roundtable: entrepreneurship


Hunt accepted that banks were ’open for lending’ but understood their terms could be quite selective. “A number spoken to do support transactions, but often if they have had a relationship with the acquirer for a long time.“


Hawkeswood agreed that funding depended upon the bank-customer relationship, but he considered banks were ’caught between a rock and a hard place’ as a result of their Basel capital adequacy obligations. “They will lend, but to the right people in the right sectors with the right track record. The closer you are to blue- chip, the more they will want to look after you.“


With banks seeming to shy away from SME funding, Williams added, the market was opening up for alternative funders, with several new names now appearing.


Hunt: “With some banks not doing deals in certain circumstances, alternative asset- based lenders are definitely coming in.“ He exampled Leumi, who won recognition at the Thames Valley Deals Awards in April, as now a regular funder of deals. Quite a number of alternative funding options are contributing to transaction funding being more creative than traditionally.


Hawkeswood concurred that the market was naturally evolving, while highlighting one recessionary outcome as the return of deferred consideration and earn-out deals: “... vendors being asked to leave something on the table, with them being repaid over time, while the potential acquirers make sure of the business and staff they are bringing on board.“


Begbour: “The lack of finance is not stopping people starting businesses; entrepreneurial creativity is still there. The challenge comes when they want to hit the growth stage, usually after three to five years. That’s when the wheels start slowing down because they haven’t got the right track record for the banks.“


Murray wondered if the UK economy could be growing faster if the mainstream banks were readily lending more.


Have we got a good entrepreneurial environment?


Hawkeswood highlighted entrepreneurs relief, paying just 10% capital gains tax on qualifying capital gains, as “... frankly fabulous for someone who has put a lifetime’s work into their business and is considering selling, especially when viewed alongside current income tax rates.“


Chapman countered: “If we didn’t have to pay so much on our corporation tax bill we would be much bigger than we are. We would have more money to hire staff and invest into the business.“


Other members of the Roundtable queried that viewpoint, when comparing UK rates to other countries.


Griffiths described R&D tax credits as “... a brilliant device for a technology company or anyone in a business involving a new product or process. It has definitely saved us a lot of money in the past three to four years.“


Begbour suggested entrepreneurship is now more fashionable, with universities and colleges promoting it better. “It’s going to be an exciting future. When I came out of university people went straight into the corporate world. Now students are being trained differently, to think for themselves and that jobs are not necessarily 40-year careers with one corporate employer.“


The academic world offering fresh business- related course, the influence of social media, even The Apprentice on television, were all enabling young people to think “... actually I can make my own way, make my own decisions. I don’t have to be a slave of the corporate world.“


Davis disagreed: “I’m not sure we are there yet.“ Reality HR is working on a project with Reading University promoting SME careers at present, and among the problems were student motivation and parents promoting corporate careers instead.


Begbour mentioned how many universities now offer business courses, with the third year as a work placement “... to see business, touch it, learn about it. It’s going to take time, but I think we are seeing a change.“


Another big problem, added Griffiths, was graduates leaving with large debts to repay being lured by the potential of big money corporate jobs.


Paul Chapman THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – OCTOBER 2014


As a fairly recent graduate, Williams revealed that his studies had included modules on entrepreneurship and starting a business. “But, we were simply taught it rather than encouraged, so more can be done.“ However, socially and within his peer group, entrepreneurship was popular. “You can set up a business with a laptop, so there is far less risk


Andy Hunt


than there was. And, is there any job security nowadays, even in corporates?“


Griffiths mentioned that the barriers to entry in the IT sector are a lot lower than other sectors, with virtual offices, websites etc. “A small business can look like quite a large business.“ He estimated that 20 years ago 1:100 students went into technology businesses, now it was 10:100.


Hawkeswood suggested levels of youth unemployment might also be a factor with necessity leading to youthful entrepreneurship. Williams added: “Ultimately, it comes down to backing yourself.“


51


Do entrepreneurs lack leadership support?


Begbour highlighted the growth of spinout businesses from universities, particularly in the science and technology fields. “Traditionally, these academics might not be business owners, but now they have the backing of the universities to do so.“


Griffiths also praised the UK emergence of business incubators helping to grow seedling companies.


There was still a need for quality business mentoring for startups, said Davis, perhaps through support from local businesses and non-executives.


Continued overleaf ... www.businessmag.co.uk


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