content. There will be more videos on personal planning and family business issues.

The legal sector in London is benefitting from globalisation. In this TV show Doug Hall discusses why London is a major centre for international disputes.

Legal sector underpinnings

It’s been a major driver, both for our practice and for legal services in the London market generally. London is one of the leading, if not the leading centre for international disputes, It’s probably a very large invisible export. I’d love to be able to add up the total fees that are generated in the London market from lawyers and accountants, for foreign nationals having their cases dealt with in London. For example, I gave evidence at an international arbitration last year, both the parties were Russian and they were arguing over an asset in Moscow, a property. They came to London for the dispute to be dealt with, they used lawyers, both sets of lawyers are based in London and I’m also based in London, so London is a great place to be for international disputes and because of increasing globalisation commercial relationships are across borders, and when they go wrong, typically, not always but it depends how the contract is framed, typically those are dealt with through international arbitration rather than through the courts in England or another country. It’s very similar issues for what I do, similar issues for the lawyers but there is a specialisation amongst some lawyers that they will concentrate more on international arbitration than for example higher court work in England. The interesting thing has been that during the recession, whilst domestic commercial litigation has been muted to some degree or front end loaded as I’ve described, international arbitration has been very strong. I haven’t come across a lawyer who specialises in international arbitration during those years who hasn’t been very bullish and been very busy, and that is very much a growing field because of that background of globalisation. And frankly some of the most exciting cases that we deal with are across borders. It’s the same principles, exactly the same issues, but there’s more complications, there’s more cotterill issues, there’s more practical issues in gathering and assessing evidence and presenting it, but that’s really where the future lies, well it’s already here, but I think there is reason for optimism for the London market for continuing to be a major centre for international disputes.

Inside Finance TV will continue to look at what is driving business in the legal sector and beyond.

 

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.

 

The digital generation are entering the workplace. In this TV show, futurist Graeme Codrington considers their impact.

Digital Generation in every industry

In every industry in the world technology, the power of technology and this new generation of young people who use the technology in such different ways are gonna come into these industries and blow these industries apart. I really do believe that we're only just at the beginning of realising what this digital age will mean for us, and that's everything from the automotive industry to the pharmaceuticals from supply chains and logistics, to manufacturing to financial services and everything else in between. And so industries need at look at where technology is going to take them in the next few years.

Inside Finance will continue to discuss the digital generation.

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?

Financial Reporting will show how reformed in the financial industry are being implemented. Caroline Newsholme discusses reporting director pay.

Financial reporting creates transparency

I think it does very much depend on the economic climate at the time. With the collapse of the banks and a couple of other very high profile individuals who’ve received very substantial pay offs where their companies have failed. It’s obviously topical and the media are going to pick up on substantial director’s packages. I think there’s probably less risk of that if the economy is performing and there are less examples of business going to the wall. I think when things are tough, everybody’s looking at what everybody else is being paid. I would like to say that in five years’ time I think that some of the reforms that are being introduced now will have been further refined. They’ll have had a chance to settle in and people can see how they work and whether they work and will have made any adjustments accordingly. I think there is still going to be quite a substantial level of reporting going forward once the reforms come in. With detailed reports obviously comes the risk that detail gets buried or people don’t quite appreciate the significance. So I think we have got to be careful that we don’t replace one reporting system with another, which ends up looking pretty similar to what we’ve already got. But I think it’s definitely a move for good at the moment anything which is designed to more closely link pay and performance and to not reward failure has got to be a good thing and it’s certainly higher up the corporate agenda, and I think that that’s got to be to our advantage, and hopefully we will see the benefit of this as the economy picks up and companies prove their performance in time.  

Inside Finance has more TV shows about financial reporting and will continue to follow discussions about reforms and legislations that affect business.

Using new technology may seem like a business risk but, as Martha Lane Fox discusses in this TV show, it is a risk not to.

Business risk - Getting left behind

It’s not that If you don’t get online or use the technologies immediately then ‘this’ will happen. I don’t think it’s quite like that, I think its a long term systemic problem. You will just be left behind because you will be operating in a world that’s just not as modern as other people. So you won’t be taking advantage, both of new cost space that you can have by using technology better, but also the new markets that you can reach. So I don’t necessarily think that you’ll fall of a cliff today or tomorrow. But over time I just don’t think you’ll be able to be competitive.   Keep an eye on Inside Finance TV if you are interesting in hearing more about business risk.  

Informed financial planning comes from awareness of tax requirements and potential pitfalls of any decisions. In this TV show Michael Pagliari explains why investment managers need to be tax savvy.

Informed financial planning

Taxes are a difficult area and we don’t give, as investment managers we don’t give tax advice, however I think it’s really important that investment managers are tax-aware and understand most of the pitfalls. And that means that if you see you know, being able to spot potential issues and making sure that portfolios are properly structured so that you don’t pay any more tax than is necessary and this is not some sophisticated type of tax planning but it means picking the right types of securities, picking the right types of funds. In my sort of experience doing this job I’ve come across so many incidences where basic errors have been made which have been very expensive to clients in terms of inappropriately-structured tax investments. 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. If you are interested in discussions around informed financial planning, keep watching Inside Finance TV for more great free content.  

Personal planning will involve paying out to different funds in different times of life, in this video Paul Garwood explains why most people start retirement planning when they are mid-career.

Personal planning factors

A lot of the work that we focus on is retirement planning. So we look at individuals who are just starting out on their career. And we maybe establish a pension plan for them or mid-career and at that point perhaps they have, you tend to find that individuals who are mid-career have more funds because as you go through your working life, you have different commitments. First you’ve got to pay off university fees and you’ve got to pay off your mortgage, then you have school fees to pay. So you tend to find that a lot more planning gets done from mid-career to at retirement. We then deal with or help to look after individuals when they get to retirement, helping them with their choices. How do they divest their or their pension plans? How do they take their retirement income? How do they generate that income that they need to look after them in retirement?

If you enjoyed this video about personal planning, why not watch more TV shows on Inside Finance?

 

The digital economy has changed the way we do business and the way companies work with each other. In this video Julie Meyer explains why she thinks we now live in a digital ecosystem.

Digital economy is an ecosystem

I do think that in the way that we used to refer to verticals we’re going to be referring to ecosystems in the future. So, we used to refer to maybe healthcare as a vertical and now I think of digital health as an ecosystem. I think it just means that these are multi-dimensional markets and that you can’t think of it in the same way. And you have to look at how the digital enablers or start-ups are interacting with the corporates and the process whereby you value any business and the transactions that will get done, whether the funding’s or the acquisitions,  is going to take on that network shape. We won’t just look at it and we won’t, I think, attribute so much value to the Goliaths’. I think there will be, you know, in those five phases of company growth, the companies that get acquired early for big amounts, like Skype in September 05, why does a company that’s in phase two going into phase three get acquired for 2.5 billion? It’s because the strategic value to the acquirer was so high. Why does a company like Beat That Quote which had £250,000 of EBITDA get acquired by Google for 37.7 million? It’s because the strategic value is disproportionately high compared to where they are in those five phases of company growth. There's a set of structures which have become fairly normalised at this point whereby we will analyse what’s going on in the market. And I think that we’ll have to assess – we won’t look at markets in the same way, we have new tools to look at that. And those kind of David and Goliath model five phases of company growth, ecosystem economics, I think these are the ways. I mean, we’ve been looking at this for a very long time and we’re quite convinced now that our set of glasses kind of works. It doesn’t mean that we won’t, you know, explore and develop and understand better and make some mistakes, etc. But we really do… we, we, you know, we had the epiphanies, we looked for the exceptions, we found the patterns and we really do think we have the correct set of glasses.  

Inside Finance will continue to follow ideas about the digital economy and will have more videos from Julie Meyer.

 

Tax law for properties can be more complicated than people often think, as Chris Springett suggests in this TV Show.

Why people need tax law advice

A lot of people think it’s really straightforward, which often it is. If you own one property, you live in that property, you sell it, the relief’s available and so you claim the relief and it’s all very straightforward. The problems arise when you get something a little more unusual. So you have two residences, perhaps you have a property in the country and one in the city or you have a period of absence, perhaps you work abroad for a number of years, or finally you use your property as part of your business, so a workshop in there, an office that you’re using exclusively. And again that can cause issues for the relief. So it’s making sure that we manage those from the outset rather than trying to piece together things from the end. The legislation that provides the relief is in itself reasonably straightforward. The problem comes, trying to fit your facts into the legislation itself. That’s where the real difficulty starts and that’s why there’s a vast sway of case law on the matter, on the subject. And it’s navigating that case, although I think a lot of people, (a) perhaps just wouldn’t have the resources to do, and secondly, even then drawing conclusions from it can be very tricky.

If you enjoyed this video about getting advice on residential property tax law, why not watch more TV shows on Inside Finance?

Personal finance planning is important but very complex. In this video Paul Garwood of Smith & Williamson discusses his work as an advisor in personal finance, and why people need help.

Personal finance planning industry

The pension planning issue, the big issues for us at the moment are the changes in legislation, which are constantly affecting our clients and we have to make sure that we’re on top of them. And we’ve seen changes on a very regular basis over the last four or five years which has made planning more and more difficult. I think it’s very nice that people have got a lot of choices at retirement, but with choices comes complexity. But again, individuals need to have advice. And in some ways I suppose that’s good news for us, that people have got choices because they will need help. They will need us to guide them in the right direction and point out things that they won’t have thought of. I think a lot of the people that I see are, because of the nature of what they do, and the nature of the individuals that they are, they’re very thorough with their affairs. But there are always things that we find and point out to everybody, there’s always something that we can help them with that they haven’t thought of. And I think that that will always continue to be the case. ___________________________________________________________________________- If you enjoyed this video about personal finance planning why not watch more TV shows on Inside Finance.

A cross border mergers does not only involve 2 firms but 2 countries. In this TV show Giles Murphy explains why English law is often preferred for the contract.

Cross border merger contracts

I think English law is still considered to be a key factor in business transactions, and we do see scenarios where you have businesses from two countries engaging with each other, but the contact will be written under English law because the businesses trust the English courts to resolve any differences.

So there’s a great opportunity to export English law, but to do so it does require firms to have a presence in these other territories, and of course a merger is one way of achieving that.

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Inside Finance will continue to look at issues around cross border mergers. Look out for more from Giles Murphy.

A finance advisor will help you understand what you need to do to comply with tax law. In this TV show Smith & Williamson's Chris Springett explains the best process to follow with your advisor.

Tax law for property

One is record keeping, record keeping absolutely vital, making sure that they retain the evidence that they were living at the property, when they were living at the property. Secondly, come to us early. There’s, under the legislation there’s an ability to make an election, if you own two or more properties and you want to decide which one is your main residence for the purpose of the relief, you can make an election. So again, if we can do that, there is a time limit on that, so if we do that earlier then that’s great. And then I suppose finally, when coming to sell the property, again let’s have a chat, see what’s happened, put together a timeline and perhaps there might be something to do at that stage. It’s a lot easier to do it at that stage than after the sale has happened and we’re looking to piece together stuff from perhaps 5/10, even 15 years ago. ______________________________________________________________________________ For more discussion on tax law, keep checking back on Inside Finance TV    

Pensions are a complex part of personal finance planning. Paul Garwood discusses different ways to receive pension payments in this TV show.

Personal planning : Different ways to receive pension funds

When you reach retirement if you’ve got a pension plan and that pension plan is one that you’ve contributed to and has now grown into a fund, you don’t just have to buy an annuity with that fund.

And you tend to find that those with larger funds wouldn’t necessarily want to buy an annuity because it’s quite inflexible.

 Once you’ve purchased an annuity, if you were to pass away very quickly thereafter, the annuity fund or your pension savings go to the annuity provider.

 Furthermore when you purchase an annuity you may have to make a one-off decision regarding spouses’ pensions.

And if your spouse predeceases you, then again you’ve bought something you don’t need.

Also with annuities you may have to consider inflation at outset.  And that’s quite a difficult call to make.

So what a lot of people do who have reasonably sizeable pots is they enter into income drawdown.

Now, income drawdown enables them to dip into their pension plan and take out an income as and when they require it. And depending upon their circumstances, their income within that drawdown plan is capped at a specific maximum or sometimes it’s open-ended, you can actually take out as much or as little as you want from that plan, as and when you want. And the other thing to consider perhaps with less successful people or with people who I think less successful is not the right expression, but people who have got a more tighter budget when they get to retirement, they might want to phase in their tax free cash. Pension plans allow you to release 25% of the fund on retirement and historically a lot of people have used that, perhaps to pay off debt or to buy assets, notably overseas property perhaps. But I think we’re finding now that a lot more people are perhaps using that tax free cash to supplement their income.  So they will phase it in over a period of years rather than taking it all in one go. __________________________________________________ Inside Finance TV are following discussions around personal planning and finance, and are releasing more videos daily.

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.

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.

Innovative technology has overcome the limits of our muscles and now it is overcoming the limits of our minds. In this TV show Andrew McAfee graphs the revolutions through human history.

Innovative technology is a "huge deal for humanity"

Well if you take a geek approach to human history you start to graph it, because geeks love numbers, they love quantifying things. So a geeky approach to human history would be one where you start graphing over a time things like how many people there are, total population, or some metric about how advanced our civilisations are. Now it turns out people have come up with those, so you can graph those numbers as well. Those two curves look exactly the same, either the population curve or the social development curve, what’s really weird about them is that they are totally flat throughout almost all of human history and then at one point in time they bend almost 90 degrees and they go from basically horizontal to basically vertical and that point in time was the industrial revolution. So in other words all the other revolutions that we’ve had, revolutions and philosophy in religion and how we approach the world, the opening up of the world via trade, lots of things have happened over the course of history. If you take this kind of geeky approach to graphing the course of humanity you come to the conclusion none of those things have mattered very much and what did matter was overcoming the limitations of our muscles, of muscle power, via the industrial revolution. What we’re doing now with the computer revolution is overcoming the limitations of our individual minds or our brains, to at least the same extent as we overcame the limitations of our muscles with the industrial revolution. So if the simple question is how could this not be a huge, huge deal for humanity. Inside Finance TV has further expert discussion about innovative technology - Look out for more from Andrew McAfee

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."

Inez Anderson: "The idea is you award your employee an option over shares.  You can put conditions on that that certain things have to be achieved either by the company or by the individual before they can exercise the option and own the share.  But the whole idea is that the value of a share at the day you award the option, any growth in value from then until the point in time that the individual will sell the share is going to be free of income tax and is subject to capital gains tax.  And there’s very different rates for income tax and capital gain, capital gain is much less.  But last year it was made even better than that and somebody who has been given an option under an EMI scheme, on or after 6th April 2012, as long as they’ve had that option for at least 12 months before they exercised and sell the shares, so the period from the grant of the option to the sale of the share is at least 12 months, they will be able to qualify for what’s called Entrepreneurs Relief.  And that means that their capital gains tax rate will be 10%. Now, most people can get ... will only get Entrepreneurs Relief if they’ve held the share for 12 months, not an option, held the share for 12 months and they owned 5% of the capital in the business.  That’s not the case for Entrepreneurs Relief; you don’t need the 5%."

Caroline Newsholme, Partner, Nabarro on the benefit of greater clarity in reporting

They should seek greater transparency around the pay that directors get, make it clear where performance levels have been achieved or haven’t been achieved and what the impact on that is on directors remuneration packages.

I think they also need to be careful about exit payments, so where a director is departing, making sure that they’re not rewarding someone for failure.  So I think they need to be much more open and clear about these points.  I think they need to simplify directors’ remuneration packages as well.

Often there are many components to directors’ remuneration, so unless you can carefully add up all the elements it can be quite difficult to get an overall feel for just how much one individual is getting.

And I think some simplicity in structuring remuneration packages would be very beneficial.

Sarah Hawes, Professional Support Lawyer – Corporate, Herbert Smith Freehills LLP on how Directors don't take a short-term view

I’m not sure there’s been a culture change because I’m not convinced that there was necessarily anything that broken.

I think with the codification of directors duties in the Companies Act 2006, all directors stopped and thought again about how to be good directors and to promote the success of their company for their benefit of the members as a whole.

I’m not as convinced as perhaps some of our national press are that short-termism is such a problem.

If you look at the way a lot of directors remuneration packages for example are structured, there are longer term incentives and share schemes that require them to actually invest some time and effort going forward in their businesses.

Dr Stephanie Hussels, Lecturer in Entrepreneurship, Cranfield University on Entrepreneurship at the Cranfield School of Management

At Cranfield School of Management, and particular in the Batton Centre for entrepreneurship, we have a remit really of four parts.

One is we do research in areas related to entrepreneurship, we teach on graduate programmes to help MBAs to start businesses.

But then maybe more importantly, especially to this audience, we work with ambitious owner managers to help them grow their business and take it to the next level.  The last aspect we're involved with is events such as Cranfield Venture Day which is an event for ambitious owner managers and investors to come together and exchange best practice.

I think learning, especially as an entrepreneur is essential.  We always say as an entrepreneur come back, learn, improve, reflect, and in the current business climate where companies are challenged, to learn from other industries, other sectors I think will help to take the business to face the challenges and take the business to the next level.

Henry Shinners, Partner - Restructuring & Recovery Services, Smith & Williamson on how companies get into financial trouble

Often they don't spot it early enough and it's often dangerous for directors to ignore some of the warning signs.

They get into difficulties for many different reasons, they may be in a recession hit sector, they may not control their working capital facilities very well, they may have inadequate or inappropriate working capital facilities.

They may be a poor management team.  There are lots and lots of different reasons why businesses can find themselves in financial difficulties.

Sometimes it's the fault of the management team and sometimes it's outside of their control.

Ultimately what causes businesses to reach the point of failure is that they run out of cash, that is the case in the vast majority of the circumstances we see.

Other causes may be, for example in the current environment where leading up to 2007, for example, we saw banks lending quite aggressively, now they may be... they have lending assets which have decreased I value. And so companies may, for example, have failed their banking covenants and that's a potential risk for failure as well.

But often it's the cash, cash running out, not being able to pay the VAT bill or the rent or the wages.

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.

Entrepreneurial spirit will be portrayed in various parts of a persons character. In this TV show Julie Meyer discusses persistence.

The intensity of an entrepreneurial spirit

I’m fairly good at picking up on how much steel somebody has in their spine.  So, you can tell and it’s not just the level of intensity or the stare that they give you,  it’s more you can kind of sense in how concerted an effort. People betray their level of persistence in many ways and I don’t know how, it’s almost like a neural network after you’ve done it for so long.  But you can kind of sense whether somebody’s going to pull through, for example, with Alastair Lukies of Monitise there’s just something that I felt about him that he was extraordinary and exceptional. And, you know, when he got his first client he secured the first client and he sent me a text message, it was like a Friday night in 2006.  And I remember getting a text message that said, you know, 106 meetings, 76 nights away from my wife, but we have a client today.  And, you know, that’s irrational, that’s obsessive behaviour.  Normal people do not do that, normal people don’t just keep on going. Now, he wasn’t just banging his head against the wall, what he was doing was constantly learning, constantly retargeting, adjusting.  And so the man is extremely smart, which is why Monitise is doing, you know, Monitise will be one of the most important companies ever to have been founded in the United Kingdom.  But it takes an irrational level of persistence.  And I think I’m pretty good at figuring out whether somebody is up for that.

There are many more great videos about entrepreneurial spirit and business success on Inside Finance. Look out for more briefings on the subject.

It is difficult to know the best time to start a business as Charlie Mullins discusses in this TV show.

Entrepreneurship Strategy

We have a situation at the moment where obviously tines are tough out there and money is tight. there is still a lot of youngsters that want to succeed in life, well you know, for me, you know they often ask when is the best time is when you are ready for it. Forget the economy, forget the climate at the moment. If you have a product and you are all ready to go with it, go with it. But it is not an easy ride and probably what I would say to people is I have never met a successful person in business who hasn't worked hard to achieve it. Another great tip is, quitters are not winners and winners are not quitters.

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: "There’s the negative impact of getting it wrong.  You don’t attract and you don’t retain the staff you want.  And the positive impact is you do attract and you do retain.  But there are efficiencies of scale, if you have the technology piece in place, which relatively speaking is inexpensive these days, historically it was expensive, but if you have that in place and you’re able to overlay your benefits and grow your benefit structure as your business grows then it’s an all embracing offering.  You would hope that, and in some of our better established clients, they have their staff online looking at their benefit structure, moving benefits around on a daily basis.  So it will engage staff undoubtedly if it’s communicated properly.  There’s no point in just having an employer spend the money and saying, “Well look, I’ve spent 15% of payroll and provided these benefits”, if it’s not communicated properly, nobody’s going to get it."

Frank Akers-Douglas:  "We’re of the view that you may be incredibly wealthy but you need probably more than £400 million to your name and your family’s name to really warrant establishing your own family office.  It’s an incredibly expensive thing to do.  You’ve got to recruit good people, you’ve got all the overheads, you’ve got the infrastructure etc, etc.  So you’ve got to be very substantially wealthy in our view for you to justify establishing your own family office.  Therefore, what we would offer to you is a quasi family office services, bringing to you most of what you might want to have in your own family office but taking away from you the financial pressure of maintaining it.  And also giving a degree of independence so that we can give an independent view on the performance of your investment managers etc, etc, which if you have your own internal family office can become more difficult."

Frank Akers-Douglas: "The Blue Book is called the Blue Book because it originally had a blue cover, it doesn’t anymore.  But it is essentially a financial summary of your and your family’s net worth brought together in a single document which enables therefore a comprehensive view to be taken of your financial worth and that of your family and family trusts that may be there.  And it’s a document that for many people, bring together for the first time ever that comprehensive overview of their affairs.  I mean a lot of people, particularly substantially wealthy people know they’re pretty rich but they don’t know, they’ve never really seen it all in a single document.  And the Blue Book brings that together.  It’s also interactive, so we can play with it to see, you know, if you decide you want to give money away, what effect that would have.  And it is a very useful financial tool.  Essentially I think it’s a sense of relief, that they are able to see their financial position and make educated and proper decisions on what to do with those assets through being able to see it all together in a single document.  And it’s also useful for them to, you know, to have for their other advisers as well, in looking at their affairs.  So as I said, I think on the whole it’s relief and gratitude I hope."

Frank Akers-Douglas:  "Like high net worth individual, it depends, it means different things to different people.  To Americans it largely means the investment management process for a family.  But a European family office model is much broader than that and really brings together all of the financial advisery aspects that you as a family need, whether it be tax, accountancy, investment management etc, financial planning, to your and your family’s affairs.  So what we are seeking to provide is those services to wealthy individuals who either choose not to have their own family office and there are good reasons not to, or frankly, can’t afford to establish their own family office.  But nevertheless are sufficiently wealthy to need a cohesive and comprehensive suite of advisery services."

David Alexander: "Company Directors can be held personally liable if bribes have been paid in their company.  And that could happen in a number of ways.  Firstly, obviously if they knew about it or they were involved in the payment of the bribe then they would be caught under the act as a direct person, as someone who is, you know, paid, offered or promised a bribe to another individual.  However, they could also be caught if they have ignored the warning signs.  And if they’ve ignored the risks in the business and not put any procedures in place, and that’s commonly called the consent and connivance clause, and what that’s basically saying is you buried your head in the sand.  You didn’t look at the risks.  You didn’t consider whether there was the potential for the business to be involved in bribery and corruption.  And as a Director, if that is established then you are as guilty as if you paid the bribe."

Inez Anderson: "Commercially it means the employees just focusing in the business. They hit the ground running.  You know, they’re looking for new customers for you. They’re not thinking, where do I need to go to register with the tax authorities?  It’s really them then ... the business is what they’re there for, they know the rest of it’s sorted out round them and they can just get on with it.  And that’s what I would say, rather than you just dropping as an employer, dropping an employee in some place and saying, “Get on with it.”  If the employee doesn’t sort everything out properly, they’re too busy dealing with clients, they don’t sort everything out they could end up in trouble and the company could end up in trouble.  You’ve not done the necessary registration with the local tax authorities or social security.  You’ve not got a valid employment contract in place.  There’s a whole lot round there, that if you can sort it out beforehand everybody knows things are going to be okay."

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: "You get a total variation of businesses.  I mean one of my favourites last year that we put forward for inclusion in the top 10 was a company called Rock Choir, which if you haven’t heard of it, it’s a marvellous social business effectively where people go off every week and sing together.  And it’s for profit, so it’s a very, very social thing.  I mean I have to say my wife goes and she comes back in such a fantastic mood, I wish she could go every night to be honest.  But no, it’s a really, really fantastic evening. And they’ve built a real business around this.  So this is a community thing, it happens in lots of different cities around the UK, well not even cities, towns, villages etc.  And I believe that they actually culminate with sort of concerts at the O2 and things like that. So everyone getting together, have a great singsong.  And they do rock music, you know, ELO, stuff like that, really good.  So Rock Choir was a business, we had a big hosting company like, you know, companies like ... I’m not going to name names in that area, but they’re ... we had a couple of bathroom companies that were basically selling online.  So technology platforms with Facebook pages, suddenly turning over 20 million a year, amazing how these things are springing up.  So a lot of sort of businesses that are becoming technology enabled and using the internet to grow, and leaving effectively, leaving those whole high street players behind.  We’ve seen it happen haven’t we?"

Mark Webb: "So if we looked at something like Financial Services sector or indeed other sort of slightly sleepy or what you would call mature sectors, you might not think there’s things like research and development tax credits there because you would think that type of business doesn’t have that sort of activity.  But if you actually start to look at what those businesses do and how they organise their business, a lot of, for instance, how they look after a back office function in terms of the computer systems, how that operates, how it links things together.  And all of the work around making these things talk to each other and making things actually happen may well qualify for research development tax relief.  So it’s worth talking to a specialist."

Laurence Bard: "The principle cost is your in-house employees, the costs of their salaries, bonuses, national insurance, pensions.  If you subcontract R&D out to another company that would qualify, there’s a sort of profit margin taken off it.  But designed to get to their underlying staffing costs, the cost of software bought for R&D, the cost of raw materials consumed in the process, for example you might build a prototype and need, spend money on raw materials and have to scrap the prototype at the end of it. Those are the principle costs.  The sort of things that don’t qualify for example would be rent and rates, hardware that gets capitalised in your accounts as a capital cost.  So the big thing is the staffing cost tends to be in most companies."

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: "The obvious examples might be pharmaceuticals, men in white coats and test tubes.  Another obvious example would be automotive, you know, Jaguar, Land Rover developing weird and wonderful extra ways that engines run.  And then less obviously you have all sorts of ... I mean banking you might think doesn’t do anything innovative, but banks spend a huge amount on software and the use of the internet and it has to be secure and it has to work."

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."

Inez Anderson: "There’s a very wide range of share schemes and they can range from where you’re actually giving somebody a share or giving them an option over a share. And they’re both very different and are taxed in very different ways.  And some schemes are Revenue approved and some are unapproved schemes.  And the approved ones will have some really good tax breaks built into them.  The schemes can range from being ones which are really suitable for hundreds of thousands of employees down to a very bespoke scheme just even for one individual.  But if we start by just looking at maybe something that’s the most common scheme or the most popular and not every employer can put one in place.  And the employers who can’t, always want to have it, it’s called an EMI scheme - Enterprise Management Incentive scheme.  And it really is for smaller organisations, smaller companies because you can have no more than 250 employees.  And the company has got a cap on its gross assets of 30 million.  And some types of companies can’t be involved in the arrangements; it depends on the nature of their business.  But it’s got huge amounts of tax breaks and indeed there’s been even more just recently introduced, very much trying to encourage share ownership within smaller companies."

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.

This business leadership video features Jo Malone, Founder of Jo Malone & JO LOVES.

Business leadership video for success

The formula for success is hardwork, courage and tenacity. She says entrepreneurs should create a team that feels like a family and would love to do business on a hand shake again. There is a value in building real relationships in business. If you found this business leadership video interesting why not watch more TV shows on Inside Finance?