Business Leader Magazine: February/March 2021

ISSN 2632-7155

9 772632 715003 9.75 FEBRUARY/MARCH 2021 • £9.75

www.businessleader.co.uk

ELON

MUSK

Becoming the world’s richest man – but at what price?

tax and your business What tax changes can the business world expect?

top 32

sustainable businesses

Who are the leaders driving sustainability in business?

BRITAIN’S LEADING MAGAZINE FOR ENTREPRENEURS AND BUSINESS PROFESSIONALS

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CONTENTS

IN THIS EDITION

12

8 AGENDA: A YEAR TO REMEMBER

Business Leader reviews 2020 and previews the year ahead.

12 FEATURE INTERVIEW: ELON MUSK

Elon Musk becomes the richest person in the world for the first time – but how has he achieved it and what can we learn from him?

18 REPORT: MERGERS AND ACQUISITIONS

What can we expect to see in relation to mergers and acquisition activity in 2021.

24 FEATURE: FUTURE OF TAX

30 CEO IN FOCUS: GEORGE DEXTER

49 FEATURE: BACK TO WORK

How is the government going to payback all the money it borrowed to help companies navigate COVID-19?

33

CEO of Armour Home – a multiaward-winning audio home electronics firm.

What impact will the COVID-19 vaccine have on whether many of us return to the office?

33 TOP 32: SUSTAINABLE BUSINESSES

56 REVIEW: INVESTOR TRENDS

Profiling individuals and their businesses that are set to lead the UK into the future.

44 REPORT: WHAT NEXT FOR THE HIGH STREET?

Business Leader - Inspire • Inform • Connect

Business Leader looks at the future of the high street and what the future will hold for the sector?

With a vaccine being distributed across the country – what does 2021 have in store for investors?

60 DEBATE: THE NEW NORMAL

What next for the business world?

What opportunities exist for those who are prepared?

1

NEWS

Is government finally taking late payments to businesses seriously?

An overhaul of the Prompt Payment Code (PPC) to crack down on delayed invoices owed to small businesses has been carried out by government.

EDITORIAL Oli Ballard - Editor E: oli.ballard@businessleader.co.uk Barney Cotton - Digital Editor E: barney.cotton@businessleader.co.uk

Under new reforms, companies that have signed up to the Prompt Payment Code will be obliged to pay small businesses within 30 days – half the time outlined in the current Code.

DESIGN/PRODUCTION Adam Whittaker - Senior Designer E: adam.whittaker@businessleader.co.uk SALES Sam Clark - Business Development Manager E: sam.clark@businessleader.co.uk Emma Filby - Business Development Manager E: emma.filby@businessleader.co.uk DIGITAL & WEB Josh Dornbrack - Head of Multimedia E: josh.dornbrack@businessleader.co.uk Lauren Easterbrook - Digital Executive E: lauren.easterbrook@businessleader.co.uk Melissa Shephard - Website Development E: melissa.shephard@businessleader.co.uk CIRCULATION Adrian Warburton - Circulation Manager E: adrian.warburton@businessleader.co.uk ACCOUNTS Jo Meredith - Finance Manager E: joanne.meredith@businessleader.co.uk MANAGING DIRECTOR Andrew Scott - Managing Director E: andrew@businessleader.co.uk

Business Leader understands that despite almost 3,000 companies signing the Code, poor payment practices are still rife, with many payments delayed well beyond the current 60-day target required for 95% of invoices.

Currently, £23.4bn worth of late invoices are owed to firms across Britain, impacting on businesses’ cash flow and ultimate survival.

To help tackle the problem, businesses owners, Finance Directors or CEOs will be required to take personal responsibility by signing the Code, acknowledge that suppliers can charge interest on late invoices under the Code and that breaches will be investigated.

Small Business Minister Paul Scully comments: “By signing up to the Prompt Payment Code and sticking to its rules, large firms can help Britain to build back better, protecting the jobs, innovation and growth which small businesses drive right across the UK.” Gary Turner, who is MD of Xero, comments: “In an age where we can use our thumbprint or a selfie to pay instantly, how is it still acceptable that large businesses pay suppliers months later? We support the measures the government is taking to enhance the prompt payment code, but this should be the first step in a longer cultural shift.”

Can Marcus Rashford save Burberry too?

After saving free school meals for millions, footballer Marcus Rashford MBE is now being called on to save luxury fashion retailer Burberry.

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It saw its sales dive almost 40% in Europe in the run-up to Christmas due to the impact of the pandemic and Brexit, the company said.

Retail revenues also fell 5% to £688m in the third quarter of 2020 but the group is ‘encouraged’ by its progress and hopes Rashford will continue that trend.

A statement from Burberry read: “We are proud to join forces with Marcus Rashford MBE on this initiative. His work to support the UK’s youth sits at the heart of our partnership and embodies our commitment to community and going beyond. Like Thomas Burberry, he is a pioneer – an innovator and a freethinking trailblazer who uses his success to give back and nurture the next generation.”

February/March 2021

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WB-AD-19 01/21

NEWS

Global tech investors show confidence in London London is at the centre of Europe’s burgeoning tech scene, with new research from Dealroom.co and London & Partners showing that London tech companies helped Europe to reach record levels of tech venture capital (VC) funding in 2020.

International investors continue to look to London, with the findings revealing that the UK capital received more tech VC investment than any European city in 2020.

Future growth also looks strong, with the data showing that London based VC firms have unprecedented levels of fresh capital to deploy in 2021.

Despite the global pandemic and the UK’s exit from the European Union, London tech firms raised $10.5bn in 2020 – significantly more than the total amount raised in 2017 ($7bn) and 2018 ($5.9bn) and close to the record in 2019 ($10.7bn).

The UK capital cemented its status as Europe’s leading tech hub – with London companies receiving over three times the amount of investment than any other European tech city.

2020 was also a record year for VC funding into Europe’s tech sector, with figures from Dealroom.co revealing European tech companies raised $43.1bn last year.

London was at the heart of this growth, with its tech firms accounting for a quarter of all European tech funding. Global tech VC investment was also resilient in 2020, with the data showing $272.3bn was invested into tech firms worldwide in 2020, up from $262.7bn in 2019.

Future investment prospects for London’s tech companies have been boosted by an increase in new VC funds based in the UK capital.

London VC firms raised $7.8bn in new funds in 2020, on top of the $4bn raised in 2019 – accounting for a third of all new European VC funds over the past two years.

This represents a huge increase on previous years, with just $1.7bn and $2.7bn raised in 2016 and 2017.

Mayor of London, Sadiq Khan comments: “London is the global tech capital of Europe.

"Despite the challenges brought about

by Brexit and the coronavirus pandemic, London’s tech sector continued to thrive in 2020 and has an important role to play in the city’s economic recovery.

"London is already home to some of the world’s best technology companies and will remain open to international investment and tech talent from all over the world.”

How will new Business Council help boost the economy?

Prime Minister Boris Johnson recently held the first meeting of a new Business Council established to work with government to fuel COVID-19 economic recovery and future growth plans.

government and businesses continue to work closely together. It will provide an important forum for frank feedback on our recovery plans and will help ensure the steps we are taking are the right ones.”

The Build Back Better Council will bring together a broad range of business leaders from across the whole British economy to work in partnership with the government to unlock investment, boost job creation, promote Global Britain and level up the whole of the UK.

A member of the council, Bernard Looney, CEO of BP comments: “I am a big believer in British business and the Prime Minister’s push to create a cleaner, greener, more inclusive economy. I am also an advocate for UK companies working with government to build back better from the pandemic. I feel honoured to be part of the Business Council and hugely optimistic that together we can help create a stronger, fairer economy where everyone wins – and where Britain is even more competitive in the global market.”

The Build Back Better Council will be comprised of 30 members representing industries from retail and hospitality, to finance, science and technology.

Boris Johnson comments: “This Build Back Better Council will ensure that

4

February/March 2021

NEWS

Are business leaders guilty of ‘gross failings’ when it comes to hiring ethnic minorities?

A new report by the Black British Business Awards (BBBAwards) in partnership with J.P. Morgan, says there are gross failings of businesses to collectively address and act upon racial disparity in the workplace.

The report is calling for senior leaders to use the new year to ‘surgically diagnose’ their HR data to act against the practices and bad actors that produce disproportionate outcomes for ethnic minority professionals.

In addition, the report highlights the perception disparity between Executive Sponsors and their people experts, with senior management often having a much more positive view of Sophie Chandauka, Global COO of Shared Services and Banking Operations at Morgan Stanley and Co-founder of the BBBAwards, comments: “We have seen many charters and pledges signed and publicised over the last year, but pledging is no longer enough.

“As we begin this new year, senior leaders will need to surgically diagnose their HR data to identify practices and bad actors that produce differentiated outcomes for ethnic minority professionals when it comes to high profile work allocation, mobility opportunities, talent ranking, compensation and promotion.

“There is no quick fix; organisations must commit to the journey in order to provide assurance to shareholders and other stakeholders that deep work is being done to drive meaningful change urgently.”

Business Leader - Inspire • Inform • Connect

Is a start-up boom coming as unemployment bites?

Nearly half a million businesses were registered in the UK in 2020 (468,371), according to data taken from Companies House.

With a reported 9.9 million UK jobs furloughed between April and December last year, this is resulting in many UK adults pivoting their careers, starting completely afresh, and picking up a side hustles as a way of making money.

highest number of registrations happened on June 8th, with 4,759 made in a single day. Incidentally, this was the same day that Health Secretary Matt Hancock announced that COVID-fatalities were also at their lowest since 21st March.

The most popular start-up in 2020 was in the retail sales sector (both online and via mail order houses) with 22,011 new registrations in this field. Other popular choices included management consultancy (16,869), the buying and selling of own real estate (16,747) and freight transport via road (10,848).

Tuesday was the most popular day in which to register a business in 2020 (98,740), whilst Saturdays were the least (8,076) busy for registrations.

By breaking down the available data further, instantprint – who carried out the research – found that the

The data also showed that London (123,462 registrations), Birmingham (11,165 registrations), and Manchester (9,684 registrations) were found to be the cities with the highest number of new company registrations in 2020.

Five of the world’s largest tech giants hold $588bn in cash reserves Data presented by Buy Shares indicates that five giant tech companies control $588.48bn in cash reserves. The figure is based on the latest financial results as of October 2020.

The 2020 figure represents a drop of 0.78% compared to the 2019 cumulative cash reserves of $593.13bn for the selected companies.

In 2020, Apple’s cash reserve was the highest at $191.83bn representing a drop of 6.83% from 2019’s $205.9bn. Last year, Microsoft cash at hand stood at $139.97bn, an increase of 2.52% from 2019’s $136.52bn.

Alphabet registered the largest gain in cash reserves with a growth of 9.5% to $132.59bn in 2020. The previous year, the figure was $128.08bn; whilst online retail giant Amazon last year’s cash reserve was $68.4bn a drop of 4.18% from $58.24bn recorded in 2019. Among the five highlighted companies, Facebook has the least cash at hand for 2020 which was $55.69bn, a drop of 4.37% from $58.24bn recorded the previous year.

5

NEWS

Amazon’s Jeff Bezos to step down as CEO this summer

Knightstone acquires stake in augmented reality start-up Knightstone Capital, the London-based investment firm, has acquired a 25% stake in Augmented Reality Creations Ltd (ARC), a tech start-up founded by three graduates.

Amazon founder Jeff Bezos has announced that he will be stepping down as CEO of the Seattle-based eCommerce giant this summer.

Bezos originally founded the firm in his garage nearly 30 years ago, originally as an online bookstore, and has been the driving force behind the company’s incredible growth – which saw him become the world’s richest man.

He will be replaced by Andy Jassy, the current Chief Executive of Amazon’s hugely profitable cloud computing division.

However, Bezos will remain a part of the company, but will focus on new innovations.

ARC develops applications that enable businesses to ▲ Zack ▲ Andrew ▲ Kristian create a better experience Tuff Clear Woolhouse for their customers using Founder & CTO Founder & COO CTO a mobile phone or tablet rather than cumbersome decisions. ARC Inplace changes all of Virtual Reality hardware. that, transforming these drawings into immersive 3D experiences using their The technology has been developed by mobile phone or tablet.” computer science graduate Zack Tuff Andrew Clear, COO and Co-founder, along with Kris Woolhouse and Andrew Clear, both from Exeter University. added: “Inplace enables home improvement firms and architects to The first product launch, Inplace, gives give their customers a much better homeowners an explorable augmented experience, increasing consumer reality 3D experience of their new desire and improving both sales conservatory, garden room and more – conversion rates and order values.” before they buy.

Knightstone Capital is a sector Co-founder Zack Tuff said: “The agnostic investment firm that acquires conservatory and garden room companies ready to exit or takes a market is circa £1bn PA, but for significant stake in those ready to years homeowners have had to rely scale, supporting the founders on their simply on computer drawings to make journey to success.

ready to scale

Bristol-based tech start-up, Payaca, has seen continued growth in its SaaS platform and is ready to scale, according to founder Matt Franklin.

He said: “Payaca started as a financial solution coupled with quoting software for small home improvement businesses, but over the last six months we have focused heavily on providing a complete job management solution encompassing a CRM, invoicing, payments and analytics across web and mobile apps.”

Payaca enables businesses to create and send interactive customer quotes and invoices quickly and easily, with e-signature

6

acceptance, payment collection and Xero, Quickbooks and Zapier integration, with a SaaS pricing model.

The software also provides a unique customer finance solution, providing a range of funding options for the customer.

Payaca is FCA authorised as a credit broker and generate additional revenue securing funding options for customers.

The start-up raised almost £400,000 in an early-stage Angel investment round but Franklin, a product expert and data scientist, is now ready to accelerate development and customer acquisition.

▲ Matt Franklin Payaca

February/March 2021

ADVERTORIAL

FAMILY BUSINESS SUCCESSION PLANNING – IT TAKES TIME Handing over your business to the next generation can be hugely rewarding, but the process is often fraught with difficulty. Paul Bray, a tax partner at the Bristol office of PKF Francis Clark who has specialised in advising family businesses for over 25 years, answers some frequently asked questions.

I’m thinking about retiring from our family business. How far in advance should we start succession planning?

The honest answer is, the sooner the better. Preparation will take time and regular reviews are key. It generally takes two to three years – sometimes five or more – to lay the groundwork for a smooth transition.

How can we prepare the next generation to take over?

It’s a common mistake to assume your son or daughter will simply inherit the abilities that have enabled you to grow the business – put simply, they are not you!

We see many instances where the next generation spend time working in other industries to gain wider experience.

Ultimately, it’s about making it an attractive career choice, not them feeling pressured into taking over the family business.

Having built my business over many years, I’ll find it hard to let go. Do you have any advice?

You need to have confidence in what will happen when you let go, and that comes back to starting preparations early. If you’re confident your successor is up to the job, you can step back and enjoy the next chapter of your life.

We often see conflict over the ‘new’ way of running things, from simple matters like the timing of invoicing and chasing debts to more significant factors, such as taking out significant finance for expansion. It’s often hard for the retiring generation to drop the emotional connection and be comfortable with the pace of change.

My children aren’t interested in taking over the family business. What are the alternatives?

Many business owners in this position prefer the option of a management buyout.

They often have to be prepared to accept a lower price in order to preserve the ethos and structure of the business they love, but it shows enormous goodwill to your existing people.

The other option is an external trade sale.

To maximise share value, you need to

Paul Bray Partner, PKF Francis Clark

prepare by getting the right processes in place so the business can operate successfully without you.

How can I release some of the value of my business to enjoy in retirement without saddling my offspring with debt?

As an entrepreneur, it’s helpful to think about how you want to get long-term value from your business at an early stage in your career.

If the business can support a significant level of pension contributions over a long period of time, you have that backstop of an income in retirement so you’re not reliant on share value. There are also ways to use the value of the business to buy back your shares.

Our job is to unlock these issues with our clients. We love getting to the heart of why business owners are doing it, what they want to get out of it and where they see themselves in the future.

For more information, please visit pkf-francisclark.co.uk Business Leader - Inspire • Inform • Connect

7

AGENDA

Whatever you do –

don’t go to 2020!

BL reviews the year just gone and looks ahead to 2021 The Back to the Future films remain generational classics and for those that have not seen them – they were partly about time travel and were made in the 1980s. This is not doing them justice, but after all, this is not a magazine about films.

Anyway, the films got us thinking at Business Leader about going back in time, skipping years and what opportunities this could give you. Certainly, as a well-worn meme of Doc and Marty from the film - that has been circulating social media shows, whatever year you chose, you would not want to go to 2020.

Because for many, 2020 has of course been an annus horribilis but we must also stress that for many business leaders, it proved to be a successful trading year.

There are thousands you could select, and we received stories every day from companies outperforming their previous year or achieving amazing feats.

Take Manchester-based Classic Football Shirts that invested £4.5m in a new factory and saw sales rise by 25%; or Norfolk's Easy Bathrooms that opened its 50th store and posted record sales revenues; or techinspired waste brokerage business Waste Source, which experienced its second-best year in ten years of trading.

This is not to ignore the struggles of many, but to highlight the impenetrable spirit of entrepreneurship in the UK, and how now more than ever, need our business

leaders to continue pushing forward and creating jobs.

WHAT CAN WE EXPECT IN 2021?

We are unlikely to see the same fundamental changes this year that we did last year – like the proliferation of tech platforms such as Zoom and Teams as more people worked from home; or the way sectors were polarised by the pandemic; or words like furlough and circuit-breaker became etched into our vocabulary.

The changes and shifts will be more nuanced – we can assume.

If we look at what tech trends we can expect in 2021, new eCommerce platforms, video and streaming services, pharmaceuticals and health technologies were just some of areas we saw develop last year and going forward Business Leader see opportunities and growth in areas such as:

COVID-19 VACCINE DEVELOPMENT Along with the development of various COVID-19 testing kits, 2020 saw the development of the first ever mRNA vaccines from Pfizer and Moderna. So, as our COVID-affected world looks set to continue in 2021, although hopefully not for the whole year, we expect pharmaceutical firms to continue coming up with new and innovative ways to test for and protect against the virus.

"ALONG WITH THE DEVELOPMENT OF VARIOUS COVID-19 TESTING KITS, 2020 SAW THE DEVELOPMENT OF THE FIRST EVER MRNA VACCINES FROM PFIZER AND MODERNA." 8

LIVE STREAM GIGS

Whilst many will feel watching music online is not a worthy substitute for the real thing, it’s one of the only ways to see your favourite musicians perform live again until COVID-19 is under control.

According to The Music By Numbers report in 2020, the music industry lost up to 85% of live revenue in 2020. So, monetised livestream gigs could be an invaluable source of revenue for the industry in 2021. Platforms for livestream gigs include YouTube, Facebook, and even Twitch, which is more commonly used for live streaming video games, although we could see more emerge this year.

February/March 2021

A YEAR TO REMEMBER

ACCORDING TO THE OFFICE FOR NATIONAL STATISTICS, IN APRIL 2020, ALMOST HALF OF THE PEOPLE EMPLOYED IN THE UK DID SOME OF THEIR WORK FROM HOME.

AI TECHNOLOGY AND DATA ALGORITHMS

Video and music streaming services like Spotify and YouTube, search engines such as Bing and Google, and social media platforms like Facebook, Instagram, and Twitter all utilise analytical algorithms. These work by collating how users interact with these services, and they use this information to recommend new videos, relevant posts on your news feed, songs, and much more.

In 2021, we could see the development of these algorithms and other online data processing technologies to work in

conjunction with Artificial Intelligence.

GPT-3, an AI tool that can write essays, translate languages, and even create computer code using algorithms, was created in 2020 – a year that also saw us using social media, video, and music streaming services more than ever.

So, as homeworking looks set to continue in 2021, we are expecting tech companies to create innovative and exciting ways to improve video conferencing and remote working practices.

VIDEO CONFERENCING AND REMOTE WORKING

Although online sales grew steadily in the years prior to COVID-19, the virus accelerated the growth of online shopping and, perhaps, the demise of the highstreet. According to the ONS, internet sales accounted for 36% of total retail sales in November 2020, compared to 21.6% at the same time the previous year.

According to the Office for National Statistics (ONS), in April 2020, almost half of the people employed in the UK did some of their work from home.

Project management software like Asana, ProofHub, and Basecamp also became more widely used by the home workforce.

Business Leader - Inspire • Inform • Connect

ONLINE SHOPPING AND CONTACTLESS DELIVERY

Cont. 

9

AGENDA

Along with increasing sales, online retailers like Amazon and ASOS and takeaway services like Uber Eats and Deliveroo began offering contactless delivery, and we expect both trends to continue this year.

E-LEARNING

With the UK heading back into its third lockdown on the 5th of January, we saw schools and colleges shut and university students unable to return to campus until the middle of February.

As such, we would not be surprised if e-learning becomes more integral to education curriculums across the UK during 2021, leading to the development of online lectures and other educational technologies.

"WITH GYMS CLOSING AGAIN AS PART OF THE THIRD NATIONAL LOCKDOWN, IT WILL BE INTERESTING TO SEE WHAT THIS YEAR HAS IN STORE FOR WORKING OUT AT HOME AND WHAT KINDS OF TECHNOLOGIES WILL EMERGE TO ENHANCE THE EXPERIENCE." 10

WEARABLE DEVICES

Following the gym closures of 2020, more of us began working out at home to stay in shape. Coinciding with this trend was the use of smartwatches, ear-worn and other wearable devices, which many used to facilitate home fitness regimes.

So, with gyms closing again as part of the third national lockdown, it will be interesting to see what this year has in store for working out at home and what kinds of technologies will emerge to enhance the experience.

THE MARKETS

These tech trends will be worth watching, as will looking at which entrepreneurs emerge as the winners in each vertical.

Which brings us on to the recent news that Elon Musk has become the richest person in the world, creating many ‘Teslanaires’ along the way – the tribe that have become millionaires through buying Tesla stocks and backing the entrepreneur.

Which also brings us to the million-dollar question – which company should investors be backing in 2021? Well, with investor confidence rising ever since the news of the vaccination rollout, Hargreaves Lansdown has identified five companies to look out for regarding potential IPOs in 2021.

The companies highlighted are Deliveroo, Instacart, Bumble, Nextdoor and Darktrace.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, gives us her insight: “2021 is likely to herald in a fresh rush of initial public offerings (IPOs) with prospectuses full of promise. News of IPOs always provoke a flurry of interest with investors keen to get in on the action from the beginning.

“The number of companies planning an initial public offering is usually boosted at a time of booming consumer confidence and a buoyant economy.

"Yet, we’re still in the middle of a global pandemic, we’re grappling with the repercussions of a deep recession and hopes are fading fast of a sustained rebound in global growth.

“However, on both sides of the Atlantic, IPOs have been coming thick and fast.

The soaring value of tech stocks has been leading sentiment, helped by a huge dose of central bank stimulus and the waves of optimism that have washed through the financial markets thanks to vaccine rolls outs.”

February/March 2021

A YEAR TO REMEMBER FAST-GROWING SECTORS Earlier in this article, we also touched on how sectors in the UK had been polarised by the pandemic and it is now common for people to mention how well online retail and remote working platforms have fared during the last twelve months.

But what other sectors are fast-growing?

Data released by Beauhurst – which looks at the levels equity investment companies are receiving – has identified challenger banks, cryptocurrencies, digital security, fintech, insurtech and quantum as sectors that are receiving above average levels of investment.

more females and ethnic minorities but also those from tougher backgrounds – breaking the stranglehold the privately educated still have on the city, politics, and positions of power.

It is important that the conversation moves beyond just conversation and translates into action, to ensure frustrations do not boil over and society becomes fractured at a time it needs togetherness.

"2021 IS LIKELY TO HERALD IN A FRESH RUSH OF IPOS WITH PROSPECTUSES FULL OF PROMISE. NEWS OF INITIAL PUBLIC OFFERINGS ALWAYS PROVOKE A FLURRY OF INTEREST WITH INVESTORS KEEN TO GET IN ON THE ACTION FROM THE BEGINNING."

It seems that digital transformation and disruption will continue to be a key trend in 2021. Certainly, another trend that will rightly be front and centre of business minds in 2021 will be diversity and representation.

How do business leaders continue to ensure their teams have a broad set of backgrounds represented and not just

Susannah Streeter

If you had a time travel machine you might not chose to go back to 2020 but, despite the latest national lockdown, there is light at the end of the tunnel and 2021 has all the ingredients of being a year to remember (for all the right reasons), as business leaders once again step up to the plate and use their skills and knowledge to build a pioneering UK in a brave new world. 

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11

COVER FEATURE

A motivated genius or outspoken space dreamer?

Elon Musk became the richest person in the world for the first time recently – but how has he achieved it and what can we learn from him?

In this article Business Leader will look at the trickle-down impact this wealth has had on investors and whether his working patterns should be more widely implemented.

Outspoken Tesla and SpaceX entrepreneur Elon Musk became the world’s richest person for the first time recently (at the time of writing he is going back between first and second), with his personal wealth for that period surpassing Amazon founder Jeff Bezos. Musk is now valued at more than £136bn. In the past year, his personal wealth has increased by more than £100bn.

Automobiles and Toyota. Yet, Tesla makes just a fraction of the cars of its more established rivals.

Jeff Bezos had held the position since 2017, having himself surpassed Microsoft founder Bill Gates.

THE GROWING ARMY OF TESLANAIRES

She comments: "Given the meteoric rise in the share price in 2020, investors would be wise to ensure they hold Tesla only as part of a well-diversified portfolio.

His success is their success. And whilst Musk divides opinion, with many also saying Tesla stock is overvalued, his rocketing wealth has helped to create a legion of millionaires.

“Tesla came in just shy of its production target in 2020 of 500,000 vehicles, which is a significant achievement given its previous production hitches, but the group’s valuation remains eye watering at around 202 times forward earnings. To get even close to justifying its price, Tesla will need to grow fast and consistently hit quarterly sales production numbers going forward.

So why does this even matter to you? Well, for the Business Leader readers that are active investors, it is interesting to take note of the growing army of ‘Teslanaires’.

A recent BBC article explained that shares in Elon Musk's electric car firm rose more than 700% during 2020 to become the world's most valuable car company.

December 2020 was indeed a milestone for the car company as it joined the S&P 500, an index of the biggest stocks in the US which includes the likes of Apple, Microsoft and Facebook. Tesla shares rocketed and it became one of the top 10 most valued companies on the index.

Tesla stock is now worth more than the combined valuations of General Motors, Ford, Fiat Chrysler

12

Is the value of Tesla’s stock sustainable though, and what should investors be considering?

Susannah Streeter, an analyst at Hargreaves Lansdown, talks about the polarising nature of the stock and what is next for Tesla.

“The sale of regulatory credits also accounts for a hefty proportion of total revenues and cash now.

As rivals manufacture new electric vehicles, the market for these credits is likely to fall, putting more pressure on the core automotive business. For the moment, Tesla is maintaining its lead and still enjoying first mover advantage. The e-vehicle market has huge room for expansion but given the premium price of Tesla’s cars, they will remain a luxury item for many consumers.

Cont. 

February/March 2021

ELON MUSK

What is it really like to work for Elon Musk?

By Manley Hopkinson – Compassionate Leadership Academy When you ask any internet search engine “What is it like working for Elon Musk”? There are two common themes that consistently emerge. First is the positive and inspirational concept of mission and purpose Tesla wants to change the world! Wow, how exciting and inspiring is that?

But there is also a worrying consistency in the dissatisfaction and unhappiness that is shared through the employees not being valued. If you work for Elon Musk, the world’s richest man, you are expected to work 24/7 and at sub-industry standard pay and rewards. So you will be expected to sacrifice all other parts of your life; your family, your hobbies, your fitness & health, and to be poorly paid so that one man can become the richest man on the planet!

Creating enormous wealth on the back of others’ efforts is not ethical success. We have created a weird world when we idolise the mega-wealthy, no matter their journey. It sacrifices all other factors of “wealth” over just the one. Surely, a more holistic and compassionate view on wealth must include happiness, health, well-being, family, community and crucially, the one and only system that keeps us alive and offers us so much opportunity Mother Earth.

"when something is important enough, you do it even if the odds are not in your favour."

Elon Musk

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I would also argue that this 'weird world vision' is not effective. Long hours are unproductive; efficiency drops, errors rise. Creating a compliant and undervalued workforce doubles up on the inefficiencies. What is the cost to your dream of mistakes, inefficiencies and a continually revolving workforce taking their experiences and wisdom with them as they leave the door?

Like Elon, you may have a brilliant idea or a powerful dream of a new world, a deep intrinsic fire within you that drives you to never settle until it is realised? Brilliant, and we need people like this, but… rather than force compliance, create commitment by truly valuing the people on whom you will reply upon to realise your dream.

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COVER FEATURE “Much of Tesla's share price growth has come from its improving car sales, boosted by strong demand from China and hopes of subsidies for electric vehicles. The shift towards electric cars globally has put car companies like Tesla in the sweet spot.

“Many investors also believe there is strong growth to come from other parts of Tesla's business, including its self-driving software and battery power storage.”

HOW DID HE CHANGE THE AUTOMOTIVE SECTOR? So, how did Elon Musk disrupt the automotive sector and how is his approach different? Raphael Lulay, who is an analyst at Block-Builders, comments: “The price of Tesla shares has risen by 869% within a year, while the competition has reported losses and it is interesting to look at how Elon Musk differs fundamentally from his competitors in many respects.

“Firstly, his investment in production facilities stands out. The US carmaker is increasing his footprint quickly. For example, his Shanghai Gigafactory was built in just under a year, while Daimler’s Factory 36 in Shanghai took around 30 months; and BMW’s factory in Leipzig was similarly built in 36 months. Tesla acts as a very active developer and Elon is prepared to take responsibility and, if necessary, initiate dismantling measures at its own expense.”

Raphael also says that Elon Musk is an outlier in how he approaches marketing and advertising, relying heavily on his own personal brand for the benefit of Tesla.

He says: “While marketing budgets across the automotive industry have recently risen sharply, Tesla does not pay for any advertising at all. He instead relies on free advertising via communication through Twitter and other platforms. Elon Musk has 38.7 million followers, and Tesla itself has another 6.2 million. In contrast BMW has 2.1 million, giving you an example of the comparison.”

COVID-19 BULLETPROOF The coronavirus outbreak has affected many industries and the automotive industry is amongst the hardest hit.

After carmakers stopped production and dealerships closed showrooms amid COVID-19 lockdown, global car sales slumped worse than ever before.

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However, Tesla was generally less affected by the financial downturn caused by the coronavirus pandemic; and the market capitalisation of the world’s most valuable car company, Tesla, hit over $500bn at the start of 2021 – almost seven times more than Ferrari, Porsche and Aston Martin combined.

Raphael comments: “2020 was been a fantastic year for Tesla, despite the COVID-19 effects on the global automotive industry. The company’s stock price surged by nearly 200% in the last three months and they are up about 500% on the year, despite a 4.9% revenue drop in the second quarter of 2020.

“One of the reasons for such a premium valuation is Tesla’s ability to convince investors that it’s much more than just an automaker and plans to make its vehicles capable of deploying into an autonomous ‘robotaxi’ ride-sharing service prove that.”

"THE PRICE OF TESLA SHARES HAS RISEN BY 869% WITHIN A YEAR, WHILE THE COMPETITION HAS REPORTED LOSSES AND IT IS INTERESTING TO LOOK AT HOW ELON MUSK DIFFERS FUNDAMENTALLY FROM HIS COMPETITORS IN MANY RESPECTS." Raphael Lulay

HIS APPROACH To become a billionaire – let alone the world’s richest person – should set off an enquiring mind with a host of questions.

How did he do it? What does his day look like? What books does he read?

With so much now said about the role of CEO and how they should structure their day, it’s interesting to look at Elon Musk’s.

So, what do we know?

Unsurprisingly, various reports and Musk himself admit to a punishing schedule.

Which shows that he avoids taking phone calls, has incredibly short meetings, multitasks and meticulously plans his day into five-minute slots.

He has also stated that he works up to 100 hours a week, sleeps six hours a day and routinely wakes up at 7am, often skipping breakfast but taking to shower – something that he said has a ‘greater positive impact than any of his other daily habits’.

To ensure he can work on several of his companies at once, Musk breaks down his day into five minute slots and splits his time working across Tesla, SpaceX and his other businesses often including the weekends.

Elon Musk’s approach to work contradicts much of the current narrative around leadership – which is chipping away at the ideal of the hero leader who works brutal hours, skips breakfast and is sending emails when he or she is with their kids.

February/March 2021

ELON MUSK But is this the only blueprint that will make you a billionaire or even a millionaire?

Is it possible to achieve Musk’s level of wealth without working non-stop? Is this just unique to his world and not applicable to the average CEO? Or should leaders actually be copying Musk?

rebels and rule-breakers who are not afraid to get their hands dirty and do not waste time on diplomacy and keeping everyone happy. Instead, they choose to stand for something, which enables both customers and employees to align. This is what is propelling leaders like Elon Musk from his humble beginnings to the richest man in the world in such a short space of time.

“So yes, you need to work hard. Harder than the next guy. And I personally think people who want to become multimillionaires by working three days a week believe in fairytales. This is not to say that you shouldn’t want to have work/life balance, but don’t think you are going to become the next Elon Musk by doing so.”

Chris Atkinson is a leadership consultant at Strategic Leaders. He is not so sure that the 80-hour week is a good thing.

▴ Jackie Fast is an entrepreneur and investor, who has successful exited a business. Here is her take.

She comments: “Despite a widespread desire for work/life balance, it is unrealistic to expect to achieve significant success in this way. As someone who achieved success early on, I know firsthand that you need to work harder, smarter, and faster than the next guy. I work all the time.

“Business now favours the brave. The

He comments: “Elon Musk’s somewhat flippant comments about dialling back his hours from120-hour weeks to a 'manageable' 80-90 hours is probably not helpful as a role model for organisations to model themselves on.

“Even Musk admits that ‘the pain level significantly increases once you exceed the 80-hour mark’. However, it’s fair to say that the majority of senior executives would admit to having made significant sacrifices to get to that position – sadly those sacrifices are often (but not limited to) personal health or family.

“While Musk’s character and approach is unique in many ways, his excessive working hours probably aren’t unique for senior leaders…. and that is a problem.

The role model of the senior exec is largely built around the hard working, driver personality willing to make sacrifices to get results.

“Some years ago, I ran a training programme for potential board members of a premium automotive manufacturer and a part of the programme was Q&A with an existing board member.

"The question of work/life balance regularly came up and, without exception, the speakers admitted that their role consumed most of their life; for many it had led to divorce or even serious illness such as heart problems. Elon Musk’s tireless work ethic therefore presents an interesting challenge for leaders; is this a necessary component or a prerequisite for success at that level?”

Chris’s final question is a pointed one – as consultants and health and wellbeing advocates point to a more rounded leadership style that does not embrace the hero aspects and burning long hours; can success like Elon Musk has achieved be found with this approach? Or is success relative to each person and Musk an outlier – a one off, and his actions and approaches completely unique to him.

Whatever you think – one thing is for certain – Tesla stocks still seem a safe bet.

COMMENT

Over-valued and over-hyped?

What next for Tesla stock?

Tesla’s valuation was justified by a friend on the basis they are probably working on a time-machine or some such incredible tech. He was being tongue-in-cheek – but meant conventional valuation measures don’t operate. It was the world’s most shorted (ie bets it would fall) stock, yet it soared. Those who have hit the jackpot (it reflects the broader truth that the wealthiest Americans own stocks generally and make a large proportion of their wealth from their investments over the long term) would want to decide if they are risk-loving or risk-averse.

Most people will be in between and will best do something in between those two extreme strategies. Few would be buying more I suspect, unless willing to hold for a decade just in case there is a sharp pullback (after all, the Nasdaq peak of 2000 was only retested in 2015).

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▲ Alpesh Patel OBE Private Equity Fund Manager

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INTERVIEW

STEVE BOLT

WHAT DOES 2021 HOLD FOR THE PROCUREMENT SECTOR? Business Leader Magazine recently spoke to Steve Bolt, a Director at BCR Associates, a procurement consultancy based in the South West, to discuss how the industry has changed over the last year, and what we can expect to see in 2021.

WHAT ARE THE KEY PROCUREMENT CHALLENGES FACED BY BUSINESSES IN 2021?

The biggest challenge from a procurement perspective is that the world is now a very, very different place. The global pandemic has caused so many difficulties in terms of getting items sent around the world – and with Brexit, there are yet more challenges for us all to face. If you look at what has happened at Dover and other seaports already – clearly there are yet more hurdles to contend with. Moving forward, suppliers will need to make the supply chain process more robust and easier to follow.

▲ Steve Bolt Director, BCR Associates

WHAT DO YOU THINK SHOULD BE A COMPANY’S TOP PROCUREMENT PRIORITY THIS YEAR? Procurement is all about key spend – so working out what that is for the individual company is vital. There are so many variables, it’s important to have clear long-term objectives aligned with budget plans. Prioritising key spend areas and leaving flexibility to adapt to changing economic environments is crucial. To do this, you will need to assess the market, analyse current deals for energy, insurance, telecoms, etc, and plan as far ahead as possible. If you must buy, then do it, but if you can plan ahead you will save money.

HOW MUCH WILL SUSTAINABILITY AND THE ENVIRONMENT PLAY A PART IN PURCHASING DECISIONS IN 2021?

It is coming. The government has set ambitious Net-Zero targets and as we go through the process of decarbonisation, UK businesses are being forced to look at their day-to-day operations and their impact on the environment. The affordability of larger carbon reduction projects will be a challenge for many businesses, and this is where reducing consumption and smart procurement strategies will come into play to allow for the necessary investment.

WHAT OTHER CHALLENGES ARE FACING THE BUSINESS WORLD AT PRESENT? Cash flow. Due to the pandemic, a large proportion of businesses have struggled financially. They have also had to adapt to working around the pandemic and preparing for the changes to procurement that Brexit will inevitably cause. Making sure that you have good control of your finances will help you to prepare for what is ahead. As an example, savvy decision makers renewed their energy contracts during the pandemic when the price of fuel was cheap. Buying at the right time will help maximise cash flow and resources.

HOW CAN BCR HELP BUSINESSES TO PREPARE FOR THE FUTURE? Our process when dealing with clients is straightforward. We work to understand what they need today, five years from now, and beyond. We consider long-term strategic elements such as reducing carbon emissions as well as short-term procurement needs. We help our clients to review their balance sheet, we are often the catalyst to freeing up money and restructuring how they operate in certain areas. This allows our clients make better, riskfree decisions, and add to their bottom line. Ultimately this helps to drive growth and allows them to focus on their core business.

WHAT ARE THE KEY PROCUREMENT TRENDS IN THE MARKETPLACE FOR 2021?

A large proportion of our supply chain in the UK, is not owned by a UK company. Whether it is telecoms or energy, for example, they are owned by foreign companies and with new borders in place, industries will change. This year companies will need to find out whether what they are buying will continue to be available at a price which is affordable.

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For help with your business’ procurement challenges, please get in touch with Steve on steveb@bcrassociates.co.uk or call him on 03330 433 233 February/March 2021

With the right procurement partner, you enjoy access to specialist resources and expertise in maximising efficiency and managing costs across your business. But finding that partner can be tricky. So it’s always good to get a second opinion from people you trust.

At BCR Associates, over 90% of our clients come to us via referral from accountants, bank managers, solicitors and other professionals – all valuing the level of service and technical support we provide in telecoms, energy, insurance and much more.

To discover what makes us the professionals’ procurement choice – and what that means for you – get in touch today.

Call 03330 433 233 Email steveb@bcrassociates.co.uk Visit bcrassociates.co.uk

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REPORT

2021

will it be an unprecedented year for mergers and acquisitions?

In this feature, Business Leader speaks to sector leaders to find out what you can expect in relation to mergers and acquisition activity in 2021; whilst also reviewing the year just gone.

It is always helpful to start at the beginning and we will initially look at how 2020 compared to 2019, regarding M&A activity – before we look ahead to 2021 and beyond.

DC Advisory is a global corporate finance advisor that, at the start of 2021, published a report assessing global levels of activity.

According to the report, 2020 began much as 2019 ended – an active M&A market but with the looming sense that we were due a downturn.

Little did anybody know the predicted downturn would be influenced by a global pandemic.

SO WHAT HAPPENED IN 2020?

Richard Madden, who is CEO of DC Advisory UK, explains: “The nine months since March show a 20% decline in transaction volumes and a 13% decline in transaction value as compared to the same period in 2019, with these declines spread relatively consistently across the world.

“After a very slow start, this is a much stronger performance than many of us had feared. To put it into context, the year after the Lehman Brothers’ collapse showed a 36% decline in volume and a 53% decline in value. Although, in both cases, the transaction values are only indicative because 55% of values are ‘undisclosed’.”

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When compared to the 2008/09 financial crisis, Andy says that there are positives to be seen.

He explains: “The first positive and most compelling difference between now and 08/09 is that there remains a plentiful supply of corporate and private equity capital seeking opportunities – and both groups are currently similarly active acquirers.

“This enthusiasm to invest remains heightened because organic growth can be challenging in straightened economic circumstances. In addition, the credit markets are open and debt remains inexpensive. Essentially, the machinery of M&A stopped working in 2008. Now, in this case of after-shock, it is running smoothly.”

SOME KEY OBSERVATIONS

Richard also says that it’s worth looking at some of the key data.

For example, there were 12,250 deals in the nine months since March 2020 versus 15,274 in 2019 under £1bn.

January/February February/March 2021

MERGERS & ACQUISITIONS

▲ Richard Madden DC Advisory

▲ Asma Bashir Centuro Global

‘the gently stirring’, which represent the bulk of the market that have seen their businesses impacted by the pandemic and the ‘deep sleepers’ – those that have been adversely affected by the last year.

Richard continues: “Activity levels in 2021 should be underpinned by ‘Safe Haven’ and ‘Light Sleeper’ transactions.

We estimate that these should deliver equivalent deal levels to 2019, with some prospect of outperformance. The impediment to material outperformance is that buyers are very discerning, diligent and risk averse.

He expands: “Of most note, and perhaps unsurprisingly, no sector reached the levels of 2019, except for the low volume Pharma, Aerospace and Defence sectors.

“Technology finished strongly and almost reached 2019 levels, with 2,545 deals vs. 2,554 deals. Interestingly, technology also almost surpassed automotive & manufacturing as the most active sector.”

LOOKING AT 2021

Richard and his team say that to look ahead to this year it’s important to categorise those in the market. There are the businesses that had significant momentum prior to March 2020 – ‘the momentum transactions’ – ‘the safe haven transactions’ – those that are in core resilient sectors such as infrastructure; the 'Light Sleepers’ – businesses that enjoyed surging demand due to the circumstances;

“We have already seen that businesses that fall short of very high standards are much less likely to transact. Consequently, for 2021 we predict the same number of deals as in 2019 – 7,500. The ‘Deep Sleep’ sectors, which represented c.2,500 deals in 2019, are likely to remain substantially inactive, so we estimate that deals in this category will reach only 40% of that level.

“And so it all depends on the ‘Gently Stirring’. We contend that these businesses will need an extended period of time to reach new and satisfactory levels of trading. If that period is six months or so, they are unlikely to contemplate launching a transaction before the Autumn – with only a possibility that they complete in 2021 - for many it will be longer.

“In a period of depressed economic activity, and with the burden of proof firmly on the vendor, it feels optimistic to suggest

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▲ Ewan McKinnon Maven Capital Partners

that levels will reach 70% of 2019 levels.

Consequently, we estimate deal activity at 60% of 2019 levels, that would suggest approximately 6,200 deals in 2021.”

UK ACTIVITY AND 2021

To look at UK activity in more detail and what trends are impacting the M&A sector BL spoke to Asma Bashir – CEO of Centuro Global – a business which supports companies looking to buy and sell, and an experienced traveller when it comes to M&A; and Ewan McKinnon, Partner at Maven Capital Partners – who also support the sector.

We asked them: From your perspective – do you expect to see M&A activity increase or decrease in 2021, compared to 2020?

Asma Bashir: “Looking at the figures from the Office for National Statistics (ONS), there was an eleven-fold increase in the value of M&A transactions in the last two quarters of 2020; surprisingly, the last six weeks of the year saw a much higher activity than 2019, suggesting the outlook for 2021 to be positive – especially now that there is confidence in the market of a vaccine being rolled out rapidly. With attractive interest rates and the availability of capital, M&A activity will continue to grow in 2021.”

Cont. 

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REPORT

Ewan McKinnon: “I definitely expect to see an increase in M&A activity this year for two main reasons. Firstly, we could be looking at an increase in Capital Gains Tax soon. This is already fuelling an increase in M&A activity this quarter, as entrepreneurs try to complete deals before the budget in case there is any increase to either Capital Gains Tax or Entrepreneurs’ Relief. Secondly, notwithstanding the above, as the economy recovers post COVID-19 we should see a return to a normal M&A market – 2020 was very subdued for obvious reasons.”

What trends do you expect to see that will impact activity?

Asma Bashir: “Many companies have shown resilience during the pandemic despite the challenges, particularly in the hygiene and cleaning products sector where acquisitions are strong.

It is understood that private equity firm Bain and Company is acquiring the cleaning company Diversey for £6bn and Singapore-based Everstone will acquire another chemical cleaning company for an undisclosed sum. There is clearly an appetite for M&A activity.”

Ewan McKinnon: “In terms of trends, I expect to see more exits due to tax changes, with Q1 being particularly busy. We may also still see forced M&A as businesses struggle during extended lockdowns, or even when the recovery commences when working capital challenges bite.”

What advice do you have for business leaders thinking about selling or exiting in 2021?

Asma Bashir: “There is a possibility of more exits due to the impact of the pandemic on some sectors such as travel, retail and hospitality and anyone wishing to sell their business should consider tax hikes and cost implications of a sale after the budget, thus reducing the value of any sales proceeds.”

Ewan McKinnon: “My advice to business leaders thinking about selling or exiting in 2021 is to not think too much about potential tax changes now, it is too late.

Instead, they should focus on getting their houses in order and look to experienced advisers to help them navigate what will be a challenging Q1 and Q2.” 

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MERGERS & ACQUISITIONS

THE BUSINESS PERSPECTIVE Carrying out an M&A transaction in the teeth of a pandemic is no mean feat, so to gain an insight into what the process is like we spoke to Chris Holland – MD and co-founder of Waste Source – a £6m business that was acquired by Reconomy at the end of 2020.

WHY NOW, CONSIDERING THE TOUGH CLIMATE?

“I can honestly say this time last year I had no intention of selling Waste Source. Jon (the other founder) and I had considered some options Chris Holland – Waste Source in terms of restructuring it but becoming part of a bigger group had not made its way on to the ideas board. We were all set for our 10th year and gearing up for a year to remember.

“When COVID struck they were scary times and I genuinely thought the whole thing could disappear before my eyes. Once the furlough scheme got announced I was far more settled and still very much focusing on the year ahead. Once we had got to grips with lockdown life, I had some space to think strategically. I got approached and for the first time ever, opened up dialogue in relation to potentially selling the business.

“I was looking for a partner that could bolster our offering to existing customers, accelerate our growth and open new doors of opportunity for my wasters. In Reconomy, I believe we found the perfect fit.”

WHAT WAS IT LIKE GOING THROUGH THE PROCESS – HOW STRESSFUL WAS IT, IF AT ALL?

“The first part of the process was exciting, at one point we had four offers on the table, and it was a proud and humbling moment to take a step back to see what the £200 I started the business with in 2010 had become. Having an offer that meant I could continue running Waste Source, with a waste juggernaut like Reconomy supporting me felt right.

“The due diligence process was stressful as every stone gets turned over, the level of detail at times was surprising to me. It took way longer than I thought it would (over three months) as well, but some of this was down to COVID-19 pressures on people’s workloads. I am not known for my patience and at times it was certainly tested.

“The thing I found most stressful was not being able to tell people, especially within the team at Waste Source.”

WHAT DID YOU LEARN DURING THE PROCESS?

“That when you get to a Friday thinking you have provided all the documents needed for the due diligence process, you almost certainly have not and there will be a new list on the Monday! I was naive thinking that as we were a simple business model we would whizz through the process. That said, as we were not really looking to sell there was naturally preparation we hadn’t done before reaching the due diligence process.

“Most importantly though I have learned how the whole process works, I have completed a 10-year cycle from business creation, growth then sale, which has been great for my own professional development. I am extremely excited with this new relationship and the opportunities it will bring. I am a naturally competitive person and now pretty set on making Waste Source the best subsidiary within the Reconomy Group.”

February/March 2021

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ROUND-UP DEALS

The Business Leader Deal Room Business Leader highlights a selection or significant deals that have taken place in the last six months FinTech: DNA Payments Group (DNA), an integrated payments company, has acquired Active Merchant Services (also known as Active Payments), a UK-based independent sales organisation with more than 2,500 merchants.

This acquisition brings DNA’s customer base to c.30,000 merchants and 57,000 terminals in the UK and EU with the actual processing volumes of transactions to over £5.5bn per annum.

Manufacturing: Aero Services Global Group (ASG) has acquired one of Liverpool’s oldest surface treatment specialists and is now looking to maximise its new ‘one-stop’ capability with aerospace clients across the world.

The Manchester-based Group, which is run by Simon Weston and backed by Amin Amiri of a2e Industries, has purchased King & Fowler in a deal that will safeguard all 59 jobs and signal a new investment drive in processes and plant at its Liverpool factory.

Retail: Fashion eCommerce platform Asos has announced that it is in exclusive talks with administrators Deloitte to acquire Sir Philip Green’s retail empire – Arcadia Group.

Asos plans on buying Arcadia’s high street brands including Topshop, Topman, Miss Selfridge and HIIT. This follows the news that Boohoo recently acquired the Debenhams Brand in a deal worth £55m.

Creative Industries:

Matt Parker – CEO, Babble

Shutterstock, Inc., a global creative platform, has announced that it entered into a definitive agreement to acquire TurboSquid, Inc. for $75m.

For over 20 years, TurboSquid has been a global 3D industry firm, offering a unified 3D workflow, and operating a marketplace offering of more than one million 3D models, a 2D marketplace derived from 3D objects, and a digital asset management solution offered on a SaaS basis.

Healthcare: Millbrook Healthcare, a provider of community equipment and mobility-related services, has today announced the acquisition of Ross Care.

The business will continue to be headquartered in Southampton with Ross Care’s Managing Director, James Parramore joining the executive leadership team of the enlarged company.

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Telecoms: Unified Comms provider Babble has acquired Portsmouth-based UItracomms.

The deal continues Babble’s rapid buy and build strategy, which has been complemented by robust organic growth over the last 12 months. It is the first acquisition following the investment by Graphite Capital at the end of 2020, valuing the business at £90m.

February/March 2021

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FEATURE

‘Soon the music will stop – and it’s all going to have to be paid back’

Business Leader look at how the government is going to payback all the money it has borrowed to helps companies navigate the coronavirus storm. Are calls of ‘tax the rich’ coming back again and what impact could the mooted increase in Capital Gains Tax (CGT) have?

It is an old worn phrase, but it has a certain relevance now more than ever – ‘only two things are certain in life – taxes and death’.

TAX IS THE NEW DARLING?

When it comes to the former, the arguments about who should pay what and how much have been debated for centuries. But one thing is for certain and that is that unprecedented changes to how the public and businesses are taxed could be on there way as the government looks to pay back the money it has dished out to businesses in loans, deferred payroll, and deferred VAT.

Nick says: Government is shelling out lots of money and the music will stop at some point; we’ll need to raise some money in the future by looking at tax and we’re seeing some signs of where this may go. Rishi undertook a Capital Gains Tax review earlier in 2020 and the outcome of that was potentially to increase income tax rates.

Such is the task ahead and importance of the subject, Nick Farmer who is an International Tax Partner at Menzies LLP thinks that tax could be back on the front pages of the newspapers soon, in a way that it has not been since the 2008 financial crisis (a more serene time when Brexit and the pandemic were mere glints in the eye.)

“There has also been an inheritance tax review, with a view to make this more like an estate tax.

And on the international stage, lots of countries are introducing a Digital Services Tax. If you look back at the 2008 financial crisis, tax was headline news and I believe this will happen again and we will start to have debates around how this should be paid back,

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January/February February/March 2021

TAX

with many pointing the finger at the big multi-nationals and those top earners.”

Certainly, even the mention of an increase in Capital Gains Tax has businesses packing up and going home. An article in The Financial Times on December 31 2020 said that a record number of UK company directors closed solvent businesses in the three months to September, prompted by fears of tax changes and the economic damage wrought by the pandemic.

Figures from The Gazette, the official public record for the UK, found 3,126 businesses voluntarily appointed liquidators during the third quarter of 2020, the highest for any third quarter since 2000. The figure was up 52% on the same period in 2019, when 2,058 businesses voluntarily appointed liquidators. The Financial Times article said that advisers attributed the surge in closures of solvent companies to potential increases in capital gains tax (CGT), concerns about upcoming changes to the off payroll working (IR35) rules and ongoing economic uncertainty.

TAX THE RICH

However, if the government do decide to refresh the tax system, there will no doubt be calls from many to tax rich individuals and companies like Amazon – who are perceived to have performed well during the last nine months.

Tory grandee John Redwood once famously said that the big ‘experiment’ in the 70s when higher rates of income tax were placed on wealthy individuals resulted in the tax take going down, as the rich fled and found ways to evade and avoid paying the higher rates.

It is an age-old argument that is countered by those that say ‘let them leave’ as there will be enough wealthy individuals and businesses who love their country and are prepared to stay.

Certainly, due to the pandemic and the heroics of many on low wages, the issue of wealthy people paying more taxes could reach a level of emotion and scrutiny it didn’t in the past.

To find out more about what levers government may pull in the future and to what degree business leaders could be in the firing line, Business Leader spoke to Eric Silvestre, CFA Senior Investment Research Analyst at Alpha Portfolio Management.

He said: “The latest estimates suggest the government is expected to spend a whopping £280bn on measures to fight COVID-19 and its catastrophic impact on the UK economy. The latest official figures for October show public sector debt passed the £2tn mark for the first time in history. The Office for Budget Responsibility (OBR), estimates that borrowing will be £394bn for the current fiscal year. That is the highest figure since World War 2.

"THE LATEST ESTIMATES SUGGEST THE GOVERNMENT IS EXPECTED TO SPEND A WHOPPING £280BN ON MEASURES TO FIGHT COVID-19 AND ITS CATASTROPHIC IMPACT ON THE UK

“Boris has been insistent that there will be no return to austerity, so with tax revenues drying up, what options are there?

“Raising taxes is the most logical option but would be politically awkward.

Especially since the Conservative 2019 manifesto promised not to raise the three biggest taxes. These are income tax, national insurance and VAT. Historically, these have accounted for more than 50% of UK tax revenues.

“Recently the Wealth Tax Commission, a study group involving the LSE, controversially proposed a ‘one-off’ wealth tax of 5%. Phased over a five-year period it could raise £260bn to recover the cost of the pandemic. The proposal could affect around 10 million people or one in six of working people with £500,000 or more worth of assets.

“The Commission said the one-off wealth tax would be the equivalent to raising VAT by 6p or the basic rate of income tax by 9p for the same period. Whilst the measure might be one of the least unappealing to the nation as a whole, to a Tory voting middle class or mass affluent it will feel particularly painful, akin to a turkey voting for Christmas.

ECONOMY." Eric Silvestre

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Cont. 

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FEATURE “Various European countries, notably the French, have tried and subsequently withdrawn variations of wealth tax legislation. UHNW’s (Ultra-high net-woth individuals) tend to be adept at switching domicile to avoid such measures, leading to an exodus of very high tax paying individuals and a shrinking pot of wealthier people.”

"There are a range of allowances/ exemptions and reliefs that could be considered.

"One of the most controversial of these would be adjustments to Principal Private Residence Relief or PPRR. This currently makes the disposal of your main residence exempt from CGT. Again, the political perspective from this could jar with voters as the structural imbalances of the UK housing market could reach a much broader catchment area, impacting those deemed well off who are simply asset rich, but income poor.”

WHAT ARE THE OTHER OPTIONS?

Everybody will have their view on how the tax system should be structured but as we look to pay back the huge rates of borrowing, could some more left field options make it to the statute book?

▲ Eric Silvestre Alpha Portfolio Management

CAPITAL GAINS TAX

In regards to Capital Gains Tax, Eric comments: “The Chancellor has commissioned a review of Capital Gains Tax (CGT) with a view to identifying opportunities to simplify the tax, but it was already suggested by many as a potential route to increase tax revenues and this review has done nothing to dampen such speculation.

One such new tax that has been touted is the ‘homeworking tax’. Deutsche Bank is proposing a 5pc levy for those who choose to work from home outside of lockdowns stating that working from home is a ‘privilege’.

Following the rise of homeworking and statements from companies like Twitter that their staff can work from home indefinitely, does the proposal have legs?

▲ Angela Love Active Workplace Solutions

"HIKING CGT RATES AND SLASHING THE CGT ALLOWANCE ARE OBVIOUS ADJUSTMENTS, BUT THESE ARE NOT THE ONLY OPTIONS AVAILABLE. THERE ARE A RANGE OF ALLOWANCES/EXEMPTIONS AND RELIEFS THAT COULD BE CONSIDERED." Eric Silvestre

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“I completely support searching for measures to help vulnerable jobs but taxing home workers is not the way. You have to also consider the reasons why some people are working from home.

Some will have their own health reasons, others may share a property with someone who is vulnerable therefore won’t risk the commute. Whilst we can’t deny that some workers and demographics have wonderful settings in their home working environment in order to work productively, others do not.

“Yet, despite that, they will continue to work from home to keep them and others safe. And that’s admirable. Taxing them for making that call is wrong. Even after COVID-19, some people will still work from home, regardless of whether they actually want to or not. Punishing them for it will only deepen the wound financially and emotionally and this will result in other major long-term effects.”

"I COMPLETELY SUPPORT SEARCHING FOR MEASURES TO HELP VULNERABLE JOBS BUT TAXING HOME WORKERS IS NOT THE WAY. YOU HAVE TO ALSO CONSIDER THE REASONS WHY SOME PEOPLE ARE WORKING FROM HOME."

“Over the summer, Rishi Sunak provided us with a ‘heads up’ that changes to the UK’s Capital Gains Tax regime could be on the cards. In July, he contacted the Office for Tax Simplification (OTS). For many years CGT has been pending a wholesale review and has been deemed unnecessarily complex.

“Hiking CGT rates and slashing the CGT allowance are obvious adjustments, but these are not the only options available.

Angela Love, Director at Active Workplace Solutions, comments: "There is simply no logic to Deutsche Bank’s proposal to tax people working from home between lockdowns. Where were these suggestions when people were working remotely pre-pandemic? Home workers are not makeshift units to be taxed, they are real people who have gone through an awful lot of upheaval in 2020.

Angela Love

Deutsche Bank Research suggests a tax of 5pc of a worker’s salary if workers choose to work from home when they are not forced to by the current pandemic.

The tax would be paid for by employers and the income generated would be paid to people who cannot work from home.

January/February February/March 2021

TAX This could earn $48bn (£36bn) if introduced in the US and would help redress the balance, the bank says (according to the BBC).

Deutsche Bank strategist Luke Templeman comments: “For years we have needed a tax on remote workers.

COVID-19 has just made it obvious. Quite simply, our economic system is not set up to cope with people who can disconnect themselves from face-to-face society.

"THOSE WHO CAN WORK FROM HOME RECEIVE DIRECT AND INDIRECT FINANCIAL BENEFITS AND THEY SHOULD BE TAXED IN ORDER TO SMOOTH THE TRANSITION PROCESS FOR THOSE WHO HAVE BEEN SUDDENLY DISPLACED." Luke Templeman

“Those who can work from home receive direct and indirect financial benefits and they should be taxed in order to smooth the transition process for those who have been suddenly displaced."

2021

It’s pretty clear that the debate is starting, so don’t be shocked if you start to see tax hitting the front pages again; as businesses and individuals find out that tax is indeed a certainty in life – and whatever the structure, it never seems quite fair. 

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ADVERTORIAL

Companies Urged to Consider R&D Tax Relief for Pandemic

Innovation As leading Research & Development (R&D) tax credit specialists, Access2Funding see every day how innovation, adaptation and responding to the unexpected is at the heart of British business. In 2020, Access2Funding secured £23m in tax credits for UK businesses, with over 1160 claims and an average return to businesses of £39,000.

adapt to the unexpected and unpredictable circumstances of the past year.

The UK has been at the forefront of the global scientific endeavour to tackle the COVID-19 pandemic, with the vaccine developed by the University of Oxford in collaboration with AstroZeneca approved for use in several countries and the UK vaccine rollout well underway. This national spirit of innovation has also meant that despite the pandemic being an intensely challenging time for business, UK companies have quickly and effectively adapted their working models and output.

• Manufacturers have stepped up to the challenge of 2020, with companies putting their usual production lines on hold to manufacture PPE equipment to help the NHS’s battle against the virus.

Access2Funding work with clients from a huge variety of industries, seeing how companies of all shapes and sizes have taken this opportunity for innovation, and successfully developed their working to

• Hospitality venues have been hit hard by lockdown, finding themselves having to specially develop and adapt recipes to make them suitable for takeaway service, adapt their menus as supply chains are impacted, and find innovative ways to make their venues COVID-compliant for customer safety.

• Breweries and distilleries have turned their hand to creating hand sanitising products for businesses and the public.

These are only a few examples of how companies all around the UK have used the last year to undertake research and develop new products, services and methods to their working.

Many business owners tell Access2Funding they would never consider

themselves eligible for R&D relief, because their overcoming of challenges and finding new ways of doing things are 'just part of the job' and 'what we do every day'.

It’s often assumed that 'Research and Development' just means laboratory workers in white coats.

If a business is liable to pay corporation tax, and has undertaken projects which achieve an advance in knowledge or capability or find new ways of doing things, Access2Funding can help them claim back money from HMRC – even if the projects in question ultimately failed.

“The COVID-19 pandemic has left so many companies worried about cashflow, with future planning and job stability impacted by the uncertainty,” says Dawn Coker COO of Access2Funding. “The cash injection we can get back quickly and easily for companies who show innovation, research, and trial and error in their day to day projects really can be a lifeline during this time. If your business has been doing new, innovative things to adapt, we would love to hear from you to see if we can help you get the refund you’re entitled to.”

Contact Access2Funding on 0333 990 0125 or visit www.access2funding.co.uk for a free review, and to make sure your company isn’t missing out on vital cashflow support

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February/March 2021

ROUND-UP APPOINTMENTS

People & Appointments Business Leader gives a rundown of recent appointments and promotions across various sectors

NEW NON-EXECUTIVE DIRECTOR AT TILNEY SMITH & WILLIAMSON Tilney Smith & Williamson, the UK wealth management and professional services group, have announced the appointment of Bill McNabb as a Non-Executive Director.

McNabb is the former Chairman and Chief Executive Officer of The Vanguard Group, Inc., the world’s largest mutual fund manager.

BRICKENDON STRENGTHENS SENIOR LEADERSHIP TEAM Business consultants Brickedon have made a new senior hire and a set of senior promotions.

The business has appointed Will McDonald as its new Director of Financial Services, Strategy & Business Development; promoted Bala Ethirajalu to Partner, Global Head of Delivery and Maureen McKinley to Senior Manager.

ROBEY WARSHAW APPOINT FORMER CHANCELLOR Former Chancellor George Osborne, is set to leave his role as Editor of the Evening Standard and at financial firm BlackRock, to take up a full-time role at a small investment bank, Robey Warshaw, where he will focus on large takeover deals.

CONJURA APPOINTS EX-FACEBOOK AND GOOGLE EXECUTIVE ADELE COOPER eCommerce data specialist Conjura has appointed Adele Cooper, ex-Pinterest, Facebook and Google and Paul Gedman, ex-Hut Group, as Non-Executive Directors to support the business as it continues to scale.

NEW HIRE AT ARBUTHNOT COMMERCIAL ABL Josh Thorneycroft has joined Arbuthnot Commercial Asset Based Lending (ABL) as Business Development Director.

Prior to joining Arbuthnot Commercial ABL, Josh held several roles at Mazars, across the company’s M&A and Debt-Advisory practices. He is also a qualified ICAEW accountant.

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JOHN BOUGHTON JOINS BOUYGUES AS REGIONAL MD John Boughton, former Deputy Managing Director at Willmott Dixon, has joined Bouygues UK as Regional Managing Director for Wales and the South West.

Bristol-native John has worked in construction for more than 30 years and was Deputy Managing Director at Willmott Dixon for four years.

PETER WALFORD BECOMES MD AT CUBEX LAND Cubex Land have announced the appointment of Peter Walford to the position of Managing Director. Peter, who steps up from his current role as Executive Director, co-founded mixed-use devloper Cubex Land 16 years ago.

LOGISTICS COMPANY CARIBOU APPOINTS NEW LEADER The parcel, haulage and freight logistics company, Caribou has appointed a new Managing Director.

Daryl Dylan, who was previously Head of Carriers & Commercials, will step up to the role and says his first order of business is to grow the Caribou depot network to 10 centres over the next 12 months.

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INTERVIEW

CEO IN FOCUS:

GEORGE DEXTER

George Dexter is the CEO of Armour Home – a multi-award-winning audio home electronics firm that has fought through the COVID-19 crisis to achieve strong levels of growth. Dexter spoke to Business Leader about the journey he has been on with the company, including the lessons he learnt from the MBO, the importance of marketing and what it means to be a leader of a company.

CAN YOU GIVE AN OVERVIEW OF THE COMPANY? Armour Home Electronics was a business that spun out of a plc called Armour Group plc, where I was the CEO for 16 years. It

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was an AIM-listed business and when I started, we were basically bust! We then grew to become highly successful in the consumer electronics sector. However, when the financial crisis hit, like many businesses, the company took a big hit and a period of restructuring followed.

I then led an MBO for Armour Home Electronics along with a couple of colleagues in August 2014. The business itself is now a specialist consumer electronics company, designing award-winning audio solutions.

Our key brands are Q Acoustics, which are Hi-Fi loudspeakers; QED, for hi-fi cables; and Goldring, which manufacturers styluses for record players –our own brand portfolio makes up 90% of our revenue, which we expect to be circa £16m in the current financial year.

The other 10% is where we distribute other audio brands, who are

February/March 2021

ARMOUR HOME

business from a large, private-equity backed American firm in March 2014, which was accepted. After that deal went through, it just left the home audio side of the business.

The Chairman, who was the principal shareholder in the plc, said to me that the business wasn’t big enough to move the share price even if we doubled the size of the remaining home audio business – and consequently he decided the best strategy was to sell the business. I’d been leading the business since the financial crisis and said that I wanted to buy the home audio business – we negotiated and agreed a deal. At the time it felt great as we were now the masters of our own destiny.

However, our biggest mistake in structuring the deal was that we were undercapitalised. Looking back, we should have negotiated harder on our debt slice in the capital structure – and as a result, for a few years, we struggled with cash flow.

The biggest lesson when buying a business, especially as an MBO, is to make sure you get your capitalisation structure correct to enable future growth. You will need cash and resources to weather difficult times, but also fulfil the strategic plan for growing your business.

"WE SELL OUR PRODUCTS IN 65 COUNTRIES ACROSS THE WORLD, WITH ALMOST ALL OF THE ENGINEERING AND INDUSTRIAL DESIGN BEING DONE HERE IN THE UK AND MOST OF THE MANUFACTURING IN THE FAR EAST. WE HAVE WON MANY AWARDS FOR OUR PRODUCTS, WHICH HAS BEEN A KEY COMPONENT TO GROWING THE BRAND AWARENESS ACROSS THE WORLD."

primarily non-UK-based – these include a headphone brand called Grado, a digital musical player brand called Astell&Kern and another digital device brand called iFi. We sell our products in 65 countries across the world.

CAN YOU TAKE ME THROUGH THE MBO PROCESS AND THE LESSONS YOU LEARNT FROM IT? Pre-MBO, when I was the CEO of the plc, we had two operating divisions. We had an automotive car audio business and the home audio business, which I was also leading at the time of the MBO in 2014.

There was an approach for the automotive

HOW DID YOU TURN IT AROUND AND ACHIEVE THE LEVEL OF GROWTH YOU’VE EXPERIENCED IN RECENT YEARS? Hard work and sticking to your growth plan. Do not get drawn into areas that

Business Leader - Inspire • Inform • Connect

are not part of your core strategy and focus on your brands that will drive your revenues and profitability. There might be an interesting new piece of technology or new sectors you could develop – but if it is not a part of your core strategy, don’t do it until the foundation of the business is secure. Put simply, focus on what you are good at.

As a business, to ensure growth, we invested heavily in product development and marketing. The latter, marketing, was the biggest change in the business after we took over, and a key to our success.

You can have fantastic products that are poorly marketed, which won’t achieve success. You can have mediocre products with brilliant marketing and succeed.

But if you have great products and great marketing, which we believe we do, then that is the winning formula.

HOW IS COVID-19 AFFECT THE BUSINESS?

On March 24 every retailer that we supplied across Europe had to close their stores. We had a plan before Boris’ announcement though, and it was immediately put in place, and whilst there have been difficult moments, 2020 ended up being a successful year for us.

March and April were very tough, we had to furlough 30 of our 47 staff members, and everyone went on a salary sacrifice for 7 months. It was terrifying and I thought we might go bust.

However, once the shock of those two months passed, audio as an industry started seeing a lot of growth. It is clear that with no opportunity to spend money in restaurants and pubs or on holidays, people are buying products and the audio category has be a beneficiary of this.

In every month since June, we have seen both sales and profits increasing, with the first four months of our new financial year, which started on 1st September, being the best performance since before the 2008 financial crisis.

Cont. 

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INTERVIEW HOW DO YOU DESCRIBE YOURSELF AS A BUSINESS LEADER? Determined, honest and willing to learn.

Determination is a vital leadership ingredient in implementing strategies and resolving problems. I always believe that there is a solution to all problems you face and whilst you might not like the solution, it is there for you to find and implement.

In terms of honesty, you must be truthful to yourself and with those who are around you. I have always believed that people respond best when told the truth – no matter what that truth is and how bad it is.

If you don’t do this – it will come back to haunt you. Being truthful pulls your team together and after the year we have all had, this is very important.

"I HAVE ALWAYS BELIEVED THAT PEOPLE RESPOND BEST WHEN TOLD THE TRUTH – NO MATTER WHAT THAT TRUTH IS. IF YOU DON’T DO THIS – IT WILL COME BACK TO HAUNT YOU. DOING THIS PULLS YOUR TEAM TOGETHER – AND AFTER THE YEAR WE HAVE ALL HAD, THIS IS VERY IMPORTANT."

ARMOUR HOME We never stop learning and you need to be prepared to learn, because if you think you know it all, you will almost certainly fail.

CAN YOU TELL US MORE ABOUT HOW YOU HAVE BUILT YOUR LEADERSHIP TEAM AROUND YOU? To grow a business, you need to surround yourself with good people and potential leaders who will challenge you. You want people with ambition and a desire to lead, whether it is in their field or in the company. For SME’s it can be hard sometimes to attract the right talent so you need to be able to offer them something that they will not be able to get in a bigger company, whether it is shares or something more specific to the role.

In their day-to-day role within the business, if you don’t trust the leadership team to do their jobs correctly, you need to question why are you employing them? Trust is very important as it is a two-way street. If they feel the trust to do their job, they’ll be a great asset – if you don’t trust them, then you’ll be constantly looking over their shoulder and not concentrating on your job.

HOW DO YOU BUILD AN INTERNATIONAL BRAND? Developing a strong international business requires good partners, a quality product and brand and capable sales people who can build and manage relationships. We

also put a lot of effort into product reviews and marketing to raise brand awareness, which in the digital world we live in is important where product information is so easy to access. Today our international sales account for 50% of our revenues and this is growing with US being our single biggest international market.

WHAT FUTURE TRENDS DO YOU SEE IN THE INDUSTRY AND WHERE DO YOU FIT INTO THIS? I am a “hopeful traveller” and an optimist about the audio industry. In the 2000s, there was a generation that grew up listening to music on headphones. This, combined with the fast growth of music on demand services, means today there is a new generation of home buyers who are potentially wanting a good home audio solution, particularly in times of lockdown as we are now – the challenge for the audio industry is to encourage them to buy and we are doing this through great product and marketing.

Today there are more people listening to music than ever before and the audio industry has a great opportunity to fly high on the back of this surge in demand for audio content. Armour and our brands are well positioned to take advantage of this and It is for this reason that I am optimistic about the growth for the company and the wider audio industry.

PANDEMIC SET TO COST EUROPE’S TOP FOOTBALL CLUBS OVER £1.7BN According to the annual report by financial services firm Deloitte on the finances within football, the COVID-19 pandemic is set to cost Europe’s 20 richest football clubs over £1.7bn by the end of this season.

The Deloitte Football Money League survey found those teams had already lost more than £960m since the start of the pandemic in March.

The loss in revenue is due to the impact of the pandemic, through loss of matchday revenue, and the loss of TV broadcasting money for domestic and European tournaments.

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John Purcell, co-founder of Vysyble, says a lack of preparation has also hurt the sport: “COVID-19 is just the accelerant of the smouldering problem that has been there for some time in football. If football had recognised its financial issues a lot earlier, then it could have done something about it, and been prepared to deal with the current crisis.

"The pandemic would have still caused issues, but the impact could have been lessened if football had started to tackle its financial dependence on TV money and looked into how the sport has been financed.”

February/March 2021

Top 32 sustainable businesses to look out for in 2021 Business Leader Magazine has put together a list of 32 individuals and their businesses that are set to lead the UK into the future.

HOW HAVE THE TOP 32 BEEN CHOSEN?

Whether they are already established or are a disruptive entity – over the next 12 months, these are the names to look out for to lead the ‘green revolution’.

The men and women listed below have been suggested by our readers, however, if you feel there are other individuals that are deserving, please email editor@businessleader.co.uk, and they will be included in the digital version of the list on www.businessleader.co.uk.

This list is in no particular order.

TOP 32

ELECTRON ◂ Jo-Jo Hubbard & Paul Ellis Electron was founded in 2015 on the belief that energy systems of the future would need digitally optimised marketplaces, rather than large scale new generation capacity, in order to deliver net zero in a cost efficient and resilient way. By combining the founders’ knowledge of energy markets and experience in building digital trading platforms, Electron set out to meet this requirement, working collaboratively with existing and emerging market participants to create the first digital energy marketplace.

ETR STEVEN DARRAH The insurance provider for new businesses and start-ups is the country’s only carbon positive insurance company. ETR uses data analytics to update insurance in real-time and plants a tree for every policy issued. In the next 12 months ETR aims to plant 2,500 trees from a combination of policy sales and staff contributions. If this goal is achieved, this will mean the company will have contributed towards the offset of 3,645 tonnes of CO2. This is the equivalent of 10,625 sqm of sea ice, over 9,000,000 miles driven in a car and 2500 long haul flights.

LUSH MARK CONSTANTINE The handmade cosmetics brand, that is an ever-present store in shopping districts across the UK, has long been a pioneer of the ‘green revolution’.

Whether it is the oils they use, the packaging for the products, the origin of the raw materials, how they manage water waste or the way the company recycles, they have led the way in sustainability in their sector.

BAXI HEATING KAREN BOSWELL OBE The boiler manufacturer has promised to revolutionise the way we heat our homes and buildings. Boswell, the recently appointed Managing Director, has committed to a portfolio of cleaner, greener products, that will work with low carbon fuels by 2025, either directly such as hydrogen boilers, heat pumps, smart electric water heating and heat networks or hydrogen ready boilers than can be converted after installation. Heating is responsible for 37% of the UK’s total contribution to greenhouse gases today. To tackle that figure and decarbonise existing homes by 2050, all new heating installations must be low carbon by 2035.

VIVOBAREFOOT GALAHAD & ASHER CLARK Founded in 2012 by two seventh-generation cobblers, Galahad and Asher Clark, Vivobarefoot is based on one simple insight - barefoot footwear is sustainable footwear.

As well as having ‘green’ at the heart of their own products, which are made from natural, biosynthetic, and recycled material products of super minimalist design – the company also runs ReVivo, the world's first eCommerce marketplace for refurbished and repaired barefoot shoes.

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February/March 2021

SUSTAINABLE BUSINESSES

CIRCULAR COMPUTING SCOTT MAC MEEKIN Circular Computing gives businesses and individuals an easy way of buying leading brand, sustainable, carbon-neutral, enterprise-grade laptops. Extending the product life of corporate IT is an easy way for large business to improve corporate sustainability, be socially responsible, improve their bottom line and aid the transition to a circular economy. Rather than using raw materials to build a laptop, they remanufacture them from scratch after disassembling, repairing, and upgrading existing parts.

PYTCH ◂ JOHNNY PALMER An events company with an innovative and sustainable proposition, founder and MD Palmer has looked to turn his industry – known for being one of the worst offending for sustainability – into the way forward. Whether it is its Warleigh Water Project, Sewage Free Swimmers programme, SolCell or Intelligo – the company is looking at changing the future of the events industry. Events cause massive issues with carbon emissions and with Intelligo, they have developed an impressive platform that can reduce travel to events.

LETTUS GROW BEN CROWTHER, CHARLIE GUY & JACK FARMER LettUs Grow was founded in 2015 to tackle some of the greatest challenges facing the world today.

Its novel technology represents a step-change for indoor farms as they design modular, aeroponic irrigation and intelligent control technology to improve the efficiency, sustainability, and ROI of indoor farming. The systems are nozzle-free, easy to clean, completely automatable and can be run without the need for pesticides.

Cont. 

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TOP 32

VEGWARE JOE FRANKEL Exponentially growing Scottish firm, Vegware, has been manufacturing eco-friendly containers and kitchen products since 2006. All its products are made from plants using renewable, lower carbon, recycled or reclaimed materials – and are commercially compostable with food waste. The company now has a product range of more than 300 items and is distributing to more than 70 countries – last year they achieved a turnover of £45.9m.

UNPACKAGED CATHERINE CONWAY

ZPN ENERGY LIMITED ▴ IAN STILLIE ZPN is a fast-growing EnTech provider that designs, develops, and produces infrastructure technologies to win the fight against climate change. It has developed innovative smart green energy solutions for a variety of applications, including ultra-rapid chargers for electric vehicles. ZPN owns a unique intellectual property portfolio within its integrated energy management systems. The technology utilises a disruptive approach, turning the standard grid into a ‘Smart Grid’ by making use of Internet of Things (IoT) and machine learning to integrate data and physical assets.

At Unpackaged, they helped pioneer the zero-waste retail business model, which is now a global trend. The firm has developed a self-service weighing scale, where people can bring their own Tupperware to the store and fill up on their daily food items and ingredients with. They also can provide re-useable jars/tubs, if needed. This eco-initiative began in the South West but has become popular across London.

BAMBINO MIO JO & GUY SCHANSCHIEFF One of the top 25 fastest growing companies in the UK, Bambino Mio was founded in 1997 by the husband and wife team and creates stylish and affordable reusable baby products. The company has now expanded internationally, is stocked in supermarkets across the UK and is a popular seller on Amazon.

The firm manufactures the products responsibly and their range are designed to last – and are part of the company’s three pillars – reduce, reuse, repurpose.

CLARITY ENVIRONMENTAL DAVID HONCOOP Founded in 2002 by Managing Director Honcoop, whose family heritage was in the waste and recycling industry, has grown the business to become one of the UK’s fastest growing companies.

The company initially traded in packaging recovery notes, the evidence of recycling needed by packaging producers to comply with regulations, but has expanded its operations and now offers environmental compliance schemes, scrap battery collection and converting waste into fuel programmes.

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OLIO ▴ TESSA CLARKE & SAASHA CELESTIAL-ONE OLIO connects neighbours with each other and with local businesses so surplus food can be shared, not thrown away.

This could be food nearing its sell-by date in local stores, spare home-grown vegetables, bread from your baker, or the groceries in your fridge when you go away. For your convenience, OLIO can also be used for non-food household items too. To make an item available, simply open their app, add a photo, description, and when and where the item is available for pick-up.

February/March 2021

SUSTAINABLE BUSINESSES

ECOSIA ▴ CHRISTIAN KROLL & SOPHIE DEMBINSKI ‘The search engine that plants trees’ is the world’s leading green alternative to Google. Ecosia uses the ad revenue from peoples searches to help sustainable causes across the world.

The firm donates 80% of its profits to non-profits that help tackle deforestation. At the end of 2020, the company had 15 million active users and had planted more than 118 million trees, with aims of increasing.

TOAST ◂ ROBERT WILSON This innovative brewery uses surplus bread to replace the virgin barley in the process of making beers. So far, more than 1.9 million pieces of bread have been saved from waste – reducing the demand for land, water, and energy, as well as avoiding extra carbon emissions in the process of creating their range of drinks.

So far, more than 42 tons of C02 emissions have been saved.

The company also donates all of its profits to charity.

Cont. 

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TOP 32

CHIP[S] BOARD ◂ ROWAN MINKLEY & ROBERT NICOLL Chip[s] Board is dedicated to developing food waste into bio-plastics and bio-plastic composites for the ever-changing design sectors however, their items are completely bio-degradable and recyclable.

The company was founded around the values of a circular economy, combining research and innovation to maximise the abundant resources not currently being utilised and improve the well-being of the planet.

MOCEAN ENERGY CHRIS RETZLER & CAMERON MCNATT At the forefront of global wave energy, Mocean Energy leads the drive to accelerate the essential transition to secure the world's renewable energy supply. The firm combines scientific principles with real-world experience to deliver new technologies which can harness the power of waves. They developed Blue Horizon, designed to generate grid-scale electricity, and Blue Star, a smaller machine which will power a range of subsea equipment, inspection, and maintenance systems.

PAVEGEN ◂ LAURENCE KEMBALL-COOK Founded in 2009, Pavegen’s technology converts footsteps into electricity through its innovative technology. The company has expanded into more than 30 countries around the world and recently Pavegen installations included smart city developments, retail destinations, sports stadiums and educational institutions in Hong Kong, India, Korea, Thailand, UAE, America, and the UK. So far, the company has completed more than 200 projects for firms such as BNP Paribas, Siemens, and Transport for London (TfL).

WE ARE TALA ▸ Grace Beverley TALA is a leader in the ‘slow-fashion approach’, and specializes in affordable gym wear that is sustainable and vegan-friendly. Beverley originally created vegan and environmentally-friendly resistance brands, which became very popular with health enthusiasts - so they expanded their product range. All clothes are resourced from 92% recycled materials. Beverley started as a fitness ‘YouTuber’, so has a loyal millennial and Gen-Z customer base.

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February/March 2021

SUSTAINABLE BUSINESSES

SKIPPING ROCKS LAB/NOTPLA

BULB

RODRIGO GARCIA GONZALEZ

▴ HAYDEN WOOD & AMIT GUDKA

As the world looks for plastic alternatives, one of the brands leading the way is Notpla - a packaging solutions firm that manufactures a material made from seaweed and plants that biodegrades a few weeks after use. After their first product Ooho went viral in 2013, they joined Climate KIC, Europe’s largest funded accelerator focused on climate innovation. In 2017, they raised their first round on Crowdcube, which helped grow the business, and set up a manufacturing hub in London.

Bulb is the UK's biggest green energy supplier, and it supplies its members with 100% renewable electricity. For every unit that customers use, they make sure a unit is produced and put on the grid by a renewable source including solar, wind and hydro.

Their gas is 100% carbon neutral and they offset the emissions from the gas they supply by supporting carbon reduction projects around the world. Bulb are also the biggest buyer of green gas for homes in the UK. Cont. 

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TOP 32

CHILLY'S BOTTLES ▸ JAMES BUTTERFIELD & TIM BOUSCARLE The reusable water bottle firm has become a prominent leader of the sustainable revolution in recent years and has consistently been recognised as one of the fastest growing companies in the UK. Founded in 2010 with the aim of providing people with the ability to always have cold water on-the-go, without having to buy single-use plastic water bottles.

The result was the Chilly’s Bottle. A modern and stylish product designed to combine the convenience of a plastic water bottle, with the high-performance technology and eco-friendly benefits of a traditional flask. They have now expanded the range to include a wider selection of reusable products.

KABLOOM Darren Wilson At Kabloom, they manufacture innovative and environmentally-friendly products that help transform disused urban districts into green areas. Wilson designed ‘Seedbombs’, which are grenade-shaped flower seed ‘bombs’ that can easily grow. Through this fun alternative to city gardening, cityscapes can now be reclaimed by local wildlife and insects. The firm has become increasingly popular and has expanded its product range to help certain animals and environments across the UK.

LYLIE’S ◂ Eliza Walter The sustainable jeweller creates high-end products that are crafted from salvaged gold and silver, recycled from electronic waste, dental waste, and the company's in-house scrap exchange. Walter was classically trained as a goldsmith, and has used that experience to help drive change in her industry. Lylie's uses the same craftspeople that help create some of the UK's leading jewellery.

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February/March 2021

SUSTAINABLE BUSINESSES

ONEPLANETCAPITAL ◂ MATTHEW JELLICOE & ED STEVENS The recently founded sustainably driven investment house has launched a specialist sustainability EIS Fund to invest in businesses tackling climate change. The OnePlanetCapital fund is broad-based and targets investments that will have a positive environmental impact, aiming to deliver market rate returns and support the emerging green economy. It will focus on three interrelated areas; climate change, the environment and consumer sustainability.

H2GO POWER Dr Enass Abo-Hamed H2GO Power is a pioneering cleantech company that develops and delivers hydrogen energy storage technology for zero-emission, safe and reliable power supply, within a range of commercial applications.

Their tech revolves around its patent-pending reactor that works by storing hydrogen in solid-state with the release of hydrogen on-demand.

The firm is set to launch its crowdfunding campaign on Crowdcube imminently.

RIPPLE ENERGY ◂ Sarah Merrick Ripple is a clean energy ownership platform. It enables people to part own large scale wind farms and solar parks and have the low cost, green electricity they produce supplied to their home, via the grid by Ripple’s supply partners. Ripple has partnered with Co-op Energy, powered by Octopus Energy for its first wind farm. Part-owning a wind farm is around 65% cheaper than rooftop solar panels and can reduce electricity bills by around 25% over the wind farm’s lifetime.

MY ENERGI ▸ Jordan Brompton & Lee Sutton My Energi is an award-winning designer and manufacturer of renewable energy products that increase the self-consumption of green energy. The firm supply tens of thousands of homes and businesses globally with renewable energy products and smart devices. They not only support the National Grid, but give the user the power to control a building’s flow of energy. Products include EV chargers, solar power converters and energy harvesting wireless sensors.

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TOP 32

SUSTAINABLE BUSINESSES

MACREBUR ▴ TOBY MCCARTNEY (CENTRE) MacRebur’s mission is to help solve the waste plastic epidemic and the poor quality of roads people drive on around the world today. The firm's innovative solution involves processing waste plastics destined for landfill or incineration and adding them into asphalt for road construction and surfacing, to extend and enhance the bitumen (fossil fuel) binder. After years of tests and trials all over the world, MacRebur now promote three waste plastic additives into asphalt.

SMALL ROBOT COMPANY ▴ BEN SCOTT-ROBINSON & SAM WATSON-JONES Small Robot Company is reimagining farming with robotics and artificial intelligence. The company's farmbots - named Tom, Dick, and Harry - will plant, feed, and weed arable crops autonomously, with minimal waste. Today’s farm machinery has been designed to be as fast as possible. The farm machinery of the future will be designed to be as accurate as possible. With small robots, farmers need 90% less energy to establish crop.

SUNSWAP ◂ MICHAEL LOWE, ANDREW SUCIS & NIKOLAI TAUBER Sunswap is developing zero-emission transport refrigeration technology that uses solar power and adaptive battery capacity to provide a clean and costcompetitive solution. Co-founded by a team with a passion for developing innovative technology to solve realworld problems, the Sunswap team are specialists in deploying zero-emission products in the cold chain, and are at the forefront of creating the next generation of transport refrigeration.

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February/March 2021

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REPORT

Retail report:

'The high street still has cultural importance in the UK' A glimmer of hope for the retail sector?

The high street was facing an uncertain future prior to the pandemic and with many retail firms struggling to survive, Business Leader looks at what the future will hold for the sector?

According to the Centre for Retail Research, almost 180,000 jobs were lost in retail last year due to the pandemic, a 25% increase on the previous year – and they have predicted that more than 200,000 positions are at risk in 2021.

However, is there any shred of hope for recovery for the high street?

A CHALLENGING TIME It is no secret that many retailers are staring over the precipice when they look at what is ahead of them. Despite attempts to try and soften the series of major blows

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they have faced in recent months, a third lockdown has again increased the frantic desperation to stay in business.

Martin Bysh, Founder at Huboo, comments: “We've started the year in lockdown and so high street retailers are facing the same three big challenges they did last year - the inability to open their shops, scared consumers staying away and a growth in understanding about how eCommerce works and the benefits it offers. All of these factors result in far less purchasing on the high street and, at this current moment, there is no definitive enddate to this situation, or any confirmation that it won't happen again in the future.”

The ever-present uncertainty hanging over the retail industry, and wider UK, has not helped facilitate a possible turnaround – and has even accentuated the challenges the industry was already facing.

▲ Martin Bysh Huboo

David Fox, Co-head of Retail Agency at Colliers International, said: “Simply surviving is the biggest challenge for

February/March 2021

RETAIL

"THE DEPENDENCE OF SO MUCH HIGH STREET RETAIL ON CASUAL FOOTFALL WAS REVEALED DURING LOCKDOWN. BUT WITH MANY OF THE TRADITIONAL RETAILERS THEIR INABILITY TO ADAPT RAPIDLY WAS THE BIGGEST REALISATION." Gordon Fletcher

retailers, as the pandemic has brought into sharp focus the existential factors affecting the sector – over supply of property, high fixed costs (rent/ rates/service charge), changes in consumer behaviour, under investment in eCommerce, failure to plan for the changes that were already in transit, and a tendency to operate with a high level of debt.

be light at the end of the tunnel.

Gordon Fletcher, Director of Business at Salford Business School, said: “The dependence of so much high street retail on casual footfall was revealed during lockdown. But with many of the traditional retailers, their inability to adapt rapidly was the biggest realisation. While small and independent retailers found

“The ability to operate in an environment of rolling lockdowns and tiering presents a continued challenge. The real need for retailers is to control costs in the face of all the above challenges with occupiers, landlords and the government working together to reach agreements on rent deferments, business rates and changes in the leasing model with a greater emphasis on turnover rents.”

However, with news of the three vaccines being distributed across the UK, there may

"THE ABILITY TO OPERATE IN AN ENVIRONMENT OF ROLLING LOCKDOWNS AND TIERING PRESENTS A CONTINUED CHALLENGE. THE REAL NEED FOR RETAILERS IS TO CONTROL COSTS." David Fox

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innovative and creative ways to continue to trade, the bigger retailers did very little.

While the independents had to ‘pivot’ to continue to trade with, for example, home deliveries, pop-up shops or even moving into entirely new areas, many of the bigger brands unsuccessfully relied on their bricks and mortar history and a misplaced sense of presumed customer loyalty.

“Therefore, rebuilding consumer confidence in high street retail as an alternative to online – with lockdown and social-distancing the tables have been turned that much. The overall high street also needs to be an attractive offer. As the vaccination programme has impact and people can move about more freely again, the appeal of the high street will be weighed more critically against leisure and entertainment destinations.”

Cont. 

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REPORT IS A RECOVERY POSSIBLE? With restrictions hopefully being eased in the months ahead, retailers will need to plan for the return of customers to the high street.

Andrew Martin, global retail design specialist, comments: “The high street will change and of course it will recover.

Market towns and village-like areas of London will thrive in the future. Why this will happen is because social interaction and interaction with goods is part of human nature and the high street has been culturally important in the country for this purpose. This will not go away but will have to evolve to provide the services and environments that are now required, enjoyable and life enhancing.”

online brings, so it's unlikely that all 'in store' shoppers will return.

“It's also more affordable for retailers to transact online, and so when budgets are challenging it makes sense for retailers to focus online more. The savviest retailers with suitable products will treat the high street as a loss leader and use their high street space as a showroom – the Apple model.”

However, Bysh believes that it will need to evolve to be relevant to the modern consumer. He said: "It will recover to some extent, but it will never be what it was.

"The high street has always depended on a large cohort of consumers shopping in stores; the pandemic has changed this and has resulted in consumers who had never shopped online before doing so and realising the convenience and benefits

▲ Ed Bradley Virtualstock

Prior to the outbreak, empty high street units were a hot topic of debate. With high rent costs and retailers collapsing across the country – debates raged on regarding whether rates should be reduced or that they should be turned into much-needed housing. This will impact on the hopeful recovery of both sectors.

Ed Bradley, Founder and Director of Virtualstock, comments: “The high street will never quite be the same again and the government has proposed legislation to allow entire high streets and town centres to be converted into housing. Whilst it will certainly take a different form, it would be wrong to say high streets will disappear altogether. One of the most interesting trends throughout the pandemic has been local high streets in suburban areas enjoying a renaissance as people worked from home, rediscovered their local high streets and wanted to support shops in their neighbourhoods.

“High streets will continue to exist in some form, and, like retailers, they will have to reinvent themselves to remain relevant. Consumers crave convenience and product choice, and high streets will have to give consumers a reason to visit. They will need to attract successful multichannel retailers who use their physical shops to curate an experience and also support their online operations.”

THE ROLE OF AMAZON

Aside from the well-established challenges and the uncertain future the industry was already facing – perhaps the largest obstacle that many retailers of all sizes face, is the relentless and exponentially growing competitor of the world’s largest eCommerce platform, Amazon.

"THE HIGH STREET WILL NEVER QUITE BE THE SAME AGAIN AND THE GOVERNMENT HAS PROPOSED LEGISLATION TO ALLOW ENTIRE HIGH STREETS AND TOWN CENTRES TO BE CONVERTED INTO HOUSING. WHILST IT WILL CERTAINLY TAKE A DIFFERENT FORM, IT WOULD BE WRONG TO SAY HIGH STREETS WILL DISAPPEAR ALTOGETHER." Ed Bradley

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February/March 2021

RETAIL

"THE HIGH STREET HASN'T LOST ITS STATUS AS A DESTINATION, BUT CONSUMERS' PANDEMICINDUCED DESIRES TO ‘GET IN AND GET OUT’ QUICKLY WILL HAVE TO BE INDULGED BY TECHASSISTED, CONVENIENCE-ORIENTED PURCHASE EXPERIENCES." Melissa Minkow

Having already announced that they are now looking at having their own bricks and mortar stores in high streets across the country, and are moving into other sectors (such as groceries and pharmaceuticals) to increase their influence – retailers need to evolve to deal with what Amazon plans on doing in the future.

a considered purchase it doesn’t work.

I expect we will see Amazon on the high street in some form, also backing up other physical retailers with the use of their technology and infrastructure. I can’t see them going anywhere anytime soon, but like all of the retail industry they will also have to evolve.”

Fox comments: “It is already known that they are out buying property for various concepts, so in one way they will become more visual. Amazon is in a unique position, where they generate so much cash that the business can innovate.

The challenge to the competition is being flexible enough to innovate without the same level of resource, one of the greatest barriers to which will be indebtedness and an expectation to show growth and generate dividends for shareholders.”

A TECH-FOCUSED FUTURE?

Martin believes that the experiential offering that high street stores can provide is the key to successfully co-existing: “Amazon is a big part of most people’s shopping habits. It has the technology and infrastructure that delivers what customers want and are becoming to expect. However, it is not personal or informative, it offers no brand insight and doesn’t offer an enjoyable experience.

This is fine if you are buying batteries etc, but for anything more life enhancing or

Much like the advancement Amazon has provided as a ‘Big Tech’ firm – almost every industry is in the midst of the ‘Fourth Industrial Revolution’. Therefore, the need for the high street to adapt in order to survive – and potentially thrive – will be driven by implementing the latest innovation.

As a result, technology will sit at the forefront of every customer-facing industry.

Therefore, high street retailers will need to utilise the latest tools at their disposal, to work together, provide an experience and reaffirm their position as the centre of communities.

Fletcher comments: “The hybrid role of the high street retailer is one that is appealing.

The idea that you visit a high street shop as the showcase which only stocks one item of everything, and you can then customise that item with a salesperson.

The highly personalised is then produced

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on demand and rapidly delivered to your home. This model already exists in new car showrooms, so extending it to other consumer items is a logical progression for the high street. Technologies that help different businesses on a high street work together to make the consumers experience join up will also play a role in the future. Collaboration between businesses will make the high street offering more compelling and more of an experience than a chore.”

Melissa Minkow, Retail Industry Lead at CI&T, concludes: “The future of the high street lies in connected retail approaches, where physical stores complement an online offering, versus the other way around. Now that consumers are more comfortable ordering online and picking up in person, many brick and mortar stores would serve best as micro-fulfilment centres or appointment-only platforms centring the customer service experience.

“This year could also see smaller format, and/or humanless stores on high street as retailers shapeshift to maintain their iconic presence in relevant ways. The high street hasn't lost its status as a destination, but consumers' pandemic-induced desires to ‘get in and get out’ quickly will have to be indulged by tech-assisted, convenienceoriented purchase experiences.”

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FEATURE

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February/March 2021

BACK TO WORK

‘It’s unlikely that we will see all employees returning to the workplace' Business Leader looks at what impact the COVID-19 vaccine will have on whether many of us return to the office.

The government’s plans to set out a structured delivery plan of the vaccine seems – at the time of writing – to be going OK but will it bring back some normality to the workplace or is homeworking and hybrid working here to stay?

MANDATORY VACCINATIONS Aside from the logistical issues that immunising an entire nation can bring, there are the social issues that can arise from a vaccination. Ever since the initial lockdown, there has been a vocal minority against restrictions and they have opposed the thought of being forced to take a vaccination. As government, companies and the public continue to debate this, what do business owners believe is the right way to go? Could mandatory vaccines be enforced to ensure an orderly return to the office?

Founder of Pimlico Plumbers, Charlie Mullins OBE has been vocal about his support the vaccination – coining the phrase ‘no jab, no job’. He comments: “Personally I think anyone who doesn’t have the vaccine is mad. I would also be a fan of businesses being allowed to make having a vaccine written into employment contracts. If for no other reason than from a health and safety point of view.

“I’m not sure however, if we want to be the kind of society where we force business owners to make staff have a vaccine. Again, speaking personally, I’m all for getting as close to 100% of staff vaccinated and would pay staff while they went to get the jab,

Business Leader - Inspire • Inform • Connect

and will be looking at making vaccinations available free of charge for staff, once they are freely available.”

In this unprecedented legal and employment issue, what can employers really do?

Laura Kearsley, Partner and solicitor specialising in employment at Nelsons, comments: “While an employer can’t compel employees to be vaccinated if they do not wish to be so, we’d advise our clients to encourage their employees to get vaccinated by ensuring staff have access to reliable information about the vaccine, so they’re able to make an informed choice, and even to allow paid time off for vaccination appointments.

“However, it may be within the business owner’s rights, depending on the circumstances, to take action if an employee is not going to be vaccinated and they think there are good reasons why they should be. For example, this would particularly apply to those working in healthcare or care home settings. In some circumstances, employees could in fact be dismissed for refusing the vaccination if it means they will present a threat to themselves, patients or service users.”

EMPLOYEE REFUSAL

With the debate on the legal and ethical ramifications of a mandatory vaccination set to rumble on, what can an employer do if an employee refuses?

Cont. 

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FEATURE

▲ Charlie Mullins OBE Pimlico Plumbers

▲ Laura Kearsley Nelsons

▲ Lucy Gordon Walker Morris

Lucy Gordon, Director in the Employment Team at law firm, Walker Morris, comments: “If an employee refused consent for a vaccination, the employer would need to decide whether it was reasonable, in the circumstances, to take disciplinary action.

This would depend on the reasons given for the refusal and the employer’s justification for requiring vaccination in the first place.

“A further potential for discord would be employees refusing to work with non-vaccinated colleagues if they themselves are unable to be vaccinated. Employers would need to bear in mind the competing interests of employees and consider whether alternatives, such as changing either or both employees’ duties or work stations, could resolve any disputes.

“It is likely to be far safer and less contentious for employers to promote take up of vaccines rather than to enforce roll-out, just as the government will be doing. Employers should be mindful of different viewpoints and take positive action to encourage reliable, fact-based information being given to employees.

Employers could consider inviting in healthcare specialists to answer employees’ questions to allay any concerns.”

WILL WE HEAD BACK TO THE OFFICE FULL-TIME? Once the government allows business to resume to something resembling pre-COVID times, business leaders will need to decide how to proceed and what working model they will go forward with.

At Pimlico, staff members will be returning to the office. Mullins comments: “Everyone here will be returning to work. I can’t speak for the entire business community, but at Pimlico we have worked through two lockdowns and continue to have all hands on deck in the office, with the obvious exceptions for people who have medical reasons to shield.

“As far as what will happen elsewhere; I suspect that the return will be much bigger than many are making out. Working from home is overrated and once some colleagues come back people will start to crave the company and comradery. And if that doesn’t work, I think people will want to be seen to be working and doing a good job, and it’s hard to get noticed and promoted when you’re out of sight.”

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"WHILE AN EMPLOYER CAN’T COMPEL EMPLOYEES TO BE VACCINATED IF THEY DO NOT WISH TO BE SO, WE’D ADVISE OUR CLIENTS TO ENCOURAGE THEIR EMPLOYEES TO GET VACCINATED BY ENSURING STAFF HAVE ACCESS TO RELIABLE INFORMATION ABOUT THE VACCINE." Laura Kearsley

However, Alistair Dornan, Director of Organisational Wellbeing at Gallagher, disagrees. He said: “It’s unlikely that we will see all employees returning to the workplace. Our ongoing research and analysis indicates the connection between work and an employer funded workplace has shifted permanently. This trend pre-dates COVID-19 – for many, work became something you did, and not somewhere you go, a long time before we reached the current situation.

“This trend has accelerated over the last 9-12 months and we are seeing the rise of the borderless workforce. Working outside of the traditional physical workspace, employees have remained productive, contributing positively to business objectives and with increased flexibility in terms of delivery, location, working hours, and delivery format.

“Whilst it’s realistic to expect the physical workplace to remain, it will continue to evolve and at an accelerated place, becoming a place that fosters creativity and connection, drives learning and

February/March 2021

BACK TO WORK

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ARE WE ALL ZOOMED OUT?

With no one-size-fits-all plan for the return to normal for businesses, many may choose to remain as they currently are, by improving on the current remote working plans that are in place. And that means the continuation of video conferencing and remote working.

Mullins comments: “I don’t see working from home as being particularly progressive. Businesses are called companies for a reason. They are about combined human endeavour, and you don’t get that from having 100 people at 100 kitchen tables and bedrooms.

Cont. 

Business Leader - Inspire • Inform • Connect

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FEATURE

BACK TO WORK

A ZOOM CALL WILL NEVER TAKE THE PLACE OF REAL HUMAN INTERACTION. JUST ASK THE PEOPLE WHO ARE ON ZOOM CALLS 12 HOURS A DAY WHAT THEY THINK OF THEIR WORK LIVES. I FELL WE’RE ALL DEFINITELY ZOOMED OUT!” Charlie Mullins OBE

▲ Alistair Dornan Gallagher

▲ Kate Palmer Peninsula

"We had the technology to work from home before COVID-19, and for some, it was obviously attractive. For the rest of us, the majority, it was handy to be mobile on occasion, but never really caught on. It’s hard to see what has changed. It was good for some before COVID-19 and it’ll be mostly the same people working from home post-COVID. “A Zoom call will never take the place of real human interaction.

Just ask the people who are on Zoom calls 12 hours a day what they think of their work lives. I fell we’re all definitely 'Zoomed out!'”

However, with the aforementioned complications still surrounding the implementation of a vaccine hanging over the UK – what does this mean for those that do return to the office in the longer-term.

Kate Palmer, HR Advice and Consultancy Director at Peninsula, said: “It may be a long time before social distancing rules are entirely gone so communications may have to continue via Zoom, or other platforms, especially for large meetings. When these COVID-secure restrictions are eventually gone though, video calling platforms may face a decline in interest, but demand will probably never die out. This is because Zoom and other similar platforms offer possibilities that employers will want to keep taking advantage of post-pandemic, such as conducting longdistance business.”

So, even though business leaders and employees may be feeling ‘zoomed out’, it is likely that tech platforms like it are here to stay but in the context of also embracing the traditional office environment.

"IT MAY BE A LONG TIME BEFORE SOCIAL DISTANCING RULES ARE ENTIRELY GONE SO COMMUNICATIONS MAY HAVE TO CONTINUE VIA ZOOM, OR OTHER PLATFORMS, ESPECIALLY FOR LARGE MEETINGS." Kate Palmer

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Dornan concludes: “Tech platforms cater for a broad demographic and, while some may tell us they are ‘Zoomed out’, the reality is that we are hard-wired to evolve and adapt to change. The rapid pace of digitisation may have accelerated faster in the current pandemic environment, however, it is part of a broader transformation that has been underway for several decades.

Ultimately, irrespective of the waves of innovation and change, the fundamentals of work remain – physical presence, and the desire to interact in person.

“Enabling communication will always be a human need, a priority for almost any of our environments, and whether we are ‘Zoomed out’ is immaterial. We have to adapt to new ways of working, just as we did with mobile cell phones, email or the telegram.” 

February/March 2021

ADVERTORIAL

Why fast growth calls for forward-thinking fulfilment

By Martin Bysh, CEO of fulfilment technology provider Huboo

2020 was a polarising year for our business community. Thousands of businesses were sadly forced to close their doors for good while many thousands of others saw record growth levels, particularly those digital-first D2C brands able to reap the rewards of the eCommerce explosion.

Indeed, the year ahead also looks to be filled with growth opportunities for agile D2C businesses. And with the broader economic background still deeply uncertain, it makes sense for these companies to pursue a rapid expansion/ diversification strategy that helps mitigate risk and provide more sustainable growth.

But what happens when a trickle in demand suddenly becomes a surge, as we saw so often in 2020?

▲ Martin Bysh CEO, Huboo

A young D2C brand with a great product, a winning brand and a slick sales and marketing operation can still undo its good work if it neglects to consider how to meet increased demand when it arrives.

It all comes down to fulfilment, something which isn’t usually top of mind for most entrepreneurs – and with good reason. Until recently, few third party fulfilment providers would cater for startups, leaving new business owners with no choice but to go it alone.

Times may have changed, but the message hasn’t fully permeated the entrepreneurial community, and hence fulfilment tends to slip down the priority list in favour of growth and building out the organisation.

However, by the time a business is shipping 30-40 product units per day, it’s an issue that HAS to be put back on the agenda. Failure to enact a fulfilment strategy at this stage will mean a world of pain once demand surges and no doubt loss of customers through poor service and delivery.

Not only that, but for a small business juggling multiple priorities, fulfilment really is a thankless task. One which makes sense to outsource to a trusted partner as early as possible. And, of course, you need a partner that won’t treat you as second-rate when you’re small, and that is capable of scaling with you as you grow.

Average Customer Rating: 5/5

At Huboo we’ve been engaged by some savvy entrepreneurs before they’ve even shipped their first product. Equally, we’ve received our fair share of 11th hour emergency calls from business leaders scrabbling for a partner as they drown in incoming orders. So whichever fulfilment partner you opt for, remember, the time to decide is now, before demand overtakes you.

For more information on the services Huboo can offer you, Call 01722 444 025 or Email info@huboo.co.uk

www.huboo.co.uk

ADVERTORIAL

VETERANS ARE AN UNTAPPED WORKFORCE And hiring them just got even easier 2020 taught us to adapt fast. Tested our resilience. And proved that even armed with the strongest strategy, plans and tools, we can’t always have the tightest grip on our business.

Now think about how that highpressured environment morphed us into better leaders. How it sharpened skills we never even knew were in our repertoire.

Welcome to a day in the life of being in the Military. Constantly troubleshooting, upskilling and learning under intense conditions. Serving in the UK Armed Forces can shape a person beyond certified courses and impressive job titles.

But, what happens after? Once Military life ends and civilian life begins? Those same skills, whether they were stationed on the front line or in the finance department, never disappear. They are transferable and can be applied to a multitude of roles, business models and environments – which can strengthen the infrastructure and promote diversity of any workforce.

HIRING VETERANS

The companies that recognise these highly sought-after qualities within the Ex-Military community were some of the first to sign up with JobOppO.

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JobOppO is a recruitment platform which caters exclusively to serviceleavers, connecting vetted Ex-Military candidates to roles that crave their unique skill set.

JobOppO founder and former RAF Medic and language specialist, Kayam Iqbal, says the business grew out of a desire to better support the community.

He says: “There is a common misconception that veterans are somewhat vulnerable and wounded.

But, I want people to know just how strong and valuable we are to any organisation.

“We can be dropped into a role or a position, and diversify, acclimatise, and adapt so quickly. That is stuff that is absolutely unique, that the Military have really taught us to do well.”

His business model is the first of its kind, with a lifetime open-door policy for all veterans no matter when they served - taking the talent pool from tens of thousands of yearly leavers to hundreds of thousands. With a focus on developing further employment support for all candidates and signing up like-minded businesses, he explains his two-fold approach to ExMilitary recruitment.

“Firstly, it’s a closed community for all veterans, no matter when they left. Each candidate’s background is verified before they can start applying for the roles we list. The second thing for us is that our corporate clients are supportive of the Armed Forces.”

Early adopters of the platform include major retailer Iceland, soft drinks producer Britvic and fast food giant KFC – to name a few.

February/March 2021

RECRUITMENT Helen Tindle, HR Director at Iceland, says: “We wanted to make a partnership that didn’t push us into any corners, but exposed opportunities we had directly to Military leaders. We chose JobOppO as our only partner in this area.”

HIGH-CALIBRE CANDIDATES

“We encourage our colleagues to bring their personalities to work with them. And we find that Ex-Military people are really comfortable and confident in doing that and they bring a great work ethic.”

10%

of all JobOppO profits support The OppO Foundation a non-profit charity which supports the Ex-Military community in all aspects of Civilian life from housing to health and wellbeing.

27+ 15,230 sectors are currently listed on JobOppO

people left the Armed Forces in 2019*

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Different job roles within the British Army alone.

Take Louise Pugsley, former RAF paramedic. After serving for 12 years and working as part of the Medical Emergency Response Team (MERT) in Afghanistan back in 2011, she says her background gave her confidence and indescribable life lessons.

“In job interviews when I’m asked to give an example of a difficult or stressful situation I say, there is no bigger stress than being on the back of a helicopter, flying over a desert to reach someone on the front line who needs their leg putting back together.”

She’s signed up to JobOppO to find her next role, which aligns with the next chapter of her life.

“I’ve been asked, how can you go from treating major trauma to working in an office? It may seem like a drastic change, but for me, I’ve been there and I’ve done that and I want to try something new.”

Want to hire from our unique pool of Ex-Military candidates?

Telephone: 0333 242 3857 Business Leader - Inspire • Inform • Connect

Sign up at: www.joboppo.co.uk/clients 55

REVIEW

Bullish or Bearish?

What are the investor trends you should be aware of in 2021?

2020 was a blockbuster year for the stock markets across the world, and with the news of Biden becoming the US president and with a vaccine being distributed across the country – what does 2021 have in store for investors?

Business Leader investigates.

Business Leader recently spoke with Alpesh Patel OBE, a noted authority on investing, to talk about the fundamentals of a sound investment strategy, and the impact of major, global announcements on investor decision making.

Patel revealed: “A lot of private investors and business owners do it the wrong way – they end up looking towards some journalists for a guide of where to invest and often fund managers, but I don’t think this is always a prudent approach as there is ample research to show that they cannot out-perform an index.

“What I would do is look for companies with good valuations, different styles, good revenue growth, consistent cash flow growth and a higher-than-average return track record – with low volatility around their market. Many investors ask – where can you find that sort of information?

There are a lot of free tools out there on the internet. I hold 15 stocks for 12 months and then I review them, and I believe this is a good straetgy. There is no point constantly reviewing – and more investors should be doing it this way.”

Regarding the recent news of Biden’s

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victory and the vaccine had on the stock markets, Patel said: “Well if you look at the American markets – they are at all-time highs – which is incredible! But then you look at the earnings and the profitability’s of the underlying companies – not just the large companies like Microsoft, Apple, and Alphabet – but a broader spectrum of the market, there are massive parts of the market that are suffering.

“We actually saw was a fall in March from February – but since then you have seen a 100% return since the end of March in these huge organisations. There is an old saying about the markets that elephants don’t dance – in other words, big companies are not supposed to give you those returns – but it has been a very exciting time. It just shows that your money has been working hard for you since the end of March to get those returns.”

So, is it worth investing around a major announcement? He comments: “It is something that you want to avoid doing.

The problem is that 90% of private investors will gamble around news – they’ll read positive news about a vaccine for example, read articles about companies in

"THERE ARE A LOT OF FREE TOOLS OUT THERE ON THE INTERNET. I HOLD 15 STOCKS FOR 12 MONTHS AND THEN REVIEW. THERE IS NO POINT CONSTANTLY REVIEWING – AND MORE INVESTORS SHOULD BE DOING IT THIS WAY.” Alpesh Patel OBE

pharmaceutical/healthcare – and they will start gambling with their investments. You are gambling, without knowing what you are gambling.

“The companies you want to invest in are the resilient ones, which when then the stock market fell between February and March were the ones that fell the least and rebounded quickest. These are the ones to focus on. For example, look at Microsoft – probably the safest company in the world – that is exactly what happened to them.

Don’t be a moth to a flame of a news story – invest in hard data.”

January/February 2021

INVESTOR TRENDS

2020: A YEAR IN REVIEW As Patel revealed, the stock market rebounded in extraordinary fashion for many businesses, following the initial collapse in March. But, what did it mean to investors in the UK? Luke Davis, CEO of IW Capital, comments: “Investing and investing wisely has never been easy by any stretch, but this year has been particularly difficult for investors at every level. 2020 demonstrated the value of long-term investing and future planning. The stock market crash in March triggered a real halt in investment, and although the market has not yet fully recovered, there has been strong growth since November and in places such as the US, share indexes are actually higher than the last year.

“There have been winners and losers from each stage of the pandemic with sectors, like travel, feeling the true impact of the pandemic and others, like online solutions, seeing growth and opportunity in a time of financial turmoil. But this is true of any world event and has forced investors to look to be more future facing.

News around Brexit has also shone a light on UK-based businesses, who many have felt are under-priced, and such businesses that are unaffected by Brexit trading have turned out to be a great investment for the new year. 2020 has taught investors a lot, but most importantly it has shown that patience and the ability to shift focus if needed is paramount.”

It was the second half of the year that lit the fire for investment across the globe, but as Patel stated, investing on the back of major news can be a risk.

Simon Crookall, Founder of InvestEngine, said: “2020 was a rollercoaster ride for investors: the pandemic triggered a stock market plunge which was then followed by a very rapid rebound. It showed the importance of investors holding their nerve and sticking to their long-term plan, rather than panicking and selling up when markets fall – which crystallises losses.

“With the Nasdaq, the US technology index, up 40%, it was also a year of the hot stock.

The stellar share price growth of Tesla, the electric car company, attracted a stampede of novice stockpickers using free mobilebased investment apps. The concern is that many of these newbies don’t

Alpesh Patel OBE Private Equity Fund Manager

Luke Davis IW Capital

understand the risks of investing in hypedup individual companies, whose shares can come down as fast as they go up.”

"2020 WAS A ROLLERCOASTER RIDE FOR INVESTORS: THE PANDEMIC TRIGGERED A STOCK MARKET PLUNGE WHICH WAS THEN FOLLOWED BY A VERY RAPID REBOUND. " Simon Crookall

Following the news at the end of the year that vaccines were going to be distributed across the country, it has set up an exciting year ahead for investors.

Oliver Gregson, Head of UK and Ireland at J.P. Morgan Private Bank, comments: “2020 was an intense and volatile year.

The coronavirus pandemic has cost over one million lives worldwide, and the ensuing lockdowns catalysed the most severe economic contraction since the Great Depression. However, we are starting to see the light at the end of the tunnel. Welcome news on COVID-19 vaccines arrived near the end of a difficult and volatile 2020. In response, broad equity markets are close to all-time highs, and the stocks of companies in industries most impacted by virus restrictions have

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Oliver Gregson J.P. Morgan Private Bank

been rallying in anticipation of the benefits that a return to normal will bring.

“We believe the global economy will continue to heal. In fact, by the end of last summer, it seemed likely that the healing process had already started, with some sectors, including technology and housing, doing remarkably well in the new environment.”

THE YEAR AHEAD

With this in mind, what can investors expect in the year ahead? And where should they be looking to acquire stock?

Patel comments: “The ones I’d suggest are some billion-dollar companies – good, solid businesses. Based on stats like valuation growth, cash flow, etc – TechTarget are a good one according to my information.

"It is like a Google for businesses, which gets a cut when deals are made by companies. Other good ones are Square, the payment processor; PayPal, a name we all know but is still a solid investment; Trade Desk Inc, which has had solid growth.

You then have your Alphabets, Amazons, Apples and Microsofts.

Cont. 

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REVIEW "I still own stocks in Visa and Adobe. But the lesser-known ones that I invested in like TechTarget were down to statistics, not news, and the valuation is up 30% in three weeks (at the time of writing).”

INVESTOR TRENDS into everyday life – this is where Damian Mohammed, Investment Director at GC Angels thinks a rise in interest will be.

Mark Sevier, Senior Investment Research Analyst at Alpha Portfolio Management, said: “For investors, the long-term structural changes such as online trends have become embedded with consumers and will inexorably grow, so the technology sector is likely to remain a winner.

However, some valuations have been driven to extremes and one of the themes for 2021 will be the growth versus value debate.

Away from the major stock market staples, there are a lot of reasons why this is the year there may be a flurry of activity.

Crookall explains: “Most people have too much of their savings in cash and too little in stock market investments. With interest rates on the floor — and staying down for the foreseeable future — savers need to consider investing in the stock market for the chance to earn a worthwhile return on their money.

“Low interest rates are also a challenge for those businesses fortunate enough to have built up cash reserves. As with personal investors, business owners are increasingly aware of the poor deal they are getting from their banks and are looking for alternative solutions for higher returns.

“Meanwhile, the surge in sign-ups to trading apps in 2020 shows that people are prepared to put their money in the stock market even in a time of uncertainty.”

KEY SECTORS

Whether you are an experienced investor or one of the new-age entrants who are making use of trading apps – there are several sectors to keep an eye on in 2021.

Davis comments: “Throughout last year, sectors such as hospitality have been hardest hit as a result of the pandemic and the restrictions that have been put in place, but these industries that have been hurt the most might also be the ones that recover the best, as people rush back to normality, so might actually be the sectors to keep an eye on. Green tech is also on the rise, especially here in the UK and is an industry that could also attract a significant amounts of investment from both the UK and abroad. Boris’ green plan has sped up what is already a fast-growing sector and one that looks to be a leader here in the UK, now that we have left the EU. In addition to this, healthcare will also likely remain strong, with biotech likely to see further growth.”

The tech sector – as it was in 2020 – will be the key focus for investors, and with an increased amount of new tech subcategories, and continued integration

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set to exponentially, grow – there are several trends that investors should keep in mind.

Damian Mohammed CGC Angels

"While the first quarter of 2021 will again be challenging, the year should see a significant recovery in global economic activity as government and central bank stimulus combines with some return to normality, due to the vaccination programmes. Those cheaper, cyclical value businesses that suffered most during the peak of the COVID-19 crisis should do better as their markets recover.”

He said: “As the digital uptake has been accelerated by the pandemic, companies that provide tech enabled solutions, accessible from the comfort of the home, will continue to thrive in 2021. EdTech, MedTech, eCommerce, FinTech and an array of other tech enabled sectors have already changed the way that early adopters and younger generations live their lives. Therefore, due to recent habit change from government restrictions and closures, we are likely see the mass market switching to digital alternatives.”

In wider society, there has been a renewed focus on sustainability and the ‘green economy’, and this is where Gregson believes investors should be looking.

He said: “2020 was a breakout year for sustainability and sustainable investing; the S&P Global Clean Energy Index was up nearly 100%. Sustainability is a powerful trend that will grow in force in the coming years. We expect a big step forward toward developing a more circular economy, especially in the food industry. By 2030, a circular economy could yield up to $4.5tn in economic benefits, solving the annual problem of 1.3 billion tons of food waste, 92 million tons of textiles in landfills and 45 trillion gallons of water wasted just through annual food production.”

KEY TRENDS

Buoyed by a positive end to 2020, a vaccine on the way and sectors that are

Jeremy Thomson-Cook Equals Money

Jeremy Thomson-Cook, Chief Economist at Equals Money concludes: “The wider movement in markets hinges around the answer to one question; do you see the US dollar strengthening or weakening in the next year?

If you think the USD strengthens then you are more likely to be doing so on the belief that markets are overly optimistic at the moment and therefore bond yields should be lower and equities cheaper as well, given the risk to corporate earnings in the coming year.” 

February/March 2021

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What next for the business world?

Business leaders discuss how opportunities exist for those who are prepared THE PANEL THAT TOOK PART IN THIS DEBATE WERE: Sarah Billingham Key Account Business Development, Infinity International Foreign Exchange Nick Leitch Managing Director, UK Corporate Lending Business, Shawbrook Bank Nick Farmer International Tax Partner, Menzies LLP Andrew Baxter Managing Director, Europa Worldwide Group Dave Edwards Partner, FRP Advisory George Dexter Managing Director, Armour Home

Sometimes when you are living through a seminal moment in history you do not fully appreciate its impact or gravity; and for many this is how the last twelve months have been. Certainly, for many entrepreneurs and professionals, it has been a case of doing what entrepreneurs and professionals do – and powering through, trying to innovative, trying to support customers and employees and looking for a brighter future.

Sometimes though, it is important to stop and reflect about the now and look to how the future will be shaped. The history makers will naturally look back in years to come and rightly package this period of our lives in stories of heroism and change, but for those in business the near future is just around the corner and it is up to them to create it.

To find out more about what is next for the business world and to answer this big question, Business Leader partnered with Shawbrook Bank and Infinity FX to debate subjects as broad as tax policy, international trade, leadership and what the new normal means.

She comments: “Brexit is having an impact on businesses from a currency risk perspective for sure. Such things as changes to international supply chains or export locations will, amongst other things, cause an increase to related costs and revenues due to the associated currency risk. Tariffs, as well as delays to transportation and increased transportation costs may also introduce currency risk.”

On the wider FX volatility, Sarah said: “The GBP/USD and the GBP/EUR exchange rates fluctuated significantly over the last year and this meant businesses may have experienced difficulties in controlling costs and revenues and so felt a greater impact on profitability from FX moves.

“FX providers often expect SMEs to pledge cash as security against forward hedges and as FX moves became greater over the Summer, providers may have called for more cash to satisfy this and of course this resulted in more pressure on businesses.”

BREXIT, BREXIT, BREXIT In a perverse way, the pandemic shunted the Brexit conversation to one side and its airtime declined but its impact most certainly did not and in combination with the pandemic, it has put a microscope on international trade and the FX market.

▲ Sarah Billingham Infinity FX

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Sarah Billingham, who is a Key Account Business Development Manager at Infinity International Foreign Exchange, had this to say on how Brexit and the pandemic is impacting markets.

▲ Andrew Baxter Europa Group

February/March 2021

THE NEW NORMAL

Infinity_CL Banner_185mmx18mm_V2.indd 1

2020/12/16 17:33

“FX PROVIDERS OFTEN EXPECT SMES TO PLEDGE CASH AS SECURITY AGAINST FORWARD HEDGES AND AS FX MOVES BECAME GREATER OVER THE SUMMER, PROVIDERS MAY HAVE CALLED FOR MORE CASH TO SATISFY THIS AND OF COURSE THIS RESULTED IN MORE PRESSURE ON BUSINESSES.” Sarah Billingham

INTERNATIONAL OUTLOOK

Continuing the trading and international theme, Andrew Baxter – who is MD of Europa Group, a logistics business – said that he is optimistic about the future and what it holds for businesses, despite the headwinds of the pandemic and Brexit.

positive and think it will be broadly OK and not as dramatic as some people think. We have a deal now but to be honest, whether we had a deal or no deal, did not really make much difference to the movement of goods – it only made a difference to the level of duty that is paid.

He said: “We’re prepared for 2021 and working with our customers in the framework of this new reality. I remain

“There are some types of goods where you might have had higher levels of checks if there was a no deal, but these are limited

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types of goods. Overall, though, the deal was more favourable as it will preserve trade.”

FUNDING GROWTH For those businesses trading internationally, it has undoubtedly been a challenging period and for many of these – and companies that only operate domestically – accessing funding has been crucial to helping them navigate this time and unlock growth.

Amongst these lending options has of course been those offered by government and Coronavirus Business Interruption Loan (CBILS) is now a term etched into business consciousness – like furlough and lockdown.

Cont. 

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Word on a positive trajectory – which, despite the tough times currently, explains the sense of optimism that many businesses feel.

Echoing Dave’s point, Nick Leitch – who is head of corporate funding at Shawbrook – is also optimistic and believes accessing the right funding will help to ensure businesses remain on track.

▲ Dave Edwards FRP Advisory

Dave Edwards is a Partner at FRP Advisory and heads up the debt division, and he says he is cautiously optimistic about the future for UK firms.

He said: “My view is that the debt landscape is confused now to say the least as you have around 100 accredited lenders for the government schemes and hundreds of different ways of applying for the schemes.

Some businesses have re-financed existing borrowing onto the CBILS scheme, which is quite a defensive move, but some have used this debt as an opportunity to win new business and get new lending by providing incremental finance.

He said: “The key challenge is getting a handle on visibility and trading and seeing where the opportunities might be and how this translates into order books and contracts, and what may require cash and capital. It has been spoken about a lot, but adaptability has of course been important too. Some businesses hit a brick wall and had to pivot and there is a cost associated with that.

“The big unknown is the greater question around the economy and how macro issues will ripple through into businesses. It is about ensuring those businesses have the funding they need to deal with what is in front of them."

“You’ve also seen businesses use other support mechanisms instead of CBILS, such as deferring VAT of PAYE and they have built debts and liabilities that aren’t interest bearing.

"Where that takes us going forward is going to be interesting as you have questions such as is CBILS transferrable? That is an open question, and some lenders will say it is, but some lenders will say you have to stay where you are.

“Ultimately though, I’m optimistic about the future as there is velocity in the market and the will of entrepreneurs and business leaders to build a bright future.”

Certainly, there is a feeling that the pandemic has suspended both reality and the economy, as before it struck the UK was

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▲ Nick Leitch Shawbrook Bank

THE FUTURE IS BRIGHT In addition to many businesses finding the correct funding aligned to their requirements, another huge challenge has been macheting the thick jungle directly in front, to plan the future and understand what the economic roadmap will actually look like.

George Dexter, who is MD of Armour Home – a business with three offices in the UK and Hong Kong – says that the government have helped on some degree.

He comments: “Anyone faced with the current problems the government has with a pandemic, there is nothing you can do right, and everything will be wrong. I look at what is going on in Hong Kong and China and there is some good stuff, but would you want to to live in such an authoritarian environment? Sure, the government is going to get policy wrong but I’m happy it’s them making the decisions and not me; it’s too easy to criticise.

“On reflection, I would say that the furlough scheme has been critical too because it made sure that businesses didn’t go into a major cost cutting process where you had to make people redundant and then re-employ in five months’ time at a huge cost.”

On the future and the economic outlook specifically, George also said: “I’m optimistic generally across whole economy.

I feel we will recover quicker than people think, and I mean within the next twelve to eighteen months. I also want to talk about the ‘new normal’. I believe it is going to be very much like the old normal. People like to talk to people face to face. Zoom and remote working is great, but it does not work for everybody and I don’t believe office working is dead at all.”

"THE KEY CHALLENGE IS GETTING A HANDLE ON VISIBILITY AND TRADING AND SEEING WHERE THE OPPORTUNITIES MIGHT BE AND HOW THIS TRANSLATES INTO ORDER BOOKS AND CONTRACTS, AND WHAT MAY REQUIRE CASH AND CAPITAL." Nick Leitch

February/March 2021

THE NEW NORMAL

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2020/12/16 17:33

“Equally, there will be many business leaders who are forced into this scenario not though choice but because the business is performing underneath it’s plan.”

▲ George Dexter Armour Home

In answering this question, Nick Leitch, from Shawbrook Bank, added: “We’ve seen a lot of transactions from people looking to buy and acquire just stall.

They have not gone away but just gone into neutral, which is frustrating as most people would like to get on. This is partly because predictability of revenue is impacting how businesses are valued and what values shareholders can expect. We hope to see more daylight soon though.”

COULD THE FUTURE MEAN MORE M&A ACTIVITY?

However, the economic recovery is shaped, the tremors being felt by the pandemic and Brexit coupled with looming tax changes are making some business owners consider whether to sell their company and exit; as well as inspiring others to look at acquiring competitors that may complement their offering or spur growth.

On whether an increase in M&A activity is likely, Dave Edwards, from FRP Advisory, comments: “Many businesses will want to consolidate, change and merge because of the crisis and this will only increase, but we also must remember that may sectors have performed well during this period too.

What I would say is that if you are looking to exit or sell – let people in the market know.

“There has also been an inheritance tax review, with a view to make this more like an estate tax. And on the international stage, lots of countries are introducing a Digital Services Tax. If you look back at the 2008 finance crisis, tax was headline news and I believe this will happen again and we’ll start to have debates around how this should be paid back, with many pointing the finger at the big multinationals and those top earners.”

"MANY BUSINESSES WILL WANT TO CONSOLIDATE, CHANGE AND MERGE BECAUSE OF THE CRISIS AND THIS WILL ONLY INCREASE, BUT WE ALSO MUST REMEMBER THAT MAY SECTORS HAVE PERFORMED WELL DURING THIS PERIOD TOO."

Covering the point about the economic future for the UK, Andrew Baxter said that the mix of government intervention and business spirit is a powerful combination that should see the UK recover quicker than some people may expect.

He said: “I’m optimistic and I believe we’ll recover quicker than is expected. It has been a complex time for policy makers, but they have done quite well with the furlough scheme and other initiatives. They have done this to fill the V-shape recovery and to get to the other side of this without too much economic damage.”

and the outcome of that was potentially to increase income tax rates.

Dave Edwards

▲ Nick Farmer Menzies LLP

IS TAX COMING BACK?

IN CONCLUSION

As touched on earlier in this article, the government intervention to tackle the COVID-19 pandemic has been unprecedented and the levels of borrowing have reached parity to those seen during and after World War Two.

At the time of writing, Business leaders will be battling a third national lockdown and continuing to face the challenges and realities that this brings. Last March, we had the summer to enjoy – and last November we had Christmas and the onset of a New Year. Now, it seems the light at the end of the tunnel for many will be the roll out of the vaccination, and the impact this will have in bringing us back to ‘normal’.

Which raises the question about how it will eventually be paid back and what levers government may pull to do this – and what this means for businesses in the future.

Nick Farmer, who is International Tax Partner at Menzies LLP, comments: “Government is shelling out lots of money and the music will stop at some point; we’ll need to raise some money in the future by looking at tax and we’re seeing some signs of where this may go. Rishi undertook a Capital Gains Tax review earlier in 2020

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In summary, it seems that what is next for the business world is much more of the same – the innovation, hard work and never give up attitude that defines UK business leaders will continue with cautious optimism as we build for the future, whilst navigating today. 

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Meet the business builder who said no to Peter Jones

For it’s latest inspirational entrepreneurs interview, Business Leader spoke to Chika Russell – the Founder of Chika’s and the person brave enough to turn down five offers on Dragons' Den. CAN YOU TELL US MORE ABOUT BACKGROUND BEFORE SETTING UP THE BUSINESS?

I started my career in finance and banking, so I have always been comfortable with numbers and I was building up a successful career in this sector. I have also always been somebody who reads a lot and I’m interested in learning and absorbing information – and always trying to better myself.

WHY DID YOU DECIDE TO LEAVE A SUCCESSFUL CAREER AND SET UP YOUR OWN BUSINESS? I was married and pregnant, and I realised I was not in a work pattern that I wanted to be in – I wanted to be a present mother.

I also felt the calling to set up my own business that was inspired by the fun and joy of my childhood in Nigeria.

I decided to go for it and launch something was sustainable, had great ingredients and supported good causes. Chika’s was the result of this and it is a Nigerian-inspired snack business.

"I WANTED TO WORK WITH SOMEBODY WHO HAD A PROVEN TRACK RECORD, AND THIS WAS SOMEBODY LIKE A DRAGON, WHO HAD GROWN THEIR OWN BUSINESSES BUT ALSO HELPED OTHER ENTREPRENEURS. " 64

YOUR MUST HAVE BEEN WORRIED ABOUT LEAVING A SAFE JOB AND SETTING UP ON YOUR OWN? No actually, I was not worried as I am a super confident and optimistic person which actually can be a problem something as I don’t think about the pitfalls. My view was I am leaving my job and I am going to start a busines. I am going to do good and I am going to empower women and it is going to be a success.

THE BUSINESS BECAME SUCCESSFUL QUICKLY AND YOU APPEARED ON DRAGONS DEN, WHERE YOU RECEIVED FIVE OFFERS. WHY DID YOU WANT TO GO ON THE SHOW? Firstly, the reason I decided to go on the show was that once I had validated a place for Chika’s in a condensed industry, I decided I wanted to accelerate the business and I wanted people around me that would work hard too.

I would imagine that for anybody leaving their job and becoming an entrepreneur, there is not another option and you just have to start and deal with the problems as they come.

I wanted to work with somebody who had a proven track record, and this was somebody like a Dragon, who had grown their own businesses but also helped other entrepreneurs.

February/March 2021

CHIKA RUSSELL I said to myself that there was no other option – I was going to do it and it was going to be a success.

"I ALSO DEEPENED RELATIONSHIPS WITH RETAILS PARTNERS LIKE OCADO AND WAITROSE, TO STRENGTHEN OUR ONLINE OFFERING. IT HAS NOT BEEN WITHOUT BLOOD, SWEAT AND TEARS BUT WE HAVE MANAGED TO CONTINUE TO GROW THROUGHOUT 2020 AND EARLY 2021."

YOU ACCEPTED PETER JONES’ OFFER, BUT THEN DECIDED NOT TO WORK WITH HIM – CAN YOU TELLS US MORE ABOUT THAT? I did not go onto the show expecting five offers but at the same time I was confident, and I did not anticipate being rejected or anybody ridiculing the business.

I accepted Peter’s offer and after the show I was naturally excited about what we were going to do together but when we were going through the plans in more detail, I started to think about what Chika’s was about. The core of the business is a character called Chika who is a strong woman, and she is about sharing and helping people. Of course, I have investors and I need to make returns and I am unashamedly commercial about that, but I started to realise it is about more than that too.

IT MUST HAVE BEEN A DIFFICULT DECISION? It a very a difficult decision, it was very stressful to say no to this incredible person, who is very nice and was offering me guidance and financial support. I was deciding to not work with this business titan – looking back it seemed like a decision only a mad person would make.

But I did not feel it in my gut, and I believe that is important – you must feel it 100%.

I could see another way forward without Peter; and I believe to do something you can only see one way.

HOW HAS YOUR BUSINESS BEEN AFFECTED BY THE PANDEMIC? It has been very tough as prior to the pandemic our business was half retail and half high street, and major chains like the Hilton and Marriott, who would stock our products. We were supplying many of the four and five star hotels in and around London – and airlines and airport too.

March 2020 was the best month for the business, and we had incredible plans, contracts in place with contract caterers and the business was on an upward trajectory. Then in April we saw sales dip and in May the tap turned off, it was like night and day – and my thought was ‘what happens now?’ – as this had not happened before, and I could not read about it and find previous examples. In this

period, we lost 40% of our business, pretty much immediately.

HOW DID YOU REACT TO THE BUSINESS BEING IMPACTED IN THIS WAY? For me it was fight or flight and like many other businesses we had to change our model and my plan of action was if you cannot come to me, I am going to come to you. To do this we revamped our online offering and launched a new website with a much-improved user experience and buying journey. Before this period, we had been growing offline and although we knew how important online was, we had not focused on it like we do now.

I also deepened relationships with retails partners like Ocado and Waitrose, to strengthen our online offering. It has not been without blood, sweat and tears but we have managed to continue to grow throughout 2020 and early 2021, which I am very proud of.

YOU HAVE CHAMPIONED DIVERSITY AND INCLUSION IN THE FOOD AND DRINK SECTOR – I WOULD LIKE TO GET YOUR INSIGHT INTO THIS AND HOW MUCH MORE NEEDS TO BE DONE? We have had a backdrop of some not very positive events, but these have brought mindfulness around the subject and an awareness to talk about diversity and inclusion. I am female, a mum and a black woman, so I feel I have a responsibility to shout about these issues and work positively to inspire others.

I would say there is much more to be done but what I am also finding is that there is

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lots happening, and the conversation is evolving, with those that have a voice using it positively.

It is also encouraging to see bigger brands like Sainsbury's and Ocado creating groups to encourage diversity and create a path for minorities to join the industry as not everyone is a confident entrepreneur who feels they have a right to belong, many people need guidance and route to work in industry.

TO CONCLUDE THE INTERVIEW, WHAT IS YOUR ADVICE TO ANYBODY READING WHO MAY BE WORKING IN A SENIOR ROLE IN A BUSINESS THAT IS THINKING ABOUT LAUNCHING THEIR OWN BUSINESS? If you are thinking about it then it is likely you have a calling and you to just get on with it. You just need to go and do it but not without analysing the risk and carrying out what I call a pre-mortem on every decision you are about to make. This is to assess what happens if you do not take the action and you do not decide to do something.

What I would also say is that it is worth taking the risk because if it does not work you can go back to working for somebody else and you will love yourself for having tried. People say failure is a bad thing, but it is not – it is just business. You will have ups and down in business, but it is about appreciating the journey and understanding that you will have difficult times, but it is OK if you are learning from these difficult times. It is the journey, which is important and if you have the calling, just go for it. 

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FAST TRACK

FAST TRACK

‘Health has never been as important as it is now’ Meet the entrepreneur that is harnessing a 2,000-year-old drink range to build one of the UK's fastest growing businesses.

In each edition of Business Leader Magazine, we profile a UK business experiencing exponential growth in a feature called Fast-Track.

This time, we spoke to Biotiful, a kefir brand.

Founded in 2012 by former Russian figure skater Natasha Bowes, Biotiful makes a range of award-winning cultured dairy drinks and snacks using the ancient method of fermentation.

▸ Natasha Bowes Founder, Biotiful

With a 65% market share of the emerging industry, Biotiful have created a range of products that are becoming increasingly popular among health-conscious Brits.

services at KPMG and Barclays – however, while working in her previous capacity, she longed for the kefir drink she had become accustomed to.

The London-based firm has grown by more than 120% over the past three years, and last year achieved a turnover of more than £10.9m. As a result, Bowes is the Managing Director of the third-fastest growing female founded company in the UK.

Bowes explains: “I founded Biotiful to fulfil my dream of introducing kefir to the UK market. After moving here with my work, I found it hard to find a kefir that lived up to my memory of what I used to drink every day. Knowing first-hand all the great benefits cultured milk can bring, I decided to take matters into my own hands, setting up Biotiful to upgrade dairy with better nutrition, taste, and quality for everyone.

FROM BARCLAYS TO BIOTIFUL

Before Bowes created the company, she had a successful career in professional

“I spent many months experimenting with different flavours and packaging before hitting upon the perfect kefir. Kefir – meaning ‘feel good’ in Turkish – is packed with billions of gut-friendly bacteria.”

In her native Russia, diary products are very popular, but with the UK food sector drastically changing to become more health-focused in recent years, Bowes knew that her product would fill a gap in the market.

She continued: “I have always had a huge passion for nutrition and healthy eating, and with an increasingly health-conscious UK consumer I wanted to bring the relatively unknown product kefir to the UK so everyone could enjoy the highest quality product with all its natural health benefits.

Using British milk and superior live cultures from Russia, I was able to produce the highest quality cultured milk drinks, both in terms of nutritional value and taste.”

For many, kefir is a new product on the shelves on the UK supermarkets, but the product itself has been around for millennia.

SUCCESS FROM ANCIENT RECIPE

Despite kefir being a historical drink for many cultures across the world, it is

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BIOTIFUL

relatively new here in the UK – and the financials at the business look strong as Natasha explains.

She comments: “Biotiful’s retail sales have increased 80% in that time to more than £26m. Our performance is a result of our core liquids range and strong performance in our Kids Slurpy range, as well as exciting NPD launches in Biotiful Shots and Biotiful Yogurts which have only just launched.

“Biotiful’s rapid growth has been in part thanks to the burgeoning UK health trend and growing market for superfoods. We were the first brand to launch kefir and start the trend for consumers looking for natural gut-health benefit products and lead the category. First mover advance enabled us to explode this exciting new category and capitalise on mainstream consumers looking to support their gut health.

company did have challenges that it had to overcome.

Bowes explains: “The biggest challenge for us was consumer education. Given the limited knowledge of Kefir in the UK when we launched, we needed to find a way to educate consumers on the extensive health benefits of the product. PR has always played a significant role in this, helping to drive mass awareness.

“In 2016 I appeared on BBC’s Dragons’ Den, which drove a lot of interest and certainly helped to bring the brand into the spotlight. Kefir also featured on BBC2’s ‘Trust Me I’m A Doctor', where their experiments confirmed it was the most effective probiotic food currently on the market.”

"OUR PERFORMANCE IS A RESULT OF OUR CORE LIQUIDS RANGE AND STRONG PERFORMANCE IN OUR KIDS SLURPY RANGE, AS WELL AS EXCITING NPD LAUNCHES IN BIOTIFUL SHOTS AND BIOTIFUL YOGURTS WHICH HAVE ONLY JUST LAUNCHED.”

“This timing, however, was not accidental.

Before starting the venture, I was able to identify the consumer need and commercial opportunity for Biotiful. As well as launching the product range itself, we have worked hard as a brand to educate the UK on the natural health benefits of Kefir. When developing a business or product, it is crucial to identify the relevant context and prioritise consumer requirements and interests. This will create a more attractive product that can be positioned in line with consumer needs.”

EDUCATING THE UK

With a simple product range that fills a gap in the current dairy market, it may appear that the road to success was down to clever planning and marketing – however, the

to feature on such a famous TV series, and meet The Dragon’s in person. I think I clearly demonstrated the potential of the business in the UK and how forwardthinking Biotiful kefir would be in the market, so I’m proud the sales results since the episode have exceeded expectations.

"The show has been great exposure to the benefits of kefir. I believe it’s important to know the true value of your business, so it appears to have been the right decision to go down an alternative route.”

WHAT DOES THE FUTURE HOLD?

Having educated the nation on the benefits of kefir and the UK’s health revolution in full swing, Biotiful is leading the way in their industry. And with the last year highlighting the importance of eating and drinking the right products, Bowes sees an even brighter future for the company.

She concludes: “Health has never been as important as it is now. We expect even more demand for naturally healthy products as consumers are even more conscious about what they eat and drink.

“Innovation has always been at the heart of everything we do at Biotiful. We are seeing more and more consumers look for immunity support benefits that they can enjoy every day as part of a healthy diet.

And Bowes’ experience in the Den was an important step before the company’s rapid rise to popularity.

"We are seeing more mainstream consumers buying Biotiful kefir, which shows there is huge demand for natural products that offer these health benefits, especially as we enter 2021.

She said: “Being on the show was a very interesting, if not daunting, experience

"We have exciting plans underway to ensure even more people can enjoy kefir.”

Business Leader - Inspire • Inform • Connect

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NEWS

What are the concerns keeping global C-Suite executives up at night?

▲ Andrew Scott Ascot Group

A study from North Carolina University and Proviti has revealed the concerns that global leaders say they preparing for.

Survey respondents were asked to rate 36 macroeconomic, strategic and operational risks, including new risks that emerged this year related to the COVID-19 pandemic and social justice.

The top 10 risks identified for 2021 are as follows: 1. Pandemic-related policies and regulation impact business performance 2. Economic conditions constrain growth opportunities 3. Pandemic-related market conditions reduce customer demand 4. Adoption of digital technologies require new skills or significant efforts to upskill/reskill existing employees 5. Privacy/identity management and information security 6. Cyber threats 7. Impact of regulatory change and scrutiny on operational resilience, products and services 8. Succession challenges, ability to attract and retain top talent 9. Resistance to change operations and business model 10. Ability to compete with 'born digital' and other competitors Jim DeLoach, a Protiviti Managing Director and co-author of the report, comments: “More than ever, 2020 demonstrated that organizations can no longer afford a reactive approach to risk management."

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Ascot Group invests through COVID-19 pandemic The Ascot Group, a marketing, media and tech group has continued to invest through the COVID-19 pandemic.

The group has employed 20 new members of staff since the March 2020 lockdown and has recently purchased a further 7,000 sq ft offices in Weston-super-Mare to accommodate growth. The new office will incorporate a pitching room, video recording studio and podcast suite.

Andrew Scott, Founder and CEO commented: “Like most companies we have been affected by COVID-19, but we quickly adapted our business model and invested in resources and talented people during these uncertain times to enable the group to accelerate faster as normality returns.”

The new office is part of a £1m-plus investment strategy and the group expects to be around 100 employees by the end of the year, across four different sites in London and near Bristol.

The Group has also successfully completed a number of acquisitions and equity investments in the last nine months and is now targeting further acquisitions in publishing, marketing and tech.

For further details visit www.ascotgroup.co.uk

February/March 2021

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