March 2008 Archives

"A living, breathing advertisement for Britain's ambition," barked BAA chief Sir Nigel Rudd, as he unveiled the new £4.5bn Heathrow Terminal 5.

The Queen heralded the UK’s largest free-standing building as "a 21st Century gateway to Britain".

The world’s press frothed at its spaceage curves and the 60,000 people, 100 million hours and five years it had taken to build; the 3,800 car park spaces; 150 check-in desks; 192 lifts; 105 escalators; 13km of rail links; 112 shops and, of course, the ability to process 12,000 bags an hour.

So how exactly did T5 go from fanfare to unmitigated PR disaster? What unforeseen circumstances led to 208 flights being cancelled in the first three days and a backlog of 20,000 bags?

Not a lot. Staff hadn’t been told where to park for the big opening; they couldn’t find their way to the terminal and didn’t know how to use the new baggage system.

BA, the sole operator for T5, admits it could take years to recover from the bad publicity. And for what? A few signs and some basic organisation? How mad is that?

Seeing as nobody’s actually died I think we can stop short of claiming it tops the Titanic as the most calamitous launch of all time. But it has to beat the Millennium Dome, because T5 probably isn’t anywhere near as bad as it’s been made to look.

Image: Flickr

Depending how old you are you’ll either find this utterly depressing or completely inspiring: a new breed of 15-16 year olds are making in excess of £60,000 by trading online.

Gone are the days when teenagers wasted away their parents' income; it seems some are now the chief breadwinners!

A report by Virgin Media interviewed 700 teenagers aged between 13 and 18 and found a staggering 43% had made money online in the last 12 months, while 22% had set up their own businesses while still in full-time education.

15% reported they were raking in £23 per hour – six times the national minimum wage – with an emerging group of teen tycoons cashing in three times the UK average salary.

When the 30-somethings among you desperate to escape employment have finished thumping your heads on your keyboards, you’ll surely agree, albeit begrudgingly, this has to be good news.

We blogged earlier this week how businesses needed to adapt to the consumer habits of the first generation raised on the internet, and now we’re beginning to see the emergence of a generation who’ll shape the future.

If this report is anything to go by, the future looks entrepreneurial - and that has to be exciting for all of us.

Sir Alan Sugar’s return with the fourth series of The Apprentice last night was pure pantomime. “I’ll fire the bleedin’ lot of you if I have to, I don’t give a shit,” he hollered, trademark pointed finger poised.

By this time we’d already been treated to opening gambits from this year’s circus of egotists and careerists:

“My strategy is to not only beat the other candidates but thrash them.”
“I am a natural born salesman.”
“I rate myself as the best in Europe.”
“There is something inherently in me which means I have to get to the top.”
“I am quite happy to cut people out of my life to succeed and be a winner.”

Crikey, talk about setting yourself up for a fall/fool. That’s the point, of course, and this is reality TV. Could The Apprentice get any further away from business?

Last night’s task had plenty of lessons of how NOT to do business, I guess. For the record, the girls beat the boys at selling fish in an exhibition of poor leadership, team work, negotiation and, well, common sense.

Lawyer Nicholas de Lacy-Brown was the fall guy for pricing lobsters at a fiver and waging an ill -advised class war with northern team leader Alex Wotherspoon.

Claiming ‘I like art and can’t relate to people who talk about football’ was never going to wash with barrow boy Sugar, was it?

“You weren’t outstanding was you?” was his gruff verdict before delivering the fatal words: “You were devastated at getting a B for GCSE French, so you’ll be devastated with the big F I’ve got for you, YOU’RE FIRED!”

It just about beats Eastenders – if you can tell the difference – but business, it is not.

Cynical publicity stunt? Well, yes, it’s impossible to deny.

Impossible for everyone except Amenworld’s marketing honcho Andrew Fassnidge that is, who no doubt dreamt up this cunning PR plan. Except, annoyingly, he does have a point.

Armed with a convincing arsenal of stats and reason, Fassnidge argues while there’s plenty of hype over growing online retail sales it’s the big boys increasingly prospering.

Plucking one particularly potent point, a survey from Directline.com found consumers were more likely to buy from a "household name" retailer’s website rather than an e-commerce site without a physical presence in the shopping centre.

“People buying a pair of socks shop online with Burtons or Marks and Spencer, just because they know the brand name. People could easily choose some individually knitted socks from an independent online craft shop with potentially better quality and value for money,” fires Fassnidge.

He’s right. Early internet innovators might have caught high street monoliths napping but it’s increasingly difficult for independents to enter markets with established brands.

Not that we’re sure exactly what the ‘Support Independent Online Shops’ campaign will do about this. Its Facebook group currently has 155 excited members sharing their small biz stories while there’s a more muted affair over at MySpace.

Ah well, as Henry Ford once said: “Coming together is a beginning. Keeping together is progress. Working together is success.”

Most of them use the internet unsupervised, over half admit to having viewed porn, while even more are expected to have browsed content that would have faced restrictions under UK law if screened on TV.

Oh and most teenagers have mobiles which they leave on all night in case they’re texted in the early hours.

According to the Institute for Public Policy Research, which compiled the research, and much of the press reports on it, the results highlight a growing need to monitor and regulate content viewed by young people.

Our thoughts? Well, politics isn’t our game, but one initial thought: 20 hours, is that all?

Surely the first generation raised on the internet is spending at least half its waking time online?!

Now we’re not claiming to be down with the kidz, but every1 knows TV, print and radio are dead as standalone mediums. What you want you download.

Hit TV show Skins screened its first episode on MySpace, while you can now watch on the E4 website or your iPod via iTunes. There’s also whole generation of Lost fanatics taking great pleasure in watching, albeit illegally, series four without replemishing Murdoch’s millions with a Sky subscription.

Yet still brands continue to blow millions targetting young people with traditional advertising instead of where it matters: online, social networks and well SEO-ed engaging sites.

Pls sA ur nt 1?

Aunt Bessie's, which started life making frozen Yorkshire Puddings for Butlin’s holiday camps, has seen sales of its frozen mash rise 1,000% since Delia’s endorsement.

Food giant Heinz makes the potato products under license from Hull-based Tryton Foods, with both companies forcasting healthy profits after a helping hand from Delia.

Heinz, heard in November that Delia would be recommending the potatoes, and stocked up in preparation, while the supermarkets also pre-empted a rush with Sainsbury’s and ASDA quadrupling their normal orders ahead of the series and book launch.

Jane Jones, Heinz’s marketing manager for the Aunt Bessie’s range, told the FT sales of the frozen mash had 'skyrocketed':

“Having someone like Delia include our products is fantastic because consumers trust what she’s telling them,” she said.

Tryton expects a ‘halo effect’ from Delia’s recommendation to encompass the rest of Aunt Bessie’s range, demonstrating the impact of successful celebrity endorsement - whether the critics agree or not!

Phew! Just as Smarta was about to blog about Robin Klein of The Accelerator Group’s (TAG) claim that “funding for first time entrepreneurs won’t happen anymore”, he’s retracted the statement.

Robin had insinuated that the investment vehicle that backed Love Film, Mind Candy, GlassesDirect and Moo is now only looking at 2nd or 3rd time entrepreneurs who have already ‘demonstrated’ consumer uptake.

However, Robin now says:

“TAG loves first time entrepreneurs and makes a habit of backing them. If you look down the list of our investments, more than half were first timers.

“We particularly like those who can demonstrate the tenacity, invention, persistence and sheer bloody mindedness that has enabled them to get their product together with little or no external funding.”

He does maintain that funding will be harder to come by for those that haven’t tested the model, though:

“First time entrepreneurs who simply have a business plan (ie a PowerPoint + spreadsheet) would find it very difficult to get funding. They will need to have built something - a demo - a basic service.”

If Robin’s retraction is to be taken at face value, it could actually be good news. Greater emphasis on proving business models and ability to make profit might see a drop in the number of start-ups funded, but should hopefully give those that do secure backing a better chance of survival – especially if the economy dips further.

Apparently, you’re not overly excited about the London 2012 Olympics. Now we can understand your scepticism over the prospect of a home soil medal haul, but did you realise there are £6bn of contracts up for grabs?

A report by Lloyds TSB reckons three quarters of firms haven’t yet looked into the opportunities the games will create.

The Welsh have been the slowest out of the blocks while there’s also been little interest from companies in the South West and Midlands.

Seb Coe, chairman of the London Organising Committee of the games, has urged businesses to start limbering up for action:

“London 2012 is a unique opportunity for businesses throughout the UK to raise their profile and reputation on the global stage, and the amount of big sporting events coming to the UK could make this a ‘golden decade’ for major events in the UK and, therefore, British business.”

Look at the stats and he’s got a point. In addition to the 9.2m event tickets available, a global TV audience of 4bn will watch 14,250 athletes from 205 countries, looked after by 75,000 organisers and covered by 20,000 accredited media.

That’s some show and why the Olympic Games remains one of the most respected global brands – can you afford not to compete?

Check out the 2012 Business Network for how to get involved.

Plenty of us suspected it and now some evidence that proves it: more people than ever before are starting their own business.

Annual stats released by Barclays show a record 471,500 new businesses opened their doors in 2007, a 3% increase on the year before and the highest level since the bank started recording activity 20 years ago.

During that period, there’s been a 17% increase with an average 393,000 businesses started each year. There are now 2.93 million businesses in the UK, equating to one company per 8.7 people of working age, an increase of 15% over the past 20 years.

It’s not all good news, though. During the last downturn in 1992, business closures reached 18% from an average of 14% and start-ups plunged to 290,000.

Closures dropped as low as 11% in 2003 but climbed to 17% last year. With the economic climate only expected to worsen, it’s reasonable to assume the number of closures will remain high – but does this necessarily mean start-ups will drop?

Possibly. If you’re struggling to pay your mortgage you’ll be less inclined to forgo a salary and we’re already seeing banks pulling back credit.

That said, it’s so much easier to start a business than in ’92. Technology and the internet have reduced the barriers to entry so significantly that it's now possible to at least start a business with nothing but a laptop and a mobile.

Grow one? Now that’s a different story…

Somehow most of the media considers the latter the lead story. Why a man should pay his wife and the mother of his four-year-old approx 4% of his £800m is clearly more important than, say, spiralling mortgage repayments and inflation.

Ahh to hell with it: if you can’t beat ‘em, join ‘em.

So what does Smarta think about thumbs-up Paul having to chuck the truth-intolerant Heather Mills £24.3m?

Well, he’s only got himself to blame, hasn’t he? No, not for choosing to marry a woman 25 years his junior and with worse references than Nick Leeson.

But because he didn’t sign a pre-nuptial (yes we know there's no official pre-nup law in the UK, but you'd have thought some legal protection might have made sense). The man who nobly dismissed pre-nups as ‘unromantic’ is now possibly considering a rewrite of ‘All You Need Is Love’.

In all seriousness, Macca’s not alone is he? How many of you in marriages and civil partnerships have protected your business interests should the unthinkable happen?

Yes, it’s unromantic – but so is the fact that approximately 160,000 people get divorced every year.

We suggest you don’t do it at the same time as working late, losing weight and getting a makeover, but perhaps it’s time to call in a lawyer. If you're business is protected in death, it should also be in the case of divorce. After all, Macca's troubles once seemed so far away...

Here we go again! The government’s Budget pledge to set up a £12.5m fund for female entrepreneurs might initially have been lost in the minutiae, but it’s re-ignited the debate about whether female entrepreneurs should be treated differently to men.

It’s widely accepted we need more women in business. Female entrepreneurs run just 15% of UK businesses and if women started up at the same rate as men, we’d have 100,000 more new companies each year.

Yet female-only policies remain a prickly issue; with both men and women. Some just oppose all forms of positive discrimination, while many women in business express frustration at being unable to separate their gender from their success as an entrepreneur.

It’s become common place at business awards to hear cries of ‘will you have a male entrepreneur of the year award as well as female?’, yet female-only support groups continue to grow.

It remains unclear exactly what the new female entrepreneurs fund will actually look like, but the fact it’s already been welcomed and derided suggests the debate over its validity will stretch considerably further than the £12.5m behind it…

What do you think? Is there a role for positive discrimination? How else do we encourage more female entrepreneurs?

But being lost in REM with visions of the CBI, BCC, IOD and FSB calling for the UK to adopt China’s one-child policy, that’s downright disturbing!

Then again in the light of Tory leader David Cameron’s claim BOTH parents should be allowed to take off the first six months of a child’s life, it’s perhaps not as surreal as it sounds.

Seriously, family man Cameron, filmed for a party political broadcast draped in his own children, claims business fails to understand how difficult those first few months are when ‘the mother’s exhausted and the baby’s not sleeping’.

Under a Conservative government he proposes parents share 52 weeks of flexible leave with the possibility of both parents being off at the same time.

Aren’t they thoughtless those nasty businesses? Why on earth shouldn’t bosses, especially those running small companies with limited resources, be happy to lose staff for six months every now and again? To hell with it, let’s make it a year. Why don't we just let all employees decide each morning if they fancy turning up or not?

Or we could adopt a crazy alternative policy of encouraging enterprise and business growth and use that wealth creation to build a competent childcare system and wider selection of career opportunities? Silly thought.

In a Budget week that left business reaching out for a cohesive opposition to understand its needs, is this ‘head in the clouds’ nonsense the best Cameron & Co could come up with?

What a nightmare.

Even by web2 standards it’s an amazing exit for a business started less than three years ago.

It’s also a real result for UK entrepreneurship. While’s Xochi’s a Californian and the business has been US-based for the past 18 months, Michael’s a Brit and idea was born and started in London.

Perhaps now people will stop staring enviously at web2 mega acquisitions and asking ‘where’s our MySpace?’. Building a user base of 40 million in little over two years and selling at what looks like the optimum moment should answer that question once and for all.

It also hopefully proves that UK web2 companies can succeed and prosper by working with and in the US while maintaining their roots. It should also bolster the creditibility of the London web2 scene to US investors.

The Birchs’ success (let’s not overlook co-founder and brother Paul) should also provide huge inspiration to those plugged away trying to make ideas reality and ends meet.

Bebo was Michael’s sixth web business, with both failures and limited successes behind him. Through perseverance and belief he’s finally hit gold.

Let’s just hope the confirmed rise in capital gains tax doesn’t disuade him from doing it again.

Ahh… the Budget. Cue much media excitement as the redtops speculate how we’ll cope with a hike in booze, fags and petrol and the pink sheets get another six months of economic forecasts to dissect to death.

And, of course, the opposition parties get to slate the chancellor and PM in front of a global audience.

Rarely, though, is there much of interest for small businesses or entrepreneurs. Arguably there is this time, but only what we already knew:

Changes to capital gains tax proceed as expected with an 18% flat rate and Entrepreneur’s Relief of 10% rate on the first £1m. The £30,000 charge on non-Doms is also here to stay – which could mean they’re not.

Other than that, there are marginal increases for the Enterprise Investment Scheme and Enterprise Management Incentive schemes, while the relief rate for the Research and Development Tax Credit system rises from 150% to 175% for small businesses.

More unexpected is a £60m pledge over three years for equipping people to return to the workplace and a £12.5m commitment to encourage more women entrepreneurs.

There’s also a pledge to increase funding through the Small Firms Loans Guarantee scheme by 60%.
Without more flesh on the bones it’s difficult to assess what impact these announcements will have, so in the meantime here’s the FT.com’s useful reactions round-up.

While we sense he’d rehearsed it, Nick Clegg’s gave us the biggest giggle:

“What we have seen today is an act of political ventriloquism. I would like to compliment the Prime Minister, I watched him very closely, his lips barely moved all the while the Chancellor was speaking.”

Aimed at unlocking the entrepreneurial talents of Britain's teenagers, the first academy will open in the South East followed by another in the North West and a national roll-out of satellite academies.

They will offer a new qualification in enterprise to students over the age of 16 - giving them the skills to start their own businesses. It will also have a broader remit of raising enterprise awareness and is part of a £30m government commitment to boosting enterprise education.

For Jones it’s about changing the mindset of the next generation of UK entrepreneurs: "There is a stark difference in the entrepreneurial mindset between the UK and the US. Here, there tends to be a 'can I?' approach, whereas in the US the 'I can' belief is instilled from an early age.”

“We need to create the right learning environment for all our children, where their talents can be developed so they can go out into the workplace or business and prosper.”

Bravo then to Jones for using his Dragons’ Den profile so positively, and the government for backing him.

We just hope the delivery of the course matches its objectives, so students graduate with the skills, not just the mindset, to turn ‘you can’t’ rejections into ‘I can’ results once they hit the real world. Surely that's the real challenge?

According to the British Beer & Pub Association, pubs are closing seven times faster than in 2006 and 14 times quicker than in 2005.

We’re certainly still boozing, just not in boozers. Today’s pubs are selling 14 million fewer pints a day than when sales were at their peak in 1979 and sales are at their lowest level since the Great Depression of the 1930s.

Rob Hayward, Chief Executive of the BBPA, fears even more landlords will be reaching for a stiff one if beer duty isn’t frozen in Wednesday’s Budget:

“Britain’s pubs are grappling with spiralling costs, sinking sales, fragile consumer confidence and the impact of the smoking ban.

“These figures show the stark reality of the pub trade today, in contrast to the hype surrounding the myth of “24-hour drinking” and extended pub opening hours. Pub closures at this rate are threatening an important hub of our social fabric and community history.”

However, some pubs are innovating to find new ways to pull in the punters. Sandra Jeffries has converted a part of The Fighting Cocks into a shop to bring in additional revenues and daytime trade.

Other pubs are now offering services such as dry cleaning, school lunchboxes and the sale of local produce, while one pub in Suffolk doubles as another endangered beast: the village Post Office.

If you’re thinking of pulling pints for a living, it might be wiser to stay on the other side of the bar.

Last week David Cameron issued a timely pledge to cut business taxes and regulation at a CBI summit. After attacking government policy as ‘insulting’ and ‘maddening’, he pledged:

"With us you'll know where you stand. An end to economic incompetence and reckless borrowing where we will put stability first, so the foundations of our economy are strong.”

And yesterday lobby group The Forum of Private Business (FPB) accused the government of spinning the results of DEBRR’s Annual Small Business Survey 2006/7.

The official gov release pointed at ‘steady progress’ on the premise 50% were producing new products and services and 65% had ambitions to grow.

The FPB dismissed the stats as meaningless, notably using a European School of Management (ESM) study commissioned by shadow chancellor, George Osborne, to claim small business growth is actually in decline.

It reports the proportion of businesses achieving an annual turnover in excess of £1 million fell from 29% in 1998 to 16% in 2006.

"Entrepreneurs are, by their very nature, ambitious. However, this alone does not amount to progress or growth," warned FPB chief exec Phil Orford. "The situation is, in fact, becoming much harder for small firms.”

So who to believe? That’s not for Smarta to dictate, but the pressure is certainly on Alistair Darling to appease business when he delivers his debut red case on Wednesday.

Isn’t it great that technology and the internet has enabled lots of women to combine their matriarchal duties with starting some lovely little lifestyle businesses?

Well done, dears, perhaps we could even give you your own networking clubs and business awards – pink trophies, anyone? Better not make it during the school holidays.

We jest, but there seems an uncomfortable assumption that the rise of internet bedroom businesses and the increased number of female entrepreneurs are intrinsically connected – yet, of course, there’s no statistical evidence this is true.

Look up 'work-life balance' and we guarantee you'll find a case study of a working mum who quit corporate life to have a family and shift hand-crafted gifts via an eBay shop. Sweet Jesus.

Could it possibly just be that more women are starting all types of businesses? Could it be that they’re driven by the same motivations as men? Could it be that just as many women are motivated by crude profit and hard cash as anything else?

Well, a survey out today by Orange claims seven million of us expect to become millionaires in our lifetimes and that the majority of women see starting a business as their best route to making it happen – compared to just 19% of men.

So much for women just being in business for work-life balance…

After all, that’s why we’re building Smarta to help you interact to share knowledge and experiences.
Occasionally, though, there’s real value in hearing from great minds outside of business.

For instance, it’s fair to assume politicians know a thing or two about PR and leadership. OK, bad example. More apt, is Sir Clive Woodward, whose feat in leading England to the 2003 Rugby World Cup has seen him heralded as an expert strategist.

Last year’s excellent Leaders In London conference saw captivating talks from the likes of Kevin Spacey, Kofi Annan, Al Gore, Karren Brady, Edward de Bono and James Cameron among heavyweight entrepreneurs.

The first speakers announced for LIL ‘08 include chess maverick Garry Kasparov. The most successful chess player of all time, Kasparov will reveal what it took to be the youngest ever world champion and stay No.1 in the world for 21 years.

He’s promising insights into organisational leadership as a game of strategy: how to anticipate the competition, prepare for their next move, force them to play your game instead of theirs, improvise, adapt your strategy in mid-flow, and ultimately hold your nerve to win.

If you want to know how to play mind games, here's a chance to learn from the master.

*No, not horsesmouth - but we love that too.

Imagine (get it?) the furore then if Lennon were around today and had the gall to claim to be bigger than the real almighty bearded one, Sir Richard Branson.

Now before the Christian world starts burning effigies of Smarta, this unnecessarily inflammatory pre-amble is of course making reference to the equally pointless poll by Opinium Research that named the Virgin maverick ahead of Jesus Christ as the figure Britons consider the best role model for children.

Branson actually pipped Jesus to second with ‘a family member’ claiming top spot. Microsoft founder Bill Gates also claimed a place in the top 10, as did Jamie Oliver who, with particular reference to his Fifteen Foundation, passes in many people’s books as an entrepreneur.

For those that are interested, here’s the full list:

1. A family member
2. Richard Branson
3. Jesus Christ
4. A teacher
5. Nelson Mandela
6. Diana Princess of Wales
7. Jamie Oliver
8. Winston Churchill
9. Martin Luther King
10. Bill Gates

Three entrepreneurs and no footballers or Big Brother contestants in the top 10 role models? Surely that has to be good news?

Branson and Jamie Oliver are the ultimate go-getters who epitomise the entrepreneurial spirit of forcing change through creative disruption and hard work. Sure sound like perfect role models to Smarta.

Mike Clare, founder of Dreams, Britain’s biggest beds retailer has a difficult decision to make if today’s papers are to believed.

The Telegraph claims Clare is in talks with private equity firms to sell a £200m majority stake that would see him step down as chief executive, while The Independent insists a stock market flotation valuing the company at £500m and keeping Clare at the helm was more likely.

Either way, it looks like Mike’s about to strike it seriously rich. The former furniture salesman is a real entrepreneurs’ entrepreneur. At school he repaired and traded bicycles, by 18 he was buying condoms in bulk using his mother’s cash ‘n’ carry card and selling them on individually at profit to shy students.

Then in 1986 with the simple observation ‘everyone needs a bed’ he started Dreams by selling his car, borrowing £8,000 from the bank and securing a credit card on the premise it was to pay for a kitchen extension.

Dreams now has 170 stores and annual sales in excess of £200m – with Clare retaining 100% equity. A frequent speaker at entrepreneurial networking events, he’s often referred to Dreams as his fifth child and dismissed the idea of a sale.

But, seemingly, not now. Is Mike representative of a host of entrepreneurs tempted to sell up before the new Capital Gains Tax rate comes into play?