Tag: Scottish Enterprise (Page 1 of 5)

Collaborate to access new markets

Karen McLeod manages the export advisory service at Scottish Development International (SDI), the international arm of Scottish Enterprise.  SDI offers support to help Scottish Businesses trade overseas

Last year a record number of Scottish businesses, large and small, started thinking globally and branched out overseas.  We spoke to Karen to find out why it’s important to consider selling internationally and the ways in which you can do it successfully.

Why is exporting important? 

Overseas markets have become increasingly important to the Scottish economy and in 2014 Scotland’s international exports were valued at £27.5 billion*, a 17.3% increase from 2010.

Our research shows that many overseas markets are underserved and there is demand for Scottish products and services internationally. This, paired with the fact that SDI supported 2,500 businesses to export last year, shows that there is opportunity and the ambition for exporting to continue to grow.

What are the benefits?

Trading abroad can boost your profile, credibility and bottom line.  That applies whether you’re trading with established markets such as the EU and USA, or high-growth markets like Brazil, China, India, Colombia and Vietnam.

International markets like these offer you access to new customers, revenue and ideas. Crucially, they enable you to spread your business risk, increase the commercial lifespan of your products and services and secure economies of scale which are not always possible at home. In fact, exporting is now considered essential for Scottish businesses that want to safeguard future growth.

The figures are compelling, showing that those firms that choose to export become 34% more productive in their first year** while those already exporting achieve 59% faster productivity growth than non-exporters**, positively impacting on staffing and financial performance.

Doing business overseas brings further benefits such as fostering ideas for new products and services. Once a company has ‘dipped their toe’ into a new market this in turn tends to increase confidence and ambition and provides the momentum for further growth through exporting.

What are the barriers and how can you overcome them?

Exporting can seem daunting to smaller businesses and the thought of going it alone can often be off putting and seen as high risk.  Collaborating with others can be a way to address those risks and make the most of the opportunities that exporting brings.

Collaboration for international markets

Businesses can collaborate using the consortium co-operative business model. This model allows businesses to come together for a shared purpose; to buy or sell in scale, market more effectively, share facilities or jointly bid for contracts.

There are good examples of Scottish consortiums already collaborating on international strategy.  Examples of shared activities include creation of a portfolio brand for export, consolidated shipping and a joint e-commerce activity.

Winning support with the Collaboration Prize

We are supporting this year’s Collaboration Prize which encourages firms to think collaboratively and pitch an idea for a new collaborative enterprise that will help them to access new markets. This could be a new sector or a geographical market including international markets.

The winners selected by the judging panel will receive £5,000 (to implement their collaborative idea), support to set up as a consortium co-operative, up to £5,000 business support (delivered by Scottish Enterprise or Highlands and Islands Enterprise) and access to export advisor support from my team.  This includes a wide variety of services such as:

  • an export advisory service, backed by international trade advisers, offering tailored support and guidance;
  • online tools to help you create an export plan;
  • and business intelligence from 43 global offices as well as events to explore opportunities and network with valuable contacts.

The Collaboration Prize is being delivered by Co-operative Development Scotland on behalf of Scottish Enterprise and Highlands and Island Enterprise in partnership with Business Gateway and the Scottish Chambers of Commerce.

 

Sources:

*Scottish Government Export Statistics Scotland 2014 publication – click here to read.

**UK Government UK Trade & Investment research publication – Bringing home the benefits: how to grow through exporting click here to read.

Climbing to success with employee ownership

Peter Will, managing director of Tayplay

Scotland’s latest business to become employee-owned is Perth-based Tayplay, a manufacturer of rope, playground and climbing equipment for the playground and leisure industry. Since it was founded in 1994, it has developed into the UK’s leading supplier of rope playground equipment, shipping hundreds of products worldwide and turning over £2million annually.

Last month’s move to an employee-ownership model has seen Tayplay’s 14 members of staff given the opportunity to become owners in the business. Managing director Peter Will discusses why the company decided to go down the EO route and shares his experiences of the transition process. 

Following the recession we experienced a difficult trading period and we were considering a trade sale.  However, we could not agree terms and after a strategic review we decided to look more closely at the employee ownership business model.  Co-operative Development Scotland then conducted a feasibility study and we quickly discovered employee ownership ticked all of our boxes.  No other options were even seriously considered at that stage.

Our EO journey started in 2014 and so far we have been able to meet all of our targets in terms of the sale price, timescales and the fact we’ve been able to retain the business in Perth.  EO is the ideal solution for retiring owners who want to preserve the ethos of the business and retain employment locally.  It is also a reward for the staff as we wanted to recognise the contribution and commitment they’ve made to the company’s success.

An Employee Ownership Trust has acquired a controlling interest in the company and will hold these shares on behalf of the employees, with the view that our employees will eventually own 100% of the company.

We spent quite a bit of time working with specialist advisors at CDS, undertaking meetings with the staff to help them understand the concept of employee ownership.  Our employees now really believe in the new model and we expect the degree of buy-in to increase now that the deal has gone through.  As the employees begin to see and feel the reality of EO we expect their commitment to the company will grow and it will make recruitment easier.

The Tayplay team

CDS guided and supported Tayplay’s transition to employee ownership, providing expert advice on the implementation of the new ownership structure. If you would like to learn more about how employee-ownership could benefit your business, please get in touch and our expert advisers will be happy to chat with you.

Happy partners make for better business at John Lewis Partnership

David Jones started working for John Lewis Partnership as a Graduate Trainee in 1982. Since then he has held a number of roles, including running several Waitrose stores and some time as Waitrose’s Supply Chain Director.  His current role is Partnership Registrar, in which he is tasked with ensuring the business upholds the principles of the partnership. David gives some background to the Partnership’s employee ownership model, and how putting the happiness of the partners first makes for better business.

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David Jones, John Lewis Partnership

“John Lewis Partnership has not always been employee-owned.  The son of the founder, John Spedan Lewis, decided it was unacceptable that his family made more from the business than all other employees combined. His objection wasn’t just moral; he felt it was bad for business.

Spedan’s view was that if he created a more successful business that reinvested in itself, took a long term view, gave everybody a voice in how it was run, and actively contributed more to community and society, then more people would want to spend money in his shops.   In 1929, he sold his shares to a trust, that would hold the shares on the employees’ behalf, and he was repaid for these shares over the next 30 years.

John Lewis Partnership now has almost 400 shops, 90,000 employees and gross annual sales of over £11 billion.  The Partnership employs 3200 people in Scotland. There are seven Waitrose stores as well as John Lewis shops in Aberdeen, Edinburgh and Glasgow.  We also have a customer contact centre in Hamilton.  We support many Scottish companies in our supply chain.  Quality of produce is paramount for Waitrose, and we are pleased to support many Scottish producers. Indeed, Stoat’s Porridge and Mo’s Cookie Dough are two Scottish companies who started out selling products in Waitrose, and have gone on to be national businesses.  We build long term strategic partnerships with our suppliers, and are proud to have been working closely with Aquascot so closely for many years.  I’m thrilled the firm has also adopted the employee ownership model.

As Partners in the business, our employees share the rights and responsibilities that employee ownership entails. This doesn’t mean that everyone is involved in every decision the business makes – we couldn’t function like that.  What it means is that they hold our leadership to account for the decisions they take.  We have 5 employees elected to our Partnership Board. These employees do not have management or executive responsibilities; they are there to provide the link with our partners and to test and probe the management. We have a democratically elected Partnership Council that ensures the business is run for and on behalf of the partners. The Council shares the views of the Partners on key issues and makes recommendations on policy.   The Partnership Council has the authority to remove the Chairman – although I’m pleased to say this has never happened!

Our Partners are rewarded for their commitment. The Partnership’s profit , after investment is distributed to Partners. This can be through pay, discounts subsidised leisure or learning. Each year we announce our annual bonus, which in 2016 amounted to 5 weeks’ salary for each Partner. Fairness is a key value and each member of staff receives the same percentage of salary in their company bonus. The same bonus is paid to employees whether they work in John Lewis, Waitrose or one of the other companies.  If John Lewis has a bad year, and Waitrose do exceptionally well, one balances the other.  This is the dual strength of our model.

John Lewis Partnership can never be sold, which gives us a powerful competitive advantage.  Because we have no option to sell our shares and invest elsewhere, each of our 90,000 partners has a strong incentive to throw all their energy and passion into making this year better than the last.

And it works. In a ferociously competitive sector, where we’ve seen the demise of high street brands such as Woolworths, BHS, Comet and others, we have not only survived, we’ve thrived.  Employee ownership is fundamental to our commercial success.  If we are to build a more diverse, sustainable and inclusive economy, we need to see more companies choose employee ownership.“

David Jones is speaking at a breakfast seminar on 20th October 2016 hosted by Highlands and Islands Enterprise at their Inverness offices. More information can be found here.

The Collaboration Prize is now open for entries


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Scottish Enterprise director Sarah Deas discusses the Collaboration Prize and why businesses should enter.

We are pleased to announce that the Collaboration Prize 2016/17 in partnership with Business Gateway and Scottish Chamber of Commerce is now open for entries.

We want to encourage firms to think collaboratively and pitch an idea for a new enterprise that will help them to access new markets. This could be a new sector or a geographical market including international markets. With the winning entrants receiving £5,000 cash and up to £5,000 business support to bring their idea to life.

To be eligible to win businesses must be based in Scotland, have an innovative idea they would like to implement by setting up a consortium co-operative and have identified other like-minded members for the consortium.

Consortia are established when businesses come together for a shared purpose; to buy or sell in scale, market more effectively, share facilities or jointly bid for contracts.  By collaborating businesses can reduce costs, share risks and create new platforms for growth.  Members could be businesses, partnerships or individuals, and the co-operative may be for any purpose which supports the members.

The competition this year has a particular focus on consortia accessing new and international markets. Two of the five prizes will be awarded to those consortia who demonstrate strong international ambitions to be delivered using collaboration. As part of their prize the winners will be able to access export advisor support where appropriate.

At CDS we think the Prize offers a great opportunity for businesses to harness the benefits that emerge through collaboration. Working with others can help businesses grow, and reduce the costs and risks of tackling new markets or investing in new processes.

In our experience collaboration can make a company better at what it does. Whether it’s about sharing resources or finding new markets, collaboration can bring efficiency and lead to increased profits.

For more information about the Scottish Enterprise Collaboration Prize visit the website.

 

Learn more at our FREE event

We’re running a series of FREE events this Autumn on employee ownership for interested businesses.  Please find below details for our forthcoming event.

To book your place at any of our events, register online at www.scottish-enterprise.com/cds-events or call 0300 013 3385.

Sharing ownership: the employee stake

Date:                5 October 2016

Time:                9:30am to 1pm

Duration:          3 hours

Admission fee: Free

Venue:             Apex Waterloo Place Hotel, 23-27 Waterloo Place, Edinburgh EH1 3BH

Eligibility:         Open to all Scottish businesses and professional advisers with an                                   interest in employee ownership.

This event explores how to assess and improve employee engagement, and how shares can be used to reinforce and reward employee commitment and contribution.

Engaged employees make for a happier, more productive workforce.  Evidence demonstrates that company performance improves when employees have a stake in the firm.  Our workshop has been designed to help you improve employee engagement in your company.

Dean Hunter of Hunter Adams and Rodger Cairns of Shepherd & Wedderburn will lead a session on how to create the right scheme for your company and the pitfalls and success factors to consider.

What’s covered?

  • Ways to assess and improve employee engagement
  • How shares can be used to reinforce and reward your employees efforts

Speakers

Lirrie Craig, a member of Scottish Enterprise’s workplace innovation team, will explain the factors that enhance employee engagement within companies.

Dean Hunter, founder and managing director of Hunter Adams, will talk through why he divested 30% of his shareholding into the hands of employees.

Dean Hunter, founder and managing director of Hunter Adams

Dean Hunter, founder and managing director of Hunter Adams

 

Rodger Cairns, Scotland’s leading expert on share schemes, will explain the variety of options available and how to decide which scheme fits for you. Rodger will also talk about the importance of effective communication to the workforce when launching any kind of share plan.

Agenda

9.30am Registration and coffee
10am Welcome
10.15am Achieving employee engagement – Lirrie Craig, Scottish Enterprise
10.35am Giving employees a stake in the business – Dean Hunter, Hunter Adams
10.55am Shares as an engagement tool – Rodger Cairns, Shepherd & Wedderburn
11.30am Q&A
12pm Networking lunch
1pm Close

Register for this event

 

Collaboration: A step-by-step guide

Jaye Martin 03

Collaboration brings a number of benefits – including business growth, reduced costs and extra resources –but when should a business join or form a consortium? How does it go about doing so? And what specific benefits can it deliver?

Here, CDS specialist advisor Jaye Martin shares a brief step-by-step guide to consortium working.

Step 1: Identify barriers to growth
For many small and micro-enterprises, lack of scale, time, finance or resources can be a barrier to accessing new markets, tendering for larger contracts or simply marketing services. These challenges will be familiar to many businesses, particularly those with small teams or those who provide unique or niche products and services.

Step 2: Look for a potential solution
Teaming up with other like-minded businesses and forming a consortium is an excellent way to break down these barriers. Suitable for businesses of all sizes operating in any sector, this model can help businesses grow by reducing the costs and risks associated with tackling new markets and investing in new products and services. It can also enable businesses to share resources such as back office functions and premises. Meanwhile, member businesses are able to retain their own brands, independence and control. You can find out more here.

Step 3: Find collaborators
Carefully identifying like-minded businesses to work with is crucial. Trust is a key factor. It can help if the businesses have worked together informally before. In most cases, member businesses operate in similar or complementary fields, although a lot will depend on the rationale for collaboration. You can read about the experience of a number of successful consortia here.

Step 4: Choose the right structure
The consortium co-operative model is an effective collaborative business structure. In simple terms it is an organisation run in a shared and equal way by and for the benefit of its members. Members are independent businesses and the consortium can be for any purpose which supports them, for example marketing, tendering, innovating or exporting. Co-operative Development Scotland has a track record in helping businesses and we’d be happy to help you explore the options. You can contact us here.

Step 5: Benefit from your collaboration
Collaborating can be a real game-changer for businesses. Collaborating can be a real game-changer for businesses. For example, through collaboration, Adventures in Light – an Edinburgh-based consortium which brings together a 3D artist, a film-maker and a carpenter – have been able to invest in essential new kit which has supported them to keep experimenting and inventing. This, in turn, has helped them work on bigger projects such as the International Science Festival and the Kelburn Garden Party.

As well as supporting businesses to access new markets, share risks and costs and develop new products or services, many businesses involved in consortium working also report increased confidence, better business connections, improved knowledge-sharing and an enhanced profile.

The benefits are tangible and numerous – and definitely worth exploring when considering the future of your business.

CDS can help you to explore the options, structure the consortium, and get more members involved. 

If you would like to find out more about collaborative business models, or if you would like to get in touch, visit here.

 

Creative Consortium Sheds Light on Collaboration Prize Benefits

Scottish Enterprise's David Smith pictured with Adventures in Light's Cristina Spiteri and Richard Anstice

Scottish Enterprise’s David Smith pictured with Adventures in Light’s Cristina Spiteri and Richard Anstice

This Thursday 12 November, Cabinet Secretary for Culture, Europe and External Affairs, Fiona Hyslop launched the 2015/16 Collaboration Prize – which aims to encourage companies to consider establishing a consortium.

Businesses from the creative industries are being invited to submit entries by 17 December for a chance to win £5,000 cash and up to £5,000 in support to set their idea in motion. Up to five winners will be selected to take a share of the prize fund.

Adventures in Light was one of last year’s Collaboration Prize winners. The consortium brings together a 3D artist, filmmaker and carpenter to create dynamic projected installations for musical and cultural performances.

Here, chairman Cristina Spiteri describes Adventures in Light’s experience of collaboration and how they have benefited from winning the Prize.

It all began when Susanna, Richard and I met serendipitously in a field whilst VJ-ing at a festival. As artists we believed that by pooling our expertise we could offer customers something completely new and exciting – delivered seamlessly from idea creation to execution. We also found that working together enabled us to collectively use resources to purchase more advanced equipment and embark on more ambitious installations.

After a year working together (during which we provided installations for T in the Park, Edinburgh Science Festival and the Scottish Dance Theatre) we decided to enter the Collaboration Prize to formalise our partnership and reach new heights.

Judges liked our streamlined approach to tendering which delivered value for money to customers and maximum return for the business. For us, it makes sense for clients to be talking to one body rather than three individual businesses. It also means we can grow to involve other companies and artists to go for bigger jobs. As a prize winner, we received support from CDS to formalise our arrangement and set up a consortium. We also received consultancy assistance to develop our collaboration further as well as £5,000 cash to inject into the business.

Winning the prize has opened so many doors for us. It has allowed us to invest in essential new kit which has supported us to keep experimenting and inventing – something all creative businesses should do. We’ve also had the opportunity to work on some fantastic new projects including the International Science Festival and the Kelburn Garden Party.

Collaborating is now at the core of our business. It has allowed us to bring in specialist skills, and together craft something truly unique and far beyond what we could produce on our own.

Our advice to anyone considering entering the Prize is ‘go for it’. It’s a fantastic opportunity and it has really helped us to grow and succeed.

Entries to the competition must be submitted by midnight, December 17. To enter, go towww.scottish-enterprise.com/collaborationprize.

Support with preparing submissions is available from CDS. For more information email info@cdscotland.co.uk.

The Collaboration Prize was launched by Scottish Enterprise (SE), in partnership with Creative Scotland, Cultural Enterprise Office, Interactive Scotland and Highlands and Islands Enterprise (HIE), and delivered by Co-operative Development Scotland (CDS).

Transitioning to Employee Ownership – the Legal Perspective

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In January 2014, software developers Computer Application Services Ltd (CAS) moved from owner management to employee ownership.  Bruce Farquhar and Bruce Harvie, from the corporate team at lawyers Anderson Strathern, advised on the process.  Here partner, Bruce Farquhar gives his views on the transaction:

“The Corporate team at Anderson Strathern work mainly with the larger end of the SME market, and although we have advised a number of cooperatives, this is our first true “employee ownership” transition.  It was an excellent deal to be part of and I would say I’m now an enthusiastic advocate for the model.

“The transaction was quite straightforward, certainly no more complicated than any other business transfer transaction.   There were two main parties to the deal, the former owners as the vendors and the employees of CASLtd as the buyers.  It was in no way an adversarial process – indeed it was very collaborative with all parties wanting what was in the best long-term interest of the company.  We also involved an accountancy firm, Johnston Carmichael, which was able to give specialist advice on the tax implications for the parties.

“Like most employee owned firms, the majority of the shareholding is held in an Employee Benefit Trust.  This Trust retains the shares for the long term and provides stability to the company.  There is also a portion of shares available to employees as options.  In this way, employees are able to see their value in the business grow as the company prospers.

“The chair and chief executive both invested in the business and this meant there was no need to source any external finance for the deal. The intention is that both chair and chief executive will sell their shares back to the employee trust in the future.

“The sale to employees was not the first intention of the vendors. They had been pursuing a trade sale which had fallen through. However, the employee ownership option provided a satisfactory exit for them as owners, and was well received by the employees of CAS.

“As an adviser, it is a model I see fitting well with the aspirations of a number of business owners. Many entrepreneurs are reluctant to see their firm in the hands of a competitor.  The grueling process of preparing a business for a trade sale can be uncomfortable for a seller.

“A sale to employees can be a much easier process. An additional attraction for the owner is that they are able to control the pace of the transaction, and can influence their role in the business going forward.  The former owners of CAS had decided they wanted to exit at the point of sale.  Many owners would prefer to remain involved in some way, perhaps in a non-executive role.  The collegiate nature of an employee ownership transaction enables the vendor to do that.

“The benefits for employees are clear.  There is continuity of employment, they have a stake in their business, and more say in how that business is run.

“We’re delighted that we are now working with another successful Scottish business making the move to employee ownership. As awareness grows, I’m confident there will be many more following suit.”

You can learn more about  CAS Ltd’s transition to employee ownership at an event hosted by CDS and CAS Ltd in Edinburgh on Thursday 3 September.

For more information or to register go to: http://bit.ly/1Vh9aUy

Why working for an employee-owned company makes a real difference

sAt Aquascot’s ‘Successful Succession’ event on Employee Ownership Day, training assistant Sylwia Goluda described her experiences at the Alness-based company.

Her presentation provided real insight into an employee’s journey towards employee ownership and here she provides us with a summary of the talk that so many enjoyed on the day.

I arrived in Scotland from Poland in July 2006. It was a scary prospect coming to a strange country, having left behind my family, friends and job. Thankfully, everyone was so nice and friendly which made everything so much easier.

I came to work at Aquascot and immediately noticed a difference from how companies work in Poland. What struck me most was the attitude of the managers – they were open and helpful and told us how much they appreciated our hard work. They care for employees and this makes Aquascot a great place to work.

In 2008, the three directors announced at our annual conference that the company was moving to employee ownership. It was an exciting time and we all felt we were part of something bigger and better. A Partnership Council was formed and I was delighted to be elected to this with nine of my colleagues.

We meet on a monthly basis to discuss employee views and to propose ideas and suggestions for our business to grow and be successful. We have been involved in lots of projects including organising social events, charity initiatives, conferences and celebrations, such as the company’s 25th birthday party.

We are almost at the end of our journey to become 100 per cent employee-owned. You can tell that everybody is waiting for that milestone with great excitement. Personally, I can’t wait to see what’s going to happen and how it can lead to even more success.

I feel very proud to work here and I’m glad I have the opportunity to grow and be recognised and appreciated for going that extra mile. I believe that Aquascot’s future is very bright – not simply because we are employee-owned but because we have a great team of people who will make success happen.

Employee ownership – the key to a stronger Highland economy?

AquaScot Dennis Overton 94Earlier this month, Alness-based sustainable seafood company Aquascot opened its doors to the local business community for a ‘Successful Succession’ event jointly hosted with Co-operative Development Scotland.

Here, Aquascot chairman Dennis Overton reflects on the day and the company’s experience of employee ownership.

With 185 employees operating from two sites in the town, Aquascot is currently 85 per cent employee-owned and is set to complete the transition to 100 per cent employee ownership by 2017. As an enterprise, we have a 12 per cent share of the UK’s ‘ready to cook’ salmon market.

On 3 July – Employee Ownership Day – we welcomed employee owners, local business people and local MSP, Rob Gibson to our premises. We focused on how employee ownership has been a successful model for Aquascot, and how it can make a significant contribution to economic growth.

I believe the UK economy would be in a much healthier position if there were more employee-owned companies. At present, I feel we are overly focused on short-term gain to the detriment of long-term value creation.

Employee-owned firms are different. In ‘conventional’ businesses there is often disconnect between shareholders and the company they part own. This can be because shareholders have different, and often more immediate, objectives than the people inside the company who have its long-term success at heart.

In an employee-owned company, the employees control the shares. They are more likely to be concerned about the longevity of the business and know that innovation, productivity and profitability are key to achieving that. Indeed, as Aquascot partner Donald Beaton put it so articulately: “This isn’t just about creating good jobs for us, it’s about jobs being there for our children and their children.”

In the Highlands, succession is a concern. In a survey we conducted in 2005, we looked at what happens to non-family, first generation businesses when it comes to considering succession. The findings were not encouraging:

  • There were few independent businesses of any scale in the Highlands
  • The most common form of exit was a trade sale to a buyer out with the region
  • In the majority of cases , the acquired company no longer had a presence in the Highlands after five years

When our founders came to consider Aquascot’s future, they knew that the final decision had to consider the contribution made by its employees. We have exceptional staff and they have made the company the success it is today.

By selling to employees, our founders have enabled this success to continue, and Aquascot will remain in Alness providing jobs and opportunities for years to come.

Friday’s event encouraged several businesses to explore employee ownership more closely, and with Aquascot as an example, this can only be good news for the local economy and the people of the Highlands.

Real Food, Real Folk – Celebrating Glasgow’s Flair for Good Food

LETS-EAT-GLASGOW logoA group of leading Glasgow chefs have formed a new co-operative – Real Food, Real Folk – which aims to promote the city as a culinary destination while also tackling issues relating to food poverty in the west of Scotland.

Here, CDS specialist advisor Ralph Leishman, who supported Real Food, Real Folk with the development of its consortium model, explains how through collaborative working, the newly formed company is benefitting the businesses involved and the wider community.

Initiated in Glasgow in 2014 by Colin Clydesdale and Carol Wright of the Ubiquitous Chip restaurant, Real Food, Real Folk is a not-for-profit consortium which counts chefs from renowned city eateries including Cail Bruich, The Crabshakk, The Gannet, Ox and Finch and Stravaigin among its members.

As a movement, it is underpinned by a founding ethos that chefs and producers who are truly passionate about food should share their expertise with more than just their customers.

And by working together to host major food events in the city the group aims to establish Glasgow’s place on the Scottish food map while building connections between local people and the fantastic produce available on their doorsteps.

As 2015 is Scotland’s Year of Food and Drink, this year provides Real Food, Real Folk with an ideal platform to launch its message. In September (5-6), the co-operative will host ‘Let’s Eat Glasgow!’ a pop-up market and restaurant festival in Finnieston developed around the theme of social inclusion.

Supported by £20,000 funding from Scottish Enterprise, with funding from other sources also currently being sought, the weekend will include a West of Scotland producers’ market, food demonstrations and meet-the-livestock events. During the day, a range of exciting dishes prepared by the co-operative’s well-known chefs will be on offer at just £5 per plate.

Real Food, Real Folk also plans to donate ten stalls at the event to established community groups involved in addressing food poverty in Glasgow, including Locavore, Plan Bee, The Freedom Bakery and Milk Cafe.

Proceeds from ‘Let’s Eat Glasgow!’ will fund the co-operative’s ongoing work in social inclusion and education. It is already working with children through after-school clubs and with mothers in deprived areas of the city.

The ambitious group also has exciting plans for 2016. The consortium’s next event – the BIG Table – will serve dishes from some of Glasgow’s most exciting restaurants and producers to 1000 people.

Guests will have the chance to purchase a ‘1 for 2’ ticket, which buys an additional place at The BIG Table for someone in the City suffering from food poverty.

To find out more about ‘Let’s Eat Glasgow!’ visit: www.letseatglasgow.co.uk

Innovation and how employee ownership can unlock it

eodayWith today marking Employee Ownership (EO) Day, we asked our EO ambassadors how important innovation is to growing your business and how EO can offer an advantage.

Here, a number of ambassadors from a range of sectors – including manufacturing, oil and gas, textiles and agriculture – offer us their thoughts on the subject.

Nick Kuenssberg, Scott & Fyfe: “Recent findings from an employee survey have confirmed the intuitive belief that a sense of ownership and a genuine understanding of and commitment to the revised innovation-led strategy would enhance performance and thus the longer term future of the company. In parallel a visit from an internationally respected textiles consultant in April said that he had been impressed by such an innovative and vigorous company. Simultaneous innovation and ownership change was perhaps a risk but it is already proving to be well worth taking.”

Alan Spence, Accord Energy: “At Accord, we believe that investing in people and giving them space to think outside the box not only benefits them but also the company. Over the past five years, our employees have developed and presented a number of new and exciting approaches to oil and gas allocation. Our innovative work has helped clients by improving their systems of allocation, while we have benefited through wider industry exposure, higher levels of activity and improved recognition and satisfaction for our engineers.”

John Housego, WL Gore: “Bringing a continued stream of innovative products is the only way to keep your business alive and fresh in the marketplace. The benefit of an employee owned business is large in this arena because of the increased engagement EO businesses often demonstrate with their teams. Innovation comes from passionate associates who can use their knowledge of the capabilities available and the culture to have their ideas more readily heard, and so leveraging a larger proportion of the team in innovation. That feeling of ownership and joint reward really helps this process.

Ralph MacLeod, Galloway & MacLeod: “When structured correctly, employee ownership can unlock innovators within the business and reward them correctly. This is having a huge impact – differentiating us from competitors, identifying new markets and improving margins for stakeholders and customers in a responsible and sustainable manner.”

Dick Philbrick, Clansman Dynamics: “Cynics predicted that in an employee-owned business there would be a cautious attitude to technical development. The cynics were wrong – 2014 was our busiest year for technical developments. Nothing is guaranteed in engineering but if there are problems the Employee Owners will bust the proverbial gut to fix them.”

Five points from Italy’s co-operative capital

Jaye Martin 03CDS specialist advisor Jaye Martin recently took part in a study trip to Emilia Romagna, the area of northern Italy with probably the richest co-operative history in the world.

Here, she reflects on the visit and looks at how Scotland can learn from the region.

The tour I was lucky enough to be part of was a collaboration between the University of Bologna and Saint Mary’s University (SMU) in Halifax, Canada. I joined a group of students undertaking a part-time Master’s Degree in Co-operative Management at SMU, all of whom are managers at co-operatives across Canada and the United States. Their organisations include food co-ops, insurance co-ops, credit unions and co-op development and their experiences provided me with valuable insight.

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One of the Towers of Bologna

Our chief executive, Sarah Deas, wrote a series of comprehensive blogs on her own experiences in Emilia Romagna a couple of years ago. With that in mind, I thought I’d simply touch on my highlights reel – although I can assure you that it was an intense eight days packed with visits to co-operatives and lectures on co-operative theory and economics!

So here’s my five most interesting points of learning:

1. Co-operatives are one of the most important tools in the reduction of inequality  Bologna – the capital of the Emilia Romagna region – has a lower unemployment  rate than other Italian cities. Emilia Romagna itself ranks first in Italy in terms of equality, evidenced by high average income and low income inequality.  Female participation in the workplace is significantly higher in Emilia Romagna (c65%) than in the rest of Italy (c45%). All of this can be linked back to the presence of co-operatives in the area.

IMG_01532. Social co-operatives… the future?

Legislation was introduced in Italy to create the legal and tax structure for the ‘social co-operative’ (what we might call a ‘social firm’).  At least 30% of employees must be categorised as disadvantaged (e.g. those affected by drug or alcohol addiction, physical or mental disabilities).  We visited some wonderful examples, such as Cooperativo Il Cammino e L’altro Giardino (‘The Alternative Garden’), a residence and gardens where herbs, fruit and vegetables are grown and used to make products such as jams and syrups.  Social co-operatives were oft-mentioned as the potential future growth area of the sector, but funding and support is increasingly hard to come by – so much will depend on the economic sustainability of projects and how they diversify and adapt to achieve this.

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Caseificio 4 Madonne

3. Caseificio 4 Madonne and the mix of the traditional and the innovative

My favourite visit – and not just because we got to taste all the lovely Parmigiano Reggiano cheese! Caseificio 4 Madonne is one of 350 Parmigiano Reggiano co-operatives in the region and together they form a huge consortium.  Caseificio 4 has 65-70 member farmers and produces 104 wheels of cheese each day.  We were shown the various stages of production and I was struck by the clever merging of traditional methods (e.g. use of muslin cloths and copper cauldrons) and innovative methods without the loss of the integrity and provenance of the product.  Perhaps something for Scottish food and drink companies to consider?

4. Co-operative funds – replicable here?

Co-operatives in Italy must pay 3% of their annual profits into one of three funds (each controlled by one of the three co-operative associations).  We visited Coopfond, the largest of the funds at 422m EUR and controlled by Legacoop.  The fund is used for the promotion of start-up co-operatives, growth capital for expansion and support for co-operatives in financial distress.  They will also help fund worker buyouts such as Greslab.  Given the issues around access to finance for employee-owned businesses and co-operatives in the UK, could a similar initiative be a potential game-changer?

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Our group outside University of Bologna

5. The importance of international connections

This study trip was important not just for the opportunity to see and hear about the strength of co-operative models in the region, but also to meet and discuss with fellow co-operators from Italy, Canada, USA and England.  Everyone in the group had a different interest or angle to their observations and questions and, for me, that was just as fascinating as the visits and lectures themselves. What is clear is that we should seek to build on these experiences, relationships and learning as far as possible as we continue to support company growth in Scotland using co-operative business models.

United States of Employee Ownership

Glen DottCDS specialist adviser Glen Dott has recently returned to Scotland after a fact-finding trip to the United States to learn about how employee ownership works there.

Here, he explores the differences in the systems across the Atlantic Ocean and why the American model of employee ownership has become so popular.

I have recently returned from the National Centre for Employee Ownership (NCEO) Conference held in Denver, Colorado. The NCEO is a membership body similar to the Employee Ownership Association in the UK. Both the United States and the conference were eye openers to me, having not seen either before.

Employee Ownership (EO) is big business in the USA. More than 11,300 firms exist there that use the Employee Stock Ownership Plan (ESOP). An ESOP is effectively an employee ownership trust which allows staff participation in corporate ownership and a share in the wealth these firms produce.

As in the UK, the company funds the purchase of shares from exiting owners, with the shares moving into the ESOP. Typically employees do not buy shares but are allocated a portion; in the UK a combination of both is common.

Purpose – retirement planning versus employee engagement

ESOPs were originally designed to provide for employee retirement. Companies would set aside stock to be given to employees when they decided it was time to collect their pension. This is still the case today. Countless US studies conclude share ownership combined with worker empowerment initiatives produce better financial results, but favourable tax treatment is a significant driver for ESOPs in the US.

Legislation driven

Even conferences in the USA are a little different.

Even conferences in the USA are a little different.

In the US, companies that adhere to a certain tax code and are 100 per cent owned by an ESOP pay no tax. Earnings are passed on to the shareholders (employees) within the corporation and these earnings are only taxed when liquidating the shares – at retirement or upon leaving the company.

Since ESOPs are the only retirement plans allowed by law to borrow money, they are attractive to owners, managers and advisers, as they can be used to raise finance. There is also considerable legislation in place to ensure ESOPs have independent trustees. ESOP valuations are independently verifiable and trustees are truly acting in the employees’ best interests. As you might imagine America’s famed legal system comes fully into play, with the Department of Labor challenging some valuations on behalf of employees.

Governance

From a UK EO perspective, employees in US EO firms do not seem to have great formal influence. This system appears to lack the ‘checks and balances’ we have, where the operating board is overseen by trustees.  There are no employee-elected directors and no employee-elected trustees. Furthermore, the trustees are appointed by the board.

There is however a certain logic to this. Trustees are legally obliged to work in the best interests of employees and are able to remove the company’s board, although in practice this rarely happens. The two interdependent governance structures are required to ‘work things out’ in the best interest of all.

While the systems across the pond differ, there is no doubt the American ESOP structure allows employees to fully share in the fruits of their labour – and provides interesting food for thought when considering how UK businesses approach employee ownership.

What do Co-operatives mean to you?

What words spring to mind when you think of co-operatives? Do you think of a specific business model or company? Perhaps you think of the business benefits? Maybe you reflect on your own experience?

We asked our team for their suggestions and compiled the answers into this word cloud – which we think is a terrific summary.CDS word cloud

What would you add to the list?

 

Employee ownership on agenda for professional advisers

Graeme Nuttall smlA recent CDS seminar saw professional advisers gather in Glasgow to hear from Graeme Nuttall OBE, author of the Nuttall Review of Employee Ownership.

Here, Graeme – partner of Fieldfisher – discusses the growing enthusiasm for the model, the important role played by CDS, new tax reliefs and Scotland’s success stories.

I was delighted to be invited to speak to an audience of professional advisers in Glasgow and was hugely impressed at the level of interest and enthusiasm that exists for employee-owned business structures.

There can be no doubt – the case for employee ownership has been made. A few years ago, a company owner looking to explore employee ownership would likely have been dissuaded from this path by their adviser. Now, advisers are much more likely to present employee ownership as a feasible succession option for their clients.

Co-operative Development Scotland (CDS), under the leadership of Sarah Deas, must take some credit for this achievement. CDS has been instrumental in building the employee ownership community in Scotland, and engaging with professional advisers to help them recognise the role these individuals and firms play in the development of employee ownership.

Advisers will know about the tax advantaged share plans designed to increase individual share ownership amongst a firm’s employees. These have been around for almost 40 years. In the Nuttall Review, I wanted to give greater priority to the trust model of employee ownership.

This is a simple model and gives employees a collective ownership of the company. I was delighted that as a result of the findings of the Nuttall Review a new tax regime for “employee-ownership trusts” (EOTs) was introduced last year. Briefly, there are two main new tax exemptions:

  • From 6 April 2014 there is an exemption from Capital Gains Tax (CGT) on gains on certain disposals of shares in a trading company (or in a holding company of a trading group) that provides an EOT with a controlling interest in that company; and
  • From 1 October 2014 there is an exemption from Income Tax (but not National Insurance contributions) of £3,600 per employee per tax year for certain bonus payments made to all employees of a company or group where an EOT has a controlling interest.

The CGT exemption has attracted attention to employee buy outs as a succession solution. Instead of a sale of shares being taxed typically, for owner managers, at an effective rate of 10% after entrepreneurs’ relief, there is an unlimited exemption from CGT.

The Income Tax exemption means there can also be a tax benefit for staff in this business model. In most cases dividends otherwise payable to the EOT as a majority shareholder are waived by its trustee and are paid out instead as bonuses to all staff – tax free up to £3,600 per employee per tax year.

This is a key concept – instead of external shareholders receiving dividends and staff bonuses being paid simply at the discretion of a board of directors, the EOT model provides staff with an economic stake.

However, tax should not be the driver of employee ownership. It is important that attention is paid to the business case. Scotland has more than its fair share of success stories.

Page\Park Architects, recently appointed to restore the world-renowned Glasgow School of Art Mackintosh Building, is a superb example of a trust owned model of ownership. Stewart Buchanan Gauges, a business where 85% of the workforce live within a five mile radius, represents the hybrid model of trust and direct employee share ownership. There are many more, and increasing all the time.

It’s always rewarding working through a transaction to completion. With an employee ownership transition, there is an additional bonus in that the relationship extends beyond the deal. The average life of a Standard & Poor’s listed company was apparently 60 years in 1958, around 30 years in the 1970s and was down to 15 years by 2014. Obviously businesses have to evolve and markets change but I like the idea that companies I help convert to employee ownership many years ago are still in existence in contrast to their competitors.

It was a real pleasure visiting Glasgow, especially speaking to so many advisers already convinced of the benefits of employee ownership. We do need more champions, and with advisers onside I trust we’ll see even more employee buyouts in Scotland over the next few years.

To read the speech Graeme gave during his presentation at Ernst & Young Glasgow, click here.

Employee ownership could be the best thing for your business

SCTRecently, Alan Spence, a founder of hydrocarbon accounting firm Accord Energy Solutions, told us why he was eager to share his thoughts on employee ownership (EO) when he spoke at the National Economic Forum in Dundee last month.

Here, in the second of his two-part feature, Alan discusses how employee ownership and investing in staff has helped his company succeed.

As a company, Accord’s goals are very simple; we want to be a successful business with a long-term future. To achieve this we need to provide our clients with a quality service at a competitive price and we rely on all of our people to ensure this happens.

We pay competitive salaries and provide a good benefits package but we recognise that these things alone won’t necessarily allow us to attract, retain and develop the best people. There has to be something more.

For us, it all starts with knowledge and understanding. Every month we get together for a staff meeting. We meet in the office or join in by conferencing and desk-top sharing. We examine and discuss every aspect of the business.

From admin and IT, through to the monthly management accounts and new business opportunities, we take time to cover it all. I think it’s fair to say that every employee knows enough about the business to understand how we’re performing and why the management team makes the decisions it does.

We also believe our staff should have significant control over their own personal development. Each individual has their own annual training budget (currently £1,800) they can spend on whatever training they feel they need.

For some, the training can be job specific – developing a deeper understanding of a familiar concept or learning about a new technique or process. Others may want to know more about business processes; accounting and finance or benefits and taxation. Not only does this help the employee grow and develop it also benefits the business by increasing our overall capability in so many different ways.

As a company with aspirations for a long-term future and a strong presence in the local community, we believe it’s important to contribute to the community. We do this in two different ways; by sponsoring local sports organisations – such as Garioch Sports Trust, Curl Aberdeen, Aberdeenshire Cricket Club and Ride the North – and by supporting local and national charities that are nominated by employees.

Beyond this, we think it’s important that employees play a major part in the key decisions. Recently our employees determined how bonuses should be paid and they are now in the process of deciding how we develop the company so it meets their current and future aspirations.

We will all be meeting in Aberdeen next month to work through this process together. Our plan is to shape our company in a way that benefits all of us and stands the business in good stead both now and in the future.

Any or all of these things and many more can be done by any company – you don’t have to be employee owned – and will result in improvements across the board. I say this based on my experience in both small local and large multi-national companies, and after hearing first-hand the experience of people like John Reid at Michelin Dundee.

However, when you’re ready to take things beyond this to the next level you may want to consider employee ownership, it could be the best thing you do for your business.

Can Scotland learn from the Basque experience?

Jim_Maxwell,_Business_Development_Manager,_Co-operative_Development_Scotland_resizedThe Mondragon Corporation – based in Spain’s Basque region – has evolved from humble beginnings to become the country’s tenth largest company.

Here, Jim Maxwell of CDS discusses how a recent visit to the area highlighted the benefits of the worker co-operative model.

Equality and a fairer society are at the heart of our new economic strategy for Scotland so in a recent visit to Spain I was keen to see how those same goals are being addressed in the Basque Country.

Started in 1956 by a local priest motivated to reduce poverty in three narrow, steeply sided valleys south of Bilbao, the Mondragon Corporation has evolved into a ‘mega-co-operative’, providing work for 74,000 people in 110, mainly industrial, worker-owned co-operatives.

View over Mondragon’s many co-operatives

View over Mondragon’s many co-operatives

Mondragon’s mission is the creation of wealth in society, delivered through a system of membership, rather than just employment for its workers. In return for a small input of initial capital and monthly contributions, each member receives a good salary and an excellent range of social and welfare benefits.

Equality and fairness are central to this system. The highest salary is no more than six times that of the lowest, all are entitled to the same benefits and no-one is paid overtime.  At the end of each year resources are transferred between companies to help strengthen those in difficulty and preserve jobs.

Job security is a hot topic in Mondragon at present. Following the closure last year of one of the member co-ops, Fagor Electrodomestico, all but 223 of its 2,000 workers have now been redeployed to jobs elsewhere in the group or have taken early retirement. A supreme effort is being made to find posts for the remaining 223, all of whom continue to receive 80 per cent of their salary.

Most surprising is the speed at which all this has been achieved.  The Mondragon Corporation took its present form only in 1992. Its overarching structures – a bank (‘Caja Laboral’), nine technical research institutes, the Mondragon University and a central co-ordinating body – have all been created within just a few decades.

Such rapid growth has been possible because of the highly engaged workforce and Mondragon’s treatment of capital as primarily a resource for the creation of sustainable employment and the improvement of people’s lives.

Mondragon Corporation's Training and Development Centre

Mondragon Corporation’s Training and Development Centre

The visionary model is impressive, but Mondragon has to be judged by its achievements.  Collaboration between the member co-operative companies has enabled all, with one exception, to survive the recession.

There have been virtually no lob losses among members across the group and a good standard of living has been provided to all. The Mondragon Corporation’s focus on creating ‘wealth in society’ has resulted in the Basque area having the most equal redistribution of wealth in Europe, as measured by Eurostat.

But a word of caution, the Mondragon model may not transfer easily to other places. What evolved south of Bilbao was in direct response to local needs and opportunities – poverty, weak state services, a strong sense of ‘national’ identity and a collective will to expand underperforming industries when the Franco regime ended in 1975.

So what can Scotland learn from all this? In Mondragon we have the clearest possible view of how the worker-owned business model can succeed. More than this, it shows how striving for socio-economic (not simply economic) outcomes can help create a fairer and more equal society.

This might be just the right moment to consider how worker-ownership could play a bigger part in shaping the future Scottish economy.

Free workshops on tendering together

Gill headshot 2

A series of free workshops on Tendering Together will be held by the Supplier Development Programme (SDP) from next month.

Here, Gillian Cameron, programme manager at SDP describes why the workshops will be a major help to Scottish business.

Our two part course, starting in May, is designed for companies and third sector organisations which have a good level of tendering experience and are looking to increase their market through collaborative bids.

Businesses can choose to attend the first part of the course in May – either in Falkirk on May 19, Glasgow on May 21 or Edinburgh on May 28 – with all delegates then able to attend the second day in the Lighthouse, Glasgow on June 4.

Topics include:

  • Why collaborate – opportunities and barriers
  • Types of collaboration
  • Finding and assessing partners, early discussions
  • Preparing a joint proposal/tender – tips and templates
  • Consortium agreements, legal documents

This is a unique opportunity for SMEs to get expert training on what it means to work collaboratively together.

There are a number of fantastic business opportunities coming up in Scotland for 2015, including Glasgow’s City Deal. By working collaboratively SMEs can ensure they are best placed to benefit and compete within the market place.

Places are limited and companies interested in attending should reserve their free place via www.sdpscotland.co.uk.

For more information contact info@sdpscotland.co.uk

Bright future ahead for Collaboration Prize winners

Adventures in LightAt the end of March, we announced the winners of our Collaboration Prize. One of those winners was Adventures in Light, an Edinburgh-based consortium which triumphed in our tendering category.

Here, chairwoman Cristina Spiteri discusses the group’s excitement at being named a winner and how they plan to use the prize money.

This is a hugely exciting time for Adventures in Light. There are three individuals in our group – a 3D artist, filmmaker and carpenter – and we have big plans and are ready to shine.

While we are individual businesses, we have been collaborating together for two years. In fact, we’ve already enjoyed a number of successes and have so far worked with the Edinburgh Science Festival, T in the Park, The Tinderbox Orchestra and Scottish Dance Theatre.

Adventures in LightBut when we found out there was a way for us to form a business from our collaboration, we were really excited. It’s absolutely perfect for us and we were already naturally working in that way.

Winning the Collaboration Prize will open up so many doors for us. Our vision is to create dynamic projected installations for musical and cultural performances.

Adventures in LightWe also have a focus on utilising projection mapping for brand promotion and interior design, something which is currently not available from one company in Scotland. And thanks to CDS and the Collaboration Prize, we can engage more prospective clients.

By working as a consortium, we can pool our expertise to allow for seamless ideas from creation to execution. The prize money will allow us to purchase more advanced equipment and embark on more ambitious installations.

It makes sense for clients to talk to one body rather than three individual businesses. It also means we can grow to involve other companies and artists to go for bigger jobs. Forming our official consortium is so exciting and offers so much growth potential for us.

Want to keep up-to-date with Adventures in Light? Follow them on Twitter, Facebook and Vimeo.

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