No landlord wants to find themselves in a market where the number of units available to let is larger than the number of tenants out there looking to take on a lease. This means empty units, costs that can’t be recouped, properties not being adequately cared for and, generally, just extra management hassle for landlords.

This is the situation I found myself in earlier this year at my industrial estate out at E-Net Park, Linlithgow. A number of empty units had been on my agents’ books for months but they just weren’t shifting. Nothing ‘bad’ was being done – we were asking a fair market rent and the units were brand new and offered great accommodation. BUT, nothing ‘exceptional’ was being done to market these units either and that’s exactly what I came to realise was required in this current market. Tenants over the last few years have had the pick of the crop when it comes to choosing premises to match their requirements perfectly. My units, as good as they were, just sat amongst the rest of the selection of other good properties out there and the tenants weren’t biting (not even nibbling!).

In business, you’ve got to be able to think outside the box and try to see things that other people can’t see – that is your opportunity to exploit and make money. In this case, we thought outside the usual landlord / tenant letting box and considered the types of businesses which were doing well during the credit crunch. The answer came to us – Ebay businesses. With their next to nothing overheads, discount priced goods attractive to the cash strapped public and latching onto the reputable and trusted Ebay name, it is not hard to see how Ebay retailers have been making big profits at a time when other businesses have been struggling. But how could I attract such businesses into my units, after all, the lack of rental overheads was one of the main attractions to them and reasons for their success. For start up businesses the rental outlay is such a big commitment that it puts off many.

Again, thinking outside the box, we came up with the next part of the answer; and this is where the added value element comes in. As an Ebay business grows and becomes more and more successful, it faces a ‘catch 22’ situation – no, make that 2 catch ‘22 situations’. Firstly, the lack of retail premises means that the Ebayer’s house gets taken over by mountains of boxes of goods which they’ve bought and await purchase orders. Secondly, the Post Office becomes the Ebayer’s home from home as they struggle there daily with stacks of boxes, spend hours queuing and a fortune on stamps. The Ebay Village concept strikes out both of these problems in a oner and gets my units let, whilst still enabling the Ebayer to enjoy the advantages of running an online business.

So, here it is: I have come up with a USP which I can offer to tenants and give them added value when they rent a unit from me. This is a Unique Selling Point which makes my product stand out from all the rest and is therefore more attractive to potential tenants. As there are a number of units in my industrial estate, I have been able to do a deal with a courier company for reduced carrier charges, and the more carriage I give them the lower the rates become. By focussing on the Ebay business which depends so much on carriage, I allow my tenants to take advantage of these reduced carriage costs and the more Ebay tenants there are, the lower their carriage costs are. Suddenly their rent is off-set by their carriage savings and essentially they are getting a retail unit in which to store their goods for FREE. Also they now have hours of spare time not having to go to the Post Office but instead can focus on building their business. And the best part from my point of view as a landlord is that my units are let which was the whole point of the exercise in the first place. Having started 2010 with 20% vacant units at E-Net Park, Ebay Village is now 80% occupied and offering its tenants a great deal.

The old cliché is true, I’m afraid.  You can’t stand still.  If you are not making progress you’re about to take a step back

Further reading : Click Here

So, the result of my conversations with Duncan Sutherland on whether you could piggyback a successful bricks and mortar retail outlet on to a successful e-tailer like Bigoffers.co.uk was that Duncan persuaded me to have a go.  Bigoffers opened its doors in the Dalry area  of Edinburgh last week.  The retail  shop carries a wide range of consumer products all at attractive discounted prices.  Looking around, you’ve got to be amazed at some of the terrific value for money offers in there.  The opening day was quite busy and of course Duncan and I were there to get instant feedback from the most important and knowledgeable critics of a new business – its customers.

So, how do you plan such an opening?  You need:

·         The right geographic location

·         A location with a good ‘footfall’ - footfall is the number of potential customers that walk past a retail location and might be tempted into an unplanned visit.  Remember that one of the main reasons for having bricks and mortar in which to display your products is to encourage impulse buying.  So the number of possible impulse buyers passing close to the  shop is key

·         A first class supply chain to maintain a healthy stock of products for customers to buy.  As they say in retailing, “If they can’t see it they can’t buy it”

·         Premises at a sensible cost - the riskiest part of a retail start up is probably the contract you have to sign for the premises you rent.  After all if you sell nothing and shut up shop after two months, you still have to pay the agreed rent to the landlord for the length of the terms on the contract

·         The right people to manage and operate the outlet

Now I thought we had got a good solution to all of these essential ingredients.  It turns out that one of them will remain unproven for a while.

After all we know that the Dalry area holds a lot of people looking for excellent value for money in discount outlets. 

The supply chain is already in place with other companies, either in my hands or associated with me in some way, well-placed to provide stock from well-developed relationships with existing suppliers.  (Remember we have the advantage of taking established products into a new market.)

Premises at this time in the business cycle and given the credit crunch are, frankly, going for a song.  Landlords are willing to negotiate rents low enough to reduce risk for the tenant even if they only cover the cost of keeping the property wind and watertight.

As for people, well first and foremost we’ve got Duncan to cast his beady eye over the venture.  In the marketplace right now, again because of economic circumstances, there is a huge pool of talent looking for work.  There are new graduates and people let go by companies that are tightening their belts and down sizing.  They are all keen to find exciting and interesting work. So we can definitely get the quality of person we need.

You can now see the one crucial matter we haven’t tested properly yet – footfall.  We were not to know that our opening of the outlet would coincide with snow that made Edinburgh more or less grind to a halt for a couple of weeks. So we shall see how things go when the thaw comes; but I feel confident that we have got the risk as low as possible and I think the idea will fly.

If you have confidence in the people you need to make a venture work you are in the best shape possible.

If you’re one of my twitter followers down load this voucher and present it to Duncan when you go into the store and he will let you have an item of jewellery free of charge up to the value of £30.00 no purchase required. Click Here to download

Which comes first the retail chicken or the e-tail egg?

This blog results from an interesting conversation I had with my friend Duncan Sutherland a few weeks ago.  Duncan is a bit of a retailing wizard, with an impressive track record in the traditional bricks and mortar retail sector.  He has been in the industry since the age of 22 working for household names like FW Woolworth and Marks and Spencer. When he was thirty the Board of Littlewoods engaged him to turn around the fortunes of the at that time ailing company. That done, John Hargreaves approached him to  help him establish a out-of-town retailer - Matalan. By the time Duncan left Matalan in 1998 the business had, from an almost  standing start, achieved a market value of £1bn.

Duncan then went on to become the CEO of Moss Bros, did a stint at Happit and built up the d2 chain that he later sold to Tom Hunter of Sports Division fame.  So what Duncan doesn’t know about traditional retailing would not fill the back of a bus ticket.

Our debate centred on where we would start a discount retailer; would we start with a base on the internet or use the more traditional way - bricks and mortar. Each model, we agreed, has its own set of advantages.

Briefly stated, for the entrepreneur the obvious advantage of an internet business is significant cost savings. There’s the hugely important cost of stock. In the e-commerce model you don’t necessarily have to stock all of your offerings. With the advent of drop shipping your supplier holds the stock and your website simply sends the orders direct from the consumer to the supplier.

But, the most important advantage for the retailer has to be the size of the potential customer base - it’s truly global. This coupled with the stock savings significantly cuts down costs associated with marketing, customer care, processing and so on.  Put simply you can e-mail the world for a fraction of the cost of sending out brochures to a limited number of people in one country.

What about set up costs in the e-commerce model?  Well that’s become a plus too. Ten or fifteen years ago it would have cost hundreds of thousands of pounds to set up an e-commerce business. Web development in an immature market was an expensive process; but these days you can buy a website in a box and be up and running within a couple of days.

How to take the cash from the consumer also threw up problems.  Payment processing a few years ago was a nightmare; today doesn’t everyone have PayPal and isn’t everyone happy to shop on line with their credit cards?? 

“All fine and well,” said Duncan, “But….” He agreed with me that e-commerce in the UK is growing faster then any other country; but what about the vast number of people who don’t buy from the internet?  This may be due to a lack of knowledge or a lack of trust. I vehemently disagree with this as a reason for not starting your business with a website.  Nowadays there are more than enough people happy to do business this way. The one Duncan argument, however, which has caused me a number of sleepless nights is – what, for a discounter, is the optimum business model.

After all, the whole discount retailer model is based on impulse buys and instant gratification.  You visit Poundland and the vast majority of the products you purchase are impulse buys. Websites are not good at providing instant gratification and the opportunity for impulse buys is greatly diminished.

So is there a hybrid model a model available to a start up business, a model which combines the benefits of online shopping with the instant gratification and the opportunity to sell some more in a physical shop?  Everyone knows that Amazon has been talking about opening distribution centres up and down the country. But does this model stack up for a new start? Definitely not, in my opinion. Duncan and I have been continuing our debate and have come up with some interesting solutions to this problem... more to follow next week.

Events have overtaken us since I started writing this blog three weeks ago. Duncan has decided that he wanted to set up a bricks and mortar retailer and if successful he wants to open a chain of them. So his trial store opened a couple of days ago. Have a look here  Yup he got the whole thing up and running within 3 weeks. Although the business is called bigoffers it has a completely different line up from the website big offers. Duncan is concentrating on a different product range – such as designer clothes, branded homewear, and consumer electronics,

If you’re one of my twitter followers down load this voucher and present it to Duncan when you go into the store and he will let you have an item of jewelry free of charge up to the value of £30.00 no purchase required. Click Here to download

This offer is only in theory is for my pals so do take advantage J Please let me know what  think of the whole concept.

The  Address of the new venture is

Big offers

Unit 2 (Next door to the plumb centre)

24 Orwell Terrace

Edinburgh

(Behind St Brides Church)

Sound financial decision making and emotional intelligence are the two most defining qualities of successful leadership, according to a study released today by Orange.

"Being an entrepreneur means being in the risk business. You will make some mistakes, and pay for them, but in the end you are your own person and the successes you achieve make up for the difficulties you've met and overcome on the way."

Are the good signs there for good?

We’re all asking if we’re out of this recession or not.  The truthful answer that I, and probably everyone, should give is that I’m not sure.  Knowing whether we’re in recession or not is a strange statistic.  Officially it’s a statistic that doesn’t come to light until well after the event – Has the Gross Domestic Product, GDP, gone down for the last two quarters in a row?  If GDP, a measure of the total economic output of the country, has gone down for two quarters in a row then we’re in recession.  Aye right, and I’m supposed to make decisions about running my businesses based on what you could call economic ancient history.

I tend to form my view of the business climate by the trends of my order book and monthly sales.  If they are staying much the same then I’m holding on but if they’re going down I take that as an indicator that the economy is slowing.  (That’s assuming that I have checked carefully that the decrease in sales is not a function of something completely different like competitive offerings or competitor pricing changes and that I am thus comparing apples with apples.) 

Can we get any clues from the big boys?  Well, in terms of retail Marks and Spencer and John Lewis showed pretty good signs of growth in their last announcement, John Lewis being particularly spectacular.  But is it apples with apples to compare historical figures with current performance?  After all, VAT went back to its old level at the beginning of the year.  We’re almost certainly looking at tax rises sometime this year.  Interest rates will go up this year making the recent times of the mortgage joy com to an end pretty sharply.  All these things will take money out of consumers’ pockets and have an impact on everyone’s sales.

On a wider perspective I’m looking for some really positive and practical signs before I think any of us can feel confident that the hard times are over.  I’d like, for example, to see the banks lending to small businesses properly again.

Having said that, any recession means that there can be big opportunities out there.  Maybe we should be looking at other small businesses to see if they have fared OK.  If we see some that are showing signs of difficulty then we should be looking for a chance to step in and see if we can get some shares in the business in return for helping it back to health.  That’s why I like being an entrepreneur; we can see opportunity in any economic situation.

If it feels like a recession then operate as though it is one.

I have made a lot of money out of buying businesses where the current owners were either underestimating the value of their assets or, more likely, overestimating the value of their assets.  In the first case some owners do not think sufficiently outside the box to realize that their assets could be worth a lot more if, for example, their customer database were combined with another customer database or enhanced with the addition of another line of products.  If I can realize the potential of the undervalued assets, then it makes good business sense to buy them for a price that reflects their current owner’s lower valuation.  The seller is valuing their assets on a stand-alone basis; I am seeing them in the context of what I can make them worth if I bring the business into my portfolio.  The trick is to realize what the assets of two or more businesses will look like if you put them together.  So in the case of a customer database, the seller sees their customer base as the ones on his customer file whilst I see it as that file plus one or two others that I control.  I know that by adding it to my existing customer databases I can reach all those new people with a salesperson or an e-mail as soon as the deal is done.

A classic example of leveraging a database is what I advised Cheryl Hardwick the managing director of www.boffer.co.uk to do. Boffer is a deal-a-day site. It sells only one product per day, sourced from stock from bankrupt companies and companies with excess stock. The bulk of that stock is sourced through another company I have an investment in called CPM asset management, a company that offers a very rapid way of turning problem stock into cash.

Boffer has a tremendous cult following. It sometimes has in excess of 30 thousand unique visitors per day. However the fact that it only has one product on sale per day does restrict the possibility of ramping up the revenue. My advice to Cheryl was that she should set up a sister site to boffer and leverage the boffer database by encouraging boffer customers to visit the new site. On the 15^th of December 2009 boffer’s sister site www.bigoffers.co.uk was born. Bigoffers also sells excess stock, again sourced from CPM asset management. But it has several thousand products on its website. On its first full day of trading it did 500 orders with no advertising apart from an email to the current boffer database. That’s the effect of leveraging a database.

Buying a company into a portfolio is an attempt to make two and two equal at least 5.  Look for the possibility of synergies between the two companies that might improve profitability of both if they were merged.

You're selling the business right?  Well yes but what is the business?  You might have one idea of what it is that's for sale here, and your potential buyer might have another.  This can cause problems.  You don't want to waste valuable business selling time clarifying all of that because:

·         It takes time and effort

·         At the end of the discussion you may find you're not talking about the same thing

·         It can be a really simple misunderstanding such as whether the customer list is included in the sale

There are a number of ways of selling a company.  You can sell the whole thing, lock stock and smoking liabilities.  You can just sell the assets.  Or you can sell shares in the company. Take a moment and consider the options. 

Finding a buyer is difficult and needs some preparation. Small, privately held businesses are not likely to be interesting to financial buyers like private equity and venture capital firms. So the two most likely exits would be trade sales and management buy-outs.  I’ll talk about trade sales in this blog and management buy-outs next.

Trade sales

This is probably the first thing you think of when it comes to selling up and with good reason as it often offers by far the easiest sale and frequently the best return.  In a trade sale you sell the business to someone else who intends to run it pretty much as it is.  One pub owner sells to another pub owner, that sort of thing. 

In this case, look for the reverse of what you were doing when you were buying businesses, searching for synergies where, for example, common customers or suppliers made the sum of two businesses greater than the value of the two separately.  This, of course, has an impact on the price of the deal.  If you can recognise the benefits of the merger to the buyer due to synergies, so that two and two make five, then you can base the price you want on the profits of the new combined concern rather than the old one.

To do all this requires some preparation work.  First you need to do everything possible to let other firms in your field know that you exist. Join trade bodies and raise your company profile in the year or so leading up to the planned exit time. Study the market and draw up a short list of buyers to whom an acquisition may make sense.  Particularly look for people who have already made acquisitions - it’s habit forming. Make sure they know your company and what it does. Study their structure and re-engineer your own company so that there are obvious synergies and as painless a merger as you can plan.

Nurture a relationship with the Trade Press and set some resource aside to get PR in the lead up to exit. Trade magazines are always hungry for stories however mundane. Make sure you feed them.  Speak to local network contacts in banks, local accountants and so on.  But, beware of giving the business a bad name by touting it around too heavily or for too long.

I’m sorry to repeat myself, but preparation is probably the most important part of getting a good price for a business

Today I'm launching a nationwide campaign to offer three of the country's
most promising youngsters the chance to come and work in my business.

 It's fair to say that young people have been hit hardest by the economic
 downturn with the latest figures showing just under 1million 16-24
 year-olds are out of work.

 The TUC described the crisis last week as a "national emergency" for the
 current government.

 And do you know what, they are absolutely right.

 I've become so frustrated by the lack of opportunities for young people
 that I have decided to launch a one-year apprenticeship scheme called "The
 Dragon's Apprentice".

 The successful applicants will get the opportunity to be taught a
 lifetime's business skills in a 12-month crash course within my
 organisation.

 Through training and mentorship, I will equip them with the skills they
 need to excel in business for life.

 I get a great buzz out of introducing open minded, creative people to the
 ways of business and I want to give something back to this generation.

 This is a time when people should be putting their stamp on the world but
 circumstances aren't going their way and through no fault of their own
 they find themselves stuck.


 We simply can't afford to waste this talent or let their lust for life
 dwindle. I want to get some dynamic minds into my organisation and let
 them get started in the world of business, finding skills that will last a
 lifetime.

 I have already set young people to work in my organisation and have been
 so impressed with their zeal for life I want to award others the
 opportunity.

 Six months ago I published a job asking for a writer and found Ally Millar
 who was immediately thrust into the world of entrepreneurialism and is now
 managing editor of geeks.co.uk.


 I know the importance of guiding and mentoring home-based talent so I lend
 my skills and expertise whenever possible at workshops and entrepreneurial
 events.

 At a special BBC Youth Job Panel event I was so impressed with one of the
 entrepreneurs I have made him my first apprentice.

 Tom Mursell was just 18 when he founded notgoingtouni.co.uk which gets
 30,000 students clicking on it each month.

 The site was his answer to the lack of options for school-leavers outside
 of further education.

 Now 20, Tom has built his profile by helping students in their post-school
 options and commentating on the trend for many major broadcasters and
 newspapers.

 Tom is quite unique so I don't want his entrepreneurial success to put
 people off.

 The opportunity is open to anyone. Although we are looking to help ease
 the problem of youth unemployment, I don't want to put off anyone who
 thinks they have the necessary skills to do the job so anyone is welcome
 to apply no matter what your skillset or background.

Experienced, non-experienced, young people, students, graduates,
school-leavers, trades people, ex-professionals, long term unemployed,
anyone.

 I just want fresh, enthusiastic talent; people who want to put their stamp
 on the world and want to let me and my organisation show them how to do
 it.

 I want to expose the successful applicants to the business and have them
 working across my portfolio, expanding their skills and finding a niche
 for their talent where they will thrive.

 I want to meet you and put you to work to learn the ropes from day one so
 we can help you make your mark.

 As I said there are three positions available and we know competition will
 be fierce.

 If you are interested or know anyone who fits the bill, Edinburgh
 recruitment consultancy Head Resourcing is supporting this campaign. To
 find out more details go to http://www.headresourcing.com/dragonsapprentice.stm

 Get your CV to them no later than 5pm on Monday January 18.

 The position will be mostly based in Edinburgh and I look forward to
 introducing the successful candidates to my teams of colleagues. It's a
 great opportunity for anyone to seize with both hands and I hope to be
 interviewing some of you very soon.

To read more about this opportunity  click here

There isn't a business owner alive who hasn't dreamt of selling their business. Just as millions of office-bound workers dream of quitting their jobs and going it alone, so business owners dream of the day when unreliable suppliers, bad payers, seasonal dips, and the maze of modern marketing are no longer problems that haunt them in the early hours.  Even very highly successful entrepreneurs, particularly in the UK, dream of getting out and going back to the simple life –leisure, sun-kissed beaches, and happy family lives all playing a significant part.  So much so in fact that it's a well-established fact in the UK entrepreneur market that a lot of serious entrepreneurs are actually second-time-rounders. They've already set up one successful business, and sold out for the magic million mark.  (It's funny how we still dream of being 'millionaires' even though a million barely buys you a house with a garden in a decent part of Edinburgh these days.  If being a millionaire were your aspiration five years ago, you better up the anti.)

Anyway these people have made it, life is good, and they can relax now.  Except they can't; or at least the good ones can’t. In the UK you get a lot of folk who 'make it' then realise that it was never just about having the money to pay off the mortgage and take the round the world cruise.  They really miss the thrill of running a business. Most of all they miss the strategy and buzz of playing the game and trading one business for another in the search of further success - I hope that's why you're reading this chapter.  But at the end of the day if all you really want to do is sell up and go fishing then good luck to you.

 If you're selling up to get out of the game or selling up as part of a plan to cash in your chips and move to a bigger game then a lot of the ground rules are still the same but you must be absolutely clear in your head which type of seller you are. Don't think it's going to be easy either because people bidding for your business will demand no end of information about it and you'll have to have an answer every question – starting with the obvious one of 'why do you want to sell it?'  If it's because you fancy retiring and growing prize marrows then great because that's the kind of answer people might want to hear, but don't expect anyone to believe that if you're in your twenties (or for that matter if you're an Asian-Scots multimillionaire known for speculating).

So, given that you’re not just giving up, what is your reason for selling? If the real reason is that you think you've reached a dead end and the business is either going to stay still or else start to decline then that's likely to be sniffed out by potential buyers who will either lower the bid or walk away.  You really need to get the business into a condition where you can, hand on heart, say that while you are confident about the business and its future, you desperately want to focus on another project that's got you excited in a different direction.  This had better be the truth and you better be able to give evidence of the secure future of the business you are selling because the buyer won’t stop probing until they’ve found what’s really going on.

Be confident about a business you are about to sell because of its intrinsic value, not its superficial appeal.