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Tuesday, 8 January 2013

Entrepreneur, VC offers shortcuts to help startups be more successful

Suggesting there are shortcuts entrepreneurs can take to improve their chances of success would appear to refute Malcolm Gladwell’s popular “10,000 hours” theory.

But instead of picking a fight with the “Outliers” author, entrepreneur and fund manager Mark Hopkins is just trying to be provocative to get people to pick up his own book: “Shortcut to Prosperity: 10 Entrepreneurial Habits and a Roadmap For An Exceptional Career”.

“I’m not at all refuting Gladwell’s 10,000 hours,” confessed Hopkins, 53, who actually references Gladwell in the book. “The shortcut is really a way to get people to pick up the book and for me to say: ’If you do these things then you have a good shot at it, but it’s going to be a lot of work.’”

As far as the 10,000 hours goes, Hopkins has put in his time as an entrepreneur. After a career with Hewlett-Packard (NYSE:HPQ), Hopkins started his own medical device manufacturing company – Peak Industries – in 1996 and sold it nearly a decade later in 2004 for $44 million to Delphi (NYSE:DPH).

After that success, Hopkins, who describes himself as an “operations guy,” was looking to share his knowledge with other entrepreneurs and started up his own Denver, Colorado-based private equity firm – Crescendo Capital Partners.

“The motivation there was to continue to be involved in small businesses that we thought we could help,” said Hopkins, who targets companies with market capitalizations of $20 million or less in the health services industry.

Since starting the firm five years ago, Hopkins has switched from early-stage companies to more mature businesses: “We’re taking larger positions in small, boring, mature companies that we think we can help grow and operate better.”

He said one of the most important things successful companies share is what he refers to as “creative tension,” which emanates from founders who have a clear vision about where they are and where you want to be.

“Any entity that doesn’t have that clearly in mind is going to be wandering in the wilderness.”

The following is an abridged version of the conversation between Hopkins and Reuters Small Business:

What are some key takeaways for entrepreneurs from your experience and from your book?

The most fundamental thing about successful startups has to do with people. Startups only survive if they do something better, faster and cheaper than the other guys that are out there. The best indicator of whether you are able to do that or not, is the strength of the people you’re able to hire and how well they work together as a team. Do what you have to do to get the best people on the team and then use trust to cement their relationship. Teams that trust each other way outperform teams that don’t.

Every startup has a core group of leaders who are going to make great sacrifice and spend an inordinate amount of time with each other to make an organization a success. Choose them wisely. A good partner means someone who shares your values, balances your strengths, will work as hard as you do and is fun to be around. If you can do those things, you’ve got a wonderful opportunity to be successful.

Where do you see private equity right now and where it’s heading?

I see two different worlds in private equity. I see the really large private equity entities in the world – the multi-billion-dollar companies that are doing multi-billion-dollar deals – and that’s all about asset utilization and somebody having a better way to utilize assets that are captured in a big company. That’s not the world I play in. I play in the world that makes much smaller investments in arenas that we’re familiar with where it’s pretty clear to us how to operate those companies better.

I’m pretty bullish about private equity, because I always think there will be companies that are under-utilizing their assets. The amounts of leverage you’ll be able to attract through debt is going to be a lot different going forward than it has in the past, but that’s not necessarily a bad thing. It puts more of a premium on operating, which is more fundamentally helpful to the company.

A lot of private equity firms have been pretty outspoken about where they sit on the whole fiscal cliff debate. What’s your take on it?

I have a pretty moderate take on it. We’ve got spending problems that we fundamentally have to understand and begin to take actions to address. On the other hand we are historically gathering revenues that are under what it takes as a percentage of GDP to run our country the way we want to run it. We need both parties to come together. Somebody, or some group of people, has got to stand up. I listened to Erskine Bowles (Democratic co-chair of President Obama’s National Commission on Fiscal Responsibility and Reform with Republican Senator Alan Simpson) on a call the other day and was super impressed – he’s a Democrat I could believe in. I’ve heard Senator Simpson talk and I can say the same thing about him. If somebody would embrace the recommendations from a balanced set of knowledgeable guys like that, I think we can get this thing done.

Article source :http://uk.reuters.com

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Small businesses face holiday expense filing crunch

While many of us are making merry, it’s hardly the most wonderful time of the year for the accounting staffs at many small businesses.

A rush by employees to submit their expense claims so they can be reimbursed before the holidays, makes today the busiest expense-filing day of the year, according to data from online accounting services firm Concur (NASDAQ: CNQR).

New Year new Passion

On this day U.S. small businesses will process more than twice as many expense reports as the daily average. That’s a lot of unhappy accountants.

Putting off those expenses has a whole host of repercussions, including paying more money in federal and state taxes.

“It’s like sitting in a car and letting someone drive you down the Autobahn going 80 miles an hour with their eyes are closed,” said Nicole Fende, a financial consultant and president of the Small Business Finance Center. “You’re going to crash and it’s going to be bad.”

Fende added that every dollar not expensed costs a business roughly $1.35 in taxes. That figure is derived from adding up the 15 percent in Federal Insurance Contributions Act (FICA) taxes businesses pay to cover Medicare and Social Security costs, and the average 20 percent due in state and federal income taxes.

“If you have a dollar of income and you’re not offsetting it with a dollar of expense, the government will tax it at your effective tax rate,” said Fende, who added there are ways small businesses and self-employed individuals can mitigate this crunch.

Like we do with our children, Fende said offering a reward, or treat, is a good way to get employees to do something they don’t want to do, like filing boring expense reports.

For self-employed individuals, giving yourself a new book or even just a chocolate after the task is completed can make you “more likely to do it next time you’re required.”

If that doesn’t work the Web is full of free and paid services that small business owners can use to outsource the pain of accounting.

Concur offers subscribers the ability to take pictures of receipts with their iPhone and Android devices and submit them electronically, allowing employees to toss away their paper copies.

“That’s helped us to get rid of a whole lot of filing cabinets,” said Christian Metcalfe, co-founder of Seattle, WA-based data analytics startup Context Relevant, which uses Concur for all its accounting needs.

“In the ‘Moneyball’ example, this helps us keep our money on the field and be more efficient in how we’re running our business.”

Metcalfe, whose company is also paid by Concur to organize its data, said no software will eliminate employee procrastination when it comes to filing expense reports on time, but cloud-based services can offset the incidence of paper claims piling up on accountants desks.

Concur, also based in the Seattle area, estimates that inefficient manual expense filing is costing U.S. firms as much as $2 billion annually in additional processing costs.

That calculation is based on a recent study by the Aberdeen Group that showed it costs the average U.S. company $18 to process each expense report. The study also found that cost drops below $8 per report by automating the process through web-based applications.

Xero, a New Zealand-based accounting software firm with more than 110,000 paying customers, also offers the ability to scan receipts by phone and is attempting to get a foothold in the lucrative U.S. small business market.

Jamie Sutherland, who heads Xero’s U.S. operations, said the ability to “knock off” expense reports on the fly from such exotic locations as a cab or airplane makes the process more enjoyable.

“It makes it a little bit more fun and sexy to do expense management.”

However some small business owners remain reticent to try the new technology, preferring to store receipts in a shoebox and hand it over to an actual accountant.

Howie Statland, 41, who sells vintage guitars at New York-based Rivington Guitars, has an iPhone, but has yet to use it to scan a receipt or submit an expense.

“This is the only way I know how right now.”

Article source :http://uk.reuters.com

Monday, 7 January 2013

British Gas managing director to step down

Phil Bentley expected to leave post as owner Centrica announces outcome of strategic review

British Gas is set to lose its boss as the energy provider's parent,Centrica, prepares to announce the outcome of a strategic review.

Phil Bentley, managing director of British Gas.

Phil Bentley is expected to step down as managing director of British Gas over the next few months and an announcement could come as soon as Centrica's preliminary results at the end of February. At the same time the energy group will also announce the outcome of a three-yearly strategic review, encompassing its three main divisions of British Gas, an oil and gas production business that includes a significant North Sea presence and a US operation. Bentley, 53, joined Centrica as finance director in 2000 and was handed his British Gas role in 2007. Centrica declined to comment on Bentley's imminent departure but he is believed to harbour ambitions to become a company chief executive in his own right.

British Gas is a lightning rod for criticism over rising household bills as the provider of energy to 15.8 million customers. In November it implemented a 6% increase in household bills, a rise that it blamed on the cost of upgrading the UK's gas and electricity grids, rising wholesale gas costs and levies imposed on energy companies to pay for low-carbon alternatives. Nonetheless Centrica is expected to announce after-tax profits of £1.4bn in next month, with British Gas forecast to produce a profit of £575m.

Centrica's chief executive, Sam Laidlaw, also faces questions over the group's involvement in the new nuclear power station planned for Hinkley Point in Somerset. It is a junior partner in the project with France's EDF and a decision on whether to proceed with the £14bn project has already missed its year-end deadline. The decision is heavily dependent on how much financial support the government provides, through underwriting a minimum price for nuclear-powered energy.

Article source : http://www.guardian.co.uk

Sunday, 6 January 2013

UK service sector contracts for first time in two years

'Very disappointing' fall in activity in dominant economic sector raises fears Britain is headed for triple-dip recession

A shock fall in activity in Britain's services sector at the end of last year has put the economy on the road to a triple-dip recession, as economists predict the UK will be stripped of its triple-A credit rating.

The services sector – including banking, retail and travel – accounts for three-quarters of the UK economy

The services sector – which accounts for three-quarters of Britain's economic output – shrank for the first time in two years in December, suggesting the UK economy contracted in the fourth quarter. If output drops again over the next three months, the UK will fall into its thirdrecession in five years – an unprecedented triple dip.

Howard Archer of IHS Global Insight said: "This is undeniably a very disappointing survey that fuels fears the economy suffered a renewed dip in GDP in the fourth quarter. Given the dominant role of the services sector and the fact that it has recently been the healthiest part of the UK economy on the output side, the reported fall in activity in December is a significant blow for growth hopes."

The data came out as Citi released a report suggesting the UK economy will disappoint again this year and could lose its prized triple-A credit rating. Michael Saunders, economist at Citi, said Britain is likely to suffer from weak growth, inflation will stay stubbornly high, and the government will fail to make a substantial dent in the deficit. "With the public debt/GDP ratio set to surge further in coming years, we think the UK will lose its AAA rating in 2013," he said.

The closely watched CIPS/Markit purchasing managers index (PMI) for services dropped from 50.2 to 48.9 in December, below the 50 mark that separates expansion from contraction. It is the lowest reading since April 2009 and substantially undershot analyst forecasts of a rise to 50.5.

The survey snuffed out the glimmer of hope offered by data released earlier this week that showed a surprise jump in factory activity in December. But manufacturing accounts for just 10% of the economy and that release was followed by a dreary set of figures from the construction industry, which shrank much faster than expected. Markit said overall the PMIs suggest the UK economy contracted by 0.2% in the last quarter of 2012.

Chris Williamson of Markit said the weakness in services could continue into 2013. "Bad weather is likely to have played a role in dampening service sector activity in December, but the fact that incoming new business dropped for a second successive month suggests that underlying demand remains very weak and that activity may continue to fall in the new year."

Poor trading meant companies chose not to replace leaving employees, which led to a slight decline in staff numbers. Williamson said that means UK unemployment could soon start to rise again, as private sector lay-offs add to public sector job cuts.

The news will reignite the debate over whether the Bank of England is likely to expand its quantitative easing (QE) programme to try to kickstart the economy.

Archer said: "While the weak services purchasing managers' survey is unlikely to prompt the Bank of England's monetary policy committee into taking any stimulative [action] at its January meeting next week, it does reinforce our belief that further QE is more likely than not over the coming months. For now though, the MPC is likely to sit tight given current increased inflation concerns and signs that the Funding for Lending Scheme could be having a beneficial impact."

There was better news out of the US, where employers added 155,000 jobs in December, slightly ahead of expectations. But analysts said it was not enough to make a big difference to the unemployment rate.

Article source : http://www.guardian.co.uk

Smartphone sales to hit 1bn a year for first time in 2013

Accountant Deloitte predicts the smartphone will become a mass market phenomenon and an everyday object worldwide

The smartphone is predicted to become a mass market phenomenon this year, with annual shipments soaring to 1bn globally for the first time, although a fifth of the devices will rarely be used to go online.

In 2013 the smartphone will become an everyday object worldwide, according to a study by accountants Deloitte, bringing the number of active phones with either a touch screen or an alphabet keyboard to 2bn by the end of the year.

Despite soaring sales of smartphones, research suggests one in five owners will rarely, if ever, use them to access the internet

The everyday accessibility of what was once a luxury device will be made possible by falling prices and better mobile networks. The average selling price of an iPhone has remained above $600 (£370), puttingApple's gadgets out of reach for most buyers, but high performingsmartphones with good cameras, bright screens and fast processors are now available for a fraction of that cost from other makers such as HTC and Nokia.

Deloitte estimates 500m phones have already been sold for $100 or less, and initiatives to create $50 devices for emerging markets are under way.

However, research in several countries suggests one in five owners of these sophisticated portable computers rarely or never connect to the web. Hundreds of millions may not even bother to subscribe to a data package from their mobile network.

These devices will not be idle, but their owners will use them for the traditional mobile activities of text messaging, voice calling and taking the occasional photo.

"They are like [traditional] feature phones in a smartphone casing," said the report's author, the Deloitte telecoms research head Paul Lee. "Smartphone penetration goes up but data plan penetration doesn't go up as quickly. Not every mobile will be used in the same way."

Many phones in use will be older hand-me-downs, whose software is out of date and cannot cope with new applications and website graphics.

Older owners may have been put off going online by reading about high bills in the press, and many may be wary of the complicated data tariffs on offer. For many of those living outside cities, 3G internet connections are still hard to come by.

Article source : http://www.guardian.co.uk

Rolls-Royce accused of bribing a Chinese airline executive

Blogger alleges that airline executive accepted payments as intermediary in deal to supply aircraft engines valued at £1.25bn

Rolls-Royce is facing allegations that it paid bribes to an executive involved with two Chinese airlines, in the latest claims attached to a corruption probe at the aircraft engine maker.

A Rolls-Royce jet engine on show. Orders for two Chinese airlines have come under spotlight over alleged payments to an intermediary. Photograph: Rolls-Royce

The latest allegations are contained in postings by a blogger operating under the pseudonym of "soaringdragon" and related to deals worth a total of $2bn (£1.25bn) with Air China in 2005 and China Eastern in 2010. They claim an executive who worked at both airlines, Chen Qin, accepted payments as an intermediary in those deals.

Rolls-Royce revealed last month that the Serious Fraud Office hadapproached the company over allegations of malpractice in Indonesia and China, prompting the Derby-based manufacturer to conduct its own investigation through a law firm, Debevoise & Plimpton. In a statement last month Rolls-Royce said the probe had found "matters of concern" in Indonesia and China and other unspecified markets, relating to "concerns about bribery and corruption involving intermediaries in overseas markets."

Rolls-Royce, which is aware of the Soaringdragon postings, declined to comment on whether the blogger's allegations were included in the dossier passed to the SFO. However, the Sunday Times published a statement from China Eastern which appeared to confirm the blogger's claim that Chen Qin had been arrested by the Chinese authorities in 2011. It said: "Neither China Eastern nor Air China has any right to talk about Chen's case; only prosecutorial organs know the real background."

The deals at the centre of the allegations boosted Rolls-Royce's presence in the rapidly growing Asian aviation market. In 2005 Rolls-Royce said it had received an order from Air China for Trent 700 engines, to power the Airbus A330, worth $800m. Then in 2010 Rolls-Royce said it had won an order from China Eastern worth $1.2bn for Trent 700 engines to power 16 A330 aircraft. The China Eastern deal was signed in the presence of David Cameron, in the Great Hall of the People in Beijing, during an official trade mission to China.

Rolls-Royce faces the threat of a multimillion-pound fine on both sides of the Atlantic if the allegations escalate into official investigations by authorities, although the SFO and the US Department of Justice have yet to announce whether they will proceed with formal probes. The Soaringdragon postings are the second set of allegations implicating Rolls-Royce in corruption to be posted on the internet. Dick Taylor, a former Rolls-Royce employee in Indonesia, had alleged via a series of online postings that Tommy Suharto, the son of the former Indonesian president, was paid $20m (£12m) by Rolls-Royce and given a Rolls-Royce car to persuade the Garuda airline to buy Trent 700 engines in 1990. Taylor has said he felt "cheated" by his experience at Rolls-Royce, the world's second largest aircraft engine maker, after he was warned that he risked redundancy when he raised concerns over a colleague's expenses claims. Taylor subsequently took early retirement in 2004 but claims that Rolls-Royce was still making payments to intermediaries in Indonesia in 2010.

The Asia-Pacific region is a vital market for western aerospace companies targeting new customers amid stagnating demand at home. According to Airbus, the region will account for 35% of aircraft deliveries over the next 20 years, with China overtaking the US as the world's largest domestic airline market from 2031 onwards. As well as bringing opportunities for aircraft makers such as Airbus and Boeing, new jet sales also boost orders for engines. The front-runners for those orders are the likes of Rolls-Royce and its US rivals, General Electric and Pratt & Whitney.

Speaking in December, Rolls-Royce's chief executive, John Rishton, said the company would not tolerate "improper business conduct of any sort."

"This is a company with exceptional prospects and I will not accept any behaviour that undermines its future success". The company also announced that it will appoint an "independent senior figure" to review its compliance process and report to the board's ethics committee. Rolls-Royce is one of Britain's blue-chip exporters and thus a key manufacturer in George Osborne's "march of the makers", posting revenues of £11.3bn last year and a pre-tax profit of £1.2bn, with its strong future prospects underlined by an order book worth £62.2bn.

Rolls-Royce has admitted that the disclosures could result in the "prosecution of individuals and the company." Legal experts have warned that Rolls-Royce's co-operation so far will not spare the business from a prosecution by the SFO. The organisation's new boss, David Green, has signalled that the SFO will eschew settlements in favour of prosecutions, tackling a perception that it had been keener in recent years to deal with cases outside the courtroom.

Article source : http://www.guardian.co.uk

Banks given four more years to introduce minimum liquidity standards

Bank of England governor Mervyn King says concessions will allow banks to use reserves to help struggling economies grow

Banks have won significant concessions from global regulators after being granted four more years to introduce watered-down measures designed to make them less vulnerable to Northern Rock-style runs and financial shocks.

As well as extending the time limit on compliance, the Basel committee of banking supervisors has relaxed proposals setting out the range of assets banks must hold as a buffer against the threat of a collapse.

The British banking industry described the changes, secured after lobbying, as a "Twelfth Night present". Mervyn King, governor of theBank of England and chair of the committee's oversight body, denied that the agreement was a weakening of earlier proposals: "For the first time in regulatory history, we have a truly global minimum standard for bank liquidity."

The standards are intended to allow a bank to survive a 30-day crisis by retaining a minimum amount of cash and liquid or easy-to-sell assets, as an insurance against the mass withdrawal of deposits and funding freeze that crippled Northern Rock or a systemic crisis of the kind triggered by the Lehman Brothers collapse.

Stefan Ingves, left, chair of the Basel committee on banking supervision's governing body and Mervyn King of the Bank of England

The new rules will not be imposed in January 2015, as intended under an earlier draft, but will be phased in over four years by 2019. King indicated that the concessions would allow banks to use their reserves to help struggling economies grow, rather than have them tied up in meeting the new global banking guidelines, dubbed Basel III.

"Importantly, introducing a phased timetable for the introduction of the liquidity coverage ratio … will ensure that the new liquidity standard will in no way hinder the ability of the global banking system to finance a recovery," he said.

The Basel group includes representatives from the 27 major financial centres – including the UK, Japan, China and the US – and it agreed a first draft of liquidity rules in 2010. The draft triggered fierce lobbying by the banking community because it required the buffers to comprise government bonds and the highest grade of corporate bonds.

Banks warned that it might choke off a global economic recovery by squeezing lending to households and businesses. They added that focusing the buffers on government bonds would force them to buy even more sovereign debt, tying their fortunes more closely to a state's solvency – a concern exacerbated by the mounting eurozone crisis.

King said the new liquidity coverage ratio (LCR) was more "realistic", although he denied that the changes represented a weakening of the proposals.

He added that the agreement would protect taxpayers from the consequences of a banking crisis, saying it was a "clear commitment to ensure that banks hold sufficient liquid assets to prevent central banks from becoming lenders of first resort".

Under the deal, banks will only have to meet 60% of the LCR obligations by 2015. A study by the Basel committee in 2011 found more than 200 banks had a total shortfall of €1.8tn (£1.4tn) in meeting the 2010 LCR. The way in which the buffer is calculated has also been changed in a way that will benefit many banks, analysts said.

King added: "The committee and the regulatory community more generally felt it was appropriate to broaden the class of liquid assets. That doesn't mean to say it's a loosening of the whole regime."

Simon Hills, executive director of the British Bankers' Association, said allowing mortgage-backed securities in the liquidity buffer would help kick-start that particular market, which has been moribund since the 2007-09 crisis. Mortgage-backed securities have been classed as "liquid" under the new guidelines even though their lack of liquidity from 2007 on was a key factor in the banking crisis, a recurrence that Basel III hopes to prevent.

During times of stress, the Basel committee said, national regulators could allow banks to drop below the minimum liquidity requirement.

The UK Financial Services Authority signalled last summer it would consider relaxing liquidity rules – which required UK banks to hold a buffer of £500bn of government bonds and other instruments – amid concerns that banks were restricting lending to businesses and households.

The financial policy committee, responsible for overseeing financial stability and chaired by King, had considered whether liquidity rules should be relaxed altogether.

UK banks have been concerned about the liquidity rules since they were first suggested in the wake of the 2008 banking crisis and could have required banks to hold up to three times the level of the assets that they held in the past.
Article source : http://www.guardian.co.uk