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  • 44% of investors now look to back UK-based companies rather than global firms

    44% of investors now look to back UK-based companies rather than global firms

    What has Covid taught investors? Luke Davis, CEO of IW Capital, discusses what investors have learned from the ongoing pandemic.

    Investing was one of the most unpredictable aspects of 2020 for anyone concerned with the market, whether that be a sophisticated portfolio or just a workplace pension. The stock market crash at the start of the lockdown and continued economic disruption has left many wondering what the future will hold, while soaring tech stocks have added further complexity to an ever changing market. But what has the Covid pandemic taught investors?
    The overall effect of this period has led investors to reconsider what they are doing with their investable assets. To understand this shift, SME investment specialist IW Capital has conducted nationally representative research to uncover the sentiments of the UK’s investors.

    They have found:

    44% of investors are now looking to back UK-based companies rather than global firms –  9,629,000
    45% of investors feel their ‘risk-appetite’ has increased due to Covid-19, as traditionally safe investments in big companies are no longer viable – 6,942,000
     27% of investors are looking to invest in sectors created by the Covid-19 pandemic, such as PPE, social distancing equipment and virtual solutions – 5,674,000
    19% of investors believe the coronavirus pandemic has opened more investment opportunities than it has closed – 6,278,000

    Looking beyond the panic 

    Each period of disruption, like that felt last year, offers opportunity for companies to adapt quickly to the changing times and although there has been a lot of worry and negativity surrounding the new lockdown restrictions, we have to look to the positives with one of them being the roll out of the Covid vaccines. Working with both entrepreneurs and investors, there is a clear desire from the small business community for growth investment and to take a big step growth-wise this year. With a 12% increase in new businesses starting up during 2020 compared to 2019, 2021 is set to create some exciting investment opportunities for investors throughout the country.

    The unexpected happens

    This year has taught us that the unexpected does happen. Investors need to look to the future and prepare for the unexpected to improve financial resilience. This could be by having liquid assets or a rainy-day fund you can use if investment values fall, which is particularly important if you’re drawing an income from investments. Having options for when the unexpected does occur should be part of any investors financial plan and is something that has been brought to the forefront for many as a result of the pandemic.

    Maintain a diverse portfolio

    The Covid pandemic has had a far-reaching impact across a variety of sectors, however some industries have been affected far more than others, with travel and hospitality being forced to close for months at a time and unable to trade. In contrast, the pandemic has created opportunities for some sectors too, such as manufacturing and biotech. While a diverse portfolio will still have suffered volatility, it can help lessen the impact. Investing in a range of assets, industries and locations can help spread the risk. When one investment falls, another may perform better helping to create balance.

    Don’t overreact to market volatility

    When the pandemic first hit and the stock market plummeted, many investors began to panic and looked to sell shares in order to avoid potential future losses, but when investing, a long-term time frame and goal is so important. Short-term volatility is often smoothed out once you look at investment performance over a longer time frame. It can be frustrating to see that investment values fell in 2020, but when you look at performance over the last five years, for example, you’ll probably still see an upward trend.
    Luke Davis, CEO of IW Capital said:
    “Investing and investing wisely has never been easy by any stretch but this year has been particularly difficult for investors at every level. 2020 demonstrated the value of long term investing and future planning. The stock market crash in March triggered a real halt in investment, and although the market hasn’t fully recovered, there has been strong growth since November and in places in the US share indexes are actually higher than the last year.
    “There have been winners and losers from each stage of the pandemic with sectors like travel feeling the true impact of the pandemic and others like online solutions seeing growth and opportunity in a time of financial turmoil. But, this is true of any world event and has forced investors to look to be more future facing.”

  • Auto-Enrolment: What employers need to know

    Auto-Enrolment: What employers need to know

    This is a huge increase in numbers compared with the first 14 months of inception, when around 3,000 of the UK’s largest employers reached their staging date.

    A survey of IFAs carried out by financial research organisation Defaqto, on behalf of Now: Pensions, at the start of this year hinted at the problems that could lie ahead.

    It found that 55 per cent of the 264 consultants and advisers surveyed had concerns about their ability to service organisations that were due to stage between April and June 2014. In fact 17 per cent said they had no intentions of advising on auto-enrolment, of which 27 per cent considered the administrative burden too onerous.

    However, the volume of employers hitting their staging date at the same time is only part of the issue. The fact that many are thought to have left their auto-enrolment planning till late will only serve to compound the problem.

    Many also lack the knowledge they need to make informed decisions about choosing the best auto enrolment solution for their employees, according to 89 per cent of the IFAs surveyed by Defaqto.

    It is with this in mind that Financial Advisers have got a very strong role to play. Becoming ‘workplace pension friendly’ is not really about the selection of the end pension scheme. It’s all about the compliance and fulfilling your duties.

    Employers want to comply with the regulations and make the installation and communication processes as simple as possible.

    The choice of the end scheme is secondary, it’s important but it’s secondary. For an employer, this is about compliance.

    Therefore what are the things that an employer needs to bear in mind.

    Up until February 2018, employers will need to automatically enroll all of their “jobholders” in a workplace pension scheme. Minimum employer contribution levels will also apply. Jobholders may choose to opt out of the scheme, though.

    1. Employers should identify the date when they must start auto-enrolment. The largest employers started from 1 October 2012, with smaller and new businesses phased in over the next four years.

    2. Employers should check in advance whether their existing pension scheme meets the minimum requirements for auto-enrolment. This includes minimum contribution levels (for defined contribution schemes) or benefit levels (for defined benefit schemes). Also, the jobholder must not be required to provide any information or to express a choice (for example, about the investment of contributions) in order to become an active member.

    3. Employers should identify their jobholders and establish which of them are not already enrolled in a compliant scheme. Jobholders include employees, temporary workers, directors employed under a service contract and agency workers (who are considered to be employed by whoever is responsible for paying them). They must have a minimum level of earnings (set at the income tax threshold) to qualify. Jobholders aged between 22 and state pension age who are not already members of a compliant scheme will need to be automatically enrolled in one.

    4. If any jobholders are not already enrolled in a compliant scheme, employers should consider what scheme to use to meet the auto-enrolment requirements.

    5. Employers will need to check that they are satisfying the requirements in respect of minimum contribution levels for their employees. For auto-enrolment purposes, contributions are based on a definition of earnings which includes salary, wages, commission, bonuses and overtime. Contributions are only paid in respect of earnings in a defined band (currently £5,668 to £41,475). Contributions to an existing scheme may be based on a different definition of earnings, so company payroll systems may need to be updated.

    6. There will be an optional waiting period of up to three months before an employee needs to be automatically enrolled into a workplace pension. Workers can, however, opt in during the waiting period.

    7. Employers should also put processes in place to identify auto-enrolment triggers for existing employees and new joiners (eg when they turn 22 or reach the minimum level of earnings).

    8. Individuals can opt out of scheme membership, within one month of becoming a scheme member or receiving enrolment information. If they do so, all contributions must be refunded. Someone who has opted out can apply to re-enroll, but only once in a 12-month period. Automatic re-enrolment will apply every three years, although employers will have some flexibility about when re-enrolment should take place.

    9. Employers will need to communicate with staff about auto-enrolment and explain that they have the right to opt out if they wish. Employers must also report to the Pensions Regulator to confirm that they have complied with their auto-enrolment obligations.

    Employers cannot encourage jobholders to opt out of auto-enrolment nor can they encourage candidates to do so during the recruitment process – penalties will apply. Employers should bear this in mind when communicating with their workforce about the new requirements.

    Don’t stick your head in the sand hoping that this is going to go away because it is here to stay. Help is available with many advisers, providers and payroll companies offering guidance through the workplace pension maze so don’t be afraid of picking the phone up and asking for help.

  • In a mental rut with your business? Let’s sort that out right now …

    In a mental rut with your business? Let’s sort that out right now …

    Learn to recognise when your negative thoughts are holding you in a mental rut and instead move forwards with success

    Vicky Stanton worked in both the private and public sectors in HR finishing her corporate career in the police service after many years. Knowing full well that HR were mostly called in to deal with the negative issues when they arise she wanted instead to empower people within their roles as business leaders and unblock the issues that she’d been privy to over the years. By asking the right questions she helps business owners become unstuck from the problems that bind them and instead move forwards confidently. If you’ve been feeling overwhelmed recently read on, one of these golden nuggets of advice might just be your meal ticket to getting going again …

    Why do we get stuck or in a mental rut with our businesses?

    One of the biggest reasons is fear: it’s the fear of change, the fear of failure or even the fear of success that can build up negative thoughts in our minds.

    But people started up their businesses wanting to be successful – why does that fear hold them back?

    Often when I start talking to clients it seems to be the fear of change more than the success; who will I be, will my friends treat me differently, do I need to change personally to accompany the success? Can I maintain the success? Will I be judged if I can’t?

    Fear of failure is a big one, yet of course you can’t succeed if you don’t try, so by not taking any action you’re failing by default …

    Yes absolutely. Fear of failure is paralysing and the amount of pressure we put on ourselves to succeed doesn’t help in the slightest. This notion of ‘one shot at success’ can prevent someone from leaping yet in actual fact you can keep re-trying. Often it can be linked to a confidence issue that may stem from a much earlier life incident. Someone repeatedly calling you ‘stupid’ when you were younger may harbour your initiative now. This kind of negative self talk can be so detrimental to your success. It’s vitally important to recognise it and talk to yourself like you are your best friend.

    So how do we begin to see the warning signs that we might be stuck in a business confidence rut?

    I think there’s eight quick fire signs of being stuck – let’s see if any of these sound familiar:

    Putting off a task? You don’t physically know how to do the task at hand – training or delegation is called for but it’s an effort that you want to delay for time or cost reasons, so you let it slide …

    Procrastination – suddenly it’s vital that the laundry is done or the kitchen cleaned or you’ll just get started after you’ve made a cuppa.
    Control – perhaps you’re in a situation where you’re trying to control something or someone that is uncontrollable and it’s making you feel frustrated and anxious.
    Instinct – perhaps you’re blocking a task or moving forwards because it just ‘doesn’t feel right’. This might be the right course of action but you don’t know what to do next.
    You’re confused without a clear, defined plan.
    Every business owner struggles with overwhelm at some point. Client stress, work demands, to-do lists, health and exercise, family obligations – having to often be more than one person on a team … the list is seemingly endless and the priorities all seem to bear down on us. making us feel completely and utterly powerless and stuck. This also leads onto the next aspect that can make us feel stuck …
    Perfectionism. Insanely debilitating, the feeling of ‘it’s never quite good enough’ harbours so many tasks from ever feeling 100% completed.
    Oddly the final aspect of being stuck is seemingly the opposite of all of the above – laziness. We’re wired to chill. Great, but success comes from taking action, so its really important to  find the time to really relax as well as the time to work.

    So what can our readers action immediately to start ‘unsticking’ themselves and moving forwards with an element of calm and decisive action again?

    I’d encourage everyone to revamp and refresh their plans. It’s been proven that our brains sees the benefits and value of actions for longer term benefits so the more you can plot, plan and visualise the future six months, year, five years the better and more focused you’ll feel.

    We need a plan of action when it comes to business. You’d never start driving in your car without knowing where you were going to or at least having a SatNav on hand and it’s the same in business. Taking time to plan and route your way to market can give you certainty and a level of focus that keep you on track even when things seem out of control.

    Have and use lists. Know what your one key action for the day is and list the other two or three afterwards. Even if you only manage one thing a day make sure it’s the most important one that will push you forwards. Setting task lists and goals will help to overcome the notion of perfectionism by keeping your time management for the completion of tasks dialled. Collaborating with someone who can honestly critique your work and tell you when it’s fantastic, will help build your confidence to know when to stop and be proud.

    When you hear yourself saying ‘I haven’t got the time’ or ‘I can’t do this’, ask yourself: ‘is it true’? Challenge your own thoughts and you’ll reprioritise your day.

    Trust your instincts – often in business we feel as though we have to do it because it’s our business and we should. However if it’s really not feeling right for you then just … don’t! Delegate the task or trust your gut instincts and think of another way round the problem.

    Complete control is unrealistic. Accept this. It’s essential that you learn to park any controlling kind of thoughts – Covid 19 has been the perfect example of this – so much has been out of our hands and we have literally only been able to focus and control on what we’re able to within our realm. Yet people have adapted and made some extraordinary things happen. Instead of worrying about control ask yourself what does this change make possible for me and what can I action to ensure it has a positive result.

    Start journaling.Writing regulates our emotions so get any worry, stress or concerns or possible plans and dreams out onto paper. From that moment on they’re not weighing you down any more so you can be free to rid yourself of them or action them if you need to. It’s a totally safe space to access your own wisdom.

    My final tip is to always plan tomorrow before today is finished. Before you close down for the day, write your list of your key actions for the next day. This way you know exactly what your first action is as you ‘arrive’ at work. No more faffing – just action.

  • Cashflow Management – the only way to keep your business alive

    Cashflow Management – the only way to keep your business alive

    As it grows from a mere thought into a living and breathing entity, it’s an obvious success – that is, of course, until the cash runs out, which is likely to be the end of the line.

    Therefore, it’s safe to say that it makes sense to put as much effort into keeping the business alive and well, as you do in creating your masterpiece. The way to do this is by very realistic forward planning.

    Keep the money flowing
    Start with a week-by-week cash flow plan for the year ahead. This plan must be made up of a realistic assessment of what income will be coming in, and when, but that also covers all the major outgoings like:

    – Tax Payments
    – Subscription fees
    – Technology
    – Utilities
    – Travel
    – Staff
    – Premises
    – Stock and raw materials
    – Insurance

    Don’t assume the worst-case scenario, as thoughts like that may hold you back from starting the business in the first place. The plan does need to be based on the lower end of the estimated sales range though, followed by an attempt to monitor your costs closely, ensuring you stay within budget.

    Try to be disciplined and leave out sales revenue or contracts that you are unsure of – they don’t fall under the ‘realistic’ category. The basis of a cash flow plan is to know whether the business can make it, even if everything doesn’t go your way. . Follow-ups, or ‘reforecasts’ are as important as the initial draft, so review and amend the plan often to see how it compares to actual results and to make sure it reflects the latest trends and impacts on the business, such as: better or worse sales than expected, new contracts, changes in staff or supplier pricing.

    You can always get more cash.
    Some businesses are non-cash businesses, so if yours falls under this category, you should think about customer payment – try to figure out how payments will be taken. You could ask for customers to pay via direct debit or you may want to offer a small discount if some choose to pay early. This will ensure regular cash flow and valuable time will be saved as you won’t have to deal with chasing payments – two things that will benefit you more than a little extra revenue.

    The success of any business is in its customer service and the relationship that’s built with customers. Delivery of service/products must be on time, high quality and consistent, as it’s the number one way to keep customers loyal and happy. Notwithstanding this however, try and keep your fixed overhead costs as low, and lean, as possible – especially in the early days of the business. This way, more cash is free for covering any difficult periods and you’ll have greater flexibility to respond to changing customer demands or issues with the business.

    The tough times don’t need to be so tough
    In some ways, a business is like a living organism – a myriad of internal and external things can impact on its fortunes, so it’s possible that at some point there will be tough times. If so, it makes sense to cut out any discretionary costs and only allow money to be spent on vital things that keep the business running. Try and cut costs wherever possible and look to working out cheaper ways to get the same results.

    If you have a good track record and enough credibility you can try talking to your bank – it works a lot of the time. By maintaining a good relationship with your bank you could get the support and help you need, such as a short-term overdraft.

    The taxman knows where you live
    If you forget to pay the taxman, he will get you! There’s no shame in admitting that you might be struggling, so the smartest to do is to let him know of your troubles. You won’t be ignored, so by contacting HMRC and explaining your cash-flow issues you are spared the dreaded phone call from them later on.

    If you act early, the chances are that you will be allowed a ‘time-to-pay’ arrangement, where you will be given time to pay outstanding amounts by instalments over an agreed period. This may avoid penalties or interest and the HMRC won’t be knocking down your door to collect overdue tax payments.

    John Hoskin is a director of CleverAccounts.com, an online accountancy firm that seeks to simplify the task of business accountancy. Paying a fixed monthly fee, small businesses, limited companies, sole traders, freelancers and contractors have access to accountancy, business-set up and tax planning services, simple-to-use online bookkeeping, a 24/7 view of their figures and on-going tax advice.

  • Coming out the other side

    Coming out the other side

    There is a lot of talk about Exit Strategies in relation to COVID19 right now.

    Whilst the UK Government hasn’t communicated their plan yet, they will have been working on it for a long time in parallel with their initial response strategy for controlling the pandemic.
    In crisis management theory, response is one of four key areas of focus; the other three being preparation, (response) recovery and mitigation.
    For many businesses the response phase will have included the rapid deployment of workers to home, stabilising operations and financial positions whilst quickly establishing new ways of working.
    With this initial response now complete, leaders can begin shifting some of their focus to what comes next and the recovery phase; otherwise known as an exit strategy.
    From a human performance and cultural perspective, there are three ‘recovery areas’ which I encourage you to start thinking about.

    #1 Knowledge Capture

    Lockdown and home-working has forced us all to work in drastically different ways. It has disproved many myths about home-working, productivity and communication. And at the very same time it has opened our minds to different ways of working that we’d never considered.
    Whilst many of us may have thought ‘things will never be the same again’, that’s probably not going to be entirely true. Unless we make a conscious effort to identify, capture and reflect on all the lessons we’re learning, we’ll simply slip back into our old ways of working.
    In some instances that will be fine. In others it would be akin to trying to put the genie back in the lamp.

    #2 Embed

    Once we’ve captured the lessons, we must think about how to embed them into our culture. How do we ensure they become a new Standard Operating Procedure (SOP) for the future that improves the performance and wellbeing of those we lead?
    One thing is for sure, this won’t happen all by itself, as if by magic. It will take smart, forward-thinking leaders to make this happen. And if we don’t make this happen, we gradually slip back to how things were before.

    #3 Reintegration

    This embedding process will be easier for those who continued working within our organisations throughout the lockdown period than for those who were furloughed (stopped working).
    Research conducted at UCL tells us that it takes around 66 days for a new habit to form (for most people). The upside is that if we’re forced into working from home for anything near this timeframe, that will be a huge help in terms of establishing those new SOPs. The downside is we may also have started to embed some new unhealthy habits too.
    But what about our furloughed colleagues? They will be returning to a business, department or team that may bear little resemblance to the one they left. Processes, customers, suppliers, ways of working, products and services could all have changed.
    This being the case, we must start thinking about how we quickly reintegrate them back into the business. We would be negligent in our duty as leaders if we simply allowed them to come back in at 9am on Monday morning and crack on.
    We need to be working on the reintegration plan for our colleagues now. And in doing so we should consider their wellbeing as well as their performance and productivity.
    Stay safe, stay well and #LeadOn.

  • Effective communication for leaders

    Effective communication for leaders

    Think of those you know who make good leaders. Are they innovative and creative? Are they analytical and concise? Are they good at juggling shareholders and banks? Most leaders are at least one if not all of these and more. However, these talents are of little use if they cannot be communicated well.

    Good communication is the basis of everything. Some are natural communicators, others are not, but that doesn’t mean we can’t improve on these vital skills.

    Recently, whilst working with a newly appointed CEO it became apparent that he preferred to use emails whilst delivering messages and couldn’t understand why people were either not doing as he asked or misunderstood the messages and wasted valuable time going down the wrong path.

    After discussion it transpired that he didn’t feel confident in his newly appointed job and was worried that if he met people face to face they may ask questions that he couldn’t answer. By receiving questions via email gave him the time to double check replies to make sure he got it right. He also liked a trail of ‘evidence’ as to what had been said.

    Emailing is fine to arrange meetings, clarify, share information, to quickly fulfil a task and to summarise, but to communicate effectively and to build relationships it should really be done face to face, via a conference call or Skype when possible.

    The first rule of communicating well is to respect one another and allow each person to express their views. It is important to put yourself in other people’s shoes in order to help understand their frustrations and feelings. It is therefore wise to enter discussions with a clear view of the points to cover, but at the same time an open mind in order to benefit from constructive feedback. Remember that communication is an exchange of information and ideas.

    As a business leader it is often the case that the points needing discussion are part of a bigger picture which employees may not be aware of. It is a good idea to paint the picture for others in order for them to fully understand the context of those particular messages. People do not know what they do not know, so never assume. Instead be clear what you want to say and add “which means that’ in several places, even if this is only a silent reminder in your head to help deliver the whole story. This is also a great time to show a bit of enthusiasm. Deliver messages with some energy to help inspire others.

    Of course, clarifying understanding and seeking agreement is essential and once established a debate on what actions are needed, who needs to do them and by what time is the next step.

    This is when emailing is highly useful in order to summarise the meeting to all involved, so that there are no loose ends.

    These steps are logical, but when we are flying around with a million things to do it’s hardly surprising that sometimes we are not effective communicators. That’s why we need reminding.

    There is however, one more step to take. Follow up. At the agreed designated times is the work done? If not, what went wrong. Could it be that the original meeting wasn’t as effective as you thought? Rather than become angry, assess if there is still a problem with communication. Perhaps it’s something quite simple, but you won’t know unless you talk about it.

    www.drlyndashaw.com