Voice of experience
Friday 3 August 2012 9:00
Brian Nicholls
Geoff Hodgson now runs the core body working to guide SMEs towards sound funding and guidance, with the vantage of being an entrepreneur himself.
Gather up Geoff Hodgson’s CV and you pick up three crammed pages, yet filled only with essentials.
His extensive and varied career, thoroughly enjoyed to date, is an argosy of experience on which he sails also through critical duties at North East Access to Finance.
He and his board must, through this organisation known as NEA2F, ensure indirectly that small and medium-size businesses of the region are helped wherever possible to get funding to develop.
Hodgson, the 51-year-old non-executive chairman, knows well what SME bosses are going through; he faces it with personal business interests that run alongside his NEA2F work. Besides extraneous duties, such as helping to organise London’s Olympic Games, he has three personal “projects” currently.
He and Keith Liddell of Greensfield Moor Developments, partnering the Duke of Northumberland, opened a 54 bedroom hotel on July 24, an Alnwick new build Greensfield is running.
Yet not even Hodgson’s acumen, and Liddell’s success in running Lindisfarne Inn at Beal and Bamburgh Castle Inn at Seahouses already, won a bank over. A start-up - and in leisure? Instead the Duke, who wanted to sell the two and a half acres freehold, has funded the building.
The site’s on long lease. So a near £5m enterprise, the Hog’s Head Inn (a la Harry Potter) will provide 80 jobs – half of them full time – in a county starved of commercial development. Clearly, it needn’t be left to banks to decide if small ventures should create jobs.
Hodgson’s also working personally with another local entrepreneur, and advising a sound management on funding a spirits distillery for Lakeland. He’s also involved with Alan Brown, ex-Robson Brown media, and developer Mark Reed on a deal to open new serviced offices in Newcastle.
“Stuff keeps coming across the desk and I’ll pick it up and have a look at it,” Hodgson says. Don’t feel sorry. He loves opportunity. He fears NEA2F’s work at Baltic Place, Gateshead, may sound boring but stresses it’s vital, albeit often misunderstood.
NEA2F is the collecting house for historic legacies from venture capital funds once held by regional development agency One North East. It receives also legacy funds generated by the remarkable £125m Jeremie programme.
It decides through specific fund managing companies, how those monies should be deployed to the region’s advantage. It gives guidance also on issues surrounding SME access to finance.
“We’ve assisted various people in terms of workshops and conferences,” he explains. Indeed NEA2F and Northumbria University have just held a gathering at the university to discuss accesses.
Organised by NEA2F’s chief operating officer Stephen Lightley, it was underpinned by research from the university’s Business School suggesting SME operators find it hard to decide which financial package is best for them - when lucky enough to have a choice.
Speakers and participants included Lucy Armstrong, who chairs Capital for Enterprise Ltd and is chief executive also of The Alchemists; Charlie Hoult (non-executive director of Hoults Yard, Newcastle); Professor Sharon Mavin, dean, Professor Jackie Harvey and Jane Turner, associate dean, all of the business school; also Pat Dellow, area commercial director, HSBC; Colin Willis, managing director, Hotspur; Graham Thrower, non-executive director, and Stephen Lightley, for NEA2F. Keynote speaker was Herb Kim, chief executive of Codeworks.
Hodgson explains: “Nobody was really digging publicly into mood music for SMEs, on whether they’re able to lay hands on money from the various sources and, if so, how easily? We’re also commissioning research to explore the landscape for redeploying legacies. Which historic funds have worked and why? Which haven’t and why? And how best to use this money in the future?
“People have opinions and many decisions in the past have been made on a basis of gut feel or he who shouts loudest rather than empirical evidence. The funds are still applicable but most have been fully invested and we’re taking in either the cash or the shares in which they’ve been invested.”
The £125m Finance for Business North East programme is a groundbreaking suite of seven investment funds made possible through European money.
It’s being managed and co-ordinated until 2014 by North East Finance, under chief executive Andrew Mitchell, the aim being to support 850 businesses across all sectors by loans and equity investments. Then these evergreen funds will be recycled, still to benefit North East SMEs.
“We’re very lucky because only two other areas of the country have Jeremie Funds like ours, and I don’t think they’re as far along the path,” Hodgson says.
“Our time at NEA2F is about 18 months away. We’ll be putting foundations down then for redeploying several tens of millions of pounds of legacy funds, to ensure SMEs’ further future access to alternative forms of finance.
"Other parts of the country where no receiving body had been created for the funds found the funds being handed back to the centre.”
Hodgson, like BQ, is surprised grumbles still circulate, claiming lack of advice on where to go for backing. NEA2F, running since 2009, has both a handbook in its third edition and a website signposting funding sources. Its Elevator Pitch website, though, whereby aspiring entrepreneurs have 90 seconds on You Tube to have their pitch passed on, has not been extensively used.
However, says Hodgson: “We now have the virtual Experience Bank, run by Alan Holmes - a sort of financial dating agency we facilitated but aren’t involved in. “Up to 70 potential mentors, business angels and whoever gather quarterly to consider e-mailed applications for investments, mentors or whatever. The Elevator thing was a pipe dream. Anyone contacting us now is redirected to Alan.”
He stresses that, while One North East didn’t support directly either, it deserves immense credit – especially Malcolm Page and Peter Judge – for putting the funds in place and getting them up and running. Page is now executive director of commercial and corporate services at Sunderland Council.
Judge, recently appointed MBE, is deciding what to do next, following the RDA’s state execution. “One or two others claim credit but theirs was the foresight,” says Hodgson. “And, in getting the money out into the market place, North East Finance has done a fantastic job”
NEA2F includes some banks when distributing information. But as Hodgson points out: “The average small business probably understands more already the workings of a bank than how a venture capital firm or a business angel works. So the focus is more on alternatives.”
Has he heard many stories about unhelpful banks? He laughs heartily, understandingly. “It was open season six or seven years ago when they were probably too lax in lending criteria. They’ve now stopped for the reasons we know. We need to be somewhere between those two points.
“We’re hearing that if you’ve a good business plan, some security and a good management team, they’re open for lending. If you can’t tick all the boxes they’re not prepared to take a chance. But unless banks borrow and lend, they go out of business. There’s still reluctance to lend on property, though, and on certain sectors like leisure where certain banks took enormous pain in their lending.”
As a successful businessman, what advice would he give a start-up? “Make sure you’ve a robust plan. You need to have thought through what you’re going to do and how, the cost and likely outcome.
"Time and again people’s good ideas don’t make first base because they can’t explain these points. A good plan others can understand has never been more important. You may know what you want to do. But someone else must explain it to others on your behalf.
“It needn’t be 60 pages. The best plans are often on two sides of an A4 sheet with some numbers on a spread sheet behind. Days of just seeing your local bank manager whom you’ve known for 10 years and knowing from a handshake you’ve got a loan are gone. Now he must go to a credit committee with your proposal. Make it easy for them.”
Also, he suggests, in any SME’s relationships - with banks, venture capitalists, accountants, the tax man or whoever - don’t spring surprises. Keep key supporters and funders abreast not only of good news but bad.
People are more amenable to early warnings. Mentors also can help others as they’ve helped him. He’s particularly appreciative of Paul Walker and David Stonehouse, who both helped him sell Federation Brewery and start Northumbrian Taverns.
So is there room for sentiment in business? Federation was the UK’s only co-operative brewery, one many loved but too few patronised, and latterly it had brewed Newcastle Brown Ale, another cherished North East institution which Scottish and Newcastle Breweries decided in the end should be brewed not on Tyneside, but in Yorkshire.
Hodgson affirms Federation did lack customers at the end, and as for the brown ale: “I did my best to keep it here. If the recession hadn’t hit – you know, the rest is history. But there is room for sentiment because business is primarily between people. Taking decisions, you must ask: ‘If this was being done to me would I think it fair?’ “
If one thing didn’t come good for Geoff was it Atlantic Radio, an American consortium he was involved in which failed to gain a licence in the North East? He gives another hearty laugh. “I’ve had a couple of others,” he admits.
“I went into partnership with a couple of guys and bought big houses in Gosforth and Jesmond to do up.
“Unfortunately, one partner died and we took a significant loss. A very unhelpful banking mob was involved in that.
“I never have a problem telling people where it’s gone wrong. Few I know who’ve been successful haven’t got a few disasters behind them. You learn more from the disasters than from successes.”
Geoff, his wife Jill and daughter (18, aspiring to Edinburgh University, reading German and entering advertising and PR) live at Gosforth. To fit in commitments, Geoff starts his phone rounds walking the dog at 7.30am on Newcastle Town Moor.
“I can have a conversation there without being disturbed - great,” he says. Being in the hospitality business, he may have to dine out one or two nights a week. Weekends off, then? “It varies. But if I want to cut off for an afternoon’s fishing or a day’s shooting or whatever, I can juggle my diary and spend Saturday or Sunday locked in the study or out and about and that’s no problem.” Jill, formerly with Tyne-Tees Television, now has her own business, Bamburgh Cottage Holidays.
“It’s been going three years - doing really well,” he says. “She did a plan and it’s worked.” Didn’t she consult with him? “I did the deal, bought the property then left her to it. I want to stay married!”
