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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Is our Education system ready for a New World of Work?

Technology is evolving fast.  It is changing everything – from home to the workplace. Although many businesses are wrestling with these changes, others are already seeing the benefits of collaborative working, knowledge sharing and real-time communication that technology advancements can bring. From my perspective, barely a month goes by without another game-changing possibility being introduced e.g. a new productivity, marketing, communication or some other channel or tool.

We are entering a New World of Work.

It is crazy to think that when I was at Uni (‘only in’ 1993-1996), we had to

  • queue to use the telephone kiosk to phone home (mobile phones were not readily available),
  • hand-write all course-work, assignments etc (some students typed them on ‘wordprocessors’ but they were the ‘v early adopters’) and
  • email was at its v beginnings of becoming mainstream (“what? you can send a message for……FREE???!!!”).

When I started my professional training-contract at KPMG in 1997 I recall firing up my laptop with trepidation…. Microsoft Office was a new world that was set to become a staple part of my working day.

At home today, I am continually amazed by how naturally my 6 year old interacts with technology. It is an everyday norm for him. He is a Digital Kid. He can log into Club Penguin and other (protected) online gaming platforms without assistance. He uses the mouse tracker pad with ease and can find his way around the keyboard to interact with the gaming experience without fuss. He loves it and, here’s the interesting bit, it has without doubt accelerated his reading, questioning and strategic thinking abilities.

Although we keep tabs on the time he spends on the Mac Book playing online children’s games, Nintendo DS and Wii, I am relaxed about him getting to grips with technology at this early age as – let’s face it – an advanced competence in technology is going to be a key life skill for his generation (hey, this requirement is already pretty much here).  Plus he enjoys it and learns in the process. A win-win. (the fact that it gives me a chance to indulge my old ZX Spectrum gaming skills has nothing to do with it!).

But what happens in our schools today to reflect these changes? Not enough from my perspective so far. Although the blackboard has now become a whiteboard with overhead projector and there’s access to a computer room, the rest seems pretty archaic. Lining up to go in, sat on a mat being read to, practising joined up writing for hours on end etc. Meanwhile, there’s a national curriculum that appears to have been designed in the dark ages.

If our UK children are to excel in the 21st century New World of Work we need to seem some changes – and fast.

We need children who are encouraged to:

  • think differently
  • question (everything)
  • find their passions and follow them
  • be au fait with latest technology and use it to interact and collaborate
  • be creative and inquisitive
  • pull together in different teams to work together and share their experiences
  • think and do – not sit and listen
  • be individuals who understand their talents and innate gifts.

The future of UK (/global) enterprise and the world of work needs Innovators. Leaders. Entrepreneurs.

Our education system needs to reflect this. It is impossible to know what job(s) my 6 year old son will carry out over his lifetime (most roles probably do not as yet exist), however, it is important that we equip our kids with an inquisitive, curious and questioning mind; confidence in utilising latest technology and an overriding focus on thinking skills and developing new, creative ideas and work (rather than an education system based on regurgitating known facts as has been the norm over the 20th Century- all pretty useless in a Google and Wikipedia New World of Work).

And then there’s my 3 year old…

Postscript: I was at VentureFest 2010 in Yorkshire today and was pleased to see what appeared to be a great deal of involvement of local high schools in tech projects, exhibitions and competitions which is promising…

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Differentiate or die!

Monday Focus:

  1. Aim for “Gravity Marketing” – this involves pulling prospects toward you rather than pushing on (closed) doors
  2. Have regular events planned throughout the year – this helps reinforce the perception in the marketplace that you are active and busy doing (ideally cool!) stuff
  3. Differentiate or die!

Being the Best in the World (in the right sector and at the right time)

I was deeply saddened by the news that an ex-client of mine was placed into administration this week. A large multinational manufacturing business with over 200 UK employees based in Ellesmere Port. What makes this news particularly saddening is that the company was the best in the world at what it did –  but there was a (known) problem…

It was part of a global group who were the world leaders in manufacturing newspaper print. It served a severely declining sector. What turned out to be the wrong sector.

I have another client who is the best in the world at providing sound equipment for film and music studios. They have a growing pipeline of orders as cinemas continue to evolve and grow their offerings, such as the recent 3D Avatar movie (for which they incidentally supplied the audio equipment). They had been through some tough times over the past 5-10 years when the movie industry was in the doldrums but now they are in the right sector at the right time (again).

All industry sectors have their peaks and troughs. Look at the dot.com boom and bust. Who would have thought the banks could have got themselves in such a state? We have neither the time nor the ability to gaze into crystall balls but we can:

  • Strive to become the best in the world in our chosen niche
  •  Look out for changing trends in customer behaviour or practise
  • Avoid deluding ourselves if we spot that external factors (e.g. competitors, trends, government policies etc) are moving against us -then take action
  • Stay nimble and flexible so that we can change direction, reinvent etc as necessary
  • Watch cash – you never know when you might need that buffer
  • Never feel comfortable. Never bury your head in the sand
  • Listen to your customers and team
  • Continually reinvest in that next killer idea for a service or product

There are disproportionate rewards for those businesses that can become best in the world in their sector. The trick is to remember that things never stay the same and that you must continually invest in seeking that next best in the world product or service. Reinvention. Always.