entrepreneurs 25 What makes an entrepreneur?


Since 2008, during the midst of the recession, Companies House has reported an increase in the number of new companies formed


Many business analysts report that this is common practice during a recession, when a new wave of successful businesses tends to emerge.


But has this increase of start-up businesses been sparked by the rising popularity of shows such as The Apprentice, Dragon’s Den and more recently Be Your Own Boss (presented by Richard Reed, founder of Innocent Smoothies), or has this been the direct effect of the recession and lack of other available opportunities?


To look at some of the world’s biggest companies such as Virgin, Naked Wines, and Zoopla; these were all set up during tough economic times and are a testament to the possibilities afforded by recession given the right attitude towards it.


“It’s all about adapting and evolving to fit the situation,“ commented


would-be Alan Sugars and wannabe Richard Bransons at a public forum last month.


The event, at the University’s Whiteknights campus, was aimed at giving anyone who wants to know more about setting up their own business some essential pointers – in both getting started and avoiding some of the common pitfalls.


Gayle Pearson, founder of Three Please, a small business formed last year. “It’s about hitting that sweet spot of offering something new and affordable that will captivate in a time of financial hardship.“


One recent trend among start-ups has been the emergence of social entrepreneurs.


But what makes an entrepreneur in the first place? And why do some people succeed in starting up and running their own business, while others never make it?


An entrepreneur is an enterprising individual who builds capital through risk and/or initiative. Leaving the security of working for an employer in an established company structure and forging out on your own is not for everyone, as the Henley Centre for Entrepreneurship stresses.


Stuart Morris, a lecturer from the Henley Centre, University of Reading, presented ’So you think you want to start your own business?’ to the next generation of


Morris said: “Lots of people, from students through to retirees, say they are inspired by entertaining TV business programmes such as The Apprentice and Dragon’s Den. But while starting a business is enormous fun, it requires good preparation to help it to succeed.


“We keep being told that Britain needs more entrepreneurial spirit to drag us out of recession – I agree. Now all we need is to equip people with the tools they need to get out there and do the job.“


The talk was part of a wider day of events at the University to inspire those on campus to consider starting their own businesses.


Business planning – an art or a science?


Martyn Begbour, south and south west regional head, UBS Wealth Management, explains the benefits of intelligent business planning


Businesses rarely grow as planned. The accurate forecasting of next year’s cashflow is hard enough but a five or 10-year plan requires the skill (or luck) of Nostradamus. Precise or not, business owners are constantly planning for both short and long- term events, so it is as well to channel this energy to maximise potential gains. Planning is not a futile exercise and patterns do emerge if one analyses recent history – so it can reduce the risk of tactical error.


Once the brave decision has been taken to start a business there quickly follow several questions as to how to fund the initial start-up: friends and family investing, bank overdrafts, grants, private placements. The ensuing growth phase is likely to involve more than one round of funding, perhaps from venture- capital funds, business angels or banks, and consequently some dilution of the original shareholding.


The third phase might loosely be described as strategic positioning,


a stage of the cycle that requires decisions about capital structuring, further funding rounds, listing and succession planning. Nowhere is the importance of planning more manifest than within this stage of the business cycle. It is well known that a number of non-contentious tax breaks exist within UK tax legislation for unlisted shares. The most significant of these is entrepreneurs’ relief from capital gains tax.


When a shareholder makes a gain on an unlisted trading share, providing they were an employee of the company throughout the past 12 months and hold a minimum of 5% of the ordinary share capital, they could qualify for entrepreneurs’ relief. In practice, the first £10 million of gain is taxable at 10% rather than the highest rate of 28%. Careful planning at least 12 months in advance of a disposal can ensure that as many shareholders as possible benefit from a relief that is potentially worth £1.8m per person.


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – NOVEMBER 2012


Good wealth managers do not just manage bankable assets. They work closely with clients throughout the phases of the business cycle to ensure that the business owner is aware of the opportunities and risks alike. The partnership grows over a period of years such that the business owner can call upon expertise that ranges from growth financing, capital raising, company listing and disposal. They can further call upon structural and shareholder-planning assistance in advance of a significant corporate event.


After that event, the highest priority is usually the protection of the wealth generated over the years by the business owner. Headwinds from taxation, inflation, low interest rates and uncertain capital markets do not make the solution obvious. But planning usually proves its worth with the accurate analysis of performance objectives, risk tolerance, time horizons and liquidity requirements. Imperfect


though it may be, human beings and businesses both benefit from intelligent planning – if only to minimise risk and maximise opportunity.


The price and value of investments and income derived from them can go down as well as up. You may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. UBS Wealth Management is a business division of UBS AG which is authorised and regulated by the Financial Services Authority.


Details:


Martyn Begbour 07887-450664 martyn.begbour@ubs.com


John Scurlock-Davies 07425-017266 john.scurlock-davies@ubs.com


www.businessmag.co.uk


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