As a company secretary its important that I read annual reports, either for learning more about potential clients, or simply to see what the trail-blazers are doing. The reasons companies (or any organisation for that matter) produce an annual report is varied, but with the potential cost outlay huge and employees attention diverted away from other work, why bother?
1. The statutory need. All quoted public limited companies (plc) are required to publish an annual report. Content of the report is regulated in law, principally the Companies Act and the Financial Reporting Council regulations. Plc annual reports have to be of similar content to allow investors to determine which companies to buy shares in and which to avoid.
2. Public relations. Some reports go beyond the investor audience and try to appeal to the general public. Take for example the annual reports of petroleum giants like BP or Shell, who have an uphill battle convincing consumers that they do anything other than pollute. The annual report can be used to bestow their corporate social responsibility (CSR) virtues to a degree that no TV advertising campaign could ever wish for.
3. Part of a marketing plan. If the report is led by the marketing department, then the annual report, in addition to reviewing the years performance, can be used to appeal to new markets and customer groups. Content can be specifically written to focus on product development or advancement into new territories. This is something that would be particularly attractive to new and vibrant businesses.
So you've decided an annual report would be good for business, what next?
It's about understanding the audience ... when writing an annual report the first place to start must be understanding who the report is primarily aimed at. In a public sector organisation such as an NHS Trust, this is likely to be the public, so plain language and promotion of clinical achievements is in order. However, in a publicly traded plc. such as Vodafone, content must focus on helping the investor understand the risks and rewards of continued investment. Obvious? You'd think so, but there's organisations out there who produce annual reports with no greater objective than doing so because everyone else is doing one.
Drawing the reader in ... I see many annual reports that are big on content and light on creativity. I understand why this happens; content requirements are divided up between directors and each wants to ensure they tick all their compliance boxes. The outcome is usually content overkill and repetition. The best annual reports are therefore the one's where directors supply facts and figures to a creative team, who then work their magic using words, graphics and photography. The board or executive teams involvement is limited to a final check over and sign-off.
On time, on budget ... An annual report should be delivered at the same time year-in, year-out. Plc's have a statutory six months in which to get the document out. Other organisations should have a similar deadline or risk the report content becoming irrelevant. Cost control is also important. Good photography is necessary but expensive, as is getting the wording of the copy absolutely spot-on. Such expense can be mitigated by integrating these costs with the wider marketing budget; so for example, the photography will also be used in your website and brochures for the next twelve months (as would the key messages). The appointment of a project manager to oversee and control the annual report project should therefore be a serious consideration.
Who are the trail-blazers?
If you want to be amongst the best, you need to know what they're up to. Reportwatch have produced their global top 300 annual reports 2010, which is a great source of solid practice and innovative ideas. In addition the UK Investor Relations Society has some good tips that can be applied to any organisations annual report, not just plc's.
Monday, 30 August 2010
Thursday, 19 August 2010
Naming your business - avoid the pitfalls
So you have business idea. Before doing market research and a business plan, the next thing you do is think of a company name and brand - hardly the most pressing of tasks, but human nature dictates we do this (there's probably some Freudian explanation for this). You have a name, "blue sky", as you want to be perceived as an imaginative and innovative business. But reality dawns, the name's been used hundreds of times before and you despondently consign the idea to the wastepaper bin. So, where do you go from here?
In the UK I'd recommend six preliminary checks, all of which can be done quickly over the Internet. Having worked for an entrepreneur I've followed this process dozens of times. Unfortunately he'd often pick a name for his project upfront and run with it for a few weeks before letting me know. I'd then have the unenviable task of reporting it as a none starter (I no longer work for him).
Step 1: make a shortlist of potential names. This can be a similar name configured or spelt in a number of ways, e.g. innovate, inof8, intervate.
Step 2: run your shortlist through a web domain directory. I use 123-reg.co.uk to see what's available. I'd limit the search to .com and .co.uk domains as they're the ones that uk businesses generally use. Good names tend to be short and catchy, and remember, your company name need not be your web domain, e.g. B&Q use www.diy.com.
Step 3: do a web search and see what else is out there using your preferred name. If there's something similar in your locality, or a business of the same name doing what you want to do, then go back to step 1. If you persist with the name you could be on the receiving end of a nasty solicitors letter.
Step 4: run the name through a translation website (such as google or babelfish). You don't want a name that's insulting or comical to overseas customers. You'll know what I'm talking about if you've ever walked round a supermarket on the continent.
Step 5: use the trademark register at the UK Intellectual Property Office to see what other businesses have already registered (the search facility is fairly straightforward). They'll be a mixture of word and pictorial trademarks registered. Again, if you see something that closely resembles your name or potential logo, then its best to go back to the drawing board.
Step 6: Finally, if you need to register a company, then do a search at Companies House. Some business owners prefer to use a company name that resembles their brand name, but this is not compulsory. Company law is also flexible about names within certain boundaries, so if your preferred company name "Bluepig Limited" is taken, a slight variation, such as "Bluepig UK Limited" would be permitted.
Above all, don't lose heart. I can pretty much guarantee you won't tick all the above boxes first time, but persist and you'll find your dream brand name.
In the UK I'd recommend six preliminary checks, all of which can be done quickly over the Internet. Having worked for an entrepreneur I've followed this process dozens of times. Unfortunately he'd often pick a name for his project upfront and run with it for a few weeks before letting me know. I'd then have the unenviable task of reporting it as a none starter (I no longer work for him).
Step 1: make a shortlist of potential names. This can be a similar name configured or spelt in a number of ways, e.g. innovate, inof8, intervate.
Step 2: run your shortlist through a web domain directory. I use 123-reg.co.uk to see what's available. I'd limit the search to .com and .co.uk domains as they're the ones that uk businesses generally use. Good names tend to be short and catchy, and remember, your company name need not be your web domain, e.g. B&Q use www.diy.com.
Step 3: do a web search and see what else is out there using your preferred name. If there's something similar in your locality, or a business of the same name doing what you want to do, then go back to step 1. If you persist with the name you could be on the receiving end of a nasty solicitors letter.
Step 4: run the name through a translation website (such as google or babelfish). You don't want a name that's insulting or comical to overseas customers. You'll know what I'm talking about if you've ever walked round a supermarket on the continent.
Step 5: use the trademark register at the UK Intellectual Property Office to see what other businesses have already registered (the search facility is fairly straightforward). They'll be a mixture of word and pictorial trademarks registered. Again, if you see something that closely resembles your name or potential logo, then its best to go back to the drawing board.
Step 6: Finally, if you need to register a company, then do a search at Companies House. Some business owners prefer to use a company name that resembles their brand name, but this is not compulsory. Company law is also flexible about names within certain boundaries, so if your preferred company name "Bluepig Limited" is taken, a slight variation, such as "Bluepig UK Limited" would be permitted.
Above all, don't lose heart. I can pretty much guarantee you won't tick all the above boxes first time, but persist and you'll find your dream brand name.
Wednesday, 11 August 2010
A cautionary tale for business owners
I was in a meeting with a networking associate the other morning. As a HR consultant she sees all kinds of horrific employment law issues and this one was no exception.
A client called to say his wife, who he was splitting from acrimoniously, had arrived at their business and ordered him to leave the premises. The wife informed him that she had purchased the shares of a minority shareholder which gave her a majority stake in the business and therefore the right to control its affairs. After the husband initially refused to vacate the building the police were called and he was forced to leave. Later, realising that the business could not function without the husband, the wife allowed him back onto the premises, where he now spends all his time (there's a mattress in the corner) working at the behest of his estranged spouse.
Although an extreme example, cases like this are not uncommon. Many accountants and financial advisers will suggest that husbands and wives split shares 50:50 in order to maximise the tax benefit. This arrangement is inconsequential while the personal relationship is good and the business is worth little. However, with nearly one in three marriages ending in divorce, legal measures should be put in place sooner rather than later.
There is a legal document called a shareholders' agreement which business owners should use as a means to regulate variety of issues such as the example above. The content of the agreement will cover matters such as, ensuring shareholders have first call on any shares being sold; what the dispute resolution procedure shall be if shareholders enter into conflict; and the process of fair valuation of the shares.
For a shareholders' agreement to be valid all shareholders must enter into it, so its of little use when the shareholders are already in conflict. However, for newer companies with few shareholders entering into an agreement should be relatively simple. An agreement can be drawn up by a solicitor, or can be purchased over the Internet. Both have drawbacks; solicitors are often expensive making the process cost prohibitive to small businesses, while Internet based agreements don't explain what the terms and conditions mean. However, there is a third way; use a corporate governance consultant or company secretary. They will be cheaper than a solicitor and take the time to explain the content of the agreement. Prices tend to start at about £170 for a husband and wife (or civil partner) agreement.
Have you had a bad shareholder experience? Why not add a comment below?
A client called to say his wife, who he was splitting from acrimoniously, had arrived at their business and ordered him to leave the premises. The wife informed him that she had purchased the shares of a minority shareholder which gave her a majority stake in the business and therefore the right to control its affairs. After the husband initially refused to vacate the building the police were called and he was forced to leave. Later, realising that the business could not function without the husband, the wife allowed him back onto the premises, where he now spends all his time (there's a mattress in the corner) working at the behest of his estranged spouse.
Although an extreme example, cases like this are not uncommon. Many accountants and financial advisers will suggest that husbands and wives split shares 50:50 in order to maximise the tax benefit. This arrangement is inconsequential while the personal relationship is good and the business is worth little. However, with nearly one in three marriages ending in divorce, legal measures should be put in place sooner rather than later.
There is a legal document called a shareholders' agreement which business owners should use as a means to regulate variety of issues such as the example above. The content of the agreement will cover matters such as, ensuring shareholders have first call on any shares being sold; what the dispute resolution procedure shall be if shareholders enter into conflict; and the process of fair valuation of the shares.
For a shareholders' agreement to be valid all shareholders must enter into it, so its of little use when the shareholders are already in conflict. However, for newer companies with few shareholders entering into an agreement should be relatively simple. An agreement can be drawn up by a solicitor, or can be purchased over the Internet. Both have drawbacks; solicitors are often expensive making the process cost prohibitive to small businesses, while Internet based agreements don't explain what the terms and conditions mean. However, there is a third way; use a corporate governance consultant or company secretary. They will be cheaper than a solicitor and take the time to explain the content of the agreement. Prices tend to start at about £170 for a husband and wife (or civil partner) agreement.
Have you had a bad shareholder experience? Why not add a comment below?
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