Fresh Water creates a Fresh Challenge for Business

A further significant challenge facing businesses wishing to do business in the 21st Century is emerging with news that access to fresh water is declining more quickly than originally feared.

A report by Globescan and SustainAbility notes that a combination of population growth, urban development, farm production and climate change is increasing competition for fresh water and producing:

“shortages so acute that virtually every industry in the world anticipates sweeping and systemic transformation over the next decade in their strategic planning, production practices and business models”

I repeat: “over the next decade“….? Are business leaders prepared for this? I must confess that this is not a business issue that has been high on the agenda with my clients but might this be about to change?

The survey, which covered some 80 countries and 1,200 influential leaders, said that water scarcity will deeply influence virtually every major company that wants to stay in business in the 21st century.

Respondents called for a focus on water conservation rather than increasing water supply.

This will impact on the way all businesses operate: from the way they function, to the products and services that they produce, as levels of water conservation continue to be squeezed.

This also opens a significant opportunity for innovation by entrepreneurs to either remodel a production process to use less water or to create products that use less water in the hands of the end user. Think of white goods manufacturers; easy-clean fabric and textiles; washing powders; sewerage systems; farming irrigation methods etc…. all ripe for reinvention.

Future investment in production plants will also likely be governed by the availability and access to water e.g. the report suggests that executives considering a new plant in China will be mindful of rapidly melting Himalayan glaciers in the Tibetan Plateau that feed some of China’s key rivers and that US factories may need to be relocated from drier South West areas to the more water-rich Great Lakes region.

So in addition to businesses managing their carbon-footprint it looks like a company’s water-footprint will become increasingly important – to understand the life-cycle of water within the business and to maximise conservation and management. Coca-Cola has been ahead of the game in this area and it is likely that the rest will have to follow.

“When it rains, it pours”…..so the saying goes, but this might turn out to be a distant wish unless we start responding to these challenges now.

Photo credit to gato.

2010 Year End Tax Planning Tips for UK Entrepreneurs

Given that the 5 April 2010 UK tax year end is imminent, we are busy advising our UK entrepreneurial clients on ways in which they can arrange their tax affairs to pay the right amount of tax – and not a penny more!

Here are just some of the issues we’re discussing – remember, you should seek advice specific to your circumstances as these are general points only:

  1. For those typically earning more than £150,000 per year, the new 50% super higher rate of tax will hit hard when it is introduced on 6 April 2010. So we are advising those likely to be affected either to bring forward bonus payments or, where they are shareholders and sufficient distributable reserves exist in the company, to pay a dividend by 5 April 2010. An accelerated dividend payment is preferable in most cases as this is normally more tax efficient plus there are National Insurance savings. A word of caution – watch out for the pension anti-forestalling provisions if you are taking steps now that might increase your total income above £130,000….
  2. From 5 April 2010, the personal allowance available to all UK individuals will be tapered away for earnings in excess of £100,000. This means that for those with income falling between £100,000 – £112,950 in the 2010/11 tax year, the effective income tax rate will be a whopping 60%! Taking steps now either to advance salary payments to pay the current highest rate of 40% or to structure arrangements to fall outside these bands will save hard cash.
  3. Making pension contributions (either personally or via the entrepreneur’s company) can still make good financial and tax sense, however, beware of the restriction on higher rate tax relief for high earners from 6 April 2011 – in an attempt to stop savvy folk from piling cash into their pensions in advance of these measures, the Chancellor introduced some hideously complex rules called the pension anti-forestalling measures that limit higher rate tax relief on contributions for those whose income exceeds £130,000 (either now or in previous recent tax years) to £20,000 (or up to £30,000 in certain circumstances). Seek professional advice if you think you might be affected.
  4. Consider transferring income generating assets to spouses in cases where the spouse is a non-earner. Given that every individual receives a tax-free personal allowance and a 20% tax band up to c£45k it makes sense to consider splitting income where possible – be wary of splitting dividend income in husband and wife companies where only one spouse is active in the company.
  5. Every individual has a capital gains tax-free annual allowance of £10,100 (in 2010/11) so make use of this to crystallise gains where possible – if you don’t use it, you lose it.
  6. The highest rate of capital gains tax is still only 18% compared to 40% (soon to be 50%) for income. Also, compare the income annual personal allowance (c£7k) with the capital gains tax allowance (c£10k). Could this influence your investment strategies going forward to favour capital growth rather than income? Beware of the time horizon though as this gaping difference is unlikely to endure for long… [Update: 22 June 2010 Budget increased highest rate of CGT to 28%]
  7. Every individual (over 16) can invest in a tax-free wrapper called an Individual Savings Account (ISA) in which interest income on cash or capital growth and dividends on shares is tax free. Most have a £7,200 allowance to 5 April 2010 and this goes up to £10,200 from 6 April 2010. Drip-feeding savings provides the benefit of cost-pound-averaging which can provide better returns than piling in lumps sums on 5 April each year!
  8. Many entrepreneurs are unaware that they can invest in pensions on behalf of their non-earning children and still obtain basic rate tax relief up to £3,600 – so you need only invest £2,880 and HM Revenue & Customs will kindly top it up to £3,600!
  9. Those with furnished holiday lets that haven’t performed to expectations have a short window of opportunity to obtain business asset tax treatment on a sale of the property up to 5 April 2010 – this allows for more tax advantageous income and capital gains tax treatment but time is running short… [Update: 22 June 2010 Budget extended this opportunity for a further 12 months]
  10. Useful additions to an entrepreneur’s investment tools include Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCTs) which offer differing but welcomed income tax and capital gains tax benefits.

Above are just 10 tax planning ideas that we are busy discussing with our entrepreneurial and family owned business clients. Hopefully your accountant is doing likewise. If not, please contact me and we can discuss your specific circumstances.

Take steps NOW to review your tax position. Time is running out for the 5 April 2010 tax year!

The above analysis is a general summary of some tax planning opportunities available for UK individuals in the run up to 5 April 2010 and should not be relied upon. Please seek professional advice specific to your circumstances.

Photo credits – Roll the dice

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5 Killer Questions for Every Entrepreneur Starting a Business

  1. What problem or need will your product or service fulfill and how is this better than what’s currently on offer?
  2. How big is the potential market? What’s the potential “open goal”?
  3. Do you have the right team? Is it well balanced with a decent mix of experience and raw enthusiasm?
  4. How will you dominate your market? e.g. by having proprietary protected know-how that creates a barrier to entry for competitors or can you (quietly) build dominance in a small niche market then blast off from there?
  5. Can you deliver it now and if not, how and when?

How to upgrade from Tiger direct to Snow Leopard

Although I’ve had few problems with the Tiger OS X operating system for my Apple Mac, there’ve been a few occasions recently where applications have not supported Tiger (e.g. Google Chrome, Evernote etc) – this is only going to get worse.

So I thought I’d better make the move from Tiger to the latest Mac OS Snow Leopard. Easier said than done.

Here’s how I managed to upgrade from Tiger to Snow Leopard.

First, let’s address my two initial points of confusion:

  1. Can you move straight from Tiger to Snow Leopard? There is little guidance on this but the answer is YES (provided you’ve got the right hardware i.e. Mac with an Intel Processor . 1 GB of RAM. DVD drive for installation and 5GB of spare hard drive disk space).
  2. Is it a case of just sticking the Snow Leopard CD ROM in to update and sitting back – NO!

(I wonder whether point 1 is not widely publicised because plenty of folk will have paid £100+ to upgrade from Tiger to Leopard OS when it was launched a couple of years ago (before the launch of Snow Leopard) however, now you can jump directly from Tiger to Snow Leopard for just £25!)

As you have gathered from point 2 above, I did initially just shove the Snow Leopard disk, rebooted my Macbook (holding down the C key to activate the installation process) and installed it. Beforehand, I had ensured that I had cleared up my disk using the handy Disk Inventory X free tool to free up the minimum 5 GB. I had also backed up my data.

It all appeared to install fine, but when I clicked on Safari, iTunes, Finder and pretty much any other application (apart from Firefox) it failed showing an error message along the lines of “Safari quit unexpectedly”.  So frustrating!

Here was my Twitter feed at the time!:

After much searching online using trusty Firefox (with Safari now defunct) for possible explanations, I found the following which came to the rescue:

This article. – although the disk permissions etc didn’t actually help, it was the reference to the “fresh installation” that opened my eyes to the fact I’d probably missed something…..

This video showed exactly what I should have done – basically, erase Tiger OS. Having followed this advice, it worked perfectly.

I hope this works for you too.

Build your business around its WHY?

What is it about a businesses like Apple that allow growth in market share plus increasing profits? All whilst retaining a cool and forward-thinking market perception?  Is it due to Apple Mac’s relentless focus on growing its profits and market share?

Partly perhaps, but there’s something else. Apple understands its WHY?

It exists to create innovative and beautifully designed products that are simple to use. The increased profits and market share follow this why – the old adage, build the fire and the heat will come is apt.

Building a successful business is easier when you understand WHY you are in business – understanding your purpose.

Understanding your WHY? helps you:

  • At best: Solve a world need
  • At worst: Solve a local need (still an incredibly compelling purpose)
  • Build a crystal clear vision
  • Inspire customers
  • Inspire employees
  • Inspire community
  • Have a mission
  • Make strategic decisions – is the issue congruent with your why? If not, bin it
  • Make a contribution to society
  • Attract like-minded customers
  • Turn off unsuitable customers
  • Make price irrelevant – your why becomes your market differentiator
  • Do good – your why must be about more than making money – it must solve a problem
  • Take pride in your business purpose
  • Tell your story (about your why) to influence your customers
  • Avoid becoming a commodity
  • Contribute – rather than extract value
  • Be focused
  • Diversify – as long as you stay true to your WHY.

Is your business WHY clear?

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Fun + games for the Budget 2010

Today was a busy day working alongside the Manchester Evening News to provide exclusive business tax coverage of the Budget 2010.

I won’t cover the detailed proposals here now as a) you can Google Budget 2010 and get a ton of facts + figures and b) you can get my initial reactions by visiting the M.E.N. Business section of the site.

Suffice to say that there were a lot of promising proposals for UK fast growth companies (including the video gaming industry – which is great news) but we are still lacking the crucial detail which will be key – I will update as the details emerge.

It was good fun to interact via Coveritlive as the Budget unfolded. Listening to Alistair Darling speak, digesting the info whilst reading and interacting with Coveritlive comments (many humorous comments too – thanks!) was both fun and challenging. You can replay our coverage here.

What announcements for UK business caught your eye? Please also feel free ask any questions following today’s Budget below.

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Manchester sparks further innovation with FABLAB launch

 

FABLAB as an institution is news to me but it sounds like a fantastic idea and – even better – they’ve recently opened their first UK based FABLAB in Ancoats, Manchester.

FABLABs offers a mini hi-tech factory where people or companies can design and create pretty much….. anything using latest 3D machine cutters and technology. There are now over 35 FABLABs in existence across the globe in as varied locations as Afghanistan, Russia and Columbia. The first FABLAB was set up in Boston, US by Neil Gershenfeld (as featured in the above short video). 

What is really exciting about FABLAB as an innovative concept is:

  • accessibility to latest cutting edge technology for local individuals, companies, community projects and kids – for FREE!
  • local problem-solving capability for local businesses, individuals etc
  • hands on education – for kids. (For everyone involved).
  • global connectivity of ideas – a global video network allows ideas and knowledge to be spread between FABLABs
  • empowerment of local manufacturing rather than outsourcing the manufacturing process overseas – typically to the Far East
  • environmental benefits of local manufacturing (see point above)
  • democratisation of creativity given the ease of access and low barriers to entry (cost, accessibility and available technology) to design and manufacture.

There have already been some local Manchester success stories using the Manchester FABLAB including the Sky Baby folding travel cot and the Crackit Bat ultralight beach cricket bat.

With the aim of empowering anyone to make anything anywhere – I can only wish FABLABs every success!

Enterprise UK Class of 2010 Make their Mark with a Tenner

Enterprise UK has just announced its finalists in its Make Your Mark with a Tenner campaign.

The 25 trail-blazing finalists include:

a 15 year old who runs an online advertising service while still at school (and works with big hitters like William Hill and MySpace to boot) and a 19 year old who set up a swimwear boutique using her own personal savings.

At a time when the UK desperately needs more promising young people to view entrepreneurship as a viable career, it is refreshing to see such initiatives seeking to instil a sense of enterprise, resourcefulness and business nous amongst our school pupils.

This is an area close to my heart, as both a father and advisor to start-up and fast growth small companies. We desperately need more kids and students to consider alternatives to the mainstream accepted path of higher education followed by a graduate job. We need more entrepreneurs and for this to take shape we need a change of attitude and policy for training the minds of our brightest kids at school.

I remember we had a ‘tuck shop’ in our school which sold (teeth-rotting) sweets – healthier alternatives might be more appropriate today! – however, it provided an opportunity for its volunteer pupils to gain a valuable  glimpse of hands-on business enterprise. But there must be opportunities for all schools to encourage its pupils to get involved e.g. collaboratively run one large school enterprise or run a variety of targeted smaller businesses within the safe confines of the school?

Meanwhile, we should be encouraging our students to set up businesses alongside a University degree course (particularly if their degree is remotely linked to business) given that the barriers to entry of running a start-up business is getting lower and lower – after all, if a 15 year old can compete with William Hill and My Space on a tenner whilst balancing with school work, then surely there’s hope for the entrepreneur in all of us…..?

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Business Tips for Start-Ups from David Hansson – 37 Signals

Some key learning points for fast growth and start-up companies:

  • Common misconception that start-ups need external finance.
  • Taking other people’s money leads to bad choices – too much staff, computers and too much time.
  • Don’t waste your time raising money. Prove the business on its own revenues.
  • Make sure you are working on your best idea right now. If not, move on.
  • Market share is not important. Profits are important. Look at Apple’s (l0w relative) market share on computer hardware and smart phones yet huge profits.
  • Don’t chase the vanity of high revenues. Profits are all that matter.
  • Number of employees is irrelevant – you can run a successful business with 1 employee.
  • Build a business that is scalable – if you land a further £100,000 of orders, you don’t want to have to ramp up your employees and capital assets to match.

Hard to fault these words of wisdom – I would only substitute ‘cash’ for David’s repeated reference ‘profits’ as being key plus keeping the ‘WHY’ you are in business at the forefront at all times i.e. how will your business change the world?

Well worth watching.

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Making BrITain Great Again – Intellect launch Technology Manifesto

Intellect launch their Making BrITain Great Again Technology Manifesto with a call for investment in supporting intellectual property rich (IP) technology companies in order, not only balance the books, but to rebuild a stronger UK business base for the future.

This technology manifesto identifies 4 types of technology business needing support and encouragement:

  1. Early stage tech start-up – great idea but need support, encouragement and investment
  2. Established technology companies – proven track record and growing
  3. Leading IT companies – becoming world players
  4. Global IT companies – already world players that we would like to see make the UK their home.

Key proposals that caught my eye in the 16 page report include:

  • simplifying the Enterprise Investment Scheme (EIS), including allowing entrepreneurs who participate directly in the running of the business to qualify for income tax relief – currently the legislation is designed to incentivise angel investors who are not the founders of the business to invest.
  • extending the Corporate Venturing Scheme from 20% to 30% tax relief in order to encourage investment by larger businesses into smaller tech companies. The manifesto points to the success of Silicon Valley investment by corporates into smaller businesses.
  • further simplifying the R&D tax credit regime to encourage further successful claims
  • careful monitoring of the UK corporation tax rate to encourage inward investment of overseas technology companies
  • ‘tax holidays’ for cluster areas of technology companies within designated areas or business parks.

I welcome this report as further progress on a growing body of recommendations and manifestos (e.g. Ingenious Britain and the Conservatives Technology Manifesto all released within recent weeks) that seek to put technology and other advanced emerging sectors at the forefront of growth for Britain – even better, they seek to achieve this by rethinking tax incentives and support mechanisms for these high growth sectors.

Download the report here.

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