ENTREPRENEURS AND GROWTH COMPANIESINSPIRATION FORISSUE 22

Kanya King on building brand MOBO

Also in this issueCelebrating female founders Overcoming adversity to build successful businesses

ScaleUp InstituteInsights from the 2018 ScaleUp survey

Budget 2018Entrepreneur-friendly measures

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This issue of the magazine also features a snapshot from this year’s 2018 Scale-Up survey, which indicates that it is an exciting time for small businesses with high innovation, productivity and ambition. It should serve as a reminder of the importance of these businesses to the UK economy and how they can set a dynamic example for their larger peers. The challenges are familiar – access to talent, access to international markets and financing. The most recent Budget (p10) was generally supportive, but many would still like to see more public sector funding for research and development, plus general business support from government.

These are difficult times, and the UK economy needs the energy and innovation of small businesses. Our latest issue shows that entrepreneurs are still busy delivering an exceptional contribution to UK PLC. ▪

The best entrepreneurs are often those who find the solution to a huge problem, one that

policymakers and governments have failed to solve. In this issue of Enterprise, we focus on female founders, many of whom are tackling some of the challenges faced by society today – from keeping children safe online, to the crisis in the care sector, to creating opportunities for aspiring musicians from tough backgrounds. These are the challenges that entrepreneurs such as Estelle Lloyd, Devika Wood and Kanya King have set themselves.

Entrepreneurship is always tough, but female entrepreneurs often face even greater hurdles: access to funding, for example. All-women teams received just $1.9 billion of the $85 billion total invested by venture capitalists last year, equivalent to 2.2% of 2017’s total pot. Some institutional sexism lingers and this issue celebrates those women that have overcome these considerable hurdles to build thriving businesses.

We hear from Julia Elliott Brown on her experiences of raising finance and how they led her to set up ‘Enter the Arena’, which helps female entrepreneurs get access to business capital at a time when they are still at a disadvantage in the male-dominated world of venture capital.

Recruiting people who share an entrepreneur’s vision and are enthusiastic about helping them achieve it, is difficult. Smith & Williamson Board member, Libby Chambers, gives her views on how talent management can make or break a small business.

Foreword Celebrating female founders

Nick Travis Head of Entrepreneurs

020 7131 4223 nick.travis@smithandwilliamson.com t: @_NickTravis_

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Where did the idea for Enter the Arena come from?Enter the Arena is all about helping female entrepreneurs to raise equity finance.

The idea came from my own start-up business experiences. My last business was called Upper Street, where women could design their own shoes, which I started in 2010 and ran for six successful years. Along the way, I sought finance from a number of different classic sources: we put money in ourselves, money from friends and family, from angels, from the bank, from VCs and from crowdfunding. This experience made me pretty good at raising finance.

It wasn’t easy, though, and I made a lot of mistakes along the way. When I was raising finance I felt very alone. I sought advice from others, researched online and went to workshops. There were advisers around who specialised in particular parts of raising finance, for example producing financial models and making introductions to investors, but I found that those advisors I came across had never been entrepreneurs themselves, didn’t know what it really felt like to be in my shoes and also couldn’t help me with the whole holistic approach of raising finance.

I felt that there was no-one looking out for my interests or guiding me through the process. I found my own way and, in the end, I was successful, through a lot of hard work, blood, sweat and tears! Following my success, I was always happy to have a coffee or lunch with other entrepreneurs who were starting out on the fundraising path, to give them the best chance of success, as I could see they were crying out for help. But initially, this was just something I did on the sidelines.

Making experience count:fundraising for female entrepreneurs

Roll forward a few years and, by the end of 2015, we sadly decided to close the doors on Upper Street as the business was struggling to get out of its successful niche and achieve material growth in the mainstream. At this point, I knew that I wanted to stay working in the start-up industry and felt that there was a real opportunity to provide the kind of fundraising support I wish I’d always had to other entrepreneurs. To be firmly on their side and help them navigate their way through the process - which is where Enter the Arena came from.

How does Enter the Arena work in practice?Effective coaching is never just about helping someone with the fundraising process alone. It’s much broader than that: you need to understand a business, taking them from early stage through to growth, as well as working with them on the critical fundraising strategy and skills that the entrepreneur needs.

When I look at a business, I’m making a million different small decisions about whether an idea has legs:

1. Are they proving traction? That proves that there’s a problem that they can solve effectively.

2. Is there potential to scale significantly? Without that, the business won’t attract investors.

3. Is there going to be a route to exit? There’s no point trying to raise equity if the owner won’t want to exit or there isn’t a strong route.

Having successfully raised several rounds of equity finance for her own entrepreneurial business, Julia Elliott Brown decided to share her fundraising experience with other female-led high growth potential start-ups. Julia explains what she looks for in a business and the attributes people need to succeed.

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People are much more important to me than the business. I look for three things:

1. Belief: Entrepreneurs are like mirrors: everything that they believe is reflected back at them. If you don’t believe your business has potential, then why would investors back you? If entrepreneurs believe that there’s traction and potential to scale, then they have a real chance.

2. Integrity: I find it very difficult to work with people who lack integrity: who give over-blown forecasts, who have inflated opinions, who fudge on certain issues. Investors can’t work with them either. I’d much rather work with someone who believes in their potential but isn’t sure how to achieve it.

3. Coachability: When you’re helping somebody to raise finance, they’ve got to be able to understand where their strengths and weaknesses are, reach out for help, listen and implement the advice you’re giving them.

Challenges facing female foundersThe first thing is: not enough women seek funding. Women often don’t think big because they have been conditioned not to take too many risks. If you ask a female entrepreneur how much revenue they want to be making in five years’ time, they’ll say: “£5 million.” Ask a male entrepreneur the same question, the answer will be: “£50 million.” Partly, women don’t want to fail, so they have a tendency to set their ambition lower, particularly in the UK.

This is also because women don’t have enough success stories to relate to. Female entrepreneurs in the media are all big hair, power shoulders, spiky heels - they look at that and think: “I don’t want to be like that.” Thinking big doesn’t necessarily mean becoming that.

As a consequence of not always thinking big enough, female entrepreneurs often underestimate the funding they’ll need, feeling that they might seem ‘greedy’ to ask for more. They might get smaller amounts of funding, taking them to the next milestone, but they won’t be thinking far enough ahead. When you get women who do want to fund and grow their business, they look at it from the outside and think: “God, that looks really scary and impenetrable!”

A lot of (not all) the businesses that women set up are in the lifestyle or creative industries. They see the world of finance, which can be male-dominated and intimidating, as totally alien. The media can also put women off. There are a lot of statistics reported showing that women struggle to raise funding, which can dent confidence.

In part, this is due to the types of businesses on offer, but there is also proven gender bias. The world of finance does not recognise this and is not working hard enough to really examine the decision-making processes: how to attract and then assess entrepreneurs. There’s too much ‘gut feeling’, which opens up unconscious bias.

That’s very hard for women entrepreneurs. Unconscious bias can be overcome by speaking the language of investors, understanding how they think and presenting strongly. That’s where I can help.

50% of my work is in building confidence: in your solution, in understanding your consumer, the market potential, the forecast, approaching investors, meeting with them. If you’re not confident or you’re unprepared, you’ll struggle.

When you radiate confidence because you know that your business is brilliant and you’ve done your homework and preparation, you will draw investors, because they will want to be part of it. ▪

Julia Elliott Brown Enter the Arena, CEO and Founder

@JuliaElliottB www.enterthearena.co.uk

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Building an independent brand

Serendipity and cinemaI began my career as a lawyer. I’d intended to be an oil and shipping lawyer, but ended up working in the film department – an example of the serendipity with which life journeys begin. I then joined Goldcrest, a film company famous for its heady rise and difficult fall in the 80s.

Being a very junior person within a company that gets into difficulties was a tremendous learning curve. If ever there was anything that taught me the importance of ensuring that all departments are aligned and that everybody’s going in the same direction, watching each other’s backs, pushing the company forward…it was that experience.

I went into public film financing, tried to be an independent film producer and then got involved with the independent production of three films. At about that time, I was approached by someone who became my business partner and he drew my attention to the Phoenix Cinema in Oxford, which was for sale. I helped organise the financing of the purchase. During this experience, it occurred to me that cinema was actually a very interesting business.

Picturehouse: an original start-upPicturehouse was a long journey. We started with the Phoenix in 1989 and grew slowly in the early stages — expanding first to Clapham Picturehouse, and then to Exeter Picturehouse. The expansion did get faster: there were years where we did two or three cinemas per year, but never faster than that.

We wanted organic growth and I always targeted university cities because that was where arthouse had the best hope of thriving. That was in the early days of the out-of-town multiplexes, which presented a huge threat to the traditional town centre cinemas. We set up

A chance posting led to a career in the cinema industry. Now pursuing other projects, Lyn Goleby reflects on how that happened and what it was like to be a start-up.

Picturehouse to counter that trend because we felt that it was important to preserve the old traditional cinemas.

As it turned out, we didn’t buy many traditional cinemas: we ended up converting other buildings into cinemas — an old snooker hall, a garage, a printing warehouse. We converted architecturally interesting buildings.

In the early days, it was a time-friendly business: I sewed the curtains for the first iteration of the restored Phoenix, literally making the masking for the screen. It was very hand-to-mouth, real start-up stuff. It was also very compatible with raising a family, which is one of the reasons it started slowly and steadily and then accelerated as life got easier and I could put more time in.

An independent brandWith Picturehouse, we were trying to build local cinemas, not a brand. Each local cinema had a different location and an individual financing package tailored to each project. We carried on with that approach for the main period of the company’s growth. In the later stages, by the early 2000s, Picturehouse had a good reputation for its programming, its service and the sort of venues it was creating — which became brand-building.

We were bought by Cineworld in 2012, which brought Picturehouse a stock market listing. From there, I no longer had to project finance every cinema.

That peaked with Picturehouse Central: the conversion of an old Cineworld cinema, situated in the Trocadero in Piccadilly, which was assigned to Picturehouse as part of a property transaction. It had a chequered history and was known as a very difficult building.

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Lyn Goleby The Chiswick Cinema, Project Director

It was a large investment for Cineworld — they put a lot of belief in us, in our ability to transform the old space into the new Picturehouse Central, which is something I’m very proud of. We brought whole areas into public use that were otherwise behind the scenes — we added parts of the neighbouring HMV property and created the entrance to the cinema on Windmill St. That whole area is developing well now and we were a big catalyst for that.

The project was a lot of fun, along with a huge amount of stress — the most complex thing we’d ever done. It brought together all our experience — it was on a big scale, right in the centre of London’s West End. Picturehouse Central won Best Cinema Award in the UK in 2017, just as I was leaving. That was a wonderful note to leave on.

Once a cinema becomes part of a chain, it becomes difficult to sustain independence: by nature, you have a larger central office, you’re processing things in a different way, decision-making can slow down…and that’s something you can see in companies all the time. We worked very hard to make each cinema feel independent and gave a huge amount of autonomy to the individual managers. Once you’re part of a larger organisation, that is difficult to keep hold of.

Entrepreneurs and the British film industry There is the odd independent cinema happening, as a one-off, but there aren’t many being individually created. There’s plenty of entrepreneurialism in the film industry generally, in distribution, production and exhibition. The multiplexes have such an oligopoly: together, the three multiplexes own 80% of the market.

My advice to entrepreneurs: when you begin, be very clear where you want to end up — both you personally and your company.

What’s your favourite film?That’s never an easy question! I only own one cinema now, which means I can see a lot more films and concentrate on them, rather than being worried about operations. There are always films that I like because they remind me of a time in my life, such as Point Break. But then if you ask me on a more lyrical day, I would say Witness. ▪

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Entrepreneurs in focus in the Budget 2018The Chancellor’s final Budget before the UK’s scheduled EU exit placed entrepreneurs front and centre and included a clutch of welcome commitments to back them. With the promise that “entrepreneurs must be at the heart of a dynamic economy,” the Chancellor made a series of notable announcements that, taken together, provide a welcome boost for start-up businesses.

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Taxation

• The Chancellor resisted calls to scrap entrepreneurs’ relief (albeit with changes to the qualifying period), raising the annual investment allowance to £1 million.

• Nevertheless, there were changes to the conditions to qualify for Entrepreneurs relief The new conditions require anyone claiming the relief to be beneficially entitled to at least 5% of the company’s distributable profits and 5% of the assets available for distribution to equity holders in a winding up.

• The qualifying period over which conditions must be met was extended from 12 months to two years. Entrepreneurs considering a sale should take note.

• A consultation was announced on limiting the benefit of Research and Development tax relief for small and medium-sized enterprises. The proposal is to reintroduce a cap on the amount of payable tax credit that can be claimed by a company.

• The Chancellor cut the business rates bill by a third over two years for companies where the rateable value is £51k or less.

• The Government will legislate in Finance Bill 2019-20 to restrict companies’ use of carried-forward capital losses to 50% of capital gains from 1 April 2020.

• Green agenda — a plastics tax was announced on manufacture and import of plastic that includes less than 30% recycled material.

Funding

• The Government will extend to 2021 the funding of the Start-Up Loans Programme for its British Business Bank (BBB), the UK-wide economic development bank, enabling it to continue providing loans and mentoring to entrepreneurs.

• The BBB will also benefit from up to £200 million of additional investment in UK venture capital and growth finance in 2019-20 if no agreement is reached with the European Investment Bank Group (EIBG) before the UK leaves the EU on 29 March 2019.

• The Government announced it will provide £5 million to support up to 10 local areas to develop proposals for new University Enterprise Zones, promoting collaboration between universities and businesses, supporting start-ups and scale-ups and sharing management skills.

Your people

• Changes to the National Insurance (NICs) Employment Allowance have also been announced. Currently, employers of all sizes may reduce their Class 1 NICs liability by £3,000 per annum.

• The off-payroll working rules that have applied to the public sector from 2017 will be rolled out in the private sector from 6 April 2020. This change shifts the responsibility for ensuring compliance with these rules and applying tax and NICs due from the personal service companies or intermediaries to the party paying the individual’s personal service company. There will be an exemption for small organisations.

• Apprenticeship support for smaller firms — contributions to halve from 10% to 5%.

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Download our full budget commentary here:

smithandwilliamson.com/autumnbudget2018

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I set out to gain a better understanding of what information was out there, but found almost nothing on the subject available to the general population. With that in mind, I sought to learn as much as I could, and I quickly got my training in prenatal and postnatal exercise. Soon enough, I had friends who were having babies and I started teaching small classes, which turned into much larger classes throughout London. A major book deal followed, where I wrote about wellbeing and fitness in pregnancy, and shortly after I launched a successful fitness DVD. In those days, I was the only one at the school gates in my gym clothes, but the message spread. I was keen to grow the business into a broader lifestyle company, finding ways to build an online community. I wanted to scale up and take it across the globe, helping people make better choices in pregnancy.

Putting power back in the hands of women

My career experiences have always been centred on health and fitness, and after I got married and moved to London I was primarily working as a personal trainer. When I became pregnant with my first child, one of the first questions I asked my GP was if I could still exercise. I was shocked when they didn’t have any useful information, and horrified when they advised that I’d be better off not exercising at all. Ultimately, they had no idea what I could and couldn’t do, and at the time neither did I. However, my whole life I had been very active and I didn’t want to change that, and I knew it couldn’t be healthy for me to stop exercising altogether.

Melinda Nicci is CEO and founder of Baby2Body, which provides support and advice on health and well-being in pregnancy. She discusses how an encounter with a GP early in her own pregnancy fuelled her ambition to put the right information in women’s hands, helping them make better choices.

Melinda Nicci Baby2Body, CEO and Founder

@melindanicci www.baby2body.com

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I recognised that I needed to go back to school to help me do this, and we needed better technology to make it possible. I got my Masters in Sport Psychology and followed it up with a two-year stint at Philips to build a consumer health and wellbeing hub. During my time there, I worked on strategy, building technology that would positively influence behaviour, and helping to bring these products to market. It was an invaluable experience and crucial in helping me build Baby2Body.

I used a TSB grant to start the company, launching in January 2015. It started out as an email subscription service to test the hypothesis. We grew our email subscribers significantly and after taking in more funding we were able to launch our app just over a year ago, Since then, Baby2Body has won loads of awards and recognition in this space, and we’ve built it up to 250,000 active users on the app with 850,000 women signed up to the Baby2Body platform.

We decided on a Freemium/Premium model. For most people it is a free service but our Premium model offers tailored fitness guidance, like having a virtual personal trainer that specializes in all things pregnancy. There are also add-ons, such as a meditation programme and a large bank of healthy recipes.

As a business, we face the usual challenges; running a business can be ‘four seasons in one day’ – one minute everything is wonderful, then it is terrible and then it is wonderful all over again. Probably the biggest challenge looking back is that it’s been tough to find the right people that fit the culture and values of the business. Our business vision is very strong and our team is on the smaller side since we’re a start-up, and occasionally we’ve found that people we’ve hired haven’t shared that vision, which becomes apparent quickly. However, we’ve now built a really stable team and recently opened an office in New York.

It is always difficult to find time for everything. I have long been responsible for the ‘brand’, which means doing the PR and marketing, the leadership function, and investment responsibilities, such as talking to investors and keeping everyone happy. Nevertheless, we have seen the most amazing growth. The business is now 14-people strong and it is incredibly rewarding to see.

Having a routine makes everything easier. I exercise five times a week and I do intermittent fasting, which grounds me and makes me more focused. I feel that if my head is strong, I can do what I want with the business. I am disciplined on my lifestyle: I meditate, I make sure I get enough sleep, I am careful about what I take on at the weekend so I can be with my children. I have a work uniform to minimise decision-making. I know what I’m going to wear ahead of time so it’s not a scramble. Every January, I state my intentions for the year ahead and I do monthly check-ins on that to make sure I’m on track – I am very goal-orientated and I take a similar approach with the business as well. We have quarterly and monthly goals that we aim for; so I definitely aim to practice what I preach.

Unfortunately, when it comes to prenatal wellbeing and fitness, I’m not sure that a GP would give much better advice today. It’s still a grey area – and doctors don’t have time, nor are they trained in fitness and emotional wellbeing to give clear actionable guidance for these women. While a lot of our users are from the US, in the UK, we still find there is a reticence to trust anyone but the NHS. A lot of women believe they get everything they need there, in spite of the lack of readily available advice on healthy living. The National Childbirth Trust offers a lot of preparation for the birth, but not much else. Our app provides daily updates on how your baby is growing, how to manage the emotional changes, exactly what workouts you can and should be doing, the best foods to eat for you and baby, and more.

From here, we are increasingly looking at what women can expect after birth – dealing with sleep issues and anxiety, finding practical techniques they can use to stay mindful and calm, learning how to build back confidence and regain muscle tone, and learning how to take care of yourself while raising a child. It really is an overwhelming time and we want to help. We want to put power back into the hands of every single woman in the world at this special time in their lives. ▪

Gender diversity in venture capital

When it comes to early stage investing, there are many different approaches but a few consistent principles are almost universally accepted. One is that the founding team is always more important than the business plan or idea. The business almost never goes to plan and it’s up to the team to react and adapt faster and more successfully than the competition. For this reason, most venture capitalists look for a strong founding team with a diverse and complementary skill-set. So, given that most investors not only accept the need for diverse business skills in a founding team but actively champion it, why is it that gender diversity is still such an issue?

The internet is awash with statistics and data on the topic. Unfortunately, with such an opaque industry, almost all of it is inaccurate and most of it could be described as misleading at best. Public information is skewed towards the largest, most high-profile transactions and even then much of the analysis is subjective.

Should an outlier like the recent $14bn raise by Ant Financial be included when it distorts the average by so much? Is it an example of capital raised by a female founder, Ant’s Lucy Peng (who stepped down as executive chairwoman two months before the raise)? Or is it further evidence that it is still male teams that secure the bigger backers?

In spite of these difficulties with the data, there are a few trends that do shine through very clearly. The first of these is that female founders are massively underrepresented when it comes to attracting investment from venture capital. Given the historic imbalance, it’s no surprise that later stage businesses, which have taken years to be ready for larger investment rounds, are hugely skewed towards to all-male teams. The frustration is that it also holds true at seed stage and Series A.

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Many explanations have been put forward for the imbalance. One of the more convincing arguments is that females are also underrepresented in the venture capital industry as only about 8% of venture capital investors are female. Most investors suffer from an unconscious bias and so will back teams that are like them, ideas they identify with personally or something that really resonates with them.

Most of the other proposed explanations are either the perpetuation of myths that have been categorically debunked or the suggestion that venture capitalists still believe in these myths at all. Those include outdated stereotypes suggesting female founders are too conservative with their forecasts, not ambitious enough, too shy to ask for a larger amount or that they don’t build big companies because they are more risk-averse and so focused only on cutting costs, not growing revenues.

The good news is that things are changing significantly. Many, if not most, venture capital firms are now actively seeking to address gender imbalance both in their own teams and in their investments. Some new funds are going so far as to invest only, or primarily, in female founders.

Over the next few years, we’ll be able to see the results of these investments. Success breeds success and that is how the positive changes we’re seeing today will really gather momentum. Hopefully, the debate will move away from the merits of male teams versus female teams and focus instead on the benefits of diversity in all its forms as a predictor of genuine business success. ▪

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Paul Stricker Director

+44 (0)20 7131 8775 paul.stricker@smithandwilliamson.com t: @PaulStricker_

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Leading by example in the war for talentLibby Chambers’ CV reads like a who’s who of impressive companies: McKinsey, Bank of America, Barclays, Barclaycard and Western Union, to name a few. In conversation with Enterprise, the only female member of the Smith & Williamson Board of directors reflects on what she has learned over the years, particularly on talent and culture.

What attracts you when you change jobs: a cultural issue that you want to fix or a problem that you want to solve?My career has included roles in financial services and professional services. When I look at what has attracted me to a specific role or company, it is whether it has the scope for change - can I personally have an impact? What’s the major thing that needs to get done? I’ve often worked in places where brand rebuilding was required or where there was threat or opportunity. I consider myself experienced in these areas, and in turning businesses around.

My consulting background gave me a foundation in different approaches to fixing things — in scoping a problem, figuring out what needed to get done urgently, and framing plans. My executive career has given me more opportunity to actually deliver, and drive results.

I have often found roles through tapping a network of colleagues that I’ve stayed in touch with throughout my career. I think it’s really important to stay connected to the people you’ve worked with closely, who understand your skills and experience. I often advise my teams that these relationships formed early in your career may be the most relevant — so help people stay aware of what you’re up to —whether that’s through LinkedIn, regular coffee chats, or even Christmas cards!

As a co-author of the original War for Talent research, do you think that its findings are still relevant? What are the issues for a contemporary audience?The talent topic started to bubble up during the 90s. The McKinsey research leading to The War for Talent (1998) came about because we were constantly making strategic recommendations that clients struggled to implement — often because they didn’t have the right team or talent in place. It wasn’t enough to simply advise clients to “get a better team”.

We knew that if we were to take on this subject, we had to be fact-based and analytically rigorous — and that we would have to demonstrate that having better talent actually produced better corporate performance. We hit the topic at the right time — we were on to something that was a major issue for boards and management teams.

The ‘punchline’ was that companies need to treat talent management as a competitive advantage: put processes in place that are as robust as a company’s strategic or financial management processes, and invest in them over time. That message is evergreen. However it’s worth noting that some of the ‘top talent’ companies that we profiled eventually blew up for other reasons. Having good talent management practices can’t make up for weak financial or risk management, poor governance, letting your products get stale, or a flawed acquisition strategy. Staying on top is very hard!

Libby Chambers Smith & Williamson, Independent non-executive director

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Leading by example in the war for talent

What’s really changed over the last twenty years is how and where these principles are applied. Companies today struggle with digital talent, with having enough people in management that understand technology. And lately, there are big gaps around data, analytics, and risk management.

In my view, the UK right now has a bit of a double whammy: there is a Brexit risk, but there is also a lack of affordable housing in place where there are well-paid jobs. A pervasive lack of affordability for young talent concerns me in some ways more than Brexit. It might reasonably be argued that time dealing with Brexit could have been usefully spent on housing and educational policy and agreeing a roadmap for investment to solve these issues sustainably. Companies and organisations must evolve to facilitate and support remote working. As an operating executive, I’ve always had a relaxed attitude about where people need to physically be to do their jobs — perhaps I’m a little bit of an outlier. I believe that those companies that figure out how to support a flexible workforce are going to outperform those that don’t. Modern leaders understand this point.

Diversity and gender The talent conversation has also really come to the fore again because of the conversation about diversity, pay equity and corporate performance. Talent management practices must evolve to address this new challenge. We are already seeing that those who are can create a strong employer brand.

Most gender pay gaps that have been reported are largely explained by the lower presence of women in the senior team. In order to have an informed discussion around the gap, you need a really good understanding of what the data is showing and what your own company’s particular challenges are. Newer companies, in particular, have a wonderful opportunity to ‘design in’ a model with no gaps, through diverse hiring and promotion practices.

Throughout my career, it has been common for me to be the only woman in a team — including on the Smith & Williamson board. I would say that has not been a barrier, per se. But it has required recognition that, in order to succeed, you have to succeed among men — who still often dominate the conversation and often the decisions. I’ve been lucky that the places where I worked early in my career have been very

meritocratic. I’ve also worked in sectors where female advancement was an early focus, and almost a given, because they were so ‘talent-led’. And I was given the right opportunities and sponsorship. I am very cognizant that these ingredients aren’t always there, and I am vocal when I have an opportunity to make a difference in this regard.

Women have many potential advantages. Listening is a key part of effective problem solving and also being (I think) more sensitised to risk. Evidence suggests that women excel in these areas.

There are lots of areas of examples of this in the financial services sector: for example, women fund managers do a great job and (in general) are objectively very strong performers in managing assets. There are many product categories where women represent nearly all the purchasing influence, and savvy marketers are paying attention to this. Also, in client service businesses, the clients and decision-makers are increasingly women - and clients are beginning to insist on having more diverse teams. If you are a strong, capable female, and you’re in a space where your client demands diversity, you should be in a good position.

So, I’m seeing in my environment, and in the careers of others, a much deeper appreciation of what women bring to the table, which will help today’s generation get ahead — as will higher education rates and the ability to rely much more on their partners for burdens at home.

What piece of advice would you give your younger self?Invest earlier in your own training and build a body of work and expertise that is clearly yours. Also, it’s really important to be a very good leader of others. In your 20s, a lot of your thinking is about you, but you must learn quickly how to be a good team leader — because that’s the way you will really succeed long-term. Think about good and bad experiences you’ve had in teams and be very purposeful about what kind of leader you want to be. Furthermore, you have to seek out the people who you want to learn from. In other words: find yourself a good boss and pay attention to what they do! It can make a massive difference for your career trajectory. And invest in others. It always has a great return on investment. Better, perhaps, than the markets! ▪

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Relatively few businesses experience the scale-up moment — less than one in 40. To address this, Smith & Williamson undertook the largest-ever sentiment study of this vital business community. We interviewed 500 scale-ups and more than 500 businesses yet to achieve their scale-up moment, charting the secrets of their success to enable more SMEs to find their own route to growth.

The research, which culminated in our Dream bigger: The scale-up moment report earlier this year, outlines practical guidance for businesses looking for fast growth to consider.

Work out your funding requirements at the beginningWhen looking for finance, timing is key. Often, businesses leave this to the last minute but that can result in having to hand over more equity or taking on a higher loan interest rate than was originally intended. Start early and pick wisely.

Get moving quicklyA business is far more likely to become a scale-up if it strives for high growth from the outset. In our report, we found that one in three (32%) scale-ups reaches this status in less than four years.

Embrace tech and innovation50% of scale-ups claim advances in technology have been critical to their expansion yet among slower-growth firms this number drops to just 18%. Our research shows high-growth companies also place far more emphasis on having an innovative business strategy.

Turning a start-up into a scale-up

Professionalise your businessMany of today’s high-growth businesses started life as market disruptors. However, to continue their growth trajectory, they all had to professionalise their operations at an appropriate stage on their growth journey. This is about establishing a clear business strategy, implementing the right processes and building the best possible team to help take the company to the next level. Once you’ve established this team, all its members should become integral to the growth plan and play an active role working on the business as well as within it.

Venture into new marketsLooking beyond the natural borders of your business can be key to achieving high growth. With that in mind, it’s not surprising that two in five scale-ups claim venturing into new markets was the turning point that led to their period of rapid expansion. As well as boosting revenue, overseas expansion can reduce costs and provide access to new markets and talent while multiple time zones can sometimes boost productivity. ▪

For a start-up business to become a scale-up, it must grow by more than 20% in revenue or headcount for three consecutive years. This is no mean feat and any aspirational entrepreneurs hoping for this kind of rapid growth will need a clear roadmap to success.

John Morris Partner

+44 (0)20 7131 4450 john.morris@smithandwilliamson.com

Download our findings here:www.smithandwilliamson.com/dreambigger

Your business &

The scale-up moment

Dream bigger:

8168a_S&W_ScaleUp_DreamBiggerReport_AW_V2.indd 1

15/06/2018 11:28

Dream bigger: The scale-up moment is the largest ever study into the sentiment and mindset of the scale-up community. You will also find our interactive benchmarking service, designed to help you compare your business to your peers. Answer seven short questions and download your personalised results

Building brandMOBOThe MOBO awards are now in their 23rd year. Kanya King CBE has built MOBO into one of the most important and influential platforms for music makers, young creatives and fans. She shares her growth business insights.

For more than two decades, the MOBO group, with its iconic awards, has been dedicated to finding and supporting new and exciting artists. It has grown into a powerful brand, especially among younger audiences.

MOBO is a voice for a large section of the community that can often feel disenfranchised. There is wasted talent out there: young creative people who may not be achieving academic success, but who have a steely determination to succeed and make a worthy contribution to their family, friends and country. It is our mission to provide a better and more diverse foundation, ensuring this talent isn’t wasted and creative arts can flourish and develop for the enrichment of the human race and the economies on which it depends.

MOBO has supported a vast selection of musical talent, giving them opportunities at the very start of their careers. This goes beyond the MOBO Awards platform. We’re also supporting emerging talent via our MOBO UnSung competition, offering life-changing opportunities such as a studio session with multiple MOBO Award winner, Craig David, and a songwriting masterclass with the musician behind many of Beyonce’s hits, Carla Marie Williams, alongside a broad range of educational workshops and performance opportunities. Then there is the MOBO Help Musicians Fund, which provides grants to aspiring musicians and producers to use in areas such as training, touring or promotion.

20 Enterprise

Even with a number of MOBO-supported artists experiencing chart success and mainstream attention, there’s still a large pool of artists who, without the MOBO platform, won’t be given the opportunity to reach a mainstream audience. The MOBO platforms celebrate a broad range of genres from jazz and gospel, to soul, RnB and reggae and hip hop, grime and African music. We put some 50+ MOBO Music nominees in the spotlight every year. Our role is to unlock the power of talent and creativity to inspire, uplift, educate and unify a global community of audiences, customers and producers.

BarriersIt is more difficult for BAME (black, Asian and minority ethnic) entrepreneurs to obtain the support and funding they require to establish a business. Some minorities, especially those from a Black African and Caribbean heritage, are under-represented and may become stuck in the early stages of development.

It has never been more important to develop and support economic growth in this country; success will depend on developing the next generation of start-up businesses and SMEs. We are currently looking at exploring ways we can help aspiring entrepreneurs, especially women and those from BAME backgrounds, who might not otherwise get access to the support and funding they require.

Over the years, the industry has become more supportive of women. Today, there are a higher number of successful women in music, both as artists and in business. However, there is still much more that can be done. Female representation (both on and off stage) is not equal to male representation. At MOBO, we have always championed and celebrated female role models as well, while creating opportunities to address this imbalance. In recent years, we have seen a higher percentage of women enter our talent development programme, whether via MOBO UnSung (34% of this year’s entrants are female), the MOBO Help Musicians Fund or our MOBO LTC Fellowships.

Creating a successful businessThere are no shortcuts in business - success is about the relentless pursuit of your goals. I found the path to success started with the understanding that it required determination and dedication to get what I wanted. Your business plan should allow you to stay true to your idea but help you to focus on the details, then remain flexible enough to zoom in and out on the vital aspects of your enterprise as your business grows.

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For every entrepreneur, whatever needs to be done must get done. This takes self-discipline and energy and you won’t meet a successful entrepreneur who doesn’t have this energy and drive. It is important to have this self-belief, perseverance and clear goals in order to overcome obstacles and aspire to greater things. And if I had to relive my business journey again, I would make the same mistakes, only a lot sooner!

Starting a business can be daunting, exciting, frustrating, demoralising, liberating and terrifying all at once. As such, a mentor can be utterly invaluable. Equally, there are many networking opportunities out there - take advantage of them and there will be a wealth of expert knowledge at your disposal.

I know how hard it can be to start, run and grow your own business and admire anyone who has the stamina and drive to make a difference via their entrepreneurial ventures. We work with many established brands and partners but also feel it’s important to give support to smaller, up-and-coming and independent brands – many of whom we hosted at the MOBO Awards - providing them access to talent while raising awareness of their brand.

We could have kept MOBO purely as the Awards but wanted to achieve more and evolve into new areas to make a bigger contribution to society. With that in mind, MOBO has naturally progressed to become a brand with a much broader reach than just music. In recent years, we have moved out into film, theatre and television and are looking forward to seeing where the brand will go next. This will certainly include entrepreneurship, career and educational opportunities.▪

Kanya King Mobo Organisation, CEO and Founder

@kanyaking www.mobo.com

THE 2018 SCALEUP SURVEY AT A GLANCE

THEY ARE HIGHLY PRODUCTIVE AVERAGING

£187,000 TURNOVER PER EMPLOYEE

These scaleups came from across all regions and sectors:

SCALEUP BUSINESSES GENERATING

514IN TURNOVER

£6bnTHEY REMAIN AMBITIOUS

62% EXPECT TO ACHIEVE 20%+ TURNOVER GROWTH IN THE COMING YEAR

41% OF SCALEUPS EXPECT TO ACHIEVE 20%+ EMPLOYEE GROWTH IN THE NEXT YEAR

THEY ARE HIGHLY INNOVATIVE

79% HAVE INTRODUCED A NEW/IMPROVED PRODUCT, SERVICE OR PROCESS IN THE LAST THREE YEARS

2x THE INNOVATION RATE OF LARGE FIRMS

THEY ARE GOOD CORPORATE CITIZENS

2/3 (64%) OFFER OPPORTUNITIES TO YOUNG PEOPLE THROUGH:

2x AS MANY SCALEUPS OFFER APPRENTICESHIPS AS TYPICAL FIRMS

61% EMPLOY STAFF FROM THE EU AND

35%EMPLOY STAFF FROM OUTSIDE THE EU

APPRENTICESHIPS (38)

INTERNSHIPS (44%)

WORK EXPERIENCE (51%)

54% EXPORT

43% IMPORT

59% ARE ENGAGED IN TRADE WITH THE EU

53% ARE ENGAGED IN TRADE OUTSIDE THE EU

THEY ARE INTERNATIONAL

TWO THIRDS OF SCALEUPS ARE INVOLVED IN

INTERNATIONAL TRADE THEY HAVE, OR HAVE ASPIRATIONS TO GAIN, LARGE

CORPORATES AND GOVERNMENT AS CLIENTS

SELL INTO LOCAL OR NATIONAL GOVERNMENT

6 IN 10 SCALEUPS (55%)

2 IN 10 (24%)SELL INTO LARGE CORPORATES AND

A QUARTER OF THOSE NOT CURRENTLY SELLING INTO EITHER LARGE CORPORATES OR GOVERNMENT HAVE ASPIRATIONS TO DO SO

The ScaleUp Institute spoke to 514 scale-up businesses, with a combined turnover of £6 billion. The following is a series of highlights from the report.

www.scaleupinstitute.org.uk

Key challenges

The key factors that will allow scaleups to continue to grow are:

The key sources of future help to grow are LOCAL:

Scaleups would also like easier access to Government resources of:

Growth Hubs Innovate UK

45% 34% 33% 31%

Peer networksLocal universities and business schools

Local leadership development programmes

55% 38% 35%

LOOKING FORWARD: HIGH AMBITIONS TO GROW BUT CONCERN THE UK WILL BECOME HARDER TO SCALE IN WITH LIMITED SUPPORT AND BARRIERS TO BE ADDRESSED

80%Access to talent

79%Access to

UK markets

55%Leadership

development and training

63%Access to

infrastructure / premises

48%Access to

international markets

44%Access to right bank / equity

finance

Scaleups know they are doing well – 63% agree that they are outperforming their peers. But four out of ten feel there is little support for businesses like them (40%) and half have concerns about whether the UK will continue to be a good place to do business (48%).

Two-thirds scaleups would like a single point of contact to act as a relationship manager to support access to services

TALENTKey future skills for scaleup employees are critical thinking (64%) and a service orientation (44%). 7 in 10 with overseas sta� say it is vital/very important they can continue to bring in this talent.

INTERNATIONAL MARKETSScaleups are already doing business across the world, and want to do more in regions such as the Middle East, Australia, Latin America and the Asian Pacific region. Key barriers to international trade are access to markets and partners overseas (31%) and having the sta� with the right skills to win overseas sales (31%). A dedicated export relationship management approach is valued.

FINANCEThree quarters of scaleups are using external finance (75%), but 4 out of 10 do not feel they have the right finance in place for their business. A quarter (25%) are currently using equity finance and 8% plan to use it in the near future. The rest (67%) cite a fear of losing control, thinking it is not a suitable form of finance, or not really knowing much about equity finance as their reasons for not using this funding.

MARKETSSelling into both government and large corporates is made more complicated by complex procurement processes (50%), the time it takes to win a contract (36%) and being able to spot relevant contracts to bid for (36%). A relationship management approach is valued.

LEADERSHIPScaleups are looking for support from people who know what it is like to grow a business, whether as employees (46%), a network of peers (36%) or as non-exec directors (27%). They also want to develop their existing leadership team (57%).

INFRASTRUCTUREInfrastructure remains a critical component to get right for our fast growing companies, particularly scaleup space. The infrastructure challenge is complementary to other challenges. Scaleups are seeking much greater university support for space and R&D facilities.

However, when asked to force rank their top 3 priorities, talent and markets remained in first and second place butbank/equity finance moved up to joint 3rd with leadership ahead of infrastructure.

Public sector funding for R&D and innovation

General business support from government

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24 Enterprise

There was also no consistency of care. It was unreliable: some would turn up, some wouldn’t. We even came home to find a carer eating her food! There was no transparency. The carer wouldn’t report back on her mood, for example.

Her problems worsened after she was left paralysed following a poor interaction between her anti-psychotic medication and her epilepsy drugs. We moved to a bigger house in an Indian area. There we found a small Indian agency and they found us two Hindi-speaking carers. This was a life-changer for our family. My grandmother called them her daughters. Finally, there was a person-centric approach to care for this intimate and difficult situation. I wanted to be able to help other people get better care and this was the germination of Vida.

Redefining care

A personal missionI understood the limitations of the care systems from an early age. My grandmother, Sita, had dementia and epilepsy and moved in with us when I was 10. I am half-Indian and that is our approach to family members who need help.

We found the care system wholly inadequate for her needs: over the twelve years she lived with us, we had 150 different carers, sent to her home by social services. My grandmother had had a stroke, which brought on early-onset dementia. As part of this, she lost her ability to speak in English, reverting back to Hindi. The carers they sent us could only ever speak English. Her inability to communicate left her frustrated, which manifested itself in increasing aggression.

Devika Wood is the Founder and CEO of Vida, which was set up in 2016 to help people who need care find the right carer. She raised £3.5m to build a technology platform, with the aim of making home care more efficient and higher quality, and to professionalise the home care industry in the UK. She shares her business insights.

Devika Wood Vida, Co-Founder and Chief Development Officer

@devikawood www.vida.co.uk

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Matching technology and healthcareAfter going to university and studying science, I was one of the founding employees of Babylon, a subscription health service provider that enables users to have virtual consultations with doctors and health care professionals via text and video messaging. This got me interested in how technology and healthcare could interact and improve outcomes for people.

Initially Vida started out as a standard healthcare provider. This helped me work out the difficulties inherent in running an agency. There were a number of key problems to address: there was a very limited supply of carers, there was no career progression and they were paid next-to-nothing for doing a pretty difficult job. Often they were travelling a lot, visiting six to nine homes per day and dealing with the most vulnerable people.

There was also huge demand: it’s not just the elderly. It may be those with multiple sclerosis, cerebral palsy, autism. I believe that with the right support, most will not need to go into a home. We want to give people the freedom of choice to stay at home, without the resulting strain on their families.

Technology presented a solution: our technology platform aims to match demand to supply. It will cluster demand in a particular location, with shifts and rotas allocated on that basis. It also helps improve reliability for families who need care: the carer accepts the job, says ‘I’m on my way’ via the app. We use geographic-tagging, so the family has peace of mind – they know the person is where they say they are. It also helps greatly with billing and invoicing.

There is also an automated care plan and the carers will have to tick off tasks. This will include areas such as ‘did you take your medication?’, but also more subjective areas such as ‘how was their mood?’. This can flag when there are concerns that someone may have an infection, for example, and a doctor’s visit is needed.

We have an in-depth recruitment process for all our carers. We do all the DBS and right to work checks, plus training. The training is led by a nurse. We want our carers to be more like healthcare assistants. We want to provide them with the skills to care for people who are very sick.

The challengesThere remains a very ‘old industry’ mentality. Carers had learned bad habits and we needed to encourage them to change their behaviours and use the tools we provided. They need to check in within five minutes of arriving, for example, and not all of them liked it. But it takes a lot to gain client trust and one error can shatter everything.

This is, rightly, a highly regulated industry. We work with the Care Quality Commission and are trying to grow with the demand. We need to show that we can scale up, within the regulatory parameters.

As a female founder, raising capital was a challenge. Finance is a very male-oriented industry and it is easy to be manipulated: I have learnt over time to be tougher in the boardroom.

It is also important to have the right team with the right mindset. I believe when running a business your vision and values need to be embodied in everything you do. Investors will be saying that you haven’t hit this KPI or that KPI, but I think you have to stay aware that you are there to help your clients and nothing else is as important. It is OK to have slower growth, if it is healthier growth.

We have built our client base both on the public and private side. There are two local authorities – Kingston and Greenwich. On the private side, we use PR and ad word campaigns. Once you have a client on board, the retention rate is high and that has significant lifetime value. For the clients, care is a very scary thing to navigate. We want to make sure we have a really good relationship with them to help them through it.▪

The motivation behind AzoomeeIncreasingly, parents recognise that the online environment as it currently exists is completely inadequate for kids. The impact of this poorly curated environment is clear: children are bullied online and viewing inappropriate content on user-generated platforms. The long-term effects are just beginning to be understood and seen – particularly the impact on mental health for children and later in life for teenagers and adults.

We are all glued to our devices and we cannot yet judge the long term impact. As adults, we are equipped to make decisions for ourselves but it’s not the same for children. It was my view that something needed to be done to protect children online.

What is Azoomee?Essentially, Azoomee came from the idea of editorialising and putting together highly entertaining educational content that is great for kids and gives peace of mind to parents.

Growth and responsibility:succeeding in kidtech

With a background in finance and media, Estelle Lloyd’s second start-up combines socially responsible business with profit. Azoomee, the kidtech app that provides educational and age-appropriate curated content for children, is expanding internationally at a rapid pace. Estelle shares her growth business insights.

We are at a moment in time where the need for our product is completely understood by the user. We are solving a pain point, a need that parents have. The question is whether parents realise that they have this need: do parents understand what’s happening online with their kids, do they understand that free isn’t really free, that free services profile their children who actually become a product?

Parents know how to make good decisions and they need to be trusted. We start working with parents from that relationship of trust.

Our content is curated around the curriculum of 21st century skills and the 4Cs of lifelong learning: critical thinking, creativity, collaboration and safe communication. Our video content ranges from very well-known brands and kids TV shows to more indie productions and hidden gems. We advocate science, technology, engineering and mathematics (STEM) in our content, which parents and kids respond well to.

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Winter 2018 | 27Winter 2018/19 | 27

“Our motto is ‘play to learn, learn to play’ and the emphasis is on parents seeing concrete benefits.”

The platform also adapts to the age of the child; when a child grows older, the content changes accordingly.

Today we also have a portfolio of about 100 games in the app. These are managed on the same principle: we like games that have soft learning components in them — such as fractions, puzzles or maths problems. We have a game on recycling, testing how to dispose of paper, glass or cardboard. We launched it just before Christmas — bizarrely (or not) we weren’t expecting this to generate a huge amount of engagement but it did. Parents are looking at Azoomee together with their children and treating it as a family experience.

Our motto is ‘play to learn, learn to play’ and the emphasis is on parents seeing concrete benefits — it also assuages the guilt so many parents feel, unreasonably, when giving a device to their child.

Growth through partnershipOur expansion has been predominantly through working with partners. Our founding partner was the NSPCC. We work closely with them on best practice, as well as sharing research.

Our second partner, O2, is a distribution rather than a research partner. O2 bundled a two-year subscription to the app with a family tablet sold instore or online in the UK. This enables them to not just sell the device but also the family experience, and it gives us a massive reach. For us, starting as a disruptive company in the edtech industry, this was very important for our long term growth.

On the back of that original partnership with O2, we signed a global partnership with Vodafone, opened an office in Luxembourg as part of that relationship, and began distributing Azoomee in several of the 40 countries where they have a presence around the globe. It’s a huge opportunity for us to grow our footprint.

We are also available via the Appstore, Google Play store and Amazon play store and are frequently featured in the children’s education sections. Azoomee is currently available in 40 countries, in 9 languages and we’re close to signing a number of very large partnerships with telecommunications companies and in the hospitality industry. Today, it’s easier to sell an experience than a device, not only from a marketing perspective but also from a CSR angle. We are offering something to parents who may be looking for a solution like this — or who might not be — but just the fact that it’s available makes them aware of the wider context and issue.

Estelle Lloyd Azoomee, Co-Founder and COO

@estelle_lloyd www.azoomee.com

We’ve had great success growing the app, through B2B2C partnerships. Our original approach was direct to consumer, which for an app can be quite challenging. Industries are searching for ways to be more relevant to their consumers, particularly families, which made the B2B2C partnership and distribution route much more attractive to us.

The difficulties facing female foundersMy co-founder is male – it would be wrong to call ourselves a female-only led business. We are defined more by our vision than the make up of our management team.

In the UK, there is still a preconception that female founders are not as focused on profit and numbers, and that perhaps their financial projections are not reliable — that businesses created by female founders are more lifestyle businesses than ‘real’ businesses with a real potential of creating a nice return for investors.

That preconception makes pitching for funding even harder — particularly when combined with Brexit, which is already making things quite tough. For example, the current fundraising conditions for us are less favourable than four years ago when we launched.

The only way that misconception will go away is by seeing more and more businesses achieving a successful exit and providing a good return. It may take some time. However, there have been some very successful businesses that have exited recently that are women-led, and every single data point works towards a collective change in thinking. ▪

28 Enterprise

Growth Champion of the Year 2018

Rigby presented the award to the automation technology development company on 7 November at a black-tie gala dinner for more than 450 movers and shakers from the UK’s SME investment community.

Launched in 2015, the Growth Investor Awards have become a focal point in the UK’s SME investment community calendar, celebrating companies and individuals involved in putting investment to work in high-potential businesses. The Growth Champion of the Year award celebrates scale-up businesses and their founders. It is the highest accolade for the SMEs that have received venture capital funding and is open to any growing and productive UK-based company with a turnover of more than £3m in the last financial year. The judges looked at a range of factors to come to their choice, including how the investment was deployed to enable future growth, job creation, and regional and international expansion.

Smith & Williamson has sponsored this award category since its inception as part of its commitment to entrepreneurship and innovation throughout the UK.

P2P global social shopping app Depop won second prize. The app is a mobile space where users can see what their friends and those they are inspired by are liking, buying, and selling. The judging panel also named AVID Technology as ‘one to watch’ thanks to robust performance, ambitious targets and great vision amid growing demand for electric vehicles. ▪

www.thoughtonomy.com

The group was founded in 2013 to develop a ground-breaking automation platform that would help organisations overcome the challenges of workforce productivity, skills availability, and digitisation of service offerings. It sought to do this without lengthy, disruptive, and expensive change programs, creating technology that was simple to deploy, easy to adopt and flexible to consume.

The view of Terry Walby, founder and CEO of Thoughtonomy was that directly focusing on the automation of the workers provided the single largest opportunity for improving business efficiency. Human resources are often both the largest investment and biggest constraint for any business and he wanted to find a way to allow automation to work non-disruptively alongside or in place of that workforce, providing a real route to value. The outcome was the creation of the Virtual Workforce: a flexible, secure, on-demand enterprise class platform onto which clients could build their own business processes as required.

Thoughtonomy saw off strong competition, impressing the judges with the strong results it has achieved with very little investment. Guy Rigby, Chairman, Entrepreneurial Services at Smith & Williamson, said: “Thoughtonomy’s robotic process automation platform and virtual workforce solution, combined with its international application and strong revenue growth, clearly won the overall admiration of the judges.”

Thoughtonomy was named Growth Champion of the Year, in an award sponsored by Smith & Williamson at the fourth annual Growth Investor Awards 2018 in association with Intelligent Partnership. It beat nine leading high-growth SMEs to win the prestigious title.

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30 Enterprise

Is the tide turning for small businesses?

These growth plans have been facilitated by better access to funding. 72% think access to funding has improved in the last 12 months. The index also shows entrepreneurs increasingly willing to put risk capital to work - 73% of firms have a greater appetite for borrowing than they did 12 months ago, double the previous level.

At the time of the survey, 70% of firms think Government policy is supportive of private enterprise, compared to 58% six months ago. This has been reinforced by a budget favourable to entrepreneurs, with the UK Chancellor holding off any major reform of entrepreneurs’ relief, extending the funding of the Start-Up Loans Programme and cutting business rates.

With Brexit looming, there has been some gloom among the general business population. Scale-ups continue to be notably more optimistic than other types of businesses, which is part of the reason these results look so different to other business surveys. It is possible that sentiment may worsen should the potential for a no-deal Brexit become a reality, but with many seeing improving trading conditions and building ambitious expansion plans, there is little sign of the tide turning for entrepreneurs so far. ▪

On the economy, the index showed 81% of businesses believe it will improve in the next 12 months, compared to 57% six months earlier. Of those, 37% think it will improve “significantly”, compared to 23% six months ago. This is a more positive message than the one reflected in UK GDP data and suggests that certain parts of the economy are in good health. It is interesting to note that 54% of firms have seen the financial health of trading partners improve, compared to 40% six months ago. This is in spite of mounting fears of a slow-down in the global economy.

Entrepreneurs are increasingly optimistic on their own business prospects - 82% of businesses expect their prospects to improve in the next 12 months, compared to 59% six months ago. 39% expect their prospects to improve significantly, compared to 26% six months ago. In spite of Brexit, 82% expect turnover from overseas growth to increase in the next 12 months. This is almost double the level of six months ago.

At the same time, the index continues to show real ambition among smaller businesses. Around a third are contemplating a merger or acquisition, while 84% expect to increase headcount in the next year. This compares to just over half six months ago. Far from a skills shortage, 87% of companies have access to the talent they need, compared to 76% six months ago.

The Smith & Williamson Enterprise Index has been charting the confidence of business leaders for over five years. The current figures, compiled in the summer of 2018 from over 1,000 respondents, show continuing robust confidence among the small business sector, a reflection of the strength they are seeing in their individual business and trading partners.

120.0

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Enterprise Index: a barometer of SME confidence

First Conservative majority in 23 years

George Osborne’s Summer Budget announcing changes to dividends, introduction of the national living wage

Britain votes to leave the EU

Theresa May/Philip Hammond succeed David Cameron/George Osborne

Article 50 triggered

Hung parliament

2018 FIFA World Cup

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Our expertiseWe are not just financial advisers. We provide a one-stop-shop of support services to meet the personal, financial and business needs of business owners, management teams and shareholders at all stages of the business lifecycle.

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Contact usIf you’re an owner-manager, entrepreneur, adviser, or if you work with a scale-up business, we’d love to hear from you.

Telephone: +44 (0) 808 164 0100Email: scaleup@smithandwilliamson.comWebsite: smithandwilliamson.comTwitter: @SmithWilliamsonLinkedIn: Smith & Williamson

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We have taken great care to ensure the accuracy of this newsletter. However, the newsletter is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. © Smith & Williamson Holdings Limited 2018. Log No: 155518hp Exp: 26/11/2019

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