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No Sales No

WEALTH Ben Bernanke’s Bluster

PRACTICAL BUSINESS Marketing in 2013…and Beyond

ENTREPRENEURS The New Funding ‘Mixology’

INVESTORS What Angels Want

The Key to Making or Breaking The Business

Q Court, 3 Quality Street, Edinburgh, EH4 5BP For further information, please contact Stephen Paterson on: Telephone: 0131 625 5151

FIRST WORD Challenging “The Oracle” Berkshire raised its stake in banking giant Wells Fargo, which is among the nation's strongest banks and was the company's top holdings at the end of 2012. Additionally the firm augmented its already large holdings in American busi ness icons such as computer maker IBM, one of his new bigger holdings, and re tail behemoth Wal-Mart Stores.

Earlier this month some 35,000 people descended upon the Midwestern US city of Omaha Nebraska, home to the college baseball World Series, the headquarters of five Fortune 500 companies and birthplace of Fred Astaire, Marlon Brando, Nick Nolte and 2008’s richest man in the world, Warren Buffett. They came en masse to attend the annual shareholder meeting of ice-cream-to-insurance conglomerate Berkshire Hathaway Inc on the banks of the Missouri river, and hear speak its company chairman, “The Oracle of Omaha”, considered the most successful investor in history. Buffett, who studied under the legendary Benjamin Graham at Columbia University, built Berkshire Hathaway from a textile company into a major corporation with a market cap in excess of $200 billion alongside vice chairman Charlie Munger. Three months prior to that gathering in his annual letter to shareholders he wrote about how the firm’s performance in 2012 was below standards for the investment guru’s funds, despite a 45% increase in profit for his investment business. It was only the ninth year in the past 48 that he failed to be beat the index, and the billionaire spent much of the day proving once again that he's a long-term investor, not a day trader, who has made a few changes to the company’s closely followed $85 billion stock portfolio in the first quarter. Unsurprisingly Buffett's stock trades are closely watched by Wall Street. Equally unsurprising is that other investors tend to mimic Buffett’s trades when they become public, which often gives a price boost to the stocks he owns; an boost dubbed the "Buffett Effect" by academics. So what’s changed? A few pieces of the investment puzzle perhaps, but not Buffett!

IBM was the real surprise after 50 years of tech-sector averse investment, Buffett plunged $10 billion in IBM while staunchly avoiding the more popular Fortune 500 darling of the last decade, Apple, saying: “I don‘t own any Apple stock and I haven’t. One of the reasons they have all that cash around is that they haven’t been taxed yet.” Interestingly Mr Buffett for the first time bought a company called Chicago Bridge & Iron and purchased more than 6.5 million shares of the Netherlands-based energy-infrastructure firm valued at more than $404 million. Jettisoned from the portfolio were positions in global agriculture giant Archer Daniels Midland, selling all of its nearly six million shares, alongside dropping 3.9 million shares in defense contractor General Dynamics, according to a company filing with the Securities and Exchange Commission. So how good is Warren Buffett? In the words of The Reformed Broker Joshua Brown: “It's always amusing to me to hear people who've not accomplished 1% of what Buffett has, throw mud at him or challenge his record. I find that the people who "hate" Warren Buffett tend to fall into three buckets, with some overlap. People Who Hate Warren Buffett: 1. Conspiracy theorists who can't let go of the fact that one of the world's richest men probably has some advantages and influence that others don't have. 2. Hardcore right-wingers and libertarians who are incensed at Buffett's ideas about making the tax system more progressive and eliminating absurd loopholes like carried interest. 3. The purveyors of complex investing products, sophisticated (read: expensive) strategies and short-term trading proponents who thrive on transactions and get paid when people turn greedy and fearful, buying and selling while generating turnover and commissions. So chalenge the Oracle of Omaha at your peril.



3% 0.6% 0.0% 100% 3

The annual growth your investments and pension fund have to achieve each year to simply cover the total annual and switch fees now charged by many wealth managers.(1) The maximum annual management fee charged by Scotland’s’ largest independent wealth manager – Alan Steel Asset Management. The fees imposed by Alan Steel Asset Management on all portfolio and pension fund rebalances and fund switches.(2) The percentage of existing Alan Steel Asset Management clients who would recommend our wealth and pension management services to a friend or a family member.(3) The number of times Alan Steel Asset Management have been voted “Best UK independent investment advisers”. This is more than any other Wealth manager in the UK.(4)

01506 842 365

Or visit

The no obligation number to call today to find out how to get your investments and family wealth back on to a tax efficient, fair cost and better performing track.

Alan Steel Asset Management is authorised and regulated by the Financial Services Authority registered in Scotland No. 58014 / VAT registration No. 446593714 / Nobel House, Linlithgow, EH49 7HU / Fax: 01506 845074 (1

Assumes annual charge of 1% and 2 x 6 monthly portfolio rebalances at cost of 1%.


Source: ASAM (3) Source: Moneymarketing magazine. (4)Source: ASAM.

Steel’s View P.8

Paul Varcoe BritDAQ P.23


GDP - Gross Distortion Predictions

Steve W. Martin Feature P.28

No Sales No Success

Marketing in… P.37

…and Beyond

Maltman: Clear Communications P.37

Practical Business P.32

The HEAT Scotland 100 High Growth Discussion Series P.12

The Basics for Running Your Business

Ben Bernanke’s Bluster P.11

Mike Williams

How Good Is Buffett Steel’s View ‘Dumb’ Billionaires Social Media 2013 Pensions Cash

P. 3 P. 8 P. 17 P. 21 P. 35

Suspicious Minds P. 7 HEAT Scotland P. 12 Angel Wants P. 19 Funding ‘Mixology’ P. 25 Duck Diatribe P. 38 P.5

Par Equity invests in innovative young companies with high growth potential. Our approach is hands-on, investing where we can add value through our Par Advisers, deploying intellectual Par Equity invests in innovative young companies with high growth potential. Our approach as well as financial capital. We offer qualifying investors access to both EIS and conventional is hands-on, investing where we can add value through our Par Advisers, deploying intellectual venture capital collective vehicles.investors access to both EIS and conventional as well as financial capital.investment We offer qualifying venture capital collective investment vehicles.

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Par Fund Management Limited is authorised and regulated by the Financial Services Authority. Funds managed by Par Fund Management Limited are available only to elective professional customers, who are able to invest in unregulated collective investment schemes. Retail investors will not be eligible to receive information about, or to invest in, such funds.


Suspicious Minds Emerson “Even a bad taxi driver will eventually get you to your destination. But bad business advisers not only prevent you from getting to where you want to go, but can destroy your business in the process.” A leaked document, revealed today by a reporter, claims the UK Government receives £billions from four specific "sweetheart" tax deals. A "sweetheart" deal involves tax officials and corporations settling disputes behind closed doors, and if this scenario proves true even Elvis wouldn't be able to shake off the backlash! The revelation is bad timing for Her Majesty's Roving Collectors, as the Government has turned up the volume to near-deafening levels on the issue of tax avoidance and "adhering to the spirit of the law".

Sounds more like folks have been negotiating over spirits in Whitehall! The document, sent in 2011 by a former head of tax at HM Revenue and Customs to the exchequer secretary at the Treasury, reveals that just four of these secret agreements were worth £4.5bn in total. It says: "In 2006, HMRC adopted a new approach to reaching tax settlements with large business through building constructive relationships and encouraging mutual openness and transparency, increasing certainty for business and reducing the time taken to resolve issues. "Settlements of above £1bn are now not uncommon and £4.5bn has come from just four settlements with bespoke governance." So what's missing in these secret nuptials (other than the transparency we're all asked to observe)? How about the actual total tax liability that these sweethearts eloped with! Can the campaign against avoidance go on together....with suspicious minds? In the words of Elvis...Uh huh huh!

Now the Treasury is calling the suggestion that HMRC is 'too cosy' with accountancy giants simply 'absurd'. The Exchequer Secretary staunchly defended the Treasury's use of experts from the "big four" accountancy firms of Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers, rejecting criticism from the Commons Public Accounts Committee that such staff could be "poacher turned gamekeeper turned poacher". Hey, what about the secret sweetheart £billions from the 'big corporates'? Meanwhile it seems the UK's big accountancy firms are seconding staff to a type of "Treasury Insider Training" camp, thereafter returning to their big four homes to use their newly acquired knowledge to help their rich clients exploit tax loopholes. So, wait a minute; the Treasury IS using big four accountancy staff, they ARE learning and advising on loopholes and they ARE taking this information back into their own firms…but there's no problem there…at all… The right honourable gentleman added: "They're not going out to advise clients on how to dodge the legislation, they're going out to advise clients on how to abide by the legislation." Uh yeah, that's why the big corporates and the uber-wealthy pay big bucks for advice, so they can ensure they're paying into the Government's coffers at every possible turn. Jim Harra, the director-general of business tax at HMRC, told BBC Radio 4's Today programme he did not recognise the problem identified by the Commons Public Accounts Committee. "Clearly they do go back out with some expertise and they do advise on how to use the legislation. We watch very carefully what advice accountants are giving to their clients. Provided that advice is how to use the legislation in accordance with the way Parliament intended it to be used, we have no problems with that." We appear to be practicing tax avoidance programmes inside Whitehall with corporate giants, and arming private experts on how to work the system, while outside admonishing the importance of the spirit of the law. In the words of Mr Osborne: "Unless (we) can show (we) can agree on this existing proposal (that the same rules apply for all), our commitment to a new, stronger standard will not be credible." Indeed, Mr Osborne, Indeed. P.7


GDP: Gross Distortion Predictions

the Nerds decreed they'd miscalculated. US GDP had been positive instead. Beating around the Bush anybody? Putting the Bootle In

By Alan Steel “I have complained before about the way Newsreaders report GDP and other miserable economic topics, but that's no reason to let them away with their constantly wild inaccuracies. That’s especially true as their obsessions upset investors who're constantly reminded by them of an alleged direct link between Stockmarket performance and current economic factors when history shows there is none.” And the pessimism among investors leveraged by our ill informed media is probably a major reason why so many sell shares or equity funds at the wrong times. The Wall Street Journal recently ran a story of two married Texas medical specialists who sold their joint portfolio in Feb 2009 at the bottom of the stockmarket, waiting in Cash watching the market more than double before now buying back in. But let's return to the Triple Dip Recession odds on favourite in the UK Economic Stakes - Over the Hurdles in Heavy Going apparently. I don't know if you are aware that GDP is supposed to represent the "Income" of a country. Oops! Now how anybody works that out at all is a mystery, but to have a stab at it on small samples less than a month following a quarter suggests it's going to be pretty inaccurate, so it's reviewed again and again by some sad people over months and even years. How else can they explain the quiet admission hidden away in the digital ethers by the Office of National Statistics some months ago that they'd just discovered their UK GDP "findings" were actually wrong for the previous 15 years thanks to some error or other in their theoretical calculations. Oops! And this kind of thing's nothing new. It's common knowledge now that when George Bush Senior lost out to Bill Clinton in the 1993 US elections it was due to his alleged mismanagement of the US Economy, thanks to "Official" GDP estimates at the time showing the economy to be tanking. After a good few years checking and re-checking however P.8

I read a piece last month by uncheery UK economist Roger Bootle who announced there was really no difference between minus 0.1% GDP and plus 0.1% GDP - if so why the fuss? - (the initial estimate for the quarter just past was minus 0.1%, and the real number came out at plus 0.3%) - but despite that, Bootle described himself as "cautiously pessimistic." Never heard that one before. I wonder if he's ever enthusiastically pessimistic? Before you get too depressed like them, do remember economists on the one hand talk about Real GDP, and on the other they refer to Nominal GDP, which reminds me of the one about the advertisement for a one armed Economist who couldn't say "on the one hand this, but on the other that ......"

And as to whether we should pay any attention to economists' perpetual gloomy forecasts, do remember what President Ronald Reagan said about them - "Economists are people who, when they see something happening in Practice say, Ah but it wouldn't work in Theory". What’s Real is Nominal But now we're told UK GDP surprised them by going up, not down. Up by 0.3%. Wow! Now what kind of GDP is that? Real or Nominal? What's the difference? Well Real GDP should be obvious. Or is it? Let's try Nominal GDP. The dictionary meaning of "nominal" is "trivial" or "not as things really are". Real GDP removes inflation, so in my book it's artificial in the real world, whereas Nominal GDP includes it. So add

UK inflation to the 0.3% and you'll get a better picture. Confused? Hardly surprising. Let's take the Big Picture. The total value of World GDP was estimated at $66 Trillion at the end of 2011 and is obviously closer to $70 Trillion now. At the end of 2006 it was just over $47 Trillion, and 5 years earlier was estimated at around $31 Trillion. Notice anything? It's more than doubled in 10 years, while here the Stockmarket measured by the FTSE Index shows no growth; in the US the Dow Jones is up a bit; and the Hang Seng (a proxy for China) is also up a wee bit. Meanwhile the world economy has more than doubled, and China's economy has quadrupled, since 2001. Nominally? No - actually! Try buying something in the Supermarket at the so-called real price - with no inflation - and see how far you get. It's a big mistake for economists and newsreaders to tell us that our Real world is Nominal. If the real world has more than doubled in size while Stockmarkets have at best gone up a smidgeon it seems to me there's a mismatch somewhere and probability tells me share prices have a lot of catching up to do. Meanwhile I promise to continue checking on what the best predictors are saying, and that includes folk like Ned Davis in Venice, Florida and his team who have a great record of accuracy over the years, unlike most pessimists who have accuracy records so low you're better tossing a coin. And can I remind everyone optimists tend to create more wealth in the long run. Squeaky Bum Time I took a chance recently and watched the news on the TV having completed my 10 day News Diet recommended for investors to improve spirits and reduce blood pressure! The big story was the impending retirement of Alex Ferguson after 26½ years in the hot seat at Man U. Next up was good news from scientists at Edinburgh University who've discovered Sunshine is good for us after all.

Meantime in the financial world, experts don't come bigger than US economists Rogoff and Reinhart , much feted by politicians who religiously follow their advice trying to fix economic damage caused by the 2008 Financial Tsunami. Researching the years from World War 2, R and R allegedly found when a developed country's debt reached 90% of GDP (Income), economic growth fell from 3% or 4% to below Zero. In other words instead of an economy growing, it shrunk. And everybody believed this to be fact. Our Chancellor is one of many who has built tax and debt reducing policies on the back of these "findings ". Rogoff & Reinhart However, like the fresh findings about the benefits of sunshine, an independent analysis of Rogoff and Reinhart's work, found errors and inaccuracies in the so called data collated by them. It seems their conclusions are wide of the mark. GDP only slowed a little, not a slump! In just over 4 years, at a time when pessimists were telling us it was too early to risk our savings buying shares and equity funds, those prepared to risk coming out the shade have seen substantial increases as some Stockmarkets have doubled. But what's next? Independent analysts Ned Davis Research have bad news for economists. They find that in terms of GDP Growth it's the tortoises - low growth economies - that produce the best long term stockmarket returns over the long haul. And US commentator Tadas Viskanta agrees. Alex Ferguson was given the Man U job in November '86, less than a year before the October '87 Stockmarket crash. And he like Equity Fund Managers for the next 3 or 4 years struggled to win against the odds. But he, like brave Fund managers including Neil Woodford and Anthony Bolton, thrived under the pressure, and went on to win handsomely. He would have made a great Fund Manager! Now it's time for him to bask in the Sunshine. He's earned it. P.9

VIEW FROM MANHATTAN So does it really sound as if a guy putting a trillion dollars into a market one hundred times that size over the course of a year is going to "control rates?" Not on your life. Rid that false thinking from your agenda because a cloudy understanding will not help you when rates do start to rise....and they will. They will rise over time as the perception of the future improves. It is all in our head mind you - because the future is always cloudy.

Ben Bernanke’s Bluster By Mike Williams

The future is only what our mind perceives it to be. Anyone suggesting otherwise is doing one of three things:

“The recent US jobs report, well, knocked the lights out. Not only that, the pesky old report from last month was revised upward by 40% to 138,000 jobs. February was revised upward (again) to 332,000. When combining revision with the April report, we have over 265,000 added jobs. Not too shabby…even as the bears told us the weather was just too bad for anything. The weather? Really?”


Fooling themselves


Fooling you


Smoking crack

Here's a question for you?

I am currently praying that the market will do the best summer swoon act it can accomplish, even though I fear there is simply too much money itching to leave bonds and "buy dips" now.

If all the "experts" keep telling the leader of the Fed that he is causing a bubble in stocks due to low interest rates, what would you do to "cool that feeling off?" You would get in front of Congress and mix in a few words which would vaguely hint at some shift in the future. Rest assured that would slice deeply into any budding good feelings propping up any experts. Alas, that is about as significant as one can make the testimony yesterday. It has been used as the 24-hour headline since to explain market weakness. "Too bullish" will turn into "terrified" after about a week of this confident. The Fed Controls Rates? That's a nutty thought but let's just be clear: The market controls rates.

What Now?

Sure we could get a week or two of chop and red ink but from a height closing in on 15,000 for the Dow, suddenly 14,300 does not seem all that exciting does it?

My Preference? I'd prefer to see a month of crappy market action, stuff that would make all of us (including me) doubt every word I type here. Then we can build; when we will least wish to do so, while the future remains cloudy. Why is that? Because the real thing to be scared of is this: When all the masses here and abroad are confident that the future is perfectly clear, that all the problems are fixed, life is a bed of roses and you just cannot lose in stocks, then it will be time to move on.

Bond buyers look into their trusty crystal ball and agree to be paid certain rates of return for their money. They control rates, no one else does.

That's when you let them have all the really expensive stocks. Until then....hope for corrections.

Keep a Proper Perspective

“Hope for a strong sounding Fed and red ink to take advantage of for a future which is far better and more opportunistic than most currently expect.”

The Fed's latest Quantitative Easing (QE) effort is roughly one trillion a year. Big number right? Maybe not. Consider the global bond market is about $100 trillion in size. Yet in any 24-hour period, roughly $1 trillion in bonds changes hands. Now, with those facts, does a trillion a year actually sound like a lot to you? It is equal to 1/365 of daily action when divided over a year.


HEAT 100

The HNW HEAT Scotland 100 High Growth Company Publication & Event Series SPEAKERS Ray McLennan, Angels Den Stephen Paterson, Haines Watts Carlos Alba, Carlos Alba Media Tuesday 21st May 2013

The HNW HEAT Scotland 100 gathering in Edinburgh this month kicked off a fortnightly series of high-growth company leader discussions that will extend out until the end of 2013. It also marked the launch of the benchmark Publication & CD of the same name, designed to create a sense of community, learning and business development opportunities for the 100 innovators, investors and professional advisers involved. Speakers Ed Emerson, HNW Magazine – “Boiling frogs” Carlos Alba, Carlos Alba Media - "The ‘Social’ media" Ray McLennan, Angels Den - “The funding market” Steve Paterson, Haines Watts - "Show me the money" Entrepreneurs Paul Bodger, Anytime Leisure Robin Mehta, Union Tech Kenny Magee, ComponentSense Mark Boyde, NAC Donnie Maclean, Eat Balanced Mike Octigan, Gecko New Media Carlos Alba – The Truth About Social Media “Social media has its place. It’s not a panacea. And it can be quite easily misunderstood and mishandled,” says Carlos Alba of Carlos Alba Media. “Consider McDonald’s who tried to promote its brand and engage with customers through two promotional trends. Unfortunately, those routes became an opportunity for customers to spout off about their own personal horror stories at the fast food chain. In essence the company paid to create a channel of bad publicity. P.12

Ed Emerson, HNW Magazine

“Similarly, Snickers paid a number of celebrities to take pictures of themselves eating a Snickers bar. However, not only did the pictures come across as a bit awkward but the Office of Fair Trading got involved with questions about the company’s approach to product endorsement. “And it continues through examples like the National Rifle Association tweeting ‘Good morning, shooters. Happy Friday. What are you doing this weekend?’ as a mass shooting in Aurora Colorado was unfolding, through to retailers Gap and American Apparel trying to turn natural disasters into selling opportunities. “It’s easy to get it wrong. But as social media has grown and we have grown with it we have a far better understanding about frequency of interaction, approach and the huge importance of listening to audiences at least as much as you try to communicate with them.” Ray McLennan – The Road to Investment “Raising money is not difficult,” says Ray McLennan of Angels Den. “That said, the banks are worse than dead, Government schemes and RDA’s take so long to get approval that they are worse than useless and yet there’s more demand than ever. As a result, the number of Angel investments made by High Net Worth Individuals or sophisticated investors is increasing. It’s also important to understand that times are difficult for the high net worth individual market (HNWI) and who on average lost 26% of their wealth through the recession – that however was largely down to falling property values. “So who are the business angels and what does it take to be one? While the regulations in the US are far more stringent and specific, generally someone is considered an HNWI in the UK by the FSA if they make over £100k per year and

HEAT 100 “Remember, the equity play may dilute the company going forward but the debt play can kill your business.” Ed Emerson - Boiling Frogs

and have £500k in assets – not including the family residence. A sophisticated investor is someone who has experience of making investments and must have made more than two, more than 6 months ago. “From the entrepreneur’s perspective, the person seeking funding, you really need to think about the whole process from the perspective of the Angel investor. The Angel investor is looking at who you are and what it would be like to work with you for maybe several years, what you’re doing, how much you’re looking for and how and when they will get their investment back. “The average angel investment in the UK just now ranges from £160k to £250k, and that angel funding does not happen here quickly. Believe it or not the average time frame for business angel syndicate funding from first contact to receiving the money is circa 18 months. So be prepared if you’re going down the business angel route. Angels Den is a quicker route to funding. Getting an offer can take just a few days or a couple of weeks and due diligence means you could have the money in the bank in as little as two weeks, but usually about 3 – 4 months. “By comparison I was in Gibraltar recently and found the investment asks were all in excess of £1million. And everyone seeking funding at that particular event was offered either funding or assistance or both. It’s a different and much faster moving investment world outside of the UK when it comes to angels and syndicates.”

“It’s easy to succumb to the 24/7 information overload and believe everything you’re told, particularly when the news is grim,” said HNW editor Ed Emerson. “Fear sells and emotions are catching. We are often done a great disservice by the media in this regard. So here are some things to think about. “We have been inundated with alleged armageddons over the last five years since the start of the recession. They’ve ranged from fears of Fiscal Cliffs, to the diminishing economic fortunes of Europe’s PIIGS (Portugal, Ireland, Italy, Greece and Spain) and images of polar bears searching vast oceans for global warming-depleted ice flows. “What you may have missed is that stock markets have been rising for the last four years and more recently the Dow Jones set a record at 15,000as the FTSE topped 2007 highs. All the while the Office of National Statistics (ONS) has coloured our perceptions with depressing quarterly growth and GDP statistics. That’s the same ONS who in the past 51 years has been wrong 193 times out of their first 205 stabs at quarterly growth. Retractions rarely make the popular reader pages. “And where are we headed? Consider the opinions of Alan Steel, Mike Williams of Genesis, The Reformed Broker Joshua Brown, the Calafia Beach Pundit Scott Grannis, Mark Perry of the American Enterprise Institute, A Dash of Insight’s Jeff Miller and many other so-called ‘contrarians’. The consensus is positive. “Rather like the frog that slowly boils in a pan of water because it cannot sense significant changes in temperature that occur gradually over time, don’t miss the opportunities for not seeing the signs around you.”

Stephen Paterson – Show Me The Money “The best investment opportunities out there are disruptive,” says Stephen Paterson of Haines Watts. “The questions that need answered when considering the GRAB of getting investment into your business are: what problem will the money solve, what opportunity is being exploited and what is your market edge. “The reality of debt to equity funding is that there are a few bank lenders out there who will do it but it’s hard. The real perk of debt funding is that it is a fixed cost; you’re locked in at a certain rate. The more obvious problem with debt is that they want it back. Equity is easier and safer. “And there are some common mistakes people make in raising capital. The first is that you need to have more than one funder – it makes the process much easier, and that people don’t ask for enough...enough funding to allow for some headroom going forward for those unexpected turns that can and will arise as the business progresses. P.13

The Angel Investment Network was founded in 2004, and is now ne the largest angel investment community in the world with 500,000 members across 30 networks in over 80 countries. The only Angel investment network to provide free business funding clinics and one-to-one pitching at regular SpeedFunding events throughout the UK and Asia, with regional managers dedicated to supporting and introducing the right Angels.

Mentoring. Insight. Coaching. Footdown is passionate about improving the performance and quality of leaders, and works from within a peer group to inspire, inform and help them respond better to challenges. The leading research and develop ment (R&D) tax credits advisory business for companies throughout the UK with a 100% success rate for Government R&D Tax Credit applications. P.14

Kiltr is a leading edge professional social network for everyone with a Scottish connection, founded with the local-to-international Scottish Diaspora at its centre. The national association for business angels in Scotland, with a membership network of hundreds of investors including those operating individually, many of the best known groups and syndicates, and a number of significant private offices.

Par Equity is an investment firm with a difference. We bring a pragmatic, hands on investment approach and extensive experience to opportunities that have the potential for significant returns. Thrive is a membership-based networking organisation for business-to-business SMEs across Scotland bringing together like-minded individuals willing to share knowledge, ideas and contacts. P.15

Larry Ellison Larry Ellison, who founded Oracle, is a billionaire college dropout and the world’s 9th rich est person. Diplomas are for los ers, he told Yale graduates in his commencement address. “Loser hood. Loser Cum Laude,” he said. Ellison is a magnate who owns planes, yachts, and islands. He also said he has given mil lions of dollars to charitable causes, including education and medical research. Michael Dell

(Courtesy: Tech-FAQ) Famous scientists and inventors who dropped out of school changed the way we understand and perceive reality. They proved that imagination, hard work, and trusting your hunches are more important than formal education. Their inventions gave recreation and work to millions of people around the world. These famous scientists and tech people donated to charitable causes to help disadvantaged people. Thomas Edison Thomas Edison is a prolific inventor, businessman, and a famous dropout who invented the light bulb, motion picture camera, and stock ticker. His mother taught him to read and write after he was expelled from school because teachers thought he was too slow to learn. He was self-disciplined and industrious, worked hard, experimented, and spent a lot of time reading in the public library. While working on a train, selling newspapers, tobacco, and candy, a bottle of phosphorus in his train lab started a fire. He gave up trains, changed several jobs, and devoted himself to inventing. The Wright Brothers The Wright brothers invented the “flying machine” and flew the first airplane. Orville Wright was expelled from elementary school. While both Wilbur and Orville attended high school, they never graduated. They spent a lot of time watching birds in flight, designed gliders, and invented an airplane that gained enough airspeed for a successful flight. The fathers of flight did work on wing design, propellers, and in the field of aerodynamics. There is little hope for advance if we believe that reality is fixed and only accepted truths are true, Orville Wright once said. Bill Gates Bill Gates, a Harvard dropout, became a dropout billionaire who earns about $20 million a day. If he were to pay the U.S. national debt, it would take him about 10 years. The former chief executive of Microsoft is a computer programmer, entrepreneur, author, and philanthropist. While Edison put a lot of time and money into his inventions, Bill Gates is focused on malaria eradication and improving access to education.

Michael Dell dropped out of col lege at the age of 19. The founder of Dell Inc. shown an interest in technology from an early age and contributed to the computer revolution later in his life. Dell Inc. has hundreds of thousands of employees around the world. Millions of companies, public libraries, foundations, and individuals use Dell computers for research and their daily tasks. The Michael and Susan Dell Foundation has donated to many charitable causes such as the Asian tsunami victims. Steve Jobs Steve Jobs, the chairman and co-founder of Apple Inc. was also a college dropout. He introduced the Macintosh and is recognized as one of the pioneers of the computer revolution. His many visionary creations, such as the iPad and iPhone, have changed the lives of millions of people. The man who set a standard for animated films believed that technology would help lives, not charity. Paul Allen Paul Allen, the founder of Xiant software and co-founder of Microsoft dropped out of the University of Washington. Known as the “idea man”, Allen became a billionaire in his early 30s. He invested in different companies while pursuing his wired world strategy. In his words, he “saw a connected future” and a wired world. Allen is the founder of the Paul G. Allen Family Foundation which has donated close to $30 million to non-for-profits in the U.S. Mark Zuckerberg Mark Zuckerberg is a Harvard dropout and the founder of Facebook. For him, it is more important to connect the world than to offer services for money. Openness and minimalism are important for him. Zuckerberg is a charity donor who gave more than $498 million to the Silicon Valley Community Foundation.

Entrepreneurship is living a few years of your life like most people won’t, so that you can spend the rest of your life like most people can’t.” P.17

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ANGELS 3. Failing to understand how small firms work It frustrates me when I hear a pitch from someone who’s worked in large companies and fails to appreciate that small ones have to work differently. Some people simply don’t want to put in the work required of a small company – it’s amazing how many potential entrepreneurs want to work from 9 to 5pm. 4. Expecting a high salary This links in with my point above – it’s very annoying when people want my investment to fund a big salary, because they expect to earn the same amount of money as they did in their previous job. People need realistic expectations. If you want a big salary, you should get a job, not start out on your own.

What Angels Want & Entrepreneurs Need…. By Hugh Chappell, Startup The average angel hears dozens of pitches every year, but rarely chooses to invest in more than a handful. With so many business ventures to choose from, they’re going to be looking for reasons to rule your business out. Startups asked Hugh Chappell, serial investor behind companies such as, and, to give us his top 8 pet hates when listening to a pitch. Here’s what he said… 1. Unrealistic growth projections Don’t give me a business plan where the sales figures are just a straight line up the graph. I see so many business plans where the sales figures are based on maths rather than reality. 2. Missing the small details I like to see a business plan which has been thought through – it shows me that those behind the venture have really done their homework. Detail is important, even something as trivial as the number of days in each month. For example there are 9.7% less days in a typical February than in January and March so a revenue adjustment to compensate should be made.

5. Expecting marketing to solve all problems Marketing isn’t a panacea for all the problems of a small business. Some of the ventures I have invested in, like, demand an intensive marketing campaign; others, like the site at required none. If the person pitching expects marketing to resolve everything, he’s likely to come unstuck. 6. Missing key skills It’s important for new ventures to consider whether essential skills are required in-house. If you’ve got any crucial skills missing, an investor is very likely to reject you. 7. Sales Brilliant ideas, innovative or remarkable products, great websites, the best systems and watertight procedures have little meaning if there is no revenue to pay for them. 8. Unrealistic valuation Time and time again I see valuations that are simply unrealistic. Is an idea worth £500,000? Is a beta-website worth £750,000, and a business which has yet to find a single customer, worth £1m? P.19

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INTERVIEW What’s the benefit for businesses? BritDAQ works with unlisted companies with more than around 50 shareholders; typically the FD gets frustrated with keeping the register up to date and that’s where we can help. A simple transfer will usually involve six people; FD, Co secretary, two shareholders and at least two solicitors. Or all this can be done on the BritDAQ platform for £2700 a year.

Paul Varcoe CEO BritDAQ We are always looking out for companies that make investing and running a business more efficient. BritDAQ is building a community of small companies and investors, currently with over 10,000 shareholders on its register. What is BritDAQ? We are the first fully online share registrar in the world. No more pieces of paper. We add share matching to the mix as well, so that that all trades go into the share register automatically. Then we add a feed to Companies House so that the annual return is updated directly from the BritDAQ register. How does it work? First, we engage with small AIM listed companies. These will be paying approx. £100,000 a year for their listing and when you add up fees from compulsory advisors, plus a share registrar like Capita, who still use embossed stamps and paper certificates, all incur additional costs for the company. BritDAQ take over managing the register and the share matching, for between £2,700 and £5,200 a year, depending number of shareholders. Typically less than 500 shareholders will cost £2,700. This saves companies substantial amount of money.

BritDAQ also has a free service, any UK company with less than 20 shareholders can manage their share register (including PDF certificate generation and emailing etc) plus do their Companies House returns online using our package for no fee. What’s the benefit for investors? Our Investors get to see opportunities in ex-AIM listed companies and smaller companies that they may not have otherwise seen. Investors may sell holdings in private companies before those companies go to IPO. Why do you think peer-to-peer lending works? Peer to peer lending is the inevitable response to the lack of interest shown from all types of investment institutions, where businesses only need small amounts of money. It takes time and money to do the necessary due diligence on any investment and banks can no longer say “Oh it’s only £75,000, we can skip the DD on that one, the manager has known him for years”. If due diligence on a deal costs £10,000, and the total amount required is £75,000, then nearly 7% is added to the cost of the loan, and this makes for very poor economics for banks, as they may only pass a third of the requests but still have to pay for them all. As a result, banks want to look at big projects, preferably in the multiple millions, and this is also true for any other potential sources of investment. This leaves a huge gap as companies are starved of loans as a result. The private investor can get 2.5% in a deposit account or 10+% by lending to a business directly. P.23

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FUNDING The New “Mixology” of Post-Recession Business Funding By Euan Ferries “Has the UK’s SME community sidelined bank lending as a primary option for funding?”

Despite travelling five years down the road since the vaunted “semi-global” financial meltdown, renewed bank lending opportunities for SMEs have not lived up to expectations. In fact, if the subject of bank lending elicits any reaction from the leaders of Britain’s small to medium sized enterprises, it’s something akin to a growl. Recent Government announcements of £hundred-

millions Business bank pot, momentum setting incentives for angel investment (SEIS) and even the rebellious and eminently likeable Burnley-based “Bank on Dave” have emerged in the wake of sentiment from organisations like the Federation of Small Business who say the flow of traditional bank credit has dried up. But the coin always has two sides. And so the banking community tells a different tale saying demand rather than supply is the problem; there is money available if small businesses apply for it. And if you believe the Bank of England's latest credit conditions report showing a "significant" drop in credit demand from small companies in the

first three months of 2013, then the banks may have a point. That or the reported drop in demand may be the result of companies simply giving up and seeking out other lending channels, like crowdfunding, peer-to-peer lending, angel syndicates and even the slow return of VC funding, which Scotland has not seen in over a decade. Regardless of which side of the argument you support, the facts suggest companies have changed how they seek funds, or how they must now seek funds, for investment and expansion. Prior to the downturn, most companies seeking to raise capital to fund growth would typically have

approached their bank in the first instance and, thereafter, looked to supplement this finance with soft funding via a loan or a grant. Lending reluctance or reduced applications aside, that funding scenario has changed entirely. By-passing that traditional source of primary finance and going straight to alternative funding sources in the private and public sectors to plug funding gaps has inevitably brought new funders into the market signposting the way forward. Euan Ferries, Corporate Advisory Director French Duncan P.25

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“Mixology” (…cont.) The Scottish Loan Fund (SLF), for example, provides mezzanine loans ranging from £250,000 to £5 million to qualifying Scottish businesses, emerged from the Scottish Investment Bank (SIB), which has provided some £55 million of cornerstone funding to the SLF. SIB is part financed by the Scottish Government, Highlands and Islands Enterprise and the European Regional Development Fund. In addition, some £58 million of private sector investment has been generated, giving a cumulative fund value of £113 million. Meanwhile shareholder banks Barclays, HSBC, Lloyds Banking Group, RBS and Standard Chartered recently established the Business Growth Fund (BGF) to help SMEs grow.

Together they have committed a total fund of up to £2.5 billion, making BGF the largest long-term equity investment company in the UK. And as an independent company BGF’s investment decisions are not influenced by the banks or government. Other funding sources include: the West of Scotland Loan Fund and the East of Scotland Investment Fund, consortia of Local Authorities working together to provide loan finance to SMEs operating within their regions, and UK Steel Enterprise, which will consider investment up to £750,000 for developing businesses. In addition to such loan funds, grants such as the Regional Selective Assistance Scheme (RSA), which encourages businesses to undertake investment that will directly result in the creation or safeguarding of jobs in Scotland, and the Food Processing, Marketing and Co-operation (FPMC) scheme, which can assist with intervention up to 50% of eligible spend in the food and drink sector (although currently that is under review), play an

Increasingly singly significant role in financing growth. The result of the emergence of these alternative forms of finance is that ambitious companies are now able to call upon a complex ‘cocktail of funds’ to help plug the funding gap created by banks’ apparent reluctance to lend. As a consequence, a company’s funding package will increasingly comprise elements of funding from four or five different sources whereas, prior to the recession, such finance would typically have been drawn from fewer sources. That increase in the number of funding sources makes the process of aligning the various requirements of all the funders more complex than ever before. And if the funding package is a ‘cocktail of funds’, then the role of the corporate advisor to the company seeking to secure funding becomes like that of a “mixologist”. Today’s funding mixologist – read corporate advisor – should urge fund seekers, and in particular those seeking grants, to act now without delay. That’s because the current assisted areas map, which is a cornerstone of the grants system, is being redrawn at the end of 2013. Whilst there’s a good chance that grants will continue in some form what that might be is at present unknown, but the likelihood is that there will be less assistance available. Thus companies would be advised to submit an application sooner rather than later under the current scheme as there will most likely be a surge in demand for assistance towards the end of this year. Fortunately, alongside change comes answers; specialists and intrepid souls who trail blaze the route for those who will come afterward, helping to create that perfect cocktail of funds to help fuel future expansion. P.27

FEATURE you will find the most frequently mentioned responses prioritized from most to least important. No Decision The real enemy of salespeople today isn't their archrivals; it's no decision. Customers will go to great lengths to reduce the stress of buying. They list their needs in RFP documents that are hundreds of pages in length. They hire consultants to verify that they are making the right decisions. They'll conduct lengthy product evaluations and talk to existing users of the products to ensure they work as advertised.

No Sales, No Success Why Customers Don’t Buy

All these steps are taken in an effort to eliminate their fears, reduce their uncertainties, and satisfy their doubts. However, customers are never 100 percent sure they are purchasing the right product and there are always naysayers in the organization who are against moving forward. As a result, customers frequently won't make a purchase even after an exhaustive evaluation.

Steve W. Martin Courtesy HBR: Steve W. Martin teaches sales strategy at the USC Marshall School of Business. His new book is titled Heavy Hitter Sales Linguistics: 101 Advanced Sales Call Strategies for Senior Salespeople.

In the past year I've had the opportunity to interview several hundred business-to-business salespeople about how they win over prospective clients and the circumstances when they lose. These interviews were conducted with salespeople across a wide variety of industries including high technology, telecommunications, financial services, consulting, industrial equipment, healthcare, and electronics, to name a few. Their companies ranged from start-ups to billions of dollars in sales with the majority being between $50 million and $500 million in annual revenue. During the interviews I always ask the salespeople to describe the top challenges they were facing. Specifically, I try to find the obstacles that prevent them from closing more business (as opposed to a general list of items that made their job more difficult). Since I didn't want to influence their answers, I asked open-ended questions instead of providing them with a list of topics to be ranked. Below, P.28

Stalled Sales Cycles Customers are more cautious than ever and moving the client to the point where they will make a purchase is a formidable undertaking. In some cases, the excitement generated by the salesperson's initial 30,000 foot sales pitch to senior executives didn't motivate meaningful follow-up from the lower level personnel of the customer's organization. At other accounts, prospective buyers weren't experienced with purchasing products. They didn't understand how to sell their project internally and were unable to garner senior executive sponsorship. During lengthy sales cycles, evaluators frequently become reoriented toward other emergencies and the decision makers disappeared. Increasingly, purchasing has more say over decisions that were previously made solely by business areas. Procurement can be introduced very late during a sales cycle and reopen the process long after the salesperson thinks he has already won the deal. Inability to Penetrate New Accounts One of the most difficult tasks in all of sales is to penetrate new accounts. Salespeople continually

FEATURE “No Sales, No Success” (…cont.) cited how hard it was to generate initial customer interest and secure an introductory meeting. In almost every interview, salespeople also lamented the lack of leads being generated by their marketing department as well. Product Commoditization Nearly every market today has matured to the point where there is very little difference between the features, functions, and specifications of the competitive products. Price vs Value From the customer's standpoint, the cost of the salesperson's solution was prohibitive because the perceived value of the operational benefits did not justify the price. In other cases, a competitor's price was significantly less thereby blocking the salesperson's future involvement in the sales cycle.

"Nice-to-Have" Product During these tough economic times, companies have drastically cut back on any type of purchase that may be considered non-essential or a luxury. In other situations, the salespeople indicated they lacked the financial arguments and real-world proof points to move their product into the "musthave" category. Internal Sale At many companies the difficult task of winning over new customers is equally matched by the effort required to sell the deal internally. Salespeople not only have to rally internal support to pursue an account, they must aggressively justify the approval of legitimate business terms and pricing concessions. They also have to contend with long-drawn-out internal processes to generate proposals, quotes, and contracts that can impact deal momentum.

800 Pound Gorilla


Many underdog sales organizations have to compete against the mindshare of 800 pound gorillas in their marketplace. Companies like Microsoft, Cisco, and IBM are so dominant in their particular industry that they win business by default.

Salespeople complained that excessive updating of CRM systems, time consuming forms/reports required by management, and post-sales administration activities sapped valuable selling time in the field. P.29

FEATURE Pre-sales Resources

2. Win-Loss Analysis Studies

Many sales organizations are not adequately staffed with enough pre-sales engineer resources and product specialists to fully support all sales efforts.

All companies and their salespeople are well versed on the logical arguments for selecting their product. However, the decision to make a major purchase is also influenced by internal politics, how the decision-makers receive information along with individual biases and personal desires.

In addition, these technical resources also serve as an important escalation focal point should problems arise during the initial product implementation. When the customer has a negative experience it hinders future purchases and the lack of referenceable customers impacts sales efforts overall. It's important to be aware of what salespeople see as their chief obstacles--especially during a tough economic environment that is making their jobs especially challenges. The percentage of salespeople making quota at some organizations was as low as 35 percent in 2012 and this is no doubt in due to the challenges listed above. Finally, I believe these challenges have also directly influenced the top business-to-business sales trends for 2013 as listed below.

Top 10 Sales Trends for 2013 So what are the top business-to-business sales trends for 2013?

Unfortunately many companies don't perform any type of win-loss analysis so they don't understand their customers in these regards. Because of the economy and relentless competition, 2013 will be the year that many companies have to re-discover the lost art of win-loss analysis. 3. Emphasis on Language-Based Interactions While proponents of the consultative, relationship, and challenger-based sales approaches will continue to argue the merits of their respective philosophies, there is one thing everyone can agree on. For 2013, it's not only what you say, but equally important, how you say it. Sales linguistics the new field of study about how customers and salespeople use and interpret language during the decision making process. If you are in sales, you make your living by talking. You need to study language and perfect your use of words because your most important competitive weapon is your mouth. 4. Sales Force ‘Verticalization’

Here's my list based upon my experience of studying some of the world's best sales organizations this past year. 1. Sales Force Behavior "Modeling" Models are verbal descriptions and visual representations of how systems work and processes flow. Models enable repeatable and predictable experiences. More organizations will study their top salespeople in 2013 to understand how they formulate their winning account strategies based upon customer politics, evaluator psychology, and the human nature of executive decision makers that are unique to winning every account. P.30

A "specialist" beats a "generalist" every time. Closely related to Sales Linguistics is the accelerated trend of sales force language specialization based upon the following strategies: ·

Industry verticalization focus (finance, government, retail, etc.) to promote domain expertise.


Technical application segmented by the different solutions the company offers to promote extremely deep technical knowledge.


Business process improvement as opposed to the recitation of standard "generic" product features and functions to customers.

FEATURE “Call High or Die" been so true. Salespeople must reach C-level executive decision makers early in the sales process because the default for organizations today is to maintain the status quo and delay every major purchase. 8. "Intelligent" Territory Management Salespeople who have to manage hundreds of accounts and vast geographic territories face the perennial problem of where to spend their most precious resource, which is their time. 5. Sales Process Ineffectiveness Many companies have realized that their sales didn't increase even after spending a great deal of money and effort implementing a sales process methodology. The reason for this is because the "black hole" of the sales process is what happens during and at the close of sales calls today more than ever, it's the personal interactions with prospective customers that determines winners from losers, not the internal processes of the sales organization.

Perhaps the most important "Big Data" application within sales will be the analytics that predict which prospective net-new customers should be called upon and what installed base accounts are most likely to buy next. As opposed to salespeople creating their own action plan for the day's activities, more intelligent territory management systems will direct them to call on certain accounts and prospects in 2013. 9. Technology Fatigue

In 2013 more companies will be studying and categorizing these customer interactions so they can improve sales force effectiveness. 6. Organizational Buying Psychology If you are involved in selling enterprise solutions, you already know the importance of understanding the inner workings of the various departments within the prospective customer's company. Your solution might be purchased by the information technology department and used by accounting and human resources. Therefore, it's critical to map out the interrelationships of the departments within an organization. The essence of successful enterprise sales is understanding not only who to sell to, but how to craft a message that appeals to various departmental constituents. Understanding organizational buying psychology becomes an even more critical topic in 2013.

While technology has profoundly improved the effectiveness of salespeople, there is an interesting trend that has been growing over the past couple of years and will only get worse. Salespeople today are always available to customers via their cell phones, constantly receiving a gargantuan stream of e-mail information, and every account update they make in is broadcast to sales management. Many long time salespeople are suffering from "Technology Fatigue" and complain they are burning themselves out. 10. Continued Migration from Field to Phone Many companies have quickly transitioned the majority of their field reps to be almost exclusively phone based.

7. No Decision as the Main Competitor

Therefore, these reps must now be able to create winning relationships with their voices as opposed to how they sold in the past with their physical presence.

For sales forces involved in large capital expenditure sales cycles, never before has the mantra

Understanding and mastering the art of persuasion will be more important for salespeople in 2013. P.31

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PRACTICAL BUSINESS Where Marketing is Going … in 2013 and Beyond By James Miller 2013 is already shaping up to be an epic year for marketers and writers. It’s the year that content, social, search, and email are coming together, working in sync for the greater good of marketing-kind. It’s also the year that wise marketing departments will use analytics and automation to scale their efforts and make better decisions. It’s the year that content tipped from being an interesting option to being a must-have. And paired with that, it’s The Year of the Online Writer — in other words, the year that content creators begin to be valued as the creators of valuable assets, rather than an expense on the balance sheet. It’s the future of marketing and it’s sitting at our doorstep. But as is so often the case, to understand the future, we must look to the past. In the beginning, there was Lead Generation. Imagine the B2B marketer at the beginning of the twenty-first century deciding to embrace the new science of demand generation, announcing to his sales team, “Let there be leads.”

“Lead generation was becoming like Ron Burgundy (kind of a big deal). But lead generation, or lead gen, was in its very early stages. Marketing teams would send out massive direct mail campaigns where prospects would literally tear off a business reply card and mail it back. Or they would collect business cards at trade shows.” Now they had a “lead” to hand over to sales, but this was a very tedious process. Fast forward a few years as email marketing began to make waves, but at first it was mostly B2C companies who were benefiting. B2B marketers would begin to make the transition from direct mail to email, but it was still a new strategy that was slow to catch on. Powered by vendors like GotMarketing, ExactTarget, Boomerang, and Vertical Response, each month marketers would go back to their database with a new offer, essentially taking a spray and pray strategy. Every person who responded would get a call regardless of their interest level. During this time, a lead was a lead. Neither sales nor marketing could figure out if the lead was hot, warm, or cold. Deciding which leads to call became a very painful process, and a source of tension, for both marketing and sales teams. The concept of scoring a lead would become a very hot topic, but no one had the technology to do anything about it. All leads are not created equal. There was clearly a need for something new. Early marketing tools from Genius and Marketbright started to make some headway with website tracking technology, but that was just the beginning. Marketers needed a platform that would tie everything together. P.33


Enter marketing automation, a godsend for the B2B marketer looking to have one central platform for all of their campaigns. No longer did marketers have to manually comb through the massive number of raw inquiries, now they had software to do this in addition to so much more. Marketing automation would empower them to build and manage multiple campaigns from start to finish while automating many of the mundane tasks associated with lead management. In this new era, marketers could now create landing pages, score and nurture leads, and effectively measure the ROI of their marketing efforts — all on one platform. In addition, they could now track the digital body language of their prospects and determine who’s hot and who’s not. This would prove increasingly important as the seller controlled buying process would soon give way to the newly empowered buyer doing their own research, not wanting or needing to engage with sales until much of the buying process is already complete. This would force marketing departments to take a bigger role in developing and nurturing the relationship. Along with marketing automation came a new, smarter kind of marketing. The other side of the automation coin is a new, more effective style of marketing that supports and improves the sales process. Smart content marketing helps sales teams by answering objections, showcasing case studies, demonstrating benefits, and even uncovering prospect pain points. Effective advertising has always been “salesmanship in print.” Content — which has actually been used in good advertising for more than 100 years — just does a better job of it. Along with the rise of content, we’re seeing the rise of the content creator — the capable writer, video producer, or podcast publisher who can make the content that prospects want to consume. Wise businesses know that talent doesn’t come cheap, but that high-quality content is an investment that tends to pay off handsomely. Where We’re Going, We Don’t Need Roads Over a century ago, the department-store magnate John Wanamaker famously said, “I know half my advertising dollars are wasted. I just don’t know which half.” Fast forward to 2013 — this is no longer an issue. Modern marketers have more data available at their fingertips than ever before in history. And marketing automation allows them to manage that data into actionable insights. No longer is there any question around what the return on their marketing spend is and how it contributes to driving revenue, there are now hard metrics to report. As marketing automation begins moving into the mainstream and quickly becoming the hot topic at marketing conferences around the world, the analytics that this technology provides will prove and improve marketing spend and finally give the marketer a seat at the revenue table. P.34

PRACTICAL BUSINESS Pension Solutions To Company Cash Flow By Martin Cook You’ll be familiar with how tax efficient pensions can be, but did you know pensions can also help solve company cash-flow issues? The Problem: Liquidity Directors of SMEs across the UK continue to be frustrated by the lack of liquidity and investment funds available to support and expand their business. Common gripes are: ● “The banks won’t lend to my company” ● “My business overdraft and charges are crippling” ● “I want to expand my business, but I need a capital injection” Sound familiar? Add to this the current annuity rates on our pension pots and one has to be wondering “What else can I do?” Potential Solutions? Self Invested Personal Pensions (SIPPs) and Small Self Administered Schemes (SSAS) can turn pension assets into valuable working capital, by: ● The business selling or partly selling it’s premises to a SIPP or SSAS. This involves one, two, or more directors purchasing a share of the premises with their own pension assets. ● SSAS Loan to the employer. ● Individual Director’s selling the premises (if held personally), to their own and/or fellow director’s SIPP’s to allow the proceeds to be re-invested back into the business. For example: Company A has 2 Director’s, an overdraft of £50,000 and a mortgage of £100,000 on business premises valued at £200,000. The bank is increasing its charges and interest rates, and applying pressure to reduce the business overdraft. (Tip – don’t argue with the bank or they will pull your overdraft facility!!) The 2 directors each have £125,000 in their personal pension plans. Solution 1: Set up two individual SIPP’s and transfer in the Directors’ pension plans totalling £250,000. Each SIPP then buys 50% of the business premises from the company. The company can then repay the mortgage of £100,000, repay the overdraft of £50,000 and have £50,000 of working capital (there may be tax to pay from this working capital especially if the building has increased in value since original date of purchase). Each SIPP will still have £25,000 of liquid cash remaining. Going forward the business then pays a wholly tax deductible market rent to the SIPP’s allowing the Directors to increase their pension assets and build up additional liquidity in their pensions. All rental income is tax free within the SIPP’s and any future increase in the capital value of the premises is sheltered from Capital Gains Tax because the property is now owned by the SIPP’s. Solution 2: Set up a SSAS and transfer in the existing pension assets of £250,000. The SSAS can then provide a loan to the business of up to 50% of the SIPP’s, releasing £125,000 for the company to pay down the mortgage and/or overdraft. The loan is repayable to the SSAS over 5 years at a rate of 1% over base - very attractive lending rates. Each loan payment has to be part capital repayment and part interest but the frequency of the repayment can be at the discretion of the SIPP i.e. they can decide to have the payment annually in arrears if they wish to aid initial cash flow. Please note - The loan though will normally have to be secured against an asset of similar value but as the mortgage will be paid off the SSAS therefore takes a first charge on the premises until the loan is repaid. The benefits of the above scenario are ongoing tax deductions for loan repayments and interest payments. The interest receivable by the SSAS incurs no income tax. Pensions are in most cases free of inheritance tax on death. P.35

PRACTICAL BUSINESS Stop Making Sense…..Make Meaning Instead By Willie Maltman “I’m sorry for writing such a long letter. I didn’t have time to write a short one.” Mark Twain American new wave band Talking Heads had a point with their concert film Stop Making Sense in 1984. Only, they didn’t know at the time that the world of business was going to implode under the weight of its own complexity, or more properly, its failure to express itself clearly and directly. So why did things become more complex than they needed to be? And why do we sometimes struggle to process complex or obscure messages? More importantly, what is the communications complexity problem here? is it: ● The message itself? ● The medium we choose to deliver it? ● The messenger doing the delivery? Or is it us, the audience? Something Important Think about the last time someone told you something critical or important. How did they try to communicate that to you? Was it by text, email, voicemail, while in a hurry between meetings, muttered into your ear in a crowded lift? Or, was it spoken face to face in a rushed meeting with too many other items and too many other people? It’s highly likely that it was one of the above and not written down with craft and care or spoken to you directly accompanied by thoughtful phrasing and emphasis. The modern day challenge is less about shooting the messenger than nuking the recipient through lazy and careless messaging. Much work goes on in business schools and training organisations on listening with impact. Indeed, McKinsey published an actionprovoking article last year “The executive’s guide to better listening by Bernard Ferrari”. This certainly provoked me into action and shook my confident complacency from “Yeah, I know all of this stuff” into “Are you really as good a listener as you think you are?” Developing listening skills was challenging and initially helpful. But it was only one side of the equation, leaving the art of creating and delivering a message at odds with my improved listening skills. Tell Me a Story Our brains are hard wired for stories, as communications specialist Karen Dietz writes: “It is how we make sense of data and also the world”. When we engage with a story, we will more easily grasp its intent and it will have the desired impact. So how do we go about improving on that? Listening harder IS good, for you and especially the other party. It shows respect and that they matter. It also improves their delivery of the message through rapport. Drop the lazy, casual messages – whatever the medium. Try to work hard on crafting them more carefully and with the emphasis on the audience. You should expect your audience to do less than half the interpreting work – not the majority of it. Use stories to get messages across. They will make what you’re saying more memorable and understandable, and if chosen carefully and told well, more effective. A good, relevant story that resonates with the audience can set a context, trigger a response and create commitment to an action. Shift your orientation; don’t go only part way in assisting your listener or reader to make sense of your message, make the meaning obvious and how it is meaningful to them, patently clear. If you do this you’ll be seen as the catalyst for making sense of things. P.37

DIATRIBE Independent Parliamentary Standards Authority exempting them from the new tax avoidance legislation in situations where they are actually caught by it. So much for parity… How about instead of them calling for retirees to give up hard earned entitlements, they settle for what the rest of us are left with after 30 years of them raiding our legitimate rights? According to the politicos, it is an “anomaly” that all pensioners receive universal benefits no matter how wealthy they are.

MPs Ducking Around With Our Entitlements “Despite all the political noise of late on the issue, there remains in place an obscure clause that specifically exempts MPs from restrictions on tax avoidance. Go figure.” Oh dear, it seems an MP has just called on wealthy pensioners to hand back their benefits. A segment of Britain’s aged community are being urged to voluntarily return “luxuries” like winter fuel allowance, bus passes and free TV licenses to the Government because “they don’t really need them”. You couldn’t make this stuff up. Even the warm pasty tax rebellion grows cold by comparison. But it’s a strange request coming from the folks (MPs) who qualify for pensions the vast bulk of us can only dream about. And in this age of austerity and general belt-tightening they’re not handing those gold-plated pensions entitlements back into the Treasury’s coffers. Meanwhile we’ve been floating on a duck pond of expenses scandals and Budget promises to tackle tax avoidance, despite a clause that exempts MPs from these new restrictions. You read that one right! There’s a wee exemption in Section 554E(8). It’s for members of the P.38

Anomaly indeed! As if everyone is receiving the same entitlements. Apparently some of us are more equal than others. Ain’t No Sunshine, Just Cicero! “The Budget should be balanced. The Treasury should be refilled. “Public debt should be reduced and the arrogance of officialdom should be tempered and controlled…………. “The assistance to foreign lands should be curtailed lest Rome will become bankrupt. “People must learn to work instead of living on public assistance.” Cicero 55 BC So, evidently we’ve learnt bugger all over the past 2068 years!!



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