Expert advice for small and medium business
IN the midst of tough trading times globally, Lifes2good Health & Beauty has bucked the trend, securing an enviable growth trajectory.
Accepting no boundaries to his vision of success, Lifes2good Group CEO James Murphy's belief in setting ambitious goals has transformed Lifes2good from a niche operator to a global player in the health and beauty industry. In 2013 Lifes2good won the widely respected accolade of Deloitte Best Managed Company and will retain this award into 2014.
Lifes2good is a multi-million, global business with a portfolio of award-winning brands, marketed in 25 countries across Europe, the Americas, Middle East and Australasia. In 2013, 95 per cent of Lifes2good's turnover came from export sales. Its flagship brand Viviscal, a hair growth programme, which is both developed and manufactured in Ireland is backed by strong clinical evidence and has been endorsed by red carpet celebrities such as Reese Witherspoon, Kate Hudson, Cynthia Nixon, Miley Cyrus and Rob Kardashian.
In the US, Viviscal is available in more than 25,000 retail and pharmacy outlets, with retailing giants such as CVS, Rite Aid, Amazon and Walgreens and is now the Number 1 selling hair growth supplement in the US. Another brand managed by Lifes2good, MICRO Pedi, has created mass demand with key retailers such as Boots UK, El Corte Ingles in Spain and Shoppers Drug Mart in Canada.
A key strategic driver for Lifes2good is to build on existing strong R&D collaboration partnerships with Shannon Applied Biotechnology Centre (Shannon ABC) through an innovator in biotechnological solutions programme, set up and supported by Enterprise Ireland.
As part of this collaboration, Shannon ABC will provide state-of-the-art technical innovation to assist Lifes2good to identify value-added product development opportunities and build IP.
Partner, Outsourcing, BDO Ireland
The decision to outsource key business processes is not one any organisation takes lightly. Here are some tips to consider when choosing a provider:
* Do they understand your business and have a proven track record and sector expertise?
* Do their services, processes, controls and resources meet the highest standards? Can this be backed up by certification and client references?
* Choose a partner that invests heavily in people, processes and IT.
* Use an international outsource provider with expert knowledge of local regulatory, accounting and compliance requirements. The provider must have good relationships with regulators and service delivery teams.
* Employing a single multi-service outsource provider for accounting, payroll, tax and VAT compliance to get significant cost savings and synergies.
* Ensure the outsource provider can scale the services they provide to you as you grow.
Partner, Risk and Advisory, BDO Ireland
While the focus of management at Lifes2good is on developing the business, they are also building structures that will allow them to sustain this growth.
It's important to remain focused on financial controls (treasury and procurement) and put clear sign-off and approval procedures in place
We advise growing companies to invest in IT systems that will allow sustained growth into new markets. Lifes2good has implemented the cloud-based SalesForce.com solution as their backbone management information system across all of their key distribution channels.
Management at Lifes2good understands how important it is to objectively assess risks when making business decisions on strategy, investment and budgets. As the company continues to grow we advise making risk management more formalised to ensure all stakeholders have an understanding of risks and opportunities.
Partner, International Tax, BDO Ireland
The impressive growth of Lifes2good has been built on internationalisation. Two areas which can drain resources when expanding cross-border are transfer pricing (TP) rules (ie connected party sales/expenses) and foreign tax compliance.
Often a company expanding can be surprised to learn that foreign TP rules apply even when the Irish rules do not. TP rules are currently under scrutiny by tax authorities globally so plan early to substantiate cross-border pricing for the likes of IP related licences/royalties, interest and goods and services in order to ensure that the correct amount of profits can be taxed at the 12.5 per cent rate.
Foreign tax compliance also adds a layer of complexity. Dealing with foreign payroll tax obligations, to include social welfare, can be very confusing. Accessing relief for double tax credits is also important. Engaging an adviser with a local presence can help to reduce costs.
Partner, Corporate Finance, BDO Ireland
One of the key challenges for rapidly growing companies is to secure adequate working capital facilities especially where the business is expanding into new international markets.
The squeeze on traditional bank credit has resulted in a plethora of alternative financing options emerging for growing export businesses.
Lifes2good has funded growth with a combination of the Davy EII/BES funds and its own resources. But future funding requirements will need to be examined carefully in order to match to appropriate funding sources.
Achieving the optimal debt/equity split is also a challenge where equity dilution is considered a last resort. The emergence of new funding sources is likely to play an important role in international expansion plans as companies seek to avoid over-gearing. The alignment of interests with shareholders' objectives and incentivising management are also key considerations in selecting the best funding partners.