How do you spend £50k pa on taxis? Join an RDA.....

Something that amazed me when I first moved back to Wales was the reliance on grant based business culture:

Need to put a business plan together? Then there's a grant for that....

Need to a financial review? There's a grant for that....

Need to employ staff? There's a grant for that....

Need to train those staff? There's a grant for that....

Need to media launch your new business? There's a grant for that....

Want to make sure your carbon emissions are low, now or again next year? There's a grant for them both, and you can have another grant every year!

The grant culture is so endemic at times here, that its surprising that anything gets off the ground, and the first thing potential customer companies ask is - is there a grant for that? I recently advised an Ecademist to avoid the training sector in Wales - its so Euro grant reliant, there are three times as many registered trainers in South Wales as there are in the Bristol market, which is twice its economic scale

I had a conversation with a lady in a well know local authorities business development team nine months ago about available office premises in her area. Her response: I'm sorry, I can't tell you what premises are available at present, only because I am instructed to send you a form to apply for a grant, and the consultant you employ can tell you!

I was always impressed by Sussex Enterprise when I lived in Kent, the local merger in Sussex of the RDA, Council and Chambers of Commerce into one business focused agency and club: if you did business in Sussex, it was and probably still is the thing to join. I always wondered until now why Kent didn't have a similar set-up - now I know what went on at SEEDA!

Grants - are they helpful to business culture, or not? I think in theory probably yes, but in application its a kind of pigs feasting breakfast, with poorly defined objectives which are rarely measured.

Online social networking - costing UK companies £6.5M AND as unstoppable as gravity?

From the recruiters stand point, I have watched the debate on online social networks with some interest.....

It's the bain of corporate life - sucking precious hours from the day, and distracting employees to a 24hr water cooler conversation

It's an essential of modern life - as much part of life as texting, pop music and fast food

For the recruiter, its a godsend! As this article suggests, ANY employer who now doesn't Google all applicants is missing out on essential information. I interviewed a guy a few months back, who on his CV and a few background checks seemed a 10 out of 10 applicant - however, his MySpace page suggested he enjoyed a regular joint and the odd bit of white powder: oh, and an active social life at the local swingers club.

I personally still believe that all should have the right to a private life, and what goes on behind closed doors/in the bedroom is your choice as a consenting adult. But if you plaster it all over the web, what would you do if you were the employer?

I pointed out to my interviewee that there was much information on him in the public domain, and much as though drugs were more acceptable and part of modern life, the employer I was searching for as a result of their customer contract required all employee's and hence applicants to under take a drug test on application, and then after at the customers behest. This generally meant that applicants would need to be drug free for at least three months prior to the test, bar the odd joint trace element - could he make that standard? He understood the requirement, and withdrew his application.

I think employers blocking social networks is quite a childish and naive manner in which to address something which is quite essential to the lives of those under 30. I remember when internet access first became widely available to all employees in my former corporate employer, and they introduced a "key word" blocker which meant that (for instance) search strings associated with sex were blocked. My innovative group of engineers found that searching on related words they found in Roget's Thesaurus allowed to still access such sites - not that they wanted to, they just wanted to prove it could be done.

Today, the number of young people coming into the market is reducing, due to a highly decreased birth rate. Hence, employers wanting new recruits need to take broader attitudes to attracting and retaining employees - cellphone bans in entire campuses, lunching at desks (because there's no where else to go), and bans on social networking sites all add up to signs of an oppressive/control freak employer. Getting employees to recognise the problems of ringing cellphones to customers and their work mates, providing some form of rest area or access to online entertainment/education, advising on monitoring of networks and expecting employees to only use social networks and MSN messenger during break times - are all signs of an employer trusting employee's to be adults and make sensible choices. Happy employees attract more happy productive employees, and put recruiters out of a job (Ha - if only! Its interesting to think I have a job because of a low birth rate, and people wanting career development...)

So, back to the debate - is social networking "As much part of life as texting, pop music and fast food" and something "We can no more prevent them than we can prevent gravity. So we might as well get used to using them effectively."

Fish - Kerplunk - Kerchunk: what did you buy?

As a present buyer of businesses, I always try to keep a keen eye on the market.

The first thing I did was build a virtual team of professionals around me, so I had the required support. One of things I looked for was professionalism, but the other was a gut feel, a "this doesn't feel right" instinct.

The first problem in buying a business is valuation - what is it worth? Much as though a professional can teach you how to value a business in around 5minutes, the price often depends on other factors - more often, what the seller wants to do next. "I want to appear on Grand Designs," "I had a bet with my mate I could sell my business for more" and "that's the cost of the Italian marble tiles for my villa in Spain" are real reasons given to me in the last two years as to why the business being sold is worth more than the professionals value it at.

But, under valuation can be as big a problem for the unwary as over valuation - why would someone undervalue their business, why would they want a quick sales process?

One of my daily reads are the alerts from the various internet postings boards for businesses for sale - in fact, that's probably the best one for the UK. A few months ago, an alert came up on my daily eMail for a business which was selling for circa £15k, but offered an income of £80k+ in the first year. So, out of curiosity and knowing it was a business in the "adult entertainment" sector - not something I want to get involved with, but my curiosity took the better of me - I wondered what would come back. After a few months, nothing came back, so after seeing the advert was till live and a chat with a friendly business agent (good one's are hard to find - most can be classed as incompetent estate agents), I rang Businesses For Sale head office.

The guy who answered me was very helpful and efficient, and told me that yes the business was still for sale, and had proved popular with 259 live enquiries...... at this point, my head starts swirling like a calculator, and thinks 259 x £15k is a lot of money...... and then guy then says: "He's on holiday at the moment on the second leg of his world tour!" No wonder!

So, here's how his business sale to his buyers works......
1. He sets up a premium rate 0901 adult chat service. Charges are £1/min plus, while income to arranger is 60p/min+
2. He agrees to take out a series of adverts in adult magazines, buying whole pages. There is an effective 20% lump per charge rate between whole pages, half pages and quarters
3. He sets up a series of websites, advertising the services. The content is exactly the same per website, its just the 0901 numbers which are different. Again, website to server to rack differences are around 20%+ lump charge - he buys a rack
4. He now sells a package to his buyer of chat lines (using different 0901 numbers but the same chat service: £1/min to punter = 40p/min network provider, 15p/min to our seller and 45p/min to the buyer
5. He sells the package of quarter page adverts/websites as well, making a 40% margin on each sold

In other words, the £15k buying charge is virtually gross bottom line profit! It probably is after the first 25 sales.....

But here's the caution, and why I have no concerns about showing you his model: the punters are wise! There are adult chat boards on which punters tell other punters looking for such a service which are the "real" services and which are the same old things re-marketed under a new name. So the buyer has bought something which may have created £200k of income a few years ago when it was "new," but now will generate - nothing but a whole of up to £15k in his bank account; while the seller plans the next stage of his world tour.

Businesses may be different in sector, but the old rules of valuation, originality and market development still apply - which ever business you are in. And there are still many happy to separate a fool and his money

Do you know the value of your business?

As someone who buys companies, I find it frustrating that most business "valuation" systems seem to be based more on.....

The amount of the sellers residual mortgage

The cost of getting into the new business

The cost of the next buy-2-let property portfolio they want to buy

What the business agent told them 18months ago, when it was turning over twice as much and before they sacked all the staff

The cost of a retirement villa in Spain, or.....

The cost of the Italian floor tiles for a retirement villa in Spain!

And less to do with the financial value of the business! I suppose a fair question is why do I need to know the value of my business? Here are some thoughts.....

You get run down by a bus tomorrow, and your surviving partner doesn't really fancy coaching people or doing whatever you do as a day job

You get a health scare next week, and are advised to take it easy - a lot easier!

You get approached by your favourite/ideal/most wonderful partner, who after a wild night of passion they say they want to spend the rest of their life with you - subject to you both departing in 2weeks for an exotic island where you will spend the rest of your life

But the most obvious reason is - you could be working very hard, and destroying value even though the turnover and profit is going upwards!

What is the value of your business, or when did you last have it valued? Seriously, if you don't know how to value it or what its valued at, you could be digging yourself into financial misery!

The lost art of positive introduction networking???

When you are starting up a new business, you need lots of help - so you go shopping around your mates/their networks for help. But it has come as a shock as to what I find on occasions I get introduced to when asking for help in certain areas:

For mobile phones - the guy I really trusted in this area introduced me to a salesman who wanted to charge me MORE than if I went direct to the networks themselves, and INSISTED that I must use Orange. I am still awaiting a reply to my last eMail of some ten days ago, pointing out that rebates were great but what about the fact his prices were a tad high?

For insurance - a good friend gave me an introduction to an MD, who shifted the job out to a "staffer" who just wanted to sell to me, when I wanted to buy. He also didn't know what type of FSA regulated insurance broking company he worked for!!!

When I make an introduction, I clarify the need, ring the introduction and clear it, give them a verbal briefing often followed up by an eMail (with a swap of vCards), and make sure later all is OK. In the first instance, my introducer simply sent an eMail with my vcard attached, so I got sold to as opposed to bought - in the second case, the introducer I know uses a similar system to myself, but their network staffed it out and has probably lost the opportunity as he couldn't listen.

Is there a lost art of networking? Or is the "I know you because I have your card" method now completely taken over?

Favourite Business Associations....

In these days of the "professional", everything is renamed and restyled - you are no longer a "house wife", you are (to reflect the PC 21st century) a "Domestic Engineer." (NB: yet another downgrade for the word "engineer" in the UK - turn up with a dish cloth, don't worry about the degree or five years of post-grad work! I hence prefer the term "Domestic God/Godess")

However, the ultimate take on professionalism must surely be the creation of a professional society or body. This defines standards of operations and membership, and represents members interests and rights en-masse to Government, media and influential bodies.

Now, some of these associations are small and stay away from the publicity lime light - but the American-esque "scare-the-UK" media, having run us around on some really serious goose-chases, now seems to be using these professional bodies as stories legitimisers - take Jamie Oliver and school meals, and the highlighting of the work of LACA. You mean you have never heard of these galant people? LACA - The Local Authority Catering Association.

My favourite for some time now has been BWAHDA - The British Warm Air Handrier Association (I must spend far too much time in motorway services!). A quick internet search won't reveal thier website on page one - but it does tell you that "Wahda Bwahda" is a song written by Ali Ashair and composed by Samir Kobty.

What's your favourite professional organisation - and why?