Like many a self-made millionaire, Charlie Marlins, the man who’s been dubbed the plumber to the stars thanks to the celebrity studded client list of his company Pimlico Plumbers, started out in business with virtually nothing.

Born in Camden, Charlie left school at 15 with no qualifications, but a passion for boxing.

'The way we run the business isn’t rocket science it’s common sense. The only problem is that common sense ain’t that common,' says Charlie Mullins

Until the age of 21 he was a talented amateur boxer who represented London and clearly demonstrated the determination, discipline and attention to detail which have become some of the hallmarks of the success of Pimlico Plumbers which he founded in the basement of an estate agent back in 1979.

Charlie’s plumbing career started after he left school when he gained City and Guilds qualifications and become an apprentice. Indeed apprenticeships and the issue of youth unemployment remain an issue he’s passionate about.

By 1986 Pimlico Plumbers reached the magic £1 million turnover mark and has been growing ever since. With turnover now at £15 million the business employs more than 155 people and carries out over 1,200 jobs a week.

When asked why he thinks the business has been so successful, Charlie makes it clear that obsessive focus on customers has been key as well as a determination to create a service that’s professional and counter to the negative experiences many have of tradesman.

As he says:

There are far too many cowboys and shoddy tradesmen out there. I believe that we have set new standards and raised the public’s perception of the trade.

And Charlie has certainly done himself and his business no harm by making the most of media opportunities. He’s appeared on Channel 4’s The Secret Millionaire, and is a regular commentator on small business issues online and in the national press.

To hear from the man himself and pick his brains on what it takes to grow a business, don’t forget you can still get free tickets to Thrive! London on Thursday 25th February. Click here and enter the discount code ’smallbizpod’.

With Google, Microsoft and a whole host of smaller players all heading for the clouds to offer software as a service over the internet, cloud computing is very much the present as well as the future.

"The best entrepreneurs believe their start-ups are deeply meaningful and rewarding endeavours." Marc Benioff, founder & ceo of salesforce.com

But it wasn’t always that way.  Certainly not when Marc Benioff, the one time Apple programmer and Oracle hot shot, decided to quit his job working closely with Larry Ellison to create his own startup.

A little over a decade later and salesforce.com is a billion dollar business listed on the New York Stock Exchange and widely acknowledged as having blazed a trail for the cloud computing revolution.

When I got the chance to put some questions to Marc, I was most interested to hear what he had to say about his own entrepreneurial journey.

1. You literally dreamt up the idea for salesforce.com during a sabbatical of quite a spiritual nature. Are startups spiritual endeavours for entrepreneurs?

Everyone comes to their entrepreneurial epiphany in their own way. I think the best ones are spiritual endeavours in that they come from a place of deep thought and passion. The best entrepreneurs believe their start-ups are deeply meaningful and rewarding endeavours.

If you’ve ever read studies or seen the statistics on entrepreneurship, you see that indicators of entrepreneurial spirit do not include perfect grades, or certain scores on standardised tests, or Ivy League degrees (in fact many great entrepreneurs did not even complete college.)

I’m not against any of those factors – there’s significant merit to each of those achievements – but there’s one success factor that’s greater than all of the above combined. It’s passion.

That’s the pivotal ingredient that drives any entrepreneur as starting a company involves tapping into one’s entire being. Start-ups also require faith. Like any zealot, an entrepreneur must demonstrate unwavering conviction, especially in the toughest times.

2. How does a business maintain that startup fervour as it grows and in your case becomes a public listed company?

It’s a challenge to retain start-up energy as a company evolves, especially as it becomes public and has different responsibilities. We’ve had to make enormous changes—financial changes, leadership changes, organisational changes—to prepare to be the company we are today.

We’ve tapped people from larger companies whose experience we needed. Other talent, people who have been with us from the earliest days, have moved on.

There’s a part of me that misses how I once interviewed every hire, knew everyone’s name, and drove golf balls down empty halls with the team. But the other part of me appreciates that those halls are no longer empty, that we’ve built something beyond my greatest expectations together, and we’ve stayed true to who we are as a company.

Companies must change as they evolve. It’s the only way.

When it comes to fervour, or energy, or passion, though, I don’t think we’ve had to make sacrifices.

The culture we built—specifically our 1-1-1 integrated philanthropy model and our V2MOM management system—allows us to achieve quarter over quarter growth and allows us to stay aligned with our roots.

Even with nearly 4,000 people (compared to four people 10 years ago), we haven’t lost excitement or determination because each of us is doing more than a job: we are changing a industry and we are contributing to making a difference in the world.

3. You’ve been called the PT Barnum of the IT industry. Are the best leaders also showmen?

I have? I suppose I’ve been called a lot of things.

The best leaders do have a persona that fits with the company’s story and bolsters its brand. I don’t really think this is showmanship because it never works if it’s fake—the “character” must be heartfelt and authentic. You have to believe in what you are doing and believe what you are saying.

P.T. Barnum believed that his circus was “the greatest show on earth.” And, he worked tirelessly to make it happen. I’ve believed in the End of Software for more than 10 years. I wasn’t wearing fatigues my first day—that persona evolved over time—but I’ve always been ready step forward and fight for our mission.

Sure, 10 years ago, five years ago, some people said that it was all grandstanding. They said the statement was bold, but look around, the end of software is actually here. Now, every major analyst firm sees cloud computing expanding its share of the overall IT market.

We used to be alone (and it was challenging work to gain acceptance for this new idea), but now there is a robust marketplace of cloud applications and now cloud platforms.

Customers today see a choice. It’s incredible to consider what’s happened in such a short period of time, yet I know that we are just beginning to prove how far cloud computing can go.

4. The War on Software has been a powerful, defining differentiator for salesforce.com. Where do you find your next revolution, your next hook to set you apart and avoid becoming the new establishment?

It’s a good question. Staying relevant is key. When you’re telling your story, you better have a modern story to tell. If I were still saying the same thing I was saying 10 years ago, it would not be that interesting.

The next new frontier is collaboration. Much as we once learned from consumer sites such as Amazon.com and eBay, we’ve all learned a tremendous amount from the latest consumer development, the rise of social networking.

Businesses are beginning to take notice. Executives are watching these new services and asking, “Why do I know more about strangers on Facebook than my own employees? Why is it so easy to follow Ashton Kutcher on Twitter, but I can’t follow a key deal? Why can a picture tell me that I have been tagged, but a document in my company can’t tell me it has been updated?”

There is a very compelling immediacy to services like Facebook and Twitter. One look and you know what’s going on in your whole world. I think that’s exactly what we want from our business technology today.

Consumer services have outpaced enterprise technology, and businesses aren’t going to wait for the traditional software companies to catch up.

The consumerisation of IT and the growing influence of social networking are going to be major trends that continue to unfold over the next few years. Customers want new functionality, but they don’t want the traditional complexity that has marred products in the past.

5. Who has been your greater influence, MC Hammer or Steve Jobs and why?

They’ve played different roles. There have been other influences too: Ammachi; Billy Graham; Larry Ellison; Colin Powell.

When I think about building a business, I try to learn from some of the best people, regardless of the industry. These people have shared innovative ideas and inspired new thinking that has helped us become one of the fastest-growing companies in the technology industry.

I’ve been inspired by what Steve Jobs was doing since I was in college. I spent a summer writing some of the first native assembly language for the Macintosh. I loved working at Apple, and the fruit smoothies in the fridge, the pirate flag on the roof, and then seeing Steve Jobs walk around and motivate the developers.

Apple was always doing something different. It’s not by accident that its products look like nothing else out there. Their dedication to innovation (and delivery of it) is what inspires customer excitement and loyalty.

When we started salesforce.com in a rented apartment I put a picture of the Dalai Lama over the fireplace and another of Albert Einstein on the wall. Both were part of Apple’s “Think Different” campaign.

I had the opportunity to meet MC Hammer once we already started salesforce.com. He came into the office and taught us about how the music industry uses “street teams” to market new songs. They actually get young people organised in local communities and get them out there generating excitement.

The street team concept was something we were able to directly pick up and use at salesforce.com. We went on tour and created a programme that allowed us to extend our message and get customers out and selling for us on a local level. The inclusion of customers in marketing has become a key part of our brand.

6. You talk about hiring the very best, but you’ve also taken pride in moulding raw talent. What % of new hires don’t work out and has DNA/attitude proved to be a more successful measure than aptitude?

Really, you need both attitude and aptitude. That said, early on we saw that many of the individuals that demonstrated raw talent (but didn’t have much related experience) were better than the more seasoned people we hired. (This was also because many of the people in our industry had been brainwashed by the client-server model and that clashed with our culture.)

The secret to successful hiring is this: look for the people who want to change the world.

These are the people who will make the biggest contributions because they really care about making something better. We value a desire to change the world via technology and an interest in giving back to the community.

Just as universities look for candidates with diverse experiences on their resumes, with a commitment to giving back, and with a point of view, we look for well-rounded people who possess impressive skills and who can easily adapt and who have a desire to do something meaningful.

7. Should entrepreneurs build philanthropy into their businesses from the start?

Absolutely. The easiest way to build an integrated philanthropy programme is to do it from the very beginning.

When we first started salesforce.com, my co-founders and I set aside one percent of our equity, one percent of paid employee time, and one percent of our product earmarked for a separate non-profit foundation. As our company grew, so would the contributions made by our foundation.

We call this the 1-1-1 Model and it has become an integral part of our culture and company.

New hires experience how it works during their first week on the job. The orientation programme includes a chance to help replant a forgotten park, paint a school, or help deliver services to San Francisco’s homeless.

We give employees paid time off each year to volunteer supporting the charities of their choice. It has had a powerful effect, with more 165,000 hours donated so far.

Because this model is embedded in our company DNA, and because it continues to be wholeheartedly embraced by our employees, we’ve been able to maintain our commitment in this challenging environment.

We just raised our matching gift programme from $500 to $1000 per employee, per year. Employees are excited about that and we’re excited to show that as a company we care about what’s important to them and we want to help them make a difference.

When we started with our 1-1-1 model 10 years ago, people asked me, “Why are you doing this?” Now they ask, “Can you help me do it at my company, too?” Google has adopted part of our model and the potential of its programme is astounding.

Other companies, iRobot, LiveOps, and BlueWolf, all incorporate parts of the model. Just last night, I received an email from Bradley Whitchurch, the CEO of Seal Shield, who implemented our 1-1-1 model for 2010. I can’t wait to see what they achieve.

In the future, I think that shareholders will pressure companies to articulate their corporate social responsibility programmes. Economic recoveries are historically times of robust small business formation. (I know this first hand!).

Entrepreneurs must seize the opportunity in front of them and understand the role that innovation, creativity, and altruism will play in securing a brighter future. It is my hope that every small business will think about adopting our model or consider creating a similar one of its own. It’s best to start from the beginning, but it’s never too late.

8. Personally, how have you dealt with your darkest hours as an entrepreneur?

We’ve been very fortunate, but of course there have been some dark moments. It’s necessary to work past the moment, though, and understand the bigger picture. I also can’t underestimate the importance of family and friends, who provide tremendous support.

In general, pioneering a new idea does bring with it a number of challenges and critics, and at times, it invites a certain amount of doubt. However, I always believed that this idea would work. It was better for customers. And even if it wasn’t yet accepted, it made common sense.

That belief helped me maintain my optimism. So did some of the lessons I learned from Larry Ellison and my time at Oracle. Even in Oracle’s darkest days, Larry’s resolve never faltered. He said, “think of it as you want it, not as it is.” Always thinking ahead to the future has allowed me to stay focused on our vision—and what we believed was most important.

9. You said you were in danger of becoming an Oracle ‘lifer’. Are you now an entrepreneurial ‘lifer’?

Yes, I suppose that might be my fate, though luckily this time there’s no danger! I enjoyed my time at Oracle and I learned a lot from the very best, but I knew that I was an entrepreneur and destined to do something different. I started my first company when I was 15 and I’ve always loved building something from nothing, and finding a new and better way to do things. I hope I’m fortunate enough to spend the rest of my life doing that.

*********************

Marc Benioff’s book Behind the Cloud tells the salesforce.com story, with plenty of practical advice on execution, strategy and scaling a business. Well worth a read for any budding entrepreneur with big ideas.

When I spoke to Gareth Mitchell the founder of online tree gift company Tree2MyDoor.com, he was juggling orders and delivery times in the pre-Christmas rush to cope with the snow disruption enveloping the UK.

A challenge for the largest of online retailers, but one which Gareth, a seasoned online entrepreneur who has circumnavigated ups and downs way more treacherous than a bit of wintry weather, was clearly dealing with adeptly.

And it’s been a good year for Tree2MyDoor. Seasonal sales are up 25% in 2009 and as an Ambassador for Enterprise UK, Gareth’s personal and business profile continue to rise.

The Startup Spark

But Christmas isn’t just a typically seasonal peak time for his business, it’s the anniversary of the idea that prompted the Tree2MyDoor founder to quit his marketing job and begin his entrepreneurial journey.

Living in London back in 2000, missing his parents in Northern Ireland, Gareth wanted to send them something special and lasting for Christmas rather than the last minute booze and flowers.

What better gift, he thought, than two beautiful fruit trees they could plant, see grow and flourish year-on-year.

Turning to the internet for a quick and easy way to order them, Gareth rapidly realised nobody was offering such a service, which planted a seed in his mind.

Anyone For A Christmas Tree?

Gareth Mitchell's festive startup is now a flourshing business

A year or so later, Gareth was living in Manchester and decided to sell Christmas trees online and via a big leafleting campaign. He thought it would be the perfect way to pull in some cash to bootstrap the launch of Trees2MyDoor, having set up an early e-commerce site with a friend.

In fact, the idea went pear shaped like the fruit surrounding the partridge in the seasonal song.

Having blown his savings, he returned to a cold Manchester flat, stuffed with unsold firs, boxes, leaflets and the detritus of a poorly planned business opportunity and went to sleep.

As Gareth says:

I just thought Oh, what have I done? So I ended up leaving everything. Slept on it, got up the next morning and then said, right time to pull your socks up Mr Mitchell.

Doing It Right

For the next 10 months, Gareth planned, sought advice from business organisations and secured start-up funding including a loan from the Prince’s Trust.

Version two of Trees2MyDoor.com rapidly began to take off and the company has now developed strong relationships with tree suppliers, designed patent-pending packaging and has an e-commerce strategy that’s delivering upwards of 30,000 unique visitors a month, with an 8% conversion rate to sale at peak periods.

I asked Gareth how he’d achieved this:

We turned our back on copy that didn’t make any sense, keyword stuffing and so on, focusing on clear, well written content about what we had to offer. From there we also began to get lots of links from the press and other websites.  The resulting PR and profile has been really worthwhile.

Socialising E-Commerce

The Tree2MyDoor.com approach is a natural one online and off.  Traffic has been built by developing quality content to attract in-bound links and an eagle-eyed focus on the flow of the site based on analysis of behaviour as visitors reach certain pages.

Common sense perhaps, but plans to develop content specialising on practical advice about trees, and developing an online community of customers sharing tips, photos and video, highlight an evolving online strategy and a deep-seated environmental ethic:

Hopefully, we’ll enable loads more trees to be planted and get those people into the mindset of doing a little bit more to focus on the importance of trees.  We’d like to be a gateway to empower people to become more involved in improving their environment.

A worthy goal indeed.  Encouraging individuals to change what they do and get involved in a practical way with environmental issues as a result of a much loved gift makes a lot sense.

But it’s also a sign of how online businesses are adapting to become more than ‘just another home-based shopping cart’ idea.

Increasingly online e-commerce brands are looking to add valuable niche content, adapt to a more social web, and build in campaigns or beliefs that will mark them out.

Tree2MyDoor is doing that and, in my opinion, it’s very much a trend we’ll see more of in 2010.

Back in 2005 way before blogging became micro-blogging in what seems like another age, cartoonist Hugh MacLeod drew a seminal picture on the back of a business card.

The diagram represented why blogging was good for business, by poking a hole in the membrane that separates a company’s internal conversation about its products and services from what’s being said in the real world.

Hugh MacLeod the porous membrane

If you’ve not read Hugh’s post on the subject, I’d highly recommend it.

Hugh’s point is that if a business’s internal conversation about its products and services is very different to what its customers are saying out in the wild, there’ll be trouble.  Customers and businesses need to be closely aligned – talking to each other.

Since 2005 the conversational, ’social’ aspects of the web have arguably become its most potent meme and evolution of recent years.

Thousands of companies large and small, from computer giant Dell to Herefordshire-based organic gardening retailers Wiggly Wigglers, have embraced social media as a way of conversing with their customers.

Salesforce.com – control or conversation?

Unsurprising then that last month in San Francisco the ’software is dead’, CRM revolutionary, Marc Benioff should unveil a ’social’ layer to Salesforce.com in the form of Chatter.

Salesforce.com Chatter - a Facebook for business

Put simply Chatter is a Facebook and Twitter for behind the firewalled garden of business. A way to let staff, projects and even business processes talk to each other in real time. A business life-stream behind a thick skin.

More porous, however, is Salesforce’s Service Cloud 2 which is where the real ’social’ action is.

It helps businesses to absorb knowledge and conversations on Facebook, Twitter and other online communities about their brands, products or services, attempting to make customer service more responsive and informed.

So far so conversational, but interaction with the customer or the consumer very much remains in control of the business. It’s all about managing customer relationships, not about letting customers manage their relationship with your business.

Power to the People

And here’s where the next revolution could take place. Vendor Relationship Management (VRM) is CRM flipped to give customers power and more importantly possession over their own digital data, identity and friends.

Espoused by Cluetrain author Doc Searls and others, VRM is initially a little hard to get your head around in terms of how it might work in practice. But a good summary can be found at London-based VRM Hub.

To take one practical example, imagine you as a customer having control of all the data relating to all the purchases you’ve ever made online, whether at Amazon or eBay or Ryan Air. Add to this a complete record of your search history for particular products or services.

This is valuable data and it’s your data. A digital footprint of your own interests, habits and online behaviour. Data many a business would find incredibly useful in terms of really understanding what you wanted from them.

If customers were in control of this information, they could selectively turn access to it on or off for certain brands they were interested in, depending on their personal privacy preferences.

They’d be in control of the relationship with the vendor. In return for allowing access to this data they might receive special offers or information they really valued.

Gone would be the broken model of poorly targeted, patronising advertising – replaced instead by a more mature exchange between equals.

Open, free and commercial?

One of the issues with VRM is where and how individuals would store their online activity data, like e-commerce transaction history and then technically how, if they chose to, would they release access to it.

This is where one could see a company like Salesforce.com creating a new customer-centric, cloud-based service. A VRM platform free to individuals, derived from yet to be agreed open standards.

As long as it ensured complete privacy and portability combined with rock solid guarantees that individuals retained ownership of their data, such a platform could become a practical way of allowing customers to manage their relationship with brands.

Why would Salesforce.com want to do this and do it for free? Because such a service would add value to what it already offers brands in terms of letting them better understand and engage with customers.

VRM might sound like sci-fi – a concept developing in some far off geek galaxy.

But for companies large and small, it may well prove to be at the centre of a much more sophisticated, grown-up and efficient way of doing business on the web.

Britain’s small businesses are unlikely to find much Christmas cheer in what could well prove to be Alistair Darling’s last Pre-Budget Report (PBR).

Politicians used to demonstrate their machismo by being ‘tough’ on crime. Now the order of the day is who can make the toughest decisions on cuts. Austerity is where it’s at.

Alistair Darling - no ho, ho, ho Pre-Budget Report

But like the cuts vs investment see-saw on which the Chancellor and the Prime Minister appear to be sitting, getting the fiscal balance right to benefit UK small businesses is going to be tricky.

Nevertheless, a thriving small business sector is what we need and cost cutting or raising taxes at its expense would be counter-productive.

The Federation of Small Businesses neatly summarises its members’ desires in a 10 point PBR wish list.

Perhaps the most critical of these are:

• a National Insurance rebate in 2010/11 for firms with fewer than 50 employees who create new jobs;
• no corporation tax increases;
• no increases in employers’ National Insurance Contributions, getting rid of plans to introduce rises in 2011;
• a delay to the VAT increase due to come in on 1st January 2010;
• automatic business rates relief, rather than the system currently in place which forces firms through a bureaucratic system in order to benefit, and;
• extension of the Enterprise Finance Guarantee Scheme beyond March 2010.

But the small business group has also made some interesting suggestions about how to plug finance gaps for SMEs.

These include the establishment of Regional Stock Exchanges and turning the Regional Development Agencies (RDA) into regional finance agencies.

The former is a fascinating idea with historical precedent currently being explored by Vince Cable of the Lib Dems.

But many would be less enthusiastic about handing funding issues to the RDAs, often seen as expensive, resource-hungry, bureaucracies.

Like a child posting a letter to Santa, the FSB is unlikely to get everything on its Christmas wish list and Alistair Darling’s not exactly in ‘ho, ho, ho’ mood.

Smith & Williamson takes a colder eye to the likely outcomes next week.

The accountancy firm warns that in an attempt to shore up public finances, the Chancellor may look to raise VAT to 20%, futher increase corporation tax on small businesses just as more of them are likely to be making a profit, and increase the top rates of tax.

The one small gesture it expects for SMEs is an extension to the Business Payments Support Service and possibly the Enterprise Finance Guarantee Scheme.

Tim Lyford, head of corporate tax at Smith & Williamson argues that much of the above:

… could add up to some painful tax increases, but the Chancellor should recognise the fragility of the economy. No one can be sure we have reached recovery-mode and he should moderate any revenue-raising ambitions accordingly.

Let’s hope Mr Darling listens.

The web is awash with news that Rupert Murdoch may be about to do a deal with Microsoft to allow its Bing search engine to exclusively index News Corp media properties like The Wall Street Journal, The Times and The Sun.

This would cut out Google and help, so the argument goes, Bing gain market share as well as strengthening Murdoch’s hand as he attempts to establish a pay-for-quality-news model on the internet.

Interestingly the strategy News Corp appears to be adopting was suggested on the 26th October by Jason Calacanis in his excellent, This Week in Startups show, well before any bloggers or other media picked up the idea. Here’s a clip of the discussion:

Was this a leak? News Corp is an investor in Calacanis’s latest venture Mahalo.

That aside, the Murdoch/Calacanis strategy seems on the face of it to be a smart one, until you factor in what’s known as ’social search’.

Social search? Well, the fact that more and more people are finding content and news via links posted by friends on sites like Facebook and Twitter, rather than through search engines.

Increasing numbers of people aren’t searching for news anymore, the news is coming to them in the form of recommendations from their social networks.

The Murdoch Microsoft deal - will social search block Bing exclusivity?

It’s not as if people aren’t going to be able to find the articles they’re looking for in The Times or The Wall Street Journal, just because they’re blocked in Google.

They’ll find the links to the stories that really matter from people they trust on Twitter. People they trust more than Microsoft’s Bing search engine which may, as Rory Cellan-Jones argues, dent its appearance of independence, if it does a deal with certain news providers.

And if you think social search isn’t really much of a big deal, why did both Microsoft and Google recently pay to index Twitter’s stream for search.

Think about the percentage of traffic online news sites are now seeing coming from the likes of Twitter, Facebook or Stumbleupon.

To give you a tangible example – here are some stats comparing percentage share of referring traffic to SmallBizPod over the last 12 months from social search and traditional search.

While the peculiarities of our own online marketing strategy may have an impact on the above, there’s no doubt of the growing influence of the power of social search in the form of Facebook and Twitter.

Then there’s the issue of anti-competitive practices and news pay walls.

If Murdoch does make internet users pay to access his newspapers online, then any exclusivity of search indexing on Bing will become a moot point.

If you search for a piece of news, find it on Bing, but are then told you can’t access it unless you pay, most people will simply go elsewhere.

Unless, of course, News Corp offers users their content for free, if it’s discovered on the Bing search engine.

This seems a highly unlikely outcome and would smack of anti-competitive practice.

So, the combination of social search and paywalls will put the kibosh on any News Corp Bing exclusivity contract.

My bet is the rumoured deal will never see the light of day.

[Picture credit: World Economic Forum licenced from Flickr]

Live blogging from the British Library launch event for Global Entrepreneurship Week.

Lord Mandellson appears in a pre-recorded message to offer encouraging words like the UK governement is ‘focused on maintaining a business environment that supports entrepreneurship’, which many would dispute. Probably the right decision, not to make a personal appearance.

Dr Carl Schramm, CEO of the Kauffman Foundation

Dr Carl Schramm, CEO of the Kauffman Foundation, launched a project to understand the science of entrepreneurship. Business formation turns up in recession.

Entrepreneurship has helped spark recovery in the last seven recessions according to the Foundation’s research.

“Messy capitalism is the way forward, not government industrial policy.”

“In recessions all economists go home and head towards interventionist approach.”

But the economy is the aggregation of business growth and failure. Nearly 40% of US GDP will be derived from firms that were created in 1980.

“Sometimes Global Entrepreneurship Week looks like an entrepreneurial cheer-leading event. But there is a profound change taking place.”

Jim O’Neil Head of Global Economics Research at Goldman Sachs

Jim highlights massive growth of Brazil, Russia, India and Chinas as the man who coined the BRICS acronym.

Discussion

Carl Schramm reckons there’s a good deal of evidence that Britain comes up with a lot of great, innovtive ideas, while the US filches them and scales them.

Discussion about why US entrepreneurship seems to be so more successful than in the UK. Marketing, the size of the market and Brits are too polite to get filthy rich?

You very often hear this argument, it seems to us at SmallBizPod that we should focus on our own startup endeavours in this country, rather than developing global entrepreneur envy!

Carl Schramm explodes some myths on startups, business plans and VCs. Only 14% of the top 400 fastest growing companies in the US did so using venture capital. Fewer than 50% ever wrote a business plan.

Matt Brittin, MD of Google UK, David Wei, ceo of Alibaba.com, Emma Harrison of A4E

After a big, albeit entertaining, video plug for Google from its UK managing director, Matt Brittin, he makes a few tips for the business on the web: be greater with data, leap and learn, use the technology, fast is better than slow.

David Wei doesn’t believe that entrepreneurship can be trained or built by government and makes a very entertaining speech.

Take away comfortable security net, more important, he advises.

Where is the new entrepreneneurial icon – Richard Branson looks very old now?

UK too good at planning, too much money, too much technology which is holding back entrepreneurial resourcefulness.

Emma Harrison of A4E speaking at Global Entrepreneurship Week

Emma Harrison, chair of A4E says entrepreneurs will always find their own way through the system. She tells her own entertaining story about illegal tuck-shops, blagging her way onto a university course, and running her Dad’s firm after 18 days.

Emma’s top tips for entrepreneurs having transformed her business into a £200 million turnover success. On leadership: inspire, encourage and elevate, find your passion, purpose, a mentor and do four marketing activities a day to get your business out there.

Panel Discussion with Peter Jones, in his role as chair of UK Enterprise, Julie Meyer of Ariadne Capital, Priya Lakhani of Masala Masala and Duncan Goose of Global Ethics, Dame Lynne Brindley of the British Library and Lord Davies, Minister of Trade at BIS.

First question picks up on Peter Jones’s comment about one UK bank telling him that 51% of their small business customers in trouble or recovery are social enterprises who clearly need to know more about business.

Peter back-peddles, stresses positives and says he was surprised by figures and says social enterprise is vital.

Discussion about the importance of education and culture to encourage entrepreneurship.

What should government do to encourage entrepreneurship? Priya Lakhani agrees that the ‘can I’, rather than ‘I can’ change in mindset mentioned by other panelists is important.

Take responsibility for change, says Peter Jones. Julie Meyer suggests take away PAYE and NI to encourage startups & buy from SMEs.

Lots of interesting points from the launch, particularly the provocative and entertaining David Wei. Shame there wasn’t enough time to discuss key issues like access to finance and bank lending to SMEs.

Yesterday the government announced a retail banking sell off of RBS and Lloyds branches to re-establish competition in the consumer and small business banking markets.

John McFall, chair of the Treasury Select Committee welcomed a return to the era of ‘boring banks‘.

Is Lord Sugar taking the piss, when he moans about moaning small business owners?

Meanwhile Alan Sugar, The Apprentice star and government Enterprise Champion, was typically brutal in his assessment of firms blaming banks for their misfortunes.

At an event in Manchester last night, he called the bosses of small firms complaining about not being able to access bank lending, ‘moaners’ who ‘lived in Disneyland’ – much to the dismay of small business groups and many in the media.

Not a great piece of timing on Lord Sugar’s part, but he does have a point.

Many businesses I talk to say while there’s still very much a crunch when it comes to credit, they want to pay off borrowing. They don’t want to increase their debt.

To ask banks to be lending more and businesses to be borrowing more during the worst recession in a generation is entirely counter-intuitive and, you could argue, makes no business sense either for banks or most SMEs.

But robust businesses with strong balance sheets and assets can still obtain lending, if they want it. Yes, businesses fail in recessions, but throwing money at failing businesses isn’t going to make them better, sustainable businesses.

I spoke to Martyn Shiner, the FD of a South West manufacturer Severn Delta, a few weeks back and he agreed with me, saying:

When other small businesses bleat about not being able to finance their business, I think, but are you providing timely management accounts, can you tell me what your margins are, can you tell me what the risks are in your business – and most of them haven’t got a clue.

To be fair, Martyn went on to concede that since most of the UK’s 4 million plus businesses are at the micro end, like consumers, they probably borrowed because borrowing was easy and got used to the habit.

The banks were lax, had lending targets to meet and free money to give away. They then slammed on the breaks too hard and left many SMEs floundering to cope with the new world of austerity we’re once again living in.

But it’s easy to forget, the last time the mighty NatWest (owned by RBS) made an almost unheard of loss, before the current fiasco, was during the major recession of the early 1990s. Why?

Not because of derivatives, but because of huge bad debts incurred by lending in the domestic commercial and small business sector.

So what of small businesses feeling the pain?

Earlier this afternoon I talked to Peter Riches owner of a small Shropshire-based web development company, BeVivid who describes bank lending, or rather lack of it, as ‘diabolical’.

His company has for months sought lending for business development funding and a new product, but RBS, Barclays and Lloyds have all turned him down flat.

Banks have never been keen on web businesses, or on funding new concepts. But lending to innovative businesses and lending to growing business really ought to be considered.

But largely, I think there’s a strong case for saying the small business lending crisis is a myth.

Strong businesses will borrow, if they want to, despite unjustifiably high interest rates. Weak businesses will go to the wall. Some one-man or one-woman bands will just slip away unnoticed.

But what about the massive decline in bank lending figures as recorded by the Bank of England this year?

What about the lack of take up of the Enterprise Finance Guarantee scheme which to end October has seen just 6,100 businesses find funding of £620 million, some way behind target?

Well maybe the demand for borrowing is just not there right now. And maybe that’s a good thing.

The huge growth in SMEs in the UK over the last decade was, in my opinion, debt fuelled.

It’s no surprise many are finding it hard to break the debt habit the banks themselves pushed, like street corner crack dealers.

[Picture credit: Jason Cartwright licenced from Flickr]

Microsoft’s Windows 7 officially launches on 22 October, but the undoubted appeal of the new operating system for the SMB (small to mid-sized business) market looks set to be tempered by potential upgrade issues.

According to Microsoft in the UK the vast majority of mid-market businesses are still running XP having skipped Vista due to real and perceived compatibility problems.

In a frank interview with Robert Epstein, head of small business marketing and sales at Microsoft in the UK, earlier this week, he told me:

As you start to look at 20 people companies and above where people are more interested in compatibility with their ERP and accounting packages, then there have been a large number who down-graded from Vista back to XP. So we think the actual install base is only 10% running Vista today.

So what’s the problem? Well the upgrade path from XP to Windows 7 isn’t straight-forward. Most would recommend a clean install of Windows 7 on an XP system, rather than an upgrade.

Indeed Microsoft’s own advice says ‘we don’t recommend’ upgrading from XP to Windows 7 and suggests the best option is to buy new hardware.

That’s one way to avoid compatability issues. No wonder Michael Dell is so keen on the new operating system!

As it happens I also think it’s a great operating system as I said in my Windows 7 review earlier this year.

But for businesses of 20-250 users the ‘clean install or buy new hardware choice’ may well cause pause for thought.

Of course Windows 7 includes the extremely useful XP mode which means businesses won’t have to buy new software to replace specialist applications that only work on older machines.

That’s good news in an economic climate where small businesses don’t want to be forking out for expensive software upgrades. But are they ready to upgrade their hardware instead?

Perhaps a refresh of hardware in SMBs is long overdue. Whether now is the time to make those purchasing decisions is another matter.

So it remains to be seen how swiftly XP-loving, mid-market businesses embrace Windows 7. Its penetration into this market may turn out to be slower than Microsoft would undoubtedly like.

Slash, burn, sweep away. Sharp blades, bonfires and new brooms.

When it comes to small businesses and red tape, politicians have a limited, but suitably strident vocabulary.

Nightclub bouncer Ken Clarke has the talk, but does he have the trousers?

Words that always play well to businesses large and small. Words that always play well politically.

Words that always play well to the vanity of politicians who believe their administration will have a light touch: less government, not more.

The problem is, for decades, Labour and the Tories alike have failed miserably to do anything about the legislative burden on UK SMEs.

They’re all talk and no trousers – words, words and more words.

So will Ken Clarke and the next Conservative government hold true to the pledge he made yesterday at the party’s 2009 annual conference that:

to get Britain back in business, the excessive regulation that businesses face has to be swept away.

Words like these echo down the years.

In 1994 Michael Heseltine famously announced the biggest purge of bureaucracy since World War II (?) and said he had lit a match under the :

… largest bonfire of controls that has taken place in modern times in this country.

In 2006 Tony Blair promised to cut red tape for business by 25% by May 2010, introduced the concept of ‘better regulation’ and Labour committed itself to:

… one of the most radical programmes of regulatory reform in the world.

The Cost of Red Tape

There is little doubt that the cost of red tape since Labour came to power in 1997 has increased dramatically.

Government figures suggest Whitehall bureaucracy costs businesses £15 billion a year.

The Federation of Small Businesses says SMEs spend 7 hours a week dealing with red tape. The British Chambers of Commerce (BCC) estimate new regulations introduced from 1998-2009 have cost business £76.8 billion.

Over 50% of the increase in costs accounted for by the BCC are linked to introduction of the National Minimum Wage, The Working Time Directive and the Data Protection Act.

Some would argue that introducing 4 weeks holiday for all, protecting personal data and setting a benchmark for low pay are all positive pieces of legislation.

But the uncertainty, cost and time it takes small businesses to deal with an ever-changing, growing legislative environment remains a massive headache.

In December 2008 the government claimed to have reduced the cost of red tape by £1.9 billion.

Bizarrely £400 million of this saving is supposed to have come via rather rudimentary ‘online tools’ to help businesses better understand their employment law responsibilities. A saving no business group I’ve spoken to finds credible.

Clarke’s Red Tape Proposals

So what will Ken Clarke actually do to address the red tape burden?

The headline grabbing ‘night club bouncer’ analogy – one in, one out in terms of new legislation – suits Ken down to the ground.

But one in, one out is not a ’sweeping away’ of red tape, although it promises a 5% net reduction in the legislative burden set out in a policy document released yesterday – interestingly retaining the New Labour mantra of ‘better regulation’.

The challenge will be to prove significant reductions, not just near status quo ‘improvements’.

For years small business groups and some politicians like Vince Cable of the Liberal Democrats have called for sunset clauses on legislation i.e. legislation disappears from the statute books after a set period of time.

Conservative proposals have avoided this step. They did, however, introduce a sunset clause for quangos, unless they can prove their usefulness.

Since much of the legislation affecting small firms is derived from Europe, the pro-Europe Ken Clarke may find the reality of wielding his new broom more difficult to execute in practice, than in theory.

Most important, however, is what’s been missing from government or shadow-government red tape policy for over a decade – the concept of deregulation.

Deregulation – A Dirty Word

The fact of the matter is that ‘deregulation’ has become a tainted word. Why? Because deregulation of financial markets played a significant part in the massive global financial mess we all find ourselves in.

But small businesses shouldn’t be punished for the crimes of big business.

We need deregulation, not the status quo and certainly not ‘better regulation’.

When Neal Hoskins left his job at Oxford University Press to set up a boutique publisher of english versions of children’s picture books from all over the world, booksellers and others in the industry raised a doubting eyebrow.

It’s just too hard to sell children’s books from non-english speaking authors to parents in the UK, they said.

Four years later and Neal’s business, WingedChariot Press, is one of those leading the publishing industry into the brave new world of digital, with the launch of an application (App) for the iPhone and iPod Touch.

He joins a growing band of ‘iPhone entrepreneurs’ who recognise the potential of the mobile platform to prompt innovation and disrupt the distribution models of traditional industries like publishing.

The picture book App, called ‘The Surprise’, has a simplicity and charm which parents and children alike will enjoy – very much in the spirit of Apple’s own design ethic.

It’s digital, but it’s also warm, benefiting from the gestures and beautiful screens of the iPhone and the Touch.

Distribution, distribution, distribution

With startup funding from the Arts Council, WingedChariot published its first books at the end of 2005, but rapidly found getting them into shops was the real challenge. As Neal admits:

Distribution is the hardest puzzle to solve and in some ways you should look at that first before throwing yourself into the deep end, but if you did you’d probably never take the plunge.

A link up with Walker Books in the UK has helped, but the distribution possibilities of the iPhone and other mobile devices was one of his main reasons for exploring digital.

It also has the potential to make WingedChariot, more of a publisher, rather than a translation, marketing and re-publishing business for foreign language picture books.

With digital overheads so much lower than printing and shipping dead trees to bookshops, Neal has ambitions to bring on new artists and authors who wouldn’t normally attract the attention of mainstream publishing companies.

Developing for the iPhone

A chance meeting with a developer at the Bologna Book Fair began the initially daunting phase of getting an App built.

In fact, although slow and sometimes difficult to begin with, Neal has learned a lot along the way about how to manage the publishing process in this new medium.

It was quite a tortuous process for us to learn how to work within that framework, how we work with editorial, images and so on. But I think it taught us a great deal. If this is really going to take off, we’ll want to develop ourselves in-house.

Of course, large publishers are already experimenting with Apps.

But by being in there early and by creating a new process and browser-based platform to streamline production and distribution on mobile, publishing minnow WingedChariot, like lots of disruptive startups in the web/tech space, has given itself the best chance to compete with larger rivals.

Marginal Margins and Speaking in Tongues

The irony is, despite slashing printing, distribution and other costs associated with getting a £15 children’s picture book into the hands of eager young readers in bookshops, margins for a 56p story in Apple’s App store are just as slim, if not slimmer.

And that’s the fundamental challenge. Will it pay?

Neal recognises pricing is untested and a bit of an experiment.

But plans to up the frequency of new titles, develop an App for WingedChariot itself to house collections of picture books and the promise of audio and images as a tool to teach reading, suggest there’s a lot of potential to sell in volume. The kind of volumes that even large publishing houses would envy.

WingedChariot’s roots are in publishing foreign language books in translation. And language may again be its biggest opportunity in the digital world.

Multi-lingual versions of its picturebook apps and the borderless appeal of the illustrations themselves, mean being big in Japan, Brazil, Russia and China is a real ambition, not a pipe dream.

As Neal says:

If we get this right, it gives us possibilities beyond our wildest dreams.

Like the books it publishes for kids, the WingedChariot story looks set to be a colourful adventure.

Let’s hope it has a happy ending.

I don’t know about you, but every time a new top level domain (the bit after the dot in your web address also known as a TLD) is released, I feel like someone’s pointing a gun at my head.

Just when you thought you’d secured your brand, small business or startup presence online by buying up the .com and .co.uk versions of your domain name, all of sudden someone comes up with .biz, .tv, .mobi, .net or the latest, .tel.

It’s as if the companies behind TLD bloat are saying: buy this new domain now before some squatter or adsense splogger grabs it and trashes your brand, your trademark or your business online.

And that’s exactly what seems to drive demand and create a ‘new gold rush’ in the domain name market – fear.

Add to this the confusion which liberalisation of domain names in 2010 is bound to cause and protecting your business ‘name’ on the internet or mobile all begins to look very messy, not to say expensive.

Telnic and .tel – more of the same?

So when I received a call from someone representing Telnic, the company behind .tel domains, extolling their benefits to small businesses, I was more than a little sceptical.

Interestingly though .tel isn’t just another domain name – Telnic really has innovated.

A .tel domain, which will cost you around £12 a year, allows you to put your business or personal contact details encrypted on servers at the heart of the internet known as the DNS (domain name servers) and make them visible online and accessible quickly and easily on smart phones. So what are the benefits?

A .tel page which allows you to keep your contact details online in a simple .tel template held on domain name servers.

Telnic claims this helps non-tech savvy small businesses get a presence online, assists in SEO (search engine optimisation) through easily updateable keywords and thereby discoverability, creates a distributed global business directory and is very fast, particularly on mobile platforms.

Most of these benefits are highly debatable when it comes to what SMEs want.

Small business benefits of .tel?

Let’s consider web presence, SEO and discoverability. The simple html and javascript template (see above) which creates the .tel web presence is certainly a one-stop-shop for your business contact details and a few keywords, but it’s not much more.

Although friendly to search engine spiders because it’s so simple, the page is very unlikely to appear high in search results other than for your name or the name of your business. And surely you’d want your own website in that position?

Most small businesses online want to be discovered ahead of their competition locally or nationally for more general searches e.g. ‘glasgow plumber’ perhaps.

Making it easy for people who already know your business to find your contact details is fine, but it’s hardly discoverability or a source of new punters.

The keyword ‘benefits’ are also largely irrelevant because search engines look for fresh, relevant content and reputation in terms of in-bound links, something these pages are unlikely to attract.

As for speed, well such simple web pages load rapidly – in less than a second – but the benefit is hardly perceptible compared to well-designed ordinary websites.

If .tel, and it’s a big if, becomes the equivalent of a global business directory online, your business will be competing against thousands of others in the same category.

And because of the lack of information on the .tel pages, it’s going to offer no perceivable benefit in terms of differentiation. No more certainly than you’d get from being listed for free in a directory like Yell.com or FreeIndex.co.uk.

Bye, bye address book?

But in a couple of areas Telnic may be on to something, although they face a catch-22 as do their potential customers.

Browsing the web on mobile phones has seen massive growth as smartphones proliferate. Telnic’s .tel domains make your contact details easily accessible and also dialable on the move.

But then Facebook, Gmail contacts, and Plaxo do this too and Apple’s iPhone allows you to dial numbers on websites by clicking on them straight on the phone’s mobile browser.

What differentiates .tel is the possibility of synchronising contact details as they’re updated by your contact, not you. Always having up-to-date details for business contacts that you no longer have to update yourself is a big potential plus.

I’m a name, not a number

The catch-22 is that this service only becomes really useful, if .tel becomes ubiquitous and you and all your business contacts are using it.

But ubiquity is tough. To that extent .tel is competing against free services like Twitter and Facebook to become a definitive ‘namespace’ for people and businesses.

What’s a namespace? Well rather than everybody having a telephone number, it’s everybody having a universally accepted digital ‘name/home’. An easy to remember ‘handle’ that every man, woman and child recognises.  One click and you’re in touch, online or on the move.

Twitter with its @ symbol and Facebook profiles have come the closest to achieving this so far. Both companies have millions and millions of people on their platforms, with ambitions to grow to 1 billion users.

Your hairdresser knows about Twitter and Facebook. Your hairdresser probably uses Twitter and Facebook. The day your hairdresser asks you, ‘what’s your .tel’ will be the day Telnic is dreaming of.

As the company’s head of communications, Justin Hayward, said to me last week:

We’re certainly aiming for our Hoover moment.

The moment when .tel becomes a generic term, a verb or a universally accepted ‘namespace’.

It may be a long wait.

When Apple launched the iPhone and its App Store in iTunes, it upped the ante in terms of what mobile phone applications could do. In July this year the number of iPhone apps downloaded hit 1.5 billion.

Competitors followed suit rapidly and the App Store wars broke out.

Blackberry launched its App World, Nokia its Ovi Store and Microsoft is about to unleash Windows Mobile Marketplace.

So I decided to take a look at the top 5 mobile apps for business on each platform and ask has the mobile world really embraced the needs of SMBs?

iPhone apps for SMEs

Here are the top 5 highest rated iPhone apps for business in Apple’s iTunes store.

1. QuickVoice Recorder – in essence an app to record and tag voice memos. Strangely number 1 in the charts, despite Apple having built a very similar app into the latest iteration of its iPhone software.
2. Griffin iTalk – another voice recording app. Useful for recording meetings and memos. A dictaphone replacement.
3. Mocha VNC – a virtual desktop app that lets you access your work PC or Mac. Seems to be difficult to set up.
4. Remote Desktop Lite - another remote desktop app from Mocha. Only connects to Windows XP. Somewhat limited and surprising to find it in the top 5 most popular.
5. Documents (Mobile Office Suite) – word processor and spreadsheets you can create and edit on the move. Integrates with Google Docs. Used to have the advantage of editing which Google’s own iPhone app didn’t have, but that’s changed recently.

The above list and indeed most of the others in the top 50 all focus on memo recording, remote access, documents and to-do-lists.

All well and good and oh so utilitarian. But then maybe that’s exactly what small businesses really need from their iPhone.

Nevertheless, there seems to be a dearth of creative apps for this audience, bearing in mind all the possibilities the iPhone itself offers from a technological standpoint.

To be honest most of the apps look pretty similar to what I remember downloading on both Nokia and Windows Mobile platforms some 5 years ago.

Why nothing creative from all those cool and talented app designers out there?

But, maybe I’m missing some diamonds in the rough. What are your recommendations for business-related iPhone apps?

UK web startups are like rock bands. Not because they all rock, although some do, but because many want to make it big in the US.

But the British invasion doesn’t look like it’s going to happen anytime soon. Last.FM and Bebo are more like Oasis and Blur, than The Beatles and The Stones. Noticed in the US, but hardly game-changing.

So what of our own backyard, Europe?

Well, I recently interviewed Yann Motte the London-based French, CEO of WebJam who prior to setting up the social network platform with Spanish and English co-founders, spent many years leading business development at Yahoo! Europe.

Yann Motte, ceo of WebJam, bringing social networks to business

A good person to ask about the challenges of building a web startup in today’s post-crunch world, but also a chance to pick the brains of someone who knows all about the cultural challenges of extending web applications and services across Europe.

Building Yahoo! in Europe

Yann joined Yahoo! in 1998 when it was only a few years old.  With just 300 people worldwide, he was one of the first business development managers in Europe.

On leaving in 2006, he was VP of Product Management for Europe.  By then Yahoo! France alone employed 500 people.

It’s perhaps these early pioneering days that confirmed his taste for starting a business on the web, leading to the creation of WebJam almost a decade later.

As he says:

One of the reasons I joined Yahoo! was because of the amazing entrepreneurial feel, especially in Europe.

As the business grew it inevitably became more corporate and Yann observed, with occasional frustration, the oscillation between US headquarters letting European subsidiaries off the leash only to have second thoughts and rein them back in again.

It’s not the culture, it’s the branding and pricing

Yahoo!’s and Yann’s experience of managing European growth, reflects ongoing concerns about how European web startups can effectively scale across the continent.

Nils Hammar one of the founders of recently sold Kindo, described developing a multi-language site as like “dragging a big heavy anchor behind you”.

And questions about why it’s so damn hard to build trans-national web businesses in Europe was also raised by Sarah Lacy on a panel at the recent Techcrunch Europas.

Yann believes for web applications that are platform based, beyond the obvious language challenge, startup CEOs should spend less time changing the product for different countries and more time concentrating on differences in the perception of the brand and the strength of its competition locally.

This and getting the pricing right for different services in different territories.

And these two elements are the very essence of the European challenge.

Language isn’t a huge problem. Cultural differences aren’t the key. The real challenge for any web company is launching a brand over and over and over again with the right price proposition in each European country. That costs.

Costs that US startups aren’t going to incur in the same way, if they want to reach punters in California, Texas, Nebraska or New Jersey.

Building WebJam

After Yahoo! Yann set his mind on working in a startup environment again.

What he didn’t know was whether he wanted to work for an existing startup, or take on what he describes as the “blessing and the curse” of creating a business himself from scratch.

He chose the latter having brought together a team of co-founders who combine creativity, technology, marketing and business development skills.

A solid foundation for WebJam which acts as a software as a service social publishing platform for businesses and organisations. A Ning for business, if you like.

Tick tock

What WebJam doesn’t have, however, is Ning’s huge VC funded pile of cash ($75 million) in the bank to help navigate the recession and grow through it. It is, however, funded by Versailles-based VC firm I-Source.

Is the timing for such a startup, which counts Random House and Yamaha Music as customers, problematic?

Yann says this is something he’s learned the importance of:

It’s all about now finding the right momentum for the vision we have. What’s always difficult for a startup is the sense of timing.

WebJam is already generating revenue, but he recognises that one of the key issues they need to address before the end of the year is whether and to what extent they will need additional funding rounds.

That depends on how aggressive a strategy WebJam will take. Slower organic growth might be the right move in the current economic climate.

On the other hand Yann sees an opportunity for startups in Europe to grow rapidly across the continent, while many US web businesses are refocusing on their own core domestic markets.

In the short term, however, WebJam’s focus is squarely on building revenues in the UK.

Although marketing budgets may be under pressure at the moment, Yann believes his startup will float on a rising tide of business interest in social media as its ROI becomes better understood.

Buzz and engagement with customers are the most commonly cited benefits of social media. But behavioural data and good old traffic are also important.

Yann clearly sees social media breaking the search hegemony of Google and helping to diversify spend away from SEO and SEM.

Certainly savvy online marketers are going to be looking for alternative ways to spend their online budget to build brand and community as well as immediate return.

With a robust team, VC funding and revenues already flowing, WebJam looks well placed to take advantage of this shift if and when it happens.

So today Microsoft clinches a 10 year deal which means its recently launched search engine Bing will be used by Yahoo.

In return for sacrificing its second place in the search market behind Google, Yahoo will be able to keep 88% of revenues (for five years) coming from search ads generated by its now Microsoft-powered search engine.

Microsoft's Bing will power Yahoo search. Competition for Google and curtains for Yahoo?

The search business that was one of the cornerstones of Yahoo from its early years is for all intents and purposes no more.

Some, like one of the shrewdest entrepreneurs currently in the search space Mahalo.com CEO, Jason Calacanis, would argue Yahoo has capitulated and is now dead meat.

In an email to members of his mailing list, copied to his blog, he says:

Aggression and innovation wins. Period … To say it clearly: Microsoft does not enter a market unless it’s important, huge and on the way to becoming even bigger. Microsoft is the buy sign, not the sell sign.

He argues the once innovative Yahoo lost its innovative edge, lost its talent and has now lost the plot.

It’s also repeating history, having once allowed an almost unknown (at the time) company called Google to power its search engine.

The logic of Calacanis is hard to contest. Innovation remains one of the most potent of competitive tools for any business large or small, but particularly small.

And small is what his own search/directory hybrid, Mahalo.com is, with a touch of innovation and a lot of iteration, ironically, of Yahoo’s original directory of the web.

When I interviewed Calacanis on SmallBizPod soon after its launch it seemed he might have his eye on a Google sale exit.

Now one search behemoth has fallen perhaps his praise for acquisitive Microsoft suggests the courting of a new suitor. Stranger things have happened.

For the rest of us, bizarrely, two main players in the search space may prove better than three.

Microsoft will undoubtedly drive even more competitive pricing into the search advertising market, if only to needle arch rivals Google.

Bullshit detection is a must have skill for entrepreneurs and journalists alike.

Telling a great story, whether you’re talking something up, or talking something down is also a stock in trade of both callings, if I can call them that.

The Clash - in the garage with their bullshit detector

But to use a few lazy, bullshit stereotypes myself for a moment, entrepreneurs are traditionally seen as optimistic and inclined to exaggerate, while journalists are seen as cynical and inclined to denigrate. Often when the two meet you get interesting results.

Witness the hoo-ha around a story about online angel network Angels Den which appeared on TechCrunch earlier this week.

Sound and Fury

The piece written by freelancer Milo Yiannopoulos, who until recently wrote for the Daily Telegraph, appeared to contain at least one factual error and provoked a storm of comments and counter-comments about the value or otherwise of Angels Den and its move into the ‘digital’ arena following the appointment of Irish opportunist Paul Walsh.

You might think this is all a huge storm in a teacup which incidentally will suit TechCrunch which gets more page views and Angels Den which gets a lot more profile than the Paul Walsh appointment would have received otherwise.

But I think it’s also quite instructive for startups and those writing about them.

Big numbers, big scrutiny

I wrote about Angels Den soon after it launched and was a little cautious in recommending it to readers.

It turns out, however, that two years on co-founder Bill Morrow and his team claim to have completed 157 deals worth £25 million in funding.

They’ve been keen to point out their disruptive startup has rapidly become the most successful angel network in the UK – at least in terms of getting money into the hands of startups and entrepreneurs which is what it’s all about. Genuinely good news.

But inevitably, and I believe rightly, when a startup puts out a story like this the bullshit detectors go up.

That’s not a judgement on the integrity of an entrepreneur, but merely recognition that some people talk up stories more than others.

When you’ve seen and heard as many over-hyped press releases and pitches as most journalists and bloggers have, you begin to realise why their first response is often a sceptical ‘really?’.

Think of it this way: the bigger the number you quote or the claim you make the more scrutiny it’s likely to receive. Don’t quote numbers you wouldn’t be happy to share in due diligence with an investor.

Where Angels Tread

Bill Morrow - co-founder of Angels Den securing significant angel funding for his punters.

In the TechCrunch piece Bill Morrow is quoted as saying Angels Den had “just over 10,000 entrepreneurs looking for money”. Blimey, I thought, that’s a lot of people forking out £99 to submit their business plan and a possible further £400.

On that basis Angels Den would have turned over well in excess of £1.3 million in two years without the recent introduction of a 5% commission on done deals.

So I gave Bill a buzz and asked him about the figure. He corrected my misconception and made it clear only a proportion of those 10,000 had actually submitted business plans, although for commercial reasons he couldn’t disclose the percentage – which to be fair is understandable.

Interestingly from a business perspective, Angels Den, while successful, seems to be doing a lot better for its punters than it is for its own bank balance, which may be why it’s introduced the 5% commission on deals and is looking to target the busy web/tech startup space.

Blog Bullshit

But you need your bullshit detectors finely tuned when you’re reading bloggers or journalists too.

Take my own harmless observation above about Milo Yiannopoulos having ‘until recently’ written for the Daily Telegraph.

This small phrase could provoke the reader to wonder why Milo no longer works for the Daily Telegraph. That combined with mentioning the equally minor factual error in his TechCrunch piece may imply something negative.

In a similar way Milo’s own phrase ‘Something’s going on at Angels Den’ combined with leading on someone quitting rather than a new appointment could be perceived as straight factual reporting or a negative insinuation.

Direct challenge is always better than insinuation in my book.

As for me, well I’ve recently dubbed myself a journalist entrepreneur so, to be honest, I’m well beyond bullshit.

For those that aren’t immersed in news about web startups and the world of social media, you might have missed the biggest story of recent weeks, the hacking of Twitter business documents by a Frenchman dubbed Hacker Croll.

By breaking into a personal email account of a Twitter employee, he was able to infiltrate most of the company’s highly confidential documents, email and other details held on their own servers and in Google’s ‘cloud-based’ applications.

He then passed over 300 of these documents to the world’s most widely read blog about web startups, TechCrunch.

For the geeks among you the fascinating details of the hack were revealed by TechCrunch yesterday.

Twitter security FAIL. But how robust are the passwords of your staff?

Lots has been made of the fact that Twitter’s security house of cards came tumbling down because like many a good web startup the company used cloud services.

Their documents, email etc were all held online on other people’s servers, like Google, rather than on their own hardware in a broom cupboard.

But the reality is it’s people that are the problem, not where your data is.

The key component of Hacker Croll’s successful break in was being able to guess the personal Gmail password of a Twitter employee.

Because, like the huge majority of people, this individual often used the same password for many accounts and also had the answers to additional security questions like ‘what’s the name of your pet’ inadvertantly spread around the web on social networks, the French hacker soon had his hands on Twitter’s crown jewels.

Secure passwords are at the heart of the problem. Most people simply don’t use them, because they can’t remember a four digit pin number let alone unique passwords for every application, computer or web service they’re signed up to.

This is a major problem. And it’s not just online security that suffers in this way.

I used to work at a FTSE 100 bank where everybody in the department had their computer password written down in the team personal assistant’s rolodex.

So how do you improve password security online and off for your business? Here are some tips:

1. establish a password policy for your business to which all staff are required to adhere;
2. encourage staff to use unique passwords for each computer or service they use;
3. make sure all passwords have eight or more characters;
4. do not allow passwords to contain real, comprehensible words otherwise guessing is about as hard as playing hangman;
5. suggest ways to make passwords, long, secure, but memorable: for example pick a favourite line from a song, poem or nursery rhyme and use the first letters of each word to form a password i.e. “You have brains in your head. You have feet in your shoes.” could be Yhbiyh!YHFIy5;
6. remember to mix upper and lowercase characters in the password together with special characters and numbers.  In the example above, the exclamation mark is used in place of a full stop (which you couldn’t use in a password anyway) and the last ‘S’ is turned into the number 5;
7. make sure answers to password hints are false i.e. if asked ‘what is the name of your pet’ make sure the answer is the name of a friend’s dog, not your cat;
8. if you really have to write down passwords, don’t store them on a computer, but write them on a piece of paper and put them in the company safe.

Just the above measures will dramatically improve your online and physical computing security, but it’s not an extensive list.

Let us know, if you have any password security tips we’ve missed.

As we reach the bottom (hopefully) of a credit and bank induced recession, most small businesses want some straight talking.

Straight talking about late payments. Straight talking about cash-flow. Straight talking about the cost of legislation. And straight talking about lending.

When it comes to the government’s £1.3 billion Enterprise Finance Guarantee (EFG) scheme designed to prop up bank credit to SMEs, getting straight answers can sometimes prove tricky, no matter who you talk to.

Time for straight talking about lending to UK small businesses

Media Spin

Take the Daily Telegraph this morning. Its business section slams the EFG for not meeting government targets for lending to SMEs and failing to meet levels achieved a year ago by the Small Firms Loan Guarantee (SFLG) scheme.

The problem is the newspaper seems to bend the facts to suit its story.  Firstly, why does it only use figures for EFG lending to end March 2009 when figures to end June or even into July are readily available?

The answer may lie in the fact the complicated EFG scheme didn’t come into force until 15th January. This gives the previous year’s figures an additional 15 days’ worth of lending to assist in making the Telegraph’s case.

How much lending was made under the SFLG during the first 15 days of the year is not made clear, but it would be surprising if volumes were significant bearing in mind the scheme was about to be superseded.

So, let’s divide the figure for SFLG lending in Q1 2008 (£205 million) by the 90 days of a full first quarter to get a daily lending figure of £2.28 million.

Let’s do the same for EFG lending in Q1 2009 (£177.8) taking 15 days away from the 90 days of a full first quarter to get a daily lending figure of £2.37 million.

Hmmm … an increase in lending to SMEs which could blow the story out of the water.

Government Spin

The government’s been spinning the EFG too.  Hardly surprising with the master of media management, Lord Mandelson, at the helm in the Department for Business.

For several months the Department was putting out press releases dramatically talking up the numbers in relation to the EFG by being economical with the full facts.  Here’s an example from the end of April:

More than 2,500 eligible loans worth almost £290m have now been granted, or are being processed or assessed to assist businesses’ lending needs via the Government’s EFG scheme.

This is as good as meaningless.  Applications ‘being processed or assessed’ may not end up receiving the offer of a loan at all.

What we need to know is how much has been actually granted as a loan. After some questioning, the Department did start to release more specific figures.

And the figures to the beginning of July show total lending after nearly six months of the 15 month scheme reaching £364 million. On course for £1 billion by the end of March 2010, but some £300 million short of the total allocated.

The Federation of Small Businesses and British Chambers of Commerce say they want to keep up the pressure to make sure lending keeps flowing.  That’s a good thing.

But you might well ask, if small businesses gain in confidence as recession eases, then perhaps demand for EFG lending will slow. Banks not being able to lend the full £1.3 billion by the Q1 deadline next year, may actually prove to be a positive sign for the economy.

Bank Spin

Until then the banks are in a race to prove they are lending more than anyone else to small businesses.

They have their battered images to rebuild and being nice to SMEs right now is vital, although their battered balance sheets may also be a powerful disincentive to lend willy-nilly to meet government targets.

The part-nationalised RBS and Lloyds TSB have quotas to fulfil in terms of the volume of loans they need to place under the EFG.  Their hands are forced.

So how much are the big four lenders (who account for 90% of the SME banking market) really lending under the EFG? SmallBizPod has managed to extract the following figures from the major banks for the period up until the beginning of July:

Barclays = £150 million
HSBC = £40 million
Lloyds TSB = £91 million
RBS/NatWest = £190 million

This totals £471 million.  The eagle-eyed among you will notice the official figures I mentioned earlier total £364 million for the same period.

So where’s the extra 30% or so come from? Well, it’s down to the banks wanting to make the highest possible figures public by quoting (in some cases) the latest sums ‘granted and in the pipeline’.

Back to straight talking

When all said and done, what matters is whether viable small businesses have access to lending when they need it and under what terms.

For example, where no other security is available, personal security is still often required by banks under the EFG, contrary to some suggestions when the scheme was launched.

With the trend in house prices down, this may be a more important restricting factor for many than the volume of lending available itself.

Straight from the TechCrunch Europas awards ceremony come the results of the winners in each category. SmallBizPod hopes to be able to grab a few short podcast interviews with winners during the night, so keep an eye out for those.

The Europas Shortlist: Best Web Application Or Service (EMEA)

Spotify

The Europas Shortlist: Best Design

SongKick

The Europas Shortlist: Best Bootstrapped Startup (less than 3 years old)

Soup.io

The Europas Shortlist: Best Social Innovation (which benefits society, EMEA)

Mendeley

The Europas Shortlist: Best Enterprise / B2B Startup (EMEA)

Huddle

The Europas Shortlist: Best Cleantech / Environmental Startup (EMEA)

Alertme

The Europas Shortlist: Best European / Real World Gadget (EMEA)

Poken

The Europas Shortlist: Best Entertainment Application or Service (EMEA)

SoundCloud

The Europas Shortlist: Best Mobile Startup (EMEA)

Nimbuzz

The Europas Shortlist: Best Mobile Application (EMEA)

SpinVox

The Europas Shortlist: Best Startup Founder(s)

Daniel Ek & Martin Lorentzon

The Europas Shortlist: Best Investor (VC or Angel fund, EMEA)

TAG The Accelerator Group

The Europas Shortlist: Best Investor Personality (EMEA)

Yossi Vardi

The Europas Shortlist: Best New Startup, Summer 2008-2009

Spotify

The Europas Grand Prix

Spotify

If you’re a first time entrepreneur looking for VC funding right now, then forget it.

Julie Meyer rallying entrepreneurs

That, to put it bluntly, was the message coming from a panel of esteemed venture capitalists and investors at last week’s Entrepreneur Country event hosted by online Dragon and Ariadne founder, Julie Meyer.

VCs are more worried about exits than they are about deal flow and business angels are on their knees as most have seen their personal wealth shrink dramatically over the last 12 months.

To be fair, as Dharmash Mistry at Balderton Capital rightly pointed out disruptive ideas and entrepreneurs will always find capital and the two largest VC funds in Europe have recently raised $1.5 billion.

Nevertheless this isn’t any consolation for startup virgins.

As Nic Brisbourne of DFJ Esprit put it:

I have a strong personal conviction that there are good opportunities going unfunded. The VC industry has yet to show a consistent ability to generate good returns in Europe.

But despite all this, the mood at the event was overwhelmingly positive. And I began to start thinking less money = good news.

It is after all only going to accentuate one of the sharpest and most important of entrepreneurial skills – resourcefulness.

In many ways I can see the crisis of capital creating a new generation of dynamic, nimble, revenue focused entrepreneurs and small business owners. The very people Julie Meyer is appealing to in her recent ‘individual capitalism’ rallying calls.

The second theme I took away from Entrepreneur Country was speed.

Speed as rapid, agile action and speed as often irrational gut instinct. The instant slicing and dicing of Malcolm Gladwell’s Blink.

Whenever you talk to investors or listen to a panel of VCs, it becomes very obvious that most investments hinge on gut. That split second, sub-conscious feel for the people behind an idea or a business.

It’s an area, of course, where investors and entrepreneurs are perfectly aligned. Both act on instinct often, both get it wrong often. So fail fast is the mantra and rightly so – or at least much of the time.

Which brings me on to the other speed.

One of the more esoteric, but nonetheless interesting speakers at the event was former editor of Business 2.0 and The Harvard Business Review, Tom Stewart.

Tom talked about five key forward-looking themes for businesses of all sizes. Among them was speed – the fact that businesses no longer have time to rest, let alone to rest on their laurels. As he said:

Speed is necessary, but speed kills.

Who does it kill? Well potentially the slower, bigger companies. And that’s where startups and smaller businesses can step up to seize new opportunities.

But particularly in the world of the web, there’s also an ever increasing need for ’speed to scale’ – at least if the VCs are to achieve a worthwhile exit.

And in that case not being able to keep up can kill off startups, just as much as monolithic corporate monsters.

As Tom Stewart pointed out somehow we’ve got to balance speed with the important task of letting things emerge – listening to the traffic, if you like.

Otherwise we’re never going to be able to make a decision about an event or an opportunity we simply couldn’t have foreseen – leading in uncertainty when decisions are beyond calculation.

What’s this got to do with startups, small businesses and VCs for that matter?

Well, uncertainty is where the opportunities are and the world seems to be blessed with an abundance of uncertainty right now.

Exciting, challenging times, but let’s make sure we also pause to reflect on what we’re trying to achieve while we’re racing towards new horizons.

It’s always intriguing to see how startups and particularly web startups refine their sites and their business models.

And these shifts in priorities are thrown in to stark relief for web businesses like Bview and Cmypitch.com which launched mid-2008 by the full horror of the financial crisis which hit our TV screens and VC funding last October.

It now looks like the Web 2.0 sensibilities of user generated content and community are giving way to ‘where’s the revenue’ as people realise only sites the size of Facebook and Twitter can afford to make no money.

Runways are considerably shorter than they used to be.

When Bview launched in the Spring/Summer of 2008 it seemed set on being a UK Yelp! with networking, local small business reviews and the added hard edge of Experian credit data leveraged by its parent price-comparison company Xbridge.

Bview's design is not a thing of beauty, but is the local business site sitting pretty after a revenue rethink?

Then today I receive a press release which describes Bview as the UK’s largest voucher search engine.  Whoa …  not what I was expecting.

So I quizzed co-founder, Colin Bruce, about the shift in emphasis. He said:

We looked at what businesses really wanted and thought about what new features we could add.  There’s a lot going on in the affiliate space, so it made sense to do something in that area and in essence we’re developing a voucher aggregation site.

The reviews or content element of the site are seen as a commodity to help drive traffic towards the revenue generating vouchers.

Although vouchers from large retailers predominate at the moment, Bview is still very much positioned as a site focusing on the ‘local’.

The announcement today, for example, promotes the fact that Bview’s vouchers will be displayed on Google maps allowing small businesses to offer discounts to a very focused online audience.

An interesting model which as Bview builds out its APIs is likely to create partnership opportunities with other search engines and price comparison sites.

Cmypitch has also had a radical overhaul.

Cmypitch looks a lot clearer than it did at launch, but will it have the traffic to make affiliate revenue count?

At its launch Cmypitch.com seemed to be a UK version of Vator.tv, a place to pitch on video for funding and clients – plenty of user generated content combined with networking, forums and editorial. That said, the homepage design was extremely confusing.

As Ian Wallis at Cmypitch admits:

We always had lead generation services on the site, but the homepage was far too confusing and the navigation didn’t make much sense.  So we decided to switch to a much more product focused site.

Cmypitch hasn’t just reworked its site, it’s reworked its business model by focusing, like Bview, on a share of affiliate revenue from offering small businesses special deals and price comparison.

The original subscription-based model, asking small businesses to pay up front for potential leads, wasn’t proving popular as the recession started to bite.

Building traffic to the site to build revenue is a priority, but Cmypitch is also exploring white labelling and syndicating its deals and quick quotes services to other sites to extend distribution.

Both sites offer a web startup story for our times.

Revenue is very much the new ‘pre-revenue’.

Yes, Yasmina! From the moment I saw her in action in weeks one and two, she was my hot tip to win this year’s Apprentice.

And so it proved in tonight’s final when shrewd business instinct, rather than polish, clinched the Reading entrepreneur and restaurant owner a job with Sir Alan Sugar.

And I’m so happy. Not just because I guessed right, but because Yasmina’s win is a win for startups and small business owners around the country.

Yasmina Siadatan - winner of The Apprentice 2009, giving up grim-faced determination for a touch of glamour

In choosing one of the very few candidates to have built her own business up from scratch, Sir Alan again showed that he and his business values the entrepreneurial over the corporate.

Ultimately Yasmina was clearly going to appeal to the soon to be ennobled business tycoon when you read what she’s quoted as saying from the outset on the BBC website:

Business is about a simple formula. Make more than you spend. That’s what I do, I keep business simple and it works. I’m good at it.

Very business savvy, very focused, but also despite her grim-faced determination, outside the boardroom she clearly knew how to have a good time and was liked and respected.

Kate Walsh put in another polished and very impressive performance and like Debra Barr the week before was unlucky not to taste victory in a challenge that pitted the two young women against each other to design and launch a new brand of chocolates.

Kate went upmarket with a box of chocolates for him, for her and to share. Brilliantly executed and presented and only just saved from being called ‘Intimate’ thanks to Debra who joined Kate’s team along with Ben, Kim and Rocky.

Nick gave his verdict on Kate’s first name for her chocolates: ‘frankly it sounds like something to do with feminine freshness’. Mouthy Debra, put it more succinctly – ‘oh my god, it looks like a box of tampons’.

And in so doing she saved Kate from a huge error as the team rapidly came up with the rather good ‘Choc D’Amour’ in just a few minutes before the deadline to confirm packaging design.

Yasmina also escaped certain death in the boardroom, by bravely giving up on a frankly idiotic idea to create a new range of chocolates exclusively marketed to men.

The moment that convinced her ‘man chocolates’ were a bad idea was when Philip, who’d joined her team along with Howard, Lorraine and James, suggested, like ‘pants man’, people would come around to the idea.

It was good to see Philip back. Most of the comedy in this final episode was his. Taking charge of choreography for a dance troupe for Yasmina’s launch event was a sight to behold, only narrowly bettered by his original pants man gyrations.

Yasmina’s Cocoa Electric chocolates, all electric shock, shocking pink and electrifying taste sensation, was all very retro with danger written all over it in a very 80s Duran Duran video kind of way. A fact confirmed when we caught a glimpse of Philip with a shocking pink thunderflash painted across his face.

Kate’s overall presentation and TV ad, in particular, outshone Yasmina’s. But Yasmina got price right again, bringing her chocolates in at £6 per box, compared to Kate’s £13.

Sadly, the chocolates tasted as shocking as the pink in which they were packaged. But in an echo of the catering task when Yasmina bought poor quality food and successfully achieved a huge margin, it was that simple business principle that won the day.

Ironic that the woman whose restaurant is by all accounts really rather good, should have won by literally sacrificing taste for short term profit.

Some will argue the short term, quick buck mentality is a short-coming of The Apprentice and its series of reality TV business challenges.

In fact the real business lesson from this year’s series, is Yasmina’s dedicated focus on her customer – namely Sir Alan Sugar.

She clearly knew her business flare would appeal and did everything necessary to deliver it in a way that would catch Sir Alan’s eye.

A good winner who I bet will return to her own successful entrepreneurial venture a year after spending time learning all she can from Sir Alan’s organisation. A smart cookie.

Quote of the week, from Sir Alan himself: “They weren’t shocking flavours, they were shocking chocolates”.

Business lesson of the week: know your customer.

I’ve been away on holiday and missed a few episodes of The Apprentice as some of you may have spotted.

But in my absence something strange has happened, if last night’s final five preview and interview show was anything to go by.

Firstly, I think I too may be afflicted by the Mystic Meg intuition of one of last night’s final firings, Lorraine Tighe.

Back in week one I predicted who would be in the final three: Yasmina, Rocky and Debra.

Well, just like Lorraine, my intuition was almost right, but not quite, although I don’t understand how I missed the Stepford Wife-like perfection that is Kate Walsh.

The other thing that struck me was just how popular The Apprentice must have become. The BBC devoted two whole hours to the show in prime time last night and the final is scheduled for peak viewing on Sunday.

Business as entertainment has clearly taken off. Celebrity entrepreneurs are the new celebrity chefs.

The last thing to strike me watching last night, is that the comedy – so easy to play up as the show’s own producers and I have done over the last few weeks – is making way for a programme that does after all have something serious to say about business.

A bit of TV manipulation’s been going on I’m sure, but Debra’s progression is a case in point. She’s appeared obnoxious, loud mouthed and über-ruthless as many of her former colleagues confirmed last night, but her journey through The Apprentice has clearly taught her something – about business and life.

The preview show focusing in on the characters and backgrounds of the final five, proved as, if not more interesting, than the penultimate episode itself.

You got a real sense of the very often working class backgrounds, adversity and inspiring family members that had shaped and motivated the finalists: James’s bricklayer Dad, Lorraine’s battle with a fused spine as a child, Yasmina’s Iranian immigrant family, Kate’s desire to impress her hard-working mum and Debra’s inspirational business father.

Suddenly caricature gave way to a better understanding of the real people battling it out to be Sir Alan’s new Apprentice. Suddenly the show seemed to be a little less about business pantomime.

It also has to be said the finalists, Kate and Yasmina, have to be two of the most impressive business people to have appeared on the show. Sir Alan must be delighted.

Quotes of the week, both from James’s comic CV: “I put a leash on people who spunk money up the wall” and “I bring ignorance to the table”.

Business lesson of the week: never underestimate The Apprentice, it might just have something serious to say about business after all.

As many of you know, Vista hell became too much for me and I spent most of 2008 using Ubuntu.

And what a very pleasant surprise the open source operating system and all the good (free) things that come with it has been.

But there were a few gotchas: poor multimedia support, no viable Linux accounting package and a power management system that left my laptop hotter than the sun.

These niggles, the fact that I’m a bit of a tech tart, David Tebbutt’s initial reactions, and my never ending quest to find out whether stuff’s good for other small businesses, prompted me to install Windows 7 beta on my main work laptop in February this year.

The following review is based on my experience of the beta and release candidate 1 (RC1) of Microsoft’s new operating system.

Windows 7 wallpaper - Gates & Ballmer ride into a Yellow Submarine landscape, but is Microsoft's new OS blue monster or blue meanie?

Wow, it works now

Remember the Wow starts now? Microsoft’s come a long way since then.

What the Vista launch proved is that a computer OS no longer merits marketing hype. The evolution of operating systems, Apple and Linux included, is now iterative, not revolutionary.

What matters is do they work well? The bottom line is Vista didn’t and Windows 7 does.

Like many others, I’ve found Windows 7 beta and RC1 to be equivalent to or perhaps even a little faster than XP.

A stable, fast, secure operating system that you can forget about is exactly what small businesses want. Windows 7 could be just that …

It’s all in the detail

There’s really not a lot to say about Windows 7. The very fact that people are talking about the new ‘wallpaper’ in the OS is a rather amusing sign of this.

But actually this is great news. It feels lighter and more refined to use and seems to herald a new less is more philosophy coming from Redmond.

Perhaps cloud computing is forcing software vendors away from the bloatware mentality of Moore’s Law where all the extra headroom created by leaps in processing power had to be filled.

What you’re left with focuses on well executed detail and usability. About bloody time.

Windows 7 small business benefits

As a small business owner these are the things I enjoyed about the software:

- at last the desktop search built into the start button works well bringing a touch of Apple’s Spotlight to the PC – this is a real time saver when you want to find a document quickly;

- the ability to mouse over the taskbar and get a peak at files and windows you’ve got open works very well and saves time (click on the image below to see a screencast review to go with this blog post) as do the jump lists which give you quick access to files you’ve been working on;

- Vista was a pig for connecting to wifi networks on the move and Apple MacBooks are also often a pain if you’re trying to get some work done in an airport or down your local cafe. Windows 7 puts that right and is much more intuitive in terms of finding and connecting to wifi networks;

- compatibility is good thanks to ‘XP mode’ which means all your old software should work fine. Much to my surprise my ancient accounting package is alive and well under the new OS, saving me from an expensive forced upgrade;

- with all the data protection legislation around these days small businesses will increasingly value the ability to encrypt sensitive data on computers easily. Bitlocker on Windows 7 does this for an entire hard drive, while encryption on a file or folder basis also works well.

That’s about it, other than general stability and speed.

Similar features are found in other operating systems and arguably Microsoft should have had all this sorted years ago. But it’s here now and it works. Having said that …

Ghosts and the black screen of death

Just like Ubuntu there are some gotchas, albeit I’ve been testing beta and RC1 versions, so some quirks may get ironed out.

I frequently get programmes including Firefox and Microsoft Office documents suddenly freezing and turning a ghostly shade of transparent. Like ghosts they’re then often difficult to lay to rest. This was particularly bad in the beta, but it’s still happened a few times over the last week in RC1.

On much more rare occasions I get what I can only describe as the ‘black screen of death’. Windows 7 doesn’t stop running (which is good), but if a programme crashes I’ve had the background turn a mournful and appropriate black …

Norton Internet Security 2009 has proved extremely problematic to install correctly – but I expect Symantec will rectify this before the RC1 turns final. Windows-targetted viruses and malware remain a pain which Linux and Apple users don’t have to struggle with.

Finally Internet Explorer 8, bundled with the new OS, still feels slow. Firefox is the way to go.

Conclusion

If you’re a sole trader with an XP or Vista computer and you’re sticking with Microsoft, yes upgrade to Windows 7 (assuming Microsoft is sensible with pricing).

If you’re a larger SME, the benefits of Windows 7 are not so compelling that you should shift existing hardware/software upgrade cycles just for the sake of getting your hands on what’s new.

But when you do, you’ll notice a positive difference.

The sniping was unrelenting. Bomb blasts of abuse rained down. Shell shock prevailed.

Sir Alan’s own brand of put-downs were so abrasive on this week’s episode of The Apprentice he must have had the BBC’s lawyers scurrying for their tin helmets and copies of slander case law.

Noorul who finally got fired received a particularly shocking parting shot in the back from Sir Alan, who quipped:

Whoever employs him, better get a receipt.

Meanwhile James was likened to a village idiot who’d gone missing.

But it wasn’t just Sir Alan who was hurling abuse. Debra outrageously and unwisely kicked off in the boardroom with Nick (yes .. Nick!), Philip continued his running battle with Lorraine, James berated Ben for almost calling him into the boardroom and Ben refused to take any more shit from a bunch of tough nut antiquarian booksellers.

From the off we were left in no doubt by the programme’s editors and writers that this episode was going to be all out war.

Ben, who’d received a scholarship to army officer training college Sandhurst, but for some inexplicable reason had never taken it up said:

Under those situations where I am under extreme pressure i.e. heavy gunfire, explosions going off around me, people getting injured, that’s when I bring a team together.

All well and good, but valuing and selling a rug, a skeleton and a few jellied eels among other things, proved a mission too far. As project manager for the first time, 22 year old Ben was more Dad’s Army Corporal Jones, than Iraq war Colonel Tim Collins.

The key to this week’s task was identifying correctly the value of a selection of items. They included an expensive rug at over £200, a first edition James Bond book, a medic’s skeleton, some valuable antique shoes, a bunch of old tat and two vats of jellied eels.

Sir Alan had pointed out there was a twist in this task all about selling: the twist being it wasn’t about selling everything, but selling the most valuable items. Judgement day in the boardroom involved subtracting the price items were sold for from their real value to work out a profit or loss.

Both Ignite and Empire sold very poorly and had no real concept of the value of anything. The spectacle of both teams hoiking a £200 rug around the streets of London finding it impossible to sell for a pittance was a great example of turning a silk purse into a sow’s ear.

Ben’s tactic, as the day drew to a close, was to offload everything by ‘finding some absolute nutcase and flogging it”.

Meanwhile Ignite team leader Philip continued to ignore Lorraine who rapidly identified the rug and antique shoes as worth a pretty penny.

He did, however, come up with the ingenious idea of selling a medic’s skeleton to punters in a pub opposite a London hospital. Amazingly, he actually found someone (not a medic) who’d wanted a skeleton all his life and stumped up £150 for it.

Back in the boardroom Ben’s team suffered defeat with a hefty loss of £169, while Philip’s team were also poor with a loss of £39.

When the losses were totted up and it became clear that both teams had completely missed the point of the task, the silence was deafening. The deathly hush wasn’t only the quiet before the storm, it was also recognition of abject failure.

Classic moment for me this week was the look on Sir Alan’s face when Margaret accused Lorraine of being the ‘Cassandra’ of the team (someone everybody refused to believe). His expression was a combination of horror, confusion and strain, like a man trying to give birth to the complete edition of the encyclopaedia Britannica.

By this time Ben was all at sea – so indecisive that he couldn’t work out who to bring back into the boardroom, opting for Noorul (safe bet) and then James before heading back to Debra who’d already received a dressing down by Sir Alan for abusing ‘him’, by which he meant Nick.

Sir Alan speculated that Ben was a broken man, before fixing on Noorul who he’d clearly wanted to sack weeks ago.

The battle was over, but the war goes on.

Quote of the week from Sir Alan describing Ben: “Your mind is like concrete. Thoroughly mixed, but set in its ways.”

Business lesson of the week: no point pricing everything, if you know the value of nothing.

Imagine if cult comic Viz had created an animated cartoon version of a North East David Brent doing the famous Office dance.

Got it? Well then you’ll pretty much have pictured estate agent Philip Taylor’s extraordinary ‘Pants Man’ performance in Episode 5 of The Apprentice last night.

In what’s become a classic task format, Ignite led by Kimberly, the rough tough cream puff from New York, and Empire led by Kate took on the challenge of devising a character, brand and TV ad to promote a new breakfast cereal aimed at children and their health conscious parents.

The final ad, box and cartoon would be presented to agency big-wigs at McCann Erickson. They’d then advise the famously advertising-sceptic, Sir Alan, who’d have, as always the final say on who won.

And his decision couldn’t have been easier.

Kate’s team rapidly settled on Treasure Flakes as a brand name, devised a pirate parrot character, worked closely with a designer to create some good packaging and shot an advert which, while not inspiring, was OK.

It all seemed too perfect. The only tension came when Kate upset Yasmina by vetoing the female singer on the ad jingle to replace her with team-mate Ben, later described by Sir Alan as “a hoarse Ian Paisley”.

It was going so well for team Empire in fact that James with a sense of sheer exhilaration about being in a jingle recording studio said:

I feel like a monkey learning to use tools.

Fortunately for him all the real monkeys and all the real tools were in the opposing team.

As much as the production team tried to build tension with careful editing, there was only ever going to be one loser last night.

Team Ignite’s efforts were to use Sir Alan’s words “a total piece of rubbish”, although I suspect that wasn’t how he’d normally have phrased it.

Nevertheless, Philip Taylor will go down in the annals of Apprentice comic highlights for single-handedly creating Pants Man, which was only marginally more palatable for an audience of children and parents than his original cereal killer suggestion.

The Pants Man concept was simple and easy to grasp, like all good brands:

a breakfast cereal called Wake Up Call is so good that it makes you want to ‘dance in your pants’, but not emulate the cartoon hero Pants Man who apparently has no Wake Up Call in the morning and therefore wears his pants on the outside of his trousers, like a superhero, something you wouldn’t want to be after eating healthy cereal which would make sure you wore your pants the right way around i.e. underneath your clothes.

The health benefits and appeal to kids are, I think you you’ll agree, indisputable.

The rest of the episode was pure comedy. Noorul was appropriately given the task of dressing up as Pants Man, Philip sang and Lorraine moaned seemingly alone in spotting that Philip’s idea was a dog.

Kimberly resolutely failed to lead or demonstrate any understanding of marketing or branding despite being a New York marketing hot shot.

She even managed to run out of time to brief the designer on box design, leaving him to make something up after a cursory call on her mobile.

The usual showdown was pretty predictable with Kimberly choosing chief critic of Pants Man, Lorraine, and his creator Philip to join her in the boardroom.

As Kimberly tried to defend herself, it rapidly became clear that Sir Alan thought everyone in New York was a psychiatrist, possibly having watched too many Woody Allen films as a youth in the East End.

And let’s face it, the last thing Sir Alan needs right now is a therapist …

Kimberly ultimately proved sickly sweet, rather delicate and largely hollow. And her doeist of doe eyes deserved instant firing, which she duly got.

Quote of the week came from Nick for: “They took logic and tortured it until it screamed.”

Business lesson of the week: laughing at your own jokes and turning them into brands is not big, and not funny.

This year’s Budget is increasingly being positioned as a matter of political life or death. But for many small businesses it’s more important than that.

Small business confidence

The O2 small business confidence survey of 3,000 SMEs released today highlights resilience and some cautious optimism with over a fifth of small firms expecting growth over the next six months (21%) and 66% determined to survive the recession.

A Forum of Private Business survey at the end of last week also showed some green shoots with 25% of their panel of SMEs saying they’d seen an improvement in the demand for their products and services over recent months.

Nevertheless that leaves a huge number of small firms feeling the pinch and living a precarious existence. Nearly half (49%) in the O2 survey said their confidence was at an all time low and the majority still cited cash flow as their biggest threat to survival, with 62% seeing scant improvement in bank lending behaviour.

An SME survival divide?

Both anecdotally and from surveys it looks like there’s a small business divide appearing. At the centre perhaps 50-60% of businesses are doing what it takes to survive and although this may be the worst recession for 60 years, they are quietly confident of getting through tough times.

But at the extremes, there are 20% who will flourish during recession and 20% who are in serious danger of sinking.

It’s very much a thrive, survive or nosedive outlook.

Budget leaks

Treasury purdah is dead and these days most of the Budget is heavily trailed. In a carefully and clearly briefed piece in the Financial Times last week, the government put a scheme to top up supply-chain insurance at the heart of its Budget response to SME concerns.

Andrew Jupp at accountancy firm Tenon suggested to me that this move was valuable as part of the overall efforts aimed at small and medium sized businesses.

But he also pointed out that just like the Enterprise Finance Guarantee (EFG) Scheme we’ll only be able to judge its real impact when we see how it’s implemented and how many businesses are, in practice, able to benefit from it.

The Telegraph has also hinted at business-related moves expected in the Budget.

These include tweaks to Export Credit Guarantees, a temporary increase to £50,000 in the annual investment allowance, but no immediate support for high tech companies struggling as VC funding has fallen by 70% in 2008 alone.

What SMEs really need from the Budget

All these elements are relatively minor and perhaps indicative of the huge debt government is increasingly saddled with.

But when it comes to the crunch most small businesses focus on cash and tax, if you ask them what they want from the Budget.

Budget 2009 - the small business twitterati speak!

A quick poll of Twitter found startups, SMEs and freelancers focusing on cuts in National Insurance, extending the VAT threshold, amending corporation tax rates to benefit small, rather than big businesses, more pressure on banks to lend and incentives for investors, like extending tax relief on the Enterprise Investment Scheme.

Meanwhile, The Federation of Small Businesses (FSB) has a whole raft of Budget proposals including resurrecting a post office bank and the introduction of a ‘corporate mediator’ to intervene in disputes between banks and their business customers.

It also points out that National Insurance and basic rate tax thresholds have fallen behind increases in the National Minimum Wage. This means benefits for the employed, benefits for the Treasury and SMEs being £8.28 a week worse off per employee.

So, in common with many businesses it’s calling for an increase in the NI and tax thresholds.

Others want to see the temporary VAT reduction extended to avoid more administrative headaches in the run-up to Christmas.

The FSB also proposes automatic business rate relief (less than 50% of small businesses eligible actually receive it at present) and reform of the AIM market for growing businesses.

AIM needs help

AIM and many of the growth businesses listed on it are suffering badly since the banking crisis hit home. It’s seen a 34% drop in the value of trading in 2008 compared to 2007 and IPOs are a sixth of what they were.

As a result both AIM itself and the FSB want to see Venture Capital Trusts allowed to participate in trading on the market to help increase support in public equity funding for smaller businesses.

Heads will roll

This year’s Budget is bound to be shrouded in nitty-gritty, indecipherable detail.

But SmallBizPod will be recording its regular Budget podcast so look out for it on Wednesday afternoon for some clarity on what it means for your small business.

Finally, as one surreal twitterer responded when I asked him what he wanted from the Budget: “Bring me the head of Alfredo Garcia”.

No doubt opposition parties will be calling for the head of one Alistair Darling. Whether the clamour will be added to by small business owners after Wednesday remains to be seen.

[Update: Take a look at our analysis of what The Budget means for small businesses and our annual Budget Podcast for more information and advice]

So farewell Noorul. Teacher, chemist, ditherer.

Never has The Apprentice seen such an indecisive project manager do so little and grasp the basic tenets of business less firmly.

Hardly surprising then that nice Noorul would come to an end as sticky as the lump of honeycomb at the centre of his team’s very soft soap.

Except … his team won and he survived, much to the clear disappointment of Sir Alan who had selected him specifically for a culling by asking him to lead team Ignite following another reshuffle.

So much for the best laid plans of mice, men and knighted belligerent bosses …

The teams began at Kew Gardens for a glamorous botanical clue to this week’s challenge. They then headed down to an industrial estate in Poole to design, produce and sell two natural beauty products.

In his candidate profile, Noorul claims he’s ‘not all talk’. And he certainly lived up to it by saying nothing more than a few umms and errrs as he left his team to it in the tricky selection of natural ingredients for their soap and bubble bath.

Meanwhile Paula was leading team Empire which looked destined to savour the sweet smell of success.

Their seaweed and sandalwood soap and shower gel looked and clearly smelled divine. Their Rock Poole branding was really rather clever and subtle packaging impressive.

But then came one small error made by Yasmina and Paula. Sandalwood was a luxurious £1000 a litre while Cedarwood was cheap as wood chips.

The two got confused with names, weights and measures and thought £5 had bought them a luxury half litre of the more expensive scent.

Sir Alan’s cardinal rule, ‘buy for pennies, sell for pounds’ was in tatters. On having their mistake pointed out by a rueful Nick, the horror on Yasmina and Paula’s face was clear.

Blame game Ben on the other hand – also delegated with Yasmina to keep control of costs – began his ‘I wasn’t there’ defence almost immediately.

Meanwhile, when the teams hit the streets to sell, Noorul again demonstrated breathtaking incompetence, dither and literal lack of direction by getting his team lost in London.

After the scandal of sandalwood, Empire did pull together to do a great job selling, but all in vain as costs eliminated profit and gave them a £68 loss.

So Noorul and Ignite escaped boardroom ignominy.

The boardroom battle was brilliantly played by Yasmina. Staying stum while Ben blathered. Offering compliments while Ben blazed abuse. Politely admitting responsibility while Ben blamed others. Sticking the knife in Paula clinically, while Ben bludgeoned.

Her potential fall from grace only demonstrated her potential for success. Ben’s defence of himself clearly got up Sir Alan’s nose, but he was saved for entertainment value, I reckon. Paula Jones got the boot. Unlucky.

If anyone was in any doubt of Yasmina’s powers you only had to watch the final scene as she and Ben returned to the house.

Her honesty about having to turn on Paula in the boardroom, how she’d have done the same to anyone and her ‘get on with it’ attitude left sensitive Mona in tears of pure fear.

Classic quotes were a little thin on the ground this week, but my favourite goes once again to estate agent Philip for “Kimberley’s as dumb as a doorknob” and his cheeky sushi restaurant quip “I wonder who he’s going to sake”.

Business lessons of the week: buy for pennies, sell for pounds and never forget, business is unpredictable.

Let’s get the mandatory boxing analogies out of the ring right away.

Rocky, my hot tip to be dodging and weaving his way to the final bout of The Apprentice in ten weeks’ time, has suffered the blow of a technical knock out in round two as the ref decided he could take no more punishment.

Personally, I was hoping Rocky Andrews, at 21 the youngest of the competitors this year, was playing an elaborate game of rope-a-dope in episode 2 of The Apprentice last night.

As the owner of 15 sandwich shops in the North East he was the obvious choice of project manager for a task which pitched the two teams into catering for high-fliers in the City.

A young contender waiting to prove himself, Casius Clay-like before an expectant world.

But in the opening seconds he looked wobbly as the ludicrous 2012 Grecian toga and gold lamé idea perpetrated by smirking team mates landed flush on his chin.

Moments later he swayed back onto the ropes as the only other person in his team with catering experience, Howard Ebison, suggested £60 a head was the going London rate for cheese on a stick.

But when the moment came to sway off the ropes and deliver a clinical one two, poor Rocky proved this was no Rumble in the Jungle re-run.

Decision one to take gobby James into the boardroom with him followed by decision two to take Howard proved fatal.

Other than leading him on, James had done nothing obviously wrong and showed his dismay at being selected with the classic line:

I honestly feel like I did when my cat died.  It hurts inside.

Howard, other than leading him on had also done nothing obviously wrong and Sir Alan had little choice but to put Rocky out of his misery, particularly as under his leadership the team had made a loss.

In fact, I reckon this was good news.

Rocky was the only real entrepreneur in the whole show and will, I’m sure, do much better for himself now than he would have done by progressing.  I think Sir Alan recognised that too.

Meanwhile, Yasmina Siadatan leading the girls team and a restaurateur herself proved she had more balls than Gordon Ramsay.

Forcing her team-mates to shout ‘yes chef’, taking dictatorial control over all decisions, and flogging cheap tuna and tomatoes for ridiculous prices, proved she is a real contender, rather than a could have been.

As one of her team said:

The food looks like it’s come from a funeral at a working man’s club.

Yasmina didn’t flinch.  I wouldn’t want to eat in one of her restaurants though.

Business lesson of the week: lead from the front, sell cheap stuff expensively and sod the customer.

When it comes to software as a service (SaaS) there’s a lot of speculation about small business demand.

But one thing is very clear, there’s no shortage of supply and the SME cloud computing land grab is on. There’s gold in them there hills.

Only today Alibaba.com subsidiary, Alisoft, announced the launch of free internet-based management software known as Shopkeeper.

The service comprises accounting and finance modules at launch and will be offered free to Chinese SMEs – all 42 million of them.

While it has to be said Chinese internet penetration means only a small fraction of that market will have access to Alisoft’s service, there can be no denying Alibaba.com’s ambitions in this area.

According to Reuters, the company plans to spend $146 million on promoting Shopkeeper to Chinese small businesses over the next three years.

Beyond China all the mainstream players clearly see the future of software in the cloud too.

Microsoft has Live and Azure. Google is already there, of course, with Docs, while hosting companies like Amazon and Rackspace also have massive vested interests in seeing utility computing (paying for what you use, when you want it whether it’s software or virtual hardware) succeed.

Meanwhile, the IBM-led open cloud manifesto betrayed a certain cack-handed attempt to regain commercial ground under the guise of openness. [Update: looks like a more harmonious approach may have broken out today after all].

And it’s not just the big guys.  Look at the flowering of SaaS accounting offerings in the UK. 

Kashflow kicked off the trend, but there’s also FreeAgent Central which only last week secured Angel funding, Clearbooks, Bionicbook and Cashboard. Look a little further afield and you could also add WinWeb, Twinfield, Zoho, Quickbooks Online, Freshbooks and imminently Sage Live.

Looking pretty crowded for such a new market, don’t you think?

So I believe supply will create, if not dictate, demand and do so quickly. Cloud computing for small businesses is already a fait accompli.

In just two years over 50% of UK small businesses will be using some form of software as a service, in my opinion.

This despite the fact the self-proclaimed largest UK provider of SaaS accounting software to SMEs, Kashflow, currently has just 3,000 paying customers.

So what’s going to spur such a rapid uptake?

Well, the the benefits of small business cloud computing have been set out well by Davids Tebbutt and Terrar on this blog recently.

But there’s something else – when SaaS becomes invisible, it will become the status quo.

Two years ago now I anticipated google gears before it appeared. Syncing between the cloud and the desktop was always going to be the killer app in terms of SME adoption.

Of course, both Google Gears, Microsoft Live/Azure and Zoho now have seamless sync, albeit a little unpredictable. But once the transition between online and offline, desktop and web are indistinguishable, SaaS to all intents and purposes becomes invisible.

The really big players will roll out adoption by default to small businesses. Several traditional small IT providers I spoke to today who you’d expect to be flogging hardware and software in boxes were already extolling the virtues of cloud computing. The groundwork is being laid.

Synchronisation will also be the key for the plethora of smaller software as a service vendors out there now.

Without rapidly making the online/offline boundaries invisible, they themselves run the risk of disappearing from view.

Let the pantomime begin.  Sixteen (minus one) new candidates like lambs loitering in the middle of the Limehouse Link road as Sir Alan’s Roller hurtles towards them.

As the fifth series of The Apprentice kicked off, it was obvious the production team had done the usual by selecting a motley array of business no-hopers and sociopaths.

The script writers on the other hand had excelled themselves.

Sir Alan’s opening salvo was classic Suralan.

“Someone’s already bottled it”,  “Pressure is what business is all about” and the hilarious:

“I’m as hard to play as a Stradivarius.  You lot are as easy to play as bongo drums.”

It’s as if you’re witnessing a whole new business vernacular evolving before your eyes.  A cross between buzzword bingo and  White Hart Lane terrace banter.

Sir Alan, the Stradivarius with his bongo backing band

But it wasn’t just Sir Alan who had the good lines.  The candidates had clearly polished their sound bites too.

The trailer had already given us “Business is the new rock ‘n’ roll and I’m Elvis Presley”, from estate agent Philip Taylor, and “To me making money is better than sex” from ‘rebellious stockbroker’ Ben Clarke.

But there were more gems tonight.

Kimberly Davis quipped “I’m a rough tough cream puff from New York”, immediately endearing herself to me and dooming her to failure.

While ruthless Debra Barr came up with a phrase that could, even at this early stage, mark her out for the final three:

“If she doesn’t take me to the boardroom, it’ll be a waste of a good suit.”

The challenge, setting up a cleaning business with up to £200 to spend on kit, was a remarkably dull affair.

Business lesson of the week: keep your costs down.

The girls’ team, Ignite, spent nearly all of its ‘budget’ and the passive lawyer in charge of the calculator, Anita, copped it for, well … being a lawyer and playing the ‘I was only following orders’ card.  Never a good option with a Spurs fan.

Empire project manager, Howard Ebison, was weak and doomed, although the boys won.

Ignite project manager, Mona Lewis, was disorganised, but despite her avowed integrity played a blinding divide and rule card in the post match analysis at the Bridge Street café before heading back to the boardroom.

All in all a low key start to the new series, but with some memorable lines.

My early bet on the final three: Rocky Andrews, Debra Barr, Yasmina Siadatan.

Capitalism as we know it is dying. Even the rays of hope offered by clinically insane social entrepreneurs are being engulfed in the restorative flames of change.

But things will get much worse before a Phoenix Economy rises from the ashes of what is a very significant moment in history.

Not your average starting point for a conference on entrepreneurship.

But then the grandly titled World Entrepreneur Society (WES) summit is not your average event and John Elkington, doyenne of corporate-responsibility and sustainability for the last 30 years, is not your average speaker.

Challenging - John Elkington of Volans

John, famous for coining the term ‘triple bottom line’ and founding partner of social innovation consultancy Volans, delivered the above economic outlook in one of two opening keynotes, the other offered by Microsoft’s European Chairman Jan Mühlfeit.

Over the last six months, I’ve witnessed several high profile social entrepreneurs incite revolution, jubilant at the mess left behind by the crisis in the global banking system.

This is a crisis too good to miss. And like any good entrepreneur, many a social entrepreneur can sense an opportunity.

As Big Issue Chairman Nigel Kershaw asked one panel, are you reformists or radicals?  One sensed that reform might not be the preferred answer.

So, the challenging, revolutionary zeal of John was perhaps as unsurprising as the dismissing of the ‘capitalism is dead’ shtick by Jan Mühlfeit, born and educated in communist Czechoslovakia before working his way to the top of Microsoft’s corporate greasy pole.

Other panels during the day oscillated between realism, fear and entrepreneurial optimism in the face of recession-based business opportunities.

With practical sessions running in parallel it was impossible to get to everything.  But for me one of the most inspiring parts of the day, was learning more about initiatives in Africa designed to stimulate entrepreneurship, creating real, sustainable economic value, rather than an addiction to aid.

Jean-Francois Ruhashyankiko of the Rwanda Enterprise Investment Company, for example, was building sustainable businesses for locals by spotting opportunities linked to aid-based flows of money.  For example, an irrigation company built to support charitable investments in agriculture.

Entrepreneurial education was also a major part of the plan for Jean-Francois, as it was for another delegate who had recently won a contract to support and develop startups in Sierra Leone.

Carlo Tortora-Brayda Di Belvedere of Alchemy World was also inspiring, but realistic about the political challenges faced by his social enterprise in Ethiopia.

Mobile communications are playing a big part in the development of business across Africa and it was no surprise to find that two UK entrepreneurs, one social and one AIM listed had an eye on developing opportunities on the continent.

The day ended with a session from the inimitable Oli Barrett and David McQueen.

Playing balloon keepy-uppy with the senior economic adviser to the Rwandan government was a touch of surrealism I hadn’t expected, but it was certainly in keeping with the day as whole.

Earlier one panelist quoted Andre Gide:

One does not discover new lands without consenting to lose sight of the shore for a very long time.

There were plenty of moments when WES09 felt like it had set sail.  Whether you smell the whiff of economic revolution in the air or not, we’re all certainly in uncharted waters right now.

And ultimately Gide’s quote embodies what so many entrepreneurs face and what the conference last week celebrated.

An appropriate thought to hold in your mind whether or not you consider your own entrepreneurial journey an act of insanity or the way to make a real difference.

Saving money for SMEs

We’re always getting sent special offers and deals for small businesses here at SmallBizPod.

Many of them are thinly veiled marketing stunts with little real value to startups or SMEs.

But every now and then I stumble on thinly veiled marketing stunts that actually are worth looking into, if you’re looking to save a little money for your business.

So, the long and the short is I thought I’d initiate a money saving tips blog post once in a while.

The idea is to include one cost cutting nugget of wisdom and a selection of deals and offers that make sense.

The downturn means all businesses are looking to save money and while we can but aspire to reach the heights of moneysavingexpert.com in the consumer space, it would be good if we could create a network of people keeping an eye out for deals that might help keep costs down.

If ever any of the deals involves an affiliate link, we’ll always mark it with an (a) so you can choose whether to avoid it or explore the deal anyway knowing you may in some small way help support SmallBizPod.

So, enough of the preamble.

Money Saving Tip #1

One of the most simple, but effective pieces of advice I’ve come across recently is from Andrew Griffiths who says every year he looks at how he can cut 20% off his business costs.  This isn’t always as hard to achieve as you might think.  

Costs creep up imperceptibly and knocking them on the head annually is a smart idea in a recession or otherwise.

FreeAgent Central

The online accounting service for freelancers, FreeAgent Central, got in touch to say they’ve just released a new version.  This cloud based solution certainly looks very beautiful as well as being fully functional for the needs of freelancers in particular.    

Not sure whether beauty is that important when it comes to doing your accounts, but if you own a Mac, you’ll probably want to check it out.  Seriously though it works on Mac, PC and Linux – part of the beauty of software as a service.

As a SmallBizPod reader, try out the free trial before the end of February and, if you like what you see, you’ll get 25% off your first six months by using the code ‘newfac’.

Business IT Online Store

Last week saw Busness IT Online the software as a service suite for SMEs which recently hit 40,000 registered users introduce an online shop for office supplies (a).  They claim all 20,000 items are heavily discounted, so it should be possible to pick up some bargains, if you’re looking for office stationery or furniture.  

Certainly an interesting idea to mix the software as a service model which is the core Business IT Online offering with the selling of tangible products too.

Digital India and Digital China Conferences

Finally, our friends at Chinwag, working in partnership with UK Trade and Investment, are putting on two conferences aimed at digital businesses looking to understand and enter the Indian and Chinese markets.

The one day conferences take place on 3rd and 4th March with early bird discounts on tickets availalbe for Digital China until 2nd March and Digital India until 27th February respectively.

****************

If you know of any good bargains for small businesses, do get in touch.

It seems like only yesterday borrowing was easy, banks made obscene profits and there was a never ending supply of money to meet our voracious appetite for consumerism.

Like George Best and Miss World in a hotel room full of cash and champagne, we had it all. But somewhere from a quiet corner a voice was telling us that it was all going horribly wrong.

And so today we’re faced with recession, while freudian slips suggest the ‘r’ word could succumb to the ‘d’ word before the year is out.

Errol Damelin, founder and ceo of Wonga.com

A strange time then for a web startup with an in your face name for cash, Wonga, to be attempting to do what some of the largest most sophisticated financial institutions in the world have failed miserably at – lending money with minimum risk.

To be fair to Wonga and its ceo Errol Damelin, the service launched over a year ago when borrowing money was de rigeur, rather than a question of survival.

Nevertheless, one might reasonably ask has this startup got its timing all wrong?

Errol, a serial entrepreneur whose supply chain software business straddled the dot.com recession of 2001, is remarkably sanguine. He says:

As an entrepreneur you don’t pick the environment you have to work in.  You start to build a business when you have an idea and usually it comes to fruition in a different economic cycle.  You have to make the most of the cards you’re dealt.

The credit crunch might superficially look like a good hand for a business in the business of lending small sums.  

Wonga typically gives its customers a near instant decision on short term lending of a few hundred pounds.  

A kind of mini-bridging loan for people who’ve forgotten that pay day is a week away, but still want to take their loved one out for a slap up meal on Valentine’s day anyway.

But here’s the rub.  Short term money is expensive money. That’s good for Wonga’s bottom line, but may be hard to swallow for many who would otherwise be potential customers.

The OFT demands Wonga displays an APR

Legally Wonga has to display a typical APR (annual percentage rate) which makes sense for bank loans or credit cards, but looks like a Zimbabwean inflation figure when applied to short term borrowing.

Annual compound interest of 2,334% is a scary figure indeed. But over the short term, if you borrow £135 from Wonga today, you’ll have to pay back £135 plus £26.29p 15 days later. Cheaper perhaps than punitive unauthorised overdraft rates charged by some high street banks, but still a hefty hit.

But this is micro-lending to people who can afford it.  Wonga is clear they are responsible, transparent lenders and for each loan taken out with them, they give a £1 interest free loan to Kiva, the micro-finance initiative which helps grass roots entrepreneurs in developing nations.

They are not offering a service to desperate individuals. They are lending to people who judge paying for the convenience of cash now, rather than later, is worth the price.

As Errol says:

It’s not dissimilar to catching a black cab.  Of course the tube or bus will be cheaper, but every-now-and-then a taxi’s more convenient, if considerably more expensive.

Not a bad metaphor. In fact, Errol admits that Wonga only lends to 1 in 10 people who apply through the site.

Which begs the question, are there really that many people out there right now who will want to pay a large charge for a small amount of money once in a while?

If younger people with disposable incomes start counting their pennies more carefully, then Wonga might be seen as an unnecessary expense.

Conversely if the service takes off dramatically, it might find the credit crunch starving it of the cash needed to lend on a large scale, even if profitably and at low risk.  Wonga’s ceo acknowledges this may cause them issues and restrict growth, if the lending markets are still frozen in 6-12 months time.

Wonga’s investors which include Balderton Capital (formerly Benchmark) must nevertheless be attracted to the cash-generative potential of the business (which already turns a profit), but also to the back end technology that takes the whole concept beyond simple money-lending.

Which brings us back to Errol Damelin’s first foray into business in Israel where he joined a founding team to build a new steel plant. 

A massive contrast to the low overhead, speedy startup world of the web, this was a big, capital intensive project.  But what it taught the Wonga ceo in his formative business years has clearly had an impact.

He has a strong sense of meeting the demand of real customers and a passion for planning, managing and automating complex supply chains to scale.  As he says:

If I hadn’t had that strong manufacturing background, I don’t think we’d have conceptualised Wonga in quite the way we did.

This attention to process and automation manifests itself in the apparently sophisticated algorithms behind Wonga. They’ve been designed to manage the risk of lending by lightning fast assessment of the credit-worthiness of customers and nimble analysis of data around their repayment behaviour.

The potential value of this intellectual property, if proven to work effectively, is clear.  

Selling short term loans is one thing.  Improving risk management in banking is something else altogether. 

You can almost hear the VCs at Balderton Capital licking their lips at the prospect.

In this historic week I’ve been trying to resist the temptation to jump gratuitously on the Obama blogging bandwagon.  Well, I held out until Friday!

Obama - the perfect president?

Despite my best efforts Obama’s inauguration has been playing on my mind. In particular his stumbling oath, followed by his powerful speech.

That and the experience of seeing him speak unscripted when he’s often thoughtful and a little hesitant – sentences punctuated by ums and errs.

It reminded me of something I’ve always called the ‘power of imperfection’.  What do I mean?  Well it’s the glimpse of the human behind the super-human.  The man or woman behind the machine.  That peering behind the curtain in the Wizard of Oz moment.

It’s often easy to believe that business, or politics for that matter must be ruthlessly efficient.  Both worlds are often described in terms of ‘machines’.

But the fact is however efficient your processes and systems are and ought to be, business is always intensely personal.  And entrepreneurs and small business owners recognise that above all.

The necessary systems of larger businesses often get in the way of their relationships with customers.  The computer says no.

Good small businesses don’t have this problem.  As Irish entrepreneurial coach, Kevin Kelly said to me in a recent podcast, you should turn customers into friends.

Which brings me to Pullitzer prize winning poet Robert Hillyer who said:

Perfectionism is a dangerous state of mind in an imperfect world.

There’s certainly been no shortage of the imperfect in the world in recent months.

But the power of imperfection is not about focusing on weaknesses, giving up on the idea that you can make things better or making do with competent.

It’s about recognising and acknowledging the human – frailties, ambition and that drive to make progress.

A leader who can build confidence, loyalty, inspire people with a vision and reveal his or her common humanity to connect on a personal level, is a strong leader. A leader that in many ways evokes the essence of the entrepreneurial.

Obama, right now, is achieving that.  He is the embodiment of the American dream, as many have said over the past few days, but he’s also the embodiment of the US entrepreneurial spirit.

So for this week at least, despite the gloom, let’s raise a glass to the new President of the USA, to the American people, and use their example to reaffirm our own spirit of enterprise and our own business hopes and dreams.

[Picture credit: Steve Rhodes licenced from Flickr]

Once in a while, like a Dr Who regeneration, SmallBizPod’s website undergoes a transformation and a new year seems like a good time for a change.  Talking of which Happy New Year to one and all.

SmallBizPod - regeneration, not time travel

I hope you enjoy the new look site which takes into account a lot of your feedback.

I reckon it’s a lot easier to navigate now and with a bit of luck many of the gems hidden away in previously dusty archives are also easier to rediscover.

Do let me know what you think and if you spot any weirdness, shout.

But it’s not just a cosmetic change.  I’m really pleased that we’ve been able to launch a new section called SmallBizPod Sevens.

‘Sevens’ lets you share your own business knowledge in, you’ve guessed it, seven business tips.  Why seven?  Well, everybody’s busy and seven’s a smaller number than 10!

Seriously though, I believe it’s vital that small businesses and entrepreneurs support each other, now more than ever.

The new site gives you the chance to raise your profile here at SmallBizPod as well as giving your karma a boost as I’m sure your insight will help others starting up and looking for business answers.

The site’s very easy to use.  You can have  a profile and your own seven pearls of wisdom uploaded in just a few minutes.  Check the link for more details on how to contribute your business tips.

The other wonderful thing about up-dating SmallBizPod behind the scenes is the marvel that is WordPress, the open source blogging software, which is rapidly becoming a fully fledged content management system and publishing platform.

Quite apart from it pleasing my inner geek, WordPress is another beautiful example of the power of open source projects and their scope to generate flourishing businesses around them out of community, generosity of spirit and borderless collaboration and innovation.

Now before your accuse me of rose-tinted, hippydom, I know that open source projects have their fair share of back-biting, factions and flame wars.

Fundamentally, however, the best simply route around major problems or fork into separate, interesting projects.

So it’s back to the network being more powerful than the node.

And, in my humble opinion, it’s the network of small businesses and entrepreneurs and the positive, can do spirit of collaboration found in the best open source projects, that is going to get us all through these turbulent times.

[Picture credit: benleto licenced from Flickr]

Working from home is clearly going to become more popular.  Companies will want to cut overheads, staff will want to spend less time and money commuting and many more will be on the market to set up businesses from home.

But the real smart cookies know that home may be where the heart is, but it’s also full of family distractions.  Bring on the shed.  The marvellous Shedworking blog, written by Alex Johnson, is a lifestyle guide to the art of working from that traditional garden haven or should that be heaven.

Well worth a look, not only for plenty of practical advice, but also if you’re into shed porn – that’s a passionate interest in the sheer range and quality of sheds, nothing smutty.

Early yesterday afternoon I found myself sitting opposite Doug Richard who had graciously agreed to do an interview for the SmallBizPod podcast (now released).  He was generous with his time, but as we chatted in The Hospital Club in London, it transpires that the company he is best known for was itself in intensive care.

Doug Richard - Library House hits the rocks

Reports in Paid Content a few hours later and then today in East of England publication Business Weekly broke the news that Library House has in essence gone bust.  Short of a last minute rescue package it will enter administration.

The conversation I had with Doug, particularly a discussion about cutting costs to survive a downturn now seems particularly poignant.

And not just for the ex-Dragon and Tory adviser on business support himself, but for all those who’ve lost their jobs at Library House and TruTap, another Richard business in trouble as reported by Techcrunch UK earlier this week.

Having mentioned I was interviewing Doug on Twitter yesterday, I received an email from an anonymous, but apparently well informed source, who claims that another company Richard chairs, VizWoz – a virtual community for teens – is also in trouble.  I have no way of substantiating this rumour, but if it proves true, Doug could be facing the kind of media storm that another celebrity entrepreneur, Rachel Elnaugh, endured when Red Letter Days went bust.

All of which is very sad, but I suspect par for the course when it comes to the kind of high risk investments that entrepreneurs like Doug Richard are used to accepting.

Nevertheless, the extraordinary economic situation has clearly helped to dent the former Dragon’s strike rate.  As he said to me yesterday:

I’d consider myself a base hitter so far (to use an American baseball term).  I start them, I grow them, I sell them.  My name hasn’t been attached to a YouTube, my name hasn’t been attached to a Google, so I’ve yet to view myself as a success.  One of these days I think I’ll hit a home run and I’m still working on that.

When one of Britain’s best known entrepreneurs has a week like this one, it’s clear that others in the web and technology industry are going to face similarly tough times.

Batten down the hatches.

[Picture credit: Benjamin Ellis @ Flickr]

I used to love the idea of the Treasury going into purdah before the Budget, like some mysterious veiled woman from the East.

But these days, not only is the Pre-Budget Report (PBR), for the second year running, shaping up to be the real star of the show, rather than the Budget proper next Spring, but Gordon Brown and Alistair Darling are also leaving very little to the imagination.

Gordon Brown leaving nothing to the imagination in the Pre-Budget Report

Posing for cameras tonight with pre-printed copies of the PBR in hand, the Chancellor and his team looked more like Man Booker hopefuls, than the custodians of fiscal policy that could change the shape of Britain for many years to come.

At the end of last week, the usual predictions and exhortations were being made by accountants and small business groups.

As early as Thursday, Gary Harley, head of indirect tax at accountants KPMG appears to have nailed one of the headlines for tomorrow:

There is growing speculation that VAT will be cut.  The UK could reduce the rate to 15 percent without any legal issues arising.

Although he goes on to suggest it’s hardly the targeted tax cut expected, it does of course put money in people’s pockets and also benefits small businesses.

It seems certain, however, that the rate will bounce back to 17.5% after a year or so, once the medicine has taken effect.

This give now, take back later approach is clearly going to be a theme.  The media’s awash with reports that the rich will be taxed at 45% by 2010 in order to help pay for a total Pre-Budget Report spending package expected to be £16 billion.

The always insightful Andrew Jupp of accountancy firm Tenon, dismisses the idea of a cut in VAT (good job he’s not a betting man), but goes on to highlight key issues for small businesses which he feels we could see tomorrow:

What I would like to see is a permanent back-down on the so-called income-splitting rules, so that family businesses can get on with creating profits rather than worrying about how they will be taxed.

He then encourages the Chancellor to abolish the increase in corporation tax for small companies which has crept up by 2% over the last couple of years.  Both these suggestions are just and plausible.

Most radical and certainly most welcome is the Federation of Small Businesses call for a £1 billion survival fund for SMEs in an open letter addressed to Alistair Darling.

Having said that this might as well be pie in the sky (despite British banks receiving a £500 million bailout) albeit a pie stuffed with hearty chunks of lobbying goodness.

So will there be a ‘rabbit from the hat’ of cliché?  Well, it seems unlikely.

What is surprising to me is the spend, spend, spend short term solution that’s shaping up, before we hit pay back time around 2010.

Is this political expediency, an attempt to defer the real pain or the only possible solution in extraordinary times?

I’ve no idea.  How about you?

[Picture credit: World Economic Forum licenced from Flickr]

Here’s the first in a regular SmallBizPod series focusing on the top seven things you need to know about all sorts of topics that could benefit you and your business.  First to take on the ‘7 thing’ challenge is writer and e-commerce guru Dan Wilson.

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In the past year or two, eBay has changed enormously and many people seem less optimistic about eBay than in the past. Whilst it’s true that there are a lot of disaffected sellers, eBay is still Britain’s most visited ecommerce destination and I predict that will hold true in Christmas 2008 and through 2009. Despite the doom and gloom it represents an amazing opportunity for small businesses to tap in to. Whether you’re a novice or a seasoned PowerSeller, here are 7 things every eBayer should know:

BIN to win

Of all the major changes, the ongoing rise of Buy it Now/fixed price listings (BIN) is the most striking. BINs are growing faster than the auctions that made eBay famous and there’s good reason to believe that eBay will continue to push BINs harder in the quest for profits. The auction isn’t dead by any means but it is at risk of becoming the ugly sister to BINderella.

eBay is complex

In terms of pricing, policies and practices, eBay must be one of the most complex places to sell. Incremental changes and category specific rules are making the eBay selling experience ever more Byzantine. For instance, if you’re flogging DVDs you must offer PayPal and free P&P and you’ll pay different fees to someone selling books or collectables.

A seller has to be self-reliant and keep abreast of changes or otherwise risk being sanctioned by an eBay that is notoriously inflexible and uncommunicative with rule-breakers. The complexity of the rules are why sites such as Tamebay are so popular.

eBay is courting big retailers

eBay established itself as a person-to-person marketplace and a home for small business. No longer. Speculation is rife that eBay is not only courting big retailers but offering them preferential terms and fees. Is the level-playing field dead?

Feedback has never been more important

eBay’s famous Feedback system has been central to the company’s success and long been important to sellers. Now, a seller’s Feedback score and Detailed Seller Ratings (DSRs) form part of the ‘Best Match’ system that determines where your listings appear in search. Even a few poor ratings can detrimentally effect how visible your listings are to buyers. Maintaining your ratings is critical and getting started under the new regime is also more difficult. It’s best to start slowly and not stake your shirt on a fast buck.

It’s not just the price.

Whilst pricing is important on eBay, it isn’t everything. It is quite normal for different sellers to get better prices for identical items. The nature of search on eBay, which considers Feedback and a seller’s previous selling success to be important to how things appear in search results, means that cheaper sellers with less good records can be almost invisible to buyers who don’t seek them out. More than that, a quality listing with a winning item title, brilliant description, superior pictures and maybe even a vzaar video can clinch the deal by inspiring confidence when a cheaper option does not.

An eBay seller’s margin are in efficiency

The one commodity struggling eBay sellers don’t seem to value is their own time. Listing, monitoring, answering enquiries, posting and packing and everything else an eBay seller needs to do is immensely time-consuming so any tools, software and discipline that boost the bottom line are to be embraced. Time saved can be invested in developing the business or spent on that other rare commodity: leisure.

Look beyond eBay

eBay is just one channel you can sell on. If you can make money there, you can do it anywhere: the skills are the same. Consider Amazon, other marketplaces and setting up your own ecommerce website. I’ve never met an eBay seller who regretted branching out. But I have met loads who regret not doing it sooner.

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Dan Wilson is a writer and consultant specialising in online communities, ecommerce and internet marketing. Part of the team that founded eBay in the UK, he worked for the company between 1999 and 2006, latterly heading the Community team. He is the bestselling author of Make Serious Money on eBay UK and an eBay University presenter. He advises companies large and small about how they can make the most of the web. He blogs at www.wilsondan.co.uk.