The Findings Behind the Debate

The following details are highlighted from the last debate.

The next output from the debate "Looking at opportunity in the tough times" will be available in due course.

Learning to love debt & embrace equity

Debt is an essential ‘leap of faith’ , Music lessons for the bankers , Memories of ‘poison and blasphemy’ , Who’ll climb on the bandwagon? , And their jaws just hit the floor , Risking it all , It’s not personal. It’s business , Have two phones – and two voices , The big fear is lack of security; , Money paralyses women with fear

Present:

• HERTA von Stiegel: Executive Chairman, Stargate Capital Investment Group (Chair)
• GITA Patel: Director, Stargate Capital Management Ltd
• TIM Campbell: Founder, The Bright Ideas Trust
• AVIS Charles: Managing Director, AVIS Charles Associates
• DIANE Benussi: Partner, Benussi & Co
• JANETTE Anderson: Managing Director, Anderson Associates
• DAWN Gibbins: Founder and Chairman, Flowcrete Group plc
• CLARE Logie: Director, HBOS Women
• SARA Carter: Professor of Entrepreneurship, Strathclyde University
• ROSALEEN Blair: Founder & CEO, Alexander Mann Solutions
• JAN Babiak: Managing Partner, Ernst & Young

Debt is an essential ‘leap of faith’

Those of us who have made our own money tend not to be worried about debt. But does that really explain why women have traditionally been adverse to debt? The more I think about this, the more I feel it may have something to do with geography. I was born in Europe and moved to the United States. And here, we all accumulated debt to go through university and graduate school. A number of my friends had debts of $100k. The notion of taking out debt was not frightening. We accepted that you can’t get an education without having debt. All the same, the antipathy to debt in this country is pronounced among women. It’s this which seems to make them afraid to make that essential leap of faith and that holds them back from building really huge businesses.

HERTA von Stiegel: Executive Chairman, Stargate Investment Capital (Chair).

Back to top

Music lessons for the bankers

I am very comfortable with taking big, massive risks and have done so often. But like any sensible business person, these are considered in terms of the potential for damage and reward. Sometimes I have won and sometimes I have lost. Like most successful people it is about taking the right risks and being right more times than not. There are things that banks might learn about risk taking from other industries, for example, the music industry. In that industry, they’re assessing and giving advances to hundreds, literally thousands of groups and individuals who may have talent and potential as musicians. They have armies of scouts screening this talent, going round the clubs late at night. They’re not looking at the headline acts. They’re looking at the secondary acts and saying: ‘Ah there’s talent there’. And they buy into the fact that one out of a hundred, one out of a thousand, is actually going to turn into a number-one selling band. Their P&Ls provide for the fact that they’re gambling on that small number of discovered talent. They give small amounts of seed money. If a record succeeds, the advance is paid back. If it doesn’t, the music industry takes the hit.

JAN Babiak: Managing Partner, Ernst & Young

Back to top

Memories of ‘poison and blasphemy’

There’s too little education about what debt actually is and how it can be used as a positive. Debt always has this negative connotation – about the risk and lack of security. I know that my mother was always on about thrift. ‘Only buy what you can pay for.’ Hire purchase was a poisonous word. You were always afraid of the man knocking on the door and taking things from your house. Debt and credit cards were blasphemous things. But today, the younger generation doesn’t have that same fear. Debt still retains this negative connotation, but it’s changing. Once you become educated in how you can leverage debt, it becomes less risky. This is exactly what bankers need to do, explain in clear, plain English about the advantages and the risks associated with certain amounts of debt. What young entrepreneurs need from a bank is an intelligent business manager who can advise about why and how they should leverage debt.

TIM Campbell: Founder, The Bright Ideas Trust

Back to top

Who’ll climb on the bandwagon?

I like the expression ‘intelligent debt’ – debt that’s suited to your business needs. So often, you find that bank products are the wrong ones, or they’re totally misunderstood because they’re explained by people that could have been trained better. They’re just too complex. If you can’t make it simple so it’s easily understood, forget it. I also think that women entrepreneurs in the UK have a huge amount to learn about debt from the US. Interesting research in the US shows that, for businesswomen turning over more than $1m, it’s just taken as read that, to expand your business, you need equity and you need debt. The US mentality is very different from ours in the UK. But there’s an even more fundamental strategic point for banks. If you look at the statistics about where all the growth is coming from in the next 20 years or so – whether you take savings, wealth, entrepreneurship, spending choices – all of them involve women. Any bank that doesn’t capture that opportunity, well, I simply don’t know what their five-year business plan can be all about. That’s where the growth is coming from. Anybody that’s not on that bandwagon is going to miss out.

GITA Patel: Director, Stargate Capital Management Ltd

Back to top

And their jaws just hit the floor

Based on current trends, by 2020, something like 60 per cent of the UK’s millionaires will be women – whether it’s through divorce, inheritance or business. We really ought to make these facts more widely known because the key question for our fund providers is: ‘What are you doing to ensure that these women bank with you?’ I’m not sure anyone has totally got it. I spoke recently to a group of top financiers about the business I run and I asked them: ‘Where is the nation’s wealth going to be in 2020?’ And they’re all sitting there in silence. They couldn’t guess. When I gave them these stats about women and wealth, their jaws just hit the floor.

JANETTE Anderson: Managing Director, Anderson Associates

Back to top

Risking it all

It’s taken me 25 years to learn about debt. When I sold my business, there was still some £3.5m of debt in there. But, to grow to that point, that debt delivered me a £44m business. And, as the business grew, so did my confidence about managing debt – and my trust in the debt providers. But the big thing with me was my confidence. You’ve got to look at yourself as a women entrepreneur, who you are and what your strengths and weaknesses are. My strengths weren’t in the black and white of compliance and finance, they were more to do with the creativity of marketing the brand.

DAWN Gibbins: Founder and Chairman, Flowcrete Group plc

Back to top

It’s not personal. It’s business

Many women start businesses from home – kitchen tabletop businesses – and so many of them are held back in their ability to build a significant global business because of a nervousness to take on debt. There’s an issue here around lack of education and knowledge about the real benefits of borrowing. I know that when I recently did a transaction and for the first time had some significant cash, the first thing I did – on a personal basis – was to pay off the mortgage. On the other hand, up to the age of 30 when I was on my own, perhaps I had too much bravado, because even if I had lost everything, I would probably have gone and done the same thing all over again - I had absolutely no fear. Now, because I’ve got responsibilities, the first thing I did was secure my family financially. Having said that, in my early years in business, I had a huge fear of debt. But then I realised that the only way to build the type of business I wanted was to surround myself with brilliant people who actually understood the value and the power of using debt intelligently. So with debt, it’s the personal versus the business. And for me they are two totally different things.

ROSALEEN Blair: Founder and CEO, Alexander Mann Solutions

Back to top

Have two phones – and two voices

The fashion industry, is sometimes viewed as emotionally charged rather than business focused. Previously my personal and business attitudes to debt were mixed up. However after a few years of running my company, I began to separate the two and started thinking: ‘I’m working for Avis Charles Associates’ (the company), my attitude became quite different. Now, I’m not averse to debt at all. One of my business associates buys and sells property as if she’s buying handbags. She actually uses different phones for personal and business calls. And even her voice changes! She’s taking decisions involving millions without even a thought about the debt. At the same time, when you’re at home with her and she’s amongst her family, there’s this sudden switch. Her attitude to personal debt and family debt is quite different. She’s much more cautious. It’s a balance that a lot of women haven’t learned. It took me a long time! It’s an age thing, and it does have something to do with our children. When they’ve grown up, you start thinking: ‘Well, what have I got to lose?’

AVIS Charles: Managing Director, Avis Charles Associates

Back to top

The big fear is lack of security

It’s about security. The biggest thing that women fear is lack of security. I’d say that women’s fear of debt is structural. Women are poorer than men, they earn less than men, they just have less than men. That difference means a lot of women concentrate only on their personal circumstances, and they do tend to be debt-averse – not necessarily risk-averse, but certainly debt-averse. We see a lot of very small businesses that are running on personal savings and growing only by retained earnings. Some of them might make it. A lot of them won’t. But when you get to the medium-scale businesses that have reached a point where they have a market potential and then have the capacity to become really significant enterprises, it’s at that stage where you need a professional attitude to debt. The real challenge is getting more businesses from the domestic small-scale to a position where they can really grow.

SARA Carter: Professor of Entrepreneurship, Strathclyde University

Back to top

Money paralyses women with fear

I work mainly for men in divorces. And I’ve never had a man say to me: ‘Will I be financially OK?’ They know how to control it, whereas the immediate reaction of women is: ‘How am I going to manage? Will I have any money?’ I think it’s entirely genetic. Money for men is power and power in a relationship is what most men are looking for – particularly the ones that are flawed and are getting divorced! But, for women, the immediate thought is: ‘I will never have any money’. That’s because, in most of the relationships I see, the man has controlled the money. But I find women are also fearful of being rich. That’s the other thing. I create women millionaires every year and those women don’t say: ‘Oh, isn’t this going to be marvellous!’ They are paralysed with fear – absolutely terrified of not having it and then also quite frightened when they get it. In my experience, women don’t enjoy money. They’re terrified of it.

DIANE Benussi: Partner, Benussi & Co

Back to top