A new breed of successful business

It is time to change how we measure and interpret success for businesses today. To introduce a definition of business success that is more aligned with our changing business environment i.e. a drive for innovation mixed with a growing distrust of large corporations and lower cost of starting new businesses.

It used to be the case that, to be considered a “success”, a business had to be BIG and have been established (almost) forever.

As a consequence we saw businesses undertake huge expensive acquisition trails to bolt on new businesses and build themselves as big as they could as fast as they could. Its not hard to find talented individuals who have been on the receiving end of redundancies introduced post acquisition to “maximise synergies”. Hoped for synergies rarely play out in the end.

BIG was once good.

Similarly, Jim Collin’s landmark “Good to Great” was attacked as many of the “great” companies profiled in the book went under or got taken over not long after publication. Critics singled out crusty old companies as better examples as these had survived since say the 1880s.

Being able to prove that a business was old and crusty was once good.

Both measures miss the point – BIG and long established companies are rarely great and are therefore rarely a suitable measure of business success.

What is a better measure of business success for the 21st century?

I think a better measure of business success is the rate at which companies start new spin-off companies to explore new markets and opportunities. Rather than judge the originating business or entity on its sole survival and relative size, why not measure it instead on the number and diversity of new businesses it has spawned.

By adopting this alternative mindset of ‘success’, companies would be encouraged and rewarded for taking risks and innovating with new ventures. Promising management teams and future stars could be pulled together into teams to test new market propositions and obtain valuable experience and feedback in the process. The stigma of failure is drastically reduced (“as hey, these are experimental missions”) and with each setback the successful business genes are weeded out and are passed onto the next iteration of the business.

This way business success breeds business success.

And so tomorrow’s great businesses would pay tribute to their business ancestors whilst gazing down proudly (at their rapidly expanding and divergent) business offspring.

What are your thoughts on this alternative interpretation of business success?

Enhanced by Zemanta

A key reason why many start-up businesses fail

Here my short (impromptu) video on why I believe many business start-ups fail.

The old adage that “cash is king” remains as true as ever today, however, there is something else that I am increasingly seeing that can put the future survival of new businesses in jeopardy.

This issue is that: many startups fail to define upfront the market need or problem that their product or service will solve.

Seems obvious right?

You would think so but with so many new businesses looking to innovate into new areas and with technology providing an increasingly affordable platform on which to build new businesses, this consideration sometimes seems to get sidelined – typically until businesses seek funding and / or its too late.

So focus now on that particular market failure or wider need that your future business will plug in the world? What need are we anxiously waiting for you solve by creating your business? What frustrates you (and many others?) that your business will crack?

Be clear on the problem and your business solution and you will be one step ahead in defining future revenues and a potentially profitable business.

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?

Enhanced by Zemanta

Hate Accounting! Or Love Accounting?

The accountancy industry, like every other, is going through a rapid period of change. When I read posts like this, I feel a little despondent.

It gives me that awkward feeling that I get when people ask me what I do at dinner parties or networking events? I stumble between:

  • “I’m an accountant”
  • “I’m a tax advisor”
  • “I work in finance”
  • “I’m a tax partner”
  • “I’m a creative accountant”….mmmh , perhaps not!

It all feels a little apologetic and understates the value we can provide. I think that as an industry we’re a misunderstood bunch, yet we’ve only really got ourselves to blame.

I believe that there is a common misconception amongst business owners between accounting or bookkeeping on the one hand and business advice on the other. The former relates to data capture and entry (which is important yet mundane) and the latter is what can make entrepreneurs healthier and wealthier.

John O’Nolan makes some great suggestions on how we can embrace the ‘uninterestingness’of many aspects of accounting work and turn it to our advantage – some ideas which are already being embraced by new firms in similar ways – but I believe he misses the mark in relation to business advisory services. Dealing with the bookkeeping aspect first, I believe that we are getting closer to creating a solution with the emergence of cloud based accounting software e.g. Xero and Freeagent, which is intuitive and provides realtime data access.

Yet business advisory services covers the whole gambit of a business lifecycle from initial advice on structuring the business on startup, to raising finance, growing the business and making acquisitions and disposals. It involves treating the business and business owner(s) as one, providing all-round tax and strategic advice. Sometimes its just a shoulder to lean or being a sounding board when an entrepreneur has some tricky seas to navigate and is perhaps feeling a little isolated at the helm of the ship.

But there’s far more as an industry that we can do.

For me the real killer move for accountancy professional service firms will be the shift from a position of information or intellectual property protection to information flow management. We’ve spent decades building huge barricades around our knowledge in professional firms to ensure that we get maximum value on consultancy services yet the waste and cost to our economies of this information not getting into the right hands (in time) must be astronomical. Let’s turn it on its head and set the information free to get to the right people as and when they need it.

Tomorrow’s accountancy firm winners will be those that can get relevant information in the hands of business owners first – business advisory information that gives entrepreneurs that “Aha” moment right when they need it – perhaps John O’Nolan and those of a similar ilk would then change their perception from HA! to LA! (Love Accounting!)?

Moving from a mindset of information or idea protection to idea release will be difficult (perhaps more difficult than identifying the tools available to achieve it) but it is the critical next step in my mind if business advisors are to be able to demonstrate their expertise and relevance in an increasingly noisy market.

Back to my dinner party “what do you do?” question: how about this response?

“I help entrepreneurs turn great ideas into great businesses”

Any takers?

Enhanced by Zemanta

iPad accountant: Best apps for professional services

iPad with on display keyboard
Image via Wikipedia

Its been some 3 months+ since my last post on using the iPad for accountancy work so where am I up to?

Firstly, I’m pleased to say that my iPad has not been consigned to the technology grave-yard cupboard. In fact, I am using the iPad more and more – largely due to the increased variety and improvement of applications or ‘apps’ for the iPad which get better and better.

Here are is an update of my latest favourite iPad apps for professional work:

iThoughtsHD (£4.99) – this is a fantastic mind mapping tool which is both intuitive to use and creates clear mind maps that can be exported to email PDF quickly and easily. For someone like me who loves using mindmaps but frequently gets frustrated with the neatness and look of my handwritten scrawls this is a great addition to the iPad. I use this on a daily basis for planning and brainstorming.

Note Taker HD ($4.99) – this app is a relatively new addition for me so I’m still getting to grips with it yet this app looks the best I’ve seen so far for making notes on the iPad. Again, my uptake has been slightly hindered by my messy handwriting yet the investment of a stylus may help (!?)

Dragon Dictation (free) – this app delivers (accurate!) dictated notes on the go which can quickly and easily be exported to email. There are certain issues over privacy of client data at this stage (as I understand the info is sent up into the cloud – not sure how secure? – before being transcribed on your iPad) but this is still a useful tool for quick recordings e.g. to-do lists, ideas etc. Fab for free!

Keynote (£4.99) – Although we currently use Microsoft Powerpoint in the office, Apple’s Keynote seems to cope well with importing Powerpoint slides. Slides can also be updated on the go using Keynote. Where this app really excels is in allowing for generic update slide packs to be carried around in your iPad ready to be fired up in seconds should the need or opportunity arise – after all, ideas can normally be better expressed using visual imagery and presentations simply look fantastic on the high-res iPad screen compared to in paper form.

Other recent uses for the iPad have included the ability to access realtime data on the go. I use it for Xero and for accessing LexisNexis (tax legislation, case-law and commentary) when I’m out and about (via 3G or wireless, if available).

My current thinking is that although the laptop will continue to be the central hub of productivity for the majority of professionals in the short-medium term, the iPad gives us a glimpse of the potential for having a mobile device capable of capturing and sharing ideas as well as providing a new level of creativity for those wishing to experiment and push the envelope.

How are you using the iPad in your accounting or other professional work?

Enhanced by Zemanta

7 tips for start-ups seeking VC funding

I’ve been reflecting on the key business learning points emerging from the BVCA’s excellent recent event Financing & funding the digital age held in Manchester on 16 September 2010.

It was a full day of fast moving panel discussions and keynote speeches that kept coming at a relentless pace until almost 6pm – plenty to chew over hence the delay in penning this summary.

There were so many ideas and tips to unpack that I’ve decided to run a series of posts covering different topics. First up is the comments made on VC funding.

BVCA Digital Age 1: 7 tips for start-ups seeking VC funding

  1. Start building relationships with VCs who specialise and invest in your chosen sector NOW – don’t leave it until you need a cash investment.
  2. Better communication is needed between both the VC and entrepreneurial community. There was much talk from tech entrepreneurs of the incredibly frustrating “long….slow…..No” from VCs (which was tacitly admitted by the VC panelists), however, there was sound advice in ensuring that you invest some time upfront to pick the right VC – this means studying each VC’s objectives for investment (does this fit with your business?), timeline for investment or where they are in the fund cycle (have they made any investments yet, and if so, any in businesses like yours?). This should save much time and frustration on both sides.
  3. Business plans are largely a work of fiction (as things rarely pan out the way you planned them) so don’t go crazy building huge singing-all-dancing plans, however, you still need one to set out the investable opportunity for VCs to get an initial idea. The point was made (and reinforced by an excellent post and VC panellist Nic Brisbourne) that the act of sitting down and preparing a business plan helps entrepreneurs hunker down and concentrate on the business model – how is this great idea actually going to make me and my investors money? Sometimes reality strikes home when it comes to calculating the sales v costs etc. See points 6 & 7.
  4. Concentrate on clearly defining the market need that your product or service will solve rather than how sexy your technology is.
  5. Dawning of microfunding? Lower costs of entry for building new tech businesses brings into question how much cash investment entrepreneurs might need and when? Put another way, entrepreneurs might now be able to reach a much more advanced milestone in proving the business concept using just “family, friends and fools’ money” than would have been possible a few years ago – the point of inflexion has shifted along the timescale – so does this represent the dawning of microfunding and a move away from traditional VC seed funding and the timing of subsequent rounds of investment?
  6. Merits of writing a business plan for startups seeking funding is best summed up by the comment: “Execution focuses the mind”.
  7. Best of all, when you do approach VCs, present your business as “strategic opportunity” rather than a request for cash.
Enhanced by Zemanta

Reforming the education system for a new world of work

Following yesterday’s rant about inspiring tomorrow’s entrepreneurs in our schools, I stumbled across this worrying trailer from a forthcoming US movie:

(Note that the UK came 18th in this league and there are lottery systems here too).

Then there are the following dependable words of wisdom from Sir Ken Robinson:

Both videos are humbling.

In the words of Jamiroquai :

“When are we gonna learn?”

Enhanced by Zemanta

Inspiring tomorrow’s entrepreneurs in school

I had an interesting conversation recently with a teacher who works at a local prestigious private school. He enthused about the private education offered by the school e.g. the high educational attainment levels, freedom from following a rigid curriculum and the worldwide travels and life experiences for the lucky pupils. All highly impressive until he got to the careers that the majority of the pupils go on to follow:

“…our pupils go on to become lawyers, accountants, bankers, doctors or work up to senior management in the local multinational companies…”

Ugh.

As a chartered accountant with a law degree who has held the position of senior manager within a local multinational company, I’m qualified to guffaw with disappointment!

I managed to utter:

“Do many go on to start their own businesses?”

The answer was a predictable “no”. This was swiftly followed by a 20 minute rant from me (poor guy) about how we need more entrepreneurs, more wealth creators and business owners and how we need to inspire them as early as possible. To show kids that there is an alternative to a “prestigious job” within the professions or in industry and to plant the entrepreneurial seeds during their schooling.

I questioned whether it would be possible to set a week aside as some sort of “Enterprise Week” within the school – a week dedicated to developing tomorrow’s young entrepreneurs?

This could kick off with an inspiring talk by a successful entrepreneur. This would get the kids enthused and ready for the fun and exciting week ahead. The pupils would be put into mixed teams ready to take on a week long intensive project. The actual outcome is far less important than the learning but the project could be framed around solving a customer or consumer problem (like the best entrepreneurial ideas usually do) with a view to each team presenting their proposed product, service or solution at the end of the week.

Each day could have a different theme or focus such as:

  • Monday – innovation techniques, brainstorming, strategy etc
  • Tuesday – team dynamics, character traits, building a team etc;
  • Wednesday – defining target markets; supply chains and distribution;
  • Thursday – branding, marketing and turning customers into mad raving fans;
  • Friday – presentation / pitching skills building to a (friendly) Dragons’ Den type event with external participants from the local business community

Each stage could be faciliated by external specialists. The week would be activity and experimentally driven i.e. minimal class room style teaching. Mistakes would be encouraged and celebrated as it takes the teams closer to a better solution.

Who knows it might even lead to the creation of solutions that are better than those delivered by the ‘real world of work’?

Is this already happening? If so, please let me know as I would love to get involved or at least shout about it here.

Photo credit

Enhanced by Zemanta

National Insurance Contribution (NIC) Holiday Scheme for businesses – What’s it all about?

Yesterday saw the formal launch of the Regional National Insurance Contribution (NIC) holiday for businesses started between 22 June 2010 and 5 September 2013.

This tax incentive announced in the June 2010 Emergency Budget allows for a 12 month break from paying employer’s national insurance contributions (currently 12.8% going up to 13.8% from 5 April 2011) on the first 10 employees.

The relief is limited to £5,000 per employee (so £50,000 in total) although it is difficult to foresee in practice how the majority of startup businesses will obtain full benefit for this relief given that new recruits would have to be paid approx £45,000 each to trigger a £50,000 employer’s national insurance liability?

It’s a welcome tax saving all the same to encourage new business start-ups (particularly in the North West), although there are plenty of points to watch – here are just a handful:

NIC holiday points to watch:

  • You must apply for relief under this scheme – it is not an automatic entitlement. You can apply in paper or online.
  • Business start-ups qualify for the first 10 employees recruited during the initial 12 month period. The “initial period” begins on the day the new business commences trading or the date on which the first employee is recruited, whichever is earlier – this cannot be before 22 June 2010.
  • Each qualifying new employee receives a 12 month “holiday” provided this period does not cross the 6 September 2013 end date.
  • ‘Principal place of business’ determines whether your startup qualifies for the relief. Certain geographical areas do not qualify (mainly London and South East) but you can foresee situations where this may not be clear (even though the guidance suggests otherwise) – there is, however, a Region Finder search tool available to assist. For example, those tech businesses that are primarily online or virtual, HMRC will look to where your books, records and equipment are kept. For those that seem to be split fairly evenly between UK locations, then HMRC will look to where the head office is as a key indicator of location.
  • In addition to sole traders, partnerships and companies, property investment businesses and charities are also included as qualifying. Managed service or IR35 income companies do not qualify.
  • Employer’s Class 1 national insurance contributions can only be withheld from the date of official launch i.e. 6 September 2010. Businesses started before this date cannot claim relief from employer’s national insurance until post 5 September 2010.
  • Those new employees paid less than the employer’s national insurance threshold (currently £110 per week) still count toward the 10 employees even if there is no monetary saving for the new business. Similarly, part-time and casual staff individually count for the 10 employees limit – this provides an opportunity for planning with respect to the order of recruits i.e. ideally recruit senior / management team first (the Business Link guidance specifically states that if more than 10 employees join at once then you are free to choose which ones count toward the 10 employee limit).
  • Anti-avoidance legislation is in place to prevent existing businesses from ceasing and restarting substantially the same activities within 6 months to take advantage of the scheme.
  • Class 1A NIC on benefits in kind are unaffected as are the normal monthly employee NIC deductions which must be paid over in the normal way.
  • You must retain the letter or email from HMRC that authorises you to operate the NIC holiday scheme.
  • The NIC holiday scheme is not yet law. The relevant law should be passed around January 2011 so businesses have a choice – either apply now and risk banking the savings (if the law is not passed the employer’s NIC will be due and payable on 19 April 2011) or wait until the law is passed and apply for a refund for the intervening period

HMRC have prepared a flexible form to help calculate and monitor the amount available to withhold under this scheme.

So what appeared to be a straightforward initiative to promote much needed UK startups proves to be a little more tricky in practice although, with a little advance planning, this incentive should provide at least some tax cash savings for new businesses during their tricky first year of trading.

The above information is for educational and entertainment purposes only. It does not constitute professional advice. Please seek advice specific to your circumstances and particular facts. You can contact me if in doubt.

Enhanced by Zemanta