Ten key tips for aspiring entrepreneurs

October 8, 2011

My new book, “From Vision to Exit- The Entrepreneur’s Guide to Building and Selling a Business” is available in all good bookshops and online now.

Here are my ten key tips for aspiring entrepreneurs:

1. Work on your vision and strategy. If you can’t be passionate, choose another path.
2. Create a clear roadmap or plan. Work out what you will do and how. Don’t set off in the wrong direction.
3. Consider your resource requirements. What will you need in terms of infrastructure, people and finance? Don’t run out of cash!
4. Develop your purpose and values. Why do you exist? What difference will you make and to who?
5. Never underestimate the power of the status quo. Inertia means that it can take far longer (and much more cash) to achieve your vision and goals.
6. Consider meaning as well as money. Work towards a “triple bottom line”, valuing people, planet & profit.
7. Protect your valuable IP. Don’t let someone else take advantage of your innovation, investment and hard work.
8. Think international. Maximise cross-border trading opportunities and take your place in the global business village.
9. Embrace change and be open, flexible and transparent in your dealings with stakeholders- including customers, suppliers, staff and investors.
10. Work hard, get up early and never ever give up!

“Guy Rigby’s book is a lip-smacking smorgasbord upon which to feast. Easily digestible, never dry, stuffed with sage anecdotes and wit, it can be devoured it in one full fat sitting, or you can pick and mix from the menu, depending on your appetite. The tasty top tips at the end of each chapter should become the staple diet of anyone wanting to run a healthy, growing business. It deserves a Michelin star. Bravo.”
Tristram Mayhew, Founder and Chief Gorilla, Go Ape!

Angel investors are heaven sent

June 6, 2011

Access to funding is still a key challenge for the UK’s entrepreneurs. With the banks still convalescing and austerity measures beginning to bite, early stage and smaller businesses might be justified in wondering how they will raise cash for their expansion or survival.

Luckily, the business angel community is riding to the rescue. More and more private individuals are investing anything from hundreds to hundreds of thousands in entrepreneurial businesses, often helped by increasingly generous tax reliefs under the UK’s Enterprise Investment Scheme (EIS). If you have a sensible vision, a strategy that’s capable of delivering long term value and a well thought out business plan, a business angel might be the answer to your funding prayers.

Type “Angel Networks” into Google and you’ll get millions of results. There are a large number of formal and informal networks to choose from. Some, but not all, can be found via the British Business Angels Association’s member directory – see http://www.bbaa.org.uk/member-directory

Take great care when selecting your angel. Some will want to be heavily involved in your business and some won’t. Find out who else they’ve invested in and speak to the management about their approach. This is likely to be a long term relationship so characters and attitudes are important. Advice from a friendly mentor may be welcome but you won’t want to find yourself in partnership with an interfering or controlling individual. Building a business is hard enough without having to manage difficult and potentially destructive relationships.

If you are talking to Angels, try to look at things from their perspective. In particular, remember that you only get one chance to make a first impression and that, given the risk profile of early stage businesses, investors will take some convincing. Lack of vision, strategy, scalability and passion will be big negatives, whereas a well thought out and fully researched business plan, high barriers to entry and a sound grasp of the projected financials and cash flows will be strong positives.

Finally, don’t overvalue your business and don’t forget to focus on how they’ll get their money back. A vague idea that you might like to pay them some interest or buy their shares back at some future date is unlikely to be attractive.

For further information see http://www.smith.williamson.co.uk/entrepreneurs/resource-centre/article/3021-ten-key-hooks-for-investors-in-early-stage-businesses

Money for nothing in the Big Society

April 9, 2011

“That ain’t working, that’s the way you do it. Money for nothin’ and your chicks for free” . So said Dire Straits on their 1985 album, Brothers in Arms.

I attended an event this week, and these iconic lyrics sprang to mind when the conversation turned to the increasingly rare practice of having to actually pay for things.

The concept of getting things for free is now well established. It has moved from gifts and hospitality through sales promotion to the production and distribution of free products. If you work in London, you can easily be weighed down by free yoghurt, special offers and free newspapers before you even get to work. When you get there you can carry out some free internet search or update your mates on your free Facebook. All paid for by, er, someone else.

There are signs that this concept of ‘money for nothing’ is becoming ingrained. We have become so used to being given things (and not least by government) that we have developed ‘Entitlement Syndrome’, a world in which we expect to be given just about everything we need.

At the event I attended (for entrepreneurs, by the way) there was a clear indication that this thinking is spreading to the world of ‘paid for’ services- a worrying feature since the service sector dominates UK GDP and employs the vast majority of us.

At the end of the day, there are a number of home truths. Perhaps the two most important are that governments (aka taxpayers) and businesses can’t survive by giving it all away for free and the second is that, in life, you generally end up getting what you pay (and strive) for. If we can bring these two concepts together to stimulate a stronger work ethic, we might beat ‘Entitlement Syndrome’ and be well on the road to a happier and more prosperous ‘Big Society.’

Who Cares Wins

March 3, 2011

One of my long held beliefs is that ‘who cares wins’ and I was pleased to be reminded recently that great businesses are built around meaning, not money. Alex Cheatle is the founding entrepreneur and CEO of Ten Group, a highly successful and fast growing lifestyle management business which he has painstakingly built around his thesis- that meaning is more powerful than money and creates value more efficiently. In our recent meeting, he pointed out that:

• Money is divisive, whereas meaning is unifying
• Meaning creates pleasure through shared endeavour, whilst money creates honour amongst thieves
• Money creates dollar thin commitment, but meaning creates loyalty and dedication
• Meaning is cost-effective; money is expensive
• Meaning creates genuine value and business strength

Businesses that build this kind of culture find it easier to recruit and retain their staff and build better value for their employees and investors. It’s a winning argument!

VAT is the problem?

January 13, 2011

With thanks to my esteemed colleague, VAT expert John Voyez, for his insight. Any errors or omissions are entirely mine!

Well, what a lot of rubbish has been written in the press in the last week or two about the increased VAT rate – never let accuracy get in the way of a good headline !

Just for the record, there is no VAT on most children’s clothing, no VAT on most basic food items, no VAT on train, bus and airplane fares, no VAT on books, newspapers and magazines, no VAT on residential housing construction, no VAT on most drugs and medicines, no VAT on betting and gaming, no VAT on education, no VAT on insurance or financial services, no VAT on ordinary postal services, no VAT on most sport activities, no VAT on entry to museums, no increase in VAT on a range of items including children’s car seats, domestic fuel, contraceptives, energy saving equipment, products that help you stop smoking, and, finally, no VAT on cremation or burial (unlike other taxes, death is still VAT free) !

So post 4th January, it will not cost you a penny more at the weekend to slap on an anti- smoking patch, jump on the bus to go to Sainsbury’s where you can buy some clothes for the kids, and at the same time buy most of the weekly shop, including a copy of Sporting Life, before picking up some aspirin to ward of the headache for when you drop in at the bookies on the way home and lose your savings (accrued VAT free) on the 2:30 at Epsom, followed on Sunday by a game of football at the local sports centre in the morning, and a trip to the museum (because you feel you should at least do one thing educational at the weekend), before finally falling asleep in your newly built Wimpey home in front of your brand new 90″ plasma 3D HD TV screen you have just bought, which unfortunately did cost you 2.5% more in VAT.

And, just for the record, if you are still feeling hard done by, most of our EU counterparts have for many years been paying VAT at 20%, and in some cases at a rate well in excess of 20%!

So VAT, exactly, is the problem?

The best place to start a business

December 11, 2010

What’s the best place in the world to start a business? According to surveys reviewed by The Wall Street Journal, it’s Denmark. This and a host of other interesting ‘facts’ about entrepreneurship around the world were published in their November 15th edition.

Based on the information provided, it seems that the UK has some way to go to become the most entrepreneur friendly country. In the overall rankings, we come 14th, behind the USA (3rd), Ireland (6th), Iceland (9th) and Australia (11th). (Source- US Small Business Administration’s Office of Advocacy)

In terms of Red Tape, we appear to do rather better, coming 5th out of 183 in a ranking of how easy it is to start a business based on the procedures, time, costs and capital requirements that governments impose. Singapore, New Zealand, Hong Kong and the US are ahead of us with a number of African countries populating the bottom of the table. (Source- “Doing Business 2010,” the World Bank)

In gender terms, 7.4% of men and 3.6% of women in the UK are involved in an early-stage business, compared with 12% and 7.3% in the US and an incredible 19.3% and 13.4% in China. (Source- “2007 Women and Entrepreneurship Report,” Global Entrepreneurship Monitor)

So what’s the message? In terms of a school report, it looks like 7/10- could do better!

Ode to an Emergency Budget

June 23, 2010

George Osborne spoke, he set the scene….

The nation is in debt.

We’re broke and he will fix it,

Clearly no need to fret!

A billion here, a billion there,

We’ll find the money now.

The poorest will be better off,

But nobody’s sure quite how.

For entrepreneurs, it’s not too bad,

That capital gains tax charge.

£5m they say, at 10%

What’s left may still be large!

For public sector workers,

The cuts will run quite deep.

Let’s hope there’s no strike action,

No promises to keep.

With VAT @ 20 per cent,

Luxury spending may wither.

So if you’re thinking of splashing out,

Whatever you do, don’t dither!

They say you’re still young at 66,

The new retirement age.

But it seems too late to me, you know,

To leave the employment stage.

So some have won and some have lost,

A very taxing day.

There’s only one question that now remains,

Will Capello stay?

There’s no need to be a hero

May 16, 2010

This is no time for heroics. With a freshly squeezed coalition government, a fiscal deficit as deep as Loch Ness, a monster sized public sector and an unfolding Greek tragedy, it is difficult to envision an entirely calm and rosy future. Indeed, the chickens that were hiding just around the corner have now come home to roost and we can only hope that some green shoots of recovery will tempt them out again. We have all had quite enough of recessions and sovereign defaults and would now like normal service to resume. Thank you!

With that off my chest, there are plenty of opportunities out there. Well run businesses will be using these still difficult times to improve their systems and processes, increase their efficiencies and work out how they will out-market and outsell their competitors, as and when circumstances permit. They will be looking at acquisitions and other strategies to increase their market share and may also be considering how our weak pound can increase their international opportunities. Above all they will be carefully managing their working capital and making sure they don’t run out of cash.

Are you one of these businesses that will be ready to take advantage of the real recovery, when it finally arrives? It’s worth thinking about…

On the financing and business development front, there have been some interesting announcements in recent weeks.

In case you have missed them, here are some of the headlines:

– A new company, UK Finance for Growth Ltd (UKFG), has been established to manage and coordinate the delivery of finance to SMEs. The range of funding will be from £25,000 to £10 million and funding will be in the form of debt, equity or mezzanine funding. Over time, it will bring together all of the existing SME finance schemes including the Enterprise Finance Guarantee and the newly announced Growth Capital Fund- a total of around £3.5 billion.

– The new Growth Capital Fund (part of UKFG) has been created to address the funding gap identified by the Rowlands Review of Growth Capital which was published in November 2009. Starting with a total of £200 million and an ambition to grow this to £500 million, it will provide funding for SMEs seeking between £2 million and £10 million, with the first investments being planned for the autumn.

– Over the next year, RBS and Lloyds have agreed to provide a total of £94 billion of new business loans. Of this, apparently nearly half is earmarked for SMEs.

– From December 2010, there will be a new portal providing access to Government contracts, with relevant contracts flagged as SME friendly. The aim is to increase Government procurement from SMEs by 15% to a total of around £23 billion. This is still only around 10% of the Government’s annual spend, so hopefully there will be much more to come.

– Although taxes are increasing to pay for our nation’s profligate spending, the budget introduced some welcome tax breaks for entrepreneurs and SMEs. There have also been some interesting developments at Royal Mail, where a decision by the European Court of Justice means that many businesses may be able to reclaim VAT on the cost of a number of Royal Mail services, including Parcelforce. Make sure you don’t lose out.

With a new coalition budget just around the corner, there will be more to report in the coming weeks. Watch out for the well trailed increases in VAT and Capital Gains Tax. Is now the time for business and property owners to consider realising some of their assets?

Ten key hooks for investors in early stage businesses

March 19, 2010

Family and friends are a great source of funding for start ups and early stage businesses, but raising money from external investors or business angels is challenging.

Here are ten of the key issues that investors will be considering when they meet you or read your business plan.

1. First impressions

First impressions are critical. Most investors will decide not to proceed within the first 30 seconds of any discussion, or within a minute or two of picking up your business plan. Think about your approach, test in on your friends and practise it to perfection. Don’t fall at the first fence.

2. Demonstrable need

Where is the pain and what exactly is the need for your particular product or service? Most businesses offer ‘me too’ opportunities which are not obviously exciting to an investor. Make sure it’s clear how and why yours is different. Is it better, faster, cheaper or is there some other reason why you will succeed when many others fail?

3. Existing Revenues

Raising money for a business with pre-existing revenues is far easier as demand for your product or service has already been partially proven. The fact that you have already established the beginnings of a customer base will carry huge weight in any discussions.

4. Strategy

You may have a great idea, and you may have existing revenues, but what is the future for your business? Do you have a vision? If so, is it realistic or just “pie in the sky”? We have all seen those hockey stick shaped graphs showing an embarrassment of riches only a year or two down the track. Don’t be tempted to over-promise and under-deliver. It’s normally transparent from the start.

 5. Business plan

The credibility of your proposal will be reflected in the quality of your business plan. A poorly presented, badly researched plan will kill your proposal before it has a chance. An idea may be good enough to gain the backing of family and friends, but it won’t cut the mustard with any serious investors.  

 6. Business model

Your business model will determine how and where you make your profits and how you will build long term value in your business. A model that requires huge revenues to deliver small profits is inherently unattractive, whereas a business in a niche market with high barriers to entry will be of interest to potential investors.

7. You

Are you credible in the eyes of the investor? What is your track record and what experience do you have of your business? Most successful entrepreneurs “stick to the knitting”, creating businesses based on their passion (ie something they know and understand), personal knowledge or experience. If this is limited, get the support of a mentor or partner. This will demonstrate maturity in the eyes of your investor.

8. Financials

Businesses go bust because they run out of cash, so be sure to demonstrate a good understanding of your financials. Margins and overheads will be part of the discussion, as well as working capital and cash flow. Remember that small businesses are normally cash constrained and prone to overtrading, so the investor will need to understand how you will manage this.

9. Pricing

Don’t be tempted to overvalue your business. We are a long way from the heady dotcom days when investors were persuaded to part with large amounts of cash based on little more than an idea. Nothing will put an investor off more quickly than an excessive or unsupportable valuation. The more you need, the more you will have to give away, so be realistic, cut your cloth and take in as little external funding as possible.

10. Exit

It’s very easy for an investor to put money into your business, but how will he get it back? A vague idea that you would like to buy his shares back at some future date is unlikely to be attractive. Taking in external funds means that you need to “begin at the end” in terms of thinking about exit, having a clear strategy and plan. This may change as the business grows, but you need that stake in the ground.

These are just some of the issues an investor will be thinking about, often subconsciously, in the short time that he focuses on your business. If you’ve thought it all out beforehand and you can tick all the boxes, you will have a strong chance of success.

Good luck!

A nation of entrepreneurs

February 21, 2010

Napoleon said we were a nation of shopkeepers, unfit for war against France, but are we in fact emerging as a nation of entrepreneurs, ready to take on the world?

At a recent breakfast held by the Non-Executive Directors Association David “Two Brains” Willetts, the Conservative MP for Havant and Shadow Secretary of State for Universities and Skills, said that fewer younger people were getting jobs, whilst older people were being retained by their employers for longer. At the younger end, he highlighted a lack of joined up thinking in the education system, an obsession with league tables and a lack of apprenticeship opportunities. At the older end, employment law and the cost of providing pensions were contributory factors.

But Julie Meyer, founder of Entrepreneur Country, said that she hardly knew anyone under 30 who wanted to work for somebody else. This is supported by a recent survey, where 38% of the 2,000 respondents (both old and young) said that they do or plan to run their own business at some stage in their career.

The fact is that the younger generation, the so called “Generation Y”, is different. They are tech-savvy, multi-tasking, confident and ambitious. They are also achievement oriented with a strong and healthy commitment to family and lifestyle.

So is this the new paradigm? Are we entering a new age of individual capitalism, where people take responsibility for their own futures, rather than trusting in employment or, ultimately, the State?

It is to be hoped that whoever wins the next election will understand the fundamental changes that are happening in our society. It is these that must drive our education and skills agenda, encouraging entrepreneurship and providing both vision and purpose to future generations.