Episode 64 Show Me the Money

Now it's time for Show Me The Money This is Show Me The Money, your

weekly guide to who's making the cash, how they're doing it, and

what it means for the way we work. With us tonight: You probably use

his products every day but don't know it. Warren East is the boss of

ARM. It keeps your mobile phone smart. Mark Pearson couldn't earn

enough as a florist so set up a money-off voucher business. It's

been a right blooming success. And Kate Bassett gets real about

business as the Managing Editor of Real Business Magazine. Some call

it work experience. Others, slave labour. Whatever you call it,

another big employer isn't doing it. Burger King has pulled out of the

Government's scheme to help unemployed youngsters find work

placements because of public concerns.

Your first break in business was a work placement. With Gordon Ramsay.

If you hadn't had that break, would you be where you are today? No, I

wouldn't, simple as that. My opportunities were pretty limited.

I was not well educated. It was a difficult start, but, going into a

vocational career, I was going to become a chef. I moved to London

and the great opportunity was it was a prestigious location. A great

someone to live up to. I learned hard work, long hours. Key skills

and ethics which were important to me. It wasn't glamourous. I was

peeling potatoes for months on end, but it was a step on the latter in

the right direction. This is a story we hear so many times, the

first step into business that teaches you very basic skills, but

things like turning up on time, doing a full day's work. Going to

work when you don't feel like doing it. These are things which make you

employable. Yes, discipline. I got my first break in publishing

through work experience. I absolutely applaud them. The

problem with the government scheme is it has descended into chaos.

Remarks about a slave labour, why aren't you paying people? Matter

Lamb, Sainsbury's, Burger King, all pulling out, negative press. That

negative press has made some companies reconsider their

participation in it. Absolutely. Do these schemes give people genuine

opportunities and contacts and experience and or are they an

excuse for big companies to exploit workers and get them to take out

the rubbish and stack shelves? doing that, isn't there merit in

that? Yes, but remember this is not paid. These schemes can be eight

weeks. How useful are they to these people? How useful are things like

that to people who are quite likely to have not done well at school for

whatever reason that would be, to not have any experience of work and

have nothing on their CV they can use to look attractive to

employers? At the opposite end of the scale, youngsters sitting a

home doing nothing, watching daytime TV? If that is the picture

painted, surely something, meeting people, seeing opportunities, they

might not all turn into a job but it's better than a blank space on

your CV. What happened during this period? That's the worst question.

What have you done? If you haven't got an answer... There was payment

for these schemes. Youngsters were getting benefits. Yes, and in some

cases the travel expenses. It's about was their legitimate training

involved and I think there is a question about that. Thank you for

that discussion on that. Time for Boom or Bust, our quick flick

through the news you'd rather have missed this week. Being British,

you might think that means tea and cakes at 4 o'clock. But this is how

Britain was represented at this year's Rio carnival in Brazil. What

fun they seem to have having. It must have used up the UK's entire

quota of Shetland ponies. If your library is never open,

here's a solution from China. It's called the Book ATM and it lends

books just like a library but it stays open 24 hours a day. You just

need an ID card and a deposit of one pound to take one out. It has a

collection of 400 books to choose from. 399 of them are translations

of Barbara Cartland. Wondering what to do for your hols

this year? How about a round-the- world cruise costing a mere �1

million? Well, you can't take it with you. You'll enjoy luxury on

board for 115 days, calling at 52 ports in 28 countries. The cruise

Let's start with the carnival in Rio. Always a spectacular visual

nature, but that representation of Britain, people in uniforms on

Shetland ponies. Beefeaters and Shetland ponies, I don't think so.

We are associated with bad food and Cheddar cheese, but when it comes

to business, people do associate the made in Britain Taggart with

quality, reliability. -- a tag. We are known for our entrepreneurial

them. We are known for our ideas. You deal with the world's biggest

companies, Apple and Microsoft. How do they see the British? I think

they see us as practical. With a minder to do business. I think

being based in the UK singles as out from being either American or

Asian. It puts us in the middle and enables us to communicate well with

both. We are the bridge between the Continent which drove for the last

century and the one which will drive the current century and they

see us as a good place to do business? Decent people to deal

with? Certainly with our experience, it's how we have found doing

business on both of those continents. Mark, tradition is

important and tradition is often a selling point. But sometimes, in

business, you need to look towards novelty. Yes, there's novelty and

innovation. In Britain, it's very important we are seen as innovators

and it's the future of the country. We need to jump on and innovate.

We're always compared to Silicon Valley. I don't want that for so I

want to be the leader. We need to push it harder. That was a nice

innovation, the ATM which dispenses books. Yes, that is taking a

requirement and finding a novel way of servicing the requirement. We

find that, amongst the hundreds of people that use our technology, if

you look at our own business model, it was born, in some ways, out of

necessity, but a totally different way of doing business. Instead of

building chips and selling chips, we licensed designs to hundreds of

other companies who then make chips and sell them. It's just a

different way. Innovation is the way of the future. The innovation

in your business is what? Well, I mean, the innovation in the design

itself. And in that business model, where we shear the Investment and

share the return with our licensees and their customers. Why do you

share it with them? We share it with them because we share both the

investment and the return. We end up servicing a huge range of

customers, last year 8 billion. That's nearly 2 billion consumers

are all from about 2000 employees of. You can't do all that with just

2000 employees, so we share the effort and the return. The it

maximises and gives you more punch? OK. The million-dollar cruise. It

shows that there are people out there with a lot of money to spend,

not shy about spending it, and the recession has not got in their way.

Yes, there's a lot of it out there. The media portray a very tough time

and there's a lot of high rises, people being very successful.

Putting a price tag on that, I think every year you see something

horrendously priced. It is going to be an Easter break in a few weeks'

time but if there's customers out there, this good business and good

PR. The luxury Business holding up from your perspective? Absolutely.

We are seeing are two extremes. Unemployment at a 16 year height of

luxury market is holding up well with brands like the Morgan Motor

Company, British luxury brand in doing well. A good place for

entrepreneurs. He if you were to go to a book ATM and take one out,

what would be? It would be some big entrepreneurial. If someone I look

up to. I can't think of anyone. you say Richard Branson, I will

make you leave the studio. I've already read it. 1984 by George

Orwell. Pride and prejudice. And the classics girl. Pourri --

probably a story about the elements. The periodic tales. It's very high

in the non-fiction charts at the moment. The a chemistry book?

not really chemistry, but it's how the elements help Bass and how we

can make use of the different elements -- help pass. I'm looking

forward to us. I know your background is Engineering, hence my

slight surprise because over the years I know scientists and

chemists don't necessarily see eye- to-eye on most things. Do you think

there is enough public understanding about the scientific

principles which underpin the type of industry you operate? That's a

very good question. And I think these are books such as the one to

which I refer, play an important role in a bridging the gap. When we

start talking about business before it became as well known as it is

today, people used to glaze over and turn off and yet, Engineering

is about making use of the world around you, and making life better

for people. Is it about mastering nature? It's about making life

better for the people who live in the world around us. The what made

you think engineering was the area for you?

It is that challenge of working with the world around you, working

with the laws of nature, and not trying to win. But trying to make

those things work for you. And create real things. I'm not much of

an artist, but I enjoy making things. That's what I have been

lucky enough to have done as a career. Engineering is cool now

because of the Big Bang theory of the television. Did it have

appealed to you when you were starting off? To be honest, I was

just interesting. We were talking at the start of a programme about

the placement schemes for youngsters who have limited

experience of work. When you look at the labour market, you look at

it from a different perspective. You need people who already have

many many technological advanced skills, and experience in working

in your industry, as well. Can you find enough of those people? We can.

Our business model means we have that fewer people relative to the

amount of business we do. Over the last couple of years, we have hired

about 700 and you people, about 400 additional people to our business.

And they tend to be graduates and some of them are experienced.

Because we're only looking for a relatively small numbers, we do

find them. You have 100 unfilled vacancies. Yes, at the moment. It

is a planned recruitment for the whole of 2012. We are going to hire

about 200 people and a few more during the year. Here we are at the

end of February. I'm not worried at the moment. You're confident you

will fill them? Certainly. We saw on Friday, the primary reason that

Britain's economy shrank last year was because businesses had cut back

on their investment. Down at 6% across the board. What is happening

D We are continuing to grow. So on top of the 400 people that we grew

by over the last couple of years we are intending to continue on that

trajectory and grow by another 200 or so this year. That is about

another 10%. When you see other companies are cutting back their

investment because of uncertainty about the euro and worries about

Greece, do you think that perhaps they have lost the plot a little?

Not at all. I think businesses have to react to the environment in

which they find themselves. We have been through years, while I have

been doing this job, when we have been in total none investment mood,

in cutting back mode. Right now, we are looking at growth markets,

growth opportunities, new projects, new geographic areas. It's time to

investment RBS lost �800 million last year. Lloyd's lost �3.5

billion. HSBC will say it made a profit of �14 billion. Back to you

on this, when yo hear the bank making that amount of money, do you

think they must be ripping a lot of people off, or do you think, good

on them, that is what we need? first I think big companies, big

profits. That's right. It so happens it is a bank. Businesses

are about servicing their customers and making profit out of servicing

those customers to give those profits to shareholders. It may

trigger a payout for the top boss of �12 million, we read. When you

saw the fuss about the bonuses for bankers, what did you think?

thought it was, in some ways, you know, a pity that there was such a

debate about one aspect. It's an understandable debate when these

sums, large sums of money by normal people's standards. The banks

operate in a global industry. UK banks have to compete globally. We

believe for instance that performance should be related to

reward. If businesses perform, then reward should be commensurate. If

they the not perform they should also be commensurate. Given the

fall in profits at the banks that the bonuses were not deserved?

There has to be a balance between being competitive and also

structuring your rewards to reflect long-term performance. Clearly not

going to get any more out of you on that one. A profit of �14 billion,

not dollars, pounds. The entrepreneurs, your customers in

HSBC are likely to have what reaction? I think they will balk

slightly. As we said the two state owned banks Lloyds and RBS made

considerable losses. HSBC is on the brink of reporting great profits.

The only thing these banks seem to have in common are big payouts. I

think entrepreneurs will find that difficult to digest, give than the

banks are iss missing targets when it comes to lending. Aren't

entrepreneurs supposed to like big profits? Isn't that the name of the

game? Not at their expense. themselves? It is a great news they

have bucked the trend. It is understandable they want to pay

such bonuses. They have achieved a great result. If we look at the

other two banks how do we know the result was not bias. They may have

delivered. What struck me were your first woords, that it's great news.

You have -- words, that it's great news. You have no problem? I can

choose which bank I used. They are all very competitive and similar.

At the end of the day, if someone comes along and does it super

cheaper and better service for me, that is where I will move my money.

You have kept away from the banks? I did it all from the money in my

back pocket. My website cost me �300. That is where I started my

business. Do you think you might have had a different attitude

towards the banks if you had to engage with them? Maybe. Also I

know that you also invest in other businesses. When you are approached

for investment is that from businesses that have been turned

down, or declined by the banks? don't think a lot of entrepreneurs

go to banks any more. They think it is a closed door. There's a lot of

online opportunities. Successful people who want to... It's more of

a personal investment. You want to grow a successful company, but

invest in the people as well. It's a different opportunity. Thank you.

Starting your own business. Why bother when you can run someone

else's business, you can buy a franchise. We ask if you would like

fries with that? Famous businesses on the high street are not always

run by the big corporations behind them. Firms like these often grant

licenses. Once you have brought a licence or franchise you get to use

the name, services and products associated with these brands. More

and more people are starting them. There are exhibitions like this in

Birmingham. Why the interest? Is it a good way to do business? We came

here today because we're in the process of buying a franchise. We

came here to sea the bank to get some financial advice. To see what

health and beauty franchises are on offer. The possibility of investing.

I have done a part-time business which is suddenly full-time.

Sticking by my existing job. I have come here to get advice on where

the business can go from here. would you want to start a

franchise? One of the biggest reasons is the success rate. A

franchise because you have a proven system with support and a network

around you, that improves your success rates six or seven times

more. Whereas a normal business start-up you find more often than

not they fail more than they succeed, a franchise it's the other

way around. 90% will succeed. do you need to do? You need to know

what you are getting yourself into. You need to understand the business.

Speak to existing franchisees. See what the reality is day-to-day:

There are banks which have specific franchise departments which can

give you advice. Make sure you understand the legal implications.

There are specialist solicitors. You can look at the agreement to

make sure you are investing in something above board and

structured properly. Someone who has taken the plunge is Roy. He

bought This franchise of Dream Doors in Croydon. I was made

redundant three years ago. After 30 years I wanted to try something

different. My wife and I talked about having our own business for

years. I decided to look at it more thoroughly and started to search

for something which interested me. I ended up buying the Dream Doors

franchise. What message would you give? The devil -- detail is in the

detail. You owe it to yourself to investigate. Don't take what is

given on a plate. Try and work with others that work. Don't go to ones

put to you. Determine your own. Visit undercover, or sometimes by

appointment. Go into the numbers. Find out what it can be and satisfy

yourself. Roy is not alone. There are 37,000 individual franchise

outlets across the country. The choice available continues to grow

with 900 different types to pick from. More impressively the

franchise industry in this country is worth over �12 billion.

But with so many franchises to choose from and the average cost of

buying one exceeding �40,000, what should you look out for? You are

restricted over prices. They want to keep a certain level. You cannot

charge more or less than the company wants you to. You may be

restricted in the terms of products you can introduce. You might be

able to influence the franchising company in terms of the product you

are offering. You can tell them, well this is selling well or this

is not. Adapt the product offering according to customer preferences.

You'll have to do your homework and make sure you get the right legal

and financial advice. If you don't, then you could edge up looking a

duck. Next week, we are building up a programme around a house building