Oracle Smb Compilation

businessfirst Ideas to help small companies retain their successful entrepreneurial spirit

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Keeping the spirit alive Small businesses are entrepreneurial by nature, but as they grow they must retain their dynamism and be careful not to stifle the creativity of their employees

contents Keep the spirit alive

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Growing businesses must be wary of stifling their employees’ creativity

Safe as houses

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IT security breaches can be cut dramatically with the right software

Harnessing better 05 applications to avoid the agony of growing pains How businesses can use technology to help prevent expansion problems

Small firms, big choices

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SMEs need finance to grow, but where should they get it from?

It’s getting easier to talk 09 Call centres were once the preserve of big companies, but no more

Upgrade without a fuss 10 Investing in technology often worries small businesses because of how quickly it can be superseded

Putting people first

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Once your business starts to grow, recruiting staff becomes an issue

The rules of distraction

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SMEs often struggle to cope with all the red tape imposed on them

The benefits of outsourcing 14 Think your business is too small for outsourcing? Think again

Connecting for success

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Why inefficiently sharing data is about to become a thing of the past

Can customer relationship management systems benefit your business? 16 Knowing, understanding and predicting what your customers want is vital to the success of any small to medium-size business – and CRM is the key

Knowledge is power

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10 tips to help small companies retain their successful, entrepreneurial spirit

Running a small to medium-sized business isn’t easy, but it doesn’t have to be difficult. This Oracle supplement addresses all the key issues faced by SME owners as their companies establish and grow

Produced by The Independent in association with Oracle Art Direction François Morrow Project Management Shazmah Yousaf

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‘We deliver. Reputation is all that we’ve got’

David Hall, a leading consultant on innovation and entrepreneurship

nterprise is almost universally associated with small businesses. ReE search has shown that 95 per cent of all innovations occur in companies with fewer than 100 employees, according to David Hall, a leading consultant on innovation and entrepreneurship. This, he says, is a lot to do with the fact that the culture of such organisations is entrepre-neurial. Small businesses encourage risk-taking, the breaking of rules and opportunism – as opposed to the command-and-control approach typical of many larger organisations. The problem large businesses have is illustrated by the fact that as many as half of all entrepreneurs are refugees from larger organisations. For example, James Davies, founder of Just Good Data, a start-up seeking to help car manufacturers manage their warranty costs better through using actuarial methods, came up with his idea while working as an actuary in a large insurance company, but realised he would have to go it alone to develop it. But while many small businesses start with an entrepreneurial spirit, they can easily be dragged in the direction of more established businesses. Hall says: “The real challenge is to stay entrepreneurial but get some discipline.” One way of doing this is to identify the entrepreneurs in a business – typically they account for only a tenth of any management group, says Hall – and help them to do what they do best. Andrew Newland, chief executive of ANGLE, a company that founds technology businesses by commercialising intellectual property discovered by researchers in universities and elsewhere, takes the approach of using ANGLE to provide a central system providing human resources, payroll, systems and other administrative roles and allowing the teams in the businesses to concentrate on “the key development actions for the business”. That

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way the entrepre-neurial spirit is protected from bureaucracy, he says. At Teamsolve, an Oracle partner that helps organisations of all sorts install IT systems, chief executive Mark Bateman (right) has installed a management team in recognition that the day-to-day running of the business is not necessarily his strong point. By not being tied down by such matters, he can concentrate on developing the business by managing key clients and selling to new ones. Another part of a business remaining agile and able to respond to opportunities is communication. When businesses start to grow it is harder for the managers to communicate both with each other and with less senior staff. Entrepreneurs talk of the critical point in this process being either when they no longer know the names of everybody in the business, or when the managers no longer all fit in the same room. The result is that it can be difficult to maintain the sense of purpose or focus that was responsible for the company’s initial success. Hall advocates dealing with this through what he describes as “planned spontaneity”. For example, an advertising agency could create an area of its office where its creative staff would want to meet and so provide a better environment to communicate and trade ideas. It is all a balancing act, of course. Not enough organisation and opportunities are lost; too much and innovation is stifled. Doug Richard, the serial entrepreneur behind the investment research company Library House among other businesses, believes being entrepreneurial involves being agile, or able to act quickly; being prepared to work harder than the competition; and having a “tolerance for ambiguity”, or the readiness to live in a chaotic world. The last is perhaps crucial in that it means having a general plan but not being so focused that opportunities are passed by.

Mark Bateman (left) founded Teamsolve in 1996 after working for many years as an IT specialist as a consultant with a large company.Initially,the business,which helps organisations of all sizes plan and implement IT systems,was just him. But four years ago he started hiring staff.Since then the Derby-based business,which is an Oracle partner,has grown at about 40 per cent a year so that it has a permanent staff of 40 and additional office in the City of London and is aiming for sales of £5m next year. Bateman, 38, says he was not born an entrepreneur and “never imagined I’d be in this position”. Starting the business was more a case of seeing an opportunity and deciding it would be a good challenge to see if he could exploit it.“It’s about keeping the passion,”he says. All of Teamsolve’s growth has been organic, enabling Bateman to avoid taking outside finance and keep total control. Nevertheless, the growth of the business has led him to take on a management team so that he can concentrate on selling the business to key clients. Indeed, he sees the company’s focus on customer service as the key to its success and to keeping it entrepreneurial.Admitting that the growth of the business has made it more difficult to maintain this ethos because of the resulting reduction in the number of people who have worked directly with him, he says systems and processes have to be put in place to make sure it happens. A key decision has been appointing a customer services manager whose sole job is to make sure the customer is “deliriously happy”. Bateman believes this focus has been key in winning the business of some big clients, such as the banking group HBOS and the National Health Service, when competitors have been much bigger organisations.“We deliver the right solution to the customer on budget,” he says, adding that Teamsolve has to because “our reputation is all that we’ve got”.

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Safe as houses? Last year, 18 per cent of businesses suffered IT security breaches, but that figure could be dramatically reduced with the right software

Keeping the right people in the loop A spin-out from The Mill, a wellknown London production house, Beam TVhas,during the six years it has been in business, developed into a leading distributor of advertising material.It uses digital technology to deliver material between formats and countries. As a result, it has transformed the way that advertising campaigns are developed and distributed. Whereas previously teams operating in different countries had to rely on receiving tapes sent at great expense by aircraft, they can now see the material instantly via the internet. However, these great savings in cost and time come with the risk of material that is often commercially sensitive being seen by unauthorised people. Systems manager James Stewart explains that Beam needs to “make sure that the right people can access the right media”. In its early days,the company used an open source database,but as it started to grow it realised it needed something that was robust yet readily accessible. It opted for a back-end system supplied by Oracle. This uses a system that breaks jobs down into sessions. Once the system authenticates the user name and password of the person seeking to see the material the session checks to see who can look at it. Stewart says that by obtaining the system through Oracle partner organisation NCS it has the advantages of a reliable system without the need to pay for a full-time database administrator,which would be too expensive for a small organisation such as Beam.

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On guard: Firewalls and perimeter security provide limited protection for businesses

he internet offers many opportunities for smaller businesses. In parT ticular, it enables them to compete with larger businesses on equal terms because – in retail, especially – size matters less in the digital environment than in the real world. It also brings many risks, however, in that going online can expose businesses to hackers, viruses and other hard-to-detect threats. Such risks have received a lot of attention recently, with individuals constantly being warned about identity fraud and misuse of credit card numbers, for example. But there are signs that warnings are often not heeded by small and medium-sized businesses. Last year, 18 per cent of UK businesses suffered security breaches and 9 per cent reported that staff were obtaining or misusing confidential information. With any such incident capable of costing smaller companies tens of thousands of pounds, it is clear that robust solutions are required urgently. In an effort to counter such threats the Department of Trade and Industry’s Global Watch Mission to the US recently reported on developments across the Atlantic, and highlighted the fact that a key part of improving security is making software less vulnerable. Threats generally fall into three groups. Accidental actions stem from such issues as poor password choices, accidental or erroneous business transactions, accidental disclosure and erroneous or outdated software. Malicious attacks include viruses and denial of service attacks that can bring businesses to a halt through flooding online operations with traffic. Online fraud involves identity theft or data theft. Many smaller businesses may believe they are protected from such threats through having firewalls or other forms of “perimeter security”. But such tools only provide limited protection. Des Powley, solutions director for security and identity management at Oracle UK, points out that a particular problem is that “internal threats outweigh external threats”. Moreover, he explains that the traditional approach of locking things down is of limited use because “in reality

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you can’t do business in a locked box”. The approach being taken by Oracle software, such as the solutions that are part of the Fusion Middleware offering, is to allow employees and individuals or organisations with which the organisation is doing business to see information that is not confidential while controlling access to more sensitive material. A particular issue that may not occur to many smaller businesses concerns databases. There are regulations concerning access to certain types of data that can be contravened if certain employees can see information they should not. By having a system involving separation of data, a business can control access to relevant data. The same technology can ensure that certain employees have the level of privileges they need to carry out their jobs without, for example, compromising the organisation’s intellectual capital, says Powley. Just as it is important to allow employees to do their jobs properly, it is crucial that they be prevented from doing it once they leave. The sort of software he advocates makes it easy to turn off or adapt employees’ access. Among the companies seeing the benefit of this sort of approach is Adfero, an online news agency that grew out of the old Dehavilland political news service. Adfero offers customised news services for companies’ websites so that they enhance the service offered to customers and also make the companies more prominent in internet searches. Technical director Stewart Snow says the company has teams of journalists working in Manchester and London’s Docklands and individual journalists working in different cities around the world. Clearly, a flexible yet secure system is vital, and the company – which also operates consumer websites, such as www.inthenews.co.uk – is in the process of moving from Microsoft to Oracle so that it can be sure its software is robust enough to handle all its databases in a secure manner . Whatever the business, though, Powley believes the key is to “address the real business issues around security, not fencing silos”.

Harnessing better applications to avoid the agony of growing pains Small and medium-sized businesses are increasingly using the best software available as they plan further into the future in an attempt to compete with larger companies and reach ambitious growth targets

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he name MessageLabs might be familiar from the bottom of emails, T where it often appears certifying that the email concerned is free from spam, viruses or other potential security threats. What is less well-known is that MessageLabs is a medium-sized company based in the UK that is successfully taking on larger, usually US-based rivals. It currently has about 11,000 clients and employs about 350 people in seven offices around the world in addition to its UK base in Gloucester. But, while acknowledging that it is facing increasing competition, it is seeking to become the world leader in its field and hence is aiming for dramatic growth. John Simpson, senior director, sales consulting at Oracle, says that one of the ways the company is going about this is by installing a customer relationship management (CRM) system. He says CRM is vital because acquiring new customers, looking after existing ones and making sure none are lost is vital for growth. MessageLabs is using it to help it focus on improving sales, marketing and client service by measuring, respectively, leads per member of the marketing team, deals per head of the sales team and tickets per head in the client service team. It is a sign of how even comparatively small companies are turning to the sort of technology that was once the preserve of the largest corporates in their attempts to become more competitive and to achieve ambitious growth plans. Moreover, high-technology companies are not the only ones recognising the benefits of using increasingly sophisticated software to help them run their operations. Software companies that have traditionally dealt with larger businesses, such as SAP and Microsoft as well as Oracle, are all seeing growing interest from smaller customers as it becomes more widely recognised that installing high-performance technology need not be as expensive as had been thought. Many companies stick to CRM or some other distinct application, such as finance or human resources management. Indeed, CRM even has its own subset, called sales force automation (SFA), which has as its goal the streamlining of the entire sales process to make businesses more efficient, improve customer interactions, increase customer satisfaction and save time and money. Paul Fielder, applications sales manager with Explorer, an Oracle partner based in Leeds, says: “SMBs [small and medium-sized businesses] tend to buy software to solve specific problems. This means they end up with a lot of different systems, which makes it very difficult to get business intelligence.” In addition, each time they upgrade they have to re-engineer all the applications, which is expensive and time-consuming. This, in turn, tempts them not

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to upgrade so often with the result that their systems become out of date. Increasingly, though, such businesses are being encouraged to buy software strategically. Accordingly, they are looking for software systems that can grow with them so that they do not have to keep changing as the business develops, adds Fielder. This is tending to fuel demand for enterprise resource planning, or ERP. This is a business management system that integrates all parts of the business, including manufacturing, sales and marketing. In a manufacturing company, for example, its use can be seen in the handling of an incoming order. As soon as the order comes in, the system would spark an inquiry about whether the necessary parts were in stock and if not order them. Information obtained during the ordering process would allow it to schedule a date for fulfilment of the order and hence a delivery date for the customer. Because it brings all the operations together, this technology enables costs to be reduced through such areas as cutting waste in inventory, consolidation of purchasing through a single system, speeding up of accounting information and increased salesforce efficiency. It also does away with the need for the same information to be put in different systems. All information only needs to be entered once to be available for all applications. One factor that is making such comprehensive systems more affordable to smaller companies is the Internet. Webbased applications simplify the implementation process and so reduce the costs. Another is the increasing readiness of large software providers to pre-package some of their offerings. Explorer’s Fielder, for example, explains how what would once have required a team of consultants to build from the ground up can now be implemented almost out of the box. Oracle’s Accelerator suite, for instance, offers a series of packages focused on particular industry sectors. Businesses can adapt them for their own purposes, but since they reflect best practice in each industry, are generally encouraged to change

Application sales manager Paul Fielder

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their processes to suit the package if required. The result, adds Fielder, is that the system can be installed much more quickly and cheaply and the return on investment realised sooner. Clive Wells, senior principal mid-market consultant with Oracle, says the approach gives smaller companies access to the sort of technology previously the preserve of large corporates without forcing them to accept a “one size fits all”. He also stresses that, besides delivering efficiencies, ERP systems encourage collaboration and the communication that can be lost as businesses become bigger. Because the same system can deliver information in different forms to different people, such technology can enable an entrepreneur to step back from the day-to-day management of the business knowing that the systems are there to allow the middle managers to do their job while also providing him or her with the vital information they need about the progress of the business. Moreover, the technology now exists to deliver daily business intelligence to organisations, so that executives receive key performance indicators. Such a system is about to be introduced by the Specialist Schools and Academies Trust, which started life in the 1990s as a government body charged with improving standards in secondary schools

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but has broadened out to become a notfor-profit organisation providing consultancy on education in the UK and overseas (see box). Finance director Colin Kerr says that from the beginning of the new financial year in April all 30 budget holders in the organisation will “come in each day and see high-level traffic lights of their budget areas”. The mark of a good ERP system, says Wells, is that “it should be able to supply good financial management information in a timely way”. A clear sign of growing pains in a business is the fact that it takes longer and longer to close the accounts. This can be very dangerous because outof-date management information is no use at all. “It is absolutely critical that management information keeps pace with the pace of growth of the business,” he adds. Ultimately, though, whether smaller businesses choose to adopt this sort of technology is down to their mindset. Wells says the people running them will want to see a quick return on their investment and they will want the system to be able to grow with them. “Scaleability” is a key word. But they will also be ambitious and keen to use the technology to help them “stay ahead of the game and remain efficient and competitive”. Just like MessageLabs, which – though hardly a household name in its native land – has ambitions to be a global force.

Technology satisfies a need for greater speed The Specialist Schools and Academies Trust was set up towards the end of the last Conservative government with the aim of encouraging the setting up of specialist schools and city technology colleges.When Labour came to power in 1997 it became the vehicle for raising secondary education standards through promoting the idea that as many secondary schools as possible should become specialist in at least one subject.With about 90 per cent of the country’s 3,000 secondary schools achieving this status, the organisation decided to broaden its remit and has effectively become a not-for-profit consultancy specialising in education.As well as advising on standards,it runs courses and acts as a network for those involved in education. Since taking the decision to broaden its services,the trust has grown from an organisation with an income of £12m a year to one doing £50m of business a year.In that three-year period,the staff has trebled in size to about 350 people. Colin Kerr,who arrived as finance di-

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rector at that time after spells in the public sector and as FD of a law firm,realised that the existing accounting system would not be sufficient to cope with the growth that would be associated with the development of the organisation. “If you wanted to do anything you had to work it out separately from the system and tap it in. There was no information about where the money was going,”he says. His first task was just to get to “where we should have been”with a system that was fit for the purpose of providing accurate monthly accounting information. Having achieved that reasonably quickly,he and his team set about what he calls the “exciting part”. Taking the view that the way to obtain the sort of information he wanted lay with technology rather than hiring more people, he opted for an Oracle system that could have extra features added on. Inspired by stories of how the US computer company Cisco Systems has introduced “real-time reporting” he set about obtaining a system whereby he

could know about financial commitments being made by members of team as they happened rather than weeks later and could also see instantly what the effect of them would be.“You’ve got to have the right data and today,” he explains. The trust is currently piloting a system due to be implemented in time for the start of the next financial year in April that will alert each of the organisation’s 30 budget holders to what is happening in their areas in financial terms. Acknowledging that only financial specialists will be interested in reading the full accounts, he is keen to make it easy for them to see if there is a problem through a “high-level traffic lights” system to be delivered by email when they log on at work each morning. Once alerted, the executive will be able to drill down through the information to find out more detail. “You’ve got to be looking at how to liven it up,”says Kerr, who also explains how the Oracle system has allowed the organisation to rid itself of paper. Invoices are scanned as they arrive and then sent to relevant person for checking. Once he or she clicks on them they are sent for payment. “We’re getting away from the idea of armies of clerks,” says Kerr. “It’s sharp, it’s quick, it’s about empowering the budget holders.”

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Small businesses can benefit from new phone technology

he revelation that lending to small businesses under the Government’s T Small Firms Loan Guarantee Scheme nearly halved last year is seen by many as evidence of the difficulties faced by new enterprises when seeking the funds they need to grow. The scheme, which has been operating since 1985 and is run by the Department of Trade & Industry, involves the Government guaranteeing three-quarters of the value of bank loans to businesses that are seen as promising but are unable to obtain finance in the normal way because they have limited assets. Last year, the Government underwrote loans worth £225m, compared with £422m in 2005 and £481m the year before. The Federation of Small Businesses has urged a return to “normal levels” of funding next year. But others suggest that the real reason for the fall in the number and value of loans is the availability of finance elsewhere. Competition among banks to lend to a sector that could produce the big businesses of the future and the arrival of other sources of funds lead many observers to believe that the problem is not as serious as it once was. Indeed, successful entrepreneurs looking to expand their businesses are in many cases spoiled for choice in terms of finance options. All have their advantages and disadvantages and it is important that those running the business understand what they are trying to achieve. As entrepreneur Chris Lilly says in his recent book The Start-Up Survival Guide, there are “two main sources of funding, namely equity and debt”. Equity involves the funder taking a stake in the business. The most obvious example of this is a com-

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Small firms, big choices Small and medium-sized businesses invariably need finance in order to grow, but where should they get it from? Venture capital can be very beneficial to small businesses

pany obtaining a stock market listing – but this is probably a good while off for most growing businesses. Other forms of equity funding are investments by friends and family; investments by “business angels”, high networth individuals who are prepared to invest some of their fortunes in businesses; venture capitalists, which despite their name are usually not that interested in investments of less than £1m; and strategic investors, or bigger companies buying into new technologies or ideas. Many entrepreneurs are wary of equity funding because they fear the loss of control. But, as Lilly points out, even though this dilution of the founder’s stake may mean that “you have a smaller stake in percentage terms, in money terms your stake will have increased”, because the value of the company should increase each time there is a fresh investment. Moreover, debt is generally more expensive to obtain because it involves a set pro-

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gramme of repayments with interest. Nor is it necessarily any easier to obtain. Both forms of funding require the preparation of a detailed business plan, which takes time and can cost money. Venture capital – or private equity, as it is increasingly called – is very demanding in terms of management performance and returns on investment. Private equity firms are typically looking to realise their investments by selling them on or listing them on the market within about five years. But perhaps the greatest advantage that venture capitalists bring to ambitious entrepreneurs is contacts. In their book Raising Venture Capital, Rupert Pearce and Simon Barnes say that, while novice entrepreneurs tend to see VCs as “a kind of giant chequebook providing an endless supply of cash”, their more sophisticated colleagues see them as “a giant Rolodex, offering the potential to broaden their networking range”.

It’s getting easier to talk Call centres were once only the preserve of big organisations, but developments in internet technology have let small to medium-sized businesses get in on the game ot so long ago, call centres were the sole preserve of large companies. N Only utilities and other big corporate organisations could afford the buildings, technology and people required. But the latest developments in internet technology are changing all that. Daryn Mason, Oracle’s Head of Solution Consulting for CRM On Demand in Europe, says there are two key “threads of benefit” for small and medium-sized businesses. By far the biggest is that the total cost of having such a facility has come down through the concept of hosted contact centres.

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This involves businesses sharing the service via the internet, rather than having to own the whole infrastructure and paying for it on a subscription basis. Industry statistics suggest this “pay as you go” approach means that businesses can have a call centre for as little as £75 per user per month. But just as interesting, says Mason, is the flexibility that the technology gives businesses. It enables them to deal with a sudden rise in demand. Oracle says that early adopters in the United States, in particular, are attracted by the “really enticing cost reductions”.

But an additional attraction is that it can take just weeks to set up such a centre. Allied to such developments is the increasing popularity of VOIP (voice over internet protocol), which is essentially the means of making telephone calls over the internet. Until now, this has largely been a domestic phenomenon, but its use – combined with hosted software applications – is starting to spread into the business arena as well. Mason says that VOIP in conjunction with hosted solutions is starting to be used in call or contact centres to route calls, so they go to the most appropriate person, and offers another convenient way for customers to contact their suppliers. “In a contact centre, most of the traffic might be voice,” he says, “but customers could also be using email or responding via a website. The VOIP technology offers another way to bring the call centre closer to its customers.” But the VOIP technology does not just apply to call centres. Dave Baxter, head of small business at mobile operator O 2, believes that convergence between mobile networks and land services and between telephones and computers has been much talked about, but has largely just been a concept until now. It will become much more important this year. Although smaller businesses tend to be cautious about technology, the growing use of this technology among tech-savvy individuals is expected to drive business use. At the same time, mobile operators seeking to exploit their third-generation (3G) services will promote it. VOIP can be particularly attractive for any business where internal telephone calls are commonplace. Lewis & Hickey, a UK architects firm and design consultancy specialising in retail fit-outs, says it’s seen a significant drop in the amount it’s spending on mobile and landline phone calls through using the business service offered by Skype. But it’s not just benefiting from cost savings. Benoit Mareschal, business development director, says: “The ability to talk with one another has increased enormously.” This is largely because an instantchat feature enables users to see when colleagues are online. But the firm is also using Skype to carry out conference calls and video conferences. As chief executive Paul Miele explains: “The benefits are far greater than just cost savings.”

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Upgrade without a fuss Investing in technology often worries small businesses because of how quickly it can be superseded, but software providers have come up with a solution arge companies are generally so convinced of the benefits of using techL nology to help run large parts of their operations that they need little persuading to upgrade their systems. Smaller businesses, on the other hand, are often seen to be more circumspect about such investments. Although attitudes vary depending upon such factors as the sector in which the business operates, its scale and the age and background of those running it, this caution tends to centre on concerns about the initial cost and fears that any systems acquired will quickly become outdated and will have to be replaced as the business develops. David Forrest, chief executive of Percipient, an Oracle partner that focuses on supplying the software company’s applications to small- and medium-sized businesses, recognises the phenomenon, but says that these days the question that needs to be asked is not whether the business can actually afford the investment but whether it can afford not to invest in technology. Smaller companies started investing in technology 10 or 15 years ago. Typically, they had a basic finance package on a Windows platform. They would have updated that a few times and would probably have added a customer relationship management (CRM) package and might even have acquired some databases. The result would have been that different parts of the organisation would have developed their technology in isolation – requiring any information that was needed in more than one part to be keyed in separately and making it difficult to obtain information relating to the whole business. Things can reach a point where the technology is actually impeding the management of the business rather than helping. Or it could be that the technology is either overloaded or just crashes – as happened to Kerrie Keeling, the former banker who runs the project management and building trades company, A Woman’s Touch (see case study). David Pinches, head of product management for the mid-market division at Sage, the software business that focuses on growing businesses, says companies typically start to think about changing their approach to computing when they reach

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certain points in their development, such as having several cost centres or operating several warehouses. When deciding to upgrade, they are conscious of obtaining systems that are easy to use, speedily installed, not too expensive and capable of being expanded as they continue to grow. It is in an effort to capitalise on this last factor that companies that have traditionally focused on the largest businesses, such as SAP and Oracle, are starting to market their offerings to smaller companies. Their argument is that hosting applications via the internet rather than having to install individual servers and the introduction of pre-configured packages is bringing “tier one” applications within the reach of smaller, more costconscious customers. Sage’s Pinches points out that there is no truth in the idea that one size fits all. But Forrest argues that several factors are helping to make providers such as Oracle more attractive to smaller companies than was previously the case. In particular, they do not seem so interested in buying specialist services but will go for more widely- applicable ofSoftware companies and consultancies are starting to target small businesses

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ferings. Also, such services do not cost as much as they once did because of the introduction of the preconfigured packages and the use of partner companies to implement them is cheaper than the consultants that used to do the work. Moreover, many of the systems can be set up with only the modules required operating from the outset. As the business grows and becomes more complex more facilities can be added without a major implementation exercise. Certainly, if Keeling’s experience is anything to go by, proprietors of growing businesses can be pleasantly surprised by how inexpensive certain aspects of upgrading technology can be. For example, she and her team leaders have PDAs that they obtained free as part of Orange’s small business package. Moreover, she opted for the top-of-therange financial controller software package because she has ambitions to expand the business from employing 20 people in the London area to a nationwide presence and felt she needed something more robust. “It’s much cheaper than me taking on my own IT person,” she says of her decision to go for what she saw as the best.

Recovery after crash Kerrie Keeling realised she needed to upgrade her technology when her computer crashed,wiping out all her files.“I started back in April 2003,just me decorating. I ran the business from home with a land line and a PC and a mobile,” the former banker recalls. By offering a superior service to that usually provided in the building trade,the business –AWoman’sTouch – grew quickly,with Keeling adding other trades in response to customer demand. However, she kept doing the accounts on spreadsheets on her original PC – until the crash happened a year and half ago.That problem – and the inadequate advice on dealing with it that she received from the store that supplied the PC – convinced her that she needed to upgrade her technology.

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She discovered a consultancy called Solutios, which operates her website (www.awomanstouch.org.uk) and also manages all the business’s communications needs. There is a networked email system linking Keeling with two other people working from home and the landline telephones are also networked so that all calls between them are free. In addition,Solutios,which provides 24-hour remote support,has organised each team leader to be equipped with PDAs that enable them to be e-mailed with job specifications.This greatly improves the level of customer service. From the start of the new financial year in April,the business will also have a new accounts system that will provide the perfect platform for future growth.

Kerrie Keeling now uses an IT consultancy

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Putting people first When you start up a business, there’s a multitude of things to think about but employing staff probably isn’t one of them, until, of course, your business begins to grow hen entrepreneurs set themselves up in business, employment issues don’t tend to be topmost in their minds. Ensuring that there’s a market for their goods or services, worrying about production, or securing finance usually loom much larger. But it doesn’t take long before human resources (HR) matters start to become an issue. HR issues begin to arise when the business’s founders consider taking on their first employees. Employing somebody is a big step, not least because you need the means to pay them every month. But it’s also an early step in making the business more complex. Indeed, small business lobby groups complain that recent developments in employment law are making this area something of a minefield for small and

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Starting a business is one thing, but recruiting is quite another

growing businesses. The Federation of Small Businesses (FSB) has revealed large increases in the past two years in concerns about such areas as age discrimination, information and consultation, treatment of part-time workers, pensions and retirement. Employment law is, says Alan Tyrrell, the FSB’s employment chairman, “vital to ensure that both employers and employees know where they stand and to protect both parties as they carry out their work”. But, he adds, the complexity of these laws is placing “an intolerable burden on smaller firms that are not big enough to have their own HR department”. He continues: “The average small business owner spends 28 hours a month filling in government forms.” This burden is seen as a key disincentive to growing businesses to take on the

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staff they need to continue to develop. There’s anecdotal evidence that many firms curtail their expansion in order to avoid taking on extra staff. However, it doesn’t have to be that way. While acknowledging that few small businesses can afford a full-time HR manager, experts in the area advocate, at the very least, putting a senior manager in charge of ensuring that areas such as training, health and safety, pay, and staff communication and motivation are covered. “Personnel issues are too important to leave up to chance,” says one. This still means that someone has to deal with the details of pay, training and the rest, but modern technology can help in this area, just as it does with finance and other specialist functions. Various businesses and industry groups have begun to offer HR support via the internet on everything from hiring and firing policies to payroll services. Such developments can undoubtedly help make taking on relatively junior people less risky in terms of possible violations of employment law, but they won’t help business founders deal with an issue that can be even more troubling. This issue is taking on senior people to reduce the burden on themselves. The history of entrepreneurial businesses is littered with examples of companies that have taken on senior personnel, only for the founder to be reluctant to let them do what they were hired to do. But if they don’t take this step and acknowledge that other people may possess skills that they, themselves, don’t, they are less likely to prosper. Jessica Seaton, who founded the clothing business Toast with her husband a decade ago, summed up the dilemma when she told Accelerator, the new magazine for entrepreneurs:“You have to delegate if you’re going to grow, working with others rather than thinking you’re the only one who can do it. It’s a leap of trust.”

The rules of distraction Government red tape is a fact of life for businesses, but small to medium-sized ones often struggle to cope with all the rules and regulations imposed on them he most frequent complaint made by owner-managers of small and mediT um-sized businesses is that they are burdened by too much regulation. Rules about employment, health and safety, waste disposal and tax – to name a few – are now so plentiful and often so complex that entrepreneurs sometimes feel that dealing with them can take up as much time as developing their businesses. The Government has made much of its commitment to small business, but – despite the presence of the Small Business Service and taskforces dedicated to investigation regulation – has done little to improve the situation. Indeed, last month’s (21 March) Budget is regarded as typical in that, in announcing a range of measures that roughly balance each other out in terms of the amount of tax received, the Chancellor, Gordon Brown, has added to the complexity of the tax regime. Carol Undy, chairman of the Federation of Small Businesses, says that the Chancellor “gives with one hand and takes with another”. It is a familiar refrain, given support this year by Brown’s decision to reduce the rate of corporation tax by 2 per cent to 28 per cent while raising the tax on small businesses by the same amount, to 22 per cent. As in the past, the Budget contained proposals for adjusting capital allowances and tax reliefs on different activities. LexisNexis, the leading provider of information for tax experts, says that the size of its Tolley’s Yellow Tax Handbookhas grown by approximately 70 per cent since the 2001 General Election. Then, the handbook of UK direct tax legislation contained 5,952 pages over two volumes. By last year, the book ran to four volumes containing 9,806 pages. This year’s Budget is expected to add at least a further 400 pages. LexisNexis’s Mike Truman says that “the Chancellor has persisted with adding complexity that is likely to puzzle and frustrate many businesses. This year’s

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continued growth in tax legislation gives real credence to fears that British competitiveness is being damaged by a complex and lengthy tax code.” However, it is not just tax that is causing concern. Increasingly wide-ranging health and safety rules mean that proprietors have to add to their costs by introducing measures aimed at preventing accidents or other incidents, even if they are not likely in their businesses. Similarly, the rules associated with employing staff have become so complex and the ramifications of getting it wrong so serious that many companies say they’re put off taking on extra people. Such concerns have fuelled interest in services designed to keep busy owner-managers who don’t have the same sort of professional support enjoyed by large companies up-to-date.

Experts advise companies to ensure that Smiles better: But are small they have policies and procedures in place businesses regarding employment and health and safebeing held back?

ty, that they try to keep abreast of legal requirements and register with the correct authorities. Most importantly, they need to ensure that they have adequate insurance. Small business groups do not wish to give the idea that they are encouraging members to ride roughshod over their employees’ rights or to have a lax approach towards safety. But they do point out that such regulations, combined with the tax rules, are hardly evidence of the sort of enterprise culture that successive governments have said they are trying to encourage. As Nick Goulding of the Forum of Private Business, says of last month’s Budget: “The changes made for smaller firms will serve only to further burden them.”

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Connecting for success Inefficiently sharing data within a company is about to become a thing of the past thanks to middleware – and the only people who won’t benefit are your competitors Come together: Middleware links up a company’s many departments

hese days, just about every company makes at least some use of techT nology to help it run its business. Com-

The benefits of outsourcing You may think your business is too small for outsourcing but thing again: it can cut your company’s costs and increase its productivity more than you might imagine Keys to success: External IT support can be cheaper than dersen Consulting (Accenture), set up ded- inhouse

ot so long ago, outsourcing was the preserve of the biggest companies. N International organisations, such as An-

icated services that enabled large businesses to have information technology, payroll and other “back-office” functions managed by teams of specialists. However, the arrival of the internet has given smaller businesses the opportunity to gain from the concept. Increasing numbers of growing businesses are, for example, avoiding employing full-time HR managers by obtaining advice and services via the net. A typical case is API Group, a producer of specialist packaging and security products used by consumer goods companies to help their products stand out on the shelf. Now a UK-listed company, API has grown into an international business with 1,000 employees and an annual turnover of £120m. By the time Iain Anderson became director of information systems in 2002, the company’s IT operations had also grown spectacularly. The IT budget was running at 2.5 per cent of turnover and there were 25 full-time employees. Now, the team is half the size and the budget is less than 1 per cent of turnover.

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Anderson says this has been achieved through a restructuring that “focused on what was important to the organisation”. He and his colleagues started by making infrastructure changes that involved moving the architecture of the IT systems out to BT. Then they made Dell the standard supplier of computer hardware, making use of the company’s support to do away with the need for support personnel on site. But perhaps the most far-reaching change Anderson has made has been to implement Oracle On-Demand, which involves outsourcing hosting and management of hardware, software and applications of IT systems. There was initial scepticism on the part of the board, but the advantages have been so great that any opposition has been overcome. Moving to this approach has contributed greatly to reducing the IT headcount, cut the cost of hiring and training IT support and reduced IT operating costs by 40 per cent. Moreover, having the system supported by a remote hosting centre has proved cheaper than the company setting up its own disaster recovery plan. Among the associated benefits is the fact that users of the system enjoy high-

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er service levels than before – making them more productive. The ease with which the system can be updated and upgraded to accommodate more users is also a great benefit, adds Anderson. Above all, the changes mean the business can focus on its core manufacturing operations instead of worrying about IT. This backs up research, which show that firms that outsource aspects of their operations tend to be more profitable than those that do not. This is partly because such businesses are probably more likely to analyse and seek to make as efficient as possible all aspects of their business. But it is also true that by outsourcing activities such as finance, HR and IT, companies are able to gain access to higher levels of expertise than might be available in-house and also save costs. The practice is not without its risks. Again, research indicates that businesses engaging in outsourcing need to ensure that the providers are meeting their needs, the costs are appropriate and that there are adequate controls. After all, if something goes wrong, it is the reputation of the company outsourcing rather than the service provider that’s likely to be affected.

puter software that is simultaneously becoming increasingly advanced and affordable is transforming such functions as finance and human resources – making them more efficient and effective. But many organisations – even large and supposedly sophisticated ones – are still not enjoying the real benefits of information technology because their computer systems are organised along functional lines and do not allow data to be transferred from one part of the business to another. We have all come across instances of this – for example, when our bank invites us to take out an insurance policy that we already have because customers are seen in terms of accounts rather than as people or when we are dealing with a call centre and are told they cannot deal with a query because they do not have access to the data. By contrast, one of the key factors behind the great success of the supermarket group Tesco has been its use of information technology, particularly the data this enables it to gather about its customers through its Clubcard. Most companies using even rudimentary information technology systems hold a lot of information about their business – the trick is finding it and making it available to the people who need it. There is no shortage of rawmaterial. In his recent book, Where Value Hides, Stuart E. Jackson of LEK Consulting writes: “Executives today are positively bombarded by statistics, data, analyses and opinions. In fact, most of the senior executives I work with tell me they get too much information.” The trick is in turning the raw material into something useful. Consultants constantly talk about the time that is wasted in management meetings because what they are discussing is either without value or outdated. This is where “middleware” comes in. This is the name given to the software

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that has been developed to link the various applications, such as customer relationship management and supply-chain management. This process, known as enterprise application integration, is designed to make organisations work more effectively by doing away with the “information silos” that hamper the transfer of information between departments and the “information bottlenecks” that require employees to intervene by either keying in data or making decisions. Organisations have been aware of the limitations of computer systems that do not allow data to be transferred between departments for some time. But hitherto the only ways around it have been the time-consuming and expensive writing of special programmes to create links between the systems and similarly costly customisation of systems. Recently, though, new systems have been devised that make it much easier for organisations to bring their different technologies together and so start to see the gains that technology promises. Gavin Dimmock, director of Fusion Middleware for Oracle UK and Ireland, says that interest in these developments is such that in the past six years the division has grown to be a significant part of the company’s revenues and its fastest growing business. Pointing out that the market is being driven by the desire of all sorts of customers to link different technologies or business processes, he adds: “The business challenges are exactly the same whether it is a business in the top ten of the FTSE 100 or an SMB [small or medium-sized business].” After all, the issue of linking an internet retail site to the company’s financial system and procurement department is pretty much the same whether the business concerned is a start-up or an internationally-known name. As Dimmock says, it is “just a difference of scale”. However, the recent heavy mergers and acquisitions activity has given an added boost to the market because the merging

companies will often have entirely different systems that will need to be integrated and also because of the pressure to produce cost efficiencies in order to justify the deals. At the same time, the arrival of Service Oriented Architecture, the name given to loosely linked services supporting business processes is helping businesses develop their technological capabilities without wasting their investments in earlier applications. As such an approach is open rather than tied to a particular technology, it is relatively easy for it to be upgraded and developed at less cost – to the benefit of the business concerned. The real advantages come later, though, as businesses become much more effective at serving customers – who are likely to be impressed by a more seamless link between, say, the call centre and the engineers department – and efficient at monitoring operations. Increasingly, the businesses that are better than their rivals at delivering more information that is accurate and timely to the managers making the decisions will be the successful ones.

Oracle’s middleware is integration made easy

NCS business development manager Bob Dunsby

Oracle partner NCS (www.ncsltd. com) is based in London’s Docklands and works extensively with the financial institutions nearby on ensuring that their technology needs are met. Business development manager Bob Dunsby says the presence of Oracle’s Business Process Execution Language (BPEL) over the past couple of years has helped boost demand for applications integration because it makes the whole process much easier. Financial institutions have been particularly eager to adopt it because – having the money to invest and the manpower to do the work required – they tend to be in the vanguard of such developments. Dunsby says BPEL offers additional advantages over the traditional middleware packages because it is maintained by Oracle and is much quicker to implement. Learn more about the latest middleware solutions at the Oracle IT Fusion conference on Wednesday 11 July 2007 being held at the Emirates Stadium. Register at www.oracle-itfusion-conference.com

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The right call: Sales staff can use CRM systems to boost sales

Can customer relationship management systems benefit your business? Knowing, understanding and predicting what your customers want – and will want in the future – is vital to the success of small to medium-sized enterprises – and CRM is the key

ny business is highly dependent on its customers. Traditionally, smaller A businesses were thought to be better able to understand their customers’ needs, simply because their size made it easier. If you’re a corner shop, say, it’s much more straightforward to serve your local customers than if you’re a supermarket chain. You know what your customers want because you see them on an almost daily basis and can speak to them faceto-face, rather than having to organise surveys and questionnaires. There’s also a much shorter chain between the person dealing with the customers and the one making the decisions. Indeed, they are often one and the same person. It’s this knowledge and understanding of customers that big companies were trying to replicate when they started to invest in customer relationship management (CRM) a few years ago. The concept is essentially a fancy management consultant way of talking about getting to know customers better and using that knowledge to serve them better. Because developments in technology made the collection of data like this relatively straightforward for large organisations, such as banks and supermarkets, the concept became bound up with information technology. But, as Business Link, the government-supported advice network for small to medium-sized enterprises (SMEs), points out: “It is more of a business philosophy than a technical solution to assist in dealing with customers effectively and efficiently”. That said, while CRM can’t be seen purely in terms of technology, it also can’t be successfully introduced into an organisation without at least some technology. After all, only technology enables one of the key aspects of CRM:

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the integration of all the means by which companies communicate with their customers (telephone, e-mail and the internet) in writing. Even basic attempts to find out more about customers and their needs should help companies serve their customers – and it may be that many small businesses feel this is all they can do. In the early days of CRM, the lack of sophistication led to financial services companies being offered services they already had with the same supplier, for example. Similarly, companies that were analysing their customers on where they lived, rather than on what they spent their money on, would find themselves offering gardening products to people who lived in gardenless flats. Things have moved on markedly since then. And there are signs that the companies that are using the more sophisticated developments in CRM technology are seeing more benefits than those that settle for the more basic data collection approach. In particular, business analytics applications, which enable organisations to analyse customers’ past behaviour with a view to anticipating future trends, are becoming especially popular with forward-thinking executives. In their new book, Competing on Analytics: The New Science of Winning, Thomas H Davenport and Jeanne G Harris write: “Many companies in a variety of industries are enhancing their CRM and SCM [supply chain management] capabilities with predictive analytics, and they are enjoying market leading growth and performance as a result.” The authors point out that there are certain challenges to this. In particular, companies need to be prepared to break down boundaries between ac-

tivities that had once been kept segregated, namely CRM-type processes such as sales and marketing, and SCM processes, such as procurement and logistics. The idea is that businesses align supply and demand more accurately and so make themselves more responsive. Many companies produce statistics along the lines of average revenue per customer and average order size. But those that are using analytics go further. They might, for example, use predictive modelling to identify the most profitable customers – or the least profitable. Utilities went down this route several years ago when they introduced different prices for different customers. Alternatively, they might integrate data they have generated themselves with that gathered elsewhere to build up a better picture of their market. Or they might test different situations in their supply chains to identify in advance potential hold-ups and other problems. They might also analyse historical sales and pricing trends, as this enables them to set prices that maximise their yields from each transaction. They might also use experiments to test the effect of advertising and other marketing activity. The good news is that what was once the preserve of large corporations is now available to growing businesses. CRM systems, like other aspects of technology, have been available in outsourced form via the internet for some time. While possibly not as cheap as buying an off-theshelf solution, this is a good way of obtaining the application quickly and also avoids having to have an extensive inhouse technology team. A form of this is the on-demand solution offered by Oracle. Daryn Mason (pictured top left on p18), European head of solution consulting for Oracle CRM On Demand, says: “The software is extremely low cost. For the first time, organisations can afford to implement [this technology] without a large upfront capital expense. It’s a message that the market is waking up to. The cost per user is comparable to an average mobile phone bill.” This has certainly been the experience of Netstore (see case study). Marketing director Alan Edwards negotiated a competitive cost per user per month deal for the company. And the fact that the Oracle On Demand system is easily scaleable meant he didn’t have to sign up for too many users in anticipation of growth, but could just expand the user base as the business developed and other operations were acquired. Oracle’s Mason says a particular benefit of the analytics approach to CRM is that it enables businesses to better predict demand. Many SMEs are now trading over the internet and seeing for

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Knowledge is power 10 tips to help small companies retain their successful entrepreneurial, spirit, while at the same time taking on the bigger beasts of business ome businesses are content to stay small. Many are so-called lifestyle enS terprises, where the proprietors have themselves the truth in the maxim that the Web makes everybody the same size. But they can run into trouble if they suddenly experience a rush for their product or service and can’t fulfil it. “Even if there’s over demand, you can use analytics to show which customers should be better served,” Mason says, adding that he and his colleagues talk of using the technology to turn “victims of success” into “victors of success”. He agrees with Davenport and Harris that obtaining the real benefits requires breaking out of traditional thinking. Pointing out that even operational and analytical CRM were often in “separate silos”, he says: “You had people in the field collecting information and then it was sucked out and the analysis took place. There was some level of insight, but it didn’t give you the ability to go straight from insight to action. It didn’t allow you to drill down and go to the root cause of the problem.” “Insights” is the word of the moment in consulting circles. Everybody seems to want that extra little bit of information that gives them an advantage over its rivals. Much has been made in recent years of how, for example, Tesco seems able to anticipate warm weekends and get the right amounts of beer and barbecue supplies into its stores while its rivals sell out. It’s largely down to analysis. Similarly, the internet search engine Google has, in part, been successful with advertisers because of analytics. It uses algorithms that are constantly analysing such things as the efficacy of keywords, placement on the page, the creative material and so on. Nor is such thinking restricted to web-based advertising. Davenport and Harris quote Sir Martin Sorrell, chief executive of the advertising and marketing group WPP, as saying: “There is no doubt in my mind that scientific analysis, including econometrics, is one of the most important areas in the marketing-services industry”.

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Netstore: CRM in action

Netstore, a UK-based provider of managed information technology services and security for organisations that have outsourced their IT, used to be a typical small business. “We were very reactive and did things day-to-day,” acknowledges marketing director Alan Edwards (pictured above right). Then, two years ago, it took the decision to take customer relationship management (CRM) seriously, “as part of the process of growing up”, as Edwards puts it. Until then, the company, which had been growing rapidly through acquisition, had relied on a system that was not well used, partly because it was difficult to use. Most salespeople had their own independent spreadsheets, which made it difficult to see the business as a whole and so to forecast. Netstore decided to go for an ondemand system because it didn’t have the high initial costs traditionally associated with such systems and because the company could use it and expand it when required. Also, because the company didn’t have a large IT team, the system meant it wouldn’t have to staff up or take the expensive route of using a provider’s consultants. Having examined the market, Edwards and his colleagues opted to acquire a system from Siebel, the market leader in CRM and then still independent, but now part of Oracle. “The service they had was similar to that of others, but there was

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one area where they stood out,” explains Edwards. “That was in its historic analytic capability. The data is kept in a warehouse and is a potentially powerful business indicator to get historic analysis.” Netstore initially signed up for 25 to 30 seats to cover the immediate sales force, but since them it has acquired three companies. This was when the investment in an on-demand service really paid off, as customer data was easily transferred from various databases to a single system. Indeed, the speed with which different sales teams have been brought together has been a great help in integrating the new businesses. “It underpins a large plank of our growth strategy,” says Edwards. As well as acquiring businesses, Netstore is keen to grow organically, and here the fact that the sales team has knowledge about their customers and potential customers at their fingertips is a great help. Netstore currently has 85 licensed users and has just bought a further 20 seats. It sees a consolidated CRM system as being so valuable to the business that users are increasingly not just among the sales team but also drawn from the commercial and financial teams. A key benefit of the system is that users only need a minimum of training to be able to use it. The fact that it can be accessed easily and from anywhere makes staff much more inclined to use it than they were the old system, which, of course, makes it more valuable.

made a conscious decision to stay small in the interests of work/life balance, but most – aware that in the current business climate it is impossible to stand still – are intent on becoming bigger. The obstacle they face is to retain that entrepreneurial spirit while becoming large enough to take on the bigger beasts. Here are a few tips to help them succeed. 1. STAY ENTREPRENEURIAL BUT GET SOME DISCIPLINE Identify the entrepreneurs – typically they account for only a tenth of any management group – and help them to do what they do best. Andrew Newland, chief executive of ANGLE, a company that sets up technology businesses by commercialising intellectual property discovered by researchers in universities and elsewhere, uses ANGLE to provide a central system that organises human resources, payroll and other administrative roles, and allows the teams in the businesses to concentrate on “the key development actions for the business”. That way the entrepreneurial spirit is protected from bureaucracy, he says. 2. PROMOTE COMMUNICATION It’s all very well an entrepreneur being creative and flexible, but if he or she cannot communicate this to the staff, the business will suffer. When businesses start to get bigger it is harder for the managers to communicate with colleagues. Entrepreneurs talk of the critical point when they no longer know the names of everybody in the business or when the managers no longer all fit in the same room. The result is that it can be difficult to maintain the focus that was responsible for the company’s initial success. In an effort to encourage this sort of communication, many creative businesses have in-house coffee bars and lounging areas, in the hope that people will chat and trade ideas. 3. MAKE PROPER USE OF TECHNOLOGY The internet has made it much easier for start-up businesses to reach their market. On the internet, everybody is the same size. This is not strictly true because it is often still possible to get some idea of a company’s size from its website, but it is correct in the sense that the internet enables small businesses to obtain the sort of national and global reach that would have been impossible just a few years ago.

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4. MAKE SURE THAT TECHNOLOGY GROWS WITH THE BUSINESS The sort of computing power that was once only affordable to the largest companies is now available to smaller businesses. Until recently, smaller companies were largely served in this area by other small businesses that took the technology offered by the largest providers and scaled it down. Now, the largest providers are targeting the growing business market. Generally small businesses are wary of spending too much on information technology. This can lead to them adopting limited solutions that can actually impede the growth of the business. For example, a business may install a payroll system because it wants to deal with the complications of tax. But if it later wants to introduce a system for handling employee benefits it may find that it has trouble linking the two. Taking a modular approach, so that it adds different aspects of the same system as it needs them, could be a better approach. 5. MANAGE CUSTOMERS – AND SYSTEMS One of the clearest examples of needing to take a more holistic approach to technology is customer relationship management (CRM). Recently, many businesses have invested in CRM systems without getting any real benefit. This is because the systems might be effective at giving sales teams information about customers, but they do not always link that data to the rest of the business. Consequently, the marketing department might have one set of data and the production another set, with the result that there is no real connection between supply and demand. The trick is to be able to obtain all the data through one system or different systems that are linked by technology known as “middleware”, so that managers have a timely and accurate picture of what is happening in the business. 6. GET PROPER PROTECTION Businesses need to realise that, in an increasingly sophisticated world, just having firewalls and anti-virus software is not enough. When investing in technology they need to look just as closely at the security aspects as the benefits. They need to think of threats from within as much as those from outside the business. 7. BE SMARTABOUT MONEY Another factor that has levelled the playing field between small businesses and larger ones is access to capital. Competition from new entrants has led high street banks to re-examine their attitudes to small businesses, while the establishment

of specialist funds and the arrivals of a breed of investor prepared to take a chance on start-ups has meant that finance is more available than it used to be. The issue now is for those running small and growing businesses to decide which sort of approach they want to take to funding their business dreams. On a basic level, they can decide between debt, whereby they typically borrow from the bank, and equity, whereby they give away a stake in the business in return for an investment in the business. 8. FOCUS ON STRENGTHS AND OUTSOURCE THE REST One of the great benefits of being a small business is that the proprietor can concentrate on a small niche in the market and seek to gain an advantage over larger rivals by offering superior customer service or a very specialist product or service. The problems start to come as the business starts to get bigger and the proprietor becomes distracted by the more bureaucratic aspects of being in business. Many entrepreneurs deal with this by appointing a management team to run the business leaving them free to deal with key customers and win new business – in other words to focus on what got the business going in the first place. This is effectively outsourcing the running of the business to an internal team. Thanks to the internet, small businesses can outsource to somebody who is likely to be much better at it than they are. Though they should be aware of outsourcing something that is central to what they do, this can be both cost-effective and successful in keeping management focused. 9.KEEPUPTO DATE ON REGULATION Small businesses habitually complain about the amount of regulation with which they have to deal, particularly in relation to health and safety, and employment. Again, thanks to the internet, much of the worry can be eliminated by handing over responsibility to specialist providers. 10. HAVE A“TOLERANCE FOR AMBIGUITY” In the end, entrepreneurs thrive by living on their wits. “A tolerance for ambiguity” is a phrase that Doug Richard, the serial entrepreneur behind the investment research company Library House, uses to describe a readiness to live in a chaotic world. It involves having a general plan about where the business wants to go but being prepared to seize opportunities as they arise. This attitude, allied with an ability to act quickly and a readiness to work harder than the competition, is probably what distinguishes the successful entrepreneur from the person with a good idea.

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