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An Entrepreneurial Christmas List

EDITED Christmas stockings DSCN8428

Most of us are reaching the end of our working year in the run-up to Christmas. With the economy finally on the rise, 2014 has been an exciting and productive year for entrepreneurs and start-ups.  As we’re looking forward to an even brighter 2015, we asked four of our entrepreneurial SMFs what’s on their Christmas business wish list.  Here they share their Christmas wishes, which range from financial investment for faster growth to a 3D chocolate printer!

James Harding, Co-Founder of Natural Juice Company

Gemma Harding launches Natural Juicing Company photo
Delicious range of natural juices

Specialising in dairy and gluten-free juices the Natural Juicing Company was recently launched by James Harding and his wife Gemma, and they are looking for venture capital financing, and marketing and communications experts to help them speed up growth and development in their new business. The company launched in November this year and is already causing a stir, having been invited to supply the juices for a leading UK premiere in 2015.

James said, “Like any start-up, we need help, particularly in the areas of marketing and business development. We have two Christmas wishes – the first is to find a communications expert who believes in our vision and is able to provide some advice pro bono to help us build brand awareness, secure trials and endorsements from health professionals and celebrities, and give us tips on getting into the media.

“Our second Christmas wish is to find a mentor/non-executive director who can provide ongoing marketing advice and introduce us to people who can help grow the business. We’re feeling optimistic as we set out on a round of meetings with venture capitalists over the next couple of weeks with a view to raising funds in early 2015.”

As we’ve discussed in the blog Raising money for your business venture, venture capital is often hard to acquire as you must demonstrate a high potential for growth. However, once secured, it is perhaps one of the best forms of start-up funding. Recruiting the sort of marketing and communications expertise Natural Juicing Company is looking for is equally challenging, but we are confident that we can connect them with Fellows within the SMF network who can give them advice and support.

Likewise, there are many non-executive directors who mentor new enterprises and by researching the processes NEDs go through as portfolio entrepreneurs, James and Gemma can gain the knowledge to find the right mentor.  Either way, they have made an important first step in identifying what they need to do to make their wishes come true. Do get in touch with us if you think you can help James and Gemma.

Mark Spence, CEO of Rheolab

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Rheolab has a long tradition of hiring and training ambitious young people

Entrepreneur Mark Spence is the CEO of Rheolab, a world class business that sells polymers as cosmetic ingredients. Mark’s business is a great model of a dynamic, transnational company, and his wish highlights the challenge of finding the right people to expand the business across different national markets.

Mark explained, “We have 13 employees split between Chicago and Leeds. The US is the largest market and within the US the North East is the largest region. We have tried for several years to get penetration in this market using distributors, but our results have been mixed. English people go down well in sales roles when visiting large US cosmetic companies. As a Christmas present for Rheolab, I would like to recruit a smart outgoing UK chemistry or chemical engineering graduate who has the confidence and resilience to succeed for us in the North Eastern US market.”

If you’re a talented engineer with the skills Mark is seeking, don’t hesitate to contact us – you could be that illusive person who can help Rheolab penetrate the highly competitive US market by bringing uniquely British business and sales sensibilities to the table.

Serge Taborin, CEO at Q App

 Serge Taborin at Q App voted Best Mobile Payment Service

Serge Taborin awarded Best Mobile Payment Service trophy by Mobile Entertainment Magazine

Q App is a leading mobile ordering platform that enables users to browse the menu and select and pay for their order at participating venues – all from their smartphone.  It also allows users to specify their collection time-slot, making it ideal for takeaway outlets, coffee shops, and theatre intervals. It is therefore revolutionising the hospitality sector by removing one of the biggest end-user pain points in the industry; queuing.

The company is now entering its next stage of development, which involves expanding the number of high quality venues using the app whilst simultaneously driving up the number of end-users. Serge Taborin’s wish is to secure the necessary venture capital funding to take the business to the next level.

Serge said, “It’s been a very exciting year, winning new contracts with big brands including the Royal Albert Hall, Southbank Centre and Premier League grounds, as well as theatres, bars, pubs, coffee shops and fast food outlets.  Now we need to raise our next wave of funding which will allow us to make a step change in the number of venues using Q App, taking it into the high hundreds over the next 18 months. We will be able to expand our team to support the increasing number of venues coming on board, boost marketing to ensure more people are aware of the service and invest in development so that the product continues to evolve.”

Nimesh Thakrar, Founder of Banneya.com

personalised rose gold ring
Beautiful jewellery created with a 3D printer

Banneya.com offers CAD-proficient jewellery designers access to the latest additive manufacture technology to create their designs in precious metals. This is in line with brand new technological developments in 3D printed metal. Each piece of precious jewellery is hand-finished to the highest standard, and Banneya offers a curated marketplace on which to trade. Banneya also offers a forum for building mutually beneficial business partnerships with all parties benefiting from the income collectively generated by the platform. Nimesh Thakrar, hopes to see new developments in 3D printing technology to bring new and exciting products to this blossoming market.

Asked for his Christmas wish he jokingly said, “We’re creating some stunning 3d printed gold jewellery – that doesn’t exactly help with treats in the office, so how fitting would it be to be gifted a chocolate 3D printer this Christmas? Yes, they do exist now!”

The business ‘birth rate’ has reached a 10-year high, with the number of new firms up by 28.5% last year.  More than ever, new businesses are looking for ways to get a foothold in their respective markets. By setting your wishes (aka goals) and timeframes, entrepreneurs, like our SMFs are well on their way to success. We hope all their wishes come true and that they have some real down time at Christmas in readiness for a sparkling start to the New Year.

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Grooming your Business for Sale: Appointing a Corporate Finance Advisor

Deal Image for SMF Blog on Selling Your Company dreamstime_m_3095784

Preparing a business for an eventual sale is usually a long, arduous process made up of many different steps and unseen complications. Selling a business is nothing like selling a house or private property: it involves negotiations over every minute detail of the company’s infrastructure, as well as its day-to-day functioning. The larger your company is, the more complex this process will be. However, regardless of size, if you’re thinking of selling your company, you need to appoint a corporate finance advisor as soon as possible.  A business sale is fundamentally a results-driven process, and the results you reap will be largely contingent on who is involved in that process.

A sale: more than just a transaction
The first person you may think of consulting is your company accountant. Now, whilst accountants can offer some sage advice about selling the company (pun intended!) – and even nudge you in the right direction when it comes to finances – their role can ultimately be very limited.  The kind of advisor you are looking for is someone that understands the sale as more than just a transaction. This is where corporate finance advisor come in.

A corporate finance adviser acts as counsel on the different types of transactions that involve a degree of change of ownership within a business. Because they will be accompanying you through the entire sale process, the success of a future sale banks heavily on their abilities and experience as advisers. You therefore need to establish what qualities, skills and prestige you need to look for in a corporate finance advisor, and bear these in mind as you begin your search.

What to look for
You might already have an idea of what to look for in a corporate finance adviser. One of the most obvious credentials might include an adviser’s track record in your sector.  Taking this at face-value is not enough; you should try to break down that track record into its composite parts. What sort of results have they achieved in the past, and in what way? What returns did their past clients see from their work?  Do they have a history of strong successes, or just a few one-offs? Look at testimonials and referrals from past clients. It’s also worth looking into any public history of recent transactions they’ve been involved in.  The more you research, the better-informed your decision whether to hire them or not will be. If their track record is consistently successful, then it should tell you what you need to know about their knowledge of the industry and their contacts within it.

It’s worth asking how many projects an adviser is currently involved in. With bigger companies, there’s a chance that they will be working on up to 20 projects at any one time. As well as this, larger advisories may start you off with their more experienced staff, but by the end of the sale’s timeline, there’s a chance they will have handed your sale to some of their less-experienced staff lower down in the company hierarchy.  This will obviously damage the ‘grooming’ process, as, ideally, you want the same advisers to work with you from beginning to end. In this case, it might be better to look at smaller corporate advisories who work with less clients at any one time. These will also tend to have smaller but more focused and targeted teams, which will be able to work much closer with you.  The downside of this is that smaller companies may not have quite the same level of prestige as larger advisories, which could make things slightly more difficult when it comes to dealing with aspects of the sale that rely heavily on an adviser’s reputation.

If looking at a smaller firm, it’s worth checking to see if they have won any awards, or examining evidence of collaboration with other professionals (such as reputable private equity firms or large law firms).  You want an adviser to ideally have quick, direct, and most importantly, confidential access to, and contact with, the different potential interlocutors involved in the sale. This should also reinforce their record of market knowledge, and tell you more about their track record generally.

Another factor of consideration is adviser fees. In this interview, Chris Hale of Travers Smith says:

“If you are looking at a deal with an enterprise value of more than £100m, you would expect the corporate finance adviser to be charging a 1% fee if they are on the sales side, and perhaps ratcheting up to encourage a higher price to a number larger than that, [above £120m] if the target was say £110m they might be getting another 0.5% and then ratchet up even higher than that once you get into the really deal glory territory.  Once you are below £100m the percentages become much more variable. The smaller the deal the less relevant the percentage is. It’s the absolute number that you need to be looking at. So if you are dealing with a deal below £10m the percentage fee might be 5% but what you actually want to look at is the £ number and whether that’s what you think is good value for what you are buying from the advisory firm that you are appointing.”

However, Bob McNaughton (in the same interview), reminds us:

“I don’t think I have ever chosen an adviser for their fees. I have chosen them for their capability to do the job. What I would add on fees is [that] I definitely agree they should be incentivised to maximise performance.”

So, while fees are an important consideration when selecting an adviser, they are not the defining factor.  At the front of your mind should be their reputation and know-how; what kind of results they are likely to bring to the table; and, most importantly, their capability, knowledge, and experience in your industry.  A corporate finance adviser is a vital component in preparing your business for sale, and it’s on the basis of these sorts of criteria that you should consider them before hiring anyone.

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SMFs Connect in New York

SMF New York Networking Event October 2014

British Engineers are renowned for their railway building skills the world over and for 100 years 42nd and Park has been the temple to railway engineering, the site of Grand Central Station.  So this was more than a fitting location for a group of British engineers to meet up on the 30 September at The Campbell Apartment Terrace in in New York City.  This event was organised and hosted by Laurence Knight, who together with Alpesh Amin on the West Coast, have set out to foster networking amongst the SMF community living in the USA.

Together with Laurence were Evaristus Mainsah, coming down from IBM in Armonk New York, Gavin Mc Mahon, from Connecticut and David Crosbie who arranged for a NY speaking engagement on that day, coming from Massachusetts.  Two others who didn’t quite make it were Phil Strong, hoping to fly through New York from London on his way home to California and Aidan McGilly, who resides in New York City.

Coincidentally I was on holiday in New York City and staying just a few short blocks away, so was able to attend as well.

It was a lively event – David, Laurence and Gavin talked about running their own businesses and Evaristus talked about life in New York and IBM.

All felt that there was real value in connecting  with other SMFs  in the USA.  Over the next few months, Laurence and will be reaching out to all SMFs in the States to find out what sort of activities and events  would be of  interest.

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Sky’s the Limit for Careers in Africa

Ernie Edited

“The opportunities to go all the way to the top of your career in Africa are unlimited, but if you want to be successful two things are essential; go with an open mind and try to understand the cultural context in which you are working.  Second, if you are going independently rather than being posted by a UK parent company, you must have sufficient resources to cover your social needs, especially housing and healthcare. Preparation will ensure that your dreams are fulfilled,” said Ernest Poku, Asset Manager at Ophir Energy, who has held two senior roles in Ghana.

Ernest graduated from Bristol University with a degree in Mechanical Engineering and initially worked as a drilling engineer for British Gas Exploration and Production. He then formed a consultancy offering technical and commercial services to oil exploration companies Shell and BP.  In 2001 he won a Sainsbury Management Fellows MBA scholarship and took his MBA at Erasmus. This gave him the business skills to become an entrepreneur and set to up Crescent Diagnostics, a medical diagnostic company that invented award winning devices that predict fracture risk.

The chance to work in Africa came via Ernest’s connections on LinkedIn. “I was considering my career options when a headhunter contacted me through a group focusing on Africa.   The headhunter thought my background was a good fit to run a subsidiary of a British-owned engineering company based in Ghana.  After extensive interviews in the UK, and a visit to Ghana to meet customers, I was delighted to be hired – it had never occurred to me that I could work in a senior post in Ghana in my chosen field.  Apart from the attraction of working in a fast-growing economy, having Ghanaian parents meant there was a strong pull towards the country.

“I worked for the Ghana-based engineering firm for one year where I managed 25 staff.  We supplied mechanical engineering products to the upstream oil and gas industry and I regularly travelled to Ivory Coast, Togo and Nigeria to meet customers and discuss their needs.  I didn’t realise just how much I would have to travel by plane to visit different cities – the road network is poor in West Africa; motorways between cities are rare.  A key part of my job was demonstrating to customers that the products and services they required could be sourced in the region rather than ordering from the EU or USA.  When that contract ended, my original headhunter helped me secure the role of Country General Manager at Ophir Energy, an oil exploration company based in Accra, the capital of Ghana.

“My transition from the UK to Ghana was very smooth because I, my wife and baby son went on a full expatriate package which covered everything from flights to housing and healthcare.  If you’re going it alone, it’s vital to have a long-term plan, to research the job market, cost of living and accommodation because western-style accommodation in Ghana is as expensive as living in London, and there is no free healthcare or free schooling.  I met expats who were trying to establish themselves independently and they found it difficult, especially competing in the local job market.

“It’s better to get a placement via a UK-based company with interests in Africa.  Even at graduate level this is do-able. While I was in Ghana a number of UK financial services companies sent graduates to set up local offices and provided them with expat packages.

“Working in West Africa has its pleasures and issues.  Operating a company in Ghana requires a more vertically integrated approach than in Europe.  We had to develop our own water and electricity supply, construct buildings and develop good logistics infrastructure to secure the materials we needed to run the facility.

“I was surprised by the large number of local university graduates and the relative lack of skilled technicians.  We found it challenging to recruit high quality skilled builders, masons, carpenters, machinists and mechanics and implemented our own in-house training programmes.  The Ghanaian government is keen to encourage local involvement to ensure that the oil companies operating in Ghana do not solely use expatriate labour. Landmark legislation aims to have 90% local participation in the oil industry within a decade.

“In terms of acclimatising to the new business culture, I encountered two other key differences.  Running a highly unionised company was testing, with tense industrial relations and negotiations, especially on pay.  The other revelation was that a strong focus on team building and collaborative approaches is necessary to ensure everyone works towards a common goal.

“Although there are challenges, if you have a passion to work in Africa, I’d say do it. It is well worth any trade off you might make and I have gained a great deal from the experience, both personally; getting closer to my heritage, and acquiring new professional skills. The quality of life is great; locals and the expat community are welcoming so you soon make friends.  Social life is great, with lots of outdoor leisure pursuits and the weather is warm all year round.”

Ernest has since relocated to Ophir Energy UK HQ where he is Asset Manager in charge of all operations in Gabon, Central Africa.  He spends three weeks per month in the UK, working with a team of finance, legal and commercial staff to manage assets, and one week per month in Gabon working alongside his European manager (an expat) and local staff.  The experience in Ghana equipped Ernest with a range of skills that enables him to deal effectively and efficiently with complex government bureaucracies, a task he believes would be a struggle had he not gained invaluable experience in Ghana.

Ernest is featured in a new careers case study book, Engineering New Horizons, which is free to careers advisors and job seekers – to obtain a copy email cathy.breeze@smf.org.uk

 

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The Power of Networking

Throughout the early stages of your career, you will doubtless have been told many times about the importance of networking. Instructive slogans are constantly thrown around: make contacts; follow up; share ideas.  The impact of networking upon the business world is also clear.  Many local business communities are now often structured around weekly or monthly meetings, and it’s likely you are already involved in such a network yourself. The power of networking is reflected in business education and discourse: large sections of MBA curricula are now dedicated to teaching networking skills.  The topic practically saturates business magazines and discussions, and it might feel like there isn’t much more to learn.

However, once you understand where it is networking draws its potency from, you can take your networking skills to the next level.

We can see the power of networking originates in the social makeup of humanity itself. The 19thcentury evolutionary scientist Peter Kropotkin argues that the ‘mutual-aid’ principle of co-operation has long been integral to industrial development and the success of human societies – a conclusion that was supported by Darwin.

“As to the sudden industrial progress which has been achieved during our own century, and which is usually ascribed to the triumph of individualism and competition, it certainly has a much deeper origin than that. …For industrial progress, as for each other conquest over nature, mutual aid and close intercourse certainly are, as they have been, much more advantageous than mutual struggle.” – Peter Kropotkin, Mutual Aid: A Factor of Evolution.

Although it might seem convenient to portray all business crudely as ‘dog-eat-dog’, a successful businessperson is someone who does not dismiss the importance of ‘mutual aid’.  It’s true, of course, that business is usually on a competitive level.  But that competition usually takes place between groups of people, rather than individuals. Therefore cooperation is required in order to realise our greater individual end-goals.  It is precisely this principle from which networking draws its potency, with voluntary, cooperative collaboration between individuals being the foundation of success.  A business network can then be understood as a more formal realisation of the fundamental social groups humans naturally gravitate towards.

Practically speaking, it is useful to trace the genealogy of contact building in order to understand further how to develop networking.  Many argue that the professional networking process starts on MBA courses and other forms of business education, which would make networking a near-constant facet of successful career development. Indeed, MBA courses are often sold as strong networking opportunities.  Many people do build strong contacts while in education, and these can often lead to positive outcomes in the future.

Such a view is productive to an extent – yes, you will make good contacts on your MBA course but it would be wrong to view an MBA largely as a networking opportunity.  MBAs are great for networking because they teach you networking skills rather than merely bringing you into contact with other businesspeople.  They should, then, be valued on that basis and, more importantly, they teach us to focus on universal, transferable skills ahead of sporadic, singular opportunities.  It’s therefore important to remember the power of networking skills – they will carry you much further through long-term career development than a one-off chance meeting, and bring you the opportunities you are looking for.

Looking at statistical evidence, we can understand the importance, place and power of networking even further. A Right Management survey analysed data from 59,133 clients they had advised over the previous three years – in 2010, 41% said they landed a job through networking, compared to the next most successful result – using an internet job board (25%).  Face-to-face networking was therefore nearly twice as effective in furthering careers than the newer means of career advancement many see as having overtaken traditional networking.

Furthermore, the Job Openings and Labor Turnover survey, found that 70-80% of job postings were not published.  By looking at the number of hires in the previous 30 days and comparing those with the number of actively recruited open positions and the number of open positions filled by someone employers knew through networking, the researchers found that new hires exceeded the number of positions advertised.  This means that many of the people who were hired filled positions never advertised to the public.

What we can take from these statistics is not just the fact that face-to-face networking is still the most powerful business tool in your career’s toolkit, but that it is also utterly necessary to furthering your career and your business. We can now start to think about structuring our networking approach in a specific way.  If you place face-to-face, mutual-aid type networking at the core of your contact-building approach, you can then utilise other methods (such as online communities like LinkedIn or other social networks) to hone your efficiency and maximise your professional reach.  If, as the statistics show, many employers do not even advertise the majority of job positions, it’s clearly vital to triangulate your networking methods rather than relying on one at the expense of another.

Networking is ultimately so powerful because it plays on a natural human tendency towards co-operation.  Far beyond being merely a business tool, networking is an important social strategy and interaction.  Organising yourself based on your strengths and social skills may well get you further than any traditional business textbook could and propel you even faster to success.

 

 

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Exit Strategies for Leaving your Business

businessman looking
Leaving a business you’ve built from the ground up can be difficult, not just practically but psychologically: it’s likely you will have developed a deep emotional attachment to your business. This emotional investment might be an early brick wall in your exit, but it’s more important to think rationally and make the right financial and business decisions for you and your business.

You may have started the business with an eventual ‘cash out’ in mind, or you might just have reached the conclusion over the course of your career.  There is an array of reasons for people choosing to leave the businesses they started.  Once the business has matured, many owners look to take a back seat or leave altogether.  You might want to sell the business to pursue other ventures as part of a wider entrepreneurial career, or you might be looking to retire altogether.  Whatever the reason, for a smooth exit to take place, it’s vital to develop an ‘exit strategy’. You need to plan for this future for the sake of both your own career and the success of the business once you leave it. The purpose of an exit strategy is therefore to enable you to leave your business on your own terms.

Building a time scale and setting objectives
Establish a time-scale: think about how much longer you want to run the business day-to-day before moving on. This provides the foundations for the rest of your strategy, enabling you to set an exit date, allowing you to specify and sharpen your other plans. It will allow you to strategise on key exit points. These could include how long you need to prepare the business for sale, to set yourself up for the future through pensions, to establish an annual income or seed money for your next venture.

Returning to your timescale, you need to think about where the market could be in a few years. This highlights the importance of a contingency plan: be prepared for the possibility that your exit strategy may not go as smoothly as you’d hoped due to factors outside of your control, and develop a plan B appropriately with alternatives. You’ll thank yourself for keeping your options open if your first exit plan goes awry.

Set objectives. Where do you want your business to be after your exit? More importantly, where do you want to be after your exit? Firstly, you should decide who is going to take over the business from you.  Are you going to sell the business to a third party?  If so, do you need to put in extra work to increase the business’ value and make it more attractive to external investors?  Alternatively, would a management buy-out work better, or simply hiring a visionary and trustworthy managing director to replace you?

These decisions will be heavily influenced by the type of business you own, but more importantly where you see yourself after the exit: are you going to set up another business, or retire? If it’s the latter, it’s worth discussing with a financial adviser to work out how much you will need to make from selling the company in order to secure an annual income, and plan accordingly.  If you plan on starting a new venture, you can use personal profit from the sale to secure seed money and a provisional income to carry you through to your new start-up. (For more information on raising money for a new venture, read here.)

Preparing and managing the change in ownership and management
“These days, companies tend to be valued at four to six times EBITDA (earnings before interest, taxes, depreciation, and amortisation). In order to get the higher multiple, you need to show a history of steady growth.” – Norm Brodsky

Create Value: Managing a change in ownership can be difficult, and it doesn’t begin and end with the sale of the company.  You need to prepare the company for a change in leadership before your exit, in a way that ensures a smooth transition after your departure.

If you’re aiming to sell the company to a third party, you obviously need to be able to attract potential buyers.  It is therefore vital to demonstrate consistent profitability, with a steady cash flow, in order to build business value. A positive side-effect of this is that it hints at future earning potential for any buyer who wishes to scale the business further. This is something you should work into your timescale estimate: how long is it feasibly going to take to build a decent record of steady growth if the company is not already there? In your exit strategy, therefore, you aren’t necessarily looking to expand and scale more of your business, but you are looking to stabilise its profitability and make it more attractive to investors. This will, of course, require an assessment of market conditions. Assess different potential investors and see what it is they are most interested in. This should form the groundwork of how you prepare your company for sale.

You should also be prepared to manage any buy-in further down the line. A management buy-in can severely disrupt day-to-day operations of the business if poorly planned. Consider the different steps of a buy-in and management transition, and plan accordingly. This is a helpful flowchart outlining the steps of a generic management buy-in. You need to put procedures in place prior to your exit that will prepare your employees for the change, such as clearly outlining to the new management the specifics of your current day-to-day operations.

Adaptability
There are many different exit strategies, and only you can know which is right for you and your company. Ultimately, the most important aspect of an exit strategy is adaptability.  By preparing for many different factors that could affect or even initiate your exit, you’re ensuring that you will come out on top.  Preparing not only yourself, but your business as a whole for your eventual exit is what will enable your continued success, and that of the business you leave behind.

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Raising Money for Your Business Venture

Pound symbol fo raising money for your business blog August 2014

Start-up businesses are often cited as the key to a healthy economy. Indeed, many entrepreneurs work hard to break into new sectors of the market, honing their product, their management and their new company to perfection. Despite this, though, many start-ups – particularly in the tech industry – struggle to attract that much-needed early capital necessary to get their business successfully up and running. This is due to a number of reasons: the macro-economy being a major one, which can affect investment at every level from bank loans to government schemes.   If a company is looking to break particularly fresh new ground, initial investors may be hard to attract as they may be reluctant to take a risk.

Thankfully, there are variety of options for anyone looking to raise funds for a new business venture. Only you can tell which will be appropriate for your business, and by examining your options and the advantages and disadvantages of each option, you will gain a clearer idea of the next step your start-up company can take in securing early capital.

Seed money – friends and family
“Family and friends can be a good source of finance for your business, but it’s important to treat this type of funding as you would a formal finance deal.”

When you’re starting out, it is essential to secure some sort of early-stage capital or ‘seed money’ to get your start-up functioning as a business. This should be seen as a preliminary stage in a funding roadmap, and its function is really to make your business venture more attractive to other, wealthier investors.

One of the most common (and easiest) ways of getting early seed money is through ‘friends and family’ investment. This involves asking those personally close to you for funds. One advantage is that friends and family are often more accommodating and flexible than other investors: this could mean longer repayment schedules on loans than usual, or the investor not asking for security in exchange.

Although this might seem like an informal arrangement given your relationship to these investors, you must see them as exactly that: investors. This means you must formalise every step of friends and family investment, and treat these investors in a professional and business-like way. Failing to do so can harm not only your relationships with these people but your business as well.

Once you’ve secured some early stage capital and your business is up and running to the extent that it is attractive to other forms of investment, you can begin to look at attracting other forms of funding.

Angel investment
“A Business Angel investor uses his or her personal disposable finance and business or professional experience to invest in the growth of a small business, generally in start-up or early stage” (UK Business Angels Association).

Angel investment is perhaps one of the more well-known ways of securing early stage capital. It does, however, require much harder work than grants or friends/family. Angel investors are generally very experienced business people and are looking to see returns from their investment just as much as you are. This means your start-up venture has to demonstrate some true potential. However, once you have an angel investor on-board, his/her resources and experience can be invaluable.

Angel investors will expect ownership of a portion of the company, and will often provide you with invaluable advice and guidance through the start-up process and beyond. There are many different angel investor groups nationwide, such as the UK Business Angels Association and the Angel Investment Network. Make sure you do your research and try to best present your business in a way that ‘angels’ will find attractive.

Venture capital and private equity
Whereas a business angel is an individual investor using their own funds, venture capital comes from a common ‘fund’ using other investors’ money and is run by paid professionals. Venture capitalists raise this money by offering investors a place in the fund, which they can then see a return from once the fund is closed and the investments eventually sold. Because it can be seen as a ‘pooling’ of many different investors’ cash, the investment amount is likely to be much higher than that which you may receive from an ‘angel’.

However, venture capitalists will often demand a seat on your board of directors and some are more interested in already successful medium-sized businesses, rather than early-stage ventures.

Government schemes, bank loans and crowd funding
It can be tricky to attract venture capitalists or angel investors to your new venture, and, regardless, it’s important to try and attract funding from a variety of sources. There are hundreds of government schemes, including loans and grants, created specifically to help get new businesses up and running. These can be reliable, low-risk sources of investment. Such a scheme might also give your venture some additional early prestige, again strengthening your case with other future investors.

A relatively new form of capital funding known as reward-based crowd funding is particularly popular with tech start-ups. These can be easy and fast ways to gain perhaps all of the funds you need. It’s been popularised by sites such as Kickstarter, and there have been a number of success stories, such as the Cube 3D printer. However, attracting funds through this method often hinges on the creation of a specific product popular and innovative enough that consumers want to see it on the market. It may not be very effective if your company focuses on things like tech-based services rather than products.

Bank loans were traditionally seen as one of the first steps taken in securing growth capital. However, since the banking crisis, banks are less likely to loan new ventures substantial amounts of money, and they usually ask for considerable collateral or security in exchange for the loan. You should have a strong business plan to justify any investment in your business, whichever source you pursue and this includes a bank loan – a common reason for failing to secure bank financing is a weak business plan. Bank loans can be a secure source of investment and can be very useful to your business in the long-term, but acquiring a substantial bank loan could be harder for a start-up than seeking other forms of investment.

And finally, keep an eye on print and online media aimed at businesses and entrepreneurs as they sometimes run competitions to win funds to support new ventures. While entering such competitions takes time and effort, they provide lots of benefits. For example, they compel you to think hard about your business idea which in turn can help you hone your proposition. If you are among the lucky winners, you will benefit not only from the prize money (which usually comes without strings), you will also gain media exposure allowing you to promote your business to a much wider audience, including prospective investors and customers.

Ultimately, raising capital takes far longer than you might initially think, and it’s important to think of it as a multiple stage, or even continuous, process. Getting advice from someone you trust with suitable experience would be a good investment.

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What is the Role of an NED?

Boardroom table for NED Blog July 2014

You’ve decided that the next step in your career is to become a non-executive director (NED). With the right experience and credentials, you might well be ready to take on the role, on paper, at least. but how do you get started? Here are some key steps in your journey towards becoming an NED.

Defining the Role of the Non-Executive Director:

Strategy: Non-executive directors should constructively challenge and contribute to the development of strategy.

Performance: Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance.

Risk: Non-executive directors should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and defensible.

People: Non-executive directors are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing, and where necessary removing, senior management and in succession planning.
© The Higgs Report

The picture of an NED painted by the table above is of an outsider to a company with specific qualities and expertise. Indeed, NEDs are often referred to as executive management’s ‘critical friend’: uninvolved in the day-to-day of the business, they are able to look at strategy and executive performance with a more objective and critical ‘eye’ than an inside director. This is why many NEDs will hold several directorships with different companies as part of a portfolio career – they are able to bring their varied experiences to other companies and provide outsider expertise.

Building the Right Profile: Whether you want to get on board with a ‘blue chip’ company or a bright new start-up, you’re going to need long-term executive experience, preferably in a number of sectors. What companies are looking for in NEDs are experienced all-rounders with industry-specific skills. You will need to prove your adaptability as well as your independent experience. Companies will not hire you if you have limited experience at an executive level so gaining an NED role is unlikely to be achieved overnight.

An excellent way of building the right profile for becoming an NED is to take a non-remunerated NED role whilst continuing your executive work. A good example of this would be becoming a school governor, who has roughly the same role as a NED – particularly in academy schools. Other examples include becoming a trustee on an NHS board or a charity. What you really need to do is demonstrate your versatile profile, particularly as part of a portfolio career, and get that first NED position even if it is not remunerated. Varied experience is the only way of achieving that.

Getting the Right Contacts: Networking is vital to gaining an NED opportunity, as many companies will go directly to head-hunters to look for NEDs. Ideally, you should build a balanced network of executive and non-executive contacts in your industry, particularly with an eye on head-hunters as the ‘holy grail’ of contacts. Try networking with experienced NEDs who can give you the advice and connections necessary to bring you closer to becoming a NED.

Changing Lifestyle: As you build your portfolio career, you’ll quickly realise some drastic lifestyle changes might be in order. You might be balancing NED-ships in several different sectors, perhaps even whilst continuing executive work in your main industry. You have to be prepared to reshuffle the way you organise your working week and in order to keep each plate spinning, so to speak. The NED role might only call for two days work a month on paper, but be prepared to be flexible as that can change quickly. You need to dedicate time not just to get the job done, but to get it done well.

Choosing Sectors: Once you’ve taken on a few NED roles, you’ll begin to have more flexibility and choice with future roles. You can start looking at directorships in new sectors, ones that don’t necessarily match up directly with your industry background or experience but have strong parallels. This is a big step in building a successful portfolio career as it will help you continue to be that ‘critical friend’ and independent director.

Your Value as a NED: Bernard Buckley, an executive coach, who ran the event, Achieving Your Next NED Role – Are You Ready? for our Fellows, said: “NEDs bring independent, objective perspectives to the business, identify new opportunities, share ideas and may even draw attention to issues that may not be self-evident to people immersed in the daily business. In addition, they may introduce to the company new key contacts and networks of people who can help to drive the business forward. In return the NED has an excellent opportunity to work with and learn from experienced board directors in complementary or different fields to their full time job. This helps personal and professional development and adds value to their employer who gets the benefit of their new experience and skills.”

The Path to Becoming an NED: Securing a NED position requires full commitment. All good career progression takes preparation, drive, tenacity and a positive attitude to secure a position. Becoming a NED is no different.

Helpful Information Sources
The Non-Executive Directors Association: Dedicated to meeting the training and personal development needs of NEDs.

Financial Times Non Executive Directors Club: A growing community of non-executive directors. Whether you are looking for your first non-executive job or already have a portfolio of non-executive roles, the Club is the number one destination for networking, resources and the latest vacancies.

Institute of Directors and Chartered Institute of Personnel Development: These organisations provide information and advice on becoming an NED.

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From LBS to Schlumberger

James Harding SMF

I began my MBA experience at London Business School as a Chartered Civil Engineer and graduated as a Management Consultant in the upstream Oil and Gas industry, following two diverse internships and some studying in Hong Kong.

Prior to submitting my hopeful application to LBS I was living in Malawi, Africa, securing key contracts with major international donors for the construction of industrial warehouses and various smaller housing developments. I managed the full operation of my business and successfully grew the company to over 200 employees. The entrepreneurial skills I obtained during this period were favourably looked upon by LBS and successfully led to me securing a position on its  high ranking MBA programme.

I entered the programme with both trepidation and excitement. I was instantly surrounded by so many successful and highly qualified individuals; it was quite overwhelming at times. However I immersed myself in the student body and quickly realised I had so much to learn from my peers. I was lucky with my placement in my allocated study group. We were six very diverse individuals who all had so much to offer. We worked well as a team bringing our experience from different sectors and cultures together. That’s not to say we didn’t have our trying times, as we overcame personal challenges and weaknesses within the set tasks, but on the whole we worked together towards success – winning more team events that any other study group. I am proud to now call these people friends, who I wouldn’t hesitate in contacting for advice long after my MBA has come to an end. The MBA has no doubt enabled me to expand my global network on both a personal and professional level, which, thanks to the Sainsbury Management Fellows Award, may not otherwise have been possible.

When I began the MBA, I was unsure exactly what direction I wanted my career path to take, so I used the programme as an opportunity to experience the various industries that might be open to me. I knew that in particular I needed to develop my finance and strategy knowledge and I set about choosing the relevant courses in order to do this.

I was fortunate to land two excellent internships in very different industries during the MBA. The first was a very structured banking role at Nomura, followed by a venture capital position at Octopus Investments. The variety in the three months I spent during each internship was extensive; an experience that I would be hard-pushed to obtain otherwise.  Both internships allowed me to gain hands-on experience of what I could expect from a role in each industry and again allowed me to build-up a varied network of prominent contacts.

In my second year of study I had the opportunity to visit Hong Kong to develop my understanding of the venture capital industry in China. I jumped at the chance and relished the learning opportunities I was offered from attending various presentations of high profile organisations and individuals that were set up for me and fellow MBA students to attend.

On the successful completion of the MBA I had to make the tough decision of joining GE on its Experienced Commercial Leadership Programme or Schlumberger in the Management Consulting Division operating solely in upstream oil and gas.

After much deliberation I accepted the latter role and I believe it was the right decision for both my career and my family life. Just a year into my role at Schlumberger, I was offered the role of Head of Production Forecasting and Performance Management for Talisman Sinopec.  I find it a challenging yet rewarding environment where I am continuously having to apply much of my learnings from London Business School on a daily basis.

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Are Leaders Born or Bred?

Are Leaders Born or Bred Fish Stock_000015329479Large

Whether leaders are born or made is a question that has fascinated political, economic and business minds for centuries. Traditionally, leaders were considered to be born possessing the innate skills necessary to successfully lead others.

Since then, our mode of thinking has come a long way. It’s important to remember that leadership is not always formally hierarchical, and leaders often emerge even if they do not have the title of manager or director – a leader may be someone taking the helm on a project with colleagues.  Leadership involves a certain level of innate ability, such as vision, charisma and interpersonal skills, but it also involves hard work to acquire the technical skills and knowledge needed to succeed within any given industry.

You only have to look at the business world to see that the best leaders successfully maintain this fine balance. We all know the radical success stories – self-made leaders of industry such as James Dyson and Richard Branson who started from nothing and built successful empires through a combination of their innate skills set, vision and hard work. But there is a vast number of largely untold stories of successful business leaders who have come to dominate in their chosen fields by using their combined technical and interpersonal skills to lead teams that excel.

Interpersonal skills
The power of interpersonal skills cannot be understated.  Take the example of Steve Carell’s Michael Scott character in The Office. Scott is said to have received many awards during his time as a salesman, and it is made clear throughout the series that he is a very skilled salesman with in-depth knowledge of the market he is working within. But in his role as manager he is utterly inept, committing all sorts of social faux pas and constantly alienating his staff.  Despite all his skill as a salesman, he lacks interpersonal skills; he is a poor leader.

What we can learn from this is that no amount of business acumen and textbook management theory is ever going to be useful if you cannot develop strong interpersonal skills and adapt your management style to get the best out of individual members of the team.  Remember that in management, getting to grips with the financial side of the business is only a small aspect of your job as a leader. It is people you are managing, not products.

You need to earn respect, which means being a good listener, and letting your employees know that they are being heard whilst also giving them all the information they need to do a good job.  You need to inspire your team and build strong, professional relationships without condescension or over familiarity.  You need not only to get your objectives and requirements across to your colleagues, but also have them accepted as legitimate.  This involves forming and sharing a coherent vision of where you want the business to be in the future – something that can only be achieved with mutual respect and genuine collaboration.

Learn from Others
Strong interpersonal skills can be developed in part by paying close attention to what you and others observe about other leaders. You can learn from others, good and bad, from studying other employees and leaders.

This does not mean merely copying all of the ideas, behaviours and attitudes of other leaders.  It means to critically observe what it is that makes them good at what they do, cherry-picking the best ideas and putting them into practice in a way that is unique to you. One way leaders have traditionally gone about developing is through mentoring [link to mentoring infographic], which provides invaluable lessons and insights from senior people who are leading successful businesses.

There are also thousands of books on leadership, ranging from Sun Tzu’s The Art of War to Kouzes et al’s The Truth about Leadership. It’s worth reading widely: don’t just restrict yourself to the business section of the bookstore.  Books alone of course, can not provide you everything you need, but by mixing different sources of learning, your leadership skills and knowledge will grow.

Awareness
Ultimately, your ability to learn leadership skills boils down to your level of self-awareness. You need to have a clear, objective idea of how you are perceived based on the attitudes and responses of your colleagues and staff.  This not only involves listening, but also explicitly asking for feedback from those around you and taking a step back from your own involvement in something to see your place in the bigger picture.  If you know the business and learn the social skills of a leader for yourself, you may be on your way to developing yourself into a great leader.