Digital North West

5 tips for growing a digital creative agency

Around 100 attendees packed How-Do’s recent Creative Industries Business Forum held at the stylish The Hive in Manchester.

Liane Grimshaw (former managing partner at Amaze) stole the show for me with a passionate summary of the key learning points that have framed her entrepreneurial journey so far. Here’s my summary from my notes:

1. Know when to say “No” – the more you can narrow your focus, the more you can become an expert and dominate a niche. Once you can dominate a niche and develop your own unique approach, the more price becomes an irrelevance.

2. Practice what you preach – why is it, she questioned, that marketing agencies have some of the worst and most unimaginative websites? Websites and literature that simply lists services…… Agencies frequently use words like “innovation” and “creativity” and then deploy “pedestrian” techniques for marketing their own services and solutions! You need to practice what you preach every day. You can’t have an away-day to create a strategy document and then expect this to magically change the agency culture overnight! The culture comes from the way you and your people act every day.

3. Trust your gut – this applies to selecting your people, strategy and interpreting your results. Probationary periods for recruiting new staff should be observed and people moved on if they do not fit into the company culture – shirking these difficult decisions early on often can develop into much bigger problems further down the line. Your intuition is rarely wrong.

4. Size does matter – there are pros and cons to being a small agency and likewise for larger agencies. Being smaller agency allows for greater agility, speed of decision-making and willingness to take more risks in terms of creative briefs. As agencies grow, the pressure to become more “corporate” in approach can result in employees trusting their own initiative less and starting to “lean on company processes”. Many large agencies could learn a thing or two from smaller agencies e.g. using smaller teams within an organization.

5. If you don’t want to get up in the morning, change it or let go – life’s too short. It may seem like a difficult decision at the time but trusting your gut instinct and making changes or walking away completely to start again may be the best decision for the longer term.

In the discussion groups that followed, these themes kept cropping up repeatedly. These principles can be applied to any business. Home truths – well said. Thanks Liane.

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Northern Tech Awards 2011 – Techcelerate – 23 March 2011

It is a busy day tomorrow with the Budget 2011 closely followed in the evening by the inaugural Northern Tech Awards 2011 hosted by Techcelerate.

Last time I checked there were a handful of tickets left. We’ve got a table there and it promises to be a great evening.

Techcelerate is a great initiative for tech and digital companies across the North so it is well worth lending your support if you can. Hope to see you there!

Reimagine your business using mobile technology

An interesting event this morning on “Redefining the Customer Experience using Mobile” hosted by the Institute of Directors (Young Directors Forum) held at the Alchemist in Manchester’s Spinningfields.

In addition to some mind-boggling stats about the proliferation of mobile connections and apps being launched on a daily basis, the overarching message for businesses is that the mobile tech opportunity whittles down to three key advantages:

1. Better customer information
2. Better customer understanding
3. Better customer relationships

After all, a smart phone or mobile device sits in the pocket of pretty much every single one of your target customers.

Some interesting case studies demonstrated how apps can add a element of engagement and fun e.g. Barrett shoes asking for user’s dates of birth to identify their birth stone and therefore their likely personality traits and of course shoe preferences (the live demo worked!). Plus Kiddicare who has built in a multitude of capabilities into their app to allow customers to view video demos of products and even scan barcodes in competitors’ shops to get a price match – plus next day delivery and a 365 day return policy (a no-brainer?!):

“so our competitors become shop windows for our products”

Watch out bricks and mortar retailers!

In designing apps, advice was given to focus on your target market and ideally get them to help design it – otherwise you’ll risk ending up with a highly functional yet dull and unengaging app. And to:

“think multi-channel rather then just Internet in approaching and targeting your market”

Disruptive technologies such as mobile point of sale apps and hardware were highlighted (I was surprised that Dorsey’s Square was not mentioned?) plus user friendly technologies to help offsite / mobile workers transfer data for processing in realtime as opposed to dropping in and out of the office.

Mobiles or smart phones have become such an integral part of daily life that if you as a business owner do not have (or at least are not thinking about building) a channel into your existing or future customers’ mobile device, then you’re pretty much toast!

I liked the comment from Kiddicare:

“we’re a tech company that happens to sell childrens stuff”

Its like McDonalds founder, Ray Kroc‘s comment “we’re a real estate company that happens to sell hamburgers” updated for the 21st Century.

Approached from this perspective, it should help us all reimagine our business or even our entire industry.

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Why 2011 should be a great year for north west entrepreneurs

Despite talk of economic doom and gloom, here are just 3 reasons why I think 2011 will be a great year for entrepreneurs and fast growth businesses across the north west:

  1. The North West Fund is here to provide £185m of equity and loan funding making investments of £50,000 to £2m into fast growth businesses across the North West. This includes specialist funding for local emerging sectors such as digital and creative, biomedical plus energy / environmental.  Just the spark that businesses have been looking for to help them achieve their ambitious growth plans – I look forward to working with my clients to make this happen in 2011.
  2. MediaCityUK finally launches. A £650m new city built to service creative and digital companies. Large parts of the BBC are on their way; ITV is also coming and, more excitingly, a hot-bed of exciting new talent and businesses should flourish to support these Goliaths of the creative sector. (I look forward to taking a trip around it to check on progress this Friday).
  3. Despite public sector cuts and the demise of the NWDA, local initiatives like Techcelerate, Manchester Digital, Sharp Project, Daresbury Innovation Campus plus many others will step up to the plate in delivering access to services and support for new businesses – and further new initiatives will no doubt emerge to plug gaps as they emerge.

This is an exciting time to be living and working in the north west. Make no bones about it, its going to be tough plus I am mindful that we need to continue to build solid links with London and internationally, but so long as we can get our own entrepreneurial infrastructure firing in the north west then we should be in good shape for 2011.

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Blueprint for Technology demands an innovative tax blueprint

And so David Cameron continues to make the right noises about making the UK a centre for hi-tech digital, technology and creative businesses – a hub or a ‘UK Silicon Valley’ for the Googles and Facebooks of the future.

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Cameron unveiled his Blueprint for Technology today in East London with a commitment to push through with improvements to UK tax competitiveness, a review of intellectual property laws, freedom of movement of skilled workers, access to funding etc – I won’t summarise all the details as you can read the report in full by clicking here.

Let me kick off my saying that I wholeheartedly agree with Cameron’s focus on investing in intellectual property rich hi-tech digital, technology and creative businesses but I firmly believe that having a business-friendly tax regime and regulatory structure is absolutely key. Given this, I do not believe that the tax measures outlined today go nearly far enough. Okay, we’ll have reduced corporation tax for large companies to 27% and 20% for small companies from next April and there’s a pledge to review the taxation of intellectual property this Autumn but we need more. Far more.

Here are a few suggestions (aka a blueprint for tax) for hi-tech digital, tech and creative UK businesses:

  1. Create Enterprise Zones across the major cities ideally near Universities e.g. Manchester, Birmingham, Cambridge etc which will screen start-ups and fast growth companies for entry to these tax incentivised business parks
  2. These Enterprise Zones (EZ) would allow companies to take advantage of certain tax exemptions and incentives for the first 3 years of trading and then, although they will be entitled to stay thereafter (to build a supportive community), they will be subject to many of the tax rules applicable to businesses outside the EZ.
  3. Hi-tech digital, technology and creative businesses only would qualify for admittance to the EZ (this would include cleantech, medtech and gaming businesses).
  4. Corporation tax rates would be 0% for Year 1, 12.5% for Year 2 and then 20% in Year 3 (or whatever the prevailing small companies corporation tax rate is in Year 3). These rates are similar to in some other countries e.g. tax holidays are available for a certain duration whilst the 12.5% rate mirrors the current Irish corporation tax rate which continues to receive admiring glances from many UK hi-tech companies.
  5. National Insurance Contribution (NIC) holidays would be available for the 3 year qualifying period. There is a temporary general NIC holiday scheme in place at the moment although there are many conditions to satisfy plus the postcode finder for qualifying areas is poor. Under this scenario, if you’re in a qualifying EZ, you qualify. No further questions asked. This way startups and growing businesses can recruit without being hit with penal employer’s national insurance contributions (13.8% from next April). At the very least, I would suggest a tax break from employer’s NIC for the 3 year period.
  6. PAYE would be applied to 70% of earnings of employees of companies in the EZ. This would help encourage skilled workers to take the plunge of joining high risk start-ups and help recruit talent from overseas. The Netherlands has a similar tax incentive in operation.
  7. R&D tax credits would be increased to 200% for SMEs within the EZ (from 175% today) in line with the Dyson Review.
  8. Number of companies set up in a group would not impact on the tax rate within the 3 years (subject to point 4). Currently, if a company decides to set up a subsidiary company (e.g. to test a spin-off concept) then the taxable profit band at which small companies rate is payable is divided by a factor of 2 i.e. as a standalone company it could have taxable profits up to £300,000 and pay tax today at 21% whereas if it set up a subsid company it could only earn taxable profits up to £150,000. By eliminating this rule, companies would then have the freedom to experiment with new ideas and concepts in new companies without getting bogged down with tax considerations. When the 3 years draws to a close, they should be in a better position to know which companies in the group can be consolidated, which ones can be killed off and which ones should be kept.
  9. Income of intellectual property companies should be subject to corporation tax rate at a reduced rate of 5% and this rate would continue to apply beyond the 3 years. This rate looks controversially low but we have to face facts that reducing rates of tax to these sorts of levels is essential if we are to encourage – let alone retain – the Google and Facebook companies of the future. Look around locations across Europe and you will see rates that are not dissimilar. Entrepreneurs owe a duty to their investors to maximise returns and likewise tax advisers owe a duty to their clients to explore best possible options for the long term profitability of their clients. Such planning aimed at shifting income overseas could be stopped in its tracks with these sorts of rates. We have proposals for a reduced rate of 10% corporation tax for patent income, however, the Netherlands already offers 5% for a wider range of intangible income. Remember 5% of Google’s annual income from its brand and other intellectual property is an eye-watering figure – plus there would be employee taxes receipts etc to throw into the mix for the UK Exchequer….tempting?

I appreciate that there is plenty to unpack here but radical times call for radical measures. We are standing on the edge of a huge opportunity. We need to be brave and demonstrate decisive action beyond slick speeches and glossy whitepapers.

George, I hope you’re listening in anticipation of your Budget speech on 23 March 2011.

Before then, I welcome your comments, criticisms and further ideas.

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Collaboration of digital businesses challenges the future of the firm

Digital businesses are increasingly setting up shop in tech hubs or shared workspaces – the merits of the Sharp Project, Pie Factory and Media:City were all discussed at length at the recent BVCA Digital Age event held in Manchester.

Much of these initiatives are aimed at providing cost effective office premises for those fledging businesses which might not otherwise be able to afford a ‘normal’ office space plus they often have access to state-of-the-art technology and superspeed broadband access.

The merits of such initiatives have been well publicised but less so is the potential importance of housing these businesses under one roof and, more importantly, what the potential for collaboration might mean for future business structures?

What if small businesses seize the opportunity to network and co-create on projects? What if micro digital businesses pull together as deep specialists to provide best of breed combined solutions to beat off the competition provided by larger established agencies? If digital businesses really can collaborate seamlessly to beat the bigger boys then might this mean that the importance of separate firms or company structures becomes less important to the point that the concept of the firm starts to dissolve?

If so, would this be a step forward?  What do you think? Could digital businesses lead us into a new era for the way we do business in the 21st Century?

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Digital NW: News round up for the week to 13 August 2010

Here’s a round up of the key digital, tech and creative business north west news that caught my eye this week:

Fun story about two NW teenagers who have managed to solve a problem related to bus timetables by developing a mobile app within a matter of weeks and on a shoe-string. Even better (or not?) is that Greater Manchester Transport Passenger Executive hadn’t managed to solve this problem despite having a £259m budget! Exciting possibilities…

Good to see NW digital agencies holding their own on high profile national projects with news of the recent contract win by Loaf Creative to provide the England team with digital content for individual and commercial supporters for the World Cup 2018 bid. Well done guys!

Congratulations to How-Do on their recent move to city centre offices in Manchester – welcome.

Best reads of the week:

Emerging companies launching in a recession – a good article from The Drum on the recent increase in digital startups with insightful comments from NW digital and creative entrepreneurs who have been there and done it before. Interesting to note how the complexity and red-tape around getting the business off the ground is drawn out as a particular issue – something BusinessN2K.com is keen to address!

Social Media and common sense – a simple guide how – straight talking and valuable advice for all from social media newbies to veterans by Ned Poulton from PushOn.

Forthcoming digital NW events:

Techcelerate Late Summer BBQ

15 September 2010 – Kicks off from 5.30pm at Atlas Bar, Manchester

BVCA Financing and Funding the Digital Age

16 September 2010 – All day event at Lowry Hotel, Manchester 

Beyond 2010 – Harnessing the influence of Social Media (How-Do)

20th September (9am – 5pm), The Point, Lancashire County Cricket Club