On Internet Business

SeedSummit standardises Term Sheets

Posted by Michael under Business Growth, Entrepreneur Resources

For any entrepreneur, it’s important to review term sheets thoroughly. But for first-time entrepreneurs and those who are already deep into their new venture, the time it takes to master the contents of a term sheet can put a brake in business development.

Term sheets are non-binding templates used to shape more detailed legal documents that will determine the terms of an investment. Usually term sheets are required for seed investment used to undertake research, develop a prototype or conduct market tests on a new product.

So SeedSummit, a Seedcamp forum, has brought together 21 European investors to create ‘reader-friendly’ umbrella documents that are intended to reduce the lead time on completing investment deals, cut legal costs and provide transparency.

The underlying ideas are to create efficiency in funding, allow like-for-like comparisons and underpin an integrity level that could lead to later standard setting across national boundaries in Europe. The documents are the SeedSummit Term Sheet and the Enterprise Investment Scheme (EIS) variant which is specifically designed for the UK marketplace and both are being viewed by Seedcamp as the prototypes for a further development of more complex legal instruments, building on the original American term sheets agreed in 2009.

SeedSummit says, ‘We hope these documents help bring coherence to the …European market. By bringing the players to reach a common agreement for the benefit of the entrepreneur we hope to save entrepreneurs time and money and to ensure that the limited funds they are raising are used for the most important thing: building product for their customers.’

Interestingly, none of the business accelerators (early stage development programmes that offer mentoring on an in-depth level – often with competitor start-ups working with/against each other in parallel with the mentor – plus small and tightly focused amounts of equity-based funding), have contributed to the templates’ development which suggests the more traditional incubator systems are finding it necessary to shorten the time between idea spotting and investment to keep up with the incubator approach.

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Six ways to benefit from the Bribery Act

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

From next month, British-based firms of every size will be facing the biggest shake-up in UK bribery law for over a century.

Whether you’re an SME or already a multinational, there are new forms of risk to assess and build into your business strategy. The most notable is a crime labelled ‘failure to prevent bribery’ which puts the onus on the business to prove that it has assessed the risk and implemented ‘adequate procedures’ to stop bribery being used within the company or by third parties acting on the company’s behalf. This crime leaves company open to fines that do not have a financial ceiling and also to the possibility of being barred from seeking government contracts.

While bribery may seem a remote issue to many firms, it’s important to recognise that the shape of the new legislation makes it a management concern and failure to implement good structures could lead to investigation and long-drawn-out interactions with the Serious Fraud Office or the Ministry of Justice. It’s also crucial to recognise that investigations are increasingly driven across national boundaries so a concern may be raised elsewhere in the world that is then acted on by a UK agency.

Dealing with the Bribery Act

Creating the right processes begins with business governance, and involves setting in place controls, ensuring there is a business culture of integrity and ensuring that individuals at the all levels in the organisation have been given training in values and behaviours that make the company averse to the risk of bribery.

1.    Start with a risk identification programme to find the areas of greatest risk
2.    Make sure you have a policy that is explicitly anit-bribery and that it is driven down from the top of the organisation to the bottom as part of induction, annual review and continuing professional development
3.    Create an anti-bribery champion at senior level who is able to challenge all levels of the organisation on their actions and their values. Resource this person effectively to carry out their role and create an annual reporting structure that is transparent to all areas of the business. A company intranet is a good way to do this.
4.    Check that existing contracts with consultants, directors and employees as well as outsourced areas all contain a clause prohibiting any form of bribery.
5.    Ensure HR can carry out good due diligence on new employees and that an effective form of due diligence is in place for partnerships, joint ventures and even funding sources.
6.    Give whistleblowers respect, anonymity and the chance to report concerns safely. Act on such concerns swiftly and with due concern for the anonymity of the person who raises them. Document the company’s actions in responding to concerns.

While such legislation can seem like a brake on business success, a good corporate strategy can use this kind of review to drive better understanding of values through the company, making integrity an aspiration, not a nuisance.

Image courtesy of images_of_money

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UK businesses face employment and finance hurdles

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

This month has revealed the CBI’s newest analysis of the UK labour market, which claims to expose long-established structural problems which can inhibit business success and won’t be solved simply by overcoming the recession. The current unemployment figures 2.46 million will continue to rise through the year, according to the CBI, with a high of 2.6 million. The unemployment rate will then begin to fall, slowly through 2012. The bad news is that within that national position there are regions of long-term, entrenched unemployment and an overall skills shortage in certain key business skills.

The report suggests that these divisions in skill and supply, or from the social perspective, in quality and quantity of opportunity, will actually deepen as the recession fades. A key factor for those planning reform and growth is that the businesses sectors with greatest employment growth between 2004 and 2007 were also the ones with the steepest employment decline after 2008, which suggests a boom and bust phenomenon that could happen again unless some form of structural improvement is made.

NESTA sees trouble ahead

And in March a National Endowment for Science, Technology and the Arts (NESTA) report found that high-growth businesses in the UK had been more resilient than their slower-growing counterparts since 2008, meaning they have been a key driver of recovery. High-growth businesses are defined as those designed to achieve high growth and rapid profit increases (usually around 50% growth per annum) often meeting these targets with innovative product development and promotional strategies and with a pool of investors providing working capital and active oversight.

By this definition a mere 6% of UK businesses are classed as high-growth, but they created over half of all new jobs since 2007 by outperforming other forms of business enterprise, by having robust systems and products, and—through the injection of investor capital—avoiding the cash-flow problems that lead slower businesses into insolvency.  However, the drop in risk capital funding in the UK since 2008 is starting to hit these businesses too, because traditional lending structures view them as higher credit risks, often because they haven’t been around long enough to have the kind of track record that commercial financing houses see as conferring stability.

Better education a solution

Both reports focus on the need to build a skilled and creative workforce to support business growth and on improving links between businesses and educators to meet the skills gaps that have been identified.

Hiring notice by srqpix

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Family Business – the future of SMEs?

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

PricewaterhouseCoopers have just published a report that suggests over 20% of family businesses in the SME category are expecting to have new owners in the next five years – but only 7% of them expect the business to pass from one family member to another. More than 1600 small businesses in 35 countries took part in the survey.

Family businesses fail to plan and plan to fail

Future-shock can be a real issue for SMEs and demonstrates a lack of strategic planning. But by breaking down the terms we use when describing an SME, there’s a chance for small businesses to lever more finance, plan for the future and even move from small to medium by redefining what ‘family’ is.

First the bad news: many SMEs still don’t understand, or plan for, their exposure to
Capital Gains and Inheritance tax. This can cause conflict at the crux point of deciding the future direction of a small business, or add to pain and grief at a time when an SME loses its founder to death or illness. There’s also an inherent problem of managing the balance between family and firm when employing relatives in a small enterprise because if they don’t perform well, it’s difficult (but not impossible) to work within the formal business structures when evaluating their performance and working with them to improve their output.

Family firms can outperform others

On the other hand there are plus points. You can get great people to work for you, often for less or no money, because family members are willing to support and invest in a family firm – and if you bring your home-grown talent with you, you’ve got less competition out there!

On the other hand, you need to work harder to get finance because funders look much more closely at family firms, seeking exactly the kind of weakness in future planning, strategy and talent development mentioned above. One way to address this is to take your business to an international level as soon as possible – showing that you can work across national boundaries is a great way to demonstrate that you aren’t a ‘cottage industry’.

Redefine family to boost business success

Think about how you define family – what about offering a loyalty bonus to staff who’ve been with you for a period of time? If you leverage them into an equity share, involve them in ‘family’ events, make sure their birthdays and family events are as important to the company as your own: you’ve started to build an extended family where intimate confidence in and knowledge of the lives of your team can extend past blood relationships to build the kind of partnership that ensure you keep your best people and establish a small empire through talent, not kinship. That’s attractive to any funder and if those ‘family’ members decide to leave, and you can support them in establishing a subsidiary or complementary organisation, you’re on your way to hot-housing a cluster of business excellence that supports the growth of your SME without cutting into your market share.

Market stall child by Ivan Mlinaric

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Mission Creep – a business problem?

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Coined in 1993, during the UN Peacekeeping Mission as part of the international response to the Somali civil war, the term mission creep has entered daily life. Bosnia, Afghanistan, Iraq, Libya – all demonstrate examples of mission creep, which is often defined as the expansion of a project or mission beyond its original goals, often after initial successes and leading success breeding more ambitious activity until a final, often catastrophic, failure occurs.

And that could be a definition of many businesses that fail, or wobble on the edge of failure, right now. It’s easy to slide into unexpected areas of operation because they are popular with customers or even with staff, and popularity can be a driver of growth: but it shouldn’t be the only one.

Many non-profit organisations have learned to control ‘mission creep’ with mission statements, and for new businesses, or older ones that are struggling to grasp and commit to their key activities, a mission statement can be the secret weapon that keeps them on target.

Simply put, a mission statement is applied when there is a doubt test. When you wonder whether to zoom off in a new or parallel direction because a client suggests it or a competitor leaves a gap in the market, comparing the new idea to the mission statement keeps on course.

What is a business mission statement?

A mission statement is a focused, attainable, simple statement. Being the biggest Murg provider in the world is a fantastic ambition and it sounds simple but it’s not focused, and may not be attainable. Being one of the top ten Murg providers in Europe, with a skilled workforce and well-funded research programme to provide new Murg add-ons for future customers is focused, attainable and simple.

How to write a mission statement

Think of it like a laser. It’s a narrowly focused weapon that cuts through the rubbish to reveal the core of things. To get it right, make sure it:

1.    Solves unmet needs
2.    Leverages key skills within your organisation
3.    Energises and inspires your employees
4.    Anticipates change
5.    Is memorable.

Somali Mission courtesy of expertinfantry

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Making customer service work

Posted by Michael under Business Growth, customer service, Entrepreneur Resources, Leadership, Social Media

A recent article in Inc suggests an unusual approach for any business that has an intensive service profile: hotel and retail and personal services, travel and holiday industries and every form of catering to name but a few. The problem it seeks to address is the issue that if you’re giving great customer experiences to those in front of you, customers further back in the queue may be losing patience and eventually, you lose their business.

So what’s the answer? According to a study entitled ‘The Quality-Speed Conundrum: Trade-offs in Customer-Intensive Services’, published in Management Science, it’s simply to find the right balance between service and speed, and while that includes a complex algorithm or two, the bottom line is that you end up deciding how many people you can serve superlatively and limiting your service to that number.

This means that you set the price for the customer number that’s optimum and stick to that price/number ratio without reducing service by adding more customers. But how many of us can honestly do that?

Alternative approaches include outsourcing or crowd-sourcing non-customer facing processes so that you can concentrate on driving a customer service ethic from the top.

This means establishing an expectation understanding with your customers – where possible before they actually become customers – and setting up systems that check you meet those expectations more or less all the time.

•    Begin by deciding what you can do, what you can’t do, and what you do that nobody else can do. Should existing customers be addressed by name whenever they call? Do you want a random audit of customer satisfaction every month? What about mystery shopping? How will you handle complaints and suggestions for improvements? What will you do to reward loyalty?
•    Make sure your staff, but more importantly, your customers, know how and when they can access this customer service. There’s no point offering superlative service if it doesn’t work for the times when your customers can access it.
•    Ensure consistency in response – don’t agree you will call customers back by phone within 24 hours but allow a week to pass before responding to emails.
•    Be honest about failure – things will go wrong, and telling your customers (where possible, in advance) that you know there’s a problem, and what you’re doing to rectify it, goes a long way to turning a negative customer experience into a good one. If there’s a postal strike planned, make sure your website, facebook page, twitter feed and phone staff all know the details of your alternative delivery system. If bad weather or some other uncontrollable force knocks out your service team, be ready with a fall-back system like an outsourcing centre, and be clear to your regular customers that this is a fall-back and they may not get the consistent familiar service they expect from your organisation.
•    Offer alternatives – if you can’t do what people want, suggest somebody else who can. It sounds risky but it’s better to hand over a relatively happy customer than lose a disgruntled one: often they come back if you’ve done the decent thing.

Poor customer service image courtesy of Matthew Wilkes

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Networking – what it give the entrepreneur

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Every business leader knows they need to network, even if they don’t do it. But what are the personal benefits to an entrepreneur from networking at events and gatherings, and why should he or she focus on this aspect of business life.

Reinvigoration

Being a self-starter is great, but sometimes an injection of outside influence can really boost a business, and entrepreneurs get tired and develop tunnel vision, just like anybody else. You don’t always need to hire a guru or bring in a consultant to reinvigorate your business – you can just soak up the atmosphere, ideas and experience of other entrepreneurs and take all their energy, enthusiasm and top tips back to your team.

Simplification

At conferences and seminars you get business thinking distilled down to nuggets. Not all nuggets fit all businesses, but you can usually find one or two simple ideas that would work for your business and that have somehow passed you by until now. Because the ideas are presented simply and swiftly, they lock into receptive business brains easily.

Identification

When somebody else tells you that your customer service is slipping you might get defensive, but when you hear somebody else talking about how their customer service slipped, and what they did to put it back, you tend to get identification. Learning about other businesses and their learning curves can highlight areas where your own business is under-performing without seeming as threatening as being ‘told’ you have a problem.

Rebellion

Entrepreneurs nearly always got into business because they thought they could do better than the status quo but it’s easy to lose sight of that rebellious streak – meeting others like you can remind you that you’re a rebel, not a suit, and that your business is a crusade, not a day job.

Networking machine by Richard-G

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Making your business newsworthy

Posted by Michael under Business Growth, Entrepreneur Resources, Social Media

Getting good coverage for your business’s successes can be tough unless you have some X Factor feature to catch the media’s eye, but businesses that don’t exploit their PR potential are likely to be missing out on opportunities and brand recognition tools.

Know your media

There are thousands of ways to reach the media, but establishing connections that lead to coverage takes time. Somebody in your organisation has to sit down and work out what the target audience reads, listens to or retweets and then read, listen to or retweet those media outlets until they understand what the themes (or memes) are that work best.  Some radio shows, for example, regularly feature the same local businesses if those businesses have some weird, whacky or other ‘line’ that works for the show. Others constantly seek opinions from ‘green’ businesses on major news stories such as interest rate or legislation changes. Certain newspapers and TV journalists like to have established family businesses to call on for quotes, while others are keen to get the views of entrepreneurs and multi-cultural organisations.

Spin your story

If a company has a new product or service, it might look, at first sight, to have a very limited publicity pull, but that’s when you need to find the right hook. Most journalists will respond to stories that hook into:

•    Public concerns (cuts in government services, economic bad news, long term bad weather forecasts etc) to which your product or service could provide a positive spin.

•    International news (look for new UN or EU legislation and pin your stories to that – it may take a while to get a credible reputation but there are many more businesses competing on the UK stage than linking their development to international stories, so over time your organisation is more likely to become a quotable source on the ‘international business stage’ even if you’re tiny)

Set up a system

Pick national days that are relevant to your organisation and others which are easy to spin off such as National Take Your Daughter To Work day and make sure you have a good PR angle set up well in advance. You can use the same days year after year so that you have a regular PR schedule running. Of course it needs to be a serious story, not a cynical approach to obtaining PR because journalists can see through these and make an organisation regret it ever tried to ‘play’ the media.

Be the squeaky wheel

This is a higher risk strategy but worth it for businesses that feel they have an edgy profile (think Branson rather than Dyson). Just take a big story and offer an alternative viewpoint. If you can make it controversial, and you are sure you can ride that tiger, go for it!

Don’t stop

PR is a process, not a story. Successful businesses expect to get one hit in eight, which means putting out eight press releases to get one into the hands of a journalist who will run with it. It can take years to build a public reputation (but only minutes to lose one) and creating systems like Google alerts allows you to keep up a momentum that will bring PR credibility and coverage in the long term.

Interview image courtesy of Phil_Parker

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How negativity can lead to business success

Posted by Michael under Business Growth, customer service, Entrepreneur Resources, Leadership, Social Media

There used to be a deeply offensive joke that did the rounds in working men’s clubs accompanying a cartoon of a man in a smart suit with a speech balloon saying,  ‘The doctor says I’m impotent, so I’m going to dress impo’tent’. The addition of the missing letter gives the joke some sense: impotent or important?

One of the biggest stumbling blocks to new businesses is the way that issues come up and hit the executive team in the face. If there’s no team, just a solo entrepreneur, it’s his or her face that gets slapped with each new ‘important’ demand. A customer complaint needs handling with tact. A new contact has to be massaged into becoming a client or supplier. A competitor moves into the company’s space, challenging market share (or withdraws from a joint arena, offering the opportunity for business expansion) and a decision has to be made. Something trending on Twitter or Facebook seems likely to bring attention to the company, but somebody has to oversee the engagement process …

Some of these are important, some make you impotent. Focusing on the wrong ones is like stepping into a hamster wheel: the faster you move the faster you have to move, but you’re getting nowhere.

Negate the problem

Negativity means refusing to put time and energy into non-productive areas. Each business is different, and every set of priorities will vary, depending on the maturity of the business and the management style and ethos of the decision-makers, but decisions still need to be made. A maturing business be ready to say ‘No, our Founder or CEO isn’t going to deal with customer complaints, but we are going to invest in a customer service workshop to ensure all managers are ready to resolve complaints effectively’ while a new business might decide the boss’s time is best spent on face-to-face customer relations, so his or her energy will need to be removed entirely from social media. The key thing is that the decisions are made because one of the characteristics of a business that outgrows its success is ‘Founder Failure’ – where the entrepreneur’s inability to be equally focused on every aspect of the organisation leads to decline in the areas where he or she is trying, and failing, to maintain personal input.

It’s difficult for determined, committed, smart people to accept that some things are just distractions from their primary role. It’s tough to give up the personal touch, but business evolution requires certain kinds of negativity. Hiring a speech-writer allows a CEO to focus on business-building: a few personal touches added to a professionally written script are usually all that’s needed. Professional ‘ghosts’ manage social media for small companies, engaging with the public and transferring genuine complaints or concerns to the management team – it saves hours of trawling through tweets and Facebook comments and still gives the organisation a personal face.

Let go of the past

How often do you really need to be up to date with finance? Daily, weekly, monthly? Scheduling a one-to-one meeting with your finance manager (or just time to focus on your accounts for the really small business) is better than trying to stay on top of the money every minute of the business day. If you can’t relinquish that level of control you are building a bottleneck into business growth.

Did you start out as a techie with people skills and are you still trying to meddle with the techie side of business? If you’re the boss, it’s your job to delegate while remaining in touch with developments: trying to ‘do’ rather than delegate is one of the main reasons that new businesses don’t grow. Use your background to hire the best, not to be the best, and keep your energy for what the best techs can’t always do: building relationships, spotting opportunities and planning strategies.

Business to do wall courtesy of juhansonin

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Big Venture start-up funding

Posted by Michael under awards, Business Growth, Entrepreneur Resources

The Big Venture Challenge will reward 25 UK-based social entrepreneurs with up to £175,000 business funding.

The awards derive from the Big Lottery Fund and the Millennium Awards Trust, and will be the result of a nationwide ‘Dragons’ Den’ type contest. The chosen 25 will receive a £25,000 grant and then can obtain up to £150,000 of funding as they obtain matched funding in the form of loans or equity from other investors. They will also be given business support and mentoring to enable them to achieve their goals.

The idea behind the Big Venture Challenge is to help social entrepreneurs scale their enterprises up swiftly so that they can improve their social impact in communities where the public sector can or will no longer provide.

There’s going to be a panel of judges including investors, successful entrepreneurs and business leaders. Those taking part include Sinclair Beecham, co-founder of Pret A Manger, and former Dragon and serial entrepreneur Doug Richard. Applications are open now until 30th June and more details can be found here.

Dragon image courtesy of L2F1

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