Video Ivan Massow debates the issues facing UK The UK’s entrepreneurs with Phil Cameron and Alex Jackman

www.ft.com/ ENTREPRENEURS UK­entrepreneurs FINANCIAL TIMES SPECIAL REPORT | Tuesday October 4 2011 www.ft.com/uk­entrepreneurs | twitter.com/ftreports

Inside this issue Q&A James Downturn Caan answers our questions Page 2 Guest column Businesses plus dole should get their affairs in order early in a recession, says René Carayol Page 2 Alternative funding options to banks Page 2 can lead Profile Nicko Williamson on green taxis Page 3 Interview Stephen Catlin talks about the to success risky business of Page 3 Jonathan Moules Storey. But those who survive will also create a large number Profile Tony Banks says finds that a recession of new jobs. going into a care home can be the best time to Hamish Stevenson, founder should not be a jail and chief executive of Fast sentence Page 3 start a business, but Track, the business tracking not all entrepreneurs service, has been following the Profile Errol Damelin fastest-growing companies since discusses Wonga Page 3 are created equal 1997. He says there are about 1,750 private companies in the Social enterprise Do well and do good Page 4 t is the best of times and it UK with operating profits Tom Valentine: launching in a recession ‘imposed the discipline of building a business with a sustainable model at its core’ Rosie Hallam is the worst of times to be greater than £3m. They have Red tape Business an entrepreneur. combined profits of £27bn, One example of this is Tom echoes this sentiment: “As an market and global economy,” he of those being made redundant minister Mark Prisk In the UK, start-up activ- employ more than 1.6m people Valentine, managing director at entrepreneurial business we says. were private sector workers responds Page 4 Iity has always seen an uptick as and have added more than Secret Escapes, an online travel can’t afford to ever be compla- The problem with asking from industry. This was then the economy has moved into 130,000 jobs in their most recent club offering discounts of up to cent or stop reviewing the mar- founders to gauge the prepared- followed by a significant recovery, since at least 1973, year. 70 per cent on luxury hotels and ket, and this is what has put us ness of entrepreneurs is that increase in self-employment, ris- More on FT.com according to David Storey, pro- “Knowing many of these holidays, which has attracted in a strong position to grow, not they tend to be more bullish by ing to a postwar high for the UK fessor of enterprise at the Uni- entrepreneurs over the years, 500,000 members since it just in the recovery, but nature, especially about their during the early 1990s. Interview We talk to versity of Sussex, who has been they certainly have the fire in launched in February. throughout the recession as own prospects. There are also The rise in unemployment at Paul Rose, chief executive researching the small business the belly and the track record to Mr Valentine claims launch- well.” reasons to fear that this reces- the moment, however, is being of Rixonway Kitchens sector for many years. overcome challenges and exploit ing in a downturn had signifi- The recession has been a time sion will be much tougher for driven by public sector cuts, “In essence, it tells us that opportunities,” he says. cant benefits. “As a discount to restructure the business to entrepreneurs in the UK. putting people on the dole who Interactive How to cut self-employment will rise with a Entrepreneurship is often site, our message suited the make it stronger, he says. First, all recessions are differ- may be less willing and able to through the red tape; and lag after a period of unemploy- counter-cyclical and thrives dur- times, we had to compete less At the end of 2009, RPM cre- ent, and the prospects for entre- turn their hand to entrepreneur- enterprise zones and tax ment,” he explains. ing downturns, according to with banks for technical talent ated a new layer of management preneurs are hard to predict. ial activity. breaks in England and There is nothing like the Alex Macpherson, partner at and, most importantly, it and formed two new teams to What is known, is that the Further bad news for existing Wales depressing reality of the dole, it Octopus Ventures, a private imposed the discipline of build- better meet its client demands. kinds of people being made entrepreneurial ventures is that seems, to push people to equity firm. “If a business can ing a business with a sustaina- Mr Robertson claims that sales redundant this time around are some of the key factors that attempt that business idea they launch, test their revenue model ble financial model at its core,” have almost doubled since. different. These people may well helped them to prosper in the never got round to when they and win customer traction in he says. “Independent or entrepreneurial not be best suited to creating past, such as a swift economic had a salaried job. these circumstances, they are Hugh Robertson, founding businesses are much better new businesses. recovery and access to reasona- Many of those fail – up to well set for rapid growth in more partner and chief executive structured in their ability to During the recession in the bly priced debt finance, have yet 60 per cent, according to Mr benign conditions,” he says. of RPM, a marketing agency, adapt to these changes in the early 1980s, for instance, many to materialise. 2 ★ FINANCIAL TIMES TUESDAY OCTOBER 4 2011 The UK’s Entrepreneurs Confidence, not caution, is the key to fast recovery

another period of businesses that may have The best-run SMEs tend business offices in the rejuvenated a failing with fresh credit facilities. only be broken when the Guest Column uncertainty brought about moved into new territories to have the agility and West Country and its sales business. Given how well the economy, and especially RENÉ CARAYOL by falling confidence during times of prosperity leadership to adapt their operation and stores in Everything was moving company had managed the banks, regain their across the markets. without having done necessarily defensive London. in the right direction, but through the downturn, and confidence. For many small or The economic problems proper research, or perhaps mindset to a more He quickly identified an he had borrowed and the painful lessons it had Forward-thinking SMEs medium-sized enterprises, in the eurozone, made expensive hires with confident approach that opportunity to close down invested significantly to learnt, it received offers have a key role to play in it is starting to feel like particularly in Greece, no real understanding of ensures opportunities are the expensive manufac- deliver this business from four banks for new a return to a stable and late 2007 all over again. have heightened the fear the return on these grasped at the first signs turing operation in the UK, turnround. facilities. It will now adopt healthy marketplace. It is Large companies are factor, especially within significant investments, are of recovery. and picked up spare By the beginning of 2008, a multi-banking approach a lack of confidence that taking their time paying large corporations. particularly vulnerable. capacity in a high-quality the recession had hit the and has set up agreements has killed so many smaller companies and are As those at the top of When revenues are Medium­sized shoe factory in Italy, branded area of footwear with three banks in order businesses. This is the cutting back on anything the business food chain high and budgets are full, and small halving production costs. hard. No one needs to buy to spread future risk. main lesson for SMEs. and everything, from start to panic, SMEs suffer it is easy to brush companies He was able to recruit high-end shoes in a SMEs and consumers And it is time we took marketing and information beneath them; many rely mistakes under the carpet. are the the services of two downturn. The banks were share the same mindset the banks off our hate technology to training and on commercial relation- But they can come back to lifeblood of freelance shoe designers, no longer supportive and currently: they are lists. By “shafting” the recruitment. These are ships with large companies haunt businesses when our economy well known to him, who his business shrank as he remaining cautious. This banks, they will only early indicators of a as the mainstay of their times are hard. also worked for certain continued to limp along, may seem sensible for “shaft” SMEs. Banks are serious downturn. businesses. And with 70 Recessions are kinder to large fashion houses. He desperately managing his businesses, especially the lifeblood of the SME The main difference per cent of us working for well-managed SMEs. These This is vital, as SMEs moved the offices to above cash flow. regarding investment, sector and the SME between now and four an SME, it does not take businesses can pick up the tend to get the recoveries one of the stores in With financial support growth, recruitment and sector is the lifeblood of years ago is that there is long for the economic pieces of their failed they deserve. London and completely from his fellow directors marketing, for example, our economy. no run on liquidity for the shockwaves to be felt far competitors, and they reap A friend of mine acquired closed down the West and an , the and so on, but it also banks. Therefore, this will and wide. the rewards of having a small, branded shoe Country part of the business made it through makes for a constrained The author is a writer and not be another credit Recessions hit poorly run restructured at the early business in 2005, which had company. This drastic, but until early 2010, when the economy. We are living in broadcaster on business and crunch, but it will be SMEs hard. Those signs of a downturn. its manufacturing base and necessary, restructuring banks eventually returned a vicious cycle that will entrepreneurship Small businesses must look beyond the banks for funding options

of working capital is that the supply Finance of finance has increased in quantita- tive but not qualitative terms. “We Unattractive terms from have seen borrowers becoming more traditional lenders mean constructive and realistic,” Mr Edjel- baum says. “If you have realistic entrepreneurs need to expectations you can get funding.” explore alternatives, writes Kirsty McGregor, executive team chairwoman at the Corporate Finance Jonathan Moules Network, a group of business advisers drawn from accountancy firms, says the key to getting finance is having The question of access to funding has credible information to provide to the not been easy to address for some bank. “Make sure you produce regular time. Since the banking crisis, trig- management accounts and projec- gered by the collapse of Lehman tions, so you can test your assump- Brothers, the US bank, in September tions about the market,” 2008, the situation has changed for the she says. better, but getting working capital Part of the problem for newer com- remains complicated. panies, launched on money either Bank lending to small businesses saved or borrowed from friends and continues to decline; even the British family, is that they only go to a bank Banking Association admits this in its when they need the cash, Ms McGre- market analysis. Those with strong gor says. “You have to be careful business models are being offered about spending all your money when money, but the terms attached are you are a start-up and then only going often restrictive or expensive. Over- to the bank when you are growing,” draft facilities are either being she says. “The bank will look at your reduced or withdrawn, so good compa- net worth and say no because you are nies are looking elsewhere for finance. asking the bank to take all the risk.” One example is Owens Road Serv- In a world of centralised credit com- ices, a 40-year-old haulage business mittees and branch managers who based in Llanelli, south Wales. Its move jobs and locations every few core customer base had been heavy years, banking relationships are no industry, which has been suffering in longer what they used to be. recent years, so Owens spent about The difficult truth, however, is that £750,000 opening four new sites along business owners have to maintain reg- the M4 motorway to help it expand ular contact with their banks, because Out of the den: James Caan describes himself as someone who has been ‘moderately successful in business’ Ben Stansall into consumer goods distribution. The that is how you get a loan. As Ms strategy worked: half of Owens’ reve- McGregor says: “Everybody used to nue now stems from this new venture. think you had loyalty from your bank, Its bank, HSBC, had already pushed but that went out of the window in Owens to move from an overdraft to the 1970s.” invoice discounting to fund the expan- She adds: “Things have gone back a ‘If you have a compelling sion. However, the bank was being little bit, but it is not so much bank increasingly restrictive in the terms it loyalty to the customer; it is that offered, so the company switched to banks are looking for businesses to be Centric Commercial Finance, a spe- loyal to them.” cialist invoice discounting provider. project, the money is out there’ “All of the banks had decided that the best way to lend was through invoice discounting,” says Robert Wil- Contributors They have created a model based on liams, the company secretary. “It was Liz Bolshaw Q&A CV James Caan a very simple idea that is now worth really the narrow view that the banks FT contributor hundreds of billions. Not only is were taking.” James Caan, the venture Born: 1960 in Lahore, Pakistan; moved graduating in 2003. In 2004, founded Google a service that we cannot live This is proving to be a good time for Andrew Bounds capitalist, entrepreneur to London in the early 1960s. Hamilton Bradshaw, a private equity without, but it is hugely alternative providers of finance, such Enterprise Editor Education: Left school at 16 and firm. Joined the BBC television series commercially successful, too. as Centric, which supplies asset-based and former TV ‘dragon’, joined a recruitment company. Dragons’ Den in 2007, leaving in 2011. lending as well as invoice discount- René Carayol talks to Mehreen Khan Business career: Founded Alexander Charity work and awards: Charities What do you keep next to your ing. New business models for lending Writer and broadcaster on Mann, a recruitment group, in the include the James Caan Foundation, bedside table? have also sprung up, with many com- business and entrepreneurship 1980s. Sold it to a private equity firm which promotes entrepreneurship and My iPad. I want to know how panies using the internet to create What do you think are the in 2002. In the 1990s, co­founded education. Awards include the BT markets are trading before I go to ways of raising funds. Online market- Mehreen Khan prospects for start­up businesses Humana International, the executive Enterprise of the Year award in 2001. bed because most of my trades are places for debt, including peer-to-peer FT contributor in the UK, given the uncertain headhunter, with Doug Bugie. Studied global, and the iPad is the best thing lenders such as Funding Circle, claim economic outlook? at Harvard Business School, Compiled by Rebeka Shaid for it. My wife does not think it is to be enjoying significant growth. Rebeka Shaid The climate is challenging because so great but, luckily for me, she “” is a concept that FT contributor banks are not lending and people are usually dozes off by the time I go arrived in the UK this year. Instead of tentative to deploy capital when to bed. one large investor putting money into Jonathan Moules things are so difficult. But if you a business, larger numbers of smaller Enterprise correspondent still have a compelling investment business is not easy at the best of the one hand, and then an How would you like to be investors contribute as little as £10 project, the money is out there, it is times. Today, there are so many opportunity to deploy that success in remembered? each to raise the required capital. The Michael Skapinker just a matter of convincing investors facets you need to master to be areas where I gain far more I have been moderately successful in first UK-based crowdfunding website Special Reports Editor you are worth it. successful. The more you satisfaction than I do in business. business, and in the past seven is Crowd Cube, which has so far The current volume of investment understand, the more prepared you My biggest failure was a few years years, I set up the James Caan financed one company to the tune of Hugo Greenhalgh/Paul Solman is around £2bn a month, so I expect are to make better decisions. ago, when I invested in a sandwich Foundation. If I were remembered, £75,000. Editors roughly £20bn to be available in the Harvard gave me a stronger chain called Benjys. It had 100 I would like it to be as someone who Alternative debt providers broaden small and medium-sized enterprise understanding of international outlets and employed 600 people. I used his skills in business to benefit the range of choices available. But Steven Bird sector this year. Clearly, there is still business and trade that I had not thought my expertise could be useful those who were less fortunate. these lenders are still niche players, Designer some money there. experienced before. I went at a point but I failed conclusively and lost all I am also involved with the and only a small part of the solution. when I had just sold a business, had my money – millions; I cannot Prince’s Trust [the UK charity] in Equity finance from wealthy indi- Lindsay Cameron You went to Harvard Business something of a gap, and I utilised remember how much. giving young people loans to set up viduals is an option that is increas- Picture editor School quite late in life. How that time to gain a different their own businesses, mentoring ingly available. It is encouraged necessary is higher education for understanding of business. The In terms of your investment them and helping them come back through tax breaks, such as the Enter- Jearelle Wolhuter budding entrepreneurs? decision seemed weird to some portfolio, is there any sector that into society with integrity. That is prise Investment Scheme. Syndica- Sub­editor My own experience has been that people, especially after I had been so you would still like to make your something really invaluable. tions or investment clubs have successful. “What could higher mark on or regret missing out on? allowed these business angels to do Siobhan Cassidy education teach me?” they asked. The sector that I am starting to bigger deals (£1m or more) and pro- Production editor But you never stop learning. If focus on more and more is social vide more rounds of financing for Words from the top you are not keeping abreast of enterprise, where you have Words from the top each investee company. Lack of demand changing dynamics, it puts you businesses that are real, but that Next generation This is also providing just a rela- For advertising details, contact: in a weaker position as a business contribute to society because they tively small amount of capital, how- Robert Grange on: ‘The absence of person. want to make a difference. It is quite ‘Young companies ever, partly because most small busi- +44 020 7873 4418; are best funded demand is a much an exciting sector, which plays to ness owners in the UK still seem to email: [email protected] by successful bigger issue for What do you consider your biggest my strengths because it is involved prefer debt finance. or your usual representative SMEs than access success and failure in business? with building an enterprise. entrepreneurs The total size of a funding round to bank lending. Success was the formation of my There have been a number of who then invest raised through angel networks and in the next All FT Reports are available on Consumer foundation. I wish I had done it times when I did not buy certain syndicates in 2008-09 was typically FT.com/reports confidence and sooner. It is a place where I have an shares, and then they went on to generation. This below £500,000, according to the discretionary spending capacity is low outlet for my success, where I can triple in value. But that is part of model of Department for Business. In most entrepreneurs backing entrepreneurs Advertisers have no influence over, at the moment, impacting traditional utilise the proceeds of my businesses the journey all entrepreneurs take. deals business angels contribute less is the future of the financing of or prior sight of, the articles in this in an environment to build schools, than £200,000. small entrepreneurial businesses’ entrepreneurship’ report or online material. Andrew Owens, founder, villages, help the homeless and be a Which brand or company do you Julie Meyer, chief executive, Henry Ejdelbaum, managing direc- Greenenergy International patron of cancer research. most admire? Ariadne Capital tor of ASC Finance for Business, a It is the best job in the world. I Google. Its impact on our society and commercial finance broker, says the have a platform to create capital on the business world is remarkable. problem for many businesses in need FINANCIAL TIMES TUESDAY OCTOBER 4 2011 ★ 3 The UK’s Entrepreneurs A strong Mastering work ethic is the arcane the key art of the Profile Tony Banks Ex­soldier who built a care home business black swan talks to Liz Bolshaw go into medicine,” he says. “I Tony Banks has changed. The Interview didn’t want to do that, so we chief executive of Balhousie agreed on a halfway house that Care Group, ’s largest Stephen Catlin tells was dentistry, and I didn’t privately owned care home Liz Bolshaw about his really want to do that either. So company, may still fly his own I didn’t work very hard and helicopter, but he has ditched almost accidental didn’t get the grades. I landed in the Aston Martin DB9 – success in insurance Lloyd’s by default because I “because you can only get two needed a job and met a guy people in the car and a packet through sailing.” of sandwiches in the boot” – hen I started the It paid off: Mr Catlin, who for a more practical BMW X5. business 27 years never went to university – “I’ve These days the “trappings of ago … I wanted to certainly got a degree in making success” matter less. make sure my fam- mistakes, I can tell you that” – “What I deem necessary to Wily and I were financially is now a visiting fellow of be considered successful is secure, and that was the extent Oxford University. recognition, to be an industry of my ambition,” says Stephen To explain what for many is leader, to have a seat at the Catlin about the motivation the arcane art of insurance and table and be listened to. I want behind his independent, Lloyd’s reinsurance, Mr Catlin cites to leave a legacy,” he says. of London-listed insurance Nassim Taleb’s book about The youngest of four group and FTSE 250 company. improbability, The Black Swan. children, Mr Banks’s father “If you said to me then, you “You can never, ever predict was in the Royal Air Force are going to be running a com- timing or causation, but you can and both his parents were pany that has a market capitali- predict effect,” he says. “That from . “We were a sation of £1.5bn, writing $4.5bn pretty much describes how we very working class-type in premiums, I’d have said, ‘You think as insurers and reinsur- family,” he says. are completely mad’.” ers. The really important thing His work ethic has run Or very prescient: Mr Catlin is is to understand the risks that in his veins since he was the overall winner of this year’s we are taking on.” Stephen Catlin: ‘I am more ambitious today than I was even 10 years ago’ Charlie Bibby a lad, “doing paper rounds, Ernst & Young UK Entrepre- Sometimes this means chasing chickens”, and neur of the Year awards. employing experts in the more we had thought of what might remains strong today. In the past 10 years, Catlin esoteric insurance classes in happen if two jumbos collided Ernst & Young UK Entrepreneur of the Year List of winners “The difference between Group has grown from 92 mid-air in downtown New people who are successful employees to 1,800. It has diver- York,” he says. and those who are not is sified the focus of its business ‘With big disasters, This allowed Catlin Group to Stephen Catlin Catlin Group Kevin Hard EvoEnergy Steve Oliver and Walter that successful people are from 97 per cent London-based the skill is foreseeing honour all claims made against Master Entrepreneur and Cleantech and Renewables Gleeson Entertainment Magpie prepared to go that extra mile, to 50 per cent, and from a com- the company. UK Overall Winner Consumer Products and Services to go through a bit of pain. pany with two international potential knock­on However, there was a conse- David Suddens R Griggs Group My business is a 24/7 offices to 54 offices in 22 coun- effects and unintended quence to the terrorist attacks Bryan Bodek Airline Retail and Wholesale Errol Damelin Wonga.com business,” he says. tries. No wonder its founder and of September 11 2001 that even Services Holdings Ecommerce and Technology Joining the Territorial Army chief executive says: “I am more consequences’ Mr Catlin had not forecast. The Business Products and Services Mark Pearson Markco Media to supplement his student ambitious today than I was even firm was running a cancellation Emerging Entrepreneur Colin Robertson grant, Mr Banks discovered 10 years ago.” book for the NFL American foot- Michelle Clothier and Alexander Dennis that he “enjoyed the TA more But while emerging markets which the firm operates. “We ball games. Sam Conniff Livity Jim Walker Argent Energy (UK) Outstanding Achievement than I enjoyed the BA, so present opportunities, Mr Cat- have someone who runs our sat- “We couldn’t envisage an Social Enterprise Manufacturing and Processing Award much to my parents’ disgust I lin’s attitude to growth is cau- ellite account,” he says. “He’s a occasion when all games would joined the army. I wanted the tious. “If you’re not very care- rocket scientist. Seriously. He be cancelled,” he says. “It had maroon beret: I wanted to join ful, you can lose a lot of money could bore you for hours and never happened – even when the elite and be the best.” very quickly,” he says. hours about space exploration.” John F. Kennedy [the US presi- by a team that is key, he says. learned...is if you can find either have those values in the He saw active service with Nevertheless, he says: “I have For a Lloyd’s name the risks dent] was shot. But then 9/11 “That process from a vision to people who share your values, heart or they don’t.” 2 Para (Second Battalion, the been part of a company that has are also personal. “I put the came along. We lost about delivery is often a 5-10-year cultural, religious and racial Even more testing than the Parachute Regiment) during been setting up new businesses, house in my wife’s name a very $10m.” period, and not everyone has issues go away and you are left hunt for the right staff is some- the , but it was albeit as subsidiaries of a group, long time ago,” he says. Mr Catlin ascribes his success the courage of his convictions to with the normal challenges in thing over which he has no con- afterwards, during a spell as a for the last 10 or 15 years. I love With big disasters, both natu- to “sheer grit and determina- weather the storm on the way. life, which is the ability to com- trol – the current macroeco- life-insurance salesman, that the start-up process – it is the ral and man-made, Mr Catlin tion”. He believes that a com- That may differentiate entrepre- municate. Our key values are nomic situation. he acquired his taste for most exciting thing you can do.” says the skill is foreseeing pany needs a vision and that neurs from others.” transparency, teamwork, “I’ve seen a good deal in my business. It was 1987 and “I Mr Catlin’s entry into the potential knock-on effects and there is often a single instigator The biggest challenge during accountability, integrity and career,” he says, “but never didn’t even have a suit”. insurance profession would unintended consequences. of that vision. However, it is the the group’s 27-year history has dealing with dignity with people before have we had to deal with He found he was good at have had long odds. “My father “We hadn’t envisaged 9/11 any delivery of a successful strategy been employing the right peo- up and down the line, both so many different moving selling and was soon pulling was a doctor and wanted me to more than anyone else had, but through focused implementation ple, he says. “The lesson we internally and externally. They parts.” in £3000-£4000 per month. “All my bosses were running round in their red [Porsche] Carreras, talking on their mobile bricks,” he recalls. The appeal of student life Words from the faded and he decided to do top Job creation Get rich quick his own thing. ‘I’d say I was fortunate Selling their house in ‘During Aldershot, Mr Banks and his recessions wife at the time, who was a new oppor­ from online cash trained nurse, bought their but never had it easy’ tunities first care home in 1992. “For emerge and the first 10 or 12 years it was a new solutions Critics say the very high lifestyle business. I was doing billionaire head of the Virgin to mentor the start-up. Climate- are required. Profile annual percentage rate (listed everything – cutting the grass, Profile Group, may have electrified his cars was born. Entrepreneurs Errol Damelin as 4,214 per cent on going to cash and carry, you Nicko Williamson insomniac teenage years, but a “During that first period create the precious jobs the UK Wonga.com) takes advantage of name it,” he remembers. chance meeting with Ivan when we were running out of needs right now, and should be Liz Bolshaw talks to the poor and desperate. Mr After a decade, he confesses The green taxi Massow, the financial services cash, I can’t say the thought supported in this‘ Damelin says that is he “was getting bored and entrepreneur, grounded that [of giving up] never occurred to Susan Aktemel, director of the founder of the “misleading. Our business is when I am bored, I am innovator explains to enthusiasm with practical me,” Mr Williamson says. “But Impact Arts Projects internet loan provider like black cabs. It is outrageous dangerous”. Liz Bolshaw ambition, advice. I was confident that the idea that it costs you £12 to cross He determined to expand and Mr Williamson was still was going to work, and we had the West End at 2am, but … build the business. “Looking not privilege, is what finishing his undergraduate a good sales pipeline. It was “My parents were not silent for some people for some of the back now, I wish I had done counts in the end dissertation when he wrote the just a matter of cashflow.” money is never easy. I’d say movie fans and although Errol time it is still worthwhile. The that earlier,” he says. business plan for his environ- A year from launch, he I was fortunate but never had is an unusual name, it is less black cab’s rates are totally Balhousie now comprises 22 mentally friendly taxi service raised a further £300,000 from it easy.” unusual in South Africa, but I transparent. Wonga does the homes serviced by 800 staff Not many 13-year-old public But “it was Ivan who angel investors. He has not taken on a have no idea where the same thing. If we provided the looking after 800 residents. school boys caught reading in suggested I should go and Last year, Climatecars had business partner and clearly inspiration came from,” Errol service for a year – or for a 10- Turnover is expected to hit their dorm after lights out are spend a month working at sales of £2.2m and is on track, relishes the freedom that Damelin, founder of Wonga, year mortgage – it would be £20m this year and he has just found to have been devouring a Addison Lee [the large according to Mr Williamson, to brings. “I do like having the online, short-term loan massively expensive, but one acquired a pharmacy business, business autobiography. But corporate taxi service in break through £3m this year. control and it means I can company, tells me over a doesn’t use it like that.” as he spends “more than £1m Nicko Williamson is no London] to really understand Ninety per cent of the business make decisions a lot faster,” crackly telephone line. “I like Average loans are £400 and on drugs with chemists and we ordinary Marlborough College the business,” he says. is corporate and the company’s he says. it though.” paid off in 15 days. Default can do that ourselves”. product: his entrepreneurial He took the advice, raised largest client, which cannot be Apart from offering big Mr Damelin, whose company rates are about the same as Mr Banks is passionate ambitions started young. He £200,000 from family and named due to a non-disclosure companies green credentials, is now four years old, is a credit cards (7 per cent) and about the need for social care describes his schoolboy self as friends, including £50,000 of his agreement, is a big US Climatecars relies on customer serial entrepreneur. After a about two-thirds of applicants to be properly funded. He “rather rebellious, not good at own savings, and won a investment bank. service. “Our cars have leather childhood in South Africa and are turned down. points out that the £570 per toeing the line”. business-plan competition at Mr Williamson has few seats, mineral water, magazines three years in investment “We’re collecting about 8,000 week he receives for a resident His pukka education – prepa- London Business School that regrets. “There are so many and be-suited drivers,” Mr banking, he was involved in pieces of data in milliseconds funded by the local authority ratory school, Marlborough, brought two MBA graduates in mistakes in the early years, but Williamson says. “Apart from two business start-ups in Israel on every transaction before we would buy him two nights in Bristol University – and I think I learned from all of trying to be the greenest option before founding Wonga. decline or accept it. We don’t a London hotel “and there no comfortable background in them,” he says. “I could have available, we want to offer a The brand, from its Romany lend to everybody all the time,” one wipes your bum”. rural Dorset followed a ‘I can’t say the been better at hiring chauffeur-level service at slang name to the catchy TV he says. The importance of providing predictable trajectory to several thought [of giving up] the right people – Addison Lee rates.” ads featuring three geriatric, Using technology to an excellent standard of care is internships at a couple of that was a skill I In the early years, the fist-bumping puppets, is self- transform the “way lending key to Mr Banks’s vision for hedge funds until, aged 22, he never occurred to me, lacked in the early company ran on off-the-peg consciously irreverent. It aims was done traditionally, based the Balhousie brand: “No one determined to start his own but I was confident stages – but I am not technology, but it has now to take the stuffiness out of upon individuals’ reading of wants to end up in a care business. Losing My Virginity, sure I would really invested in a bespoke banking and replace it with other people’s risk” applies an home. It is an unfortunate, the book by Richard that the idea was change anything.” information technology system slick, quirky humour. It wants objective measure to consumer distress purchase, but going Branson, the It is tempting to that is driving everything from to demystify what is typically credit, Mr Damelin argues. there should not be a … [jail] British going to work’ ascribe some of his the online booking to an a socially unacceptable need “Everyone gets to pay the sentence. It should be a part success to a iPhone app. “It is a technology- for short-term cash, and make same – we don’t have of your life that you can privileged start, driven business now,” Mr it routine – even fun. It is a differential rates.” hopefully enjoy. That is what but such Williamson says. disruptive player in a crowded Competition is growing, I am trying to do.” accusations are With the business in profit market. however, and an internet simplistic. As and a solid team in place, he is “People have and continue search reveals a slew of he puts it: looking towards the horizon: to have cash flow problems lookalike companies apparently Words from the “I was lucky “There is no reason why around the world … so we’ve offering the same service. Mr to have Climatecars isn’t replicable in mobilised technology to solve Damelin, though, is not top State of play connections other cities,” he says. “We are the problem. Data storage worried. “Consumer services ‘I fear this but raising actively looking at a particular capabilities allow us to deliver are always competitive and downturn serious city in Europe at the moment, the service much more quickly they should be. That is could result as well as other cities in the and conveniently than anyone [testament to] the strength of in a genuine UK, and we have a lot more to could hope to do without the market if people try to adjustment do in London, where we are technology,” Mr Damelin clone and copy it. We spend across many still a minnow.” explains. very little time as a business nations. Of His drive is palpable. “I am a The company, most recently thinking about competition.” concern is very, very ambitious person,” backed by £73m of venture Entrepreneurial success rests whether the UK is becoming he says. “I want to build funding led by Oak Investment on “thinking big while being uncompetitive with oppressive sustainable businesses. It is not Partners, has not found focused on execution when tax regimes, high costs and just about Climatecars. I am financing a challenge. Mr playing in a very big market. negative sentiment towards sure I will build other Damelin says: “If there’s an Too many good people focus on business‘ businesses in my life. I imbalance today, it is too much opportunities that are just too Haraldur Agustsson, managing don’t look back, but am money chasing too few good small. You need a vision and director, Globus (Shetland) Photo: Ben Stansall always focused on the ideas. Even more than that, you need a lot of energy and next stage.” there are too few good teams.” endurance.” 4 ★ FINANCIAL TIMES TUESDAY OCTOBER 4 2011 The UK’s Entrepreneurs New kind of company wants to care for the community

businesses to be working in Chambers, chairman of the the poor. That is unlikely to lost a bid to run community back social enterprise. enterprises who struggle to more businesses coming Social enterprise the most deprived areas Skoll Centre for Social be successful in an increas- health services in neigh- Emma Turner, director of get bank finance. It recently through that not only want (39 per cent compared with Enterpreneurship at the ingly connected world.” bouring north and west client philanthropy at Bar- opened a microfinance fund to grow but also want to Andrew Bounds 13 per cent). University of Oxford’s Saïd Governments should gen- Surrey. The preferred bid- clays Wealth, the wealth for them to tap into. make a difference.” For one looks at turning a However, they often do Business School, detects a erally not get involved in der for the five-year deal, manager, says clients Thom Kenrick, the com- thing, it helps to attract better than their for-profit new breed that aims to enterprise, but should set worth about £90m per year, increase their donations in munity investment man- motivated staff, he adds. profit from solving peers, with 58 per cent become global. rules to ensure the innova- was Assura Medical, which difficult times, but some are ager, explains that CDFIs Mr Chambers agrees. The social problems growing last year, com- “My profound belief is that tors have a chance to suc- is 75 per cent owned by Vir- turning to social enterprises help businesses to grow in profile of those attending pared with 28 per cent of what we call social entrepre- ceed, says Mr Chambers. rather than charities to their own communities. “If his course has changed over mainstream companies. neurship today should be “There is always a role solve deep-seated problems. our communities prosper, the past few years, from Tough economic times have They employ approximately called entrepreneurship for government. Businesses ‘Many more Andrew Haigh, head of our business prospers,” he charity delegates to more not stemmed the rise of 800,000 people and contrib- tomorrow,” he says. have to be constrained by businesses not entrepreneurs at , the says. conventional MBA stu- social enterprise – a loose ute more than £24bn to the He says these types of the system,” he says. private bank, says many of Mr Chambers of the Skoll dents. The divide between term covering mainly not- UK economy. businesses would be solving Mr Holbrook says there is only want to grow his clients are looking to Centre says: “There is a those who want to make for-profit businesses that Peter Holbrook, chief problems such as crime, a danger the sector could be but also want to invest in social enterprise. wall of investment cash money and those who want aim to improve society. executive of Social Enter- poor education, climate throttled by its bigger rivals However, there needs to be available to improve the to do good is shrinking. Social Enterprise UK, the prise UK, says: “We are see- change and water shortages as its public funding is cut. make a difference’ a system for measuring the efficiency of our uses of “There is a mainstream- body promoting the sector, ing a new generation of in future, while traditional According to him, big cor- “social return”. There is energy.” ing of social entrepreneur- says 62,000 such businesses, social enterprises being cre- companies would just be porates with a long track also an appetite for receiv- Duncan Cheatle, an entre- ship. Most people didn’t including co-operatives, are ated during these incredibly saddled with the costs. record and deep pockets are gin, the UK-based group ing a small financial return, preneur who also runs know what it was eight operating in Britain. difficult economic times, in “The big challenges are able to outbid younger controlled by Sir Richard allowing money to be “recy- Thanksto.com, a website years ago, 100 per cent now According to Fightback the communities where social. The liabilities associ- social enterprises for gov- Branson. cled” into other projects. allowing people to thank know what it is. They want Britain, a report from they are desperately ated with social threats are ernment contracts. Given that the govern- RBS, the bank, has been everyone from their inspira- business to make the world Social Enterprise UK and needed.” not on company balance In September, Central ment is retrenching staff backing community devel- tional teacher to the bus a better place. They see no the Co-operative Bank, The vast majority of these sheets but soon will be. The Surrey Health, a staff- and returns from tradi- opment finance institu- driver that returned their distinction between doing they are three times more businesses have fewer costs are shunted on to gov- owned service lauded by tional investments are low, tions, small funds that lost wallet, says: “There is a well and doing good,” he likely than conventional than 10 staff, but Stephan ernments, aid agencies and the coalition government, private money is seeking to channel money to social sea change, with many says. Minister: UK red tape is strangling business

Andrew Bounds reports Most entrepreneurs want to see it cut back to 40 per cent. A Treasury on this year’s Made festival study reporting this year is likely to for entrepreneurs find it raises little, if any, revenue, as it can be circumvented. But the Lib Dem partners in the coalition believe ark Prisk, business minis- it is necessary to show that all sectors ter in the Conservative of society are sharing the pain as aus- he said. “I have seen businesses give organisation, has urged the govern- invest in bundles of small business On the train: -Liberal Democrat coali- terity measures start to bite. up because of this. The costs of fight- ment to stimulate lending to small loans. business minister Mark Prisk tion government, likes to Some question how much regula- ing are so great that most companies business by reducing the capital However, such bold ideas are addresses entrepreneurs Mquote Ronald Reagan, the late US tion can be cut, given the constraints agree to settle,” he said. requirement set aside as provision unlikely to be adopted by a govern- en route to this year’s president, as saying the scariest imposed by the European Union, The government is reviewing the against such loans. He has also sug- ment committed to Ronald Reagan’s Made festival words in the English language were whose demands can be seen to be system, believing it is too easy for gested that the Bank of England could dictum. “Hello, I am from the government and responsible for 80 per cent of UK legis- staff dismissed for incompetence to I am here to help.” lation. claim they were victimised. Mr Prisk The familiar refrain raised a laugh Duncan Cheatle, a co-founder of said it would enact measures to target from the audience at September’s StartUp Britain, a private sector cam- vexatious and repeat claimants. Made festival in Sheffield, attended by paign to encourage enterprise, said However, the Labour government several hundred entrepreneurs and the government’s best intentions did do much to encourage entrepre- more than 2,000 people hoping to could be thwarted by Brussels. neurship, according to Stuart Watson, learn from them. He said the biggest bugbear among a partner at Ernst & Young, the pro- Mr Prisk, a Conservative member of members of his Supper Club network- fessional services firm. “There is a parliament who ran a property con- ing group was employment law, rise in entrepreneurship,” he said, sultancy before entering politics, which they view as favouring employ- with some credit due to Gordon believes the best thing the public sec- ees. “Employment tribunals are a Brown, the former prime minister, tor can do for the private sector is get more important issue than cash flow,” and Sir Ronald Cohen, a veteran of out of its way. the industry, for “We cannot let thousands of flowers bringing its techniques to government bloom if I trample all over them.” and creating a range of tax-friendly However, he then went on to list structures for investors. But he said five things the government was doing the UK faced a constant battle. to help. They range from tax reform – “Entrepreneurs have to compete on incentives to invest in start-ups – to a the world stage; governments have to mentoring scheme. The tax system is compete on the world stage. too complicated, he admitted. “We “Entrepreneurs create businesses want to make this country one of the and jobs and disrupt things. You have best places to start and to grow your got to encourage people like that to enterprise, not just for the sake of the live in your country. That is a mix- economy but for communities.” ture of local government making it an He claimed the government had interesting and vibrant place to live, scrapped legislation that would have good transport links [and] research- cost small and medium-sized busi- led universities. Is it the kind of place nesses £350m. “There are 21,000 bits of View from the FSB young, thrusting people want to live?” red tape and regulation on the statute Regulation hinders growth he said. book. We are working to strip that Governments need to keep taxes away.” A third of entrepreneurs have said low, and invest in a fast and wide- The coalition has adopted a “one-in, that regulation is the single biggest spread broadband network. However, one-out” strategy under which it must obstacle to growth. The Global Britain’s private providers have first repeal a regulation before intro- Competitiveness Report from the baulked at funding this. ducing a new one. However, the World Economic Forum, the inter­ Mr Watson also questioned the effects have yet to be seen. national business conference, still effectiveness of public sector venture Mr Prisk said replacing government- ranks the UK 89th out of 139 capital funds, aimed at bridging the paid advisers with voluntary mentors countries for the burden it places “equity gap” of up to £5m where start- on business. would transform business support. ups find it hard to attract investors to Government must make microfirms The government is recruiting the first help them grow. “The problem with exempt from new regulations in the 10,000 and hopes to increase that to EU where possible; reduce the flow these funds is they can only fund you 40,000. of new regulation in the UK as well so far. If they can only go up to £2m, “These are people with business as tackle the existing stock, and who is coming in the second and third experience,” he said. “A little grey ensure inspection regimes are round? You can’t find them,” he said. hair makes a lot of difference.” proportionate and risk­based. With funding still a big issue some However, on the most controversial have called for radical action by point – the temporary 50 per cent top John Walker, national chairman of government. rate of income tax brought in by the the Federation of Small Businesses Richard Lambert, the former editor previous Labour government and con- of the Financial Times and ex-director tinued by the coalition – he was silent. general of the CBI, the employers’

Ernst & Young Entrepreneur of the Year

The Ernst & Young Charles Dunstone (Carphone At each step of the went on to take the Entrepreneur of the Year Warehouse), Aidan Heavey process – from regional to worldwide title. awards programme (Tullow Oil), Tim Richards national and then global – However, this is more celebrates entrepreneurs – (Vue Entertainment), Michael judges receive a detailed than an awards programme. recognising that Spencer (Icap) and Ayman history of the finalists and The entrepreneurs build entrepreneurship and Asfari (Petrofac). conduct formal interviews valuable networks, raise innovation drives the growth In the UK, there are three with them. their profile – the Irish of the broader economy and regional rounds. Here the Finalists are rated on programme produces a plays an important role in entrepreneurs are evaluated seven criteria: television series shown on job and wealth creation, by an independent judging ● Entrepreneurial spirit RTE, the state broadcaster – writes Steve Varley. panel. Each regional winner ● Financial performance and, as alumni, are invited This year’s UK finalists are goes through to the national ● Individual and/or to world­class events. These responsible for combined contest where they are re­ corporate social include E&Y’s Strategic annual revenue of £7bn and evaluated as they compete responsibility Growth Forum in Palm have achieved employment for the title of Overall UK ● Innovation Springs, US, Entrepreneur growth of 20 per cent in the Entrepreneur Of The Year. ● Leading and building Of The Year Retreat in past year. Some of them are The judges are recognised teams Cape Town, South Africa, growing their businesses industry leaders, many of ● National or global and annual Irish chief cross­border through exports whom are past winners, so impact executive retreat. and overseas investment. they understand the ● Strategic direction This year, the programme The awards programme challenges the participants The overall winners from celebrates its 25th year of was founded by E&Y to help face. This year, our 2008 both the UK and Ireland running in 140 cities in 50 entrepreneurs achieve their winner, Richard Harpin, then go on to the Ernst & countries. potential. Over the years, it founder of Homeserve, the Young World Entrepreneur has spotlighted more than home repairs insurance Of The Year awards in The writer is UK and 1,700 finalists, with past UK company, chaired the Monte Carlo. In 2010, UK Ireland managing partner and Ireland winners including judging panel. winner Michael Spencer at Ernst & Young