Sunday Business Post - Recruitment Section - Jan 25 2009
Read the article on the Sunday Business Post website by clicking here.
Voluntary redundancy is on the increase, just a few weeks into the new year, as businesses look for solutions to the cost pressures caused by the downturn.
‘‘This is probably the highest number of companies offering voluntary severance packages that I have seen in the 15 years I have been in the business,” said Miriam Magner-Flynn, managing director, Career Decisions.
‘‘Voluntary redundancy is increasingly being seen as a necessary step by companies looking to reduce headcount.”
Managing the process
Voluntary redundancies should always be managed in a careful and sensitive manner, said Magner-Flynn.
‘‘No matter what a company calls it - downsizing, right-sizing, restructuring, merging, off-shoring - it often boils down to people losing their jobs,” she said. ‘‘Addressing and managing the separation of employees from the company is a difficult task for any organisation.
‘‘If a redundancy is handled badly, and poor-quality support is provided to departing or remaining employees, you can expect departing employees to express anger towards the company, and the remaining staff to feel extremely anxious about their future career prospects.”
Frank Keane, a partner with MKO Partners, also advised companies to handle the voluntary redundancy process carefully, no matter how severe the financial pressures they face.
‘‘It is not just as simple as letting some staff go,’’ said Keane. ‘‘The issues facing an employer range from the more clear-cut financial and legal aspects, such as, ‘How much will it cost me to make an individual redundant?’ and ‘What are my legal obligations?’, to the more difficult human aspects, including, ‘What position will I make redundant?’ and ‘How will this affect me and the individuals involved?”
Communication
Honest communication with everyone affected - from staff to customers and clients - is vital, according to Magner Flynn.
‘‘Information about job losses should be released first to staff, in a planned and honest way. The timing, wording, content and delivery of this announcement is pivotal in maintaining the goodwill, morale and confidence of remaining employees,’’ she said.
‘‘If word leaks out early, it creates uncertainty. Companies run the risk of prompting an employee exodus, rumours, reduced productivity and revenue.”
Who to include
Keane said it was often difficult for employers to decide which roles to include in the voluntary redundancy scheme.
‘‘It can be a gut feeling that someone is right and should be kept at all costs. One argument is to keep qualified and experienced staff if possible, as they will be more expensive to re-hire when times improve.
‘‘The opposite can also be true as less experienced people are generally on lower salaries and may be hungrier, born from desperation, to stay employed.”
From a legal standpoint, companies cannot simply select certain individuals to let go and offer a redundancy package just to them, Keane said.
‘‘One makes a role and not a person redundant,” he said. ‘‘It is therefore hard to decide [to keep] certain people, especially where there are a number of people at a similar level doing similar work. Companies need get proper legal advice on structuring and planning for the future.”
It is important to keep valuable staff, whose jobs are not affected by any redundancy plans, informed about their future with the company, said Magner-Flynn.
‘‘An organisation that is downsizing relies heavily on the loyalty and performance of remaining staff for its future survival and growth,’’ she said. ‘‘An individualised approach to communication, career development and role clarification is the key to retaining important people. It is important to spend time with employees to individually and collectively reassure them of their value, answer questions, explain how expectations have changed, find out their concerns and lay out the future vision for the organisation.”
Attractive package
Getting staff to accept voluntary redundancy in the current economic environment often required a substantial package, said Keane. In the current environment, redundancy would have to be generous to tempt someone out of a job unless they had another job already.
‘‘In an economic storm like this, the employer has a vicious circle of not being able to offer much money, but yet needing to offer larger sums to get people to take it,” he said.
‘‘Employees will weigh a tempting package against the probability of not getting another job for a period of time.”
Keane said there were mandatory payments that must be included in any redundancy offering.
‘‘Elements of the package should include the statutory redundancy payment - two weeks’ pay capped at €600 per week - for each complete year of service, plus one bonus week, as well as anything the employee is contractually entitled to,” he said.
Most voluntary redundancy packages went well beyond the legal minimum, Keane said. ‘‘Any ‘ex gratia’ payment offered is at the employer’s discretion,” he said.
‘‘The employer may choose to include company assets in the settlement - for example, company car, laptop or mobile phone, as a means of reducing the cash cost to the company. This may prove favourable for the employee from a tax perspective.”
Outplacement
Magner-Flynn said employers could assist employees who have taken voluntary redundancy, via outplacement programmes.
‘‘The main concern of employees is getting a job. Outplacement programmes enable employees to identify their next career or job move and to use the intervening period to up-skill and re-skill,’’ she said.
‘‘The employee has increased marketability and employability when they re-enter the job market, while the employer maintains employee engagement and productivity throughout the change process.”
Michael McDonnell, director, CIPD Ireland, said non-monetary factors were often foremost in an employee’s decision to accept a redundancy offer.
‘‘Issues like counselling and outplacement are quite important in seeking volunteers,” he said.
‘‘A well designed programme will help them with things like refreshing their interview skills, redrafting their CVs, helping them to reply effectively to job advertisements and also some advice about finance issues.”
Magner-Flynn said many employers were surprised at how many staff members decided to avail of voluntary redundancy schemes, despite the downturn, when given the opportunity.
‘‘A lot of people begin to see that there are opportunities. The initial reaction is one of fear, but once they are provided with the support they begin to feel differently,” she said.
‘‘From the perspective of some employees, it can be an attractive route out of an organisation. In some circumstances, voluntary redundancy presents an opportunity to satisfy the requirements of both the company and the individual, and create a win-win for both parties.”
Who might go?
Younger staff members were often less likely to accept voluntary redundancy, McDonnell said.
‘‘A lot of younger people have high mortgages, car loans and significant other debt. That puts extra strain on individuals who might have taken redundancy before,” he said.
‘‘Also, in the past, there were generally more opportunities abroad - people could leave Ireland for Britain or Australia and pick up jobs - but the global downturn limits the job opportunities abroad.”
However, others tended to take amore positive viewpoint, according to McDonnell. ‘‘A lot of young people are fairly optimistic that this thing will pass and, in a couple of years’ time, there will be more opportunities,” he said.
‘‘This can be a good time for younger people to maybe go back to college and upgrade their skills portfolio.”
Staff members who are already considering a career move are often the first to accept voluntary redundancy, McDonnell said. ‘‘You may have people with the idea to set up their own business, or who would like to take a year or two off. There may also be people who have given long service, and may be eligible to opt for retirement,” he said.
‘‘That can be a way of reducing numbers. The more you can meet their future expectations and address the apprehensions that individuals might have, the easier it is to get voluntary redundancies.”
Working practices
McDonnell advised businesses to let staff know that if they did not accept the voluntary redundancy package, there would still have to be changes in their working practices. ‘‘Carrying out an appraisal of future work prospects and possible changes in working arrangements, is also important.
That might persuade people to go, if they think that in future the company will be looking at salaries and work practices.”
Monday 26 January 2009
Severance packages on the increase
Duolog’s silicon design product Weaver is launched in Japan
Sunday Business Post - Money & Markets - Sunday Jan 25 2009
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In a busy week, Irish technology firm Duolog Technologies has previewed a new silicon design product and completed the acquisition, for an undisclosed cash and equity sum, of British-based competitor Beach Solutions.
Duolog’s new software tool had its first public demonstration at industry event EDS Fair 2009 in Japan last week.
‘‘Weaver was launched in Yokohama on Wednesday,” said Ray Bulger, chief executive of Duolog (pictured). ‘‘That is due for official release in April, and will fit into our Socrates platform, with the tools already there.”
Duolog develops electronic design automation (EDA) software tools that enable chip-design companies to better and more efficiently design their products. The new product manages the assembly of a complex silicon design system, and allows fast-track integration of IP blocks, Bulger said.
The Japanese launch complements Duolog’s focus on sales to markets in the Far East, which was also a driver behind the Beach Solutions move, Bulger said.
‘‘Instantly, we get Beach’s customer base, and it was doing about £1 million (€1.06 million) a year from customers including Samsung, Sony, NEC, Toshiba and Olympus.”
Bulger predicted that the new product launch and acquisition would help Duolog to grow its revenues to $15million (€15.9 million) this year, up from €5.5 million in 2008.
‘‘Beach’s £1 million (€1.06 million) was for just one product, and we have five products now,” he said. ‘‘In Japan we hope to add €1 million this year, and we reckon we will do about €1 million more in the US as well.”
The Beach deal, which took three months to negotiate, was not a straightforward acquisition, Bulger said.
‘‘We get its technology, its customer base, and some of its key employees. There were liabilities associated with the company which we did not want to take on,” he said.
The company’s sales in Japan are supported from Ireland and the US, but Bulger said he was close to a deal with a local distributor.
‘‘We are in fairly advanced negotiations with a key distributor in that market and hope to appoint a distributor before the end of this month,” he said. ‘‘That will involve a dedicated person on the ground, plus a very large sales organisation targeting Japanese customers.”
Last February, Duolog opened a new office in Palo Alto, California, at a cost of €500,000. Bulger said the Far East held greater potential for growth. ‘‘We are happy enough that we are holding our ground in the US, given the present market. The US spend actually shrunk by around five per cent in 2008. In the Far East, and Japan in particular, it has increased by between four and six per cent,” he said.
The US investment was funded by money raised mainly from Duolog’s existing backers, including Enterprise Equity, entrepreneur Jim Mountjoy and private clients of Davy Stockbrokers.
Bulger said the cash for the Beach acquisition came from the company’s internal reserves. ‘‘We would like to get more funding for this year, but we are assuming that there is no money out there. This all has to be financed from our own cash reserves and revenue coming in,” he said.
Duolog has raised €4.5 million since it was set up by Bulger and non-executive director Mark O’Donovan in 1999. It employs 85 people, 12 in Dublin with the rest split evenly between its Galway plant and a Budapest operation opened in 2003.
‘‘All the R&D, development, support and deployment is done from Galway. We have value-added, supply-end services which are done from Budapest. This has helped to reduce our costs, as the costs in Ireland were too high,” Bulger said.
Bulger said Duolog initially provided 3G mobile services, before switching to wireless data technology after 2001, and then launching its current range of EDA tools last March. Such flexibility is critical for growth in the high-tech field, Bulger said, particularly given current difficulties.’ ‘Technology companies have to be flexible, as markets can change by the month,” he said.
‘‘It is tighter out there than it has ever been, but if you show people a way to save money, they will spend money. If you have the technology, the R&D, and you can develop a best-in class value proposition, the sales will come.”
Monday 19 January 2009
Berkley looks to grow its operations in Asia
Sunday Business Post - Recruitment Section - Jan 18 2009
Read the article on the Sunday Business Post website by clicking here.
Irish-owned recruiter Berkley will open its first overseas office next month to counter the downturn in the recruitment market at home. The new office in Singapore would employ ten local staff to target businesses throughout Asia, said Fergal Brosnan, co-director, Berkley Recruitment Group.
Berkley recruits IT, pharmaceutical and sales & marketing candidates from bases in Dublin and Cork. Its decision to set up an office in Singapore is part of a wider overseas strategy, which will include two further bases in Hong Kong and Taiwan, said Brosnan. He said the decision to move into new markets was not a ‘knee-jerk’ reaction to the downturn in the Irish market.
‘‘We did not see the Irish market going down and decide to take the first train out. However, about 18 months ago, we did feel that the growth in the economy was slowing and that, from a growth perspective, we should take this step,” said Brosnan. ‘‘We looked at our own client base, both multinational and Irish companies, to see where they were situated on an international level, and where their next steps might be. We also did a feasibility study looking at other locations, but the nucleus of all the Asian operations seemed to be in Singapore.”
Berkley’s co-director Steve Greenwood said the company was already working with a number of life-science companies with operations in Singapore, and other parts of Asia, including Eli Lily and Schering Plough.
‘‘There are nuances between Ireland and Singapore, but the overall life sciences industry, the companies and people involved, are pretty similar,” Greenwood said.
Brosnan said he planned to spend up to 80 per cent of his time at Berkley’s Singaporean office in the city’s Central Business District this year, to build up the firm’s business in the region.
‘‘It is not just a separate entity trading there on its own, it will be integrated into the Berkley family,” he said. ‘‘People from our Irish offices will work out there on various projects. The people from there will come to Ireland to get acquainted with our particular recruitment model.”
Greenwood said the company would also look at ways to encourage businesses in Singapore to set up operations in Ireland.
‘‘There are an awful lot of Asian companies who want to come to Europe, and would look at Ireland as a gateway to that,” he said. ‘‘We see as much business coming in this direction as going the other way.”
Established in 1993, Berkley has existing overseas alliances in London and Sydney. Brosnan said the company would continue to focus long term on the Irish market, despite current difficulties in the recruitment sector here. The company’s turnover last year was in the region of €5 million.
‘‘We are not as exposed to the downturn here as other recruitment companies,” said Brosnan. ‘‘Our base is solid and we have long-term relationships with our clients, and our market share in Ireland has grown throughout the last number of years.”
Wednesday 14 January 2009
Strong Irish Contingent at PAF Fest
IFTN.ie - News Story - Jan 14 2009
Read this story online at the iftn.ie website by clicking here.
It is not the first place you might expect to stumble across an extensive programme of Irish animated films, but audiences at last month’s PAF animated film festival in Olomouc, Czech Republic were treated to a season of 50 plus Irish animations running to a total of over eight hours.
Film-makers whose work was shown ranged from established figures such as Aidan Hickey and Deane Taylor to newer directors like Rory Bresnihan and Jason Tammemägi, while animations from studios Cartoon Saloon, Monster Films, Boulder Media, Brown Bag, JAM Media and many others also featured.
PAF's programme manager, Kateřina Surmanová, said the festival's Irish season had been warmly received by the local audiences.
"We were very happy with the Irish programme," Surmanová told IFTN. "During the festival many people told me that they were surprised by the high quality of Irish animation and asked us where they could get copies of the films we showed. PAF wants to introduce national animations that are not widely known here in the Czech Republic and Irish cinema is almost unknown here."
Ross Murray, Ross Stewart and Tom Moore from Cartoon Saloon were guests of the festival. Stewart and Murray gave a presentation outlining the genesis of their new Disney-distributed animated feature 'Brendan and the Secret of Kells' (on general release in Ireland from March 6th), while Murray talked about the practicalities of competing on an international stage from a smallish studio in Kilkenny. Diarmuid O'Brien and Mathew Lloyd from the Irish School of Animation at Ballyfermot College of Further Education also attended.
PAF ran from December 11th to 14th in Olomouc, a city 300 kms east of Prague. Austrian filmmaker and film theorist Peter Kubelka was another special guest, giving two energetic lectures on animation history and practice. Japanese composer and visual artist Ryoji Ikeda and Czech improvisation trio Mikroloops both contributed to the festival’s 'Live Animation' strand, where film-makers or audience members used the 'Polyekran' technique to animate in real time using fractured images on multiple screens.
The festival also featured an 'Adult Animation' season, built around the work of US auteur Ralph Bakshi and included a screening of his X-rated 'Fritz the Cat' (1972). Czech film-maker Miloš Tomić ran a pixilation technique workshop, while young Czech director Martin Kohout won the PAF 'Other Visions' award for his YouTube inspired short 'Moonwalk'.
For more info on the festival check out www.pifpaf.cz, and click on the English icon in the top right hand corner of the screen.
The reason I wrote about this for IFTN is that I travelled to the festival to give a talk about the history of Irish animation to give some context for the films being shown. Here's the proof.
Monday 12 January 2009
Nothing taken for granted with GAA
Sunday Business Post - Business of Sport - Jan 11 2009
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After long negotiations, the first government grants to inter-county GAA players were paid out last month, but already there are signs that they could be cut this year.
A total of €3.5 million was shared among 1,800 inter-county footballers and hurlers, with individual payments ranging from €1,400 to €2,500, depending on how many appearances were made in the 2008 All-Ireland championship. The grants are administered by the Irish Sports Council (ISC) on behalf of the government, and distributed by the GAA.
However, sports minister Martin Cullen has signalled that the player grants scheme may be scaled back in 2009, due to the economic downturn.
Dessie Farrell, the GPA’s chief executive and a former inter-county star forward for Dublin’s footballers, said he was confident that there would be no substantial changes to the scheme. ‘‘The ISC has an 8 per cent reduction in its budget, and we would be very happy to work within those parameters,” he said. ‘‘We see no reason why it should go beyond that.”
Farrell said that it had taken a good deal of hard work to persuade all involved to accept the grants scheme.
‘‘It was a very hard-fought concession,” he said. ‘‘We have been campaigning for this since the 2002 Finance Bill, when professional athletes were given lucrative tax breaks. Nonetheless, we are delighted with it.”
Farrell said that the principle involved was more important to players than the amounts being paid. Neither the payments nor the aims of the GPA interfered in any way with the GAA’s amateur ethos.
‘‘The upper levels of the GAA have accepted our acceptance of the amateur status of GAA players, but there is still some scepticism out there,” he said. ‘‘We have gone on record on numerous occasions to insist that we are very happy to see the amateur status retained. There is no hidden agenda.
‘‘You could always do with more funding. But, in this particular instance, we felt that there should be some recognition of the role that intercounty players play within the society.
‘‘We also felt that the revenue generated for the exchequer by these high-profile games should be taken into account.”
Farrell stressed that GPA members were eager to contribute off the pitch, in return for the money coming from the government.
‘‘It is not just a case of players putting their hand out and doing a runner,” he said. ‘‘There is an opportunity to convey very important social messages through high-profile role models. We are currently in discussions with the HSE about a programme involving mental health awareness for the general population. We would like to encourage more take-up from various government departments.”
However, Farrell said that, to keep the prospect of pay-for-play at a distance, there would have to be a certain ‘‘quid pro quo’’ on the part of the authorities - in both Croke Park and Leinster House.
‘‘The basis for the retention of the amateur ethos will be continued government funding, married with the introduction of a comprehensive welfare package for inter-county players,” he said. ‘‘That would be a foundation for players within an amateur context.”
Sponsorship
Farrell said that the GPA signed an agreement with sports marketing and management agency Platinum One last November. ‘‘Platinum One will manage the commercial side of things for us and seek out new sponsorship opportunities,” he said. ‘‘We are happy to hand over our commercial portfolio to a company with vast experience in sports sponsorship and management.”
The GPA currently has commercial relationships with Energise Sport, Halifax and Opel. The latter company’s three-year agreement with the GPA, signed in 2006, is understood to be worth approximately €3 million over three years. No figure was released for the Halifax deal, which was agreed in 2007 and runs for five years.
Farrell said that commercial relationships had been vital in establishing the GPA as a going concern.
‘‘Our ten-year share of revenues agreement with Energise, with what was C&C and is now Britvic, has been a great success for us,” he said.
‘‘Without that, there possibly would be no GPA today. Halifax sponsors our Fair Play award, and is involved with our twinning programme and Gaelic performance summer camps. Opel sponsors our Team of the Year and players’ awards.”
Last year’s Opel footballer of the year was Tyrone’s Sean Cavanagh, while Kilkenny’s Eoin Larkin won the hurling award. Farrell said that being associated with household names such as these was attractive for companies.
‘‘Ultimately, the companies see a huge benefit in being associated with the GPA, because of their involvement with our high-profile members,” he said. ‘‘It is a very attractive proposition for companies wanting that kind of brand exposure and coverage.”
Other work
Farrell said it could be frustrating when people automatically associated the GPA solely with financial matters. He pointed to two less heavily publicised GPA programmes, both of which were introduced last year.
‘‘The Fair Play award focuses on the positive aspects of players’ discipline and on and off-field behaviour,” he said.
‘‘Discipline has been a big problem for the GAA for as long as I can remember, so it is vital that disciplinary issues are tackled at an early age and applied across the board. We see the Fair Play award fitting in well with that.”
‘‘We also launched a twinning programme which pairs strong hurling counties with weaker counties,” Farrell said. ‘‘Players from the stronger counties do coaching sessions in the weaker counties. This programme was devised and implemented by the players themselves. It was hugely successful, yet that seems to get lost in the wash.”
Official recognition
Farrell said the GPA was now focusing its energies on gaining official acceptance from the GAA as the recognised voice of inter-county footballers and hurlers. ‘‘We have been recognised in a de facto capacity for a number of years,” he said.
‘‘The official recognition involves having an official agreement between the GPA and the GAA which recognises the vital role that the GPA fulfils in player welfare and other areas. We would hope in the coming months to ultimately bring that to the final stages.”
Farrell said that this agreement would have to recognise the central role the GPA played in protecting the welfare and rights of its members.
‘‘Through the official negotiations with the GAA, we would like to put in place a very comprehensive player welfare package, with funding from the GAA,” he said. ‘‘Those services would include career development programmes, educational programmes, help with financial planning, and health and wellbeing, including injury, psychological and medical issues.’
Banking on the right support
Sunday Business Post - News Feature - Jan 11 2009
Read the article on the Sunday Business Post website by clicking here.
Bank of Ireland’s Business Support Fund (BSF), which was launched last December, will help viable businesses to overcome trading difficulties brought on by the recession, according to Damian Young, head of small business, Bank of Ireland Business Banking.
The €250 million fund will be used to target small, indigenous businesses.
‘‘We wanted to demonstrate our commitment to the small and medium enterprise (SME) sector in Ireland by allocating specific funds to support businesses going through the current economic conditions,” Young said.
He said the support fund was designed to help fundamentally viable and sound businesses that are going through cyclical change due to the conditions in the market.
Applying for funding
Businesses can apply to Bank of Ireland for funding under the scheme in a number of different ways.
‘‘With the Business Support Fund, we are doing things like extending existing debt over longer repayment schedules,” said Young. ‘‘We are also providing moratoria to businesses so they can stop repaying their existing debt over a period of time to give them that flexibility and breathing space to get through the current turmoil.
‘‘We can restructure existing debt so that people can do smaller repayments now, and payments will increase then as their working capital requirement changes.
‘‘Where businesses have an existing overdraft facility that is coming under pressure as they are not getting paid quickly or because suppliers are looking for cash payment upfront, we can change an overdraft facility to a term facility so that it can be spread across a period of time.
‘‘The support fund is there for businesses that need additional borrowings, or new borrowings in the case of existing businesses who did not need to borrow to support their business previously.”
Term facility
Money made available to SMEs under the scheme will be provided as a term facility only with no arrangement fee.
The terms of the loan will depend on the company’s business needs, but maybe extended for a period of up to seven years. The fund is open to sole traders, limited companies and partnerships.
Young said that the amounts available, and the terms of the loans granted, would depend on the nature and circumstances of each individual applicant.
‘‘This is a tailor-made loan for businesses,” he said. ‘‘We are not putting any restriction on the upper limit available, but we are saying about €150,000 or €200,000 in most cases.
‘‘€20,000 is the nominal lower limit, but we are very flexible there as well. We are looking to see what is needed to support the business over the next 12 to 18 months, and how to best structure it over that period, which will be the critical time.”
Future plans
Young advised business-owners hoping to secure BSF funding in the present climate to put together a detailed business plan with in depth and specific details, bearing in mind the difficult trading conditions currently in play.
‘‘We want to see what the business is going to do with the money, including their business plan and projections for how they are going to trade through the current difficult environment,” he said. ‘‘We need to see that it is a sound viable business, which can trade through the next period of time.”
Young said Bank of Ireland business managers had certain criteria they would use to assess each application for BSF funding.
‘‘We want to see if they are looking at new markets,” he said. ‘‘Do they have a new product or innovation? Are they reducing their costs or sourcing materials from different suppliers?
‘‘Are they looking at more effective debtor collection systems and are they over exposed to any one particular debtor that puts them at risk going forward? Small businesses in any environment need to continuously look at their business plan and cashflow, if they do not do that they will find themselves in trouble.”
Business records
All companies should keep up-to date financial records in the current turbulent climate.
‘‘These should not necessarily be formal, audited accounts, but should include information on debtors, creditors, how much stock the company has, how long it has had that stock and how much is the stock worth,” Young said.
‘‘The SME owner should be able to update the bank on their current position. The bank then has up-to date information on how the business is doing, and can therefore make informed decisions based on that.”
Banking relations
Young advised SME owners to talk to their bank as soon as they current credit limits. ‘‘If you require additional debt, come and talk to the bank beforehand, do not just write the cheque,” he said. ‘‘Banks generally do not like surprises, so do not assume that an additional facility will be there whenever it is needed.
‘‘We are happy to sit down with any business and talk about restructuring debt or looking to see if existing debt is sustainable over the coming months. Agreeing beforehand protects the SME’s credit rating across the board, which is vitally important at the moment.”
Current difficulties
Young said the recession was affecting smaller businesses in a number of different ways.
‘‘Payment days have increased quite significantly and SMEs are waiting longer to get paid by debtors,” he said. ‘‘Average ‘debtor days’ are now 67 working days, which means the working capital requirements of a business have changed dramatically. Companies are looking to extend their own overdraft facilities, and to restructure their facilities to meet changing working capital requirements.
‘‘General market factors are another issue. Businesses are getting hit by declining consumer sentiment, retail sales are falling and businesses are coming under more pressure than they had been. This is not unique to Ireland. This is happening across the globe in the current environment.”
The capital structure of some newer businesses is a concern in the current climate, Young said.
‘‘Some smaller companies, particularly ones that have been set up in recent years, have been reliant on interest bearing debts to support the business,” he said. ‘‘When the economy changes and there is more pressure on cash, in a lot of cases there is a need for more equity in put or additional debt.”
The recent fall in the value of sterling relative to the euro has hit some smaller Irish businesses hard.
‘‘A huge number of SMEs are coming under significant pressure due to the near parity between sterling and the euro,” he said. ‘‘That is a 20 or 25 per cent difference from 12 or 18 months ago, which is eroding margins significantly.’
Funding new business
While the BSF is targeted at more established SMEs, Young said Bank of Ireland was also eager to speak to entrepreneurs looking to set up a new business in 2009.
‘‘For brand new businesses, we have a separate fund called the Developing Business Loan fund,” he said. ‘‘That has been running since 2006. In 2008, we upped the upper limit available to €50,000. It is an unsecured loan, so the entrepreneur does not to have tangible assets to secure it against.”
Young said that entrepreneurial activity w s continuing in Ireland, despite the downturn.
‘‘We are still seeing good activity in the Developing Business Loan fund despite the current environment,” he said. ‘‘There are still businesses being set up. There are still people coming to us looking for finance, and we are still supporting those businesses .Our activity in that is running at an average of €2.5million a week being provided.”
Start-up plans
Young advised entrepreneurs seeking bank funding to factor the current difficult economic climate into their start-up plans.
‘‘In the current environment, businesses coming to look for new funding should be prepared with evidence of how they are going to run the business over the next 12 to 18 months,” he said. ‘‘They should have a detailed business plan with cashflow projections, cost control measures, debtor collection plans, new markets or product innovation plans.”
According to Young, it is never too early to approach a bank for a chat about a new business idea.
‘‘The bank is not just there to give you a loan; it is a source of advice, support and direction,” he said.
‘‘Feel free to go in and meet with the business manager and talk to them about the idea and what type of things you should be looking at. You can then go away and prepare the plan a bit further before a more formal meeting with the bank about cash requirements.”
Business basics
Young said the same key business fundamentals applied in any economic climate.
‘‘Have a very good business plan and ensure it is your own and not somebody else’s,” he said. ‘‘The business plan should reflect the passion that the entrepreneur is willing to put into the business. Research the market very well. Understand the upsides, but also the downside, so that you have researched what can go wrong. Be prepared to work hard and manage the finances.”
Banks are generally keen to see the entrepreneur is showing a personal financial commitment to a new business, according to Young.
‘‘Make sure you start off on a good footing in terms of capital structure,” he said. ‘‘There should be signs they are putting their own money into the business, and that they are looking to the bank to provide a similar level of funding.”
Start-up trends
The number of new businesses created in Ireland fell notably last year, according to Damian Young, head of small business at Bank of Ireland Business Banking.
‘‘We do a barometer of start-ups and the first nine months of 2008 saw a 20 per cent drop off in the number of start-ups in Ireland,” Young said.
‘‘The final three months of the year, however, were the most difficult of the year, so we would expect that the overall start-up figure would be around 14,000 to 15,000.”
Bank of Ireland’s Start-up Barometer showed that the number of start-ups in Ireland in 2007 totalled 18,740. This represented a considerable drop over 2006, when 19,221 start-ups were founded.
Young said the fall in construction and related sectors accounted for most of the recent drop-off in start-up activity.
‘‘The shortfall was predominantly in construction, or construction-related sectors, which saw a 43 per cent fall in businesses being set up,” he said. ‘‘The non-construction related businesses were down in the first nine months of last year by only about 7 per cent. Certain services and retail operations would also be down on 2007.”
Low levels of start-up activity prevailed in all sectors last year, according to Young.
‘‘No one new sector really stood out in 2008,” he said. ‘‘The technology businesses were a little ahead of the previous year, and there are more niche businesses being set up in those areas.”‘ The downturn is affecting the type of new businesses setting up in Ireland.
‘‘In the current environment, you will get different types of start-ups,” he said. ‘‘You sometimes see stronger, more focused businesses being set up in a downturn. We see very good expertise coming from multinational companies that are downsizing or scaling back establishing niche businesses that have the capacity to internationalise and export. Those are the type of businesses that will add value to Ireland Inc going forward.”
Young welcomed the government’s commitment to support entrepreneurs in 2009.
‘‘The government’s new initiatives with regard to research and development are very positive,” he said. ‘‘Ensuring that businesses are putting capital into developing their own businesses is going to be important going forward. The likes of the County Enterprise Boards and other support organisations will be focused on supporting new businesses in 2009 as well.”
Bank of Ireland will expand the supports it provides to new companies this year, according to Young.
‘‘We are committed to continuing and enhancing our business start-up package this year,” he said. ‘‘In 2009, we want to be even more active in local markets, in terms of supporting businesses and providing advice and direction to them.
‘‘We have a partnership with Kernel Venture Capital to provide equity capital into new and developing businesses and we have been probably the most active bank in Ireland on the VC side of things.
‘‘We have a number of initiatives looking at business innovation and how we can support more innovative businesses. I am reasonably optimistic for 2009, even though it is going to be very tough here.”
Young said he did not expect any major drop in the number of new businesses setting up in Ireland this year, compared to 2008.
‘‘It is hard to say at this stage, but I would predict that it will be at a similar level to last year,” he said. ‘‘We will take out the element that would only be there in a boom time, but there is a core that might see the figure at around 14,000 next year. We are not going to go back to a stage where we would see fewer and fewer startups.”
Wednesday 7 January 2009
Broadcasters prepare to fight the online battle
Sunday Business Post - Business of Sport section - Jan 04 2009
Read the article on the Sunday Business Post website by clicking here.
The ways in which football fans view their favourite teams play may be rapidly changing, in ways that will have knock-on effects for all involved in the football business - clubs, broadcasters, sponsors, shareholders and fans.
Instead of having to fork out for a monthly or annual subscription to a pay-per-view broadcaster, or visit a pub or friends’ house, a significant number are watching their live football online, for free. The service is facilitated by sites such as the popular and notorious US-based website Justin.tv.
Set up last April to allow individuals to broadcast their daily lives online, Justin.tv is now being used by people and companies to show everything from rock concerts to political rallies to sports events. Fans can now generally watch every Premier League game - or other sports events such as European Cup rugby or USPGA golf - live via a stream on Justin.tv or many other copycat sites, albeit often with an imperfect picture and unsteady stream.
However, Setanta’s customer acquisitions director Brian Quinn said this development was not unduly concerning broadcasters who own the rights to show Premier League games in Ireland.
‘‘We are aware that in a small number of instances, some consumers are illegally viewing premium sports content for free on the internet,” said Quinn. ‘‘We do not believe the number of users in Ireland is very high as the viewing experience is very poor and unreliable."
‘‘Most people with a genuine interest in watching these games are happy to pay subscription charges to the legitimate rights owners, such as Setanta, and enjoy a quality experience at a price which represents very good value,” said Quinn.
However, despite this attitude, Quinn said that Setanta, in partnership with the Premier League authorities in Britain, was actively pursuing sites that illegally broadcast material to which Setanta owned the rights.
‘‘We are working with our rights partners, such as the Premier League, to pursue illegal businesses and have them shut down,” he said.
This is easier said than done, however. Justin.tv, for example, claims to be merely offering a facility for others to broadcast, and is therefore not responsible for the content shown. According to Michael Siebel, chief executive of the VC-funded website, Justin.tv immediately shuts down any channel broadcasting copyrighted material, once notified by the copyright holder.
‘‘The Premier League is registered with Justin.tv and is actively using our suite of tools that we provide to copyright holders, so we expect to continue working with them to manage their content on the site,” said Siebel.
Policing these channels, and the thousands of similar websites that have emerged in recent months, is difficult in practice.
Websites such as YouTube and 101greatgoals.com have been targeted by the Premier League, to ensure compliance with copyright legislation. However, as the websites where the content is actually hosted can be in faraway jurisdictions, including China and Iraq, complete enforcement is almost impossible.
This may be why Quinn said that Setanta was developing ways to utilise the internet to broadcast its sports coverage.
‘‘We were very early to realise that some consumers are interested in viewing premium sport through broadband,” he said.
‘‘In Ireland, we work with Eircom as the distributor of our premium content online. In the British market, we retail our online content directly.
‘‘We believe the percentage of our customers viewing online will grow and we are constantly working on improving the online product,” said Quinn. ‘‘In both Ireland and Britain, we will be launching some enhancements next year, which take advantage of the higher speeds now available.”
The previous Premier League rights went for an astronomical stg£2.6 billion for seasons 2007-10, including €570 million paid by Setanta for just one of the four available bundles of games. The next round of rights, for 2010 to 2013, will be sold next year.
Quinn said he did not expect illegal online viewing to impact significantly on the upcoming negotiations.
‘‘It is possible that many factors could influence future rounds of rights auctions, including the economic climate. However, at this point, it is unlikely that users illegally viewing poor quality sport online will impact on the process,” he said.
However, the next round of Premier League broadcast rights will include more complex packages, including different bundles of TV, and online and mobile delivery methods, rather than the traditional TV only deals. Setanta can be expected to bid for at least some of these new packages.
‘‘Distributing our content through various channels - such as satellite, cable, freeview, online and mobile - has been an approach we have embraced from early on and this has brought rewards for us,”
Quinn said. ‘‘We will continue the approach and will always look for new ways to ensure the widest distribution of our content.”
But Quinn said he did not foresee the internet replacing television as the primary medium for viewing live sporting events in the near future.
‘‘It is important to note that the vast majority of premium sports subscribers in two or three years will still be happiest consuming sport through their TV in a traditional format,” he said.
Siebel, however, argued that consumers would want to view content - whether live football, music or television - wherever and whenever they want, and said that rights holders should work with online channels to reach the most people possible.
‘‘I think the trend we have seen over the last few years, where consumers are able to enjoy content any time and anywhere, will continue to grow and evolve,” he said.
‘‘More and more content owners are coming to realise that they need to meet that consumer demand and find new ways to make their content available - whether it be through mobile devices, social media or live video.
‘‘Our vision is that all leagues will work together with Justin.tv in order to provide their fans with a live, televisionlike experience online.”
