Archive for the 'Creative' Category

Cloud computing

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on 5 August, 2008
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Cloud computing is a familiar cliché. But what does it really mean? What are the benefits and costs? And is it time to jump into the cloud?

An insightful article by InfoWorld brings cloud computing into focus. They define it as “a way to increase capacity or add capabilities” to IT infrastructure, which “encompasses any subscription-based or pay-per-use service that, in real time over the Internet, extends IT’s existing capabilities”.

Think online data backups. Think web-based office, customer relationship management (CRM) and emarketing platforms. Think collaborative online workspaces. Think online image editing. Think remote access to computers a hundred times more powerful than yours. All such services are already in the cloud. And that’s just the beginning.

The key benefit… Cloud computing offers access to increased computing capability and capacity, through cost-effective and scalable online services. The key cost… Cloud computing services are remote and thus beyond our direct control. Its remoteness places the cloud far outside internal IT infrastructure; a fact that raises the important issues of service reliability and data security.

The loss of control over reliability and security vs. the cost-effective, continuous expansion of capacity and capability represents, in simple terms, the cost-benefit equation of cloud computing.

So, let’s further illustrate the benefits…

The cloud provides on-demand access to advanced, powerful computing and software platforms. It creates an online workspace, from which you can communicate, collaborate or work remotely. It offers solutions to a multitude of needs, from mail hosting and security to image processing and storage. The list goes on. And this myriad of cloud services holds the potential to reduce software licensing spend, cut hardware and maintenance costs, and make working lives easier.

Consider the ’software-as-a-service’ platform Salesforce as a case in point. In short, it’s an online CRM platform which offers sales management, marketing automation and customer service and support services. And it offers these services to individuals and global businesses alike. Or… not quite alike… Salesforce is scalable to fit different users’ budgets and needs. That means a small business can enjoy the benefits of the same CRM platform used by global companies, but not pay for features it doesn’t need. As that business grows, the platform can grow too, expanding to provide increased features and capacity. For example, if said business employs its first in-the-field salesperson, they can instantly and cheaply begin using the ‘mobile’ version of Salesforce, accessible via smart phones and internet-enabled devices. Some features also pop along for free, such as the recently announced Google Apps integration, which seamlessly links itself and Salesforce into one single web-interface.

The Salesforce and Google Apps combination is reminiscent of another, competing collection of business productivity services, called Zoho. Zoho offers a whole bunch of services - from CRM, project management and invoicing systems, to a word processor, note taker, organiser, collaborative chat and mail services. Again, these services (some of which are free for up to three users) provide capabilities and capacities that can grow alongside users’ needs.

A third, final and wildly different illustration of the scope and potential of cloud computing is Amazon’s EC2 computing platform, which provides “resizable compute capacity in the cloud”. EC2 lets you create your own virtual computing environment right inside Amazon’s cloud. From there, you can run applications that draw on the raw computing power of EC2’s infrastructure. For example, the New York Times used EC2 to convert scanned images of 11 million newspaper articles into PDF files. They did so in 24 hours; a fraction of the time it would have taken on in-house computers. Again, it’s about increasing capacity and capability.

Now to the thorny issues of reliability and security…

First of all: it’s impossible, and unfair, to make generalisations about the reliability and security of the entire cloud computing industry. A cloud service could theoretically be just as reliable and secure as a similar service running onsite and behind a firewall. Individual cloud services must be evaluated case-by-case, within the context of your distinct IT needs.

In an article entitled “The dangers of cloud computing“, Computer World explores the assertion that decisions about whether to use cloud services to perform IT tasks should focus on whether those tasks are “mission-critical” or “non-mission-critical”. If a task is mission-critical, and a cloud service cannot provide the required level of reliability and security, it should not be used.

As grand as the New York Times’ plan of converting its old articles was - it was not mission-critical. In fact, it was much less mission-critical than the computing tasks millions of users conduct every day in the cloud, such as managing sales leads, following up support requests, communicating with customers and issuing invoices.

These users either don’t know the risks, or they have made professional judgements - to first define if a task is mission-critical or otherwise, and then to decide if cloud computing services are, within that context, reliable and secure enough to complete that task.

Is it time to jump in?

Cloud computing is in its infancy, so it’s wise to be wary about jumping in with two feet. With that said - feature-rich, reliable and secure services are emerging that challenge doubts and increase confidence in the cloud.

The challenge for the cloud computing industry is not so much to offset risks with additional benefits, but to strike a balance between features, reliability and security. If the industry does that, the cloud will succeed.

The challenge for you is much more simple… See through the hype. Look past the benefits, and evaluate the risks too. Then, if you still see value in the cloud, maybe it’s time to take the jump.

Cloud applications and services

We’ve compiled a list of cloud computing applications and services:

Cloud applications and services

Backing up data

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Data… A few megabytes of spreadsheets or a terabyte of design assets. If your system crashes, you’ll be lost without it… So back it up.

To piece together a backup strategy, you need to understand the common approaches to backing up, and the strengths and weaknesses of available backup mediums.

Backup approaches

Full backups

A full backup creates a complete copy of an entire system, or a complete copy of selected files and folders. The result: an exact clone of selected data.

During every new full backup the entire data set is copied again, regardless of what data has been added or changed since the previous backup.

A new full backup either overwrites the previous one, or is copied to a distinct location, such as a dated folder. The advantage of the latter approach is that you can roll-back to previous backups if newer ones are corrupted or no longer contain recently deleted files.

Full backups are sometimes preferred because of their cleanliness and simplicity. They are a precise clone of a data set which - unlike other backup methods - don’t rely on specialist software to function. You can take away a full backup, open it on another computer, and access the data instantly.

Restoring data from a full backup is relatively simple. Because it’s an exact copy, you can easily navigate to desired files and folders, restoring individual files on demand. Or, you can simply copy and paste the entire data set back to its original location. Of course, data added or changed since the last full backup will be lost after a restore.

The problem with full backups is they take time. 60GB of data could take an hour or longer to backup, and the process could disturb business operations or force you to schedule backups out-of-hours. Such pressures might prevent you from doing them as frequently as you should, exposing you to the risk of significant data loss.

Incremental backups

Incremental backups begin with a full backup. Once that’s done, only amended or newly created data is subsequently backed up. The result: a full backup plus a collection of new data sets containing new/amended data.

The process requires specialist software, which identifies changed or added data and manages the backup and restore processes automatically. Some incremental backups keep archives of previous versions of amended/changed files so that data can be rolled back to a previous state. The backed up data may not be accessible manually, or accessed on another computer without installing the backup software.

The advantage of incremental backups is they are usually much quicker than full backups. The exact duration of an incremental backup depends on the amount of data added or changed, but typically they will take a fraction of the time needed to conduct a full backup. Some modern backup programmes are also more capable of conducting on-the-fly backups, which means you might not need to halt data activity during backups.

Because incremental backups (and subsequent restores) are dependent on specialist software to function, it’s vital to select reliable and robust backup software. The process of working out what data to restore is a complex task, which in rare cases could fail. Modern software is becoming much better at the task, but it’s important to test programmes thoroughly and have confidence in their reliability.

Note: If you’re unsure about which backup approach to adopt, remember: you can use both independently. To illustrate, you could manage a weekly cycle of full backups on one external hard drive, and implement an incremental backup process on another. If the latter process fails you could revert to the previous full backup… The most important thing is to consider the strengths and weaknesses of each method. If the weaknesses of either approach amount to an unacceptable level of risk, consider how a combination of different approaches could be used. (That said, it’s also easy to overcomplicate things - your backup strategy needs to be robust, but also simple enough that you’ll keep it up.)

Backup Mediums

Tape. Suited for large-scale, ’set-and-forget’ automated backups. Tapes are relatively inexpensive but tape drives are costly and relatively slow. Tapes are durable and compact, so they can be easily moved, stored and archived on or off site.

CD/DVD. Cheap, compact and portable. No moving parts, so when in good condition they are relatively stable. Disk capacities are a fraction of modern hard-drives so full backups may require numerous disks, and the process must be managed manually or with backup software. Because disks may need to be changed they are not ideal for unattended/automated backups.

External hard drive. Modern USB and Firewire drives are fast, reliable, and offer storage in excess of internal drives, making full and incremental backups easy to manage. Their portability means they can be easily transported off-site, but like any hard drive they are sensitive to shock, heat and moisture. Some external hard drives support “RAID” configurations for simultaneous mirror backups over multiple hard drives. Some drives can also be networked. All hard drives contain sensitive moving parts, so external drives are as (if not more) susceptible to failure as internal ones.

Server. Servers can be used as a backup location for data stored on individual computers, or they could be employed as a ’shared drive’ upon which users store their data in the first place, which is then backed up onto another backup medium. They are expensive, but often support advanced features such as “RAID” which allows automatic ‘mirroring’ of data onto another server hard drive, stored on or offsite.

Online ‘cloud’ storage. Online storage can be used as a networked hard drive; meaning you can drag or drop files like an internal/external drive, or use your own automatic backup software. Or, they are designed as proprietary backup services in themselves; usually incremental backups which can be done automatically whenever you are online, at a pre-determined time, or whenever your computer is idle. Capacity is usually modest (at a fraction of a typical internal hard drive) but most services offer increased capacities at a cost. A fast, reliable internet connection is crucial if regularly transferring large amounts of data. As with off line incremental backup services, the reliability of the backup process is paramount to the ability to successfully restore. On top of that, online services must be chosen carefully, considering factors such as: guaranteed ‘uptime’ of service, safety and security of where your data is stored, how quickly restores can be accessed and downloaded.

Piecing together a strategy

Rule number one: the more backups in the chain, the lower the chances of losing everything… Rule number two: using different backup approaches and backup mediums helps minimise the weaknesses of one single approach.

Paranoia can be a good third rule when it comes to backups. And it’s easy to become paranoid when you contemplate losing everything. But worrying too much could lead to obsessive backup processes that are overly costly and time-consuming. It’s therefore important to find a balanced backup strategy that reflects the value of your data (or put another way: the cost of losing your data), but one which is also pragmatic about what you can afford to do, and what you can (realistically) be bothered to do.

When defining a backup strategy remember the following… If your data is invaluable, be bothered… The more backups the better, within reason… If you’re not 100% positive on one approach, consider others ways to crack the egg… All backup mediums - regardless of cost - are prone to failure, so consider the strengths and weaknesses of each and use a combination to reduce overall risk… Always have an off-site backup in case of fire or theft… And finally: settle on a backup strategy that protects your data as far as you reasonably can, but one which is realistic enough for you to keep up.

More info

Check out online data backup and storage services in our list of cloud applications and services.

Hosted email

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There are many hosted email solutions, from those offered by web-hosts to services nurtured by dedicated email providers. They give you email using your website’s own domain name, message storage, a web email interface, and important stuff like email access via your favourite Mac or PC email software. Some are good, others are OK. Few really stand out.

Or at least, that’s what Microsoft, Yahoo! and Google would like you to think. The big three global tech companies are offering hosted email solutions for professionals and small businesses. These services build on technologies developed for their free consumer email services, with a bit more on top.

So, let’s explore the big three’s hosted email services to see what you get…

Microsoft Office Live Small Business / Microsoft Online Services
Office Live Small Business - first year free
Microsoft Online Services - price TBC

In early 2009 Microsoft will launch an integrated collection of business services in the UK called Microsoft Online Services. Until then, you can get 100 email accounts hosted through Microsoft Office Live Small Business Email, free for the first year.

In addition to custom-domain email hosting, Microsoft Office Live Small Business offers website hosting and other online business productivity services such as email marketing and project/document management tools. The service provides basic email functionality, such as cross-platform web email, and supports email, contact and calendar management through Microsoft Outlook.

But the fun really starts next year, with the arrival of Exchange Online, a big part of the upcoming Microsoft Online Services. It’s a fully hosted communications solution based on Microsoft’s world-leading Exchange system, providing email with 99.9% scheduled uptime and technical support. As you’d expect from Exchange, there’s also advanced business features such as built-in continuity and disaster recovery, mobile email and push, and various advanced sync features.

It’s hard to say if and how Office Live Small Business will transform into Microsoft Online Services. For now, the former is a competitive offering at its price (free). In 2009, Microsoft’s hosted email service should get really interesting. One to watch.

Yahoo! Business Email
Around £20 per year for 1 account, £5 per month for 10

Yahoo doesn’t offer hosted email for free, but its paid for options are competitively priced and decently-featured.

Email protection and security is in focus with Yahoo! Mail. Built-in Norton Antivirus protection is standard, and Yahoo! has developed its own technologies - SpamGuard and DomainKeys - to help fight spam. The email front-end has seen extensive re-development in recent years, offering similar functionality to desktop email clients. Yahoo! is also strong on support, with 24-hour access via email and phone.

One big drawback of Yahoo!’s email service is a lack of IMAP email support (supporting only POP). You can download emails using an email client on the PC or Mac, but IMAP is often preferred as a way of keeping messages in sync between client software and server.

Google Mail
Standard edition: free for up to 200 user accounts. Premier edition: £25 per account.

Google’s standard edition offers custom-domain hosted email for free. After a few tweaks to your domain settings you and up to 199 other users can access email via web/mobile interfaces, or via your chosen email client on Mac or PC.

Google puts great effort into policing its email network for spammers and in technologies for filtering spam. As a result the built-in spam filtering is on a par with - if not better than - many paid-for solutions.

Web-integration with other online ‘cloud’ services such as contacts, calendars, Google Documents and Spreadsheets makes the ‘Google Apps’ package a comprehensive offering. And recently, Google began integrating third-party online services too, such as integration with the customer relationship management software Salesforce.

The downside: Like any free service, guaranteed uptime and dedicated technical support are lacking. That’s where the premium edition kicks in.

For £25 per user account, the premier edition makes up for the standard’s shortcomings. It offers a service level agreement with a 99.9% uptime guarantee (though this appears to be only for the email web-interface), online support, and phone support for critical issues.

The premier edition also offers advanced email services from Postini, a specialist email firm Google recently acquired. The ‘policy management’ service offers administrative control over filtering and blocking messages, and configurable spam and virus filters. ‘Message recovery’ lets administrators recover messages deleted in the past 90 days (extendable to 1-10 years for an extra cost).

The verdict

The big three’s email services are feature rich, to be sure. But email is about more than just features. The integrity, reliability and security of such services is crucial to ensure maximum email uptime, reliable and timely receipt and delivery of emails, protection against viruses and malware, and effective email backup and archiving. And with all that, comes the need for support when things go wrong.

Premium, paid-for services are bridging the gap more and more, providing reliable infrastructures, service level agreements, and dedicated support. Google’s acquisition of email security, administration and archive company Postini, and Microsoft’s moves towards Exchange Online, are particularly interesting developments to watch with respect to future advances in reliability and integrity.

An IT manager might wait a while before ditching the internal mail server to outsource email to hosted providers. But for individuals and small businesses, these services are worth a look. In time they’ll improve, and thanks to the increased market competition, other hosted email services should improve too.

Innovation is…

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on 25 June, 2008
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Innovation is the process of successfully introducing new ideas, methods, or things. Creativity and invention may drive innovation, but they are just its beginnings; the transition from concept to successful execution is what innovation’s really about.

The inventor Thomas Edison is often credited as inventor of the light bulb, but historians have since cited handfuls of inventors who perhaps should have taken that accolade. What is certain is that Edison was the best innovator. He took the idea, he made it work the best, and he built an ‘entire, integrated system of lighting’ which provides widespread, practical application. As Edison himself said: ‘genius is 1% inspiration and 99% perspiration’. Creativity is important - but it’s just one part of the innovation process.

Skip forward 130 years, and innovation experts are using phrases like ‘operational excellence’ and ‘practical science’ when talking about innovation. The Economist argues that “the innovation process is steadily becoming a practical science to be measured, taught and managed.” For the lone individual like Edison, or the innovative global firms of today, attention has turned to mastering the ‘process’ of innovation. Firms are trying all sorts to innovate at innovation, from attracting inspirational leaders and creating innovation-friendly company cultures, to opening up to ideas from outside. And of course, there’s big bucks being thrown around.

Apple co-founder Steve Jobs once said: “Innovation has nothing to do with how many R&D [research and development] dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.” A sentiment echoed by media mogul Rupert Murdoch, who mused: “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.”

These quotes are interesting because they offer mixed messages. On one hand they highlight tangible features like leadership and people as important to innovation (things that businesses can really focus on getting good at). Then they allude to less measurable influences such as business agility, and the art of ‘getting it’. They suggest that - increasingly - innovation does not rely on size, power and money. And they support the notion that innovation is a process that can be measured and improved. But they also imply that part of innovation is more intangible. Innovation seems to sit somewhere between science and art: something that constantly frustrates those who can’t, and puts a smile on the face of those who can.

The daunting thing about innovation is that it’s the revolutionary, world-changing creations like the light-bulb and the Mac that fall under the spotlight. This type of innovation is inspirational, but the disruptive and grandiose nature of such change makes you wonder - as a creative individual or business - whether you can ever emulate such feats. The constant quest for the next big thing is part of what drives innovation, but this glosses over the equal importance of evolutionary, incremental innovation; the type that people and businesses do every day.

Because innovation is a process, it can be applied to constantly improve everyday lives and everyday businesses. Through day-to-day, on-the-job modifications of practice, products and services, incremental change offers a layman’s alternative to million-pound research and development projects and high-profile innovations. Often, it’s the small incremental improvements which contribute to increased profit margins, add up to competitive advantage, or simply make our lives easier.

Innovation is… the process of successfully introducing new ideas, methods, or things. It is difficult. It is there for the taking; by anyone from individuals with little money to global businesses with billions. It is small, incremental, evolutionary change and it is revolutionary, world-changing change. It is a process that goes beyond creativity and invention, and it is a process which is increasingly being measured, taught, managed, and mastered. It is part science, part art - because even the experts would agree there is an undeniable magic left in innovation.

Read - The business case for innovation

business i welcomes your views. Comment on this article and share your thoughts with our readers… What is innovation?

Failure - three ways to make failure a friend of innovation

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As Woody Allen once said: “if you’re not failing every now and again, it’s a sign you’re not doing anything very innovative”. Woody is as creative as they come. But it wasn’t creativity alone that made him a film director, writer, actor, jazz musician, comedian and playwright. It was innovation; the process of turning creative new ideas into successful realities.

Innovation is oft described as a loser’s game, because new initiatives often fail. The trick, they say, is accepting and managing failure as a part of the innovation process. And when you fail, fail quickly.

Accept it

Failure is not good, but there is good in failure. Learning from failure can help make future innovations stronger. And for innovation’s sake, trying and failing is sometimes better than not trying at all.

Failure can be managed and thus minimised, but success is never guaranteed. Failure is therefore an intrinsic feature of innovation. Innovators should accept failure, and take value from it.

Manage it

Acceptance of failure does not mean failure should be welcomed. Big business may swallow the cost of failure, but the rest of us need to keep mistakes to a minimum - if only to survive. One of the biggest challenges for creative individuals and businesses is deciding which new ideas are most likely to succeed, and thus which ideas should be devoted time and resources.

Harold Sirkin, co-author of ‘Payback’, a book on innovation strategy, argues that “firms have too many ideas and too much emphasis on creativity - more ideas merely choke the funnel even more”.

Having too many ideas is not necessarily a problem, unless their development leads to too much failure. It’s therefore crucial to manage failure like any other risk. The transition from creativity to innovation (idea generation to implementation) is something to be closely managed.

For businesses, effective communication, leadership and decision-making help control and filter new ideas. For the lone individual, the filtering process may simply mean being pragmatic about how much time can be spent ‘chocking the funnel’ with new ideas. Either way, managing the move from conception of creative idea to innovative implementation helps avoid countless and costly dead ends.

Do it quickly

If you accept failure but manage it to the point that it never happens, you are either incredibly successful, or you are pursuing fewer new ideas. That could ultimately stifle innovation. A happy middle ground: fail, but fail quickly. This approach lets individuals and businesses try new things, without losing too much time or money if things go wrong.

The problem: an innovator with a new idea can be like a dog with a bone. It’s sometimes difficult to let go. Niklas Savander, an executive vice president at Nokia, argues that innovators “need really harsh discipline to weed out ideas quite quickly”, and explains that Nokia “are working at fast failing, but are not there yet”. Failing fast is a challenge for even the biggest firms (and arguably, it’s easier for smaller, more agile entities).

Interestingly, the need to fail quickly brings us back to the need to accept failure in the first place. If failure is a dirty word, it’s going to be less easy to do quickly and comfortably. If it’s accepted as part of the innovation process, the act of giving up, learning from one’s mistakes and moving on becomes a less bitter pill to swallow.

Related resources - The business case for innovation

Collaborative innovation

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On the 17th of June Mozilla launched Firefox 3, the latest iteration of their cross-platform internet browser. It’s the culmination of 10 years work by “a global community of people who believe that openness, innovation, and opportunity are key to the continued health of the Internet”. The company lauds the fact that thousands of individuals from around the globe contributed to the innovations contained within Firefox.

On that day alone the new Firefox was downloaded over 8 million times. Even before launch the browser had an estimated 15-18 per cent of the web browser market. Internet Explorer remains a dominant leader, but Firefox is a respectable second, beating Apple’s Safari browser which holds just a few per cent. Even if Safari catches Firefox, many of the innovations contained within Apple’s browser come from collaborative, open source software. And open source software is not just in web browsers - it’s a part of major operating systems, professional and consumer software applications, and website technologies. The collaborative approach to creating innovative software is no fad - it’s challenging and changing the computer software industry.

In many ways open source software is a showcase example of collaborative innovation. An open approach to the development of new ideas provides a diverse knowledge pool, which when organised effectively and underpinned with strong communication, has the potential to make disruptive, creative and innovate products and services.

That is the opportunity. And it’s becoming so compelling that the business world is beginning to ‘swarm’ around the concept of collaborative innovation.

Swarming - an increasingly used model of ‘collaboration beyond the organisation’ - injects mass participation into businesses. MIT Sloan Management Review defines the three principles that should govern a swarm business: it must ‘gain power by giving it away’, ’share with the swarm’, and ‘concentrate on the swarm, not on making money’. A focus on sharing, integrity and community offers the potential to generate new ideas and innovations, and create successful businesses along the way. “Now collaborative innovation is being extended from the realm of idea generation and product development to the very essence of doing business”, say the authors from MIT Sloan.

The importance of this model is the recognition that collaborative innovation demands a certain level of responsibility and integrity from stakeholders. If collaborative innovation evolves upon open principles akin to those of swarming, there should be universal opportunity. The creative individual could obtain invaluable resources usually reserved for much bigger fish, or showcase their talents with a view to developing employment or new business opportunities. And businesses large or small could take value from a wider and more diverse pool of knowledge, talent and ideas - in order to improve their innovation process.

With open innovation as the primary goal, and self-interest a close second, creative individuals and businesses can collectively benefit from the collaborative approach. Should the balance swing too far from give to take, the spirit of collaborative innovation may quickly fade away. That makes collaborative innovation something to be used, but also respected.

Read - The business case for innovation

Investment finance and the economic climate

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on 27 May, 2008
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Until recently the prospect of economic downturn was little more than speculation. GDP rose last quarter and employment continues to grow. But looking forward, the outlook is worsening: figures from the International Monetary Fund do not predict a recession, but its UK economic growth forecast of 1.9 per cent for 2008 and 2009 is the lowest since the early ‘90s. In light of such gloom, growth-hungry business owners might wonder what the future holds, and so might investors.

Anticipation of tougher times ahead could spur businesses into seeking investment sooner rather than later. They may feel pressured into securing investment deals before the tide goes out, or anxious to secure finance to weather potentially turbulent times ahead. Credit problems - making it more difficult and costly to borrow - may also lead more businesses towards considering investment finance as a viable option. In the face of a more competitive landscape, businesses might find themselves working much harder to find and negotiate satisfactory investment deals.

Reduced confidence in the wider economic climate does not necessarily equate to less confidence - or less money - from investors. Low-value sources of finance such as friends and family funding may dwindle as individuals shy away from high-risk investments. But managed sources of finance - such as Business Angels and Venture Capital - are less likely to be deterred by economic downturns. Just like any other business they aim to make money, whatever the climate. If anything, an economic downturn could to play to investors’ advantage. They may need to pick and choose more wisely, seeking investments in ‘recession-proof’ markets, or work harder to negotiate better deals. But investors know how to secure good investments in good businesses, so turbulent times may represent less of headache and more of an opportunity to grab a bargain.

At what cost businesses find finance is therefore a crucial question. Just because they can, investors will question business models, critique business plans and more than ever make businesses work harder for investment deals. When seeking investment finance, evaluating current and projected business performance and value are crucial tasks for business owners, even more so during uncertain economic times. Businesses must be sure of their own value - being realistic but confident. It may be easier to settle for less during uneasy and competitive times, but a sense of realism and confidence in current and projected value ensures a strong negotiating point for businesses looking to broker strong deals.

The marketplace a business operates in - and its business model - are two additional factors affecting the perceived value of a company during uncertain economic conditions. Some marketplaces are less susceptible to economic turbulence, such as reductions in consumer spending or rising operating costs. Recession vulnerable business will clearly struggle in times of economic certainty - but businesses operating in ‘recession-proof’ markets could actually become more compelling investments.

Talking about specific markets and business models at a recent Business Link jointly-sponsored event entitled ‘Access to Media Finance’, several investors commented on how a recession could impact investment decisions. Investors reiterated the feeling that valuations might need to be reconsidered, but that ‘more disruptive’ business models are likely to remain strong despite economic fears. The general feeling was that:

“Disruptive businesses are recession proof. Something that’s really going to change the way markets work; the velocity may be a little slower, it may be a little harder to get the cash upfront, but if you’re literally changing the way business is done, it will work in a recession as well as in a big time.”
Alex Hoye, Go-Industry and Seedcamp

So, what could an economic downturn really mean for investors and business owners seeking investment? Investors are likely to seize on the opportunity to challenge company valuations and focus on securing investments in so-called ‘recession-proof’ businesses. They will work a more competitive environment to their advantage, ensuring investment deals are sound and future-proof. As a result, business owners will need to work and fight harder for good investment deals; work harder to justify their value and potential, and fight to ensure that they don’t under-sell themselves because of negative economic conditions.

But remember: investors - whatever the economic climate - are looking for good entrepreneurs with good business models. Even though more disruptive or recession-proof businesses may be more desirable, it does not mean that those falling outside that picture will be left in the cold:

“When the tide goes out, it thins the ranks and really focusses on good entrepreneurs with good business models.”
Alex Hoye, Go-Industry and Seedcamp

Fundamentally, talk of an economic slowdown does nothing more than make this observation more true. Good people running good businesses are going to survive less than favourable economic conditions - and they are going to find the investment they need. The landscape may be more competitive, but that just means business owners will need to fight harder for investment. Confidence (not arrogance) is key: being sure about valuations and performance metrics is vital. Even more so than usual.

The process of getting ‘investment ready’ is more important now than ever. The marketplace for investment finance is still there, but with uncertain economic times ahead, it is likely to become lean and mean - it’s up to you to lay the groundwork that ensures that your business, your proposition, and your potential are so strong that they don’t get left in the cold. The tide may go out, but as one investor put it: that just serves to indicate who remembered to wear their swimmers. In other words, be prepared.

More info - Getting investment ready

More info - Top 3 investor wants

Top 3 investor wants

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on 27 May, 2008
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1. Growth potential and profit

Investors want to invest in businesses which turn over substantial profits and grow significantly in value. They want a regular share of said profits, and eventually, want to exit the business by selling their shares at the most profitable moment.

Business owners looking for investment must deliver not just excellent business performance, but explicit evidence of it. Business plans must showcase past performance, illustrate future profit projections, and demonstrate how growth translates into increased business value.

It is generally not enough to walk through an investor’s door with a unique idea, disruptive business model or vague promise of future success.

An investor’s job is to manage risk and reward. They do this by demanding realistic, tangible and measurable evidence that their investment is going to offer long-term, profitable returns.

In short: they want to see strength in numbers.

2. Strong management

Investors want to invest in great people, not just great businesses. Strong management is what delivers strong business performance, maximises profit, and ensures the potential value of a business is fully realised.

Management teams must show unrivalled motivation, courage, creativity and persistence. They must illustrate to investors how their ideas, capabilities and skills translate into added-value, and deliver consistently strong business performance.

Talking at a Business Link jointly-sponsored event on investment finance, Patrick Bradley from investment group Ingenious Media observed that “what investors are increasingly understanding is that size of investment you make doesn’t necessarily have a correlation to the amount you get out the other end. It’s really whether you believe the people sitting in front of you 1) have an excellent idea, 2) have the right blend of management capabilities, and 3) most importantly, have the ability to execute the idea.”

In other words: a great idea is one thing, a pile of cash is quite another - but crucially, it’s the people steering the direction of these two things that adds the most value to a business proposition.

In short: investors manage risk by putting their money in safe hands.

3. Market opportunities

Investors want to invest in genuine, significant and achievable market opportunities. They want businesses that can capitalise on their investment by seizing said market opportunities more effectively than competitors.

Businesses looking for investment must identify and assess market opportunities and clearly outline their nature, size and potential. What is the market opportunity? How fast is the market growing? Do you have a sustainable and/or unique competitive advantage over competitors? Are there additional, future monetisation opportunities in the market? What makes your company and management team more capable of seizing on the market opportunity than others?

Painting a clear picture of your business’s market opportunities puts your position into context for the investor. For example, if your addressable market is small, an investor may wonder how their investment can increase your potential. Back that scene up with evidence of future monetisation opportunities in the marketplace, and your market opportunity becomes much clearer.

Often investors don’t have intricate knowledge of markets. It’s your job know your market opportunities and make them transparently clear to investors.

In short: turn your vision into theirs.

Getting investment ready

Investors want investment ready businesses that understand the investment journey and are ready and prepared for it.

More info - Getting investment ready

Tool - Assess your finance readiness