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R&D tax credits get thumbs up in Tory Technology Manifesto

Hot on the heels of the Ingenious Britain report by James Dyson, the Conservatives have released a disappointingly limp Technology Manifesto. Although its key aims build on many of the promising ideas set out in the Tory commissioned Dyson report – in aiming to position the UK at the forefront of global technology and science based exports – it unfortunately lacks any great detail (I’m all for brevity but 11 pages?!) plus it appears to veer off track in many parts (not sure how publishing data like….public sector salaries over say £150k etc is going to put us at the leading edge of global tech commerce? Worthy aim, wrong manifesto).

To its credit it promises to implement many of the proposals set out by James Dyson as soon as possible which sounds promising plus it singles out R&D tax credits as being retained and simplified – although unfortunately no mention of increasing the tax relief to 200% as Dyson recommended (although this is still a vast improvement given the rumour that the Conservatives were, up until very recently, considering abolishing research and development (R&D) tax credits altogether in an effort to simplify the UK corporation tax regime.

There is also talk of implementing a superfast broadband network of 100mbps that is some 50 times faster than Labour’s proposed super broadband network but the detail on exactly when and how this will be achieved is also notable by its absence.

Overall, I am delighted to see that the Conservative party is choosing to focus its efforts on pushing the boundaries in making the UK a leading global technology and science friendly location to do business, we could just do with a little more detail – as we’re not the only ones with this lofty ambition.

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10 tips for getting more stuff done

  1. Plan your day but build in contingency time for last minute emergencies (they always happen!).
  2. Open email first thing in the morning and deal with emails that can be sorted within a few minutes. Then close it, ideally until lunchtime when you can revisit. Reopen at close of play. 3 focused email processing stints. Good luck (still struggling with this myself).
  3. Close that internet browser!
  4. Get some quiet / alone time. Shut your door if you have an office or find a quiet space if you’re open plan (or go to your local coffee shop).
  5. Use autotext shortcuts where possible e.g. in a Blackberry go to ‘Options’ then ‘Autotext’ and insert commonly used email terms (e.g. ‘R’ for ‘Regards’). Saves you a ton of time when you’re on the move.
  6. Ask yourself “Am I the right person to be doing this? or “Is this the best use of my time?”. If not delegate or outsource it.
  7. Treat ‘To-do lists’ with care. Make sure you put your most important task at the top and don’t allow yourself to jump to the easier stuff until you’ve completed it. The danger of to-do lists is that we become obsessed with the thrill of crossing actions out and so end up focusing on the low value easy stuff (often without realising it).
  8. Turn off the ‘New Mail received’ chime and notifier on your email.
  9. Have stand-up meetings only. This makes everyone focus on the important stuff, keeps meetings shorter and minimises the risk of chit-chat.
  10. Get out for some fresh air or exercise. Even if its only for 30 mins. A refreshed mind is usually more focused and productive.

Any further productivity tips to add?

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Dyson backs ingenious Britain + Changes ahead for R&D tax credits & EIS?

James Dyson hits out at the existing “lacklustre” UK R&D tax credit system and its “botched” implementation by HM Revenue & Customs.

Dyson is right in his assertion that the recent tightening of policy in restricting certain claims (e.g. for prototypes that are eventually sold) is fundamentally flawed, however, my experience of working with the specialist R&D HMRC units has been positive overall.

Sure, the legislation is complex in parts but this is inherent in a system that seeks to adapt for ever-changing claims in line with the emergence of new industries. It should be added that much of the complexity has arisen from attempts to enhance the attractiveness and availability of the research and development tax credits for UK companies!

Dyson suggests that a new improved R&D tax credit scheme be implemented that is simpler to apply and that should be targeted at small, high tech companies. Although I sympathise with the principle of helping many of our future innovative small businesses, such a policy is misguided in its laser focus as it omits larger, more diverse companies that can equally contribute to the UK economy from successful R&D.

An increase of the R&D tax credit rate to 200% (from a current rate of 175% for SMEs) could further increase the attractiveness of the UK as a place for internationally mobile companies to do business – the UK currently ranks 19th internationally for the attractiveness of its R&D incentive regime.

To shift from recent murmurs of a Conservative government (if elected) abolishing the R&D tax credit scheme (in order to simplify the UK company corporation tax regime) to actually improving the regime if the recommendations from this report (commissioned by the Tories) are implemented is welcome news.

Enterprise Investment Scheme (EIS)

Meeting the funding gap for start-up and fast growth hi-tech technology companies has always been tricky given the higher risk of failure – the recent credit crunch has made this a whole lot worse. Angel investors (or micropreneurs) have frequently come to the rescue as, not only can they bring their expertise to the table (particularly if they made their money in a similar sector), but they can also invest in smaller tranches to meet this funding gap where the companies are too small for larger private equity or venture capital funding – and where the banks prefer to look the other way.

Despite the existence of UK angel funding, Dyson notes that over £3.5bn would have been invested if the UK kept parity with angel investment in the US – actual investment in the UK was a disappointing £1bn in 2007.

Tax incentives are available to encourage private investment in UK fledging companies including EIS which provides 20% income tax relief subject to qualifying holding requirements and company types. Dyson calls for an increase in the income tax relief to 30% which should be welcomed, although how far this would go in encouraging wealthy individuals to part with their cash to invest in start-up tech companies remains debatable – unless they have a deep understanding of the sectors.

Overall, James Dyson calls for a change of perception towards science and technology from grassroot levels with greater focus on such subjects at school. He cites a frightening statistic that:

4% of teenage girls want to be engineers

14% want to be scientists

32% want to be models

There is clearly much work to be done!

Welcome your views. You can download the Ingenious Britain report here.

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UK Innovation Investment Fund – Too little, too late?

Launch of the £200m UK Innovation Investment Fund could not come at a better time as funding for early stage technology, digital and life science companies continues to dry-up – worrying given that these are the innovative fast growth companies that our UK economy is relying on to dig us out of our UK budget deficit. Dow Jones VentureSource estimates that venture fund-raising for investment in early stage tech companies is down from 210 in 2005 to just 86 in 2010.

Although news of this additional funding is good for entrepreneurs and start-up ventures, there is a risk that it could be a long while before the cash trickles down to the fledgling businesses that need it most – like now! In the meantime, it is predominantly more adventurous private investors who are picking up the slack. A welcome form of microfinancing by microangels, perhaps?

Rather than relying simply on showering (further) State Aid, I do believe that we need to think more adventurously about introducing further tax incentives for our exciting and innovative new start-ups. This could also provide further stimulus for smaller (but welcomed) financing from private investors who can match the risk against tax incentives even with smaller (micro)investments.

Consider that there is currently no difference in UK capital gains tax payable between selling a property or shares in a start-up company as an external investor (CGT rate of 10-18%).  Does this accurately match the risk / reward? I think not.

Consider also that there are murmurs of a Conservative government removing the highly valuable R&D tax credit incentives in order to simplify the corporation tax main and small company rates – where is the incentive to break the mould and create game-changing businesses under this policy?

At least announcements were made in the Pre-Budget Report that we should see a lower rate of corporation tax for patent income but this is delayed until 2013 at the earliest – this is assuming it doesn’t get derailed prior to implementation in the same way that the Broadband Tax might (see further below)!

We need more support for UK innovative businesses. We need it now.

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How to listen to your customers and competitors online using Google

It is really important that you are listening to the comments being made online by your customers regarding your business products or services. Also to monitor industry trends and news – plus to keep an eye on your competitors.

This allows you to be responsive to any complaints or erroneous information that may be published online and keep abreast of what aspects of your business that your customers are raving about – so that you can concentrate on doing more of it.

I have turned my Google homepage into a real-time database of news and information pulling articles from across the world as they are published – and its really simple.

Watch this short video in which I show you how to do it.

A couple of top tips before watching:

  1. Click on the Full Screen View option in the bottom right of the above video to enlarge the viewing screen.
  2. I continually refer to RSS Feeds which is the technology behind delivering the articles and news feeds directly to your Google homepage – it stands for Really Simple Syndication but you don’t need to know much more than that (I just like to consider it as magic!).
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Entrepreneurs hold the key to bridge the wealth gap

Today’s Financial Times had an interesting article about the widening wealth gap opening between generations.

The synopsis is that the Baby-Boomers aged 55-64 hold double the wealth of Generation X aged 35-44. Worse still, it is believed that Generation X will never achieve the level of wealth of the Baby-Boomers given factors such as the fall in pension benefits (especially final salary schemes – now pretty much the preserve of the Baby-Boomer Generation!) and the rising fiscal burden falling on Generation X to support ever extending life expectancy (aside from our budget deficit).

It reminds of a recent conversation I had with a friend who was day-dreaming about winning the Lottery to achieve his financial and lifetime goals. Without wishing to shatter his illusions (I did!), we discussed the only real way to achieve financial success:

Building your own business.

This is the only way for most people to achieve financial freedom or even millionaire status. And a surprising number of everyday folk do. I’ve met many self-made millionaires. I’ve never met a lottery winner…

So if Generation X are to bridge the wealth gap with the Baby-Boomers, we need to encourage more entrepreneurs. More start-up businesses. More support for early stage and growing companies. Perhaps the creation of more micropreneurs…?

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Rise of the Micropreneur running Microbusinesses

Entrepreneurs are the lifeblood of our economy. Especially those entrepreneurs who are prepared to pick up their bat and start again after a successful exit or business failure – they are often referred to as serial entrepreneurs.

But there may now be a new kid on the block…

The Micropreneur

The Micropreneur is a different sort of entrepreneur. They start and build lots of small businesses normally simultaneously. There is also no overriding aim to build a large business. Being small is ideal. Being a microbusiness is key. This has the following advantages:

  • Lean infrastructure e.g. fewer employees, small / shared office space etc
  • Technology-driven to increase speed and maintain low costbase
  • Networked relationships to outsource non-core activities
  • Flexible, nimble, adaptive ready to jump on the next idea, opportunity or trend
  • Cross-pollination of ideas between microbusinesses
  • Getting started doesn’t cost much
  • Failure doesn’t cost much

Microbusinesses run by Micropreneurs are on the increase and it is easy to see why. For example, why settle for a 9-5, 5 day -a-week business when you could juggle 3-5+ exciting small businesses instead. This also spreads the risk should one business fail.

For those employees who view the alternative of being an entrepreneur as risky, being a micropreneur could be the perfect antidote.

Likewise for those investors who view business angels as big risk-takers, being a microangel that invests (say £1k – £20k) in these fast growth, nimble businesses could provide an exciting opportunity as well as supporting some of our best and innovative talent.

What’s in a price?

Getting the price right for your products or services is key if you are to survive – let alone thrive – but how do you achieve this?

Most businesses reverse-engineer pricing – put simply, they work out how much it costs to buy and / or assemble the raw materials or goods, factor in other indirect costs (e.g rent, power etc) and then add a profit margin. This approach is widely accepted and, although its a reasonable start, it is fundamentally flawed.

There is a far better way. But it’s harder as it takes imagination. It also requires that you step away from the safety of the herd.

1. Customer experience = Customer value (Price)

YOU should not dictate YOUR perceived value (aka price) for YOUR goods / services onto me as a customer.

Think about it – if you start from the perspective of:

YOUR cost of purchasing goods + YOUR rental (+ other indirect costs) + YOUR perception of the ‘right’ profit margin = Price

then you completely miss MY (all important) customer perception of value. There’s far too much of you as the business in this equation and too little about me as a customer. This is exactly where most businesses go wrong – and ultimately end up in a price-war because they’ve no other competitive-edge.

What if you could:

  • Single out the aspects of your service or product that are unique or different?
  • Make it a pleasure to deal with you.
  • Change the rules.
  • Focus on those aspects that your competitors are blind to.
  • Ask for my opinion.
  • Be a game-changer.
  • Ask for feedback and suggestions for improvement (and act on them).
  • Innovate.
  • Engage me as part of your community.
  • Listen.
  • Support me and the initiatives and interests that are important to me.

How could this be different for your business?

Clue: me (+ lots like me) will become blind to your price and loyal to you + your business. Trust me.

2. Potential for exponential growth

Once you’ve cracked point 1, the (ingrained) correlation between YOUR costs and price become disconnected. This is key.

  • Now your price is determined by your customers.
  • Your customers determine the market value and this has nothing to do with your ‘behind the scenes’ costs or how hard you are working. This is irrelevant (and quite right too!).
  • Value and therefore price is driven by customer experience.
  • This makes the competition irrelevant.
  • The rewards for being the best in your market are disproportionately high.
  • Combine this with the fact that technology opens your market to practically six billion + customers

and you have the recipe for exponential growth in your business.

Cracking No.1 is the hard bit. But its worth it. What the world needs now is Soul Businesses that deliver exceptional service like no other. Its an open goal…

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Is Craigslist a game-changer for the newspaper industry?

Whilst we watch the newspaper industry being decimated, its tempting to attribute its demise to the recession and consequent decline in advertising revenue.

But such a widely held view misses the KEY point.

Look at the above chart, comparing ad revenue of US classified ads website Craigslist with ad revenue generated by traditional newspapers over the same period. Advertising revenue for newspapers has decreased (no shocks there) but look at the ad revenue for Craigslist since the recession hit in late 2007 – it has increased dramatically, demonstrating that capital does not disappear, it simply shifts to a more effective and efficient business model.  It is estimated that the newspaper industry has suffered a $10bn hole in ad revenue in the last decade – Craigslist has clearly picked up much of this slack.

As well as being a game-changer for the newspaper industry, Craigslist is one of the Top 30 most visited websites in the world yet it has less than 30 employees.

Craigslist is an example of a new breed of flexible, lean, game-changing businesses that are capable of challenging traditional, established businesses – or even entire industries. No industry sector is safe. You should be considering now what game-changing business model could redefine your industry and either prepare to compete in the very near future or (ideally) start building it.

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#003 Speakeasy – Effective Business Communication with Andrew Thorp

It is with great pleasure that I introduce Andrew Thorp as our guest on this week’s Business N2K podcast. Andrew is a business speaker and trainer focusing primarily on effective communication skills within business.

Andrew recently launched SpeakEasy within the North West and it is proving hugely popular amongst the local business community.  SpeakEasy is a forum for business leaders and owners to get together in a supportive and informal environment to practise delivering their business message and obtain valuable feedback in the process. I was lucky enough to attend a recent SpeakEasy event in Manchester to experience the benefits first-hand – it was a great and enlightening experience.

In this conversation, Andrew shares some tips and learning points on effectively communicating your business benefits and message including:

  • the art of influencing and making an impact
  • the importance of engaging listeners with your passion for your business proposition
  • how to effectively use humour
  • implementing changing ‘status’ to add impact and influence
  • incorporating the 3 circles of influence
  • introducing the Magic of 3
  • essential tips for using slides (or the dreaded PowerPoint)

It is said that a US survey identified public speaking as the No.1 Fear held by people (death was ranked as a lowly second!). Yet with practise and perseverance in an encouraging atmosphere like SpeakEasy, many more business people should be able to tackle this vitally important (life as well as) business skill with confidence.

How you can listen to the BusinessN2K podcast:

  1. Subscribe by clicking on the Subscribe to Podcast icon in the side bar or subscribe via iTunes. This is the best way to listen as it will ensure that all future episodes are delivered directly to you as new episodes are released, or
  2. Click on the Blubrry player below to listen now:

Blubrry player!

Please leave your comments, feedback and suggestions for future shows in the comments section below.

Credits: Thanks to Andrew Thorp for this week’s show + music used in the BusinessN2K podcast is by Viba – In the Orchard lies a Secret – available as a free download and is released under a Creative Commons Licence

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