For businesses that want to be better.

By Moore and Smalley

A Shining light
Forge Europas Peter Barton recalls the moment he decided to start his own business

Funding university costs dealmakers view entrepreneurs Fight back the Funding world 2012 hr update become a linkedin expert executive health check

issued in spring 2012 www.mooreandsmalley.co.uk

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2 welcome

bottomline
Spring 2012
cover story: Peter Barton 2. 3. welcome news the big issue Compulsory pensions the tax man Reducing university costs your people Unfair dismissal changes the dealmakers view thoughts for the year ahead one to watch ghostbikes

welcome
t a time when fresh resolutions are made and all too often fall by the wayside one commitment we should stick to in 2012 and beyond is to be better. no matter what line of business we are in, we must all raise our performance. not only will this make our own work more rewarding, it will also mean we are doing our bit to haul UK plc out of the doldrums. Recovery will come its up to us as a business community to determine how soon this happens. it has never been more crucial to focus on the future and not allow the economy to be an excuse for inaction. there are plenty of opportunities to make better decisions, tackle challenges with greater resolve, and manage our affairs more efficiently. this issue of Bottom line unreservedly promotes our resolution to be better. When we talk about success, we turn instinctively to our entrepreneurs and on pages 10-13 some of the regions most gifted business leaders give us some straight talk about how we can overcome obstacles to prosperity. Access to funding is essential to growth and, although not easy to come by, finance is out there for those prepared to look hard enough. On pages 14-15, members of our corporate finance team explain the importance of targeting exactly the right type of funding for different businesses in various situations. Opportunities for individuals to protect and preserve their wealth are also available and on page 16 graham gordon looks ahead at a raft of investment prospects, while on page

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four David Bennett discusses ways of tax efficiently funding university education at a time when our children are facing unprecedented tuition fee rises. Elsewhere in this issue, our theme of being better is picked up in our Food for Thought section, where you will find bite-sized articles on everything from organising meetings more effectively to being a master on linkedin, the business social networking site. there is also our usual round-up of news from around the firm, illustrating how we at Moore and Smalley have been doing our utmost to push ourselves that little bit harder. i do hope you enjoy the read.

8. the bl interview Peter Barton, Forge Europa 10. the moore and smalley debate tips from the entrepeneurs 14. Feature the Funding World 2012 16. the wealth manager Be balanced 17. Food for thought 20. smalley talk

4 7 14

David ingram Managing partner

the big issue 3

are you in favour of the forthcoming compulsory pension regime?

luke watson, managing director, gb energy i understand the thinking behind the changes and naturally see how it will benefit employees. i feel that employers will not want to bear the cost completely. i also think that it will take a while for employees to understand that their negotiated salary will have to incorporate an element of employers pension contribution and will not therefore be taken as wages. thus we could end up in a position whereby employers and employees salary expectations may become somewhat skewed.

simon hockings, auk invetsments ltd this policy will force some employers to freeze wage rises to cover their costs. it is an additional administrative burden that restricts competitiveness and dampens growth. the government should pay a decent state pension to all, funded by a redistribution of the fat cat final salary pension schemes enjoyed by the public sector and reducing the enormous expense of an abused and out-of-date welfare state.

david brooks, managing director, bromak Yes, the idea of forcing people to save for their retirement is sound and will widen private sector pension coverage. With an ageing population, the burden will otherwise fall on the state. there will be admin and payroll costs, particularly hard for SMEs, but businesses could see it as a way to attract and retain key employees, by offering increased contributions. its a much-needed step, helping the nation to start rebuilding for the long-term.

lorraine birch, managing director, ibex Many businesses see it as another form of tax. Employees will do too. i encourage savings but businesses and employees should have been consulted on the best approach to solving the pension problem. in an environment where financial resources are tight for both businesses and people, now is not the best time to be considering additional costs. For many businesses, they may choose to hold back pay rises to fund nESt which could impact morale and productivity. it wont do the economy any favours.

news

Dealmaking spree continues for corporate finance team

oore and Smalleys corporate finance team has completed a flurry of deals on behalf of its clients in recent months. The firm advised the owners of Cumbriabased bookmakers Chas Kendall on the companys sale to betting giant gala Coral group. it also acted for Blackpool-based software specialist MAP ltd on its sale to US giant Autodesk inc and for Skelmersdalebased safety-switch manufacturer Mechan Controls for its purchase of PJO group. Stephen Gregson, corporate finance director, said: We worked on over 40 corporate finance projects in 2011 including business sales, acquisitions, mergers, fundraisings and financial modelling.

Despite the obvious economic challenges, we know of a number of businesses which anticipate carrying out a transaction in 2012 and so were expecting another busy year. if the current situation is the new normal, it may lead some business owners to consider an exit sooner rather than later. For some, its likely to be true that if it made sense to sell in 2010/11, it will still make sense to sell in 2012 and i expect deal volumes to hold up reasonably well. read stephen gregsons dealmakers view on page 6.

4 the tax man

david bennett tax partner 01772 821021 david.bennett@mooreandsmalley.co.uk

Using the family firm to reduce university costs

By david bennett, tax partner at Moore and Smalley

ending your child to university will become even more expensive from September 2012 when most universities tuition fees will rise to 9,000 annually. While tuition fee loans are generally available, there is a shortfall for maintenance costs. grants are not available for households with income exceeding 42,600 and loans for living costs range from between just 3,575 and 5,500 per annum. Costs for accommodation, travel and subsistence, not to mention books for study, are estimated at around 9,000 a year, which creates a funding gap of between 10,000 and 20,000 for a three year course all of which must be paid from taxed income.

Share transfer
however, there are ways of funding this shortfall tax efficiently. Parents who run their own business can transfer shares in the family company to children over 18, enabling dividends to be paid directly to them. no tax is payable, provided the students gross income is less than 42,475 a year. the gift must be outright, with no arrangement for the return of the shares, as this would trigger anti-avoidance legislation that would effectively treat the childs income as the parents. Despite the anti-avoidance rules, it is possible to pay dividends at the required levels and avoid higher rate tax. in addition, it would be possible to cancel shares transferred to the child at a later stage.

costs for accommodation, travel and subsistence, not to mention books for study, are estimated at around 9,000 a year.
will be useful to the job that the graduate is about to start. this could cover a wide range of skills, for example problem solving skills developed during a physics degree could be applied in a wide range of positions outside the more obvious scientific roles. Secondly, the loan must be repaid when the student is employed by the family company. hMRC takes this a stage further, requiring that the student should normally be employed by the company while the course is being undertaken. Although there is currently little support for this view in case law or legislation, evidence of the link between the employment offer and completion of the course is essential. it may make sense for the student to be employed by the company while at university and work there during summer holidays, as well as for the business to make an offer of full time employment conditional on completing the degree course. Assuming the conditions are met, the family business will obtain tax relief for the expense, and the reimbursement will be exempt from tax in the hands of the new graduate.

working for the family

Although loans are available for tuition fees, many parents prefer their children to start working life free of debt. Parents often ask us whether their family business can pay off the tuition fee loan without incurring a tax charge and this is possible where the student returns from university to start working for the family business. As usual, though, there are strict conditions. Firstly, the course must provide knowledge, skills or personal qualities that

your people 5

tina clayton hR consultant and employer services manager 01772 821021 tina.clayton@mooreandsmalley.co.uk

unfair dismissal tops employment law agenda

verall it looks as though 2012 will see only a limited number of changes for employers to tackle, although there continues to be a fair amount of activity in the pipeline, with much still to be confirmed.

unfair dismissal period

By far the highest profile change is the extension to the qualifying service for unfair dismissal claims from one year to two years. this change will come into force on April 6, 2012. there has been much debate as to whether or not this change will have the desired effect of giving businesses the confidence to start recruiting again. It should be noted that employment areas that currently require no qualifying service for a claim, such as discrimination or asserting statutory rights, remain unchanged.

by far the highest profile change is the extension to the qualifying service for unfair dismissal claims from one year to two years.
Some basic changes around statutory payments are as follows: From February 1, 2012 the maximum amount of a weeks pay used to calculate a statutory redundancy payment increases from 400 to 430 per week. From February 1, 2012 the daily rate of statutory guarantee pay increases from 22.20 per day to 23.50 per day. From April 1, 2012 the rate of statutory maternity, paternity and adoption pay will increase from 128.73 to 135.45 per week. From April 6, 2012 the rate of statutory sick pay will increase from 81.60 to 85.85 per week. the maximum unfair dismissal compensatory award increases from 68,400 to 72,300 from February 1, 2012.

tribunal fees
As well as the above, the government is running a consultation programme to gather feedback on the introduction of fees in employment tribunals. the aim of the proposals in the consultation document is to reduce the taxpayer subsidy of tribunals by transferring some of the cost to those who actually use the service. the current cost of administering the claims and appeal service to the taxpayer is 84m per year. the consultation includes two options for consideration: An initial fee of between 150-250 for a claimant to begin a claim, with an additional fee of between 250-1,250 if the claim goes to a hearing, with no limit to the maximum award. Or;

A single fee of between 200-600 but limiting the maximum award to 30,000 with an option of an additional fee of 1,750 for those who seek awards above this amount. For both of these options the tribunal would be given the power to order the unsuccessful party to reimburse fees paid by the successful party. the consultation will close on March 6, 2012 with a view to introducing the fees after 2013/14. Further reading is available at www.justice.gov.uk

6 the dealmakers view

stephen gregson Corporate finance director 01772 821021 stephen.gregson@mooreandsmalley.co.uk

hope for the best, prepare for the worst

By stephen gregson, corporate finance director

ello. i am sitting here in the middle of winter gazing out of the window and wondering whether we will have snow soon. it certainly feels cold enough outside with stinging wind and occasional hailstones suggesting something much worse is just around the corner. But when i look at the temperature gauge, there is more underlying warmth than you would think. Cold, yes for sure, but not unseasonably so. All well and good you might think, but what has the weather got to do with a piece on the economy? not a great deal in a direct sense, but it struck me as a good metaphor for where we are at the start of 2012.

warm and cold fronts

improvements in availability of bank funding, an economy which hasnt (for now) dipped back into recession, not as many businesses going bust as had been feared; these are perhaps the background temperature. the eurozone situation, additional UK public sector job cuts, constantly falling government growth forecasts, unrest on the streets; these feel like the chill wind.

economics is not a science in the sense that mathematics and physics are.
I am not an economist, so you will find nothing in here which attempts to analyse often arcane statistics. But therein lies one of the conundrums that the last three years or so has thrown up that economics is not a science in the sense that mathematics and physics are. hence any prescriptions uttered by one group or another as to the best way out of the current economic situation always stem firstly from a particular political viewpoint. this suggests that there cannot be such a thing as a dispassionate scientific assessment of what needs to be done. On the one hand, we have those who believe that all we need to do is push the banks to lend further and faster than they have done to date so that the money supply to businesses increases, allowing them to invest and consume and thus generate growth. in that greater confidence among funders could lead to greater lending (or with fewer conditions) which in turn may lead to greater borrower confidence. But that is not to say i am joining the band that says if only the banks lent more, all would be right. im not convinced that life is that simple. So, what does the future hold? i dont know. And i am very wary of anyone who claims that they do. One thing i do know is that often in times past hoping for the best and preparing for the worst has been sage advice. As an old teacher of mine used to say, the darkest hour is just before dawn and she was usually right.

Confidence
On the other, some argue that the greatest problem we face now is the collective collapse in confidence among lenders, borrowers and consumers as to what their personal economic future might look like; and with such a collapse comes the natural desire not to incur greater indebtedness, but rather to focus on paying down existing debt. to my mind the two are probably linked

one to watch 7

Bikers gear firm accelerates into the fast lane

motorbike clothing and accessories retailer that started life in a spare bedroom has become a 4m turnover business with realistic ambitions to lead the European market by 2017. Preston-based ghostbikes aims to achieve this goal by delivering a hassle-free buying experience that enables people to buy quality biking gear at competitive prices, with high levels of customer service. ghostbikes, the trading name of parent company UK good Deals ltd, was set up in 2004 by owner and managing director Adam Patel. His first employee was Ian Moore, who is now the companys sales director.

constantly researching new products that we can offer to our customers. ghostbikes, which employs 30 staff, is principally an online operation, but its store in Preston has expanded to become a significant part of the business. Based at the companys distribution premises in Deepdale Mill Street, the store offers all products available online.

Customers are offered a wide selection of motorcycle and motocross helmets, gloves, clothing, armour and accessories from top brand names including Arai, Shoei, Spada, Airoh, Caberg, Sidi, Oneal, nitro, Ducchini, givi, and Oxford.

award winners
Ghostbikes success has been reflected in a string of industry accolades. in lancashires Be inspired Business Awards (BiBAs) in 2010, the company won the Best use of eBusiness category, as well as reaching the finals in the Small Business of the Year and Excellence in Customer Support categories. Even greater success followed in 2011 when Ghostbikes became the first business to win three BiBA categories leadership and team, Small Business of the Year and Excellence in Customer Service. Adam continued: We are looking to develop a large retail and distribution site effectively a one-stop shop to reach out to a wider customer base. At the moment we are rather hidden away and need to be in a more prominent location.

european expansion
in 2009 we expanded sales across Europe, selling our products in 25 countries and we have plans to grow this number considerably over the coming months, said Adam. Our dedicated purchasing team includes national-level motorcycle riders who are

in 2009 we expanded sales across europe, selling our products in 25 countries and we have plans to grow this number considerably over the coming months.

moving forward
ghostbikes intends to take advantage of a number of strategic opportunities, including expanding its range of own-brand products and handling distribution, while growing the firms network of suppliers and product ranges. in addition, we plan to develop our markets and channels as well as benefitting from greater efficiencies through more automation, said Adam. We will then be in a strong position to replicate the business model across Europe, the USA and other international locations. Challenges include keeping ahead of the competition in the it sector, streamlining stockholding, and improving business processes to boost productivity. We are always looking at ways to enhance the customer experience, both online and in-store, added Adam. By raising our performance across all areas of the business, we aim to keep our service levels high and our prices low.

(L-R): Reece Rothwell, Adam Patel and Chris Alldritt

8 the bl interview

lighting the path to success

peter barton, boss of multi-award winning lED and solid state lighting business, Forge Europa, talks about starting a business during a recession and being named iOD north West Director of the Year.
hen you consider Peter Bartons family history, its hardly surprising he turned out to be a successful entrepreneur. his father was a farmer, one grandfather ran his own spade forge, and the other operated a garage business while moonlighting as a funeral director. As the boss of Cumbria-based lED and solid state lighting business, Forge Europa, Peter admits that mucking out the pigs on his fathers Ulverston farm certainly inspired a strong work ethic. it was good training on the farm - not at all attractive, just simple hard work, says Peter. i still have a lot of admiration for farmers, they get a terribly bad press even though they work six and half days a week without the level of remuneration they probably should be getting.

university career as i thought it would at that time, he explains. Peter, the youngest of four children (he has three older sisters), came back to the North West without finishing his degree. it was the early 1980s and back at his local job centre in Ulverston, he answered an advert to work for a local electronics manufacturer that made components for telecoms, instrumentation and defence industries.

independent streak
Despite driving a tractor at 10 years old, Peter decided not to follow in his fathers footsteps. in fact, his self-confessed independent streak meant he didnt find what he wanted to do until his early thirties. having been a straight As student at Ulverston Victoria high School, he went to University College london to study law, but the boy from the country found city life didnt work out the way he planned. having done extremely well at school, it did not easily translate into a high-flying

my self-belief and sense of entrepreneurial heritage drew me to the conclusion that i had the potential to create a successful business of my own.
A number of different roles allowed Peter to develop his business skills and he successfully returned to university to gain an accountancy degree an asset that would later prove invaluable in running a profitable business. he also honed his entrepreneurial skills by renovating houses in his spare time.

i was not achieving what i wanted to and i suppose it gets to a stage where you have to decide whether youre okay with life as it is, or whether youre going to move out of your comfort zone and do something groundbreaking and utterly more worthwhile. My self-belief and sense of entrepreneurial heritage drew me to the conclusion that i had the potential to create a successful business of my own. Peter was 31 when he started Forge Europa on March 5, 1993, the company name being a combination of words that inspired him to take the plunge. Forge comes from his grandfathers spade forge, which made tools for the local mining industry, and Europa from the grand Europa hotel in the Czech Republic, where Peter was staying on holiday with his wife when they finally decided he should go it alone.

czech mate
i was sitting having coffee outside the hotel in Wenceslas Square contemplating my future. i just thought its now or never. i was in the fortunate position where i was still relatively young and could afford to be broke for a while which is an essential pre-requisite for a fledging business. Even more fortunately, my very tolerant and supportive wife felt the same way. By early 1995 I was confident I could make a living, and by Christmas 1996 i knew it was going to be a significant success.

changing track
Despite his success in employment, Peter says he was extremely dissatisfied.

the bl interview 9

the business formative years were spent making lED displays for products like vending machines and instrumentation, before it gradually began to develop into a business making custom-designed lED products for clients across the globe. nearly 19 years later the company has one of the most highly-skilled R&D teams in the country. Supported by a strong, technicallytrained sales and marketing team, the company delivers value-engineered lighting solutions to customers on time and within budget. it has won a clutch of awards, including a Queens Award for Enterprise in the Outstanding innovation category, and its products can be found in a wide number of applications in many different sectors including commercial lighting, automotive, marine and retail.

recession. lEDs last longer than traditional incandescent, halogen and fluorescent lights, but they also use far less energy, which means that we are perfectly aligned to the low carbon aspirations of government. To demonstrate these benefits, in 2011 the company invested in a purpose-built lighting Solutions Centre, 100 per cent illuminated by lEDs. An additional logistics facility has also opened to accommodate increasing demand for Forge Europas many projects.

peter bartons tips from the top

one for the team

to top it off, Peter was named as the institute of Directors north West Director of the Year in 2011. But his down-to-earth roots mean success hasnt gone to his head. its nice to get the plaudits, but you cant do everything yourself. You have to have a strong management team around you and professionals who can advise you on the things youre not an expert on. Above all, you cant be successful without your team wanting to work hard and do a good job for you. This team ethos is also reflected in the companys community work which Peter takes a strong interest in. in 2010 the company raised over 33,000, more than 1,000 per employee, to support hospices at home and abroad through a sponsored cycle ride the length of Cumbria. Donations from customers, suppliers, and the local community were 50 per cent matchfunded by Forge Europa and the company is planning another large fundraising event for 2012.

i was sitting having coffee outside the hotel in wenceslas square contemplating my future. i just thought its now or never.
And the future remains bright for the company, which has 30 staff, as more businesses become wise to the environmental and performance benefits of LED and solid state lighting. We have always had a varied customer base and that has helped us stave off the latest

1 2 3 4 5 6

tenacity is vastly underrated. Dont give up. Believe in your idea. if you dont, youre doing the wrong thing. Dont try to get rich quick as it rarely works out. it takes time to get things right. in the longer term you need to develop a good team, you cant do it all alone. it is essential your people know where theyre going. invest time in communicating your vision. take your corporate social responsibility seriously and you will find that this has a hugely positive effect on your business.

10 the moore and smalley debate

the moore and smalley debate

Entrepreneurs take

the moore and smalley debate 11

on the fight i

t is often said that adversity brings opportunity, but as the downturn rumbles on, entrepreneurs need all their qualities of judgment, resilience, inventiveness, and appetite for challenge.

if the region is to play its part in driving the recovery, its enterprising individuals must be ready to step up to the mark and lead the way to better times. to evaluate how this can be accomplished, Bottom line asked a group of entrepreneurs, advisers and academics to give their take on the issues for enterprise in the region.
the panel comprised: peter barton, managing director at Forge Europa; sally bate, enterprise manager at UClan; barney cunliffe, managing director of gilpin lodge hotel; Jeremy gorick, chairman of Centaur technologies; kirsty henshaw, director at Worthenshaws; and michael proudfoot, a partner at Moore and Smalley.

here are the panels opinions.

how are you going to take on the economy in 2012?
sally bate: By being positive and looking for opportunities. We have great UK businesses that are innovative and creative. We need to back them in every way. there is far too much negative talking. talk positive, act positive, look for opportunities and grab them. barney cunliffe: im being optimistic. in the leisure and hospitality sector there is a lot going on that we can take advantage of, such as the Olympics and the Queens Diamond Jubilee. By being optimistic, we hope to make the most of the opportunities that come our way. michael proudfoot: We must be realistic. 2012 is likely to be another year of consolidation rather than expansion, but also getting ones business in a position to react quickly when the signs of improvement in the economy filter through. In the autumn statement several measures were announced that hopefully will help the SME sector obtain finance to expand. Jeremy gorick: At the moment i am involved in setting up a new business Centaur technologies so im upbeat about the future. the economy goes in cycles and although were in a trough right now, we will see a recovery.

has your attitude to risk changed as a result of the economic downturn?

kirsty henshaw: Weve been in a downturn since i started the business, so to me nothing has really changed. From day one, weve always had to think very carefully about every penny we spend and this will continue to be the case. barney cunliffe: My personal attitude to risk has not changed, but it seems like the banks have changed their attitude. i have a lot of confidence in my business and Im sure many other entrepreneurs feel the same way about their own businesses. We just need the support of the banks. peter barton: A good product or service backed by sound business principles will make money in any business climate. however, in a recession it is probably more important to know your customer well before their troubles become yours. Jeremy gorick: i have always advocated a cautious attitude to risk, so my attitude to it hasnt really changed. Yes, there are more pitfalls out there, but if you are in business, you should be aware of them anyway. sally bate: Entrepreneurs have to be risk takers but they have always done this in a

12 the moore and smalley debate

calculated way. Difficult times may call for more creative solutions particularly in financing but we have to continue to take risks to stay ahead. i think UK entrepreneurs are very good at this.

issues. She was also a great example of being a figurehead for your business. michael proudfoot: i very much admire Duncan Bannantyne. he has built a substantial business empire from nothing but has not forgotten his roots and provides significant input to his charitable work in Africa. kirsty henshaw: Richard Reid the co-founder of innocent Drinks. i admire what hes done with the innocent brand and how hes managed to keep it fresh and young. hes also helped the brand to maintain its integrity, despite part of the business being sold to Coca-Cola.

what are the hallmarks of an entrepreneur?

peter barton: You need to have a vision, work to the plan with focus, have tenacity in the difficult times. Dont be pessimistic or optimistic, just realistic. michael proudfoot: While entrepreneurs are very different as individuals, they share many common attributes. they are usually passionate and single-minded about what they are doing and have a vision of where they want to take the business. their commitment to the business is 100 per cent, and they generally inspire those around them to share that determination. Jeremy gorick: An open mind and a real ability to think strategically about where you are trying to go and how you intend to get there. Some people see entrepreneurs as people who are impulsive by nature, but i really dont think you should shoot from the hip. You should thoroughly understand all the issues before you make a business decision.

entrepreneurs are passionate and resilient. they learn from their mistakes. Sally Bate

creativity and focus dont always go hand in hand. Barney Cunliffe

Jeremy gorick: Charles Dunstone of the Carphone Warehouse. he started his business with 6,000, but he knew where he wanted to go and what he wanted to achieve. hes now worth 1bn personally. not bad in a little over 20 years. barney cunliffe: it has to be James Dyson for his creativity in reinventing household products. Britain has always been creative, but has often failed to convert this into commercial success. Dyson has used the creativity, but also mastered the manufacturing.

kirsty henshaw: I would say flexibility, creativity and resilience. You have to be able to adjust to whatever business life throws at you and not let setbacks drag you down. the ability to keep coming up with new ideas is essential. barney cunliffe: Creativity, focus and good communication skills are the ones that stand out for me. Creativity and focus dont always go hand in hand, but if you have both, you can be successful. sally bate: Entrepreneurs are passionate and resilient. they learn from their mistakes and use the learning to do better business. they are creative, innovative and often fearless. they dont sit back and wait for government or big business. they are troublemakers who can upset the status quo but thats how things are changed.

What have you learnt from previous financial crises?

peter barton: Be aware of our countrys recent history as we have had a series of economic cycles and dont believe all you read in the papers. 2012 is still a much better economic environment to run a business in than any time between 1970 and 1982.

which entrepreneur do you admire and why?

sally bate: Anita Roddick, founder of Body Shop. She took her idea from kitchen table to multi-million pound, international business. She changed the way the cosmetics industry did business while championing human rights and campaigning on environmental

the ability to keep coming up with new ideas is essential. Kirsty henshaw

the moore and smalley debate 13

Jeremy gorick: the economy always bounces back and recessions are transitory. the challenge is to plan ahead so you are in a position to take full advantage of the recovery, which will inevitably arrive. barney cunliffe: i was a bit too young for the last major recession before the most recent one, but my father talks about having to deal with interest rates of 14 and 15 per cent. in the recent slump weve actually had very attractive interest rates as far as being an entrepreneur is concerned, so i think well be able to stimulate growth very quickly once we all start feeling more positive. michael proudfoot: it may be that ones memory fades with time, but they did not feel as bad as the present slump and the upturn was quicker and more pronounced. the issues then were about keeping good control of costs and managing the cash flow, but I think the availability of external funding was such that there was more flexibility with overdrafts. the issue then was more about avoiding overtrading in the upturn and running out of cash.

peter barton: Be aware of the increasing economic power and capabilities of the developing eastern economies. if we are to continue to do well in the future, UK plc is going to have to work a lot smarter.

top tip for a budding entrepreneur

peter barton: tenacity, tenacity, tenacity. Remember that all your efforts are worthless unless you are able to make a profit and also, most importantly, get paid.

the economy always bounces back and recessions are transitory. Jeremy gorick

remember that all your efforts are worthless unless you are able to make a profit. Peter Barton
michael proudfoot: Do not be put off by the difficult economic conditions. If you have a good idea, go for it, but do look at the figures carefully, take professional advice and make sure you factor in some sensitivity into the numbers. barney cunliffe: Find a mentor. Entrepreneurs, by their nature, are very driven and enthusiastic people. they just need someone whos been there before and who can help them avoid the pitfalls.

what have you learned from this economic slump?

Jeremy gorick: things dont always improve as quickly as you would like. You need to be running a tight ship all the time, not simply when theres a downturn. People sometimes ask me if i have battened down the hatches and my answer is that the hatches are always battened down. You should always keep costs low and promote efficiency. sally bate: the importance of having the right team and surrounding yourself with a good support network. its easy to forget in the good times. Yes, many things are connected to financial issues but people make such a difference. barney cunliffe: to cancel my newspaper subscription. the perpetual regurgitation of negative news is incredibly demoralising and is doing us no good. We need to hear more about the good news of interest rates being at record lows, of inflation now going back down and growth in the economy. it may be very weak growth, but its growth. kirsty henshaw: ive learned that you have to make the most of whats around you, such as the support available from different organisations and business mentors. Worthenshaws has been lucky to be able to make use of the excellent business services provided by UClan.

sally bate: napoleon said: Whatever the mind can conceive it can achieve. Keep having ideas, keep pushing boundaries be a troublemaker. kirsty henshaw: treat people with respect, learn from everything you do, and dont be afraid to make mistakes. Jeremy gorick: have the guts to follow through your ideas. too many people have a good business idea but decide not to take a risk, which is a shame.

i very much admire duncan bannantyne. he has built a substantial business empire from nothing. Michael Proudfoot

14 feature

rough guides: the Funding world 2012

ccess to finance is likely to be a continuing challenge in 2012, but businesses can achieve better outcomes by making sure the type of finance they seek is right for them and their particular circumstances. in this special feature, Moore and Smalley has asked four members of its corporate finance team to assess the various options.

alternative funding
By ian waddingham, corporate finance manager
what do businesses need to know about alternative funding in 2012? there are various types of alternative funding, such as lancashire County Councils Rosebud Fund; business angels (individual investors); and the government-backed north West Fund. Another source is peer-topeer lending, operated by organisations such as Funding Circle which matches businesses and individuals who want to invest with businesses looking to borrow. how does it work and what are the benefits? if you cant get adequate funding from other sources, alternative funders may be able to help. however, this is usually to bridge funding gaps that occur when a bank is prepared to offer some, but not all, the finance needed. why might it not be the solution for your business? Alternative funding tends to come with onerous conditions which include regional or sector-specific requirements. The Rosebud Fund, for instance, aims to promote growth and employment opportunities in specific sectors in Lancashire, which can make it unsuitable for many businesses. Additionally, alternative funding providers prefer to work alongside traditional lenders. assessment this can be a useful means of topping up your funding needs, but its by no means easy or straightforward. new funders are arriving, but their effectiveness remains to be seen.

private equity and venture capital

By paul bennett, corporate finance senior manager
what do businesses need to know about private equity and venture capital in 2012? PE and VC funding involves the funder becoming an investor in your business and thus being entitled to a share of the profits, which arguably, makes it expensive. Just as importantly, PE and VC diminishes control of your business because the investor often wants a seat on the board. From day one, you will need to focus on growing the business and the eventual exit because the investor will generally be looking for their exit in three to five years. how does it work and what are the benefits? PE and VC funds are available, but you must have a solid track record and very strong growth prospects. Businesses that find a suitable investor can flourish as a result of the strategic expertise that PE and VC funders bring to the business. why might it not be the solution for your business? PE and VC funding is not widely available to start-ups investors tend to prefer established (although this can include early stage), fast-growth businesses. Also, some business owners may not welcome the involvement of an investor, particularly if the investor and owner have differing timescales for their eventual exit. assessment this is specialist funding which is only going to be appropriate in limited circumstances, and it will involve giving up a proportion of the ownership.

feature 15

Invoice discounting and stock finance

By Jane harrison, corporate finance manager
what do businesses need to know about invoice discounting and stock finance in 2012? the time when invoice discounting was seen as finance of the last resort is well in the past and it is now a mainstream source of finance that often sits alongside other funding options, including debt. in general, for regulatory reasons, and where appropriate, banks prefer to offer invoice discounting rather than overdraft facilities. how does it work and what are the benefits? invoice discounting is readily available and ideal for established growing businesses because it links your sales ledger directly to your credit facility. this means funding grows in direct proportion to business expansion. invoice discounting also works well for seasonal businesses because funding mirrors sales. in addition, it has recently become available to a fresh range of sectors, such as particular types of contracting businesses, that were previously excluded. why might it not be the solution for your business? this type of funding may be expensive in terms of interest and bank charges depending on the nature of the business. however, if you use the funds to grow your business, it may be possible to get discounts from suppliers, for early payment, that would go some way towards outweighing these funding costs. invoice discounting is not normally available to start-ups, although lenders are prepared to offer factoring facilities to new businesses. Unlike invoice discounting, factoring is not confidential, so your customers are aware that you are using the facility. assessment This is a widely used source of finance in a highly competitive market that delivers flexible funding. Its extremely well suited to fast growing businesses.

debt funding
By stephen gregson, corporate finance director
what do businesses need to know about debt funding in 2012? Debt funding packages will not be cheap, but availability may show some improvement following the Chancellors recent announcement of a 21bn credit easing scheme aimed at smaller businesses. When considering an application for debt funding (also known as term finance), banks will focus on serviceability, rather than just security. to obtain this type of funding, you must demonstrate strong cash flow to convince the bank you can service the loan.

how does it work and what are the benefits? Debt funding is designed for strategic, long-term investments and is paid off in fixed instalments over a longer period, as opposed to a fluctuating overdraft facility. its advantage over private equity funding is that you can undertake major projects, such as acquisitions, while retaining complete control of the business. why might it not be the solution for your business? This type of finance isnt suitable for short term working capital requirements, for start-ups, or seasonal businesses, because their cash flow fluctuates. In addition, term funding may not be the most appropriate solution if you already have significant debt because taking on further debt will affect your credit rating.

assessment Debt funding is always going to be at the core of most funding structures. it is still very much available, but you must be able to make a convincing case to the bank.

Please call our award winning corporate finance team on 01772 821021 to discuss any funding requirement in confidence

16 the wealth manager

graham gordon Head of financial planning and wealth management 01772 821021 graham.gordon@mooreandsmalley.co.uk

unsettled conditions are forecast for investors in 2012

By graham gordon, head of financial planning and wealth management

overnment cutbacks may well have a greater impact in 2012 than last year, eroding consumer confidence and creating conditions for an extended period of limited growth. nonetheless, its important not to be overly pessimistic: we should not allow ourselves to be unduly daunted by fears of a double-dip recession.

Inflation
The Bank of England appears confident that inflation can be pegged back to two per cent this year, although any decrease is likely to be slow, during which time inflation will remain higher than any of us would like. the markets will be neither bulls nor bears, and the pendulum will swing back and forth, driven by the latest reports on consumer confidence, especially in the US, and growth in developing nations. On a more positive note, the world would be a very different place if we were no longer concerned by eurozone defaults, the US housing market recovered, China and other developing nations balance inflation and growth, and consumer confidence rallied in the UK.

we should not allow ourselves to be unduly daunted by fears of a double-dip recession.

Of course it would be a truly miraculous year if all these things happened at once. All the same, if more than one was to occur, we would be well on the road to recovery.

be balanced
Against this unsettled background, it has never been more important to maintain a diversified portfolio. This means managing exposure to a range of asset classes, not just developed market equities and emerging market equities, but fixed interest, property, gilts, bonds and commodities. looking at the broad asset classes, many believe government bonds now only have

safe-haven appeal, with corporate bonds better able to cope with any increases in interest rates or improvement in economic outlook. As for equities, the US and UK look favourable compared to Europe, with a similar picture for commercial property. Asian and emerging market equities are likely to continue to be volatile, yet with

arguably the greatest longer term growth potential. generally speaking asset classes will be affected differently by prevailing market conditions. this has historically provided the balance in portfolios. however, for the last few years there has been a much higher degree of correlation. Unfortunately this may continue.

food for thought 17

foodforthought
open mike my Fd life: Q&a
John vandermeer, finance director, Booths Supermarkets
How did you get into finance? i always felt very comfortable working with numbers and thanks to an inspiring teacher at high school I was influenced to try this as a career option. Following a business degree at university, the rest is history. who has been your favourite chancellor and why? Kenneth Clarke is a straight talking politician who, when chancellor, managed to significantly reduce the governments budget deficit along with interest rates, unemployment and the basic rate of tax. if only we had a bit of Ken Clarke fairy dust to sprinkle on the economy now. the uk and europe, in or out? As it stands, definitely in Europe, but no to the single currency. the EU is desperately important to the UK. however, European countries are so culturally and economically diverse and require different economic levers to address problems. to have them linked with a single currency is, in the long term, a recipe for disaster. if you were chancellor Rationalising the amount of bureaucracy and red tape in business would help the private sector immeasurably. i also believe the government could do far more in encouraging the banks to get lending. biggest Fd achievement to be successful in the supermarket retail industry, one of the toughest, most competitive and well developed in the UK, is definitely something I am proud of. to develop teams and individuals who have contributed to this success has been extremely satisfying.

business opinion, thoughts and advice

in a recent BBC news bulletin, the BBCs economics editor Stephanie Flanders, presented a story that the UK economy had grown a little more than all the experts had predicted. i wouldnt say she sounded disappointed, but she did seem a little put out. She then followed it up with a report on economic confidence: A global survey from Ipsos Mori shows us going into 2012 as one of the gloomiest nations on earth. i gasped at the irony. After all, along with most national newspaper commentators and BBC pundits, she has peddled a consistent diet of doom throughout the last few years. in fact, if you took seriously Robert Pestons 20 minute motivational lectures on the ten OClock news, youd probably lock the doors on your business and throw away the keys. there are positives to take out of the last few years. Weak and annoying competitors may have fallen by the wayside. there are more new business start-ups eager to do things differently and with energy to burn. British products still have a first rate reputation around the world there are new export markets to chase and lower cost overseas suppliers after your business. Standing still isnt an option, seeking new opportunities definitely is, but you might want to give up Peston and Flanders. michael taylor is on a mission to make the north think more. after a journey through london in the 1990s, he returned to his native north west in 2000 to work for insider media, a business-to-business media and events company in manchester. he puts events together, interviews people and he pops up on the bbc from time to time.

18 food for thought

foodforthought
business opinion, thoughts and advice

a guide to...becoming an expert linkedin user

linkedin answers to gain exposure and become an expert within your field. LinkedIn groups can also put you in touch with other experts in your industry. these niche groups can foster discussion, spread your message and connect you with key people. it is also great for your online reputation. think PR! When you are finally confident with maximising linkedin, set up a company page for your business. Company linkedin pages have gone through something of a makeover lately and are no longer static pages. the new look pages are able to promote a companys brand, products and services and can also be used to complement an organisations overall internet presence. these pages can be customised to include Youtube videos, linkable banners and status updates. it will also aid your search engine performance. Once youve completed the above steps you and your business will be on your way to engaging with over 120 million business professionals. written by mitch landis, mlpr

its been around for over nine years, but few use linkedin to its full potential. More business professionals are however wising up and seeing the business social networking platform as a powerful commerce tool. Whether you wish to leverage online presence, drive traffic to company websites, build up your contacts or simply tout for potential new customers, used correctly, linkedin can give you a major advantage. First and foremost, ensure your personal profile is up to scratch by adding a bio, image

and sufficient employment history. Using linkedins apps you can also incorporate a company blog or twitter account, which will help keep a consistent feed of information on your profile. Ensure you also list your skills as this will make you more searchable to others. it is important to establish goals. Determine connections to target, highlight people who you wish to receive recommendations from and start to use linkedins new application tools such as

5 ways to be better in 2012

1. commit yourself to strategic planning Make time to consider strategic business issues rather than committing all your resources to reactive firefighting activity. its easy to put off things that seem nonurgent, but you must get to grips with long term planning issues that are equally crucial. 2. money makes the world go round Positive cash flow is where money entering your business is greater than money paid out. You can boost your financial management performance by preparing a rolling 13-week cash flow forecast; taking a good look at your costs; and keeping a tight rein on stock control. 3. but not everyone is money-motivated the key to raising the performance of your people is motivation. however, the belief that all your people are always moneymotivated is misleading. Consider using psychometric tests to help you understand what makes individuals tick and deploy a range of incentives that allow them to flourish. 4. people can be a great asset and a potential liability Successful business leaders must not only attract talented individuals, but also reassign, or even remove people who are not making a sufficient contribution. Its true that people are a business greatest asset, but the flipside is equally valid the wrong people in the wrong jobs can cost you dearly. 5. consider a coach Owner managers frequently get so close to their business that they cant see whats working well and what needs changing. For example, you may not realise you are out of sync with shifts in demand, or that your business practices have become outmoded. An external perception can identify and help address these and other issues. written by damian walmsley, partner

food for thought 19

foodforthought
the textbook guide to more productive meetings in 2012
start from the end and work with military precision Effective meetings start with thorough planning in many ways like a general organising a battle plan. Before you do anything else, establish your final objective or desired end-result, and structure your plan accordingly. is a meeting necessary? having developed a plan, ask yourself if a meeting is the best solution. Meetings are often expensive because senior people must set aside time to prepare and attend. You may be able to achieve your aims through phone calls or emails. dont kick off without key players Ensure everyone you need to be there can attend. if not, postpone the meeting (to pick up on the military analogy, a general wouldnt plan a battle without the tank commander being present). if a decisionmaker sends a substitute, make sure he or she has the authority to act. make sure everyone is fully briefed and knows what is expected Brief all attendees before the meeting to avoid wasting time. Right at the start, inform everyone what the outcome should look like. For example, you might say: At the end of this meeting we need to have agreed all the key milestones for Project Alpha. keep it businesslike and stay focused Set a friendly but businesslike tone that encourages everyone to contribute, and stick to the agenda including timings allocated to individual items. this means you wont get sidetracked by minor concerns and have to rush through important issues. keep everyone involved Some people are more assertive than others, but dont let a small number of individuals dominate the meeting. You can avoid this by asking questions like: What do other people feel about this issue?

business opinion, thoughts and advice

an effective follow-up plan is vital Make a follow-up plan with specific action points, including the names of the individuals who have taken ownership of items, dates by which actions must be completed, and agreement about what constitutes completion. written by adam parton, corporate services director

how to... be a healthier exec this year

Deciding what and when to eat are crucially important decisions that will directly affect your commercial performance. Eating right means you have greater energy and focus to run your business. On the flipside, your judgment isnt at its best when youre grabbing unhealthy snacks while rushing between meetings. Fruit and veg at least five a day Fruit and vegetables are rich in fibre, vitamins, and anti-oxidants. take on board the governments advice to eat at least five servings a day of fruit and veg. Youre no good to yourself or your business if you have to take time off work through ill-health. meat and starch are best apart Eat meat and starches separately. this helps digestion and avoids bloating, constipation, and heart burn, all of which can impair clarity of thought that is vital for a busy executive. this may mean fewer pies, but will lead to a healthier waist line and bottom line. make breakfast the foundation of your day tests show that eating breakfast improves mental sharpness but this doesnt mean tucking into a full English every morning. A yogurt, piece of fruit and bowl of healthy cereal will set you up for the day. lunch is not a luxury Dont make a habit of grabbing a sandwich and eating it on the go. its important to take a break and take time to eat. An ideal lunch should include protein, whole grains, and fruit and vegetables. this will boost your stamina and aid concentration when you need to stay focused during those long afternoon sessions. keep a cap on your coffee intake Caffeine is especially tempting for busy managers because it gives bursts of energy that help you through a heavy schedule. the downside is that your energy levels eventually crash, leaving you needing even more caffeine. One caffeinated drink a day and three or four glasses of water is good advice.

smalleytalk

Managing Editor: Danny Houghton Written and Made in Freshfield. www,freshfield.com

Fundraiser michael aiming for a ton of runs

Moore and Smalley partner Michael Briggs recently completed the Amsterdam half Marathon to raise money for Derian house Childrens hospice. Michael, 51, has clocked up more than 10,000 miles in over a decade of road running and is hoping to raise thousands more pounds for charity by completing 100 races. he has so far raised over 15,000 for various charities after taking part in 89 races of 10km or further, including seven marathons and 23 half marathons. Michael, who did not begin running until he turned 40, said: like many others before me, i didnt get the motivation to start running until later in life when i found myself to be overweight and unfit. After a year of getting up to a reasonable level of fitness, my first race was the 2001 London Marathon and ive never looked back since. i hope to get to 100 races as soon as i possibly can and im looking to break through the 20,000 mark for funds raised in the near future. With the support of my friends and colleagues, this will hopefully be with my next few races. Other charities Michael has supported include the Childrens Society, Children with leukaemia, Spinal Research, galloways Society for the Blind, legacy Rainbow house, Marys Prayer Appeal, and the international Aid trust.

numbers add up for leading learner laura

trainee accountant laura nanson has come first in a series of rigorous regional accountancy exams after gaining the highest scores in the north West. Laura, who currently works in the firms audit department advising charities, gained 66 and 74 per cent, respectively, in her recent business strategy and financial management exams, the highest out of all the students in the region. the exams were taken with the iCAEW (the institute of Chartered Accountants in England and Wales). laura, 23, pictured with tax partner Rachel Marsdin, is two years into a threeyear training contract with Moore and Smalley, after which she will be a qualified chartered accountant.

You can now get access to all our latest news, views, thoughts and updates via our blog, twitter feed and linkedin page. www.bottomlineonline.co.uk | twitter.com/mooreandsmalley | linkedin.com/company/moore-and-smalley-llp

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making the news

Moore and Smalleys experts have been helping to shape the headlines in recent weeks after being asked to provide comment and analysis on the big business and financial stories. in the aftermath of chancellor george Osbornes Autumn Statement, tax partner David Bennett and corporate finance director Stephen gregson offered their views on the impact on businesses, being interviewed by publications including the Blackpool gazette, lancashire Evening Post and north West Business insider. Partner graham gordon, head of financial planning and wealth management, was interviewed by Fylde Means Business and the nWl Chamber of Commerce magazine for his thoughts on the Bank of Englands decision to extend quantitative easing measures. Meanwhile Moore and Smalleys trusts and estates manager liz Procter was asked by Money Observer for her thoughts on how to use trusts to protect family wealth. lancashire Business View featured Moore and Smalley corporate manager Joe Sullivan in its annual Young Uns feature, profiling some of the best up-and-coming business talent in the region.

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Moore and Smalley LLP is a limited liability partnership registered in England and Wales: No. OC313896. Registered Office: Richard House, 9 Winckley Square, Preston, lancashire PR1 3hP. the term partner indicates a member of Moore and Smalley llP who is not in partnership for the purpose of the Partnership Act 1890. A list of members is available from our registered office. Moore and Smalley are registered to carry on audit work in the UK by the institute of Chartered Accountants in England and Wales. Authorised and regulated by the Financial Services Authority. Moore and Smalley C.A. limited is a limited company registered in England and Wales: Company no. 5373155. Registered Office: Richard House, 9 Winckley Square, Preston, Lancashire PR1 3HP. An independent member of MHA, a national association of UK accountancy firms. UK member of Morison International with independent member firms worldwide.