Thoughts and ideas on growing a business

“Keep your feet on the pedal!”

With little cash for job investment the government

 has made a fairly good stab with the Jobs Initiative

 announced today. One strong theme is to stimulate

 the tourist industry by removing barriers to visiting

 and reducing costs. A different need is met by

encouraging further education and training,

and work placements through internships.

At Celtar we welcome the initiative as supporting the new government’s strategy to energise the economic recovery.

What will be of interest is who will coordinate and supply the training, and what will be the remit of the training agency FAS? Current initiatives such as Skillnets have run their course – to meet today’s challenges new bodies with new objectives should be created.

The package of measures is budgetary neutral over the period to 2014, highlights are below.

- Temporary visa waiver scheme for short-stay visitors of 14 nationalities. This initiative will make it much easier for overseas visitors – including visitors from crucial emerging markets – to come to Ireland without having to incur the trouble and expense of applying for separate visas, once they have already obtained visas for the UK.

- Abolition of the €3 per passenger travel tax as part of a deal with airlines to restore lost routes. The Air Travel Tax will be reinstated should the airlines not open additional routes and increase visitors to the country.

- Introduction of a temporary reduced rate of VAT of 9 per cent, from 13.5%, to support the tourism industry. This new temporary second reduced rate of VAT will apply to a number of tourism and entertainment related goods and services with effect from 1 July 2011 to 31 December 2013. Hairdressing and certain printed material such as brochures and newspapers will also be charged at the new rate.

- Halving lower rate of PRSI with effect from 1 July 2011until end-2013 on jobs paying up to €356 per week.

- R&D tax credit legislation to be amended to allow companies to account for the credit either above or below the line thereby giving more flexibility for companies and increasing its attractiveness for corporate taxpayers and in particular US and other foreign investors.

- The Employer PRSI charge on share based remuneration which was recently introduced has been reversed with effect from 1 January 2011.

- A national internship scheme operating for two years with 5,000 places

- Additional 3,000 places in back to education initiative

- Additional 20,900 places for training, education and upskilling

- €10 million to be provided for school works, in addition to €20 million reallocated from existing budget

- €75 million reallocated for transport projects aimed at creating at least 1,000 new jobs

- €15 million for improvements in general transport

All paid for by?

The tax reductions and expenditure measures announced are to be funded through a temporary levy on funded pension schemes and personal pension plans. The levy will apply at a rate of 0.6% on the capital value of assets under management in pension funds established in the State. It will apply for four years commencing in 2011 and is intended to raise €1.9bn over those four years.

And of course the 12.5% rate of corporation tax so important for attracting foreign direct investment is here to stay. (Sarkozy, Merkel and Co. please get off our backs!)

Celtar provides business advice to owner managers, directors and CEOs of small and medium sized businesses and not for profit organisations.

“We work with businesses that have growth potential, with entrepreneurs who value an external perspective on how their ambitions can be realised”.

Contact Billy Linehan, billy.linehan@celtar.ie

There is no real choice . . . . . . vote YES to show our commitment to a shared ambition for the citizens of Europe

Yes, I am strongly in favour of voting YES in the Irish referendum on the Lisbon Treaty in early October.

Why?

In no particular order

- the Irish people have benefited from being members of the European Union through

• infrastructural funding of billions
• a “common market” where we trade
• a “common market” where we work
• involvement in institutions where we have a greater influence then our size dictates
• democratic participation in the EU parliament and representation of our elected government in the EU Councils
• we have become one of the major locations of foreign investment by US companies
• our participation in peace keeping in Bosnia and the Sudan
• we have gained by EU laws for Irish workers, protecting rights
• we have gained by EU laws for all our citizens, protecting human rights
• our environment has been safeguarded
• the economic dependence on the UK has been lessened
• being part of the Euro zone has limited the effect of the property led recession in Ireland (see Iceland’s experience)

Q. Is the European Union perfect? A. Far from it, but what are the options for a small island economy/country which has to gain it’s income from exporting. There is not a large enough economic base in Ireland.

Q.  Can we vote NO and still be part of the EU? Yes, but voting NO demonstrates our lack of commitment to the EU for the future. It shows selfishness in that we have gained much, why should the other newer members not gain in the future?

Q. Declan Ganley appears reasonable in his comments, doesn’t he?  I have no time for this guy; he parachuted into the last referendum with undisclosed financial backing, lost an election to the European parliament and then vowed not to be involved again. And he’s back.

His agenda is unclear, seems partly libertarian, certainly he holds a US type of right wing ideology, and is anti everything that the EU does to develop as a political and economic bloc of states. Possibly he sees the US (under Bush) as the leader of the free world and free market and does not care for a different world vision portrayed by Europe? By accident he is Irish by birth, by conviction he carries a US inspired ideological banner, by attitude he is anti European.

Q. And the other opponents COIR, PANA, Socialist Party, Sinn Fein etc.? A. they could be described as the jetsam and flotsam of all sides of the political spectrum. All posing the “when did you stop beating your wife” question to create doubt and distrust about the EU, and none of them describing what their real agendas are. None are pro European and all share a Euroskeptic (though very different!) perspective.

For further illumination see Mick O’Leary’s statement of the facts as he sees them on this entertaining video

http://www.youtube.com/watch?v=RyvVTRHYmZg

 Billy Linehan of Celtar management consultants, 15 September 2009

Celtar Update – Enterprise Ireland’s Current Support

It’s not the best of times for Enterprise Ireland, the Irish state’s lead body for supporting businesses from SMEs to prospective Irish MNCs. Rightly there is a focus on support for exporting companies, though there is less concern shown about import substitution.

Below is a list of supports plus relevant links to the EI website

Billy Linehan, MD of Celtar Ltd, business and management consultants

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Enterprise Ireland offers a number of categories of funding designed to help expand business and grow exports: -

Enterprise Stabilisation Fund http://www.enterprise-ireland.com/AboutUs/Organisation/Enterprise+Stabilisation+Fund.htm

An initiative aimed at viable but vulnerable internationally trading companies to help them survive the current global downturn by supporting their drive to reduce costs and gain sales in overseas markets and to sustain employment.   Sustainable economic recovery will be driven by enterprises focused on increasing their exports of innovative products and services in global markets.

Funding to explore new ideas/new markets http://www.enterprise-ireland.com/Grow/Finance/FundingforExploringNewOpportunities.htm

Preliminary funding to explore new ideas/new markets, including feasibility studies (ordinary, CORD, GreenTech Support, EU 7th Framework), recruitment of a key manager, assistance towards hiring a business mentor, attendance at trade fairs, market research and consultancy (strategic and GreenTech Support consultancy), and training which includes the supply chain management initiative.

Funding for Start Up companies http://www.enterprise-ireland.com/Grow/Finance/Standardhighpotentialstartupcompany.htm

The High Potential Start Up package matches the financial needs of a new company, by providing finance as the business gets started and by sharing the risk.

Growth Funding http://www.enterprise-ireland.com/Grow/Finance/Growth+Fund.htm

The Growth Fund is designed to assist SME clients to achieve greater competitiveness by improving their export potential.  This will be achieved by increasing both their gross output and gross productivity, while also providing new employment or maintaining existing employment levels.  There are 3 components to the offer:

• Stimulating Business Innovation http://www.enterprise-ireland.com/ResearchInnovate/Productivity+Improvement/Stimulating+Business+Innovation.htm

• Growth Fund http://www.enterprise-ireland.com/Grow/Finance/Growth+Fund.htm

• Growth Expertise http://www.enterprise-ireland.com/ResearchInnovate/Productivity+Improvement/Growth+Expertise.htm

R&D Offer

The R&D funding supports market-led innovation in manufacturing and services companies. The offer has five elements designed to support manufacturing and services companies;

• Stimulating Research & Innovation http://www.enterprise-ireland.com/ResearchInnovate/R+and+D+in+your+Enterprise/RandD+Stimulation+Grant.htm

Aimed at companies that are new to product, process and service development activities, these financial supports, including the R&D Stimulation Grant, allow companies to explore how research & innovation can drive their future development.

• R&D Fund: Small Projects http://www.enterprise-ireland.com/ResearchInnovate/R+and+D+in+your+Enterprise/RandD+Stimulation+Grant.htm

The R&D Fund: Small Projects is a provision under the R&D Fund to support product, process or service project R&D where the expenditure amount is less than €150,000.  This may be companies undertaking R&D for the first time or companies progressing R&D activity in the business.

• The R&D Fund http://www.enterprise-ireland.com/Grow/Finance/R+and+D+Fund+2008.htm

Supporting innovation in services, products and processes.
Companies that are ready to progress to larger projects or want to set their own research agenda can apply to Enterprise Ireland’s R&D fund which supports market-led innovation in manufacturing and services companies.

• Collaboration http://www.enterprise-ireland.com/ResearchInnovate/R+and+D+Collaboration/

Companies can also get funding for collaborative research projects with other companies.

• Innovation Expertise http://www.enterprise-ireland.com/ResearchInnovate/R+and+D+in+your+Enterprise/Expertise.htm

• Funding for company expansion http://www.enterprise-ireland.com/Grow/Finance/FundingforCompanyExpansion.htm

A year of challenge

This year will be a challenging one for many of us; in fact survival will be the objective of many small businesses. Here I have gathered ideas and approaches – which are being implemented by clients – to demonstrate that proactive actions can have positive returns. Many of the ideas are as much about changing attitudes and behaviours as about taking decisive action.

Why should anyone buy from us this year?

This was the question for a recent workshop I facilitated. Yes it is good to know your USP (unique selling proposition) as it is a reason why people buy from you. But for most businesses their selling proposition is not unique. Location, accessibility, quality, convenience, customer service, price, reputation all contribute to purchasing decisions by customers. Make sure you know which elements of this package influence your customers.

Increase customer focus

Customer focus is a clear requirement, and I think it is more spoken about then actually delivered. Aim to provide excellent customer service to all existing customers and maintain relations with ex-customers. In fact go out of your way to be in contact with ex-customers, they still have potential to be won back, so aim to stay on their supplier list.

Business connections

In my mind much networking has limited business value and is social in nature (and there is nothing wrong with that!) – I suggest you focus on connections where they are of value to your business (or to your customer’s business). It is not how many connections you have on Linkedin but what is their potential value to you and your network.

Staff communications

Communicate to your staff: through the hard times talk to your staff more, share your plans and targets, and engage with them how objectives are to be achieved. United teams where conversation is open and ideas shared will weather the stormy months ahead.

Be online

Work out what makes sense for your business (blogs, LinkedIn, facebook, web directories, google maps etc). If you are selling to the mass market, put your message everywhere, if you are selling to a niche market make sure your potential customers know of your products/services and why they should buy from you. Attractive and cheap websites are available to all using software such as Joomla templates.

Suppliers

Treat key suppliers as valued customers. Forming partnership type relationships with your suppliers is more important now, make sure you have agency and distributorship agreements signed up and confirmed. There is little point in building a market for an OEM and then losing the agency because of poor communications and key supplier management.

Cash flow management

Yes, cash is the lifeblood of a business. Prepare your budget and update your cash flow projections at least monthly. Regularly updated cash flow forecasts and management of working capital are key to business survival this year.

Cutting costs

Several clients of Celtar have made considerable savings by renegotiating their rent in the middle of lease periods. Rent for commercial property has fallen everywhere back to the levels of five or more years ago. You are now in the driving seat and can use professional negotiators such as (only the more commercially minded of) solicitors to negotiate on your behalf.  

Shop around for professional services

One client has reduced auditor fees by 30% by shopping around, and staying with his current auditor. Negotiate solicitor’s fees upfront so you know what you are getting. For value for money advice on employment law join the SFA (www.sfa.ie) or ISME (www.isme.ie) and avail of their well regarded services.

Staffing reviews

In previous recessions layoffs and redundancies were the usual reaction to a slowdown. Now business owners are looking to a more flexible series of options. Why? Because there is a strong belief that the economy will recover sooner so keeping the talent that has been recruited and developed makes sense.

Reductions in salary, of 10 to 30%, are commonplace amongst Irish SMEs. In technology companies salary cuts are made reflecting today’s market rate for a job and bring salaries back to what they were in 2004. Often the senior positions are taking the most severe cuts, directors and managers are bearing the greatest decreases and are sharing the pain of dropped income.

Working time flexibility

Salary reductions are also being made through the introduction of three day weeks and other flexible working arrangements.

Frequently staff are put on three day weeks to cut costs. This option of making staff work part time needs to be managed effectively so productivity is maintained or increased.

Offering unpaid leave to your staff is a way to temporarily reduce your wage bill. If you are overstaffed at the moment, but expect you need staff in a year’s time when the economy picks up some staff may find the option of unpaid leave attractive.

Introduce customer focused flex-time as a competitive response to the downturn: an organisation’s opening hours could be extended without increasing cost. Implementing flexi-time should have the effect of creating longer open hours. As a customer I would like to see this happening for banks, accountants and solicitors.

Remember you are not alone

There are many experienced business advisers out there who will listen, advise and stimulate your ideas and activities.

So ignore the radio and TV reporters who appear to luxuriate in the bad news announcements, and get on with doing the business.

This is part of a series of articles on managing a business through the recession by Billy Linehan of Celtar, business and management consultants.

Billy Linehan is a specialist SME adviser who has been working with small businesses in Ireland and the UK for nearly 20 years. A director of the Institute of Management Consultants and Advisers, as well as managing a private consulting practice Billy provides a mentoring service to clients of the IMI and the Dublin City Enterprise Board.

They say hunger is the best sauce, and hunger was foremost in the minds of web developers Ciara Traynor and her Canadian business partner Anthony Kauffmann when they found themselves working late into the night on a project a couple of years ago.  After turning their office upside-down in vain looking for a takeaway menu, they fumed at the fact that there wasn’t some way of getting fed online.  That frustration was their eureka moment, and the idea for takeaway.ie was born.

Ciara had an understanding of how the restaurant business ticks as her parents owned a sea-side restaurant in Laytown, Co Meath.  However, her career had taken a different path.  She had worked in the banking sector in IT and then spent a few years in Paris before returning home to break into the area of web design.  Herself and Anthony, pride themselves on building clear, practical commercial websites through their company Technotion (www.technotion.ie).

The duo realised that the concept for an online food ordering website, coupled with the fact that they were the first in Ireland to try to fill this gap in the market, was a big project, and probably best separated from the ‘bread and butter’ business of Technotion.

“Essentially we wanted to build a portal, where good quality food outlets could put their menus on our site and customers could order directly through it,” explains Ciara. 

They approached Dublin City Enterprise Board (DCEB) and got assistance through two employment grants and the invaluable mentoring skills of Celtar consultant Billy Linehan. “DCEB have been fantastic,” says Ciara. “Billy was really enthusiastic, but he warned us that we needed to get a better grip of the details.  We realised that we had to do more than just talk the talk; we had this great idea, but it was just an idea.  We had to build this site and start approaching people before we could speculate on how our users, clients and income might grow.”
They managed to secure the essential ingredient for any web-based business – the right domain name.  When someone is hungry and hunting for a solution online, a ‘does-what-it-says-on-the-tin’ domain name is crucial – no tricky hyphens, no added words.  Takeaway.ie was launched in April 2008 and is on an impressive growth curve both from clients keen to make their food available, and from punters happy to take part in Ireland’s latest food revolution.  What’s more, Ciara and Anthony also snapped up the takeaway.mobi domain so they will be able to develop their concept into the mobile technology market.

Online food ordering is a hot idea right now.  One of the biggest restaurant franchises in the world, Dominos, has seen online sales grow 85% to £25.3m in the UK in the last year, with internet and text orders representing 22% of the firm’s pizza delivery sales in the UK.  While many restaurants have websites where they can place their latest menus and offer contact details, takeaway.ie can give them something almost impossible to achieve on their own – top billing on a Google search. 

“Some of the restaurants we approach say ‘well we already have a site’, but we explain that what we’re doing will not detract from that online presence at all,” says Ciara.  “In fact, they have the same facility to update their menus and keep control of the content, but we make that menu easier to find online and much more prominent.” 

From a surfer’s point of view, takeaway.ie ticks lots of boxes.  Searching for a meal near you is made easy by the straight-forward layout and function of the site.  And there’s no bickering if someone wants Indian and someone else Italian food, as it’s easy to order from a variety of outlets at one sitting.  It can cater for an individual with an attack of the munchies just as easy as someone  who’s entertaining guests for the evening.
The revenue stream is simple, there is no set up charge to restaurants and it’s free for website users. Takeaway.ie’s business model sees it take a percentage of each sale generated through the site.  Food outlets are happy with the growth in business, and customers can enjoy the satisfaction of good food delivered to their door without the hassle of cooking and cleaning.

www.Takeaway.ie
www.DCEB.ie
www.CELTAR.ie