Tag: Scottish economy

Memorable year for co-operative working

Sarah Deas resized2014 has been a busy year for Co-operative Development Scotland (CDS), with interest in co-operative working higher than ever.

Here, CDS chief executive Sarah Deas reflects on the year and looks ahead to what 2015 may bring.

As we hurtle towards the end of 2014, it is a natural time to look back on the past 12 months. Last December, I remember fondly writing how the eyes of the world would be on Scotland throughout the year – and that certainly proved to be the case!

One shining moment was the XX Commonwealth Games, held in the always-friendly city of Glasgow. I was proud to serve as a Host City Volunteer at this spectacular event which will live long in the memory as an example of what can be achieved when we work together. CDS was delighted to contribute to Glasgow City Council’s (GCC) business event held during the Games. In fact, one of the highlights of the year was seeing GCC and its counterpart in the capital progress their commitment to be Co-operative Councils.Sarah Deas

This is a significant endorsement of co-operative working, which CDS is supporting through the provision of specialist advice. Co-operative working is now recognised as a means of achieving competitive advantage by businesses in a wide range of sectors and there is also growing interest in employee ownership – specifically as a succession solution – helped by the new tax incentives.

To tap further into that growing interest, we held five ‘successful succession’ events during the year. Kindly hosted by employee-owned companies – Aquascot, Galloway & MacLeod, Page\Park, Stewart Buchanan Gauges and Scott & Fyfe – these sessions gave those interested in the ownership model the opportunity to see how it works in practice.

We also engaged with Scotland’s professional advisers through our expert briefing sessions, tackling subjects including funding the employee buyout and employee share ownership.

David Narro Assoc 09

David Narro Associates celebrated becoming employee owned in August.

CDS helped a wide range of businesses across the year, including Fitwise and David Narro Associates, both of which made the transition to employee ownership. Scotland has a host of new employee owners, and hopefully they will find the newly-formed EOA Network Scotland useful – one to watch in 2015.

I was also grateful for the opportunity to visit Quebec for the International Summit of Cooperatives, a truly insightful conference. We heard from the Mondragon Corporation, often seen as an example of best practice when it comes to co-operative working. It is worth noting that the Basque region, where Mondragon is headquartered, is now looking to learn from the UK. Just last month, I welcomed a delegation from the Gipuzkoa province who visited some of our well-established employee-owned companies.

Finally, we once again offered companies in Scotland the chance to win £5,000 in cash and £5,000 in support to make their collaborative ideas a reality. The standard of entries to the Collaboration Prize this year was high, and all of us at CDS are excited to see who will follow in the footsteps of past winners the Scottish Mountain Bike Consortium and The Wee Agency.

In 2015 we anticipate interest in co-operative working to continue to grow as the benefits for staff, business and the economy are further demonstrated. While awareness is most definitely increasing, our job is to keep that momentum going. The growing desire for fairer, more inclusive approaches to working is an opportunity to further underline the virtues of the models – and we will continue to shout about it.

The year began with Kim Lowe, a managing director at John Lewis, calling for more businesses to consider a co-operative approach. I think it is clear that many have done just that, but more can and will be done in 2015.

2014 has been a memorable year in many ways, and I wish you all a happy, healthy and successfully prosperous 2015.

End of the holidays – and the beginning of a busy end to 2014

After a summer of sun and fun – and of course the Commonwealth Games – things are about to return to normal with the end of the school holidays.

Merchant City FestivalIt tends to be this time of the year that businesses across the country refocus their efforts on a strong end to the calendar year, perhaps even taking a fresh look at opportunities to expand revenue further.

We’ve seen many terrific examples this year of how organisations across the country have done this by working co-operatively.

During the Commonwealth Games, the Merchant City Marketing Co-operative helped promote the events linked to the Commonwealth Games – as well as the wider calendar of events and attractions throughout the year.

The Food from Argyll consortium was busy too, helping feed hungry festival-goers and showcasing their produce stalls at BBC at the Quay and the popular Belladrum Festival.

For each of the individual businesses involved in both organisations, such exposure and opportunity may not have been possible on their own.

By coming together, however, they have opened up new markets, boosted sales and increased awareness of their brands, both collectively and as individuals.

And as the nights start to draw in, now is the perfect time to start thinking about how working in such a way can boost your business.

Going against the grain has led to success for Galloway & MacLeod

Donald Harvey, MD at Galloway & MacLeod

Galloway & MacLeod has roots dating to 1872, and is now one of Scotland’s most successful employee owned companies.

Here, Galloway & MacLeod’s managing director Donald Harvey explains the benefits the business model has brought to the agricultural firm.

Selling the business to the employees is the best succession option Ralph MacLeod could have chosen – for the company and for the employees. It can be an uncertain time when a business owner begins to think about exit from a business. When Ralph started to speak with me and thereafter the management team, his first concern was that we were kept informed and involved in whatever choice he would eventually make. It was the opportunity of a lifetime – owning the company!

The company began in 1872 and Ralph MacLeod was the third generation of the family to own the business. When the time came to think about handing over, Ralph was not clear on the options open to him. He did have strong views on what he didn’t want to do. Galloway & Macleod is a unique company, which is an important feature in the local community. Ralph wanted to find a succession route that protected that.

Agriculture is a fiercely competitive business, dominated by large players. As an example of this domination, there are now only two main players in grass seed supply worldwide. None of us wanted to see Galloway & MacLeod swallowed up by a large conglomerate. We pride ourselves in the strength of relationships we have with our customers.

Ralph MacLeod took the firm down the employee ownership route

Ralph MacLeod took the firm down the employee ownership route

If Ralph had chosen to sell to a trade buyer, then the danger was that the business would have become product driven rather than customer driven. To me, the move to employee ownership allowed us to maintain our independence and preserve our customer-centered focused approach, without a noose round our neck and an overdraft which would have had a big impact on the business.

There have been other benefits in the move to employee ownership. We now have 34 owners who all have a stake in the prosperity of this business. This means that most of the people come into work thinking like owners. They want the business to do well, and they know that they will share in the rewards of that success. We don’t have issues with absence or staff turnover; people enjoy being here. We are able to attract the highest calibre of recruit, and will always promote from within.

Alongside these benefits are challenges, particularly for the management team. How do we make sure that these owners understand how the company works and where our revenues and costs are? How can we ensure everyone has the information to enable them to make the best contribution possible? We had to take a very close look at how we communicated with our people, and how we make complex information accessible. We had to ensure our management team had the skills and support to do their job well. We don’t always get it right but we are quick to acknowledge and address our mistakes.

The owners at Galloway & MacLeod

The owners at Galloway & MacLeod

As Managing Director, I’m accountable to the 34 owners of this business. As these owners are the employees, they see and understand the process from prospecting to order fulfillment and the relationship we have with our stakeholders.  As our management team is running a business in an accelerated growth plan with high expectations, we meet challenges which can be hard to overcome. However, I’m sure we have the skillset and understanding to make these decisions, ensuring our values, sustainability and environmental impact are exceeded. Every day’s a schoolday!

The flip side is that I’m leading a team of people who have a stake in the future of this business. It’s in their interests to do as good a job as they can to ensure the company prospers. I’ve first-hand experience of the evidence demonstrated in the research: employee ownership is the most effective route to true employee engagement.

And it all seems to be going in the right direction. Sales are up 39% since 2010. We keep our customers and have won several new ones. Our employee satisfaction levels are extremely high.

As for Ralph, I’m delighted to say he’s still there for when we need him. He knows this business and its people inside out. It’s good to see him have the time to spend on his other passions of sailing and hill walking. Ralph MacLeod did a great thing for the employees of Galloway & MacLeod. The current owners know we have a lot to live up to, and we are all working to ensure we continue the legacy and deliver a prosperous future for our business.

 

Time to learn from the experts…

CDS Employee Owner Managers Event 21Last week we hosted the first of our expert adviser breakfast briefings, with Baxendale’s  legal director Ewan Hall delving into the world of employee ownership.

Here, CDS specialist advisor Carole Leslie reflects on the key learnings from the session.

At CDS, we have been working with professional advisers on building knowledge of employee ownership (EO) over the past 18 months.  We uncovered a real appetite amongst lawyers, bankers and accountants to learn more so we organised a series of expert breakfast briefing sessions, each one led by a respected specialist in their sector, covering an aspect of employee ownership.

Our first event took place last Tuesday (4 February), with Baxendale’s Ewan Hall – one of the foremost legal advisers in the field of EO in the UK. He has managed more than 20 EO transitions directly and been involved in many more.

20090316153332.m2ts.Still001

Ewan Hall, Legal Director, Baxendale

 The company itself is a major player in the EO field across the UK, with an impressive 50% of their projects in Scotland. They offer specialist advice and investment to help support the creation of sustainable and growing businesses.

During the session – which was covered exclusively by BusinessScotland.com – Ewan spoke about the key decisions and elements involved in an EO transition and talked the audience through the process of an employee buyout (EBO).

 Breaking the subject matter down, Ewan touched on many important points during the 90 minute presentation – here’s a snapshot of the key learnings:

  • An EBO deserves every bit as much consideration as a trade sale or management buyout. The vendor can expect to get open market value for their business, which can be hugely attractive to them.
  • Having a stake in the business doesn’t just motivate people as the new owners of the business; the stability of the EO model safeguards the future of the firm, sustaining local jobs.
  • The vendor also retains considerable control and influence over both the process and the outcome, and can help to put the post transfer structure in place.

20090316131940.m2ts.Still001

  • Vendor financing is a major feature of today’s EBOs and is often the favoured source of funding – many businesses are conservative about taking on external debt.
  • The sector is incredibly supportive, with CDS providing adviser support in the initial stages. CDS will introduce potential EO companies with established EO firms, so they can share their experience  of the process.
  • Scotland is seeing more EO transactions than the rest of the UK – this is possibly due to the amount of support available.
  • EO doesn’t end with the completion of the legal transaction. It is a constant process, with engagement and communication key to driving the benefits of the model.
  • The EO model gives a long term solution to the issue of succession, but it doesn’t mean the owner has to leave the business – they can still be involved post transfer, often in a non-executive capacity.
  • The key to success for the EO model is flexibility, as it can be adapted to suit the vendor and industry.
  • EO is growing and there is a high level of interest. Upcoming changes to tax legislation are likely to make a major impact on encouraging new EO businesses and rewarding employees of existing ones. The changes will enable businesses to pay out bonuses free of income tax.

If you were interested in attending one of our breakfast briefings, we have four more throughout 2014 – for more information, click here.

And for those of you who couldn’t make it, you can watch Ewan’s full presentation on our website or watch a short teaser below:

Co-operative Development Scotland is the arm of Scottish Enterprise working in partnership with Highlands & Islands Enterprise  that supports company growth through collaborative and employee ownership business models.


Shining a spotlight on finance

Jaye Martin 03At the most recent CDS Advisory Board meeting, some of Scotland’s key industry figures gathered to discuss how ‘stakeholder banks’ can be the ideal solution for co-operatives looking to raise capital.  

Jaye Martin, a Specialist Advisor at CDS, shares her experience of the day.

As January comes rapidly to an end and the weather shows no signs of improvement, like me, you are probably longing to get away from the soggy grey skies.

But at the recent CDS Advisory Board session, we refused to be cowed by the January blues and instead presenting an eclectic mix of speakers to throw some light (and shade) on the topic of Financing and Capitalising Co-operatives. 

James Graham 2323 - 008

James Graham of SAOS

Insights gained from the session will help inform our thinking over the coming year as we consider in sharper detail the financing issues affecting the businesses we work with particularly relating to employee buyouts and consortia of scale.  This is of course in the wider context of Scottish Enterprise’s ongoing work in the Access to Finance arena and the Scottish Government’s Sustainable, Responsible Banking strategy, published last year.

 Attendees from CDS, our Advisory Board, Scottish Enterprise and the Scottish Government heard from James Graham of SAOS on the challenges of capitalising a typical agricultural co-op and the potential need for a farming and rural financial intermediary to serve that community, and Angus Waugh and Gerry Sweeney from First Milk on the challenges of raising capital in a 1,700 member strong dairy co-operative. 

New Economics Foundation’s Tony Greenham gave an in-depth analysis of the UK’s banking system and the benefits of ‘stakeholder banks’ with Rod Ashley of Airdrie Savings Bank, the UK’s last remaining independent savings bank, highlighting the benefits of local banking.

Trying to summarise the rich learning and discussion from this jam-packed session is probably an injustice. However, as a taster let’s consider on the top five financing facts:

  • The UK, and particularly Scotland, lacks diversity in its banking system as compared to other developed nations.  In the UK, local banks comprise just 3% of the sector as compared to 67% in Germany and 34% in the USA. 

Fact 1 image

  • Co-operative (and employee-owned) business models by their very nature make capital-raising difficult due to the ownership structure.  In the USA, there are special provisions supported as a necessary counterbalance to other types of enterprise.
  • Collaboration is the name of the game in Germany. Local banks co-own central services (for example, back office, regulatory and marketing functions).  This collaboration (rather than the consolidation seen in the UK) allows them to remain locally focused, with sophisticated systems.

    Rod Ashley, chief executive of Airdrie Savings Bank.

    Rod Ashley, chief executive of Airdrie Savings Bank.

  • Airdrie Savings Bank was founded on 1 January 1835 and is the only institution now operating under the auspices of the Savings Bank (Scotland) Act 1819.  Customers have ready access to bank managers and staff with knowledge of the local area and local businesses.  The Bank faces an ever increasing scrutiny from the regulatory landscape. 
  • There are comparatively higher levels of lending to co-ops, social enterprises and charities as well as local SMEs by local banks.  For example, the German government-owned development bank KfW has specific funding available for family businesses to help the younger generation to buy out the older (retiring) generation. 

Although, like the January sun, this is just a brief account of the topics, the discussion will help us to put finance in the hot seat in 2014.

CDS is here to help businesses considering the adoption of co-operative business models.

2014 is a time for change

Kim Lowe Director John Lewis Partnership

Co-operative Development Scotland recently hosted ‘Embedding a Culture of Ownership’ in collaboration with the John Lewis Partnership – the UK’s largest employee-owned company.

 Kim Lowe, managing director of John Lewis Glasgow, shared insights with an audience of over 30 existing and prospective employee-owned businesses in Scotland. Here she explains why she thinks 2014 is the year for employee ownership.

A new year presents opportunity for change. It is my hope that 2014 will see more businesses adopt the Employee Ownership (EO) model, aided by legislation and by examples of best practice. New legislation will be included in this year’s Finance Act after a period of parliamentary scrutiny and will mean that bonus payments to staff of employee-owned companies will be free from income tax up to an annual limit of £3,600. We hope this will encourage the creation of more employee-owned firms and will also help existing EO businesses – such as The John Lewis Partnership – to thrive. 

Last year, the Government-commissioned Nuttall Review revealed the link between employee-owned businesses and long-term economic success. According to academic evidence, they outperform other companies in job creation, have a lower risk of failure and are more satisfying places to work.

Employee ownership, in my experience, is most often motivated by a desire for a fairer and more responsible form of capitalism. At the John Lewis Partnership, shared ownership means engaging our Partners to deliver more for our customers and the business.  It means adopting a positive culture based on sharing in the rewards of success and creating a business that remains resilient in the face of challenging economic conditions. Giving employees a personal stake in the long-term success of their business is a powerful way of aligning their interests.

While the Government is starting to take forward many of the Nuttall Review recommendations, the playing field is still weighted against employee-owned businesses. The EO model remains relatively rare in Britain, despite evidence to suggest numerous benefits to the economy.

For too many and for too long, ownership has implied the right to sell, when I would contend that good ownership means the responsibility to nurture, develop and sustain organisations for the long term. This requires a change in culture and the way we perceive ownership in the UK. This shift won’t be an easy one to make but if done correctly it could mean a new generation of high-growth businesses, new employment opportunities, greater productivity and an economy better able to cope with the turbulence we will face in the decades ahead.       

Kim Lowe, managing director of John Lewis Glasgow

Kim Lowe, managing director of John Lewis Glasgow

 The article above appeared in The Scotsman on Thursday 9 January 2014.

New Year Message

Sarah Deas resizedFrom Sarah Deas, Chief Executive, Co-operative Development Scotland

The eyes of the world will be on Scotland in 2014 as we host the Commonwealth Games, Ryder Cup and Homecoming. It’s a fantastic opportunity to showcase our country on the global stage.

Whilst we wish our sportsmen and women every success, 2014 is much more than medals – it’s a catalyst for regeneration, innovation and sustainable economic growth. An opportunity to build international business relationships, demonstrate our capability to host major events and present Scotland as a leading tourism destination. 

Commonwealth-Games-2014For Co-operative Development Scotland it’s an opportunity to shine a light on the positive contribution that co-operative and employee ownership models are playing in the Scottish economy. Working with the Supplier Development Programme, we’ve been helping businesses to tender together to compete for Games related procurement contracts – capacity building that will have long term legacy benefits. 

One co-operative that will play a key role in helping visitors discover the best places to stay, eat and drink is the Merchant City Tourism & Marketing Co-operative. The Merchant City will be a hive of activity during Games time, including hosting the venue for high profile business events. 

Another co-operative that should benefit from the growth in tourism is the Scottish Mountain Bike Consortium. Set up to increase the range and quality of mountain bike experiences, it aspires to make mountain biking the ultimate family-friendly adventure activity.

roadshow

Scotland is leading the way in the adoption of innovative business models. The coming year offers an excellent opportunity to leverage this success. Businesses that are already successfully exporting, such as employee owned Tullis Russell, Clansman Dynamics and Scott & Fyfe, are well placed to use the flexibility and power of their business model to seize new opportunities for growth. 

As Scotland ‘Welcomes the World’, hopefully you too are considering what 2014 could mean for your business. Are you capturing this once in a lifetime opportunity to profile your business and build international relationships? 

Wishing you a successful 2014

Best wishes

Sarah

2014: An exciting time to collaborate

Marc Crothall picture

The Scottish Tourism Alliance (STA) is an independent trade body comprising trade associations, individual businesses, marketing and local area tourism groups who earn their living from tourism or have an active interest in tourism.

Marc Crothall, CEO of the Scottish Tourism Alliance, explains why the organisation has partnered with this year’s Collaboration Prize at an exciting time for the Scottish Tourism industry.

The STA’s primary role is to lead, facilitate, co-ordinate and provide support to industry to help enable the successful delivery of the national strategy (Tourism Scotland 2020) objectives and vision. Other activities undertaken by the STA on behalf of its members are to collaborate with and represent industry views to government and agencies, offer advice and information to its members and enable strong networking opportunities across industry sectors.

We are recognised by government and public agencies as a credible and fully representative ‘voice of the Scottish industry,’ which Co-operative Development Scotland (CDS) has also acknowledged, and we are pleased to have been asked to work in partnership with them as a representative of the Scottish Tourism Industry.

The STA is delighted to support CDS’s Collaboration Prize as it focus’ on one of the key elements that underpins the National Strategy (Tourism Scotland 2020) “Collaboration”.

With the hook of a great £10,000 prize, the competition creates market opportunities, facilitates collaboration, endorses sustainable tourism and helps drive economic growth in the tourism sector. All of this contributes towards the Tourism Scotland vision in: “Making Scotland a destination of first choice for a high quality, value for money and memorable customer experience, delivered by skilled and passionate people.”

Tourism is one of the most important industries in the Scottish economy, generating £4.3bn from overnight visitors, employing 185,900 within the tourism growth sector and attracting 15 million visitors in last year alone.

Now is an exciting time to be a part of the Scottish Tourism sector which will grow exponentially in the coming years with three landmark events taking place next year when Scotland “Welcomes the World” in 2014 with our second year of homecoming and two of the world’s biggest sporting events: the Commonwealth Games and the Ryder Cup.

These events are key to the tourism industry as they will not only give us the opportunity to showcase Scotland to the world, but will provide the stepping stones to delivering the growth ambition set out in Tourism 2020. Many opportunities will also be generated for our home grown talent to work together to succeed on the world stage and compete in the world market.

With these vast opportunities on the horizon the STA is looking forward to seeing the calibre of entrants that emerge from the Collaboration Prize this year and how they plan on taking advantage of these forthcoming key events. Fundamental elements we will be looking for in the proposals are: 

  • Innovative and creative concepts
  • Collaborative opportunities identified
  • Sustainable plans and projects
  • Valuable contribution to the Scottish Tourism sector
  • And most importantly, vision for future expansion and growth

The STA is looking forward to seeing what the future stars of the Scottish Tourism Industry have to offer.

If you are not yet a member of the Scottish Tourism Alliance for more information on membership please visit www.scottishtourismalliance.co.uk or email jean.kilpatrick@stalliance.co.uk