Ask the expert

Good morning. I’m Robert Glazer from Ripe Chartered Accountants and I’d like to introduce you to Howard Schaverien, financial advisor from Capital Solutions Limited. Morning Howard.

Morning Robert.

Thanks for coming in.

Pleasure.

Do you want to start off by explaining why a company would need a financial advisor?

Well, the issue is that companies are so busy focusing on this week, this quarter, the trading, the position of the company that very often they lose sight of the bigger picture, which is “How can I best organize my company affairs to take into account what’s happening down the line? And also, how can I protect against the unforeseen here and now, you know, the things that might come up?”

And what sort of areas should a company be looking at?

Well, on the one hand, if you’re looking at your own business, then you may be looking at “Well, what happens if I can’t work? What happens if I’m ill? Or what happens if I die? How does my family make ends meet?” If you had a biz like a partnership or a small company with a few directors, well, the big question I often ask is “Well, if you’re in business with someone and he dies, do you want to be in business with his or her spouse? And with that case, can we put the plans in place to avoid that?” The answer’s yes. So, that’s the one area, and then the other area is around pension planning, particularly with NESTs coming up, and also investing you know, yourself, companies don’t take dividends necessarily, but they don’t know what to do with them when they’re in there. And there’s some very interesting ways in which we can deal with that.

So, I guess the issue—there are some similarities in the issues facing limited companies and sole traders. There’s also some differences.

Yes, big differences. One is—if you’re multi-owners, then you do have this issue of, well, I’m relying on other people. And, as I say, particularly if one of those other people is a key person to that business in terms of bringing the business in—one guy’s the financial controller, one guy’s the marketing guy. The marketing guy is all of a sudden tragically taken out of the picture. Then how are you gonna replace his financial input until you can find someone new? Key man Insurance that’s what we call it.

And what about—where does life insurance come in?

Well, life insurance comes in in terms of, again, key man and shareholder protection, but also for a sole trader, it’s I am my business. If I die, there’s no more money coming in. How does the family survive? But if you’re a limited company, then of course you can run that through your business and it’s tax-deductible. So, that’s something that’s worth bearing in mind as well.

And do businesses have to worry about the new pension legislations?

I don’t think they have to worry about it. They just gotta know it’s coming. You do the worrying for them. Yeah, I do the worrying for them. But, you know, businesses should be aware that we are talking about anything up to 3% of your paper ultimately is gonna go in pension contributions for employees when the new auto-enrollment comes in.

And what’s the feeling you’re getting? Are companies saying, “Right. Well, yes, we’ll make the contribution, but that’s gonna have an effect on pay rises or—”

Well, it’s gonna have to. I mean, it’s the law. They’re gonna have to make the contribution, and also, the employee is going to have to make a contribution. You know, by law we’re looking ultimately at 8%, 3% of which is gonna come from the company. In this day and age, I think that’s gonna—that’s really gonna impact on people, but, you know, talking to business owners, you know, you’ve just gotta know at one point no pay rise this year maybe, but 3% of what I would’ve given you as a pay rise is gonna go into the business. Don’t forget, of course, that, you know, if you take the contributions from gross pay rather than net pay from the employee, then it’s a big tax saving both to the employee and to the company because you’re saving the net insurance.

So, is this a good plan for a government to say—having to [INAUDIBLE sounds like: find out] state pensions in the long run?

I think there’s gonna be state pensions as well. I just think this is a way of getting people without personal provision to force them to have it. Other comp—other countries have it. Australia, I think, has it. But, you know, I think it’s a changing culture of forcing people to save, and then if you do opt out, you’re gonna have to opt out year after—almost every three years. It’s not something you can opt out of personally. You really are—it’s gonna be almost like an increase in your national insurance contributions.

So, I guess if you opt out and then you reach retirement and you don’t got enough money, you only got yourself to blame.

Exactly. And, you know, the country cannot afford to keep people in the manner that they think they’ve become accustomed. But what I would say also is that very rarely is 8% of your income enough to fund the kind of retirement I would suggest most of your clients are looking for.

So, I suppose in a way, is that—would you consider that type of a saving a pension scheme for a company and its directors and employees or are there other tax-efficient saving schemes that companies can evolve like individuals have?

Well, for companies, it’s particularly investments of, like, for the medium term, where if you keep it in the company, in the bank account with really nothing on it, you can put it somewhere, for example, in an investment—a certain type of investment that will grow, but it’s a historic—it’s complicated. Maybe I should talk to you about it, but, you know, there are ways of dealing with that. That would save a lot of tax, but also really the big tax saving is going to be through pensions. It’s also very much an employee benefit. You know, I think some employees—if you’re looking for good staff, if you’re offering a pension and another employer isn’t, you know, it’s like “Well, what am I getting for my money?”

It’s government-approved tax avoidance.

It’s an incentive. The other way of tax saving is through development life plan, which is a tax-advantaged life insurance. Basically falls under the same pension legislation. But for any employee, which would include a company director, you can have those life insurance contribution—almost like a special service benefit for small companies. You can have those deductions—deducted from the company and it’s not a benefit in kind and it’s written into trust for the benefit of the beneficiaries of the employee. So, it’s almost a life—death in service for the families of employees. Of course if you’re a limited company and you’re the employee of your company, it works very nicely.

So, tell me a little bit about Capital Solutions, how you work, and who your clients are.

Well, I’ve been around for about 23 years now since 1989. You’re getting older. I know, I know. ’Cause I’m running around the countryside telling other people what to do with their money. I advise private clients on their investments, and families, and also businesses on the things I’ve been talking about. I work—I have a team behind me that handles all the admin. The advice is all mine and the advice—the meeting is all mine. I’m the guy that the client deals with, and the business side. And my modus operandi, if you would like, is really, you know, just good personal service. I make the point that I have about 150 clients. I’m looking for 200, then I’m closing the book. I can look after 200 clients really well. That’s really what I aim to do.

We hear that over and over again from the successful businesses that personal relationships really count.

I think it’s vital these days because otherwise you can just go alone and get it. It’s the personal experience, it’s because of that.

And where does the accountant fit into this? How do I work with you? How do I help you?

Well, you know, it’s kind of—I can’t really do this without the accountant, particularly with businesses. We have to work. If you’re looking at shareholder protection, you’re looking at company valuations. If you’re looking at just—accountants identify the need and then tell their clients, “Look, you really need to be talking to a financial advisor about that.” I need a client that’s looking for certain issues about valuations, for example. “Well, you really need to see an accountant about that.” So, there’s definitely a synergy between a financial advisor and an accountant. It adds value to both of us.

And so, what should be the first step for a firm that hasn’t got a financial advisor?

Well, an initial consultation is—costs nothing.

And what should they be looking for?

Well, they should be looking for somebody who can really listen and understand what they are asking for, that really is out there to say, “Look, this is a lifetime journey.” Your advisor needs to be someone who is going to regularly come back and help you year after year after year, not just someone that comes in, does something, and disappears again. And I think you need someone with a bit of staying power, someone with experience, and someone that can actually sort of almost provide references for this.

And someone you can build a relationship with.

Exactly. Over time. Well, I would like to think so. You know, a lifetime relationship means you’ve actually got to get on with the person. You know, if you meet me and don’t like me, please don’t engage me, because, you know, it’s not gonna be nice for you.

And you would do the same—

Yes. If you didn’t like someone, you probably wouldn’t take them on. And I’ve done that. I’ve done that. Not in a nasty way, but— But it’s fair to both sides. It’s fair to both sides that you can really only really work with people you like.

Hi. I’m Robert Glazer from Ripe Chartered Accountants and I’d like to welcome Jo Inoniyegha, who’s a hypnotherapist from Inoniyegha Therapy. Good morning, Jo.

Good morning, Robert. Thank you for having me.

Pleasure. Why don’t you tells us a little bit about your business and what you do?

OK. My business is a general hypnotherapy practice. We’re based in Watford. What we do is we fuse life coaching and hypnosis to help our clients move forward in their life. The tools that I use generally is NLP and hypnosis. The purpose of doing that is, you know, through personal experience and also through working with people found these tools to be particularly useful in getting people clear about their visions for their life, their work, their business, etc. and moving forward in terms of achieving whatever goals they set themselves.

So, I guess what you do really matters and it matters to your clients, yeah?

Yeah, absolutely.

What made you get into this business?

I suppose I’ve always been interested in the mind, always been interested in what motivates people to act and do things, always been interested in psychology. But for the best part of my career, I took an academic interest in the sense that I lectured psychology for, you know, a number of years. But within that role, I did a lot of work through mentoring students in terms of helping them achieve their goals, overcoming obstacles, etc. And that sparked another interest in me in terms of looking at how I could go into private practice and work one-on-one. So, I suppose I kinda stumbled into it, but then I made the finite decision a few years ago to leave academia, as it were, and to set up my company.

How long ago was that?

Three years ago I made the decision. I acted on the decision two years ago. And saying that, it’s taken two years to completely phase out of academia and into private practice. So, it’s been a long process.

So, is there anything you know now that you wish you’d known two or three years ago?

Yes. [LAUGHTER] In terms of business, when I first started the business I did it all. I started from up here in terms of my business planning was very logical and in terms of I was doing things that I thought were the right things to do in business. I was saying things that I thought were the right things to say in business. So, I didn’t really have much business experience, but from what I, you know, gathered from reading around the topic and speaking to people. Essentially what happened then was I was getting the wrong clients, getting the wrong kinds of people through my door and getting quite stressed about it actually because I wasn’t—the results weren’t fruitful, essentially. I had to take a step back and really consider what it was I really wanted to achieve. And I took a reverse approach. And I’ll tell you this to make my point. Our mind essentially is made of two parts: the conscious element and the subconscious element. So, I was working up here, in the conscious element—logic, reason, will power. That makes 10 to 12% of our total mind capacity, whereas the subconscious mind makes 88 to 90% of our total mind capacity. So, what I needed to do was take a step back and really be still and consider my purpose and get familiar with my friends, beliefs and values. Those are two key things that really propel me and drive me in terms of what I do. So, to answer your question, what do I wish I knew then that I know now is to trust my subconscious mind and to trust that my gut instinct knows, you know, where I need to be and to make decisions based on what I feel, decisions based on my own purpose, life purpose, and the purpose of my business. Also, make decisions based on my own beliefs as well as the beliefs and values of the business that I’m wanting to grow and develop. So, I suppose, yeah, that’s one thing I wish I had started off doing and not doing halfway through learning that, well, actually it doesn’t work when I stay up in my head.

I know that when we do business planning with clients, we talk about their vision, and you referred earlier to vision. Is that a bit ironic that when you started up yours, you didn’t have a clear vision what you wanted?

Didn’t have a clear vision. [LAUGHTER] No, didn’t have a clear vision at all. I had an idea of what I wanted to do and just ran with random thoughts without really taking a step back and thinking actually where is—what is my purpose, what is my end goal.

We find that quite common. So, what advice would you give someone starting up a business?

Precisely that. [LAUGHTER] Start with a clear vision in mind. You know, I suppose the first thing to think about is what is your purpose. What is the purpose of you being in business? Why are you in business in the first place? What gets you up in the morning? What makes you open your doors to your customers or clients? And also with that, bearing in mind, well, what is your identity, what is your brand identity? What is it that your business says about you as an individual and what does it say about, you know, your business, you know, what it is you’re trying to achieve? And then also with that, just thinking about what are your beliefs, your personal beliefs, and also what are the beliefs within your business and how do those beliefs affect the decisions that you make in business. Also think about your values. What are your values in business and what are your personal values, and how do they impact on how you treat people—so how you treat your customers, how you treat your staff, etc. All of these things will have an impact on what you do on a day-to-day basis as well as have an impact on where your business would go in the future. So, those are key learning. [LAUGHTER] I mean, these are things that I’ve known mostly academically in my head, but it took me through trial and error to really embody it.

Practice what you preach.

Precisely.

That’s always the hard part, isn’t it? So, I guess there’s pretty—a lot of competition out there for hypnotherapists. So, how do you set yourself apart?

[LAUGHTER] That’s something that’s taken me awhile to get to terms with as well. The one thing that I say sets me apart is I like to think of myself as beauty therapy for the soul. So, again, it’s going back to this whole idea of really embodying the things that we try to achieve or things that we know. When I first started the business, I was doing the same thing everybody else was doing, but now I take it from the perspective of, again, what is my—you know, what does my gut tell me is right to do. And helping people come to terms with their true self without being overwhelmed with what they’re supposed to be doing when they’re supposed to be doing it, but rather doing what they feel is right for them at any given moment in time.

It’s people like us often act and that leads to lying not only to others, but to themselves.

Yeah, absolutely. Absolutely. So, it’s coming to terms with the real you in terms of honesty, integrity, etc.

That’s quite scary for a lot of people, isn’t it?

Absolutely, yeah.

So, if—what tips would you give to others that wanted to start out as a hypnotherapist?

I suppose the #1 tip would be being true to yourself as a hypnotherapist and not necessarily jumping on the bandwagon of what other hypnotherapists are doing. Again, going back to having a clear vision. And when it comes to planning out the business, it’s got to start from that. It’s having a clear, you know, understanding of what your vision is, what your purpose is in starting a hypnotherapy practice in the first place. Different people start their practices for different reasons and it’s being clear in terms of what that reason is for yourself and then plan your actions and your activities based on that.

So—and for those that are a bit unclear about what actually hypnotherapy is, do you want to summarize that and what you actually do? [LAUGHTER] That’s quite fascinating.

OK. Hypnotherapy is—gosh, how do I summarize that? Hypnotherapy uses hypnosis, which is a state, to help people deal with subconscious conflicts, if you like. If you remember what I said about the capacity of the mind, the subconscious mind influences any action that we take on a day-to-day basis. Sometimes they work for us, other times they don’t. Sometimes people get stuck in a particular pattern of behavior, a particular habit of behavior.

Is that similar to the left brain/right brain stuff where the left brain is quite logical and the right brain is more expressive and—

In some respects, yeah. There are some similarities there and there are some—yeah, there are certainly some similarities there. So, the subconscious mind you can think of as the right brain—more the right brain stuff, the feeling, if you like. And the conscious mind you can think, you know, is linked very closely to left brain logic, reason, will power, analysis, that sort of thing. So, what hypnosis does is it helps the individual to overcome certain habits, patterns that have become automatic to them. How does it do that? Well, generally speaking, under the state of hypnosis, the therapist is able to speak directly with the individual’s subconscious mind, which in so doing helps the individual to create new associations in terms of, you know, things that they do that weren’t working for them in the past. Can I just explain something very briefly?

Sure.

I’m not sure how it will pan out. So, essentially when we’re born, we’re born as—we’re born with reflexes. And as infants, we only have, well, two main fears essentially: fear of falling and fear of loud noises. And the mind at that stage of development is very primitive and it has primitive responses- that you all know about fight or flight, you know. So, if you think about infants, what do they do? They use primitive mechanisms to make their needs known. They cry, they shout, they scream—they do whatever they need to do to make sure that, you know, they get needs met. As we progress through life, we begin to learn through interacting with our environment. And we learn in two ways: identification and association. So, we identify certain actions with certain behaviors, etc. So, for example, you go to the beach as a child with your family, you have a great time. Well, that, you learn two things: identify the beach with fun. So, that’s a positive experience. Another example is you might touch the radiator and you get burned. Well, you’ve learned to identify pain with a radiator, for example. So, you develop all these fears and habits and experiences, etc. through identification and association with different aspects of life. And as you grow into an adult, you know, sometimes these behaviors—more often than not, these behaviors become automatic. And as I said before, sometimes they help you in moving forward through your life and in being successful and then other times they don’t necessarily. And I get people coming through my door who haven’t necessarily been successful in their life and they don’t know why, perhaps because they’ve identified that success is bad, for example, for whatever reason. So, what hypnosis would do would be to reverse the identification or the association that they—

So you can challenge their beliefs.

Absolutely. Yeah, certainly.

And NLP must be a useful technique and tool to help you with that.

Yeah, absolutely.

And do you get resistance from people telling them—when you tell them what to do? And how does that sort of manifest itself?

There are a number of things that I experience in relation to resistance. First off, you know, telling someone you’re a hypnotherapist is almost [LAUGHTER] “Stay away from me.”

I was gonna wear dark glasses today.

Exactly. And one of the common things I get is—I’m gonna guess that most hypnotherapists may get this is “Well, I’m a bit skeptical about hypnotherapy or hypnosis. I don’t know if it actually works.” And a lot of that is borne out of people watching stage hypnosis, for example, or stage hypnotherapy—or yeah, stage hypnosis shows. And they watch people barking like a dog and, you know, quacking like a duck and they think, “Ah, that’s not gonna happen to me.” So, the skepticism in some respects come from that, you know, people fearing loss of control.

So, they give you a bad press, don’t they?

Absolutely. You know, but what people fail to understand is that stage hypnosis is just that. It’s for entertainment purposes. It’s meant to make people look stupid, to make them look foolish. Clinical hypnosis, on the other hand, is the opposite of that. And one thing I tend to say to people is, you know, there’s no need to fear losing control because when you’re in the hypnotist’s chair, you are in total control. Yes, your conscious mind may be in abeyance, but the hypnotist cannot say something that negates your beliefs and values in order, you know, for you to accept. Usually if that happens, you will reject it, you know.

So, do you have to build a stronger rapport with your clients—

Absolutely.

—before you take them into the state?

Yeah, certainly. The first consultation usually involves me dispelling any myths they may have about hypnosis, giving them the model that I work with, answering any questions that they may have before, you know—I don’t put them in my chair without their permission, you know, and similarly no one can hypnotize you without your permission. Saying that, it is possible for people to do that as people do do that. I like to use the analogy of you may give a knife to a surgeon and he knows what to—a scalpel, for example, to a surgeon, he knows what to do with it. Give a scalpel to a child, potentially dangerous, you know. With everything in life, you will have some good and you also have some bad.

You mentioned during the interview a couple of business themes that we work on such as beliefs and visions and so on. Do you work with business clients or do you work—what sort of clients do you work with?

Generally speaking, I work with a wide range of clients at the moment, which is quite interesting actually because whilst they come from all walks of life, they all share the same, you know—excuse me—the same thread holds them together. So, I work with students in terms of testing anxiety and things like that. I’ve worked with businesspeople in terms of overcoming their fears or for public speaking, their fears of speaking, giving presentations and things like that. Most of my clients tend to be either businesspeople or top-level executives who are experiencing some difficulties in or challenges in their personal lives that may or may not necessarily affect their work. I am in the process of developing some training programs. That’s another part of my business that I’m looking to grow and develop, which the training program is all about planning, business planning from the subconscious mind, business planning from making use of your inherent values, you know, getting in touch with, again, your purpose, making sure that your business activities are in line with your purpose, your brand identity, your beliefs, your values, what you do, how you do them, where you do them, when you do them.

If I’m talking to clients and I’m aware of a problem—you know, a typical client  that really knows what they’re doing in terms of their vision and their way forward. Well, what signs should we look for in order to say, “Hey, maybe you need to have a word with Jo?”

Well, one of the signs would be when what you’re doing doesn’t feel right and you’re not quite sure why it is it doesn’t feel right. You know, that’s one key sign that something is wrong there, some incongruence somewhere or some misalignment somewhere. That’s something that I could—you know, they could benefit from, you know, using my services. Another thing that struck me this morning—another area that I work with as well—driving in, they were talking on the radio about, well, two things. First thing was a headline that today apparently is International Happy Day.

Is it?

The first International Happy Day. I thought, “Well, what’s all that about?” [LAUGHTER]

Every day is a happy day.

Exactly. And then on the back of that, the discussion was about stress in the workplace and issues surrounding stress in the workplace. And that’s another major area that I’ve encountered in clients coming through my door dealing with stress, not only personal stress, but certainly stress at work—work overload, for example. So, some physical signs and symptoms—when you begin to—you know, to get palpitations, you know, you cannot sleep at night, you know, losing sleep, either, you know, find it difficult falling asleep or waking up too early or waking up in the middle of the night, can’t get back to sleep—those are signs of stress. And perhaps either go and see your GP or come and see me.

OK. Thanks very much, Jo, but I must ask you one final question about the new movie that’s come out, the Roddy Doyle movie called Trance. It’s all about hypnotherapists.

Really? OK. I don’t know about that.

So, definitely the flavour of the month.

OK. All right, I’ll look out for that. [LAUGHTER]

Yeah, you have to go see it. Anyway, thank you very much.

Thank you.

Thanks very much.

Hi. I’m Robert Glazer from Ripe Chartered Accountants and I’d like to introduce you to Perry Burns from Working Capital Partners Ltd. Hi Perry. Thanks very much for coming in.

My pleasure.

Would you like to start off by just telling us what Working Capital Partners Ltd actually does?

Well, the clue is in the name. So, we help businesses with working capital. So, businesses that are growing, businesses that are finding it tight with working capital within the business, we help them to get that cash they need to grow.

And why did you set that business up?

Well, before Working Capital Partners, I was working at a consultancy and we had a lot of clients who were trying to grow, trying to find capital. And they knew about factoring, but they didn’t really want to commit their whole ledger, they really didn’t want to have the pain of having to pay every month whether they used the facility or not. And I started looking around on behalf of clients for something that would be flexible and cost-effective, and I couldn’t find anything at all. And then one day I found a Web site and I thought, “Great. That’s exactly what I need.” The downside was it was an 818 telephone number, it was in New York somewhere. So, I phoned him up and said, “Well, why can’t I do this in the U.K.?” He said, “We don’t know.” So, I had a long conversation with him, got some more information, went to say hello, and said, “Why can’t we do this in the U.K.?” And they said, “You can.” So, we did.

So, what do you do that’s different from traditional factoring?

So, traditionally in factoring, a business has to sell its whole receivables ledger.

Its sales ledger.

So, its whole sales ledger, yup. And what they would do is they would have a minimum commitment every month, so there’d be an administration fee every month and there’d be a minimum commitment, usually 18 months with a 3-month cancellation. So, entering into the factoring is very, very expensive. You’ve gotta show—you got a big jump to get into it. And then there’s a lot of administration and quite a lot of interference—

A lot of due diligence as well, isn’t it?

A lot of due diligence. So, that doesn’t actually go away. The due diligence is still there, but it’s easier to cope with. And there’s also a—it’s quite a lengthy process to go and get into. What we’ve been able to do is to say, “Look, we’ll cut it out. We’ll just make it very, very simple for you to go and do. If you want to sell even as low as one invoice, you can. So, it makes it much—and so, effectively pay-as-you-go factoring. Now, if businesses start doing more, than we can restructure it for them. But if they only want say one invoice, they can.

So, it sounds like you found a gap in the market and you’ve filled it.

Yeah.

Is there any competition to what you’re doing?

There are another couple of companies who do something similar. Each one of them has their own particular take. We like to think that we’re better than the others—

I’m sure you are.

—but that’s up to the clients to decide really.

And by way of background, working capital requirements, I guess, would traditionally come from the owner’s back pocket or from a bank, from other sources. Do you want to say a little bit about them in comparison to what you do? For example where might it be suitable or relevant or appropriate for them—for our class to seek those sources rather than yours?

Sure. Well, traditionally when a business starts up, there’s a need for capital within the business and that will be everything from paying for initial stock, paying for premises, even getting the stationary reprinted—all of those costs have to be paid for and that capital has to come from somewhere. Typically in a smaller startup, that will come from the owners themselves, but there’s a limit to how much that they’re going to be able to—typically it’s very difficult to put a number around it, but most people can get to 10, 15, 20,000. Once it gets beyond that, they’re gonna need additional help from other sources. They’re gonna need external investors, all very often working capital financing. But the traditional source always has been the High Street banks. So, in the days of  the past you would walk into your branch or your bank and say, “Look, here’s my business plan. I need £20,000 because I’ve got to buy a stock and I’m—here’s what I’m going to be able to do,” and the bank manager would say, “Yup, that looks pretty sound to me. Certainly your overdraft is marked.” It would be that simple. Well, today they won’t do it without a great deal of security. Their due diligence process is very, very lengthy. And frankly, unless the business plan is pretty much gold-plated, they probably won’t give you more than a couple thousand pounds. So, that means that the—your traditional source has just completely dried up. So, that really leaves you with very limited opportunities to get that capital. There’s what the bankers like to call the three Fs: friends, family, and fools. You can go to those people and you will get a certain amount of capital, but it’s not gonna allow you to grow really at the pace most owners want to grow. A lot of owners will fall back on things like credit cards, but of course that’s really expensive financing and probably not the best way to fund a business. And of course a lot of them go to angels So, classic angels dragons den kind of approach, but that is—not only is it expensive money, but you’re giving away your most precious asset, which is the equity in a business. And if you’re going—I saw one on Dragons’ Den the other day where they gave away 30% of the business for £70,000. This is a business been going for 10 years. I just couldn’t understand why their directors would do that. It would be—

Desperation

Yes, absolute desperation. And I think the—what we’ve been able to do is—in that particular case, we would’ve been able to provide a facility for them at a fraction of the cost and give them all the flexibility they possibly needed.

Are you finding that companies still have access to invoice discounting or factoring?

In what way?

In respect to finding—funding working capital.

Oh, there are. For large businesses, invoice discount—let me just define the difference between.

Sure.

Invoice discounting is undisclosed. So, in other words, they discount the invoice, but the customer doesn’t actually know that it’s been factored. In order to do that, the bank is usually going to want very, very rigid back office procedures within the client. So, they’re going to have to have very, very good control of their accounts receivable. They’re going to have to have very good systems and processes and they’re gonna be subject toward it usually four times a year, but often more than that, and subject to spot checks. It’s a very onerous process. So, typically for a small business, ID is not really available. Factoring is slightly different from that in that it is disclosed to the customer. In most cases, what a factoring company will do is it will take over the ledger in its entirety and will do the collection for you. So, what we’ve done is we’ve created a hybrid between the two. So, it is disclosed, but we don’t do the collection. And what that means for the owner is that their relationship with their customers is not into—as long as—interfered with. So, as long as we know that it’s a provable debt—in other words, the goods or services have been indisputably delivered—then we’ll be able to fund that invoice.

And are you in a position to advise in companies that come to you in terms of “Right, we think it’s best if you go this route, that route,” and what would make you decide?

Well, first thing we do is we do due diligence on the company. So, although we’re not regulated—it’s not a regulated industry, we aren’t registered with the FSA as a registered business—we have to carry out due diligence, we have to behave as a responsible lender. So, we only lend if we think that the business proposition makes sense. And in order to do that, we need to make sure the business is solvent and that the—there are things like the payments to HMRC have been made, they’re not about to get wound up by the taxman, and we also need to make sure there are no county court judgments against the business and the business being run with due diligence. Where—and we do get businesses who come—who had shall we say a difficult credit history. That doesn’t necessarily rule them out, but does mean to say that there’ll be some additional processes that they’ll have to go. Most businesses can be factored. It may not necessarily be the best—if they’ve got security and the bank will support them, that’s gonna be the cheapest for them, so they should definitely go that way. They might—if it’s a long-term lend that they need—so, for example, they need to buy a piece of machinery, which is gonna have a three- or a five-year life. You’re better to finance that over a three- or five-year period than do that over less. So, you have to match the kind of finance you want. But if it’s working capital—in other words, the capital you need to keep the light switched on, pay the staff, and pay the rent, and make sure your tax is paid and pay the suppliers, very importantly—for those kinda things, working capital finance is the right thing to do.

You mentioned the banks of course—and it’s a very difficult time for our businesses and the banks. They say they’re lending. Our clients say they’re not. [LAUGHTER] Do you have a view on that?

Well, the banks always tell us that they’re open for business. What they leave out of the small print, which is “as long as you can meet these criteria,” very often that will be total security. So, very often they’ll want a charge over a marital home or something like that, and getting those securities in place can take a long time, at best 8 to 10 weeks, usually longer than that. And if you need working capital tomorrow, that’s not gonna help you. We also found at the banks that they sometimes apply very curious criteria. I had a client last week that we just signed up who had an overdraft facility with one of the big High Street banks. And they came along to renewal time and they said to them, “Well, we’re really pleased with the way you’ve been managing this and we see that you’re turnover has topped £2 million a year.” So, they said, “Yeah. We’re pleased about it.” They said, “Well, we’ll continue our overdraft on the basis that you keep it at £2 million a year.” Now, the problem with that was that they were in a slightly difficult market. What that meant was they had to start chasing business at the lower margins in order to keep their overdraft in place. It was completely counterintuitive.

Crazy.

And I’ve discussed this with a couple of bankers and they said, “Well, that’s an absolute daft covenant,” but that was the situation he was in. What we’ve now done is we’ve taken his overdraft out, we’ve taken over his working capital facility, he’s released his debenture from the bank, he’s now dropped his turnover to about 1.6 million, but it’s a profitable 1.6 million and the future of the business is preserved. So, the bank was actually creating a situation where he was if not doomed to failure, but certainly destined in that direction.

Yeah, you’d think that banks would be more concerned with profitability and cash flow than turnover.

Yeah. Well, you know what they say, [LAUGHTER] “Turnover is vanity.”

Absolutely. So, who are your typical clients then?

Typically, our clients are small businesses, usually owner-managed, but not always; usually two to three directors, again, can be bought, but often only a single director; usually turnover between half a million and 2 million; and providing some goods or services with a provable deliverable. So, as long as there—as long as it’s the kind of business where we can see that their goods or services have indisputably been delivered to a creditworthy customer.

Does that include Internet type of businesses?

Yes. We’ve got a number of Internet businesses and we use an online verification. It’s actually very—usually it’s very easy to verify. But if they’re selling to consumers, then this is the wrong kind of finance.

Well, often they would use PayPal and get paid straight away.

Exactly.

And what about startups?

Startups—again, as long as the credit history of the directors isn’t too difficult—very often there might be a bit of history, but as long as there’s a reasonable story that we can see behind that and we feel that the directors want to go forward in a positive way, we can look at that. The two main criteria are a provable deliverable and a creditworthy customer. If those two things are true, and also there should be a good reason for factoring—so, a good reason for factoring is not “I don’t like to phone my customers up and ask them to pay their bills.” That’s not a good reason for factoring because the best way to get cash into a business is to get your bills out on time.

So, it’s not the—or how much of it is based on you knowing and trusting the individual directors? Does that factor?

We know every one of our clients individually. We work with them. And sometimes they’ll phone up and say, “Look, we’ve got a bit of a problem, a short-term problem.” We might do an over-advance for them or something in order to get them through a particular short term. But they build up trust with us and we build up trust with them.

So, you can provide additional funding in exceptional circumstances.

Yes, they do.

That’s very interesting. And what are the risks to the companies that sign up with you?

Well, the main risk is that we rely on the integrity of the paper that’s coming to us. So, effectively we’re buying a piece of paper, in return for which we’re giving folding green. So, we need to make sure that our investment is properly secured. So, in order to do that, we will be looking for a debenture on the business. In other words, we take first position in the event of anything going horribly wrong. And secondly, we’ll be looking for the support of the directors in the documentation—

In terms of personal guarantees?

In personal guarantees, yeah. So, that—and that’s really there to say when we’re issuing invoices and we’re saying that this is a real invoice, it really is a real invoice. However, in order to protect them, what we do is we then insure the debt on their behalf.

So, that’s part of the fee that they pay is the protection policy.

Correct. So, as long as the debt is a real debt, if their customer goes bust, then they’re protected against that to the tune of 90%.

So, to repay 10%.

Yeah. And that will mean that they’re pretty well assured if they’ve sold us the debt, they’re going to get paid as long as the customer suddenly doesn’t turn around and say, “Well, actually there’s no deliverable.”

And at what point—is there a 90-day term or something similar in which you would seek recourse?

Yes. So, generally what happens is that we go by the terms that they’ve given to their customers at 30 or 60 days. The longest we’ll take is 90. We usually want repayment at least 30 days beyond term. So, if the term is for 30 days, when it gets to 60, we’ll be saying to the directors, “You really either need to repay us the advance, you need to get the customer to pay, which would be the best possible thing, or alternatively substitute another invoice.” If, on the other hand, the reason that they haven’t paid is because the customer said, “Well, actually we’re just not paying. We’ve just increased our terms from paying 30 days. We’re now paying 90 days,” we would then put that into the hands of our insurer. And if they still wouldn’t pay after 30 days, then that would trigger the policy.

And do the—does the—your client’s customer pay you or do they pay the—they pay—

So, the money is sent to us.

Is sent to you, OK.

Yes. So, once they’ve sold the debt, the debt is our debt, not their debt.

So, if the customer doesn’t pay, what—presumably you take normal legal action to recover a debt from your client if need be?

Yeah. And very often the reason for nonpayment is because it got lost in the system, particularly if they’re selling to much larger organizations. I think one of the problems you have is if you have a small business selling to a large business, then they find it very difficult to work on the same kind of time schedules. So, that can be a problem. Sometimes it can be—especially smaller businesses haven’t yet got the hang of getting their invoices correct. So, they haven’t put the purchase order number on it or there might be some kind of mismatch between the ordering department and what was on the invoice. So, there might be all sorts of reasons. Those kind of things usually get ironed out, but they all take time to iron out. And we work with businesses.

Do you have any tips?

Well, the #1 tip is get your invoices out on time. Don’t wait till the end of the month. When you’ve completed a piece of work, get the invoice out. That can accelerate your payment terms by 30 days very often. So, get your invoices out on time.

Make sure to send out statements. It reminds people that they do need to pay. Don’t be afraid to call accounts payable and say, “Can you tell me where my cheque is going to be sent out or.” Most businesses understand that that’s in order to be good. Do do a credit check. It is astonishing how many small businesses assume just because three magic letters, PLC, that somehow that guarantees payment. It doesn’t. So, they really do need to do a credit check. There are some free credit checking resources. Some banks offer it. There’s a site called Duedil which you could go on it, you could get a very top level assessment. It wouldn’t be good enough for our purposes, but it will give you an indication as to whether this company is good for the money. And if the company isn’t good for the money, don’t be afraid to get at least your cost element upfront because you really do need to make sure that you as a business are protected. So, those things make a massive difference. Once you’ve done all those things, then you can start looking at forms of finance, but very often that will improve your cash flow hugely. And the other thing—and this will be music to your ears—forecast your cash. Yeah? If you’re not forecasting your cash, don’t be surprised when you get it to the end of the month and you run out of cash.

That’s amazing

Isn’t it just?

Well, great. Well, thank you very much, Perry.

It really is my pleasure.

Hi. I’m Robert Glazer from Ripe Chartered Accountants and I’d like to welcome today Susie Kaye from Your HR Partner. Hi Susie.

Good morning.

Thanks for coming in.

Not at all.

First of all, could you tell me a little bit about what HR Partner does, the type of clients you work with?

Yeah, certainly. We are HR unemployment law specialists, so we advise anybody with employees.

Our clients range from the private sector, accountants, we actually even have some law firms, (obviously if they don’t do employment law), we have IT companies, but we also have charities: anybody that has staff that needs advice in terms of employment law and how to treat people fairly.

Right. And in terms of number of employees?

I’d say it’s generally up to about 100 employees. We do have one client which has got 400, but generally it’s the smaller companies who don’t tend to have an internal HR department. They might have an office manager who is dealing with admin and HR among other things, but they’re not an HR specialist. They want generally some advice.

So, how do you start working with a new client? It must be quite a challenge.

Yeah, I think so. I think what we tend to do is look at what we call the backbone of the employment relationship. So, we make sure that their contract of employment and their staff handbook are up-to-date with employment law, ’cause if that’s not right—

The basics?

Yeah, exactly. And sometimes they don’t have them at all, in which case, you know, it’s really important to put those in place and we’ll draft them for them. And if they do have them, then we—it might be years ago that they were drafted and employment law’s changed quite a bit since then. So, we just really update them for them, make sure they’ve got the key policies, and then we advise them on any kind of issues of poor performance they might have with their staff or potentially any restructuring they want doing or appraisals, that type of thing really.

So, just asking a lot of questions and finding out about—

Yeah, exactly. Finding out about what the key issues are for them, how we can help.

Where their risk areas are.

Exactly, yeah.

So, do all businesses that employ people need to have contracts for employment and employee handbooks?

Yeah. So, all organizations have a legal obligation within two months to provide basic terms and conditions for their staff, which can be done just as a list of terms and conditions or usually as a contract of employment. A staff handbook is more of a best practice thing essentially because it helps the employer to really have processes around, you know, how they should manage their staff, you know, both in the event of any problems, disciplinaries and grievances—but also any in terms of, you know, maternity rights, statutory rights around flexible working, all those things, it gives them a toolbox of ways to deal with it really.

So, when businesses take on new individuals, would their letter of offer inviting them to join, would that be—would that set out terms and conditions or should companies do more than that?

Yeah. Usually people like to see the contract before they actually join. I mean, some companies don’t—I have come across a few that don’t show contract till the first day, but if there’s anything in the contract the individual’s not happy with, it’s a bit late really ’cause they probably resigned from their previous job. So, generally I would say a nice offer letter that, you know, details what it promises, details what the conditions might be around references being satisfactory, that type of thing, and then an offer letter as—I’m sorry—a contract as well to say, “These are the terms that you will be employed and please sign and return a copy of the contract.”

Staff handbooks can be quite a Bible. They can be quite a massive document?

Yeah. And we try not to make them too lengthy ’cause otherwise they don’t tend to get read, but what we do recommend is the clients put them on their sort of Intranet or shared IT drives so that if they need to make updates, then they can be updated. Because the law does change, it means they don’t have to be reissued to staff all the time. They’re there as an online resource for people.

Well, I guess they would refer to appraisals. What would you advise with respect to appraisals?

Well, best practice with appraisals really is to have at least an annual review of people’s performance every year to actually sort of check in with somebody who’s been working for you for however long really and say, you know, “OK, this is how you’re doing.” It shouldn’t be anything that’s new. It should be—you know, you should be getting feedback on the job. But it’s like a point in time to say, “OK, this is what you’ve achieved. This is fantastic. What would you like to achieve? What are your objectives gonna be going forward?” And ideally, you know, to have a check-in perhaps after six months to say, you know, “Have you achieved those objectives? Where are we going?” And ideally, again, to try and tie the objectives into the organizational objectives so that people feel that they’re working in line with where the organization is going.

That sounds a lot like investors in people

Yeah. I think that’s right. I think that’s good practice. I think staff appreciate it as well.

What do people typically do wrong in an appraisal?

Sometimes people do all the right stuff in the meeting and they have a really kind of good developmental discussion and then they never write it up. And it’s the paperwork, it’s like anything. It doesn’t take top priority. And then there’s no record. And so, the individual feels a bit aggrieved that they had this discussion, but there’s no record of it. And if they do perhaps know that they want to be working towards a certain position in the company or they have specific training needs, it’s not captured. So, I think that’s the thing to try to dot the Is and cross the Ts.

And do you provide guidance for 360-degree appraisals?

Yeah, we do. So, all the forms we prepare are very much bespoke. So, we talk to the organization and we work out what do they actually need in their appraisal  rather than just getting something off the Internet or whatever. Well, we’ll design that for them with the right key criteria and the right questions and then we’ll also offer feedback, as you say, ’cause feedback’s such a valuable tool. And we do, as you describe, a 360 process. So, if people feel a little bit uncomfortable about that, we’ll actually facilitate it for them on a confidential basis, enabling people in the organization to give feedback perhaps on yourself as a director or whatever it might be in a confidential way and we can help just kind of relay that back to the individual, giving the whole picture so that it’s not sort of biased in any way. Sometimes organizations are happy to do it themselves, they might want the office manager to facilitate it. It really depends.

Like I said, the team members might be a little bit intimidated about appraising their boss.

Yeah. I think that’s exactly right. And then you get other bosses who are really open to getting that feedback and it’s about, you know, making people feel comfortable to be constructive in their comments.

I think I would feel intimidated about being appraised.

Yeah. I understand. I think it’s only natural.

So, I guess handbooks would also cover things like disciplinary as well and performance management and disciplinary, I guess, are very different things.

Yeah, they are. Essentially, performance management is ideally about trying to get somebody to improve their performance. So, it’s about giving them a fair chance, setting objectives, explaining where they’re going wrong. It can also result in an exit from an organization because if they don’t meet those targets, they’ve been given a fair chance, they can still get dismissed. But a disciplinary tends to be used more for where there’s perhaps a case of misconduct, God forbid somebody’s sort of stolen or potentially stolen or had, you know, inappropriate behavior, or damaged the reputation of the organization. The disciplinary is a sort of three- or four-stage process that enables them to have a chance to have, you know, their explanation heard, have somebody accompany them, but essentially it will be a process of warnings to that individual that if this behavior continues they could be dismissed. And it would stand up in an employment tribunal if they were to claim unfair dismissal, for example.

And in case—with gross misconduct, which I understand is automatic dismissal, does that—can that vary from business to business or is that set?

Usually there’s—it’s not an exhaustive list in a disciplinary policy. So, we’ll give some examples of gross misconduct like, you know, theft or something that anybody would consider outrageous would be likely to be considered gross misconduct. But everything should be, you know, listened to first and considered. And sometimes things that aren’t on the list of gross misconduct might actually be a final written warning, which is to say, “This was really inappropriate.” You know, perhaps it damaged the relationship with clients or the reputation of the company, but it’s perhaps not quite serious enough to completely break down that trust between employer and employee. Final written warning, but if it happens again, then it will be, you know, dismissal territory.

You mentioned employment tribunals, which seem terrifying, which is why, I guess, companies and businesses need to be really careful and know what they’re doing with their HR. And in the current climate, there’s a lot of restructuring and redundancies happening. How should companies go about doing it right? What’s the difference between restructuring and redundancies?

Sure. It’s a really good question. Essentially, any organization can restructure, but the law makes sure that people ideally should restructure in a very fair way, and that means that they should consult with their staff. So, whatever service, people have a right to be consulted in an organization to say, “Look, these list the changes that we’re considering and this is why.” And so, unless they’re making more than 20 people redundant, they don’t have to do what’s called collective consultation where there’s everybody together. But we still certainly recommend that they make it very clear what are the business reasons why this organization needs to restructure. What are the reasons for the new roles, new posts? And therefore, as a result of that new structure, what are the potential redundancies? Who is at risk of redundancy? It doesn’t mean someone will definitely end up making those redundancies because that structure can change through consultation. It’s helpful to employees who are affected because they actually feel they understand and they’ve got an opportunity to comment on the restructure. It may still, however, mean that some roles are at risk, and if that is the case, then people obviously will be told about that. And then the organization has an obligation to look for suitable alternative employment and try to avoid ways of making redundancies. But, you know, it can’t always be the case. Sometimes people restructure because of cost or people restructure because redundancy is defined as, like, a reduced need for work of a particular kind.

And in a restructuring, it can be positive as well. People might want to take on staff. Do you help with that, the recruitment process?

You know, we’re not a recruitment consultancy, but we have a lot of experience with recruitment. So, where we tend to get to sort of step in is where they perhaps had a problem with refilling one particular role; they may have had a succession of people that just haven’t worked out, they feel that their judgment perhaps may be questionable in this particular case. So, we come in and perhaps look through CV’s and decide on who to shortlist and actually interview for them, or with them sometimes, to advise them as to who we think would be good.

Is that often because they’re not clear of the job spec or the criteria isn’t quite right?

Yeah, it really varies. I think sometimes it’s just because they’ve had bad luck with people. But I think sometimes it’s very useful to have an external opinion. Often HR is called in in that way. We sometimes get called in to hear appeals and things like that, to disciplinaries because you’re removed from the organization, so you can be more objective about it.

And so, tell me a little bit how you work with your clients. Is it a transaction base, is it relationship-based where you’re kept on a retainer?

Sure. It varies. We do have a lot of retained clients. And the way the our retainer scheme works is it’s according to the number of staff people have. They pay a fixed monthly fee and we essentially give them unlimited HR unemployment advise by telephone and e-mail. If they need lots of documents drafted, then we’ll give them a price for those, but generally, as I say, it comes within the unlimited, which people find very useful. However, we will also take clients on just for bespoke projects. They might just want contracts and handbooks or they might want, you know, a specific appraisal program done for them. So, it varies.

And what—I mean, apart from the obvious like companies don’t have an employment handbook or they don’t give out contracts, what are the signs that we should look for when we’re working with our clients to say, “Right, actually you need to talk to Susie?”

I think you’re gonna hear people always complaining about their staff, like they’ve got longstanding members of staff that just are not performing and they think, “Oh, no, don’t want to dismiss them because, you know, I’ll have a tribunal claim against me,” you know, that type of thing. So there are ways to do it fairly. You just really need professional advice about this. Or if they need to restructure, they need to lose costs in the organization, again, then it’s best to do it with guidance in the right way really.

Yeah, it’s just safer in the long run, isn’t it?

I think that’s right. I think that’s right. Exactly. And even if they do face a claim, if they’ve got a fair process, they’ll probably win it.

And probably some peace of mind too.

Yeah, I think so, through handholding.

Priceless. [LAUGHTER] Great. Thank you very much.

Not at all. Thank you. Cheers.

Hi. I’m Robert Glazer from Ripe Chartered Accountants and I’d like to welcome Ran Carmon from Chelsea Corporate who’s an expert in mergers and acquisitions. Hi.

Hi Rob. Thank you very much for inviting me.

Pleasure, pleasure. First of all, perhaps you can explain who is able to buy a business.

The reality is anyone can buy a business, whether you are a businessman with some cash to invest in a business or buy a business for yourself or you own a company or several companies and you want to add some more substance to your already existing businesses.

So, if I wanted to buy a business, where would I look for a business?

That’s a very good question. The Internet is full with Web sites with very, very useful information about buying businesses. If you simply Google “businesses for sale,” you will find many, many Web sites with useful information about it.

So, you seem to be indicating I can do an awful lot of research myself. So, where do I—why do I need an expert? Why do I need an external advisor?

Well, the reality is you can probably do 90% of—go through 90% of the process yourself. People make the mistake of calling the expert when they’re not needed and not calling on the expert when they are needed. By the point that you need an expert, you need to have identified a target, you need to make sure that there’s synergy between the people, you need to have done what we like to refer to as light due diligence so you know that you’re buying what you want to be buying, and you need to have all the paperwork in order so that your advisor can simply look at the paperwork, give you the right advice, and help you move forward quickly and efficiently.

OK. So, there’s a certain amount of advice that you can give a buyer in terms of what they need to look at first before they actually appoint someone to deal with the detail.

Absolutely. We work with the business buyers to the point where they need an external expert. We help them find the acquisition target, we guide them how to behave on first, second, third meetings, what kind of information they need, and we make sure that by the time they [INAUDIBLE sounds like: run a]—they call it the accountants or lawyers in, they have exactly what is required for those people to pass their judgment on the acquisition.

Are you able to advise on the external advisor or do you have preferred suppliers?

Absolutely. Every business obviously is going to be in a different industry. At Chelsea Corporate, we have access to professionals who specialize in specific industries and specific segments within industries. For example, if you were buying an IT support company, you would need an accountant who specializes in IT support companies in order to tell you the little nuts and bolts of what is required in order to know if that business is going to be successful or if it’s going down the tubes for other reasons.

That’s a good point. And how many businesses are typically on the market at any one time in the UK?

At any one time in the UK, we’re looking at least 80,000 to 90.000 businesses throughout all the industries.

And all different sizes.

Yeah, of course. From small fish and chips shop all the way up to AIM’s listed companies.

And how would a buyer find information about a target company? Where would be good places to look?

That’s a very good question. When a seller is represented by a broker, there is a lot of information presented in a way that will attract to the buyers, not necessarily the way the information is expected to be presented by the buyer. So, the buyer would need to take that information that’s presented to them, strip it out from all the marketing wording and numbers, and get to the absolute nitty-gritty of what the business is about, what’s the sales like, what the infrastructure costs are, and what the staff costs.

And what do you find are the main reasons people want to buy business?

Well, there are several reasons. There’s what we call the right reasons and there’s the wrong reasons. We’ll start with the wrong reasons. Some people’s businesses are dependent on buying more and more businesses. Effectively, they buy a business, they eat it up, and they go and buy another business.

In order to achieve what?

Clients come in and clients go out. If they’ve got very short sales [INAUDIBLE cycle, if they’re not doing a very good job for the clients, but they charge a lot of money, they absolutely constantly need to buy more and more companies because the organic growth is just not going to give them the right amount of clients. When we look at the right reasons to buy a company, it’s if someone has a business that has got a recurring revenue and they’re doing well for their clients and they want to grow and making an acquisition at that position, that’s a—that’s the right reason to buy a business. And another reason is if you own a business that is providing a service to the clients, buying another business that can provide additional services to those same clients would make a hell of a lot of sense.

And how would I typically find funding for buying businesses in this market in particular?

This market has been quite challenging, you’re right, Rob. This market has been quite challenging when it comes to raising funding. The easiest way of raising finance is to do it through angel investors. You talk to the individual, signs the checkbook, there’s no box-ticking exercise, and typically they can do it quickly and efficiently, and there’s a lot of—there’s a big element of whether or not they like you as a business owner whereby when you go to the banks, they’ve got a box-ticking exercise. And typically banks would lend you what you’ve already got. So, they would need a collateral against the investment.

So, would an angel investor want equity or would it be in terms of loan finance?

There’s—there are two ways of doing it. One would be for them to take equity in the business and the other would be them lending you against an asset with an entrance route and an exit route. The difference between those two routes would be determined by how well you get on with the investor.

Like—as you said, an angel investor is really investing in you, the buyer, rather than the prospect.

Absolutely. Absolutely.

And if you can’t find an angel investor?

Then probably a conversation with your bank. Some banks lend more than others to small businesses and to startups and to—for acquisitions. And we know who have a bigger and smaller appetite for lending.

That seems to vary day-to-day.

Absolutely. And we have to—every day we have to raise our bar in order to find better and more efficient sources of finance.

So, you—are you in constant contact with not only angels, but also banks?

Absolutely. We are not regulated by the Financial Services Authority. We cannot deal with—we’re not authorized to deal with investments. So, if we feel that there is an investment needed, we then introduce the buyer to a body which is regulated, let them do the right work.

So, it sounds like you play a key role in the process.

Absolutely. We know the experts to call upon and we know when they’re required and we know when they’re not required.

Tell me, Ran, how did you start your business? How did you get into the mergers and acquisitions?

Personally, I love doing deals. I used to be in property for many years and then I realized that the property doesn’t change. There’s four walls, there’s four or five windows, there’s the kitchen, there’s the bedrooms, there’s the living room, that’s the location, that’s it. And I’ve always been fascinated by business. I’m passionate about business. So, I thought it would make a lot of sense to help people looking to buy businesses find the right acquisition for them. That means that we on a day-to-day interact with businesspeople who want to make a corporate move.

How long have you been doing it for?

I’ve been in mergers and acquisitions for just over six years now.

So, you must have seen a great variety of deals—

Absolutely.

—from the good to the bad and the ugly.

Yes, absolutely.

So, what tips would you give to someone that was looking to buy a business?

The best tip I could give someone looking to buy a business is find someone you get on well with and do a deal with them. If you don’t like the person sitting in front of you, no matter what what’s on the table, you run. We make a living out of doing deals, not out of talking a way out of it. But if the two parties can’t do a deal between them, they probably shouldn’t.

We haven’t talked much about selling, but what tips would you give to someone looking to sell a business?

Firstly, it’s much of the same. They need to get on with the buyer and they need to trust them. A buyer is making a corporate move typically and the seller is selling their only asset really, their only business asset, and they’re looking to retire. So, first of all, make sure that your retirement plan is sound, something that you can actually rely on, and that you have a plan before you go to market. There’s nothing wrong than—there’s nothing worse than selling your business, making the money, not knowing what you’re gonna do with it, a year—six months to a year down the line you run out of the money, and you’re in a problem. So, have a plan.

We always put—we always tell clients to plan an exit. We have certain steps for them. So, would you be able to recognize when that seller is ready and when they actually need to go back and do small donkey work?

Absolutely. We work a lot with business owners and we refer them to specialists who specialize in preparing their business for sale. That is a process that usually takes between two to three years if you want to do it properly.

Great. Well, thank you very much.

Pleasure.

Hi. I’m Robert Glazer from Ripe Chartered Accountants and I’d like to introduce you to Dan Rhodes of Daniel Rhodes & Associates. Hi Dan.

Good morning. Hi.

Dan, you’re a brand expert.

Well, I like to think so, yeah. Brand and marketing communications.

Great. And what—how would you define a brand? I mean, I think we’re all aware of what brand means in terms of large companies like Coca-Cola, but, I guess, what does brand mean for the SME market in particular?

Well, it’s the same really. I mean, obviously, you know, you wouldn’t be a household name if you’re an SME. But a brand really should follow the same definition for a small business as it does for a large, and really what a brand is about is it’s really the personification of a clearly defined set of attributes, differentiators, and values. What it is also is it’s a promise, it’s an experience, and it’s a memory. What it isn’t, a brand, which a lot of particularly smaller business make the mistake of thinking is that it is not a logo. A logo obviously is an intrinsic part of a brand identity, but that is not what a brand is.

So, it’s much more than that. It gets to the essence of a heart of a business.

Yes. It should be—it should really communicate what differentiates and what a business—what a proposition is and also why potential customers should use them and that should be encapsulated in a brand rather than a logo. So, when I say brand, I mean all forms of communications, everything from the way the receptionist answers the phone to the way your business card looks and your Web site looks and how you sound. So, a brand is really about articulating the personality of an organization.

I notice you said “promise” earlier on. I guess that would mean a promise not only to the outside world, to customers, and suppliers, but internally as well.

Oh, absolutely, yeah. A brand—for a brand to be truly successful, your internal audience, your team, your staff need to really understand what your brand is all about before you can successful communicate to externally. So, that is all part of the—an essential part of the process.

So, looking at corporate values and—

Yes, absolutely. The starting point is doing all the strategic work on the brand, getting everybody to understand internally and buy into it. See, if they don’t buy into it, you won’t be able to sell it externally. So, everybody needs to understand it, be infused it, and understand how they communicate to the outside world. Then it’s time to make that transition.

Well, that buy-in must be quite a challenge.

It depends how it’s communicated. What you don’t want to do is impose—if you are thinking of rebranding, what you don’t want to do is be in a situation where the first thing your staff know about is on launch day. So, providing you can follow a very clear internal communications path where you get internal buy and you get involvement to a point, then you can successfully bring your staff along.

Does that mean that the team has to really buy into the same values?

Yes. Well, generally, values should really be established as part of a team. It depends on how large your organization is. For smaller companies, I generally would work with—in two stages. I’ve worked with the owner/managers or the CEO or directors at a very high level to kick off the project in terms of what they see their values are. But bear in mind that they’re the ones with the vision. I wouldn’t expect, you know, someone low down in the team to have the vision for the company, but they should share it.

Well, of course they could.

Yeah. Well, they could help shape it, but really from the top, I’d want to know what the vision is, what the commercial goals are, and then start to talk about values, but involve it—involve people more widely in that discussion so that at the end of it everybody’s agreed on what those values are and everyone understands that.

Right. Well, that’s got to be core to creating a brand. And how often should a company review their brand to make sure it’s still relevant?

Well, firstly, I think formal review you’re talking about probably every five years. But having said that, there should be an ongoing evolution of the brand. Whether you change and just come back to the logo, it doesn’t mean you change the logo. But you should be constantly evolving your brand, your brand messaging as either a reaction or preemptive in what’s going on in your market, what your competitors are doing. I’m talking broad about communications. So, you’ve set off, you’ve rebranded, you’ve done all this fantastic work. Well, then, you know, stuff happens. You need to be fully aware of what’s going on in your market, your competition, and you evolve your message, you adopt new marketing strategies and channels—an obvious one, social media—and that can be embraced not just for your own benefit in terms of a dialogue with your audience, but keeping tabs on your competition. You know, a great way to find out what your competitors are doing is follow them on Twitter or on Facebook.

So, there’s two sides. I guess your core values don’t really change, they ground you, but you’re reviewing your brand to remain flexible and change particularly in this day and age when change happens so quickly.

Yeah. Your values should be consistent and that’s very important to bear in mind. I’m working with a company at the moment where they have some new product offerings coming online and they may start to diversify slightly into different sectors and markets. And they’re concerned about the rebranding program we’re going through and how relevant that’s going to be. But that’s quite right what you were saying is that your values should be consistent throughout everything you do. That’s a company statement of your beliefs and that should be consistent throughout whichever way your business heads. And of course your vision may change slightly depending on market, but that’s why you need to constantly evolve.

So, if a company hasn’t thought about their brand and their branding, what are they missing out?

Well, they’re missing out on an opportunity to leverage their brand for growth. You know, everything that I do with a company is about commercial benefit for them. It’s not about self-indulgent great designs that are good in my portfolio. It’s very much about what are the commercial realities, what are the starting point is working behind the managers, what are your commercial goals and aspirations? And really a brand identity is one of the key elements that will get you along that road map to your desired outcome.

So, in a way, companies need to consider their brand before they even start on their marketing or sales strategies.

Absolutely, because how will they know if they’re on brand when they’re marketing their messages?

So, what’s the sort of process companies have to go through if they haven’t considered branding before? What are the sort of steps they need to take?

Well, I have a methodology that I call designing commercial advantage and that’s a set of clearly defined stages that one goes through. We start off with inquire stage, which is some things we’ve just touched upon—so, that’s really obviously understanding the business, getting onto the skin of it—establishing what the vision is, and then working with the client to establish the values, the USP, if there is one—and I have to say that it is very difficult to have a truly unique selling point. I like to talk in terms of great if you’ve got one, otherwise it’s about key differentiators. So, that’s looking at the competitors, perhaps exploiting some of their weaknesses, building on some of your strengths, and really working on what is your value proposition, what are you offering your clients, what’s the added value that you offer, what makes you different, and the most important question, why you. Why should a potential customer choose you over a competitor? And you need to answer that question in a clearly defined way. And it’s no good just saying the same thing. You’ve gotta benchmark what your initial answers are against would your competitors say that, and if they would, forget it. You need to come up with something that’s clearly defined. So, after the inquire stage and you’ve really defined what your values are, what the differentiators are, then it’s about the think stage, which is create your brand strategy based on the insights that you gathered. So, OK, we understand where the business is going, we understand what makes it different. What brand structure do you—are we going to put in place in order to deliver that? And the output of that is really an internal design and branding brief for my team to go away and come up with some concepts, which leads into the next stage, the create stage. So, that’s going from presenting the client with concepts for a new or revitalized brand identity that fits the brief that we’ve agreed, that will help achieve a vision, getting feedback on the various options we present, we’re finding that until signoff, the client’s perfectly happy. The next stage is delivery. So, that’s about delivering the tangibles that are required. So, the obvious one: stationery, Web site, could be sales collateral, whatever the client will need.

And of course logo. [LAUGHTER]

There’s a logo will be in there somewhere, yeah. Then there’s a review stage, which again is ongoing, so you need to review the activities that you’ve gone through, see how successful they are, measure them wherever possible, and then fine-tune things and move on to the evolve stage where you’re continuing that loop so you’re really having a good look at what your activities have been and see what the best returns are. And that’s where you shift your resources. And then constantly evolve that.

There have been a few high-profile rebranding cases recently which have been met with a certain amount of cynicism. How do you avoid that negativity when you’re going through a rebranding exercise?

Yeah, I mean, the knee-jerk reaction quite often is “Oh, God, how much is that costing?” You know, unfortunately, one gets messages in the media that, you know, this big organization’s rebranding, it’s lost some £400 million. So, that is one of the areas that one has to mitigate against. Of course, that’s a little misleading because what they’re talking about out of that budget, it’s [INAUDIBLE] is rolling it out worldwide. So, you’re talking about, you know, rebuilding BP’s petrol stations worldwide. So, again, it’s the—mitigating cynicism by getting people to buy in is all about communications. So, there’s—you need to make sure that there’s internal buy-in and external buy-in. And as we touched on before, right from the outset with internal buy-in, you need—once you committed to do this, you need to let your team know what you’re undertaking, why you’re undertaking it, and what the benefits to the company and them particularly are going to be. Once you’ve got that program rolling, you need to regularly communicate with them what stage of the project you are. If you’re in a really small team, they might all be involved , so that there may be less of that. With large teams, you need to keep them up-to-date on where you are and then share things at key stages. You may do an interim presentation on “Right, this is the brand identity that we’re going with.” You don’t necessarily want to share if you’ve got a large team every single option because you’ll—you won’t move forward very quickly. And then write the way through to an internal launch, which obviously should be before an external launch, where you present to the team the output of everything they’ve been hearing about. But there’s a similar challenge of course externally. You don’t want your customers thinking, “Well, how much have they just spent on that? You know, I want a better deal on what the fees they’re charging me or the cost.” So, again, that’s about deciding early on how you’re going to communicate a launch, this revised brand or a new brand, and that may be a soft launch, it may be a more formal launch, but—it’s often worked well in the past. My client is perhaps doing a key launch around a trade event, for example, when you might have a little event where you present to your customers the new brand after you’ve told them the story about why you’ve done it, and again, what it means for them. How are they going to benefit from it? It shouldn’t be going trying to—and what we tend to see with things like this is not only do you get great internal/external buy-in, they’re genuinely interested in the story, it gives you an opportunity to reengage with your customers, which obviously has commercial benefit, and invariably I see a large spike in new business for my customers, for my clients post-this because what tends to happen is, you know, existing customers, particularly if you’ve been working for a long time, don’t necessarily know everything that you do and you have to offer. So, you get fantastic opportunities for cross-selling. So many times I’ve had my clients’ hustlers come and say, “I didn’t realize you did that. I’m buying that from someone else. I’ll now give that business to you.” So, it’s a great—it’s a positive story; there’s nothing negative about it at all. One shouldn’t be shy about what you’re doing because it will help to move forward.

You mentioned communication a few times. Is that one of the most important things when marketing your business or a brand or are there other very important factors as well?

In terms of marketing your business, yeah, communication is essential. Are you talking about outside of marketing communications or—

Well, you want to show off your new brand. What are the really important things in doing that?

Well, firstly, when you launch it, you should make a big splash, and that doesn’t have to be expensive necessarily, but you should find the best channels and the best routes to make an impact and tell that story. And you need to embrace all avenues that are open to you. It’s very much dependent upon a particular company. What I would suggest is a review of existing channels and marketing strategies that are in place. How do we normally talk to and engage our customers? What I find a great deal of the time is many customers, although they seem to be coming less—many clients spend a lot of money on advertising, for example, traditional advertising, where they don’t need—they have no idea what return they get or whether they get one at all, but that’s what they’ve always done. Now, there are various ways that you can either review that and gonna replace that with online campaigns or we’re go to track and measure or spend because obviously embracing technology you can get reports on where your new customers are come from and how cost-effective that is. If traditional press ads are still important to you, then why not put a QR code on there, which are the funny little boxes that you scan with your smartphone, so that people want information, more information, they zap that, and that means you can automatically record where that is come from. You can put a unique code in there so you know it’s come from that publication and you ca engage through that route. But the same with your social media if you’re utilizing that on there. So, we’re living in a marketing age now where it’s much easier to measure the cost-effectiveness and I would advise whether you rebrand or not for you to regularly review your marketing spend and make sure you’re spending it in the next place.

And what—going back to sort of rebranding in general, what other—well, not just rebranding, but setting the brand, what are some pitfalls that are quite common?

I suppose one of the largest pitfalls is what we’ve already discussed is if you don’t get internal/external buying, then you do risk being negatively received. Other pitfalls are about inconsistency. So, you put a lot of energy in the beginning and all to the point of, you know, this really exciting moment where you launch your new brand, but a brand is really judged by its weakest component, not its strongest. So, it’s all very good. You’ve got a beautiful new Web site, a great business card to hand over, and then you put an ad out or something that just isn’t consistent even by messaging or look or feel. So, the ways to mitigate that is brand guidelines, which are very commonplace in larger companies. If you’re a smaller company, it can be something very simple. It can be about the dos and don’ts of the usage of a logo & colour pallette. It can be quite something quite modest. But most importantly, no matter what size your company, is to make someone responsible, make somebody brand police for you. If you have a director of marketing manager, there can only be one of them, certain things run through them. If you’re a smaller company, then you may just choose one—appoint somebody that has the resources and the understanding of the brand and what you’re trying to communicate. Obviously, it’s not an issue if you are getting your agency to produce everything that you sent out. That’s not an issue because they understand the brand. They will make sure it’s on brand. But where you’re using different supplies, it might be, you know, one person for the Web, you might use a printer or two to knock up something for you. Then some modest guidelines, but whichever way, brand police have to sign that off.

So, if a company’s using a brand agency like your own, you would control it, make sure it works properly, and in other cases, I guess the directors have to think, “Does this fit my brand?” and ask—continuously ask that question and keep it at the forefront of their mind.

Yeah, is it on brand and one has to be—one has to put all personal preferences aside. So, you know, sometimes I come across, you know, managing directors that, you know, happen to like the color green. And so, “OK, actually that ad’s fine, but make it all green.” Well, if your corporate color is blue, then that’s really not a good idea. So, it’s actually best left—you know, one wouldn’t normally do this at the director level anyway, but even with the larger organizations, even if we’re the main agency, I always do bring guidelines anyway because, you know, you shouldn’t restrict your client to always having to use you for everything; you know, there will be other occasions. So, they can just send that on, usually do it just as a PDF with resources and the logo’s attached to it. They can send it out anywhere in the world and they know what they get back.

Must be very frustrating if you’re involved with a company and you set all these brand plans and they outsource it. It must drive you crazy.

Yeah, and I would always highlight that to a client if it’s a problem, not from the respect that I feel that that means the client has to use myself. I think they should be using different suppliers, specifically if they’ve got long-term relationships. But if you supply the rules, people know what to follow. It also saves—I mean, although there’s—depending on the size of the guidelines, there might be a small investment imbalance. it should save the client money because what they don’t have is another party oohing and ahhing about how they’re gonna set the template or the star or the fonts out or the colors. They’ve got all of that, so it should make it very cost-effective to roll out the—any campaign or any piece of collateral.

I guess it goes back to communication.

Yes.

You ought to be able to talk to each other.

Yeah, absolutely.

And what would you consider to be the added benefits of branding?

Well, generally when I work with clients about their brand—with their brand, they’re very much focused, which is quite natural particularly with owner/managers. They’re very focused about “OK, how are we going to get more business from our customers, how is this identity going to really help us build our business and gain market share?” And of course that is our key focus, but what we don’t forget about and what the client often does is the added benefit of hav—by having a really strong clearly defined brand identity, something that’s really engaging and compelling, you’re also gonna attract the best people to your company. So, every company that has any kind of ambitious vision can only achieve it with the best people. And you can only attract the best people if you’ve got the right kind of communications and brand identity. So, I’ve got countless examples where I’ve rebranded companies and they’ve managed to attract some fantastically high-caliber candidates that would normally go to the bigger players, but they come to the smaller ones because they’re engaged and they feel the brand is—they feel—

Like connected with them.

Exactly. They can connect with it. They bind to the values. You know, values shouldn’t just be about what your values are to your customers. It’s what are your values to working there or attracting key people? So, you know, with—particularly in the professional industry with new employees, they might also bring with them some nice new clients. So, you should expect a return on your investment in a brand as well.

Can you measure that return?

You can with assistance from the client end. That’s often challenging. Clients are very busy, but yeah, one should be able to measure the effectiveness. Obviously, sometimes it’s hard to make tangible, direct attribute to brand relaunch, but certainly as I cited before, you know, post-relaunch of most of my clients’ companies, big spike afterwards, but it doesn’t tail off if you continue to run with it and you continue to communicate those clearly defined messages about “Why you?” So—and that comes back to my comment about your brand constantly evolving, and I don’t mean changing, but it’s be true to your values and your differentiators and keep that message going and then you’ll undoubtedly help you achieve your vision.

So, business owners should really consider it as an investment?

Absolutely, absolutely. It’s an investment, not a cost, the same way you would invest in any kind of asset for your business. And at the end of the day, that is going to be one, if not the most valuable assets you have is going to be your brand.

And what would a typical branding exercise cost?

Well, obviously, I’m not gonna answer that question. [LAUGHTER] Well, obvious—you know, it’s very—every project is unique. It depends what it is and how big your organization is. So, obviously, you know, I’ve worked with some of the biggest companies in the world, which obviously have bigger budgets, and I’ve worked with startups and family businesses. So, I get—

So, a family business with a £1 million turnover, four or five staff?

Again, it depends how much work needs to be done to move them from where they are to where they need to get to. And the extent of deliverables that they need. So, it’s a pretty hard one to give an exact cost on.

So, you’re really not gonna answer that question.

No, I’m really not gonna answer that question. I think—you know, each is individual and it very much depends on the requirement of what needs to be done. But, you know, with—I don’t know how other agencies work, but for myself, I’m conscious particularly with the smaller companies that, you know, it can be quite an investment. So, I do look at ways to spread the cost so that it’s not all very front end loaded. You know, a project will take months  rather than weeks to do usually to go from beginning to end, so it’s usually something that’s manageable for the client.

And how will a client—or, I’m sorry, a business choose a right agency for them? What makes them connect to the right brand agency?

Well, what I would suggest is to get two or three agencies or individuals to come in either by recommendation or through other routes, have a chat with them, give them all exactly the same brief, preferably in writing, so that you can benchmark the proposals that come back, have a look at their credentials, see what they’ve done before, see how impressed or not you are with that. Then once all the proposals come back, which should break down stage by stage what they’re going to deliver and what the fees for that will be. So, that would be obviously a key consideration would be the cost of the project. And throw into the mix the chemistry: you know, how did you get on with these people? Can you work with them for what is going to be a matter of months? Because some agencies might have the right credentials, but maybe not the right chemistry fit. So, you need to be sure that you can work with these people.

So, key criteria are experience, cost, chemistry?

Yes.

Great. OK, thanks very much, Dan.

Pleasure.