The Dark Side - Nov 2011


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The Dark Side - Nov 2011

  1. 1. Dark 30k Basic 50% Equity! NOVEMBER 2011ww Herts base for w. the a GREAT Recruiter See Page 2 for Details Fancy a PhD in Entrepreneurship? See Page 12 Inside this issue: Banks take a bashing Selling Up! Part 1 Corporation Tax Basics Google+ Exposed! The Death of Cold Calling? Who Owns YOUR Contacts? August October BLAST OFF! 2011 BLAST OFF! 2011 R N ENGINEERING AND RTRCOMMERCIAL AND FS ? Great New Partnership formed by Unusual combination of Experienced Recruiters looking to exploit their combined 10 years E Engineering recruitment with a side dish of RTR work! This is a business led by a Recruiter with of Perm’ based Commercial and X lots of experience and lots of U Financial services experience. Clients are UK based with a focus frustration about having worked on salaries up to £50k For more info, contact: T for someone else for too long! For more info, contact:
  2. 2. EDITOR’S NOTE 7Well, we asked for feedback following our first effortat publication of TDS last month & boy, did we get it?!So, no complaints from us even though we did in fact Greedy?get the odd complaint from you! Fortunately, most ofthe feedback was positive and there were only one ortwo occasions where we contemplated suicide as analternative to another attempt at getting it right! Lazy?Truthfully, we are very grateful for the response andhope that we have incorporated most of yourobservations into this & future versions of TDS. Itseemed that the one consistent complaint went Maybe.something along the lines of ‘what took you so long?’– which is a nice way we hope of suggesting that weought to have made more of an effort historically to Are Banks all the same?get the word ‘out there’ about what is on offer forbudding entrepreneurs and their businesses. Fairenough.The most savage and (hopefully) unique ‘feedback’ Regular Stuffwas sent by an existing client of Support ServicesGroup who attempted to send an anonymous emailfrom her private email account (which is in fact partly 5 I.T. Matters For the latestmade up of her name!) who observed that we should 14 Selling a Business‘shove TDS where the sun don’t shine’ (which must be SSG Launches,rainy Manchester I guess?). Oh well, you can’t please 19 Gill and MMA’s please take aeveryone! peek at pages ...So, anyway, keep the comments coming please. We 19 Recruiters in a Barare genuinely keen to improve TDS with each issue 21 Voice of Vikki 1 Two Newand appreciate that every publication needs to be atleast vaguely useful to justify the trees that have 23 Serious Stuff 13 Another Twobeen felled in the name of ‘communication’.Highlights this issue include news of the launch of the 15 3 this time Other StuffSSG Doctoral Programme in Entrepreneurship 18 And 2 More!( This unique initiative has alreadybeen attracting some welcome publicity but reallykicks off in January 2012. We also start our series 2 Exciting Vacancies! Featuresof articles aimed at exploding the mystique of how toSell Your Business – great fun and full of direct advice 19 Belly Laughof what needs to be done to extract value from your 22 Comfort Food 4 Cold Calling!business. Chris Ion waffles on about Google + whilstGill explains why your Monthly Management Accounts 26 Don’t forget 7 Survey Timeare so important. As ever, Clare is serious about her‘Serious Stuff’. 26 Worth a Read 10 Economics ‘101’Anyway, please enjoy and let us know what you think 27 Next Time 12 The SSG PhD– hopefully avoiding 4-letter fuelled tirades andremembering to be careful about which email 25 Entrepreneurs’ Reliefaccount you use when letting ‘someone have it!’. info@ 1. All the contents of The Dark Side are only for general information and/or use. Such contents do not constitute advice and should not be relied upon in making (or refraining from making) any decision. Any specific advice or replies to queries in any part of the publication is/are the personal opinion of such experts/consultants/persons. 2. The information in The Dark Side is provided on an "AS IS" basis, and all warranties, expressed or implied of any kind, regarding any matter pertaining to any information, advice or replies are disclaimed and excluded. 3. The Dark Side and its associates shall not be liable, at any time for damages including, without limitation, damages for loss of any kind(but excluding personal injury or death caused by negligence) arising in contract, tort or otherwise from the use of or inability to use the publication, or any of its contents, or from any action taken (or refrained from being taken) as a result of using the publication or any such contents or use of information contained in the publication. 4. No representations, warranties, or guarantees whatsoever are made as to the accuracy, adequacy, reliability, completeness, suitability, or applicability of the information to a particular situation. 5. Certain references in the publication refer to third parties over whom The Dark Side has no control or connection, business or otherwise. Material Submitted by Others Some sections in The Dark Side contain materials submitted by users. The Dark Side accepts no responsibility for the content, accuracy, and conformity to applicable laws of such material, and any views or opinions expressed by such third parties are those of the author alone, and do not necessarily reflect the views or opinions of the owners or publishers of the Dark Side. Effect of these Terms These terms constitute the sole basis on which the Dark Side is published and made available and supersede and replace all prior or contemporaneous understandings or agreements, written or oral, or any implied terms which might otherwise apply. 3
  3. 3. Something NewTHE DEATH OF ‘COLD HOW?CALLING’? Innovantage is what is generically known as a Sales Spider – in that the clever software used by the CardiffFor most of we merry band of Recruiters, based Company tracks (daily) over 1.5cold-calling can leave us, well - cold. million live online job postings from theHammering the ‘phone all day to find UK’s leading job boards and hundreds ofnew vacancies is hard work, irritating to thousands of employer websites, andthe potential Client and largely helpfully differentiates between directunsuccessful. ‘All part of the Recruiters employer and agency advertisers.job’ we are told – just tough luck, anumbers game. Yada yada – just get on This is ‘lead generation’ software at itswith it! finest.Let’s face it though, digging up avacancy via an unsolicited ‘phone callwhich a prospective Client is actuallyhappy for you to work on usually meansthat the vacancy is toxic in some way!The job is rubbish, the money is worseand along with the requirement to The ‘Sales Spider’ that never stops!work-nights and weekends the boss hasbad breath! (& that’s just a job at SSG!). WORTH IT? Recruiters can use the system not only to generate vacancy listings, but also to track customers and competitors. So, in addition to generating the vacancy listings for SSG Clients, we can also perform targeted searches (which can Charlie sometimes regretted wasting be saved) using a range of parameters his youth on cold calling... including location, discipline, salary, private or public sector roles, and job WHAT IS IT? type . On top of that, the system enables you to continue building your database As often as you wish, any SSG Client can of key contacts and decision makers. choose to have us generate a Vacancy Report covering any market sector and But I guess the most obvious benefit isThe results of ‘Cold Calling’ are often any UK geography. You define the terms that the software saves you invaluable just ‘Toxic Vacancies’ of the report (market and geography) time & (often wasted) effort (i.e. cold and SSG will email to you an Excel based calling!). report covering the Employer Name,SOULTION Address, Vacancy Date, Job Title, Vacancy COST? Location, Salary, Advert Copy (ifSo, thanks to a great partnership with a available), Telephone Numbers.... & so on As a SSG Client, we are able to offer youbrilliant Company called Innovantage, this service for free, thanks to theSSG can now offer all of our clients up to EXAMPLE cooperation and generosity ofthe minute VACANCY LISTINGS! Innovantage in allowing us to contract Let’s say that every week, you want to with their wonderful business.Not just any old vacancy listing mind know what SOFTWARE VACANCIES thereyou, but a listing so pumped full of are in Bucks, Herts and Bedfordshire or, NEXT STEPSsteroids and additives that even the you want to know what RECRUITERinfamous Columbian Drug Lord Pablo VACANCIES exist in Glasgow – or CNC Please contact Catherine White onEscobar would be interested in a regular VACANCIES in Birmingham. You get the 01442 200 945 to find out how to makesupply! idea of course! the most of this amazing system.
  4. 4. Chris’ IT ReviewThe next best thing to Teleportation!“Beam me up Google +”What is it? If you’re familiar with the Venn Diagram, I can see this being a really usefulThe aim is to re-invent the way we this idea is based on that, overlapping advertising medium – particularly fornetwork and to make sharing online circles, sharing some content in the offering specific jobs to thosemore like sharing in real life. By overlaps and keeping the rest unavailable subscribing to the relevant job typecompartmentalising your contacts you to each circle – see Venn Diagram below: (more about that in How Can You applycan communicate with them all from this to your Business).one interface – and choose whichcontacts can see each other and talk / At the time of writing I was unable tocommunicate with each other – both find out how this works – whether theyin real-time (video-conferencing) and Family Friends are Google-controlled feeds or whetherthrough the blog style system (system you as a recruiter with a Google+to add comments regularly, logging account can set this up and use it as anyour activity / emotions / events online Me advertising stream.– either for people to see or just to act I particularly see this as useful in theas a journal or diary, called Blog based Retail and Media Industries – filmon it being a WeBlog). Candidates Clients releases, new album from a particular artist, special offer at a supermarket thisYou can share information / photos / week only etc.conversations with different sets ofcontacts (whom you choose) and in I’m not sure how “commercial” thisdifferent ways. a simple Venn Diagram section is but I can imagine it will be used heavily for marketing targetedSo, in short it’s Twitter, Facebook and products / services – perhaps in a similarLinkedIn all rolled into one – assuming Google+ is the easiest way to differentiate way to Google AdWords (where youthat you have contacts that have a between and communicate with people sponsor certain keywords to enableGoogle+ account. in all areas of your life, assuming that all your Google advert to appear when the people involved in your life have a someone searches on that word – for Google+ account of course! Keep your example if someone searches for friends and family separate from your Boss Engineering Jobs on Google then you and work contacts. Use Circles for may have sponsored Engineering as an Candidates – perhaps in different AdWord to display your advert in their disciplines – and Client Contacts. Perhaps search results). a separate circle for work colleagues and one for bosses. These Circles can then be Hangouts: combined – for example work colleagues Where the cool people go to socialise! can share with client contacts. Combine Using video-conferencing this is the and share your Friends “circle” with your next best thing to Teleportation! You Family “circle”. can have multiple people involved in the The basic idea is to share the right stuff same video-conference – so you could with the right people. join your candidates and clients up with a video link and hold interviews over the Sparks: web – and watch how your candidate Sparks of inspiration sparking innovation gets on – brings a whole new way of and interest....... interviewing (at least for first stageHow does it work / what features are As in sparks of information or sparks of interviews anyway). It’s a great way ofavailable? interest. Here you allow targeted keeping in touch visually – although itThe idea is to compartmentalise your information and offers for those times may tempt you to not go out with yourcontacts into different sets – “Circles”. when you want to just be “fed” something mates and just video chat with them ofUsing “Sparks” & “Hangouts” to get you’re interested in. course!information and communicate inreal-time through bothVideo-Conferencing and blogging. “Share information / photos / conversations withCircles: different sets of contacts (whom you choose)Ever thought of your Boss as a circlebefore? You can now..... and in different ways”
  5. 5. Huddles: group your candidates in terms of advertising. As the service grows inLike Cuddles by Text!... suitability / ability and skill set. In the popularity I am sure that there will beTurn texting into conversation by words of the great Eddie Izzard “the ways of targeting specific jobs to peopletexting multiple people at the same possibilities are endless....”. choosing their “sparks”. It seems thattime – like the Hangouts but by text. currently it is google-led in terms ofUseful if you’re having a debate about a Possible drawbacks: If you merge the content but it is inevitable that this willcandidate with multiple HR people (as wrong groups in the wrong way you be opened up to advertisers (and I’m surean example) may find your clients going direct to it will work in a similar way to AdWords) your candidates and vice versa!! CautionPhoto storage and sharing needed when sharing contacts!! Assuming this is the case, there will beI’ve got something to show you......but only if I let the facility to sponsor a “spark” and haveyou...... It could take quite a long time for all of you adverts delivered to the user in theirYou can upload photos instantly with your contacts to get subscribed to chosen “spark” – for example a candidateyour phone and choose who is allowed Google+ so may be another flash in theto view them from your circles. Photos pan approach to networking if not in your candidate “circle” might putare uploaded to a private storage area. enough people take up subscriptions “Engineering” as a “Spark” they areYou then give access to chosen circles to (free). I know I got fed up with Twitter interested in – so you may be able toallow them to view them. This could be after a couple of weeks as it didn’t seem target your “Engineering” Job advertsuseful for storing candidate photos and through this access to them to your clients.Who’s it for? Google+ can be The video-conferencing as mentioned above could be used for both your initialIn a word, ANYONE! Sorry, that’s a word used by everyone - interview with a candidate and also as aand an exclamation. first interview with a client. You could including YOU! use it for talking to your own staff andIf it takes off (hopefully better than also if you have multiple contacts at aGoogle Wave a couple of years ago!) company that you want to discuss rolesthen this really could be “the one” to use very fruitful and was all about getting as with, it opens up the possibility of havingboth for Social and Business many people (whom you don’t know) as a meeting without having to co-ordinateNetworking. It allows you to do both possible to add you as a “friend”. It’s a lot a physical meet at their head-office.under one roof and keep them separate of work to get it working properly –– or combine them if you’re as sad as me Google+ could prove to be similarly These are of course just suggested waysand business is pleasure etc...! frustrating – or fruitless. of using it. I am sure if you get yourself subscribed you will find other ways toIt will take a while for Google+ to gain In short, it is a great idea that’s being benefit.sufficient users and networks to be set tested. So long as enough people see itup but if you are one of the fortunate as a good idea and subscribe to it, it has How do you get startedones to have been invited (more on this potential to be fantastic. A bit The system is currently in “Limited Fieldin “How do you get started” later), it disappointing in its current beta format Trial” and as such is only open to thewould be worth signing up. I’ve just but watch this space...... privileged few that have been invited bydone it and found a couple of regular Google or an existing Google+ member.contacts already – admittedly they are How can you apply it to your business? If you receive an email invite, it is aspersonal contacts! Simple – as a tool to group candidates by simple as clicking on the email, adding a suitability / ability and skill set. Ditto with profile (name and gender) and clickingLinkedIn will probably remain “the” your clients – by discipline, skill go. We expect this to be removed whenbusiness network, at least until this gets requirements, position seniority levels the system goes “live” so I won’t wastesome wind under its wings but it etc. too many words on joining right now.realistically could replace Facebook andTwitter fairly quickly. There are rumours The 2 big things as far as I can see are the If you know someone who is alreadyof Facebook creating a “groups” system Video-Conferencing of multiple parties subscribed, ask them to invite you –so the jury is out until that is fully and the “Sparks” targeted information / they’ll probably be only too keen at thisreleased. stage as it is early days.Is it any good? When they do, don’t be too disappointedThe idea’s got mileage!.... if it still doesn’t let you in. They have aOn first look this looks fantastic. An easy limit on the number of subscriptions theyway to get everyone you know under are allowing at this roof and use this as a useful tool tokeep in touch – and of course as abusiness tool to save mileage and Did you know?.......inappropriate candidate submissions. Itcould speed up the whole recruitment 8,000 Recruiters receive thisprocess by arranging first interviews via and allows you to
  6. 6. Our Survey ResultsBanks Are All The Same.We all know the score. Banks couldn’t They can’t all be that bad – surely?care less about the little guy. Is it not just the case that if you actuallyBanks have taken the Mickey for such a bother to ask for feedback, you arelong time that they really don’t know more likely to hear from those who areright from wrong anymore. disaffected (often with good reason of course) than you are to hear fromThe Banks were largely responsible for happy bunnies?the hideous recession of 2009 and thecurrent contagion issues faced by the Maybe so, but perhaps we should lookwhole of Europe are a consequence of specifically at some of the typical areastheir sharp practices & dull wits. of impatience and dissatisfaction ofThey stink & worst of all, they don’t care some of our Recruitment Start-Upthat they stink. Clients (2011)? Customers are notIt all starts with their deplorable ‘Happy Bunnies’attitude to individuals and quicklypermeates the veneer of ‘customer care’ By the way, ratings-wise – here is ourwhich they exhibit when dealing with explanation key:small businesses. (1) Survey Misery % - the higher it is,They get fat and we get fleeced – right? the worse our respondents feel about‘’When you need support, they won’t the banks.provide it. When your business is flying& you don’t need help, they offer cheap (2) Frustration Score – the higher theloans, incentives and free gifts!’’ score, the worse respondents feel about the banks.‘’If your personal Credit History is lessthan 100%, loans are either impossible (3) Bank Explanations – the lower theto get or offered at ludicrously high score, the more ridiculous ourinterest rates. respondents felt the banks to be in their response to complaints.If you are self employed, mortgages are Allegations of Greed wereless common than UK Call Centres & all strenuously denied (4) Resolution Ease – the lower theBanks charge stupidly for any form of score, the harder it felt to get the bankshelp, support or facility’’ to rectify / explain their mistakes. So, help us out and have a quick look atWhilst our recent survey of Bank the results below and think if you agreePerformance certainly highlights some with the ratings given to each of the 1: OPENING A BANK ACCOUNT:of the traditional issues and familiar areas examined.challenges faced by fledgling Our recent experience suggests thatRecruitment Businesses, we wonder if If you have time, please give us your there is undoubtedly a common trendit is fair to label all banks with the same feedback – ‘Every Little Helps’ or so we developing when trying to open alousy feedback. are told! Limited Company Bank Account for a Recruitment start-up business. The issue is not so much to do with the J JOKER! £50 J JOKER! £50 irritation of relentless paperwork, personal credit checks (even if the Bank Jane from HertsAlan from Surrey y Q: Why did the Consultant Q: Two Senior Recruitment Account in question is NOT asking for bring a ladder to the Consultants walk into a pub? building.... any credit facilities at all), I.D. requirements (at seemingly MI6 levels of A: Because he heard the A: You’d have thought one drinks were on the of the would have seen suspicion) or even the inexplicable Bank house! it! ‘loss of paperwork’ scenario (apparently WINNER! WINNER! more common these days than would appear anywhere near reasonable).
  7. 7. Did you know?....... SSG launched new businesses in 2010........ Yep, - that’s a lot with the same contempt with which Sir at the same time as Banks take Alex Ferguson regards his ‘noisy responsibility for the Euro Crisis just (Manchester) neighbours’. before Mr. Jones get back his £25 for receiving a letter he did not invite. Survey Misery %: 70% Frustration Score: 9/10 Survey Misery %: 99% Bank Explanation: 1/10 Frustration Score: 7/10 Resolution Ease: 2/10 Bank Explanation: 1/10 Resolution Ease: 0/10 2. BANK CHARGES 3. FACTORING All Banks charge for seemingly anything & everything. For those of you not familiar with I.T. Systems are Slowing Banks factoring as a concept, factoring is Receive a letter – get charged. meant to be a quick and easy way of down.... Unauthorised overdraft of a £1 – gets turning your recruitment invoices into charged at £25. cash – allowing a Recruiter to ‘pay temps’ before he is paid by his end clientAmazingly, suckers that we all are, the Recall a cheque – get charged. for example.real bug bear is in fact ‘none of theabove’. Walk past their premises holding a It is almost impossible for a Temp-based Starbucks Coffee? business to ‘run temps’ without having aThe frustration is much more to do with factoring facility. It would require far toothe absolutely stupid, Watch Eastenders in your Underpants? much ‘available cash’ for a Recruiter toincomprehensible and utterly (OK, we agree with the Banks that it is a consistently pay temps before his endbewildering TIME that it takes to open chargeable offence to watch client paid his recruitment invoice toeven the simplest ‘money-in, Eastenders! survive in the market without amoney-out’ bank account. factoring facility. We have no official position on theSSG Clients have recently reported Underpants dilemma by the way – thatdelays of literally MONTHS when trying comes down to personal choice anddesperately to give the Banks new personal hygiene).business. These delays to opening anaccount are met with no explanations Either way, the perception is absolutelywhich are vaguely reasonable to any that Banks are callous and completelyliving soul. inflexible in the methods of charging client’s.In chasing the progress of AccountOpenings for our Clients recently, we Whatever the truth, the feeling is that ahave been repeatedly told that the Bank will do almost anything to issue areason that accounts have been charge of some kind.promised and then delayed for a periodof weeks and even months was a What also seems to be perceived as‘problem with the I.T at the bank’. ‘fact’ is the notion that once charged, it is almost impossible for a customer toWhat a load of rubbish! – Or phrases like successfully apply for a come to mind. I think we all suspect Experience levels ofthat small businesses are being treated Hell is likely to freeze over whilst Recruitment varied between Darlington win the Champions League Banks
  8. 8. The provision of factoring facilities is a markets within which they operate. Survey Misery %: 80%massive market and the good old banks Frustration Score: 7/10make a great deal of money from the In other words, no provision is made for Bank Explanation: 4/10provision of this type of finance (which is the particularly tough cash-flow issues Resolution Ease: N/Areally a ‘loan’ - as the bank are advancing faced by all start up businesses andcash to pay a temp on the basis of a absolutely no innate understanding of OUR CONCLUSIONS:recruitment invoice being raised by the Recruitment as an industry is evident.Recruiter) Ok – it seems clear that the average Most of our sample survey genuinely Recruitment Start-up business is notOur survey suggests the following might feels that their contacts at a bank would happy with the service, attitude andbe true: not understand a placement from a performance of banks in general. banana or Gross Profit from a gross Banks are loath to offer factoring waistline. I guess that is not a surprise.facilities to start-up RecruitmentBusinesses. It seems that if a Recruiter were to ask an It also seems obvious that the average Account Manager at a bank about Recruitment Start-up business is If factoring is provided, the Bank will candidate procurement, advertising bewildered by the charges the banksalways want to impose a ‘Deed of rates, industry debtors days or anything apply to even the most basic ofGuarantee’ on the recipient of the service. else particular to the recruitment sector, services. you are likely to get a very brief silence Charges begin with scandalous ‘up front followed by the sound of a childish giggle I guess that is not a surprise.fees’ (i.e. a Debenture Charge) just for of embarrassment!opening a facility. It seems clear that the average Recruitment Start-up business is almost Charges continue with an on-going convinced that these criticisms are notService Charge of typically 1-2% of particular to any one bank or another.turnover (not 1-2% of GP but Turnover!). I guess that is not a surprise. Charges leap forward with theseemingly miss-named ‘discount charge’ A SURPRISE:(which is really the interest charged onthe money advanced). SSG contacted Lloyds Commercial Finance who themselves faced a difficult Charges then migrate swiftly into a period over the last few years of course.‘Minimum Service Charge’ each month This is not our surprise.(typically around £300). We invited them to address specificallySo, even if you do not use the factoring the issues raised by our survey. This isfacility, it will cost you £300. not our surprise eitherNice business if you can get it! We asked them to come to our office and tell us why they are different. If anything goes wrong with theaccount – you WILL be chased if your We asked them to come along withCompany cannot pay the outstanding some tangible examples of how theyBank fees could help small businesses. We asked them to prove what they knew about If you think that it isn’t easy to get into Recruitment.a factoring agreement, try getting out ofit! None of these requests are our surprise. The surprise is that they accepted theSurvey Misery %: 60% Mr.Smith was pleased to invitation! – With good grace and aFrustration Score: 6/10 smile too!Bank Explanation: 4/10 have finally settled hisResolution Ease: 3/10 loan with the Bank So, the challenge has been issued and the good sports at Lloyds are coming4. MARKET KNOWLEDGE into meet with us and we WILL report Can that really be the case? back on what they say....Bankers take no time to understandeither the particular problems of small Is it fair to suggest such a lack of Maybe all Banks are Not all the same?business or the complexities of the understanding? Surely not? Now, that would be a surprise!
  9. 9. Economics ‘101’An Idiot’s Guide to the EconomyEver wondered what the hell the News This is obviously what the Eurozone is trying Ratings range from AAA, the safest, downPapers are on about? to achieve with Greece, Italy, Spain etc to D, a company that has alreadyToo embarrassed to ask the difference defaulted. Ratings of BBB- or higher arebetween the Eurozone and the G20. considered "investment grade".No idea what a triple AAA is? Below that level, they are considered "speculative grade" or more colloquially asDo you need a little Quantative Easing after junk.a heavy lunch? If a leading economy has their credit ratingWell, thanks to the collective intellect at lowered then other countries are lessSSG (such as it is), what follows is a sort-of confident about lending money to thatIdiots ‘Guide to the Economy’ & all that type economy – i.e. the lender is worried thatof stuff.... the economy in question may not be ‘good for the loan’.Austerity How can we be ‘out of the Euro’ but DefaultEconomic policy aimed at reducing a part of the ‘Eurozone’ crisis?!governments deficit (or borrowing). Strictly speaking, a default occurs when a Base rate borrower has broken the terms of a loan orAusterity can be achieved through The key interest rate set by the Bank of other debt, for example if a borrowerincreases in government revenues - England. misses a payment.primarily via tax rises - and/or a reduction ingovernment spending or future spending It is the overnight interest rate that it charges to banks for lending to them. The term is also loosely used to mean anycommitments. situation that makes clear that a borrower The base rate - and expectations about how can no longer repay its debts in full, such the base rate will change in the future - as bankruptcy or a debt restructuring. directly affect the interest rates at which banks are willing to lend money in sterling. A default can have a number of important This is very important to us all as most implications. If a borrower is in default on lending costs are tied in with the Base Rate any one debt, then all of its lenders may be (e.g. a variable mortgage is usually quoted able to demand that the borrower to you and me as ‘2 points above base’ or immediately repay them. such a number above the base rate). Lenders may also be required to write off Credit crunch their losses on the loans they have made. A situation where banks and other lenders Double-dip recession It all started in New York with all cut back their lending at the same time, Lehmans because of widespread fears about the A recession that experiences a limited ability of borrowers to repay. recovery then dips back into recession.Right now, our Government are working This whole thing started back in 2008 with The exact definition is unclear, as themainly to reduce future spending meaning the collapse of Lehman Brothers in the USA. definition of what counts as a recessionthat there is a squeeze on Public Spending, varies between countries.reducing employment and therefore (so If heavily-indebted borrowers are cut offthe criticism goes) reducing tax income! from new lending, they may find it A widely-accepted definition is one where impossible to repay existing debts. the initial recovery fails to take totalBailout economic output back up to the peak Reduced lending also slows down economic seen before the recession began.The financial rescue of a struggling growth, which also makes it harder for allborrower. businesses to repay their debts. ECBA bailout can be achieved in various ways: providing loans to a borrower that Credit rating The European Central Bank is the central markets will no longer lend to bank responsible for monetary policy in The assessment given to debts and the eurozone. guaranteeing a borrowers debts borrowers by a ratings agency according to guaranteeing the value of a borrowers their safety from an investment standpoint - It is headquartered in Frankfurt and has a risky assets based on their creditworthiness, or the mandate to ensure price stability - which is providing help to absorb potential ability of the company or government that is interpreted as an inflation rate of no more losses, such as in a bank recapitalisation borrowing to repay. than 2% per year.
  10. 10. A new Libor rate is calculated every Some economists fear that quantitative morning by financial data firm Thomson easing can lead to very high inflation in the Reuters based on interest rates provided by long term. members of the British Bankers Association. Rating The assessment given to debts and Monetary policy borrowers by a ratings agency according to their safety from an investment standpoint - The policies of the central bank. based on their creditworthiness, or the A central bank has an unlimited ability to ability of the company or government that is create new money. borrowing to repay. This allows it to control the short-term Ratings range from AAA, the safest, down to interest rate, as well as to engage in D, a company that has already defaulted. unorthodox policies such as quantitative Ratings of BBB- or higher are considered easing - printing money to buy up "investment grade". government debts and other assets. Below that level, they are considered Please pay me, so that I can pay him, Monetary policy can be used to control "speculative grade" or more colloquially as inflation and to support economic growth. so that he can pay you...... junk. MPC Rating agencyG7 The Monetary Policy Committee of the A company responsible for issuing credit Bank of England is responsible for setting ratings. The major three rating agencies areThe group of seven major industrialised short-term interest rates and other Moodys, Standard & Poors and Fitch.economies, comprising the US, UK, France, monetary policy in the UK, such asGermany, Italy, Canada and Japan. quantitative easing. RecessionG8 A period of negative economic growth. InThe G7 plus Russia. most parts of the world a recession is technically defined as two consecutiveG20 quarters of negative growth - when economic output falls.The G8 plus developing countries that playan important role in the global economy, In the United States, a larger number ofsuch as China, India, Brazil and Saudi Arabia. factors are taken into account, such as job creation and manufacturing activity.It gained in significance after leaders agreedhow to tackle the 2008-09 financial crisis and However, this means that a US recession canrecession at G20 gatherings. usually only be defined when it is already over.HaircutA reduction in the value of a troubled Toxic debtsborrowers debts, imposed on, or agreed Your Mortgage is probably tiedwith, its lenders as part of a debt directly to the Base Rate Debts that are very unlikely to be recoveredrestructuring. from borrowers.Leverage Most lenders expect that some customers Quantitative easing cannot repay; toxic debt describes a wholeLeverage, or gearing, means using debt to package of loans that are unlikely to besupplement investment. Central banks increase the supply of money repaid. by "printing" more. In practice, this mayThe more you borrow on top of the funds (or mean purchasing government bonds or During the financial crisis, toxic debts wereequity) you already have, the more highly other categories of assets, using the new very hard to value or to sell, as the marketsleveraged you are. money. for them ceased to function.Leverage can increase both gains and losses. Rather than physically printing more notes, This greatly increased uncertainty about the the new money is typically issued in the financial health of the banks that ownedDeleveraging means reducing the amount form of a deposit at the central bank. much of these are borrowing. The idea is to add more money into the FINAL NOTE:Libor system, which depresses the value of the currency, and to push up the value of the If there is anything that you would like toLondon Inter Bank Offered Rate. The rate at assets being bought and to lower understand a little easier, why not drop us awhich banks in London lend money to each longer-term interest rates, which note and we will get the intellectual Giantsother for the short-term in a particular encourages more borrowing and of SSG on to it for you (no promises ofcurrency. investment. course!).
  11. 11. They say that education is wasted on SSG will pay all of the University Tuition the young. They also say that ‘education’ fees, provide a generous Salary, mentor is too academic, not relevant to the ‘real your studies in partnership with the World’. I have even heard them say that as incredibly talented University team & Recruiters, we are all such ‘know it all champion your ideas, ambitions and arrogant little Devils’ that we would all research ‘outputs’. agree that ‘book learning don’t make no difference to me mate’..... Perhaps? Well, it is time for a change! In a unique initiative between Support SSG Services Group (‘SSG’) & St. Mary’s University College, we have created a fantastic opportunity for interestedSt Mary’s University College, London Applicants to not only complete a Post Graduate M.Phil or PhD programme but also to get paid for doing so! This formal partnership between SSG & St. Mary’s University College has been designed to generate ‘Real World’ pragmatic Research Outputs for the Recruitment Industry. Focussed entirelyThe SSG Doctoral Programme on the development of Entrepreneurial Research, this innovative programme represents a very special opportunity. Can you help our Budding Entrepreneurs? Fully Funded Study A Little Detail:in Entrepreneurship with All tuition fees paid by SSG. A salary of around £20-25k p.a. David Jones of SSG and Professor Lance provided by SSG. Pettitt of St. Mary’s got together to Formal study (Research) leading figure out how best to entice talented to a Masters or Doctoral Applicants to generate pragmatic Qualification solutions to business-based conundrums within the Recruitment Industry. It was soon agreed that together, SSG & St. Mary’s would embed a Doctoral Research Programme in (Recruitment) Entrepreneurship within the School of Management and Social Science at the Twickenham campus of the University. SSG would ‘cough up’ the funds required to do so & St. Mary’s would provide the necessary tuition, support and research facilities. A genuine partnership between Business & Academia. Interested Applicants (see right for a little more detail on who they might Back to school? be!) would be invited to work with SSG & St. Mary’s to ‘work up’ suitable To put it simply, we are looking for high Research topics (see right for a little calibre individuals who want to combine more detail on what they might be!) & practical Entrepreneurial Research invite motivated individuals to enjoy (leading to an outstanding qualification – salaried employment with SSG whilst i.e. M.Phil / PhD) alongside challenging simultaneously undertaking to employment within an exciting & unusual complete a programme of research at Company (that’s SSG by the way). doctoral level.
  12. 12. Based out of SSG’s head office in wizzy-wig solution to the most irritatingHertfordshire, suitable applicants will of (recruitment) business challenges or Septcombine their M.Phil / PhD Researchwith practical employment within our you might just have an instinct of what might help Budding Entrepreneurs BLAST OFF! 2011Recruitment Venture Incubation become more successful?Company. Another North West50% of your time is likely to be spent on Although SSG will continue to welcome based start up!pure Research and the other half would Applicants to submit their ideas for The hot bed of Recruitmentbe dedicated to delivering your Research research, the emphasis will be on that is ManchesterOutputs to existing SSG Clients & the research likely to provide innovation and launches a great newwider Recruitment Community. support for the Recruitment industry and business specialising in particularly for Recruitment Construction andSo, now we are talking about you rather Entrepreneurs. Engineering - with all of thethan them! (Did you see what I did challenges associatedthere?). The ‘on-going’ research ‘outputs’ must with CIS & difficult help SSG to provide additional support to payment terms!Interested Applicants – a Little More our existing group of businesses.Detail: Current topics under seriousWe want to identify individuals with a consideration include: For more info, contact:genuine interest in pragmatic Researchwithin the arena of (Recruitment) The ‘Social Media’ challenge to clare@supportservicesgroup.tvEntrepreneurship. Job Boards (for Candidate Procurement). You will have guessed by now that ourYou will want to contribute not only to Innovative finance for a start-up Research web site goes live at aroundthe stock of common free-to-access business the same time as the Houses Ofintellectual property but Parliament were to havealso to the success of the been blown sky high.core SSG business(which is, as we all know SSG will be runningthe ‘launch & on-going regular updates of thesupport of Recruitment progress of the DoctoralBusinesses for budding Research Programmeentrepreneurs’). over the coming months.You might be recentlygraduated with a 2:1 or Feel free to get involved!above in a relevant It might be fun!discipline OR you mightbe 3 or 4 years out of University with a Successful Incubation of David Jonesbig bag of complimentary experience Recruitment Entrepreneurs. 01442 200 944 / 07967 562 847slung over your metaphorical shoulder. FF! Having said all of this, we sincerely hopeYou may even be an experienced Nov and expect that there are a millionRecruiter looking for something new and O 2011 exciting and relevant potential Research ST BLAexciting! g topics floating around in the minds of tin keWhoever you are, you will be happy to be thoughtful, dynamic and motivated ar Mbased out of Hertfordshire and hugely Applicants..... d anexcited by this unique opportunity. s le What to do Next? SaYou must be intelligent, mentally agile,amusing, self deprecating, practical, Fed up withinteresting & interested. If you are reading this article sometime after November 2011, you should first working “through” anSuitable Research Topics – a Little visit our web site ( for Agency rather than owning AMore Detail: a detailed explanation of how ‘it all her own business, our works’. Partner is determined toYou might already have some great make up for lost time andresearch ideas which SSG & St. Mary’s Alternatively, if you are wandering years of poor commisionshave yet to uncover. through this edition of TDS before Guy Faulkes lights his fuse, then you ought For more info, contact:You might have recently thought about probably just get in touch with SSG for a clare@supportservicesgroup.tvhow to develop and apply the latest chat.
  13. 13. Selling a Business - Part 1 Part 1 - Some Basics How toWe have all sometimes wondered how it The multiple used in valuing theis that an apparently ordinary Recruiter Company will be generated by thecan casually walk away from a small purchaser, once the ‘guys with the cash’ unlockrecruitment business (which they just have looked closely at the business andhappen to own) with literally millions of made an estimate of what they believepounds jangling in their pockets. the Company will ‘earn’ in the next few the value years.Every two minutes it would seem, somelucky chap features in the current edition As an example, let’s say that our littleof The Recruiter, smirking away next to a Recruitment Company (‘ABC Limited’) As an example, let’s imagine that threeposh Corporate chap shaking hands and currently generates £300,000 of profit in individual Vendors all own a businesssmiling in that irritating way that a year. A purchaser might look at ABC which is making £300,000 profit in a year.successful people sometimes do... It is Limited and feel that the business is They all walk into an East End pub (let’senough to make you physically want to robust & will probably continue to make call that pub The Queen Vic’) laughingthrow up – all of that money for a at least that profit for the next 5 years or out loud, but one of the Vendors happensbusiness which was probably built on the more (they call this the estimated Future to laugh the loudest:back of the efforts of other hard working Maintainable Profits of the Company –& diligent Recruiters. the FMP). Vendor 1 (called Dirty Den) sold his business for £1,500,000 (on a multiple of 5) whilst Vendor 2 (Dot Cotton) received‘Wish it was me’, we all privately day £1,800,000 (using a multiplier of 6) butdream.... Vendor 3 (Alfie Moon) is the luckiest of all with a sale valuation of £2,100,000 (aSo, how do these ordinary Recruiters do multiple of 7).it? Are they ‘ordinary’? Who actually buysRecruitment Companies and whatexactly do purchasers get for their cash - Words To Learn Today:the recruiters, the clients and thedatabase? What can be worth so manymillions? Vendor MultipleWell, you will be thrilled to know over the Purchasernext few publications of TDS, we are Future Maintainablegoing to show you exactly what happens Profits (FMP)& how you too might one day get the A “deal” isn’t always achance to be that chap shaking hands good deal! Price Earnings Ratio (PE)with the Corporate-suit! Due Diligence Easy Corporate-math will therefore MMASOME BASICS suggest that the multiple which ought to Information be applied to the valuation of ABCHere we go then.... Many small Limited’s £300,000 worth of profits p.a. is MemorandumRecruitment businesses are purchased by 5. In other words, the would-be IMPLC Recruitment Companies or by purchaser values ABC Limited at PBITSupport Services Companies or Venture £1,500,000.Capitalists (maybe even Private Equity Gearingmobs led by ‘Dragons Den’ types). THE BASICS + Acquisitions Organic GrowthThe Vendor of the business (i.e. the So, it is easy to see what might directlyRecruiter fortunate enough to own the affect the amount of money that a CucumberCompany) will sell the Equity of their Vendor receives for his business. It is not Tractorbusiness (i.e. the ownership / shares) in so easy to see what the purchaser Jelly Beansexchange for a multiple of the profits of actually based their ‘guess’ at the ‘right Giraffe......the Company multiple’ on though is it?
  14. 14. Nov Nov Nov 2011 BLAST OFF! 2011 BLAST OFF! 2011 BLAST OFF! SUPPLY TEACHING AVIATION TAKE OFF!HR AND ACCOUNTANCY We Midlands base, West our Recruiter Partner A great market but Perm-based Recruiter increasingly tough as Schools working on UK and initially going to work is ini move towards demanding s solely on Perms but more ‘consultative’ solutions overseas Aviation wants the flexibility to teaching cover. projects - not engineering to offer Temp-based Our new colleagie will use but airport staff from solutions too-more all of her fabulous communication skills to pilots to baggage handlers. paperwork Tough market if you convince new clients that for SSG but she can deliver. don’t have the right perfectly do-able! CRB & List 99 included contacts and skills For more info, contact: For more info, contact: For more info, contact: In other words, should the purchaser Planning The purchaser logic is sound enough – if apply different ‘multiples’ to their we pay 5 times the profit levels for a valuations of the three businesses for business that will continue to generate at some reason, the hard-cash that each least that level of profit for 5 years, then Vendor receives for their equally we are really ‘in for free’ after that! profitable business can vary wildly. FMP BASICS + This tidy logic happily allows us to illuminate a few of the basic principles that affect the amount of money that any to get away?.... What we now need to understand is what criteria a potential purchaser is going to recruitment business is worth. FMP BASICS use to generate their FMP. Clearly, it is NOT just the profits of a Remember we mentioned Future business which generates the valuation. Maintainable Profits (FMP) a little Surely as the owner of ABC Limited, it Dirty Den’s business may not be as while ago? We suggested that the would be great for us to be able to squeaky clean as Alfie’s for example. Dot multiple that any potential purchaser persuade the purchaser to apply a higher Cotton may have less of a Management might use to generate a valuation of FMP to the business which in turn would Team in place than Alfie but Dot’s ABC Limited was really a reflection of generate a bigger multiple which would accounts are up to date whist Den is still how many years the business might eventually lead to a higher valuation? in debt with the VAT office. continue to churn out at least the Just as it is not just solely the number of current profit level of £300,000. Let’s start to call the multiple that is bedrooms in a house which generates applied to the valuation of ABC Limited If the purchaser estimates that the the sale price of a property, there are also by its grown-up name – a PE. business can roll along post-sale for at a significant number of other things that least 5 years at the same (or higher) make a business (or a house) worth A PE is shorthand for Price Earnings. profit levels, then maybe a multiple of buying. Therefore, when we ramble on about 5 is about right. multiples, we are really waffling about If profit represents our metaphorical 6 years might be a good starting point Price Earnings Ratios. To be blunt, if ABC number of bedrooms, then let’s think of for a valuation of a business on a Limited is a shabby little business with the following as the business equivalents multiple of 6 and of course, a multiple iffy accounts and dodgy legal of things like location, garden size, of 7 times profit would suggest that a documentation (just typical of Dirty bathrooms and so on: purchaser is estimating that the Den), then our purchaser is likely to err on business will operate at these profit the side of caution and keep his offer low. Market Sector levels (or more) for 7 years. Management Structure Employee Attrition Rates If, however ABC Limited is neat, tidy, and Legal compliance legally compliant & has a good Accounting Standards Management Team in place (and run by a End-Client demographics lovely chap like Mr. Moon), then it is & on & on & on probable that our purchaser will push the In other words, when a potential boat out and offer lots of cash to our purchaser examines the Accounts of ABC happy Vendor. Limited, they may well need the business to generate a certain level of profit (i.e. Did you know .......... have a certain number of bedrooms) before they are interested in buying the Over 8000 recruiters Company, but that is only part of the How would your Could read this story. Business be judged?