Start-ups: when the going gets tough…

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The final of the second round of the Scottish EDGE takes place today and I’m lucky enough to be part of the judging panel, listening to the pitches of 30 inspiring entrepreneurs.

Throughout a start-up’s journey there are many defining moments. The chance to relieve a little financial pressure by winning this competition is an incredible opportunity.

But it’s not all about the money.

It’s about the confidence that the budding entrepreneurs will gain to take the next step – perhaps spending money on finishing a product, hiring a key member of staff or starting a marketing campaign.

Most entrepreneurs are faced by the fear of failure − externally they may look very confident, yet typically they are much more cautious than appearances show. Entrepreneurs love to take risks, however, these are balanced and calculated to minimise the downside. Gaining access to some support gives them the ability to take the next step.

We are very lucky to have the drive and determination of Jim Duffy and the team at Espark who had the determination to go and ask the Scottish Government for support. Scottish Enterprise and Business Gateway have also been instrumental in their support, by creating an ecosystem to support ambitious entrepreneurs.

When we started Diet Chef in 2008, the global banking crisis had just begun. Investors were nervous about start-ups and, although we had a very supportive banking relationship with RBS, we couldn’t get funding to grow our business.

So we used a slightly different model than most start-ups − we worked with our key suppliers.

They were the businesses that wanted us to grow and more customers allowed them to become more efficient in production.

We worked closely with them to help extend and plan our finances, cash flow and deliveries – helping us to streamline our growth and manage the limited investment we had.

We were bold.

We told one manufacturer that we would be bigger for them than Waitrose, Sainsbury’s and Tesco combined.

Initially they laughed at us but we guided them through our plan and showed them how we could work together.

Twelve months on, we achieved that goal.

This is one of the many occasions that people laughed at our idea, but to create new companies and products you need to be able to spot a gap in the market that no one else is exploiting.

The difference between success and failure is a sliver of extra hard work!

So, given my background, I’m very much looking forward to hearing the pitches today.

It’s important to encourage more companies and individuals to be brave enough to take the next step towards making their ambitions a reality − the Scottish EDGE is certainly one way of doing that.

Finally, for companies that didn’t get through to the final, it’s important to remember to never give up: instead, think of other ways to fund your growth.

From a good team to a great team

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What makes a great team? That’s the question I asked more than 50 Scottish business leaders recently at a Scottish Enterprise workshop in Glasgow.

Most of us have been lucky enough to have been part of good teams throughout our professional and personal lives. However, every once in a while we find ourselves part of a great team.

So what is it that great teams have in common that raises them above being simply good?

I’ve identified eight indicators of a great group. Most extraordinary groups exhibit four or five of these and they vary from team to team:

Compelling purpose - Great teams have this, and each individual in the team knows what this is and buys into it – although what makes it compelling can be different for different team members.

Shared leadership - everyone in the team feels empowered to speak. There is shared responsibility for delivering the outcomes that everyone wants to achieve and everyone is motivated to do their individual best and best for the team – it’s not just about what the boss says!

Just enough structure - teams are structured for outcomes rather than doing it a certain way because they are supposed to. It may not fit a standard format or model, but it works for them because it has been shaped for fit, more organic than mechanical.

Full engagement – engagement goes beyond the job description. Engaged individuals step outside their regular job to make things successful, people enjoy working hard together, they willingly give – and then give more!

Embrace differences – there is often a natural aversion to conflict but if you let the opinions of dedicated team members be heard there is often great value to be derived. Differences create opportunities. Recognising and discussing all points between two opposing opinions can create new and different options.

Significant learning – stretching to learn builds the confidence of the team and its individuals. Learning together is often exciting, regardless of whether the learning is deliberate or accidental, and can generate great sense of achievement and satisfaction.

Strengthened relationships – great work often leads to great partnerships. By risking and succeeding together, people count on each other – great work creates great bonds

Great results – both tangible (what the sponsor recognises) and intangible (individuals feel ‘better’ as a result of being on the team). Celebrating successes and results along the way can also build momentum.

The people attending the workshop agreed that there is a single difference between a good team, and a great team. And this difference is that extraordinary groups create opportunities for personal transformation while delivering outstanding results.

Read how Scottish Enterprise helped Kilmarnock’s Brodie Engineering Ltd through a period of rapid growth

Find out more about the leadership support available through Scottish Enterprise

Innovate for export success

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Want to know the secret to successful exporting? Innovate.

We live in a time where competition is intensifying and globalisation is radically reshaping Scotland’s business environment.

So it’s not surprising that companies with a track record of innovation are more likely to export successfully and generate growth from exporting.

When developing new products or services, the needs of customers or new market opportunities should be at the core of the development activity.

But do companies fully factor in the international perspective of the customer or market?

Do they create global products?

Or do they create products for the Scottish market and then try and sell them internationally?

scotland's export success

We all know how important it is to gain wider customer or market intelligence early on and to feed it into the development process: I would like to consider some different approaches in creating global products.

Innovators and exporters are increasingly embracing ‘open innovation’ approaches to beat the competition, using external ideas (from customers and suppliers) as well as internal ideas (from staff).

These collaborations give access to additional resources, skills, technologies and markets through business-to-business partnerships, supply chain relationships and by harnessing established distribution channels.

Open innovation is moving from ‘nice-to-have’ to ‘must-have’ as companies see it as an integral part of their management practices and export strategy.

For successful businesses the ability to innovate is increasingly seen as a key asset for competing in international markets.

Innovation, knowledge transfer and internationalisation are inextricably linked.

SDI office locations worldwide

Assessing market intelligence is critical when it comes to international trade.

The key questions are:

  • Is there a market?
  • What size is it and is it growing?
  • How competitive is the space?
  • Do we have a compelling offering?

The insight needed to tackle these questions comes from the country you’re trying to build relationships with.

And that’s where Scottish Enterprise and Scottish Development International can help.

With over 20 offices around the world, our in-field staff can help find the answers that will lead to successful exporting.

Scotland’s continuing inward investment success

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Securing a 50 percent increase in inward investment projects in any year is a fantastic achievement.

Doing it against a backdrop of global economic uncertainty and a fiercely competitive international marketplace is something that all of Team Scotland should be incredibly proud of.

Scotland was the top performing region in the UK outside of London for inward investment in 2012…

Today’s Ernst & Young report shows that Scotland was the top performing region in the UK outside of London for inward investment in 2012.

The fact that the number of foreign direct investment (FDI) projects to the UK as a whole increased by just 3 percent puts Scotland’s performance in an even more impressive light.

The report also highlighted that Scotland secured 11 percent of all FDI projects to the UK, up from 7.5 percent in 2011, and 18 percent of all research and development projects – widely regarded as the most valuable type of investment.

Anne McColl, chief executive, Scottish Development International

Anne McColl, Chief Executive of Scottish Development International

Scotland has a strong track record in attracting inward investment over the past decade.

What is that makes Scotland so attractive to investors?

I believe there are a number of factors.

The first is Scotland’s inherent strength in key sectors such as energy, financial services, technology and engineering and life sciences. Together with our world class universities and research institutes, these strengths give Scotland some unique competitive advantages.

The second is the ease of doing business here – Scotland offers companies a highly competitive business environment and strong networks of local companies that can act as important supply chains for these investors.

And finally, investors tell us time after time that the deciding factor for their investment in Scotland is the quality and integrated nature of support that is available to them from the public sector.

While grants and financial assistance are one part of this, it is the level of aftercare and support available which investors tell us they find most valuable.

Our teams are fully integrated with Scottish Enterprise and Highlands & Islands Enterprise and work closely with other Team Scotland partners.

That means we can work with investors to really understand their business and provide them with strategic advice, support and assistance to help them expand further in Scotland.

The fact that almost half of all FDI projects to Scotland included within the Ernst & Young report were follow on investment from investors already based here is testament to this. I believe that is what sets us apart from other UK regions.

There is no room for complacency and we need to step up our efforts to attract investment from new and emerging economies…

Of course, the report also highlights that there is no room for complacency and we need to step up our efforts to attract investment from new and emerging economies such as India and China.

Given the increasing competitive marketplace for inward investment, this is something we’re acutely aware of and we continue to increase our resources in new and emerging markets so we can respond to global opportunities.

This has seen us open six new offices in key locations over the past 12 months – including Hyderabad, Calgary, Shenzhen and Rio de Janeiro – and we’ll soon be establishing a presence in West Africa. This will ensure that we continue to punch above our weight in attracting new jobs and investment for Scotland as well as increasing trade opportunities in these important markets.

Already we’re beginning to see the positive impact from this with our own figures showing investment from Asia has doubled over the past year and I’m confident that we’ll be able to maintain this trend long into the future.

Meeting the challenge of scale

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Earlier this month I joined 500 delegates, including over 100 investors, in Edinburgh for Scotland’s premier investment conference: Engage, Invest, Exploit (EIE13).

More than 60 companies from the information and communications technology (ICT), energy and life sciences sectors – the majority supported by Scottish Enterprise – pitched their businesses to investor panels.

Feedback so far has been extremely positive, both in terms of the quality of the company presentations and the potential deal opportunities for investors.

EIE13

What’s now important for these companies is the challenge of scaling up: the first of these companies to enter the market won’t necessarily end up dominating the others – however, the first company that gets to scale will.

We’ve seen a sharp increase in the number of UK start-ups in recent years as more people are seeing the appeal of starting their own business, but we still lag quite significantly behind countries like the United States in the number of start-ups that reach scale in the market.

This matters not only for entrepreneurs but for the Scottish economy as a whole: over half of new jobs are created by the small number of companies that succeed in achieving rapid, sustained growth.

This is the challenge that Sherry Coutu, the keynote speaker at EIE, addressed. Sherry highlighted a recent report based on the Silicon Valley event she co-organised in Cambridge in November last year where serial US entrepreneurs came to the UK to discuss the challenges and opportunities they faced in scaling their start-ups.

The report, Start-ups that Scale, emphasises that to achieve scale, companies and entrepreneurs should:

  • Choose a big enough problem or market opportunity to give themselves room to grow
  • Embed themselves in the right networks to benefit from advice and connections of people who will understand the challenges they will face
  • Hire for tomorrow, not today because in a high-growth organisation needs will change extremely rapidly
  • Take the right kind of money at the right time and avoid making fundraising an end in itself

Of course, this is not an exhaustive list and it all very much depends on how these are delivered, but it does give valuable first-hand insight to exactly what is required for companies to scale, from those who have been there and done it themselves.

And it gives us a useful guide to help determine how we identify companies with the greatest potential to deliver and how we support ambitious entrepreneurs to achieve their growth plans.

Much of our support focuses on building the capability and capacity of management teams in our high growth start-ups, and positioning and helping them to secure vital growth funding. EIE 13 provided exactly that – a platform for companies to engage and pitch to investors.

Scottish Enterprise is now supporting the European Tech Tour in September which will provide the opportunity for 12 of our best companies seeking £1 million plus of investment in ICT, Cleantech and Medtech, to pitch to a group of international venture capital investors.

Watch this space!

Scottish Enterprise offers a range of support to help entrepreneurs in Scotland:

 

Sharing the risks and costs of exporting

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It’s natural that SMEs should be wary of venturing into overseas markets, when hanging on to domestic customers is their number one concern. But for those prepared to be adventurous, Scotland has established a formidable reputation in such areas as food and drink, textiles, engineering and IT, in overseas markets.

Jim Maxwell, Business Development Manager, Co-operative Development Scotland

Jim Maxwell, Business Development Manager, Co-operative Development Scotland

Yes, Scotland is geographically on the fringes of Europe and yes many of our companies are smaller, but tapping into overseas markets is possible. And for those with fears over red tape, they should make full use of the help available from such bodies as Scottish Development International (SDI).

One approach, now actively promoted by Scottish Enterprise, is for small firms to form an export consortium. This can cut the risks around exporting and make it easier for public agencies to channel their support – for example in the form of overseas market intelligence or support with trade visits.

As with so many other aspects of business, achieving the required scale can be crucial to success.

Consortium co-operative model

cds-logo

The consortium model has proved its worth in Scotland. Companies come together and get involved in jointly marketing and tendering for business. But this innovative model is also perfectly suited for smaller firms which want to share the risks and costs of trying out export markets.

The consortium co-operative model enables independent businesses that wish to remain independent – to become members of a new legal entity. The purpose of which is to carry out some agreed activity – in this case exporting, on behalf of its members. The consortium operates on a ‘one member one vote’ basis.

This type of consortium has a number of advantages for the businesses who are its members – not least that new member businesses can join or even exit, with the greatest of ease. On leaving the consortium members have no shares to sell and members are protected by limited liability.

What matters is having a shared purpose.

This is a flexible approach and could mean anything from selling into the same overseas market, targeting the same customers, or benefiting from the same market information or research.

This can give rise to new ways of thinking – businesses that see each other as competitors inside the UK may find collaboration works for them in export markets.

If collaboration in exporting is to succeed it is vital to have the right advice from the outset, and to agree clear ground-rules which the members will adhere to. Setting up the consortium on the right lines, with workable rules, is where the experience of Co-operative Development Scotland (CDS) comes into play.

Through their specialist advisers (and working alongside industry experts in SDI and Scottish Enterprise) CDS provides a full, free, support service covering everything from co-ordinating the initial discussions, to providing the right legal structure, articles of association and members’ agreement.

Of course the challenge can be for businesses interested in working together to find each other in the first place.

CDS can help initial conversations with those firms who come forward, to establish a shared purpose and willingness in principle to collaborate.

Small steps can always have big results.

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Raising the bar from G&T to Asian Dog

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It was always Dog’s ambition to grow beyond our geographic boundaries, and when we started the business over 12 years ago, it was perhaps not the top priority but at least a point on the horizon.

Gerry McCusker, MD, Dog Digital

Gerry McCusker, MD, Dog Digital

Traditionally the communications industry has been fairly parochial in nature. Many of the older agencies concentrate on the domestic market in Scotland, and did not venture across the border. Over the last few years that has changed with the advent of digital communications and, possibly, better access to the foreign market.

Dog has had various pieces of success, winning business in Toronto, Geneva and London, and also working with Scottish businesses exporting to a foreign market.

However around two and a half years ago, after the current team had just bought out one of the former directors and shareholders, we embarked on a strategy workshop through Scottish Enterprise (SE) and Scottish Development International (SDI). This was the catalyst that allowed the team to begin to work out how we could realise our international ambitions.

It’s the classic situation where we were so concerned with the day to day running of the business that we couldn’t work on the strategy and overall direction.

Our initial steps were to build resilience into our organisation and allow headroom to allow us to implement our plans.

While this was happening opportunities began appearing, and one of these was an opportunity to work for a client in Singapore.

Working again with SE and SDI, we entered a further series of workshops that allowed us to build on our initial plans incorporating this opportunity.

Our springboard to Asian markets

Within six months we found ourselves searching for offices in Singapore – immediately other opportunities opened up. One of our other key clients in Edinburgh and London had a huge Asian presence based out of Singapore and began to enter discussions with us about working together.

dog-singapore

Dog Digital has offices in Glasgow, London and Singapore

A key decision that is always difficult was the hiring of the team there.  Singapore is known as ‘Asia for beginners’. English is the business language and the red tape to set up a company is relatively straightforward. However it is a 14 hour flight away with a vast difference in culture and 7 hour time difference. Those three factors can never be underestimated.

People often talked to me of the ‘Gin & Tonic’ effect. This is where company leaders often venture out on trade trips to foreign markets but as soon as the have a G&T on the flight home it all seems a bit too difficult. It is.

Our opinion was to create a team that that was the Asian version of Dog, as opposed to Dog in Asia. Therefore we recruited local staff, and directors. This has also been supported by significant time in the market from key people in the business.

dog-officeThere is no way to get a better understanding other than physically be there and experience it for yourself. SE and SDI have been fantastic in offering support for trips and help in hiring staff, however this is just the tip of the iceberg in the help they’ve given us, which has been a huge investment of their time, resource and mind space.

Our Asian business has been established for over a year now, and each day a new challenge will come to the fore. Ensuring staff from each location appreciate the challenge the others face is ongoing, and the cultural differences are forever evident.

Imagine our Glasgow team meeting our Singapore team for a Christmas night out in Glasgow on a rainy cold December night and you begin to realise the work involved to make a global team.

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Harness the power of digital for global success

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BrewDog live and die by one mission – to make people as crazy passionate about craft beer as we are.

We wanted to kick start a revolution that saw the rejection of mainstream, fizzy, yellow lagers in favour of craft beers that use natural ingredients in an honest way by people who are passionate about what they do.

In order to fulfil this mission we had to go global.

BrewDog founders James Watt and Martin Dickie at their Ellon brewery

BrewDog founders James Watt and Martin Dickie at their Ellon brewery

As well as being widely available across the UK, we also now export to over 20 different countries.

For us, forging interest and engagement with beer drinkers in other countries was made possible by digital; mainly through our website and social media.

Our blog, which receives 200,000 hits every month, acted as a window into BrewDog and a soap box for what we were trying to achieve.

Domestic and international media quickly realised that if we were going to make a big announcement, it would happen on our blog first. This meant that all eyes – regardless of where they were in the world – were on our website.

While we organised distribution in new territories, our website – or more specifically, our online shop – allowed visitors from different countries to order and try the beer before it was widely available in their home town.

Boxed-dogTo date, the majority of our international online orders come from America, Canada, Australia and Sweden.

The community that exists on our Facebook and Twitter is hugely international. By engaging with social media we’re able to get direct feedback from craft beer supporters and BrewDog fans from all over the globe. We also harvest user generated content like Instagram images which shows how people are interacting with the product wherever they may be.

Investing in social media and digital is our biggest piece of advice for other Scottish businesses considering export.

The internet knows no boundaries. Compared to other methods of leveraging the product internationally (such as paid for advertising, using an international PR company and so on) it’s a much more cost-effective and impactful way of introducing people to your brand and why you exist.

Operating internationally has shown us that no matter what country you’re from, there’s massive demand for good beer.

People are united by this cause. A brand that’s worth backing isn’t constrained by language; and by harnessing the power of digital we’ve provided an easy way to get involved with the discussion and stay up-to-date with BrewDog.

Everything we do online considers the global community; not localised pockets of people. As such, this year is going to be a big year for us in terms of further expanding our online presence.

Since BrewDog does absolutely no paid for advertising, we invest in our website instead which is in the process of being made even more accessible to mobile and tablet devices.

We’ve also expanded our web team – bringing in two new members of staff to manage online customer service and social media as well as an e-commerce manager who will be accelerating the capabilities of our online shop so, no matter where you are, you can purchase BrewDog beer and merchandise quickly and easily.

PunkIPA-love-hopsWant to check out what we’re up to? Follow us on Twitter and Facebook to be part of the craft beer revolution:

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Read more about BrewDog’s global success and other inspiring Scottish exporters in The Times Business Insight supplement – 14 May 2013

Building a global company through language and culture

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Christian Arno, Managing Director, Lingo 24

Christian Arno, MD, Lingo 24

When I first set up a translation company in a spare room in Aberdeenshire, running a global business seemed a far-off dream. The idea was to use online marketing to keep costs low, with translators based around the world providing a 24-hour service. But it was slow going at first. We made our fair share of mistakes, such as a poorly designed website and not targeting our advertising effectively.

But, with an enthusiastic, talented, and growing team, Lingo24 has managed to exceed my expectations. We’ve now got hubs on four continents, and work with major international clients such as World Bank, American Express, Orange, and Save the Children, as well as hundreds of small and medium-sized companies.

As a multilingual company, exporting has always been a key part of our strategy. We’ve recently set up offices in the Philippines and Germany, and a growing proportion of our business comes from overseas.

We’re passionate about helping Scottish businesses branch out and take advantage of some of the exciting emerging markets around the world. Languages really do open up a world of opportunities, and a little local knowledge is often the key to success.

Just a few years ago, becoming a global business was out of reach for many smaller companies due to the high costs. But the rapid growth of the internet has changed this. Now it’s relatively easy and affordable for companies to become “micro-multinationals” by setting up international websites and selling their products and services overseas.

We’ve almost completed a project to translate and localise Lingo24’s website for more than 50 countries. We recently launched sites aimed at high-growth South-East Asian markets including Indonesia, Malaysia and Taiwan. These are an effective way of giving a global company a local feel – building trust and tailoring our services to each market.

I’d advice business owners to consider the opportunities on the foreign language internet. It’s easy to think everyone speaks English online – but that’s far from the case. Arabic, Russian, and Portuguese have all seen huge growth in user numbers in recent years, while Chinese is soon expected to overtake English as the most widely spoken online language. But there’s still much less content in these languages, giving companies a competitive edge.

There’s also plenty of evidence that most consumers prefer to browse and shop using their mother tongue. In fact, a recent study by the Common Sense Advisory found that customers were four times more likely to make a purchase if they had information in their own language.

When we started out, our main work centred on European languages. But now, with the growing economies in Asia, the Middle East and Latin America, we’re seeing rising demand for translation into Arabic, Spanish, Chinese and other Asian languages.

There are plenty of challenges to building a global company. With staff based in different countries and time zones, I think it’s still very important to build a close, supportive culture. We’ve worked hard to make sure we have effective communication channels, as well as giving people the chance to travel and develop their careers. On a personal level, I find it fascinating working with talented people from all over the globe.

Along the way, we’ve had invaluable assistance from Scottish Enterprise and Scottish Development International, from advice on marketing to organising networking events. Their GlobalScot Network helped us successfully launch in the United States – and even led to us winning our first million-dollar contract with a major US technology company.

Whether you’re just thinking about exporting or want to move to the next level, I’d definitely recommend taking advantage of the support and advice on offer. Scotland has always been an outward-looking nation, and there’s a huge wealth of opportunities out there.

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Seize the moment to take your business global

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This week is Export Week, a UK wide initiative aimed at encouraging more companies to think globally and consider the benefits of trading internationally.

Export Week: High Growth Markets 13-17 MayWith a focus on high growth and emerging markets, our programme of events over the next five days will highlight the significant opportunities on offer to Scottish companies in markets such as Brazil, China, India and South Africa.

We’ll also have a number of guest blogs over the coming days that will cover a range of export related themes, such as building a global company through language and culture and harnessing the power of digital for global success.

With Scottish exports increasing by 7 percent to just under £24 billion in 2011 – an increase of £1.6 billion on the previous year – we are on track to achieve the Scottish Government target of a 50 percent increase in the value of international exports by 2017.

However, while these figures are certainly encouraging, the number of companies exporting isn’t increasing at the rate we need to see for true transformational change.

It’s therefore vital, more than ever before, that Scottish companies embrace a global mindset and view international trading as an integral part of their strategy.

From food and drink and textiles in Asian markets to oil and gas in Brazil, West Africa and Western Australia, a world of opportunity awaits. Scottish Development International, along with our partners, are on hand to help companies, both first time exporters and those already operating internationally, to boost their overseas sales and help them to be braver and smarter about doing business globally.

Indeed, we’re continuing to see strong demand for support as companies increasingly recognise new international opportunities.

This support ranges from Smart Exporter training which helps companies to understand how to do business in overseas markets, to a global network of offices that provide market intelligence and an extensive programme of trade missions that allows companies to experience markets for themselves.

SDI office locations worldwideWe understand that the prospect of exporting can be daunting for companies and we know that there are many perceived barriers to international trade, however with this support we are helping to equip companies with the appropriate skills, knowledge and support to be able to target new markets effectively.

We now operate in a truly global economy so there’s no doubt that we have to continue to raise our international aspirations. Tapping into international markets can transform an established business and play a key role in promoting business growth and economic recovery.

That’s why we’re helping more and more Scottish companies to consider overseas markets, particularly new and high growth economies.

So I encourage all businesses, small and large, to come and talk to us and find out more about the world of opportunity that awaits.

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To find out more about the support we offer and our programme of activity to mark Export Week, visit www.sdi.co.uk/exportweek or join the conversation on Twitter: #ExportWeek, #ScottishExports