Fifo Capital Q1 2019 NZ

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Thinking ahead for success

QUARTER 1 I 2019

Meet Liam Lawson — Fifo Capital’s Race Car Champion Michelle Phan: harnessing influence for entrepreneurship Daniel Ek: reinventing the music industry Building a disruptive startup requires an innovative environment Drive growth by taking control of your business’ finances in 2019

When expertise counts Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help: • One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability.

When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital on 0800 86 34 36

is a leading provider of business finance solutions, specialising in solving short term finance needs fast with purpose-fit solutions and one-on-one expert consultancy. With over ten years supporting clients across all industries, our specialists work with the unique complexities of business clients, to identify finance solutions that are appropriate for both short term needs and long term sustainability. Working alongside clients’ financial professional advisers and in harmony with their existing banking facilities, our finance solutions are very often bespoke to each client and designed to fit their specific need at that point in time. Since launching in 2004, Fifo Capital has established more than 70 offices across New Zealand, Australia, United Kingdom, Ireland and Canada, and provided business owners $1 billion growth capital finance.


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Welcome to this first quarter 2019 edition of Headway. I hope you had a great break and are already enjoying significant growth, which is inextricably linked to business success. Positive cash flow enables growth, yet cash flow issues are the mostcited barrier to growth. All aspects of growth require investment, from R&D to strategic planning and the execution of those plans, all whilst maintaining existing operations. In a perfect world, growth opportunities would be presented at the perfect time, but growth tends to be messy in the real world. When growth opportunities arise, you need access to funds to pursue them. Fortunately, we’re ideally placed to help businesses with this kind of need. Fifo Capital has enjoyed incredible international growth because we help solve money problems whilst growing client businesses with the right financial tools. We also make the experience personal, to understand exactly what we’re dealing with, which yields positive results. When our clients succeed, we succeed. Therefore, mutually beneficial relationships are the key to success and growth.

Whichever path to success you take, there are many moving parts. But it’s not as difficult as it sounds, especially when you have the right partners on your side. These pages are packed with stories about what makes growth happen. We look at Daniel Ek who cofounded Spotify in 2006, and today it’s a media giant worth over $26.5 billion. Michelle Phan disrupted the beauty industry with nothing more than the power of Youtube, to grow two substantial businesses and a personal net worth of over $50 million. And in 2012, Tinder brought digital dating into the mainstream, making it a household name, and its founder, Sean Rad, a multibillionaire. You can also read about Liam, a young Fifo Capital-sponsored race car driver performing on the world stage and why Fifo Capital doesn’t take a traditional view of sponsorships. And much more. As always, we’re here to help you with your plans for growth. Best regards, and enjoy this quarter’s Headway. Best regards, N igel Thomson Fifo Capital Founder and CEO




















Meet Liam Lawson—Fifo Capital’s Race Car Champion Growing your business with the right kind of finance Daniel Ek: reinventing the music industry Building a disruptive startup requires an innovative environment Trust is the foundation of all business success Michelle Phan: harnessing influence for entrepreneurship Dealing with non-payment is an essential skill for entrepreneurs Drive growth by taking control of your business’ finances in 2019 Sean Rad: dating for the 21st century Enabling growth is about hiring the right people

Published by Fifo Capital International Ltd. Headway magazine is published four times a year. Copyright © 2016 by Fifo Capital International Ltd. Email Visit All rights reserved.



Meet Liam Lawson: Fifo Capital’s Race Car Champion Most sponsors in today’s age are all about what they can get out of the deal. But for us, it’s all about helping a young guy achieve his goals and chase his dreams. 1

Fifo Capital CEO Nigel Thomson met a young 14-year old Liam and his family a few years ago, through a car club event day at Pukekohe Racetrack, New Zealand. At this event, kids were welcome to get in and zoom around the track along with cars owner-driver. As luck would have it, Liam happened to get in Thomson’s car, who, to his surprise, quickly found the promising race car champion telling him the correct lines to take on the track. Impressed, and very surprised, Thomson decided to begin helping him to fund his passion for racing. Today, just a few years later, he’s a Fifo Capital sponsored racer with a growing international profile.

Liam Lawson is an emerging international talent Liam is currently competing in the 2019 Toyota Racing Series (TRS) with M2 Competition. The first of five rounds was held early January, where he placed 1st, 5th, and 1st in its three races. For a TRS rookie competing against far more experienced professional drivers, this was a truly amazing result. More impressively, his current success comes hard on the heels of a highly decorated racing season in 2018 and 2017. In 2018, Liam took multiple podiums and race wins at the ADAC German F4 Championship, and ending the series as the runner up. In the Asian Formula 3 Championship, he won

all three races in a clean sweep. A year earlier in 2017, at the age of just 14, Liam finished second in the CAMS Jayco Australia Formula 4 Championship, after becoming the world’s youngest ever Formula 4 Champion. In keeping with this, we can be sure that we’ll continue to see Liam’s talent grow, and Fifo Capital is proud to support him along his journey in establishing himself as a world class racing champion.

Sponsorship for the right reasons In regard to Fifo Capital’s sponsorship of Liam, and why it’s particularly important to support people who deserve that helping hand. It’s about doing good which is good business,

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rather than just doing business for its own sake, Fifo Capital CEO Nigel Thomson had a few words to say… I’d like to talk about sponsorship, and how it can be a great thing to put in place for the right cause or something that is close to your heart — to give back and help people out. Most sponsors in today’s age are all about what they can get out of the deal. But for us, it’s all about helping a young guy achieve his goals and

chase his dreams. We encourage other companies to support people in need too. It is a hugely rewarding experience — it just feels good. This is what Fifo is doing. It’s not about leveraging Liam’s success for our business at all but helping him get ahead and succeed. Currently, Fifo Capital’s financial support helps Liam to continue his racing pursuit in return for Fifo Capital branding on his car and race

suit. We don’t expect new business from this – it is about giving a good kid and his family a helping hand. Fifo Capital was the first party to become a sponsor for Liam. Leading motorsport manufacturers have expressed an interest in working with him, and we expect soon one will offer him a place on their team. As those sponsorship financial levels increase, as we expect they will, we will continue to support him in other ways.

Fifo Capital is proud of Liam’s achievements so far, and looks forward to supporting him in the future, however it can. We hope you’ll watch and celebrate with us as Liam continues to grow and break into the highly competitive global racing scene. 3

We’re here to help. Business finance when you need it.

Working capital to support and grow your business We know that the working capital your business needs to support and grow can easily exceed what other financiers can approve. And that’s where we can help, with flexible financial options from $10,000 to $1 million. We understand, because we’re business owners like you When you talk to us, you’re talking to a business owner like you. We’re a privately held finance company, which means we can be innovative in our approach and work closely with our customers. We’re all about keeping things simple – from a single point-of-contact who’s also the decision maker, to a 24-hours turnaround time… all with minimal paperwork. We don’t require long term contracts or property security – and it’s up to you when you choose to use our services and when to stop. All with no impact on your existing lending arrangements In fact, banks often recommend us as preferred short-term funding option. And because we work as a complementary service, there’s no need to refinance your current funding facilities. Contact Fifo Capital today for more information

0800 86 34 36

Growing your business with the right kind of finance


In a perfect world, growth opportunities would come along at the perfect time, when your business has surplus capital to spend, and operations are running smoothly. This, however, is rarely the case. In the real world, growth tends to be messy. Opportunities often arise even as creditors come knocking, equipment breaks down, and for suppliers unexpectedly go into administration. In order to grow aggressively and successfully, businesses need to be able to take advantage of these irregular opportunities. To do this, businesses need to be able to adapt and pursue their growth strategy at any time, even while other issues are being addressed.

Most pressingly, this means that businesses need ways to come up with funds to pursue growth without infringing on their ability to deal with their regular operation, and all the troubles that come with it. Fortunately, alternative finance companies like Fifo Capital are ideal for this kind of financing.

Alternative finance provides the flexibility businesses need Using traditional financing options, it can often take weeks or even months before any funds are actually made available. Given that the windows of opportunity that business owners tend to be offered measure in days or a few weeks, this can become problematic. Worse, those loans might not be approved at precisely the times when your business needs them most. Traditional lending is easiest to access for businesses who are already doing well, and don’t necessarily need the help. Alternative finance institutions like Fifo Capital, on the other hand, make it their business to help businesses to help themselves. For ambitious small businesses, that means working to maximise their growth. To do that, they need access to cash immediately, even at times when their finances aren’t in an ideal situation. Finance institutions like Fifo Capital, for their part, provide it. While a bank loan application can drag on for a prohibitively long time, alternative finance institutions can often process an application less than a day. They can do this because they don’t rely on collateral or on checking a business’ credit profile to inform their financing decisions. Instead, they build up a long term 1:1 relationship with each client, getting to know their business directly. This allows them to manage risks without requiring business owners to provide collateral they might not have available, or going through a timeconsuming credit check.

By using these tools, business owners can ensure that they always have the cash on hand to take advantage at those critical moments.

Knowing the right tools for the job When it comes to financing growth there are 3 particularly important financing tools that can be applied separately or together to provide the cash your business needs, when you need it. While each has unique uses on its own, they all serve to free up the funds businesses need to operate as effectively as possible and to drive growth. Supply chain finance Supply chain finance allows you to pay outgoing supplier payments through a credit fund, instead of with your own working capital. That fund can then be paid off later, effectively giving you more cash to work with in the near term. Best of all, you can continue to pay suppliers on time, or even early, so this doesn’t affect operations in any way. Supply chain finance is an ideal tool for keeping supply chains running smoothly when cash flow isn’t completely regular, but it’s just as effective for coming up with additional funds for growth purposes. Invoice finance Where supply chain finance works by deferring outgoing payments, invoice finance allows you to collect incoming revenues early. Instead of waiting for a client to pay, you simply hand over your outstanding invoice to your financial institution, who will pay out most of its value up front. They will then work with the client to settle the invoice themselves, before issuing the remaining amount, less their fee. Unlike a loan, this allows businesses to effectively give themselves an advance on revenues that they have already earned. Unsecured business loans Unsecured business loans are an ideal solution when time is of the essence and invoice financing isn’t enough to provide the funds needed. Unlike more traditional secured loans, this type of loan doesn’t require collateral, and can be issued very quickly. This makes it possible for businesses to react to a growth opportunity immediately. In managing their everyday affairs, businesses often find themselves in less-than-ideal situations. Dealing with unexpected costs, seasonal sales cycles, late client payments, or any number of other potential issues can make it difficult to pursue growth opportunities when they arise. Businesses who succeed are ultimately those who find ways to do it anyway. By using these tools, business owners can ensure that they always have the cash on hand to take advantage at those critical moments.

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Daniel Ek: reinventing the music industry I had two passions growing up - one was music, one was technology. I tried to play in a band for a while, but I was never talented enough to make it. And I started companies. One day came along and I decided to combine the two - and there was Spotify. 7

Growing up at the turn of the millennium, Daniel Ek benefitted from the breakdown of the traditional music industry. Napster, and the many file-sharing platforms that followed it, effectively ended the era where the music industry giants could control their product. Where making tapes or burning cds produced inferior copies, digital sharing effectively allowed anyone to access music for free at commercial quality. It’s this idea that Ek, together with his cofounder Martin Lorentzon, used to create Spotify. The combination of his and Lorentzon’s entrepreneurial experience, programming skills, and innovative outlook allowed them to patch together a badly disrupted music industry. Since its founding in 2006, Spotify has grown into a media giant worth over $26.5 billion, and Ek himself has amassed a fortune of over $2.8 billion. In 2017, he was named by Billboard as the world’s most powerful person in the music industry.

music industry needed to evolve. Revenues had gone into freefall, and record labels were beginning to panic. Apple offered a legal alternative for digital downloading through iTunes in 2003, but, while it did recapture some of the market, it wasn’t enough. After all, it offered the same product as free illegal downloads, but with added costs and no additional utility. While listeners didn’t want to break the law, many simply weren’t willing to spend money on music anymore.

Early career While Ek’s current wealth and success are largely a result of his work with Spotify, his earlier career clearly shows what made such an achievement possible for him. His entrepreneurial ambitions became obvious at an early age. As a teenager, while he was still attending school, Ek began programming, and employed his fellow students to build websites for $5000 per site. By age 18, he ran a team of 25, and earned over $50,000 per month. As an adult, he moved on to serve in senior roles at Tradera, a company that was eventually bought up by Ebay. Later he moved on to launch Advertigo, an online advertising company which he sold in 2006. After this, he briefly took on a role at μTorrent, which lasted only until the company was sold to BitTorrent in December of the same year.

Using Spotify to reimagine how music is sold In the early 2000s, Ek knew that the

Spotify solved this problem elegantly. In Ek’s view it isn’t possible to “legislate away” music piracy. Laws can help, but ultimately only a service that was better than piracy could displace it. So, instead of demanding payment from end consumers, he decided to offer music for free. To use the platform, however, users would need to listen to sponsor advertisements, who would then pay for the music. Like iTunes, Spotify offered artists a revenue stream. Unlike iTunes, however, Spotify didn’t force users to buy music anymore, opting to substitute the purchase for the inconvenience of occasional ads. While this business model was purposely designed to help the music industry deal with the disruption that internet piracy had caused, it looked suspiciously like Napster to those same businesses at first glance. It likely didn’t help that Spotify was backed by Napster founder Sean Parker. Because of this distrust, it took several years for Ek to negotiate his first major deals, which, in Parker’s words, Ek did with “Zen-like patience.” In the years since, Spotify grown rapidly, and has tweaked its

model repeatedly, offering music purchases until 2013, and monthly subscriptions since 2010. Today, the company boasts 83 million subscribers, with over 140 million active users in 78 countries.

What we can learn from Daniel Ek While most entrepreneurs look for opportunities to disrupt their industries, Ek entered an industry that had already been disrupted by an out-of-control technology. The internet made music piracy simple and easy, and, in the early 2000s, virtually untraceable. The impact was severe, and effective solutions to the loss of revenue that music creators and publishers were nonexistent. Rather than being any kind of disruptor himself, Ek essentially made it his mission to help music labels to recover. He did this by providing them with a measure of control over their product, allowing them to collect revenues from them again. For entrepreneurs, this offers an important reminder. Innovative success isn’t inherently about disruption, but rather about providing solutions. Along with its competitors iTunes and Pandora, Spotify shored up the instability that emergent technologies had caused in what was previously an enormously profitable mass-market industry. 15 years later, the music industry’s revenues are climbing again for the first time this century. Ek’s innovative approach to delivering music to users, and generating income for artists and labels has made him one of the world’s most successful people, and potentially the most important person in the music industry.

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Building a

disruptive startup requires an innovative environment


Businesses all over the world steadily grow and try to compete against each other every day. While taking the slow and steady approach is certainly viable, it’s not what most entrepreneurs set out to do when they first launch their operations. Entrepreneurs typically understand the value of taking calculated risks, and of making an impact. Rather than simply surviving, they dream of disruption; of building a business that seemingly comes out of nowhere to permanently change an entire industry, and to leave its mark on society. Disruptors don’t just slowly edge out competitors to set themselves up as industry leaders, they break into new markets, develop brand new solutions, and change the business environment around them in a way that forced their competitors to follow. They set a new standard that renders traditional competitors obsolete. While many entrepreneurs theoretically set out to do this, few will ever succeed. That’s because it’s incredibly difficult, and requires businesses to have the financial security, the skills, and the creativity to develop and implement disruptive ideas.

Creating financial security for a startup Most startups today are still funded by the business owners’ own savings, personal loans, and informal loans from friends and family. In light of this, most new startups are forced to operate on a shoestring budget until they can begin generating sufficient profit to drive growth. Often, something as minor as a late client payment, equipment breakdown, or financing hiccup can interrupt operations, and cause further cash flow issues later on. This kind of financial insecurity is a bad environment for innovation. Disruption isn’t a simple process, and often requires extensive brainstorming and experimentation that takes up valuable time and resources. Worse, that research and development won’t always pay off, and if it does, it might not do so very quickly. To manage setbacks, and to pursue disruptive innovation in the longer term, businesses need access to great financing.

Build a relationship with your alternative finance institution Traditional banks are a great source for a long term business loan, but they aren’t designed to help manage the daily cash flow needs of a startup. Alternative institutions like Fifo Capital work directly with small businesses to provide custom-tailored financing solutions using invoice financing, supply chain finance, trade finance, unsecured business loans, and other great tools. These allow businesses to immediately come up with additional funds, whether it’s to deal with a cash flow shortage, or to fund a potential growth opportunity.

Get the skills your business needs Because of the financial insecurity that many startups suffer from, many also find themselves dealing with a significant skills shortage. This is a serious issue, because improperly skilled or trained workers frequently need support from managers and business leaders to be effective. This creates an environment where everyone is focused on managing underperforming workers, instead of redefining their industry. Disruptive businesses need workers who can not only perform well in their primary role, but also understand the broader context of their role in their industry to help develop novel solutions that support the business’ greater innovative goals.

Leverage diversity to boost innovation Disruption is built on transformative changes, rather than more traditional incremental improvements. To facilitate this kind of change, innovators need to find new and different ways to approach problems. In addition to securing the skills they need to operate efficiently enough to allow for innovation, businesses also need to take steps to boost the creative resources they have access to, to drive that innovation. After all, if a disruptive solution were obvious, it would already be an industry standard set by some other disrupter decades ago. Experienced industry insiders, while essential to the smooth operation of your startup, are unlikely to bring those fresh ideas. Instead, startups need to invest in developing a diverse team of innovators with a broader range of professional backgrounds. This allows your team to combine orthodox industry expertise with skills and knowledge that haven’t previously been applied to the challenges your business faces. In this way, even businesses in older, well-established industries can generate new ideas and innovations that haven’t been explored by competitors. Launching a startup can be a tough job on its own, and creating a business with the potential to be a disruptor is a task that requires an order of magnitude more dedication and planning. Fundamentally, it requires a more innovation-focused approach to doing business than most startups will ever achieve. To achieve this, businesses need to plug the skills gaps that keep their businesses from focusing on their future, and the financial issues that limit critical investment in innovation. By taking this strategic and comprehensive approach, entrepreneurs can create a more innovative environment with a much greater potential for disruption than their competitors.

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is the foundation of all business success


In order to grow, new businesses need more than just an innovative idea and sufficient funds to get it off the ground. Growth and success are built on trust relationships, and the most successful entrepreneurs are ultimately those who build and maintain those relationships best. This is true in every relationship a business has, including those with employees, suppliers, customers, and ultimately investors. A business that inspires trust can operate far more efficiently, and build a larger, more robust professional network than competitors who don’t. This allows it to attract better talent, gain and retain customers more easily, gain more flexibility from suppliers, and attract more investment than other businesses. Conversely, a breakdown of trust can have serious and far-reaching negative effects that can take years to repair. Before an entrepreneur can take their startup to the next level, they need to learn to build and maintain trust with the people and institutions around them.

Being a reliable client The first relationships that many businesses build are with their suppliers. Like any other business, suppliers rely on steady revenue to provide them the stability they need to operate reliably. Being a trustworthy client is most importantly about paying on time, and providing a reliable source of revenue. A supplier that knows that a client can be relied upon will be incentivised to provide higher quality work, and may offer more generous payment terms in order to retain their business. Of course, startups are frequently forced to deal with cash flow interruptions that can make timely payments seem all but impossible. Fortunately, there are a number of financing tools

that can help businesses deal with this. Specifically, supply chain finance allows businesses to draw funds from a third party credit fund to pay supplier bills, instead of paying out of their own pocket. That balance can then be paid off at a later date, when incoming revenues are collected. Alternatively, businesses might use invoice financing to give themselves an advance on an outstanding payment to boost the working capital they have available. By using financing tools like these, businesses can ensure that their outgoing payments are always on time, and suppliers are kept comfortable.

Earning the trust of clients Customers, whether they’re other businesses or regular consumers, base their trust of a business on whether the products they pay for meet their expectations. For businesses, that means not just ensuring that products and services meet the highest standards, but also communicating with their target markets to set the right expectations. In the short term, businesses might rely primarily on sales and marketing tactics to generate customer interest. As customers become more familiar with them, that interest needs to be sustained and justified by the utility that the business offers so that they’ll keep coming back for more, and refer the business to contacts within their own networks.

Building a team In many traditional corporate environments, workers are encouraged to compete individually against one another. This might sound like a good way to promote hard work, but it isn’t. Instead, it promotes distrust, breaks down cooperation and innovation, and promotes a toxic company culture, all of which

slows down productivity. In order to function as effectively as possible, employees need to work together, share information, and trust that their coworkers will look out for them. They need to think and act like a team, and work to the benefit of the group. That trust needs to be built from the top down. The way that entrepreneurs interact with their employees will inform how employees treat each other. An employer who looks out for the interest of their employees provides them with the security they need to extend the same courtesy to their coworkers. This allows them to work together, knowing that the work they do for their business as a whole is also ultimately for their own personal benefit.

Attracting investors A business with a cooperative and innovative team, a steady supply chain, and a strong client base is ultimately perfectly primed for growth. Above all else, though, growth is expensive. Scaling a business up requires investment, and securing that investment is about gaining the trust of investors. Fortunately, investors know what to look for. The trust relationships that businesses build with their suppliers, customers, and employees are ultimately what dictate how well they’ll be able to make use of an investment to grow and generate revenues for investors. In this way, the existing trust that a business has built up with the people and institutions around it help it to build more trust with others. This cycle of building trust effectively generates the more mundane resources and institutional stability that businesses need to compete, grow, and succeed. By giving this rather abstract quality the respect it deserves, entrepreneurs can facilitate their business’ success for years to come.

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Michelle Phan: harnessing influence for entrepreneurship Makeup is not a mask that covers up your beauty; it's a weapon that helps you express who you are from the inside.


Michelle Phan wanted to disrupt the beauty industry, but had no resources, no entrepreneurial experience, and no clear business model. What she did know, though, was that Youtube was the global television of the future, or at least the 2010s. More than a decade later, Phan is a globally recognisable figure, the co-founder of Ipsy, a beauty business that was most recently valued at $800 million in 2016, and has a personal net worth estimated at over $50 million. Most importantly, she’s built a personal brand that has empowered her to pursue her own interests with a freedom that many other entrepreneurs don’t enjoy.

Building a brand Rather than launching a business right away, Phan began as a vlogger, creating makeup tutorials on Youtube starting in 2007. She was immediately successful, garnering 40,000 views in her first week. Over the next few years, her content went viral several times, bringing her to over 1 million subscribers by 2010. While she stopped actively posting on Youtube in 2017, she built a subscriber base of 8.9 million people before that point. Rather than tying her identity to a company and a product, Phan quite literally built her own brand. This direct contact to the public, and her market, essentially gave her the personal influence to make any business she chose to launch or support in the future succeed. In 2011, she

realised this potential by co-founding MyGlam, a beauty sampling business that would become Ipsy in 2012.

Founding Ipsy Following Phan’s own example, Ipsy is designed to operate on this influencer principle. Rather than spending heavily on advertising, Ipsy relied on the influence of Phan, a few other major influencers, and a vast number of beauty vloggers to bring in new subscriptions to the business’ product. These associated vloggers were largely unpaid, being compensated through products, mentoring, and access to the Ipsy coworking space. Their association with the company, and with Phan, helped them to boost their own viewership, and associated incomes. Essentially, Ipsy not only relied on the influence of a large number of vloggers to sell products, but also compensated those vloggers

through its own influence, which translated to actual income only when leveraged appropriately.

Leaving for Em Cosmetics Like many entrepreneurs, Phan found herself at the top of a business that she helped found, but that wasn’t really her own. Her co-founders and investors have their own visions for the future, and success in this kind of enterprise typically means compromise, rather than self-actualisation. Many entrepreneurs are uncomfortable seeing their businesses become something other than what they identify with, but many have little choice but to remain if they want to pursue success. Phan’s most important business asset, however, is her personal influence and individuality.

In 2017, Phan announced her departure from Ipsy, citing the desire to pursue her own interests, and a need to escape from the restrictive red tape of the company. Also in 2017, Phan acquired Em Cosmetics from L’Oreal, with whom she co-founded the brand in 2013. Now 31 years old, and still fairly early in her career, she is poised to pursue success on her own terms, at the head of her own business.

What we can learn Most entrepreneurs pursue business success by developing a range of business skills, from building investor relationships, to administering businesses, to developing novel products. Michelle Phan has proven herself capable in all of these, but her true focus throughout her career has been on building her personal brand, and pursuing her personal definition of success.

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Unlike a traditional celebrity brand, Phan’s success as a celebrity and as an entrepreneur is built from the ground up, within her appropriate market. As a beauty celebrity who entered the beauty business, she actually is an expert in her field.

A 21st Century form of entrepreneurship At Em Cosmetics, Phan is developing new and innovative beauty products with the aim of disrupting the industry. Unlike more traditional entrepreneurs, though, Phan’s success is based in her direct relationship to her market. What her business specifically does within the beauty industry, and the products she sells, come second. This personality-driven mode of doing business is by no means new. The legitimacy with which Phan does so, however, is definitely new. Unlike a traditional celebrity brand, Phan’s success as a celebrity and as an entrepreneur is built from the ground up, within her appropriate market. As a beauty celebrity who entered the beauty business, she actually is an expert in her field. It provides us with a clear view of exactly what kind of power influencers have within their industries, and how that influence can be leveraged to support entrepreneurial ambitions. Both for influencers seeking to become entrepreneurs, and for businesses seeking to leverage influencers, Michelle Phan’s career provides invaluable insight.


Trust Fifo Capital to sort your seasonal cash flows A standby working capital facility ready to access when you need it most.

Simple preapproved facility sitting alongside existing finance arrangements. • Pay only if you use it • Fast and simple to activate • Peace of mind for unexpected cash flow interruptions • Small and large exposures • Treated on a case by case basis, and tailored to your needs

Contact Fifo Capital today for more information. 0800 86 34 36

Dealing with non-payment is an essential skill for entrepreneurs


Late or non-payment is one of the trickiest issues that entrepreneurs are commonly forced to learn to deal with. How good business owners are at dealing with clients who don’t pay, or who pay late, is strongly indicative of how successful their business will be both in the short and long run. There is no simple set of rules that can guide how to best proceed when a client doesn’t pay. Acting too aggressively can result in the loss of potentially valuable clients, while not being assertive enough can result in a company being exploited and driven into serious financial difficulties. To manage this type of situation well, businesses need to work hard to understand their particular clients, their own business, and the financial and legal options available to them.


When to stop work

For many businesses, halting work immediately isn’t the best policy, because of the opportunity costs associated with such a move. This is particularly true when the client represents a major portion of the company’s business. However, a business that overextends itself in serving a non-paying client could find itself dragged into serious financial difficulties of its own. Suspending work, or firing a client entirely, is something that businesses need to do when they seriously suspect that they won’t be paid for that work. This might be because the client is insolvent, or simply planning to avoid paying until forced to do so legally. For many small businesses, the legal costs of suing for payment in such a situation could exceed the value of the outstanding invoice. At this point, continuing work for any length of time is generally unprofitable. If, on the other hand, a client just pays habitually late, other measures could be taken to remedy the issue. The introduction of late fees or the threat of involvement of a legal professional, for example, can often deal with more minor chronic problems.


A ddress cash flow issues immediately

Entrepreneurs without a great deal of experience may only respond to late payments by attempting to chase the delinquent client. After all, they need those revenues in time to make their own outgoing payments. Relying on those late or non-paying clients to come through, however, is extremely risky. If the money doesn’t come through, the business could become unable to pay its own suppliers or to make payroll, resulting in interruptions to its own operations. This, in turn, would likely cause even more issues going forward. Instead, business owners need alternative financing solutions that will help them keep their business running regardless of what kind of cash flow issue might arise. The two most versatile tools for this are invoice financing, and supply chain finance, which can be used separately, or in conjunction, in order to consolidate funds as needed. Invoice financing is a tool that allows businesses to bring in additional revenue by trading in an unpaid invoice for most of its value to their financial institution. That institution then collects the payment from the client, before issuing the remaining funds, less their fee. Supply chain finance, on the other hand, works by freeing up existing working capital. Instead of paying suppliers out of their own pocket, they can do so using a credit fund that’s furnished by the financial institution’s investors. Payments on the balance of that fund can then be deferred, giving the business the time it needs to deal with the original issue.


revention is about P communication

The best way to deal with payment issues is, of course, to avoid them in the first place. While some businesses fail to pay due to their own financial difficulties, many simply hope that they’ll get away with it, or even just forget. To nip these latter two issues in the bud, it’s essential to base client relationships on strong professional respect and communication. This is ideally done more specifically by communicating with clients effectively about payment expectations, and what they can expect in the event of non-payment. Most importantly, it means working with a lawyer to create a clear and enforceable contract, and taking pains to ensure that the client is explicitly familiar with it. This doesn’t so much remind the client of their obligations, so much as indicating that the business won’t simply tolerate ill treatment, and would likely be both bothersome and expensive to attempt to swindle. Dealing with non-payment is both a soft and a hard skill. Business owners need to be able to calculate costs, manage their finances, and consider risk, while also making largely intuitive judgment calls about their clients and communicating effectively to establish the respect they are due. By mastering this diverse array of skills, business owners can ensure that their operations run smoothly and grow, while also avoiding potentially predatory situations, and retaining profitable clients.

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Drive growth by taking control of your business’ finances in 2019 For small and medium sized businesses, cash flow issues are the most-cited barrier to growth. This is because all aspects of growth require investment, from research and the development of a growth plan, to the execution of that plan, to the ongoing management of existing operations. Apart from those comparatively few who benefit from significant outside investment, businesses are forced to stretch their existing budgets, along with any financing they can secure, in order to finance their growth. Because of this, the most meaningful step that business owners can take toward enabling their business’ growth in the new year is to focus on and get better control of their cash flow. By learning to manage costs and to apply the right financing tools to particular situations, businesses can free up the capital they need to drive growth without taking prohibitive risks.

Limit unanticipated cash flow interruptions On any given day, a typical entrepreneur might be doing what would otherwise be three or more separate full time jobs. Small business owners frequently make themselves responsible for a wide variety of tasks, whether it’s managing payroll, chasing down late payments, communicating with investors, managing employees, or jumping in to cover for a sick employee. Because of these extreme demands on a business owner’s time and attention, it’s very common for minor issues to go unaddressed for extended periods of time, until they develop into major problems. Over time, business owners increasingly find themselves running to put out one fire after another, with no time left for innovation, growth plans, or deliberate financial management.

Delegate non-essential tasks As operations grow, business owners need to begin delegating tasks that don’t explicitly require their personal attention. While it might initially seem more cost effective to take on a wide range of responsibilities, it’s critical that business owners have the time they need to deal with the high level tasks that can’t be delegated. This enables them to maintain a big-picture view of their business, which allows them to spot potential cash flow issues before they manifest. More importantly, it allows them to budget and plan for the future, which is critical to guiding sustainable growth.


Use financing to regulate cash flow for growth Once a business’ leadership is able to focus on high level objectives and growth, they can begin to take control of their finances. That doesn’t just mean keeping proper track of accounts, but also budgeting, projecting future revenues and expenditures, and putting in place measures to manage cash flow shortages, as well as any unanticipated costs. To do this, it’s a good idea to get in touch with a financial representative at your financial institution to discuss the best options for your business. A few alternative finance tools, invoice financing and supply chain finance, are particularly useful when it comes to consolidating funds for growth investment, and to manage cash flow interruptions that could otherwise cause problems for a business that’s already investing in its growth.

Shortening your cash conversion cycle A business’ cash conversion cycle (CCC) is the amount of time it takes for a business to convert an initial investment into profit. For example, it takes a significant amount of time for a furniture manufacturer to purchase raw materials, wait for delivery, produce products, and then those products before it can collect any revenue. The time between the purchase of those raw materials,

its sell

and the collection of revenues on the sale of the final products is the cash conversion cycle. As businesses begin looking at funding growth, this time period can become a major stumbling block. A small business that’s looking to scale up faces a major challenge as it begins to take on its first large clients. It’s not unusual for a single new client to require a small business to double its production capacity. Paying for that growth, however, can be tricky. Most small businesses won’t have the funds to simply double in size on short notice, but won’t begin billing or receiving revenues from that client until well after the investment needs to be made. To deal with this issue, businesses can make use of supply chain finance to defer much of the cost of this kind of rapid growth. Instead of paying suppliers out of their own pockets, they can draw from a third party credit fund. The payments on that fund can then be deferred up to 90 days. In an event where the business’ clients enjoy significant payment terms, which could push the CCC well above 90 days, businesses can then also use invoice financing to get access to revenues much sooner. Instead of waiting for a client to pay, they can trade the outstanding invoice in to their financial institution for most of its value. Used in conjunction, these two tools often allow businesses to reduce their CCC below 0, meaning that they don’t need to pay any funds out of their working capital until after the associated revenues are already collected. A business that can achieve this will be able to greatly reduce the ongoing up-front costs of growth, and be able to grow faster as a result. Moreover, by applying these financing tools strategically, businesses can stabilise their working capital in any number of otherwise difficult situations. In this way, entrepreneurs can build businesses that are more resilient, more profitable, and which grow faster than their competitors. Fifo Capital Headway


Sean Rad: dating for the 21st century

By 2010 it seemed that online dating was going to be a niche market without real mass appeal. In public perception, films, and media, it was represented as a tool for the desperate or socially awkward. Then, in 2012, Tinder brought digital dating into the mainstream. Within just a few years, founder Sean Rad turned his company into a household name and a global enterprise. Today, Rad has a net worth of around $3.1 billion, owing primarily to his incredible success with Tinder. While the success of his company might look similar to great tech startup successes, it did something especially remarkable. Rather than the more classical scenario of a great innovator disrupting an existing industry, Rad’s story shows us how a business can innovate in ways that open up entirely new markets, effectively creating an entirely new niche.

Look at what’s happening in society. We’re living in a technical age, it’s creating transparency and equality and connecting us. On top of that, women are more independent than ever. Tinder isn’t redefining romance. Progress is.


Early career Sean Rad started his first tech company, Orgoo, early in college. An unsuccessful early attempt at a unified communications platform, it provided Rad with his first taste of entrepreneurship, and prepared him for his next venture, Adly. This company focused on celebrity social media branding, and enjoyed considerable success. After running the company for 5 years, Rad left the company and sold his stake to a private equity firm in 2011.

Tinder’s big splash After leaving Adly, Rad took a job at Hatch Labs, where he was put in charge of the app Cardify. In his free time, though, he, Justin Mateen, and Joe Munoz began working on the idea that would eventually become Tinder. Seeing their chance, they submitted a prototype to a Hatchsponsored hackathon, and won. After that, things began to happen quickly. Hatch Labs switched Rad’s team to developing the app further, and had a more polished app ready for launch just 3 weeks

According to Rad, the thing that made Tinder relevant to everyone was its double blind swiping feature. By allowing users to “like” others without their knowledge, Tinder removed the risk of rejection that comes with approaching people in person. Since users can only reach out to each other after they’ve matched, both people already know that the other is interested in them.

What we can learn Rad’s career and his personal success with Tinder are inspiring in their own right, but a closer examination also provides a few key points of insight for entrepreneurs and business owners. Business success isn’t always about competition Competition and disruption is a great approach for most businesses, and entrepreneurs often pigeonhole themselves into pursuing it because the existence of competition proves the existence of the market. If no one wanted to buy their good and services, there wouldn’t be any pre-existing industry to compete against. Rad, however, looked past this to consider the needs of consumers. Instead of attempting to beat traditional online dating at something that it already did fairly well, Rad looked at what he could do for potential users who weren’t being catered to at all. As a result, when Tinder launched, it did so without any competitors, effectively guaranteeing its astronomical success.

later, on 12 September 2012. Within 2 months, Tinder had already made more than 1 million matches. Growing exponentially, that count reached 1 billion early in 2013. Today, Tinder is estimated to have over 50 million users worldwide, and has fundamentally impacted how young people meet and get to know each other.

What makes Tinder different Tinder didn’t disrupt the online dating industry so much as it expanded it, pushing into new markets. In fact, Tinder isn’t in direct competition with traditional dating websites. Traditional dating websites primarily catered to people who didn’t have access to potential mates in the traditional dating world because they were too busy, geographically isolated, too socially awkward, disabled, or otherwise held back. Tinder, however, managed to get the attention of the regular dating public.

Great entrepreneurs focus on creating businesses Rad left Tinder in 2017 to pursue other projects. To date, he has invested in 35 different tech companies, and is looking to nurture the next great wave of innovation and entrepreneurship. While Rad’s departure from Tinder has been controversial, the act itself provides valuable insight to entrepreneurs everywhere. As the creators of new and innovative businesses, entrepreneurs are in their element when they’re creating something new. Because of this, the greatest entrepreneurs are frequently those who leave completed projects behind to develop new ones. Rad has fundamentally changed how an entire generation builds romantic connections, whether it’s through Tinder or one of the competitors that has sprung up in its wake. Considering this, it’s important to realise that at just 32 years old, Sean Rad is a young multibillionaire who is still at the beginning of a promising entrepreneurial career. In decades to come, Rad is sure to establish himself further as a force for entrepreneurial progress in the tech industry, whether it’s through his investments, or his entrepreneurial talents.

Fifo Capital Headway


When business owners think about growth, the first thing that often comes to mind is revenues, financing, and client retention. While growth often certainly feels like a numbers game, though, entrepreneurs quickly learn that it’s about people and relationships. That means finding and building strong relationships with the right investors and lenders, but it also means finding ways to recruit the right employees. The employees a business hires play a major role in what kind of company culture it will develop. After all, businesses rely on employees for their productivity, their attitude toward each other and toward customers, and their ability and willingness to innovate. Understanding who those top performers are, and learning how to recruit them as a small business, is a critical part of making a business competitive, and keeping growth sustainable over time.

A few A-players disproportionately boost productivity Price’s law, based on Derek J. de Solla’s research on the productivity of academics, states that 50 per cent of the productivity of any group is attributable to the square root of the number people in the group. Having been found to apply to groups in all kinds of situations, including typical work environments, this means that, statistically, a small business with 36 employees typically relies on just 6 workers for approximately 50 per cent of its total productivity.


Enabling growth is about hiring the right people Of course, many of the workers who aren’t among those top performers may still fill essential roles, underpinning the company’s culture, or perhaps enabling the high productivity of others.

What’s important to learn from this, however, is that businesses who can attract just a few more of these top performers will enjoy a disproportionate competitive advantage over others in their industry. If our above-mentioned 36-person company had 8 of these top performers, for example, its total productivity could already be 15 per cent higher than that of a typical competitor.

Attracting top performers Finding and hiring A-players isn’t easy for businesses in any circumstances, but it can seem particularly difficult for a small business. After all, small businesses usually can’t compete with large corporations when it comes to compensation, benefits, or room for advancement. That doesn’t mean, though, that it can’t be done. Write effective job listings To attract top performers, a job listing just needs to do a few specific things well. It needs to communicate the

demands of the positions clearly and effectively, and it needs to engage and inspire potential candidates. Firstly, that means the job description needs to be written by someone who fully understands the position. Job descriptions need to give readers a very clear and succinct idea of what is required of them, while avoiding vague and largely meaningless qualifications such as “adaptability”, “team mentality” or “strategic thinking”. Since no candidate would ever admit to lacking these qualities, these just draw the reader’s attention away from the position’s core qualifications. Inspire potential candidates A great job description also needs to inspire and excite readers. Ideally, this is done by showing candidates how the work they’ll be doing matters to the company, and how the work the company does matters to its customers. This provides context to the job, and allows potential candidates to picture themselves in their future role. Avoid accidentally filtering out top performers It’s important not to overemphasise non-essential skills or experience. More experience doesn’t always translate to greater competency.

Discouraging candidates from applying based on an often arbitrary experience requirement might filter out otherwise desirable candidates. Similarly, a company can seriously harm its prospects by requiring applicants to have relatively minor skills, such as familiarity with obscure software that a new employee could simply acquire during training.

Make sure candidates are a cultural fit Even an otherwise ideal employee can become ineffective when placed in the wrong environment. To avoid this scenario, businesses should avoid a candidate that just looks great on paper, or who interviewed well in an isolated setting. Rather, it’s important to narrow down your options to a handful of individuals. These can then be interviewed specifically for their cultural fit, or even invited in to interact with future coworkers before a decision is made. This gives both the candidates and the business a chance to actively consider how good a fit they are and make a deliberate choice. Taking just these few relatively minor steps can make a big difference for businesses. By working to attract the right kinds of applicants, and being deliberate about how new hires will interact with the company culture, businesses can significantly improve their growth potential. Not only does this make it easier for businesses to find and hire top performers, it also helps to establish a more stable company culture that’s inherently more innovative, and that works better together to make growth possible.

50% of the productivity of any group is attributable to the square root of the number people in the group. eg.......... 36 employees typically relies on just 6 workers for approximately 50% of its total productivity.

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When expertise counts Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help: • One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability. When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital on 0800 86 34 36

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