SHOULDWE SWITCHOUR CARS TO LPG?SSwrites: To reduce the cost ofthe three company cars used byour directors, I am consideringhaving them converted to run onLPG. This should save on fuelcosts, butwhat tax savings canwe expect?

While fuel costs have been rising,the cost of a liquefied petroleum gas(LPG) conversion has fallen inrecent years, making it worthconsidering,writes Jon Sutcliffe,partner at Kingston Smith LLP.Savings of about 50% at the pump

are partly offset by higher fuelconsumption of 15%-20%. Youwillalso have to consider the cost ofconverting the cars to run on LPG— typically £750-£1,500 — and youwill need to get the system serviced,whichmay cost an extra £150 eachyear.Ask your LPG installer about the

running costs of the system youchoose and check that your insurerwill not increase your premiumsafter the conversion. An LPGconversion tends tomake financialsense for cars that do high annualmileage.In calculating the company car

benefit, you do not need to add thecost of the LPG conversion to thecar’s list price as youwould forother accessories, so theindividual’s taxable benefit is basedon the same list price. The carbenefit percentage of list price forLPG cars used to be lower than forpetrol cars for a given emissionsrating, but this is no longer thecase. This means your taxablebenefit in kind will be unchangedby conversion to LPG.Real tax savings are now focused

on very low emission cars. Lowcarbon dioxide emissions reducethe company car benefitsubstantially, and there is notaxable benefit at all onzero-emission cars, includingelectric cars.The company also benefits from

100% allowances for capital spend-ing on new electric cars or cars withcarbon dioxide emissions of notmore than 110g per kilometre.

BATTEREDMANAGERUNSETTLES CLIENTSSDwrites: I have amanagerwhodeals face to facewith clients.In his spare time he likes topractise boxing. Often he returnstowork after theweekendwithinjuries and, while hiswork isexcellent, his appearanceworriesme, especiallywhen he talks tocustomers daily. Is thereanything I can do?

Your employees are the face of yourorganisation and leave an image onanyone they come into contactwith,writes Peter Done, managingdirector of Peninsula. It is right thatyouwant them to comply withcertainminimum standards ofappearance that show yourcompany in a good light.Clearly, your customers are likely

to wonder just what your employeehas been up to when they see himwith black eyes or a broken nose.Although he has received theinjuries through legitimate sport,this will not be apparent andcustomersmay think he has simplybeen in a brawl. This could leadthem to question the type of peopleyou are employing.Because thismanager’s

performance is good, his departurewould be a big loss to your companyand so somemiddle ground needsto be found.You have to explain to him that

his hobbies are potentiallycompromising the company’sreputation and that his injuries area distraction to the operation of thebusiness. Tell him he needs tomakea decision: does hewant to work foryou or does he want to be a boxer?If any concerns have been raised bycustomers, you shouldmentionthese because this is hard evidenceof the effect his appearance ishaving.If your employee calls in sick

because of his injuries, you cannotwithhold statutory sick pay becauseof the reason for the absence. If hemeets the requirements— forexample, theminimum period ofabsence and earnings level — heis entitled to statutory sick pay aslong as he submits the requiredevidence.

Kingston Smith LLP, the charteredaccountant, and Peninsula, theemployment law firm, can adviseowner-managers on their problems.Send your questions to Business Doctor,The Sunday Times, 3 ThomasMoreSquare, London E98 1ST. Advice is givenwithout legal responsibility.

bizdoc@kingstonsmith.co.uk

HOW IMADE IT

Rob Bettinson boughtseven alpacas in 1997 assomething of a side-line. A writer andtheatre director, whose

West End hits include themusicalBuddy, Bettinson owned the ToftManor estate inWarwickshire andstarted to use his land to breed thecreatures from the Andes.Today Toft Alpacas, which Bet-

tinson runs with his wife, Shirley,has about 180 animals and a studservice. It also sells alpacas as petsand even as guard animals to pro-tect chickens and sheep.Yet changes made by his eldest

daughter have made the biggestdifference. Kerry Lord, 28, has cre-ated a market for alpaca yarn anda variety of associated products,fromclothing to knitting patterns,that has “doubled or tripled” thesize of the business. It shows everysign of continuing to expand.“The size of the herdwill always

be limited by the amount of landwe have and the number of ani-mals we can keep on it,” said Bet-tinson, 58. “But the fibre side isgrowing 25% a year — and that’slimitless.”He is not the least bothered by

theway inwhich his daughter hasreshaped the business. Not allfounders are as open to change,however. Some are unable to letgo, while others are unwilling tolet their children (or grand-children) make their own deci-sions after they take over.A big part of getting the transi-

tion right is involving thenext gen-eration in the business as early aspossible, according to AlexandraSharpe, a partner at Peter Leach, aconsultancy for family businesses.Thismeans allowing the successorto learn from both the successesand the mistakes of the founder.“It is abouthaving space to gain anunderstanding of the business andsee why [or whether] they want tobe there in the first place.”Growing up with alpacas gave

Lord plenty of time to get to knowthe animals — she remembersgoing to shows with her fatherwhen nobody knew what analpacawas—but shehadno inten-tion of going into the family busi-ness. The turning point cameseven years ago after she gradu-

ated from York University with adegree in English. “I came backduring shearingweek andmy par-ents asked me if I thought therewas a market for raw fleece in theUK,” she said. “I researched it andfound that there wasn’t, so Ilooked for a market for yarn, andthere was no one buying thateither. So I realised we had to takeit right through to retail.”Lord, who is married to a man-

agement consultant andhas a son,turned the fleece into clothing,bags, toys and other consumerproducts. These sold so well thatthe next year she bought fleecesfrom other farms, too, and beganoffering knitting workshops aswell as yarn and finished products.An idea that began as an off-

shoot of the farm business has inmany ways taken over. The tex-tiles side now has 10 workers(some part-time) plus Lord, whilethe farm employs two people inaddition to the Bettinsons.

Rob Bettinson is not yet plan-ning his retirement, but founderswho are thinking about steppingback should consider a gradualhandover rather than a full stop,said Sharpe.Start by making sure the busi-

ness is structured so that it canoperate independently of thefounders before they gradually re-duce their involvement, she said.“It is not a case of Dad goes

home one Friday and does notcome back. There should be aperiod of partnership before youget to the stage where the founderis out of the picture. Very often,even when the entrepreneur hasstepped down from an executiveposition, he or she is in the back-ground providing advice, formallyor informally.”Lord would be happy to take

over the whole business when herparents are ready to retire. Shealready has her eye on a potentialthird-generation owner: her

10-month-old son Edward: “I’mpretty sure that hewill be learningto put labels on the yarn soon.”Lucie Campbell, the now-

retired founder of the Bond Streetjeweller that bears her name, tooka similar approach to succession.She explained it with a sportinganalogy. “If youno longer have thestrength to play tennis at Wim-bledon, you can still play for yourclub,” she said. “After a while,whenyou can’t play anymore, youstop playing, but you can still tellother people how to play.”There is a balance to be struck

between offering advice and beingunable to let go of the reins, Camp-bell added. Her sons, Richard andRobert, have changed the businessso that it is now a manufacturingjeweller rather than an antiquesspecialist.They have alsomade other deci-

sions that would not necessarilybe those that Campbell wouldhave made, but she does not want

her sons to spend their timesecond-guessing what she mighthave done.“They are intelligent men,” she

said. “I trust them and it is nice tosee them bring in new ideas.”Her advice to other retiring

founders is: “If you think that adecision is wrong, remember thatit may be the right decision andyou are the one who is wrong.”There is no point in trying to

run a business as someone elsewould have, said Richard Camp-bell, who now co-owns the jew-eller with his older brother. “Youcan only run a business to the bestof your ability and in accordancewith your own values,” he said. “Ifyou try to do it in a way that is nottrue to yourprinciples, youwill getin amess. I can always askmyself,‘What would my mother havedone in this situation?’, to try toview it from a different perspec-tive. But it would be dangerous todo that for everything.”

Graeme Malcolm has sales of £3.1m and exports 95% of his output

My lasers helped iPadsto see the light of day

Graeme MalcolmFounder ofM Squared Lasers

Letting the kidstake over the farm

GRAEME MALCOLM may have a PhD inlaser physics, but when he set up his ownbusiness his strategy was elementary: “Ifthe cost of making lasers was less thanwhatwe sold them for, thatwouldmake usprofitable.”In May 2006 he founded M Squared

LaserswithGarethMaker, a colleague fromStrathclyde University, using advances inphotonics — the science of light — todesign and manufacture lasers for use inindustry, defence, healthcare and energy.The company, based in Glasgow withoffices in Silicon Valley, had revenues of£3.1m in the year to February 2013 andprofits of £278,557 the year before (themostrecent figure available).Its lasers and photonic optical instru-

ments are capable of performing cellularsurgery,manufacturingmicrochips for lap-tops, iPhones and iPads, producing imagesof invisible gases and sensing chemicalwarfare agents and explosives.“In comparison with other laser compa-

nies, M Squared is quite young,” said Mal-colm. “We take a more open, collaborativeapproach that has not beenwidely adoptedin our industry — not competing butworkingwith experts wherever they are inthe world.”Malcolm, 44, was born in Edinburgh and

raised in Glasgow. His mother was a med-ical secretary and his father a sales man-ager for HP Foods. “I guess it’s in my bloodto go out and sell things,” he said. “But Ihadmuch to learn on the way.”His passion for physics and technology

was inspired by an enthusiastic teacher atEastwood High School in Glasgow. By co-incidence, the same teacher taught BillMiller, the technical director of M SquaredLasers.Malcolm went on to study physics for

his BSc and PhD at Strathclyde University,where he met Maker. There the pairformed a laser research group and devisedthe skeleton of their first business, Micro-lase,which they set up soonafter theygrad-uated in 1992. “I learnt the ropes on thatbusiness,” said Malcolm.In 2000 their portfolio of products was

bought by one of the world’s largest lasercompanies, Coherent, based in California.Their business became Coherent Scotlandand they stayed on until October 2005,whenMalcolmandMaker decided to strikeout on their own again. “We were keen todevelop our own ideas. That is still our aimtoday — to invent technology for uses thathaven’t existed until now.”Malcolm heads a team of 40 laser physi-

cists, scientists,mechanical designers, elec-tronic and control system operators andsoftware designers. “We make our lasersstrong andvery simple to use,” he said— so

strong that to demonstrate to a customerthe robustness of the standard lasers, histeam once threw one from a second-floorwindow. “It crashed to the ground but weretrieved it, set it back up and it was oper-ating again.”M Squared Lasers’ products range in

price from £25,000 to £250,000. “The low-cost lasers are often sold to universityresearch labs,” said Malcolm. “Thehigher-end systems may be bought byblue-chip companies for more sophisti-catedmanufacturing.”Demandhasnot always beenhigh, how-

ever. “When you are taking new tech-nology to market, the real difficulty isfacinghuge global changes,” saidMalcolm.“The terror attacks of September 11, 2001,the credit crunch in 2008, even the ashcloud of 2010 can create real logistical prob-lems . . . It becomes difficult to shift goods

and obtain supplies. You have to be flexibleand adjust your commercial plans.”In April 2012 the Business Growth Fund,

the government investment scheme forsmaller firms, ploughed £3.8m into MSquared, taking a minority stake. Malcolmhas used the funds for research and devel-opment as well as marketing. About 95% ofM Squared’s sales are overseas, 50% inAmerica, where the lasers go to researchcentres such as the National Institute ofStandards and Technology and StanfordUniversity. “America adopts technologyearly so it’s a very goodmarket for us.”M Squared is collaborating with tech-

nologycompanies, universities andgovern-ment research labs across Europe. Its lasersalso play a key role in medical research,being used in a range of optical techniquesknown as multi-photon microscopies. “Inbrain research and neurology, scientistsare using our lasers to light up fluorescentproteins in the brain so we can begin tolook at diseases such as Alzheimer’s andParkinson’s,” said Malcolm. “Similarlywith skin cancers — the same techniquecan be used to excite fluorescence and fluo-rescent markers to understand differentforms of cancer processes.”Malcolm lives in Perth with his wife,

Kellie, a full-time mother to their threeyoung children. He advises entrepreneursto grab chances early: “The younger youstart, the easier it is. There’s help available.So if you’re fresh out of university andhavea technical idea, it’s worth the risk.”

HattieWilliams

BUSINESSDOCTOR

STUARTWALLACE

Tight-knit: Kerry Lordwith son Edward andfather Rob Bettinson

ANDREWFOX

An alpaca farmshows howfamily firms canmake a successof successions,writes CarlyChynoweth

10 SMALL BUSINESS smallbusiness@sunday-times.co.uk