What would it take to make Santander a serious contender in the small business banking sector?

Until their acquisition of Abbey National in 2004 Santander was practically unheard of on the British high street. This has all changed. Not least because of their purchase and rebranding of the Alliance & Leicester and Bradford & Bingley branches but perhaps mostly because of their Formula 1 sponsorship deal with Lewis Hamilton! We may not own a single major car manufacturer but that doesn’t seem to diminish our ‘Top Gear’ obsession with fast cars and winning at sport.

In the UK, Santander is 2nd in terms of mortgages, 3rd in terms of deposits and 5th in terms of branches operated. It has over 25 million customers.

But how can Santander turn this impressive performance on the racetrack and high street into a winning formula for small business banking? The competition is tough. There are already many strong incumbents such as Barclays. But would a Spanish bank have a better chance than anyone else?

There are a few of factors that might influence the outcome.

  1. The relationship between Spanish and British people is largely positive. Our last serious direct conflict was centuries ago and we have an interest in each other’s cultures and climates! Of course, there are issues around Gibraltar and the number of British citizens residing in Andalucía. Did you know that in 2008, 590,000 people left the UK and 430,000 arrived? And, after Australia, where did the British citizens leaving go? Yet, the Spanish remain largely positive about the British.
  2. UK banks and bankers have a somewhat tarnished public image, which extends into the business sector. This might just be a ‘window of opportunity’ for a new non-UK contender to enter the market. Of course, small businesses might be slow to move their banking. However, over 1 million of them don’t seem to be too happy (
  3. The most taught foreign language in Spanish secondary schools is English. In the UK all secondary schools offer French and 76% offer Spanish, more than German. French is declining at GCSE level yet Spanish is increasingly popular.

I’m writing this blog mid-way through teaching (fortunately for me in English!) entrepreneurship to a group of MBA students at the University of Salamanca. I’m also receiving Spanish tuition at one of the many language colleges in this beautiful city. Interestingly, Santander recently sponsored a major programme of Spanish business school professorships and an entrepreneurship programme for researchers and faculty with Babson College – a recognised global leader in this field.

Oh, by the way Santander has just made a significant move. They are the only bidder for the RBS branches, which serve some 2 million small businesses in the UK ( It looks like they have just shifted into second gear!

I wonder if one of their next steps will be to get involved in university based enterprise programmes in order to influence the graduate entrepreneurs of the future.

Dr Nigel Lockett
Director of Centre for Entrepreneurship and Innovation Management (CEIM)

Is the new coalition government going to be good for small business?

With all the talk of hung parliaments, national interest and stable government it is easy to forget that the ‘enterprise show’ must go on! Small businesses provide nearly 60% of private sector jobs and over 50% of UK turnover. Over half a million people start their own business each year. We are clearly an enterprising nation. So, what might the new Conservative – Lib Dem coalition mean for small businesses and entrepreneurship?

If we had to use one word to describe each party’s approach to enterprise what would it be?

  • Conservative = the Markets. Tends towards supporting the City, reducing the national deficit quickly, reducing regulation for businesses and reducing NI and tax. Going greener.
  • Lib Dem = the Individual. Tends towards local accountability, splitting banks and creating a Post Bank, reducing the national deficit, reducing regulation for businesses, supporting social enterprise and reversing NI increase. Gone green.

But, what do small businesses and entrepreneurs want?

Simply, anything that will free them to be more enterprising and create jobs. That means reduced regulation and bureaucracy, access to finance and fairer taxation. As well as, wider recognition of the role they have in innovating and creating the jobs and wealth that fund public services.

With George Osborne as Chancellor and Vince Cable in the Treasury with responsibility for business and banks, what are my ‘top ten’ predictions?

  1. Banks: Legislation to split investment from retail banking. New bank levy. Formation of Post Bank delivered through the Post Office network;
  2. Business rates: Automatic business rates relief for small businesses;
  3. Business support: Reduced role for Regional Development Agencies. Business mentor networks;
  4. Economy: Attempts to rapidly reduce national debt in order to increase financial stability;
  5. Finance: Increased access to funds from state-owned banks and government schemes;
  6. Green: New low-carbon schemes for small businesses;
  7. Public procurement: Increase access to contracts for SMEs;
  8. Red tape: Reduced regulation and bureaucracy;
  9. Tax: Reduced NI and simplification of Corporation Tax. Review of IR35;
  10. Training and higher education: Increased apprenticeships and work-based training. Increased university enterprise and collaboration with industry.

So, with George Osborne focusing on macro-economic and market issues and Vince Cable supporting businesses we can expect enterprise to matter. With politicians calling for responsibility, compromise and stability there is no doubt in my mind that, given the right environment, small businesses and entrepreneurs can deliver more than their fair share of new jobs and wealth generation.

Dr Nigel Lockett

Director of Centre for Entrepreneurship and Innovation Management


I have just reviewed the ‘coalition agreement’ to see how my ‘top ten’ fared. Still in the charts are:

  1. Banks: New bank levy [Yes] and legislation to split investment from retail banking [Almost – independent commission to investigate];
  2. Business rates: Automatic business rates relief for small businesses [Partly – cancelling some backdated demands];
  3. Economy: Attempts to rapidly reduce national debt in order to increase financial stability [Yes – significantly accelerated reduction. £6 billion in 2010-11];
  4. Finance: Increased access to funds from state-owned banks and government schemes [Yes – to viable SMEs. Major loan guarantee scheme and using nationalised banks];
  5. Green: New low-carbon schemes for small businesses [Partly – creation of green investment bank];
  6. Tax: Reduced NI [Yes];
  7. Training and higher education: Increased apprenticeships and work-based training [Yes – work programmes].

Out of the charts [well at least no news yet] are:

  1. Banks: Formation of Post Bank delivered through the Post Office network;
  2. Business support:  Reduced role for Regional Development Agencies. Business mentor networks;
  3. Public procurement: Increase access to contracts;
  4. Tax: Simplification of Corporation Tax. Review of IR35;
  5. Training and higher education: Increased university enterprise and collaboration with industry.

Now we just have to wait for the emergency budget in 50 days …

A long way from home – from sheep to shop

The fashion industry is full of specialist retailers with each purporting to offer a unique range of clothes that will appeal to a unique group of customers. But how do such niches emerge in what seems like an already crowded market?

Just like the mainstream fashion industry, the active outdoor and sports clothing industry is highly competitive. Many small companies have emerged to meet the needs of customers in this increasing global niche sector. One such company is Howies, which was founded June 1995 by David and Clare Hieatt in the living room of their London flat. Initially, they designed just four T-shirts and launched them in a mountain biking magazine – the T-shirts cost £30.

Let us consider four critical stages of Howies story: the decision to start the company (opportunity recognition); the expansion and the move to Cardigan Bay, in Wales (growth);  the sale to Timberland (acquisition); and David and Clare Hieatt (founders).

Opportunity recognition: The identification of the outdoor enthusiasts sector was a key factor starting the company. The founders and early staff members were passionate about biking, snowboarding and skateboarding. They knew what their potential customers wanted – something unusual and something different. Initially, Howies sold through shops, with 45 selling their product by the end of 1999, but in 2000 they realised this business model wasn’t sustainable – the decision to move into mail-order, that is selling from a printed catalogue, was made and the first catalogue was produced.

Growth: Space is nearly always an issue for growing firms and Howies was no different. The company moved to commercial premises in Wales and secured a grant from the then Welsh Development Agency in 2003. The mail-order catalogue sales were increasing and were supported by e-commerce sales. By the end of 2005 sales were just over £2 million. Clothes were still promoted as ethically produced, both in terms of manufacturing and the textiles used, including hemp, bamboo, organic cotton and the Zque accredited Merino wool from New Zealand.

Acquisition: In early 2007 Howies was acquired by Timberland, the large US-based outdoor clothing company ( The founders of Howies could see that in order for the company to grow to meet ever-increasing demand more working capital was required. The amount of money involved was beyond the reach of conventional funding, such as secured loans. This would either mean raising venture capital or finding a partner with similar values. David and Clare felt that for Howies to maintain its values there was only one option. At the time of the acquisition Jeffrey Swartz, President and CEO of Timberland, said: “We are excited and inspired by the brand potential we see in Howies and are pleased to welcome them to the Timberland family. We look to invest in like-minded brands that are focused on innovation, authenticity and integrity, and Howies encompasses all of these core values”.

Founders: And where are they now? What is David Hieatt doing?

And finally, ethical points: In addition to prompting environmental sustainable material such as Merino wool, hemp, bamboo and organic cotton, the company only uses 100% renewable electricity from Good Energy for its London store and in 2005 moved to ethical bank Triodos

Dr Nigel Lockett

Director of Centre for Entrepreneurship and Innovation Management (CEIM)

The big [investment] issue – investing for social returns

Increasingly governments around the world are recognising the importance of enterprise for bringing about social change (the third sector). Venture capital funds are beginning to emerge to provide alternative methods for raising capital and securing investment.  One of the first of these was the Big Issue Invest, which is a specialised provider of finance to social enterprises or trading arms of charities that seeks to bring about social and environmental transformation ( It is part of The Big Issue group of companies. The main financial instrument is their £10 million Loan Fund, which provides capital from £50,000 to £250,000 at competitive rates of interest, but it can also arrange large financing with other social finance institutions.  The Big Issue was founded by Gordon Roddick and John Bird in 1991 to help homeless people have the dignity of self-employment through selling the magazine at designated places ( The ventures accessing the fund are wide and varied – including:

Belu Water is the first carbon neutral, bottled water company in the UK. It uses compostable bottles made from corn and invests all surpluses in clean water projects. It supplies leading supermarkets, high-end restaurants and corporate boardrooms. The CEO, Reed Paget, won The Independent’s 2008 Social Entrepreneur of the Year award (

Fifteen Foundation was founded by Jamie Oliver to provide training in the restaurant industry for disadvantaged young people. Fifteen has succeeded in giving young people a transition opportunity to a good career – latest figures show that 75% were still chefing or working in another part of the food industry. Fifteen’s philosophy is to help young people learn within the work environment, from experts in the field, surrounded by the produce, equipment and dishes that they will work with. Fifteen has restaurants in Amsterdam, Cornwall, London and Melbourne (

But what is real return on investment (ROI) for our society?

Dr Nigel Lockett

Director of Centre for Entrepreneurship and Innovation Management (CEIM)

Keeping on track – but not a train in sight

Vehicle-based satellite navigations systems (Sat Nav), which first started to emerge in the early 1980s, now represent a huge global market. In Europe alone sales in 2009 exceeded €1.5 billion. Many of the leading brands have become household names. For example, Garmin with global sales of $3.5 billion ( and TomTom with global sales of $1.5 billion, in 2009 ( Not surprisingly, as the market grew so did both the number and size of suppliers – competition was very intense.

The systems rely on a Global Positioning System (GPS) tracking device, which can determine the location of a vehicle, person or anything else for that matter! The location is regularly recorded and transmitted to a central database using mobile cellular, radio, or satellite technologies. The position of a device can be displayed on a map in real-time or recorded to identify movements or routes. Whilst, we are familiar with car-based Sat Nav systems they have many other applications. From surveying to monitoring and from climbing to tourism.

The market for personal tracking has also begun to emerge particularly as a result of increased functionality of mobile phones. Such as, the Nokia N95 and Apple iPhone.  Specialist phone applications became available to take advantage of these new GPS-based features. For example, the LocoBlog mobile phone application and web site supported location-based mobile photo blogging. As users blog and upload images their location is tracked and displayed on website (

The Apple iPhone 3GS, launched in 2009, provided a built-in digital compass with GPS technologies to find the direction of travel to orientate of maps. This service used GPS, Wi-Fi and mobile network masts to identify the exact location of mobile devices. This high-level functionality was incorporated into new iPhone Apps, many of which were developed independently. By March 2010 over 2,600 iPhones Apps that used GPS were available.

With so much competition surely gaps in the market wouldn’t go unnoticed by the larger players for long. They could expect to indentify an unmet consumer need and use their considerable resources to address it quickly. Perhaps this is why it was so surprising that Sara Murray was able to develop and launch her ‘buddi’ product and service under their radar ( Sara developed the ‘buddi’ after her daughter went missing in a supermarket and she had no way of knowing where she had gone. Sara could not find any product on the market that provided a discrete way of tracking vulnerable children. She developed a new device which was small enough to be worn discretely yet powerful enough to provide reassurance.

Like Sat Nav systems and mobile phones the ‘buddi’ used GPS technology to track people and combine this with emergency support. This kind of tracking device may be equally useful for vulnerable elderly people or lone workers as it is for children. Sara Murray was awarded Best Female Entrepreneur 2009 by the BT Business Essence of the Entrepreneur awards (

I think Sara has got that entrepreneurial ability to spot a good idea through having a personal experience. But, what makes her different from most people is realising that this was a real opportunity and then obtaining the resources to take it to market. I can’t help thinking that this won’t be her only enterprise!

Dr Nigel Lockett
Director of Centre for Entrepreneurship and Innovation Management (CEIM)

Water, water everywhere but not a drop to drink

In the last 30 years sales of bottled water have grown to more than 1.3 billion litres in the UK and to over 9 billion litres in the US. This is of little comfort the estimated one billion people in the world who don’t have access to safe clean drinking water.

Duncan Goose, founder of Global Ethics and One Water (, set-up his new venture, in 2005, to sell ethical bottled water and donate 100% of its profits to installing a specialised water pumping systems called PlayPump ( He recognised the potential … “The water market is an absolutely huge market in the UK, worth £1.5 billion” (Guardian, 22/03/2007). At one level Duncan’s vision is simple – use all the profits from selling water, to people who can afford it, to provide clean water for people who cannot. Clearly, there needs to be more to it than that. In his younger days Duncan travelled the world, in fact he was inspired by Ted Simon’s motorcycle journey in the 1970s, detailed in his book Jupiter’s Travels (1979). Duncan is in good company, actors Ewan McGregor and Charley Boorman were also inspired by reading Jupiter’s Travels. As you can image Duncan has his own adventures, including surviving Hurricane Mike that destroyed many communities in Honduras in 1998. Duncan recalled … “What really struck me was to make a difference we did not need a lot of money, just a little money spent in the right way” (Sunday Times, 01/12/2008).

One Water was conceived and launched in 2005 just at the same time as Bob Geldof’s Live 8 appeal was launched. Having created a vision and sharing it with organisers of Live 8, he faced the challenge of promoting and supplying it to individual consumers. Can you imagine how you would go about persuading retailers and supermarkets which have shelves full of numerous brands of bottled water to delist one and put yours it its place? Indeed, it was hard very work for Duncan but when Total ( became the first national stockist in 2006 others started to follow. In their first year One Water donated £70,000 to charities working in Africa and India. By 2008, this had exceeded £1 million. Then One Difference started expanding its vision to include other humanitarian issues in developing countries, such as HIV through the sale of One Condoms ( Interestingly, Duncan has recruited other people to promote his vision, including actors David Tennant and Rebecca Lacey.

Dr Nigel Lockett
Director of Centre for Entrepreneurship and Innovation Management (CEIM)

Electrifying ideas: Deregulation lights up new opportunities

Back in 1989 the UK Government passed the Electricity Act that was, over the course of the next decade, to transform a monopoly into a dynamic market supplying electricity to commercial and domestic consumers. The intention was to allow customers to purchase their electricity from a range of competing providers, albeit still distributed over the national grid, thereby increasing competitive forces and reducing prices. Intuitively we think of large corporations like E.ON ( and Scottish Power ( competing in such a large established market rather than smaller providers, let alone new ones.

Juliet Davenport saw no barriers to meeting this challenge head on when starting Good Energy (, which only supplies electricity generated by 100% renewable sources. This ethical company employed over 50 people and had annual turnover of more than £12m (The Times, 08/06/2009) but how was this achieved in only 10 years? Juliet had a clear vision that she was able to share with investors, independent generators and consumers, which was based on a set of clear values linked to fighting climate change … “We see our customers going on a journey, switching to Good Energy are the first part” ( In addition to its own wind farm in Cornwall, Good Energy has developed a growing community of over 500 independent renewable electricity generators in the UK.  More than 25,000 homes and businesses across the UK switched to Good Energy ( so Juliet’s clarity of vision of saving 1 million tonnes of carbon a year paid dividends with both independent generators and consumers buying into it.

So, switching to Good Energy could be your valentine to the planet!

Dr Nigel Lockett
Director of Centre for Entrepreneurship and Innovation Management (CEIM)

A gem of a report: The Global Entrepreneurship Monitor

It can sometimes be difficult to see impact from entrepreneurship research – not necessarily because of poor quality or lack of relevance but simply because it can take so long to disseminate findings. Publishing in peer-reviewed journals is notoriously difficult and slow – typically 18 to 24 months. So have can high quality evidence-based research be disseminated quickly? Firstly, by publishing in conference proceedings, like the one run by the Institute for Small Business and Entrepreneurship (ISBE now in its 32nd year, which can take less than 6 months from abstract submission to appearing proceedings. Secondly, by self-publishing on the internet. But how can the reader be sure the research is high quality if it is not peer-reviewed?

In the end I’m afraid it comes back to ‘brand’. We develop relationships with our brands, built up over time and through establishing trust. So if you are looking for high quality entrepreneurship research why not start with the top global brand – Babson College ( The Global Entrepreneurship Monitor (GEM) is the largest and longest-standing globally focused entrepreneurship research project.

The recently published GEM 2009 Global Report’s key findings include:
1. Attitudes towards entrepreneurship vary widely across the world. Fear of failure is a significant barrier (in Japan) but some can entrepreneurs have a high status (in Denmark).
2. There is a decline the number of early-stage entrepreneurs and evidence that more existing entrepreneurs are stopping their activities.
3. In terms of creating new jobs only 14% expected to create 20 or more jobs. This might be because of increased employment protection or that successful entrepreneurs consider employment more attractive that developing their own business.
4. The impact of the recession meant that over 50% of entrepreneurs felt it was more difficult to start a new business in 2009 and that more experienced ones tended to be the most pessimistic.
5. Venture capital activity in the US and Europe fell significantly yet increased in China were funds will soon overtake those in Europe.

Now in its 11th year and with over 200 researchers involved, the project sets the standard for others – provided it continues to produce gems!

Dr Nigel Lockett
Director of Centre for Entrepreneurship and Innovation Management (CEIM)

New Year’s resolution: Time to get closer to your customers?

There could be good news about the recession. There is growing evidence, both from the respected ACCA global survey ( and recent O2 small business survey (, that business confidence is increasing. From the ACCA Q4/09 survey ( there is even optimism that Q3/09 was the bottom of the downturn. Although, we may still have a year left before recovery is really underway. O2’s survey shows 27% of small business healthier now than this time last year and 59% are predicting better business performance in 2010. However, economic recovery and low consumer confidence remain key concerns. According to ACCA, last year the two big issues for small firms were falling customer demand and accessing finance ( The government and banks continue to make reassuring noises about the latter but what can they really do about increasing customer demand?

But some small firms have already been reporting growth in sales and profits:

Thunderhead, which helps companies to integrate marketing to their communications with customers through automation, saw sales grow by 28% to £16m and Pre-tax profits by 47% to £2.9m ( For details of the top 50 growing companies see Growing Business Magazine (

Deliver Net, a specialist supplier to the community healthcare sector ( Managing director Tim Lockett said, “We have seen our business grow in the last two years but it’s been hard work. We have spent as much time on finding efficiencies and reducing costs as we have on developing new business.” And the key to reducing costs and increasing sales? “E-commerce has been critical to both. We have supported our customers in moving their ordering online by bespoke product templates and budget control systems. In the end, they see the saving to themselves rather than us. We now receive over 70% of our orders online.” He added, “The number of customer service staff is down but warehouse and distribution numbers are up. We still employ the same number of people but process more orders.” And what about the future? “I’m optimistic. There are new customers in the pipeline and we can see new markets opening up. In the last year we have had to get better at what we do. This increased efficiency hasn’t gone unnoticed by our strategic partners. Yes, I’m hoping 2010 will be a good year.”

Vickers Laboratories, which has been manufacturing chemicals for over thirty years ( CEO Julian Driver said, “Sales haven’t grown. But more importantly, we’ve been able to maintain profit margins and keep cashflow under control.” How has this been achieved in a recession? “Innovation has been at the heart of what we do. Most of these have been incremental but when you add them all up we have come a long way. We’re almost invisible! We have become embedded in our customers’ supply chains and add value to their service offering, which makes it counterproductive to move from us and if cash is tight we still get paid.” And what about the future? “Our markets are deliberately diverse and we are constantly looking for new business that is difficult!” Why? “Well, we are really a solutions company. Not chemical ones – we solve problems and that draws on our knowledge to health and safety and experience of reagents. And this protects our margins. So I’m quietly confident about 2010, even though I know new business is going to be difficult to find.”

What do they all have in common? In the end, they are all focused on process innovation. They appear to anticipate their customers’ needs. And the key to this? Get close to your customer. Or in the words of Mrs Wilson, the housekeeper (Helen Mirren) in Robert Altmans’ Gosford Park (2001), “What gift do you think a good servant has that separates them from the others? It’s the gift of anticipation. And I’m a good servant. I’m better than good. I’m the best. I’m the perfect servant. I know when they’ll be hungry – and the food is ready. I know when they’ll be tired – and the bed is turned down. I know it before they know it themselves.”

So perhaps 2010 is the year in which to get so close to your customers that you can anticipate their needs before they do – well at least before your competitors do!

Dr Nigel Lockett
Director of Centre for Entrepreneurship and Innovation Management (CEIM)

Standing out in the crowd

The Public Relations (PR) industry is all about how organisations communicate their message and differentiate themselves or simply just ‘stand out in the crowd’ ( But the industry faces many challenges from building the profession to ensuring the workforce is well trained and representative.  The PR industry is not unique in having a profession, which does not fully represent the communities it serves. Now in its second year, the high profile Brunswick Intern Programme seeks to address this imbalance in an innovative way ( Brunswick (, a leading communications company, and (, which specialises in placing graduates in PR jobs, designed the 10-week training programme for recent black and minority ethnic graduates. The six participants receive formal training, meet leading practitioners and participate in practical PR projects.

So how did this year’s six interns fair? Well, judging from their weekly blog (, Charlotte, Claude, Jenard, Junior, Param and Tina have certainly had access at senior level in major media and PR companies. By week 10, they had even been able to escape London for the cities of Leeds and Bradford and brush up against the Yorkshire Dales ( The two-day Yorkshire experience was instigated and arranged by Northern Lights PR ( and even included a trip to the Northern Ballet (!

Having spent the morning with Pace (, the set-top box manufacturer based at Saltaire, the World Heritage Site (, their afternoon focused on innovation. The interns experienced a three-hour innovation workshop at Bradford University School of Management ( designed to help them recognise and develop their innovative thinking. As leaders of the future Charlotte, Claude, Jenard, Junior, Param and Tina will all have to initiate and manage change. Perhaps they have been given a head start with the Brunswick Intern Programme but their ability to bring about change will be based firstly, on the combination of attributes, background, experience, network and values they each have now and secondly, how they set about enhancing their innovation skills.

Judging from their performance at Bradford, change is on the way! Each has the potential to stand out in the crowd.

Dr Nigel Lockett
Director of Centre for Entrepreneurship and Innovation Management (CEIM)

STOP PRESS Final blog from interns

Reflections on the trip to Bradford University School of Management (by Jenard)

“After a great morning session at the Pace headquarters in Saltaire, we were driven to the Bradford University School of Management, where we had a truly inspirational session with Dr Nigel Lockett. He delivered a master class on innovation.

During the class he showed us the different ways he might conduct sessions like this. For example, he used techniques like role-playing to promote interaction between the people in the class and himself as the lecturer.

But more importantly, he gave us an unique insight into “innovative thinking”, demonstrating such thinking wasn’t something that only a special few could take part in. Rather, it was about strategically looking at the world around you, and having the gusto to go ahead and put new ideas into action.

He gave us some great examples of how just one person in a company can recognise an improvement or innovation that can be made, and how that person – even if they fear others disagree – can push ahead, make a change, and initiate growth for both their company and themselves. I definitely took away the idea that I can be a leader too.”

More …