HOW I MADE IT

MAXIMISETAXRELIEFON FUNDRAISINGSDGwrites:We are trying to raise£250,000 of equity finance to fundthe development of our technologystart-up over the next two years.Wewould like to use both the SeedEnterprise Investment Scheme (SEIS)and the Enterprise InvestmentScheme (EIS) but I understand thelimit under SEIS is £150,000. Howdowe co-ordinate the two rounds?Canwe do them simultaneously?

It is common for businesses in yoursituation to split their fund raising sothat the first £150,000 qualifies forSEIS and the rest, £100,000 in yourcase, qualifies for EIS relief,writesChris Lane, partner at Kingston SmithLLP. But the important point toremember is that 70% of themoneyraised under SEIS has to be spentbefore the EIS qualifying shares areissued.Therefore, the EISmoney, if raised

at the same time, has to be held backin “suspense” until the SEISmoneyhas been spent.It is also important that the EIS

money is not thought of as a loan toyour firm as this will compromiseany EIS relief. A good ideawould beto hold the EISmoney in escrowwithyour solicitor until required.Youwill need to decidewhether

it is worth going through theseprocedures. This will ultimatelydepend on the rate at which youexpect to spend the SEISmoney.If this will be short term, then it willwork, but anything longer and it maybe best simply to have a secondfundraising round in the future.In terms ofmonitoring your

spending, youwill need to prove youhave spent 70% of the SEISmoneyand, therefore, will need to keeprecords. It may be easier if you keepthese funds in a separate bankaccount opened for the purpose.The EIS investors will also need

to be informed that the date of theEIS share issuewill depend on thecompany’s planned expenditure rateand the issuemay have to be delayedif necessary.

WORKER TAKES DIVORCEPROBLEMSINTOOFFICEAJwrites: I have an employeewho isgoing through a divorce and bringingher personal problems intowork.This is affecting other staff and theytell me they feel demoralised by herbehaviour. How do I deal with her?

It is inevitable that work and privatelife overlap sometimes and normallyemployeesmanage to separate themadequately so that one does not affectthe other,writes Peter Done,managing director of Peninsula.However, there are timeswhenpersonal life may start to affect worklife, and then you need to takeaction.Most employers are compassionate

and arewilling to dowhat they canto help their staff through a bad time.However, youmust remember tofocus on fixing the problem at workand not on resolving the employee’spersonal problems.Take the employee to one side and

inquire about her general wellbeing.It is important to show compassionand understanding. If she is made tofeel that you do not care about herwellbeing, this may affect her view ofyou and the organisation as awhole.Showing you care builds loyalty andcommitment and takes little effortand time.Ask the employee if there is

anything you can do to offer support— possibly in terms of agreeing sometime off or re-assigning some of herheftier tasks if she is not performingat her best.Do not forget, however, the point

of themeeting— that you need herto adjust her behaviour to avoiddemoralising her colleagues. Strikinga balance is important because if shefeels you are doing something forher, she is more likely to accept thatshe needs to give something inreturn.Being too harshwith her atthis sensitive timemay not have thedesired effect. If things do notimprove after your initial chat, speakto her again and reinforce your point.Get her to redirect her frustrations

in the right way. If you have anemployee assistance programme,remind her she can use it. Havinga telephone counselling serviceavailable to staff is an excellent wayof helping to ensure they have anoutlet for any problems in theirprivate or working life.

Business doctor

RebeccaMortby neededspace. “When wedecided we wanted togrow fast, we knewwe had to think aboutdesks and environ-

ment,” said Mortby, who hadwon a £1,000 prize to spend onher business, Greenfinch Gradu-ations, which supports overseasstudents and their familiesthrough graduation.“Renting an office was out of

the question,” said Mortby, whograduated from Liverpool Uni-versity in international politicsand policy two years ago.Since thensheandco-founder

Julie Truman have worked withthe universities in Liverpool tooffer help on accommodation,dietary requirements, dress hireandgifts.Theyplantoexpandthebusiness to Manchester andacross to Sheffield.“We wanted to work in an

office with other entrepreneurswho aren’t operating in the samesector,” said Mortby, 27. “Wewanted to learn from them.”Her prayers were answered

when Santander announcedplans for a new incubator in StPaul’s Square, central Liverpool.The bank rewarded eight young,fast-growing companies withdesks on its premises and accessto expertise. Mortby’s was one.“They have connections with

universities and can help withadvice,” she said. “We want tooutgrow the incubator by thetime our year is up. That’s thepoint of signing up.”Santander’s office space for

start-ups, which opens thisweek, is part of an upsurge inincubators and accelerators setup to house and nurture cash-strapped entrepreneurs.Bigcompanies,banks,univer-

sities and other organisationshave continued to open officesto help breed flourishing firms.Companiessignupforsetperiodsandcanbenefit from investment,freeresources,contactsandvalu-able lessons from peers who aresharing the space.“A key element of the business

incubationprocessisthecommu-

nity feelingwithin thepremises,”said Arnaud Drapier, researchmanager at UK Business Incuba-tion. The trade body estimatesthat the number of centres openhas shot up from 30 tomore than300 since 1998. More than 60%are not sector-specific. “Beingwith others in the same earlystage and learning from them asyou grow is excellent,” he said.Most accelerator programmes

act as venture capital firms,taking shares in return for fundsand support. Some of the better-known ones in Britain andEurope include Seedcamp, Tech-Stars and Wayra. On the otherhand, traditional incubators pro-vide start-ups with support aswell as a hub towork in.Somemay offer entrepreneurs

cash in exchange for equity.

Manylocalcouncilsprovidebusi-ness incubation centres, as douniversities and not-for-profitorganisations.“We’re trying to be innovative

inthewaywesupportsmallbusi-nesses, not just in the traditionalbanking way,” said MarcelinoCastrillo, head of small businessbanking at Santander.Thebankstartedofferingloans

tosmallandmedium-sizedcom-panies in 2009. “We have accessto customers they can tradewithandprovidemasterclassesaspartof our Breakthrough program-me,”hesaid.“It’smorethandeskspace,whichisthethingallstart-ups need in the early stages.”However, some worry that

while the space and access tomarkets are valuable, fundingwillbetoughtosecure.“Wedon’t

wanttobeinaSantanderbuildingand have to go to Barclays for aloan,” said David Harries,co-owner of one of the eightcompanies to join the bank’sincubator. “We want them toholdourhands throughgrowth.”Interview People Online,

which he started last Decemberwith friend David Arthur,replaces real people withso-called avatars that conductjob interviews on theweb.“We signed up for the incu-

batortobelinkedtoamainstreambrand,” said Harries. “You can’tbuy that recognition. We’regrateful for the office space butit’s secondary.”Although some are sceptical

about the rise in the number ofincubators and accelerators, it iswelcomed by industry experts.

“It’saboutthequality,locationand the people who run them,”said Simon Devonshire, directorat Wayra Europe, Telefonica’sanswer to a start-up incubator. Ithas a presence in 12 countries inEurope and Latin America. In itsLondon space, off TottenhamCourt Road, 30 companies aregiven €40,000 (£32,000) inexchange for shares and€20,000worth of acceleration services.Wayra receivesmore than25,000applications a year.“The biggest contribution to

their successandprogress is theirpeers,” said Devonshire. “Thereare a lot more start-ups thanthere are accelerators and incu-bators. However, what we don’twant are lots rushing to themar-ketplace that don’t add much ordeliver progress.”

Abank’s officesin Liverpool arebeing cleared tomakeway forstart-ups, writesKiki Loizou

Rebecca Mortby’sRebecca Mortby’sGreenfinch GraduationsGreenfinch Graduationsis receiving help fromis receiving help from

SantanderSantander

PHIL TRAGEN

Dustbin queen cleans up withwheelie great line in recyclingWHEN Emma Elston was growing up shedidn’t know what an entrepreneur did —but she knew shewanted to be one. “I justliked Sir Richard Branson and the idea ofowning an island,” she said.Herventure turnedout tobequitedown

to earth. In 1998 her boyfriend, whobecameher husband,was earning a livingreplacing damaged waste bins on thestreets of Manchester.“Julian came home from work one day

saying it was daft to chuck out the oldbins,” said Elston. “We agreed it wouldmakemuchmoresense,andearnusagoodliving, if he repaired them instead.”In August that year the couple founded

UKContainerMaintenance, repairing andrefurbishing waste and recycling con-tainers for councils and waste disposalcompanies.BasedinNorthwich,Cheshire,the business now employs 100 staff andreportedsalesof£5.1mlastyear. It expectstoreportrevenuesinexcessof£5.5mwhenaccounts are filed in December.The company’s clients include Sita UK,

BiffaWaste Management and Veolia Envi-ronmentServices. JulianandEmmaElstonare currently looking to expand the busi-ness on to the Continent.“Wetakerisksbutthey’realwayscalcu-

lated,” said Elston, who copied out theiroriginal business plan froma library book.“When you come into a business withabsolutely nothing it becomes very pre-cious and you protect it fiercely.”When her business plan failed to secure

a loan with Royal Bank of Scotland (RBS),the pair borrowed £30,000 on their Nat-West credit cards (the bank is part of RBS)to set up UK Container Maintenance.Almost half was spent on buying a Transitvan at auction, which broke down on itsfirst trip. “We had to have a new engine—yetmoremoney,” she said.The couple lived in his grandmother’s

house inStretford, southwestManchester.Whilehewasrepairing thebinsElstonwasstriking deals from their bedroom.Withinamonth she had secured their first client,Trafford borough council, helping UKContainer Maintenance to turn over£15,000 in its first year.The couple married in 1999, and she

became pregnant. “I wasn’t able to takematernity leave so I was still ringingaround doing the sales, the accounts, andVAT returns,” she said. “It was hard workand I’d feel guilty, as amum.”They moved to rented accommodation

but, unable to meet payments, wereevicted. “Luckily one of our jobs in theearly days of business was cutting up oldcaravans,” said Elston. “One of themwasinpretty goodnick soweaskedmumifwecould pitch up in her garden.”Theylivedinthebackyardfor18months

while the business grew before buyingtheirownhouse in2001.Workingtogetherhas been successful. Elston’s husband, 45,is still involved with the engineering andmaintenance side of the business.“I couldn’t do what he does and he

leaves the finance to me so it works, handin glove,” she said. “Not everybody candoeverything.”In 2003 the Elstons moved their equip-

ment to a small shed on a pig farm inKnutsford,keepingtheofficeattheirhomenearby. Three years later they moved totheir present 20,000 sq ft site.Elston said: “We stood in the yard

thinking,‘Areweevergoingtobeabletofillthis space?’ Now it’s absolutely jam-packed, like a sweetie shop of bins.”Householdwheeliebins,skipsandship-

pingcontainersareall servicedonsitewithshot blasters and spray booths. There is afabricationworkshopandsparepartsdivi-

sion. The company also buys redundantstock from local authorities, and refur-bishes and modifies it. They recentlybought and adapted a 40-year-old bottlebank for electrical recycling.“Most of theUK’s bins are steel and can

be refurbished, strengthened and modi-fied,”saidElston.“It’sallaboutthere-use,doingthebestwecanwithwhatwehave.”Elston grew up in Altrincham, Greater

Manchester. Her parents split when shewas a teenager and she and her threeyounger siblings lived with their mother,who owned a hairdressing salon.“We’d lost the house we lived in and

were struggling for money,” she said.“Mum is my biggest inspiration; she wasoutworkingall the time tokeepusgoing.”WhenElstonleftCulchethHallSchool in

Altrincham, aged 16, she worked in salesand administration for companies in therecords and waste industries. She metJulian on a blind date in 1995. The couplehave two children.Elston’s three siblings are also involved

with UK Container Maintenance. Lydia,36, is head of marketing; Lizzy, 32, runsfinance; while Ben, 30, is depot manager.“It’s a real family business,” said Elston.“When I’mnothere, they’remyeyes, earsand heart.”Elston,38,wasnamedthemost inspira-

tionalbusinesswomanat the2010NatWestEverywomanawards.Heradvice toentre-preneurs is: “Remember cash flow is king;every single day is a survival of the fittest,so you’ll needpassion, a belief inwhat youdo and hardwork to achieve it.”

Hattie Williams

‘Cash flow is king,’ says Emma Elston. ‘Every single day is a survival of the fittest’

PAUL LEWIS

Emma ElstonCo-founder ofUK ContainerMaintenance

Kingston Smith LLP, the charteredaccountant, and Peninsula, theemployment law firm, can adviseowner-managers on their problems.Send your questions to BusinessDoctor, The Sunday Times, 3 ThomasMore Square, London E98 1ST. Adviceis givenwithout legal responsibility.

bizdoc@kingstonsmith.co.uk

EmploymentLawExperts

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Baby Bransons cometo life in incubators