Small businesses will be looking to capitalise on the anticipated market upturn this year. In this special WebTV show, Lord Digby Jones will be offering his unparalleled expert advice and invaluable entrepreneurial insights and experiences to help business owners, entrepreneurs and aspiring entrepreneurs ensure they are in the strongest position possible.

Lord Jones has had a lifetime in business – travelling to over 70 markets across the world gaining a unique breadth of knowledge and experience. He spent 6 years as the Director General of the CBI, held the position of Minister of State for UK Trade & Investment and has unrivalled heritage in advising a multitude of businesses around the world.

To coincide with the new Vodafone ‘Business First’ store, based in Cheapside, London, join our webTV show with Lord Digby Jones who will be offering his unparalleled expert advice on the key priorities to ensure small business growth in 2010.

Join us for the exclusive Business Clinic featuring Lord Digby Jones and Rob Shardlow from Vodafone will be aired online and you have the chance to have your business questions answered by the guests.

H: Jayne Constantinis, Webchat Host
A: Lord Digby Jones
B: Rob Shardlow, Vodafone UK

H: Hello I'm Jayne Constantinis, welcome to this Vodafone Small Business advice show. Brought to you from Vodafone's brand new business focussed store in the heart of the City of London and I'm joined today by the former Chief of the CBI Lord Digby Jones and also by Rob Shardlow who's head of small business here at Vodafone. He specialises in providing telecoms solutions for small businesses. You'll also notice we've got a live audience with us today, made up of a broad collection of small business owners, entrepreneurs and journalists and we've been inundated with questions from you in advance of the show. Thank you very much for those, we'll do our very best to get through as many as we can during the next 25 minutes and we'll also be taking some questions from our live audience. Gentleman, welcome. Lets begin, if I may, looking back to 2009 pretty terrible year for very many people, we're all very glad to see the back of that. But there are the early signs of optimism for 2010 do you think this optimism is justified?

A: Well, '09 was the anis horribilis for everybody I think there wasn't an aspect of the global economy or politics that wouldn't say that it wasn't disastrous. The announcement last week that we are out of recession of course didn't mean that we came out of recession last week it meant we probably came out in about October but I wouldn't take any great shakes of what the Sunday Tuplins of economic recovery out of this. I mean the greatest, best message for businesses is it's not going to get any worse and 2010 is about the big disciplines of business must be maintained. Ensure that the core capital that you will have when you come out of recession because you are going to hopefully going to recruit one or two other people, you're going to invest in kit, your technology, all of that is going to call for a better engaged bank community. I don't see much of that at the moment. It's going to call for a government of either colour that's going to work with the grain of business and not against it, because only business... business are the only the only agent in our society that create the wealth that pays the taxes that sorts us out and at the same time it's going to call for more and better trained people. Now all of that against the background really, of bobbing along is a huge challenge, a huge challenge for nation, a big challenge for business. So I don't see 2010, I mean politicians are going to run off to the election hustings with come out of this, you know, everything is fine. No it isn't. It's a really difficult business environment. What I would think, is that 2011 and definitely 2012 you are going to see some good quality growth in the economy but I would be amazed if this economy delivered more than one and a half, two percent growth GDP by this time next year.

H: Ok, so it's not going to get any worse. Rob what... does that fit with the mood of the people that you are meeting, that are coming into the store for advice?

B: Absolutely. I think all recessions are great opportunity for organisations to learn and to address some of the challenges they failed to address in the comfortable times. So the businesses that have got through the recession have got through stronger, smarter and will be in a great position to take the opportunities of the upside. So the green shoots we see are absolutely there and those businesses that have survived should pat themselves on the back and be confident and bullish about the future.

A: Actually picking that up, I think that the small businesses that have survived all this see themselves as veterans of a conflict in many ways. They've lost confidence in their bankers they've lost confidence in their politicians. They don't see the education system delivering raw material into the workplace that is fit for purpose and so, they feel, as you have just rightly said. They pat themselves on the back a bit and think I got here in spite of all you lot not because of you and so what are you going to do now to create an environment in which I can carry on to create some wealth in myself, wealth for the nation, employ people, pay some tax. The recovery of always comes out of small business and in that respect I think they are entitled to feel hard done by and it's now a time for those other agents in our society to get behind them.

H: I suppose it's the what doesn't kill me makes me stronger sort of thing, isn't it. Do you think small businesses are particularly vulnerable in bad economic times or is there a slight sense that because they are smaller they are lighter on their feet more able to adapt maybe to changing circumstances.

B: I think there is a bit of both I think all businesses small, medium and large are vulnerable in recession if they are not run smartly and run smoothly, run efficiently. Clearly the big companies tend to have more of the parachute and support mechanisms but small businesses have the benefit of agility and fleet of foot and generally much leaner. So I think its swings and round abouts for both.

A: I think the flexibility of a small business can work against it sometimes. You know, the decision making process which is so good in getting things done quickly also means a far more personalised decision. So you tend to not chase your bills on your mates, where a big business wouldn't allow that. You tend to actually allow some of your customers to basically bank with you. Why on earth do small businesses say its ok, you don't have to go and borrow off a bank to pay me I'll just wait and borrow off the bank. It's mad. Where as in a bigger business there are those disciplines that have been ingrained of discipline. Smaller businesses... on the other hand of course, smaller businesses you can make in investment decision more quickly, you can make a hire and fire decision more quickly and you can be responsive to a little bit of up turning in your sector or in a different market, so much quickly than in a big business. So to try and get the best of that bit without having the down side bit, that's the trick to making money in 2010.

H: Let's take our first question that came in before. It's from Thomas Whitman from Basildon. He says, it doesn't say what business or sector he's in but we cut back on travel and hospitality over the last 18 months. Is it time to get back out and meet the clients again? Now I'll tell you what slightly frightens me about that question, the fact that he's suggestion that he hasn't been out there talking to his clients, nurturing those very important existing clients during the last 18 months. What are your thoughts?

A: To be fair to him, he might not have been able to afford to and, you know, a lot of small businesses bet their range in recession don't they. So, either to set a good example to staff who've been told they are going to take a pay cut or to set an example to your customer base who you don't want them to think that you have the money, that you don't, you know, you're still asking them to pay full dollar for what you do. It doesn't pay in those times to be seen going off to Ascot and taking a box and having a great time. So I can understand the hospitality side, you can make friends with your clients keep in touch without taking them off on the booze. So think that part's right. Meeting your clients, there's two sides here and one is, and I think the recent weather, I think we were talking about this earlier the two of us. The recent weather has proved that maybe not your first meeting; I want you to buy into what I'm doing I want some eye contact and body language and that sort of stuff, but internal meetings, meetings with regular customers or suppliers, meetings with the stakeholders of your business. I think that the lousy weather meant that no one got around the country. The fifth biggest economy on earth and you can't get to work but mind you on Saturday they could all get to the shops. I think that it has proved that you can use technology so much more than we all do. To have more conference calls, to analyse if the meeting is necessary. I think all of that is something as we come out of recession don't let's pull all the leavers to spending loads more dough on how we used to it, lets thing about how we spend that money wisely to get a better productive result and if anyone is listening to this from the public sector, that's you as well.

B: I think the weather is also has kind of the come at the back of the very soft recession. The rules of business, and business communication and business etiquette have changed over the years. The introduction of mobiles, email and texts etc means that the traditional business medium of a meeting face to face is not irrelevant but is certainly complimented by other means of communication and very, very often, we were saying about this earlier, is that people tend to drive to places that inevitably means, oh this person has spent an hour getting here I had better give him or her an hour of my time when actually it's a 10, 15 minutes worth of conversation that can be had quite happily, I say to a lot of my colleagues, is to take the opportunity for conference calls. People don't find it rude typically and it's a good way of driving out efficiency, in time and money.

A: Do you know I started off my own small business a year a go when I came out of government and I have a business manager she lives in the north York Moors. I have a PA, she lives in Coldfield out in the west midlands and I operate my business out of Marylebone and we do the whole thing with three stores. We do the whole thing as three virtual office, I don't have, I don't pay over head on office and I do it all on three of those and the whole of my business is in one of those and I am a technological dinosaur. I mean I had to be brought to this kicking and screaming. People say, well, was this as good as your last one? I never had a last one. So this is absolutely fabulous and they are and you do find that you can become very productive, very effective, save a lot of over head by better use of technology and it's an important point and as you come out of recession there's a little bit of money around, there's a little bit more optimism, don't go back to your old ways. Think about what got you through this recession and then tailor those so you put a bit more on the bottom line.

H: So we're talking about technology, which may require some investment and that just leads us nicely to a question that's just come in from Kathleen Hall, who's from smallbusiness.co.uk. She says: "Is finance for small businesses, maybe they are thinking about investing in new technology, harder to obtain following previous recessions? Is this one different?"

B: I suspect that the rules of raising finance are tougher than they would have been, but the business that can demonstrate track record and has got through this recession; that's got credentials and the criteria to raise finance, and if it's a finance project specifically backing ideas, initiative, capital, with logic and sense and direction then it's a good investment decision and hopefully the finance can follow. It's going to be tougher, inevitably.

A: I think there are two sides, to a new project, a new idea. For an existing business or a new one, I think that's absolutely right. I think if it stacks up, the money's there. I think in your ongoing relationship with your banker on working capital, I think it is different now than it has ever been. We are a little bit hypocritical as a public, so you see there's a pound and you see what we're saying is "we want you to take that pound, bank; we want you to keep it over here as tier-one capital, so next time all of this trouble starts, you've got more capital to save yourself. By the way, with the same pound, we'd like you to lend it to small business as working capital. And we'd like you to do that with one pound." Politicians are telling them to do it, you and I are telling them to do it. We all are. So we have got to understand that we've only got the one pound. On the other hand, I don't like to hear banks (and they're all doing it), they're all saying "Yeah we're open for business, we're lending, lending, lending..." And I get round the country a lot, I talk to a lot of businesses in different sectors, and I hear the same story everywhere – they're telling me they're lending, can you explain to me why they put so many conditions on this?, that yes they are but only if you meet so many conditions. Basically they're not. And you hear that so often. And I think there's a lot of market share to be gained quickly by a bank that actually gets on the page of extending working capital requirement to small businesses, more easily understood, better communicated and then just more activity in it.

H: What do you think is the key to unlocking that finance, that ability to get hold of that important investment?

B: Creating a sensible business plan.

H: As simple as that... But the bottom line is, now is the time to be making those capital investments, spending, even though it is going to be another difficult year.

A: Well, oh, please don't just say, "it's going to be easier, let's just go spend the money, let's go borrow the money." You've got to have a business plan, you've got to have the case. And what you must do is why are you doing this? Good example is, this will be an export-driven recovery... Because we have a weak pound, so all our goods are cheaper around the world. If you get smaller businesses exporting, they expose themselves to overseas competition, therefore they have to be more productive and effective or they won't do it, therefore they can make more money at home, because they bring those lessons home. And thirdly, you've got a wider market – instead of selling to 28 million adults, 60 million people in Britain, you are selling to a global audience and a global market. And a lot of that market is getting richer every day – China, South Africa, Brazil, India. So, it's going to be that type of recovery. Now, if that's what you want the money for, fine. Put up the business case, go for it. But if all you're going to do is "well, I'm just not going to chase my bills in the same way, therefore I need more working capital because I'm not getting my money in" or it is "I'm going to employ one more person while it makes my life easier", don't go and borrow it because, frankly, you'll go bust. And that's when companies ... more companies go bust coming out of a recession than going into a recession, because what they do is they pull all the levers, go back to their bad habits, think "phew, got through that", and off to the receivers they go.

H: OK, one area that people might want to be investing in this year is marketing, and we've had a question in from Mark Foster from London: "As a small business, how can I compete with the marketing spend of bigger companies if consumer spending does return?" Whether we're in a recession or not, that's always a challenge isn't it, for a small business. How to use their marketing dollar cleverly and effectively?

A: Now you're a big marketing company...

B: We are a big marketing company, and I think the answer for that, for the small business, is that... and we see this a lot, many of our companies by definition are small businesses... Their marketing cut through, the gravitas, is in providing local service with personalisation and customisation at local level. So whether that's actually spending money or investing the time and effort to understand the needs of the local community; that's exactly where they should be putting their money. They're never going to be able to compete with the big multi-million pound budgets of big business per-se, but big business per-se cannot provide the local intimacy that small customers like to enjoy from their suppliers.

H: One thing I've noticed, in the small businesses that I work with in these recessionary times, is that it can lead to low morale and people think "we're working harder than ever to keep this business afloat, others are not quite pulling their weight." What can you do when times are tough to keep morale high?

A: People like good news. They don't like bad news, but they much prefer bad news to no news. You know, if you've got to tell somebody some bad news, don't behave as if you're going to tell them, tell them! And, at least they know where they stand, they have what they've got to do; they're clear. If you just don't communicate, if you don't ensure that people know where they stand, don't be surprised if morale goes through the floor. And always, always, always, praise in public. And always tell them off in private. You really don't get any prizes for belittling somebody in the eyes of someone else. And you've got to tell them off, you've got to help them and steer them and criticise them, course you have. Do it constructively, give them a way out, make them feel a million dollars when they've gone out after a telling-off. I mean, it's... I tell you, they will go through hell for you if you talk and communicate with them in a way that you're on their side. And always praise them in public, always say well done in front of other people... and then they feel that they've got a bit of skin in the game of this enterprise. And the other thing is, we are coming out of something and things, if they're not going to get much better, they're not going to get any worse. Sometime in the last eighteen months or two years, you asked your workforce do to something that was going to hurt them. They either went on short time, they went on short dosh, they worked a few more hours, they saw everybody under pressure. You know, life has not pleasant. And if there's a few more bob around, give them a bonus, treat them out to something, put a few extra bob in their pocket; do something that says "you were with me, and you helped this business survive this, well here's a way of saying thank-you." It'll work wonders. By the way, it's not the quantum, it's the fact you even recognise it and do it.

H: Is offering training and career development, is that a good thing to do to improve morale in a business where perhaps things are a bit flat?

B: I'm a huge fan of training where it's appropriate. The worst training in the world is the sheep dip training where people get put on courses because someone's got some budget to use and wants to get rid of it. And that's, kind of... it wastes money, it sends the wrong message to the people being trained. There has to be at the bottom of it some needs analysis, some real clarity over the purpose of the training. And if there's a real purpose there, if there's a business benefit to be had from it, then invest the money. But do it wisely.

A: And the workforce will feel that you care for them more, and they'll feel better equipped to deal with all this stuff. Because they've got another string to their bow, they feel they've got another ticket, you know, and that's good stuff. But if they feel they're participating in something that's just not particularly focused, you're actually going to debilitate them. Because they know, I mean people are not stupid. They know. And, small business again, big advantage – you're probably not going to get these enormous trading budgets where people have to spend by the 31st March, you know... and that's a good thing because you can actually make judgements more easily, more quickly, and if you've... in mind... communicate them more easily as well.

H: We touched early on the bad weather recently and the impact that had on people having to do remote working. Interesting in the context of praising people in public and so on, does the remote thing work in terms of morale?

B: Yes, absolutely. British business went on hold for three or four weeks during Christmas because of the bad weather. We at Vodafone, everybody else, we were forced to work from home. The technology - the mobile email, the mobile broadband, the mobile telephony per-se – is much stronger now and can be relied upon as a technology. I think for a lot of people, whether it be families, whether it be people with mixed working lives, have the benefit of being able to work from home. It saves 2, 3, 4 hours travel time a day - for me that improves morale no-end - and if you get back to that thing about a business etiquette, the rules of business have changed a lot over the last ten-fifteen years. Most of my time is in meetings that are actually spent over conference calls, rather than face-to-face meetings, and that works just as well. There has to be some strict disciplines – about time-keeping, about agenda-keeping, about follow-ups and actions – but if you apply the sensible rules to the call, the remote working can work very effectively.

A: And there are one or two tools that trade... that will trade secrets that can help with that. You know, if you're in command of that conference call, if you're the one they're all ringing in to... a little call beforehand saying "Thanks very much" individually to one or two of them – one or two of them who probably aren't used to this. Afterwards, there will always be somebody there who felt you didn't give them their time in the sun and that they didn't have their say, (you know, welcome to life), make the personal call for a couple of minutes and just say "Hi, thanks very much, I'm really grateful. Anything, if you'd got a word in edgeways, anything else you would have said?" You know, make them feel that it was important to them to be part of that. Then the next time you do it, you'll have a willing participant. And it works, and you'll have somebody who actually buys in. A lot of personal stuff goes into stuff like this. You know, isn't in interesting that you walk into somewhere, you look somebody in the eye and you say words like 'please' and 'thank-you' and 'I'm sorry', and the moment you get on the phone and you're not looking somebody in the eye, all the words go out of the window. People think, well it doesn't matter does it? Well, of course it matters. It's just as important. And also, I've always maintained (I've put this to very good use over the years), and believe me, this works, this really works, and that is: it's very difficult to give a telling off to a cheerful person. It's true isn't it? If you walk in and someone's glum, and you say "Hey, the sun's shining!" and they say, "Yeah... might rain later", and suddenly it becomes very easy to tell them off. Whereas, if someone's cheerful and positive and wanting to do the stuff – very difficult to get angry with them. Now, you can communicate that, by remote, in just the same way as you would to your face. You just have to think about it as if the person's sitting there. That is the challenge to management through remote. It's actually to ensure that you think that the people are there, you're behaving as if they're in the room. And if you can do that, you can turn it to huge advantage, save a fortune of overhead and get a better result.

H: We're sadly running out of time, but I just want to move from talking about businesses that are already established, to perhaps the entrepreneurs out there who are thinking "Hmm, is this the year when I should be chasing my big idea." Is it a good time to be starting up a new business?

A: Definitely, yes. Categorically, yes. Most of the big, successful start-ups of the last 25 years came out of recession. And, just as you're turning up, it's a very, very good time to start. But don't for a minute think it's easy. Entrepreneurship: you and I always see the results of the great names. If you ask kids at school, give me some names of great entrepreneurs, they'll always come up with the same names – they're the huge ones that have succeeded in various things. There are millions of them who fall by the wayside, some because they weren't good enough, some because the idea, no matter how much they believed in it, wasn't good enough and some because the environment out there didn't work in their favour. But don't... this is only one life, this isn't the dress rehearsal, and if you're going to spend the next three years thinking "I should have", well then have a go. But please don't kid yourself that this is easy. It's seven days a week, it's at least fourteen hours a day. Everything else gets excluded, the family have to buy into it with you, because the family are as important at this time... they're your support mechanism, they are with you and they've got to understand that this comes first. Huge ask for individuals, but if you can and you pull it off...

H: The rewards...

A: It's not just financial rewards...

H: No, no, from a personal perspective...

A: Emotional rewards, self-respect rewards, self-esteem rewards... It's a fabulous time to do it as an economy comes out of a recession. But please, don't just do it because you think you're going to make money and please don't do it if from day one the family and kids are saying "Ugh...", because you wont win through. Well you might, but you'll be divorced on the way through it. And then all the money you were going to make's going to go to them.

H: To the lawyers, you mean...

A: Well you find somebody you don't like and buy them a house!

H: Is that the kind of advice you are giving to people who are coming in and asking whether they should be starting in business?

B: Yeah I agree with all that. And people have said to me often about "What would you do?" and you don't have to have a great idea. You just have to do something a little bit better than a lot of other people. And think about the platform for sustainable differentiation – big words, but at the end of the day it's about how the guy or the girl in the café serves me that little bit better. It's just small stuff that makes a big difference. And if you've got that then you're ???

H: Fantastic. Let's just move on to our final question which is actually from somebody in the audience... Martin Reid is here with us and he's from BHP Information Solutions. Martin what's your question?

Martin: Hello, yes... It's quite simple really: what should small businesses owners be doing to grow their business this year?

H: OK, thanks very much. Digby, would you mind starting with that – what about growth? So, businesses that are already established and have got ambitions for 2010.

A: Rediscover innovation. If you define innovation as taking an idea to market... so you have an idea, it doesn't have to be a manufactured good, but it could be. It could be a service, it could be the way you serve that coffee in the café... that's the idea, how do you covert that into making money? That is something most businesses start off with that innovative idea. But then they get stale on it; they don't reinvent, they don't reanalyse what they're doing. It's "This is working, let's leave it lads." When China wants your lunch, India wants your dinner – they'll reinvent your idea for sure. So whatever you do, reanalyse what you do and how you do it and take it to another level of innovation. Secondly, desperately, don't forget that cash is king. You can grow your business is you look after the cash. Keep those bills going out on time, keep those bills being paid on time. And don't bank your clients. And then thirdly, look, and have the courage to look, and pay for a bit of research on the way through, for wider and better markets. That might mean a better customer, a better quality customer; I call it the integrity of the book. Make sure your customer book is always getting just a little bit better, a bit more prestigious, people who you can depend on more. Or wider/ Different countries, different sectors. Those are the three things I would do.

H: I'm just going to pick you up and put you on the spot for a second, both of you, on that word sectors. Because we've had a question in from realbusiness.co.uk, wanting to know which high-growth, possibly innovative, sectors would you be backing for 2010? Rob, you're first.

B: It's got to be communications.

A: How are your share options? Are they alright?

B: There's an awful lot going on in the communications space, some of which I understand, a lot of which I don't but all of it gives customer benefit and the organisations that are in that space can join up the options of technology to bring real benefit to the end user whether it's time or convenience or money. These are the organisations that are going to do well. There's a massive amount out there. Bring it together is the key to a successful organisation.

H: Lord Digby what about your favourite sectors for this year?

A: I choose three. I think the whole education and training space. Britain's number one in the world, only America's got more universities in the top 50 than we have. But in training companies around the world we are number one. So the private sector, working in the delivery of training and education, huge around the world. Secondly, environmental engineering. Either in the anti pollution side of life or in the sustainable energy side of life. I mean there are two different sides to it. Now the small businesses that are growing in Britain doing that around the world are fabulous and you won't read this in newspapers because it is good news why would you and then thirdly I would say the growth and development of IT in to the delivery of public services. We have got to make sure we can afford more nurses, more solders, more policemen, more doctors, more teachers by actually revolutionising the back office. The administration of our public services is unproductive, inefficient and over manned. Now you can't just say, that's it, all out. The thing will fall apart, the culture wouldn't stand it. What you've got to do is take people with you and get IT in all of its forms into the delivery mechanisms of our public services. A hundred times better and more than we are now. Now those three are actually things where we win through. Of course I could talk about value added manufacturing. Of course we could talk about oil and gas around the world, especially support services. Definitely pharmaceuticals we excel but if I think you are highlighting where a small business could make a difference quickly, it would be in those sectors.

H: Fantastic. I'm afraid we're way over and out of time but it's been fascinating. Thank you very much for you excellent advice and your insights. Everybody is madly making either physical or mental notes, quickly get it all down. Thank you very much and thank you for watching I hope you've enjoyed it, I hope you've found it interesting. I hope it's helped you to focus on the priorities for your small business might be in 2010. Whatever business you're in, good luck with it and thank you for watching. Good bye and let's show our guests our appreciation.