Enterprise Zone strikes a chord

Leafing through last Sunday’s Mail on Sunday newspaper I was interested to see how many articles on pages 66-67, the “Enterprise Zone” struck a real chord with what we are looking to achieve in 2009.

Pride of place went to our good friends at BCMS Corporate who had their “refreshingly different approach to selling companies” and their current successes in what conventional thinking would have you believe was a difficult climate for buying and selling businesses featured in this article. A very SMART business in our view.

Not so encouraging however was the news that 38% of small businesses do not expect to survive 2009 because of the downturn. Commenting on the survey carried out by Financial Mail and its sister site thisismoney.co.uk, Nick Palin from the Forum of Private Businesses said that he believed that the survival of many businesses will depend on the banks, who he maintains “are often still bracketing all small firms as high risk despite pressure from the Government and the small business lobby.” Banking relationships are crucial and are something that we will be covering in a presentation to Surrey Chamber of Commerce members on 3rd February in Shepperton (booking details).

Interestingly though, according to a report on a survey by Tenon Recovery, businesses that have been trading for between five and nine years are most likely to benefit from opportunities in the downturn. 37% of companies in this category say the economic downturn has provided opportunities for their business, including “taking clients from competitors, purchasing assets and stocks at a good price and increasing their client and customer base compared with only 29% overall”.

The basic message from these Mail on Sunday articles remains that existing SMART companies will continue to prosper, but equally it is not too late for companies to get themselves SMART to give themselves every chance of not only surviving but thriving.

Successful entrepreneurs – How to sell your business to Microsoft

An excellent evening last night hosted by the wealth management division of an international bank, at which two entrepreneurs talked about how they built successful businesses.

Firstly, Sean Phelan, founder of Multimap in 1995, talked about how he foresaw the convergence of mobile phones, GPS data and the internet and set up Multimap to exploit the convergence. He varied the business model along the way when he couldn’t get mobile phone networks to show any interest and this led to Multimap becoming a website-led service. The business grew strongly as Sean looked to cash in some of the wealth he’d created by seeking a minority investor in 2007. He eventually sold the business entirely to Microsoft in December 2007.

Next, Michael Acton-Smith, co-founder of online retailer Firebox discussed the challenges of being first to market. “We noticed there weren’t any competitors on the internet. Unfortunately, there weren’t any customers either”. Michael spoke about persevering if you know something is right and that a market is coming. However, he also talked about how Firebox raised £500k from VCs, took on too many highly paid staff and made a loss of £400k the following year. Realising the error of his ways he then downsized the team and went on to make £400k profit the following year.

The key messages we took from the excellent speakers were:
1. Be patient – many business plans talk about an exit after year 3 or 5 but in most cases it takes much longer than that; 12 years in Multilmap’s case.
2. Review and modify your business plan as you gather more information. If something’s not going to work, change it before its too late, but make sure it’s not that you’re just too early!
3. Keep an eye on your costs – sound obvious but don’t get carried away by having a pile of cash from investors.
4. If you can sell to Microsoft, then do! Sean didn’t reveal the sale value but we suspect it wasn’t trivial! Microsoft are good payers!