Many small businesses will be worried about how the current economic climate will affect them and what the new year will bring. In this special WebTV show, we bring you an interview with founder and CEO of Dell Inc, Michael Dell for some invaluable entrepreneurial insights and experiences that can help business owners.

The task of running a $60bn global company with 80,000 employees is hardly going to be short of challenges. Michael gives his advice for those looking to start a small business and also provides expert opinion on dealing with tough times like those we are currently experiencing – especially for those who want to use technology but are concerned about cash flow. Staying on the technical side of running a business, he asks what SMBs can do to effectively manage their data storage as levels of digital data increase significantly.

Covering topics such as how Green IT and social networking impact on small businesses, Michael also reveals what he views to be the three most important factors for a successful small business.

Presenter Sean Walsh will introduce the show, and after this exciting interview, you'll have the opportunity to send in your comments. Sean will also be joined by Andrew Stone, Small Business Features Editor from the Sunday Times who will be on-hand with his advice and commentary on the big issues facing small businesses. We will also have our regular round up of all the latest small business news from the BCC.

Join us online with Michael Dell and Andrew Stone to discuss advice for small businesses.

For more information visit www.smallbusinessadvice.tv

H: Sean Walsh, host
M: Michael Dell
A: Andrew Stone, Small Business Features Editor, Sunday Times
S: Sara Beirne, business news
I: Interviewer, Murray Norton

H: Well hello and welcome to the Small Business Advice TV brought to you by the British Chambers of Commerce and Dell in collaboration with Intel. I'm Sean Walsh. Now on this, our second show, we bring you an interview with Michael Dell, the founder and CEO of the global IT company. He'll be sharing his insights and experiences with us a little bit later on. I'm also delighted to be joined in the studio live now by Andrew Stone, the Sunday Times Small Business Editor. Andrew, thanks very much indeed for joining us here today. Now of course this is a live show so if you have any questions for myself or for Andrew, please type it into the box on your screen, click "send" and we'll do our very best to answer the questions in the time that we've got here today. But before we talk to Michael Dell, here's Sara Beirne with a round-up of today's business news headlines.

S: Here are the latest headlines. The BCC welcomed today's dramatic interest rate cut by the Bank of England. Proposals in yesterday's Queen's speech are going to cost businesses time and money. And the UK's failing transport system costs businesses over £17,000 a year. First interest rates: David cairn, the BCC's Chief Economist has welcomed the Bank of England's decision to cut interest rates by a full percentage point, to two percent today. He's also calling for additional cuts early in 2009 to bring the base rate down to around 1%. Yesterday's Queen's speech offers little medicine for the economy, says David Frost, the BCC's director general. He believes the government's proposal to bring in new employment legislation and increased business rates will cost firms time and money. And finally, according to the BCC's 2008 business transport report released today, our failing road and rail infrastructure is costing each business over £17,000 on average a year. The report calls for public transport projects to be brought forward for a new north / south hi-speed rail line, and for an urgent decision on Heathrow's 3rd runway. That's all for now, back to you Sean.

H: Well I have in my hand, I've just had – been handed the British Chambers of Commerce reaction to that interest rate cut, and they say they're obviously pleased with the one percent rate cut, but they're looking for a further half percent in January. Now Andrew, you just heard that breaking news there, a one percent cut to two percent. Do you think that's going to be enough to help kick-start the economy and help small businesses now?

A: I think it's welcome. We can argue whether another half point is a good thing or not. I think the bigger issue is bank lending and you know, whether that comes back to – you know small businesses in particular are, you know, many of the businesses we speak to week in, week out are having problems, you know with overdrafts being pulled or rates going up, and I think the price of bank lending and the amount of bank lending will count for far more you know than cuts to base rate.

H: Indeed, because cash flow at the moment for small businesses is really crucial, isn't it?

A: Yes absolutely. We – I did an interview with Alan Leighton the other week, who, you know he was saying find cash in your business because cash flow is the big issue, and I think the severity of the downturn for some businesses, you know, has really caught them by surprise, and you know cash has become the all, you know the all-encompassing issue.

H: Indeed. Having said that you know we have heard that there is some banking support coming along now, I mean I know HBOS have announced £250 million to help with the, lending. Lloyds TSB have made some announcements as well –

A: Yes

H: About secured lending. I mean is that enough to encourage confidence do you think?

A: I think it's a start, you know, it's a good start. The pledges they've made are, you know are good, and let's hope they hold to them. Whether it's enough, we'll see. I think the new year we'll start seeing how quickly lending comes back, how much the government schemes, you know, how they're being administered and how they'll come into play. I think that'll be important.

H: And of course this week we've had the Queen's speech. Been described as a little bit of an anti-climax in a way. I know the British Chambers of Commerce have said it's little medicine for the economy and it's not really going far enough at the moment. What do you think?

A: Yes I'd agree. I mean there wasn't much in there for small firms, you know and what was in there which wasn't really pronounced on is the, you know the council's ability to add to business rates. I think they've got 2% discretion.

H: Yes this business rate supplement issue.

A: Yes

H: I mean if I could just pause you there for a moment because we've just had a question in from Simon Mitchell. Simon Mitchell writes, "the idea of business rates supplements just puts more pressure on me. Everything I earn goes straight into the Chancellor's pocket. What I really need is relief and support." So an interesting there – an observation there

A: Yes

H: What could we be saying to Simon Mitchell, I mean is he right that actually it is more pressure on him?

A: I think it is more pressure and I think you know, we saw in the PBR last week the cut in VAT, I don't think that was the right incentive for small firms, I don't think they are very impressed with it and they're seeing a 2% increase on the, you know, on the rates. So I don't think they've been given the right incentives in that respect, and you know I do think it's an example of tinkering around the margins and I think, you know we need a much clearer sense of direction from the government to get confidence back.

H: Indeed. I mean the VAT rate cut is kind of giving with one hand and now the business – this business rate supplement is kind of taking away with the other in some respects.

A: Yes I quite agree. I mean perhaps even more so because I'm not sure how much – you know, the businesses we've spoken to, I don't think they think they're going to see much benefit from a 2 ½% cut in VAT, you know a 2% tax hike is a 2% tax hike, so I think it's going to cost them.

H: Now another, just pause there because another question that's just come in from David James. David thank you very much indeed for your question. And David asks, "what are the chances of banks passing on the rate cuts to small businesses?" Interesting. Now if I'm looking for some funding, we've just heard this great announcement that the Bank of England is cutting rates. But what's it going to mean to me as a small businessman?

A: Well the banks have been pledging in greater numbers now, the big lenders, to match those cuts. I think there's still an issue around how much it costs to borrow from other banks, and you know how relevant is the base rate? We'll find out again – we will start finding these things out in the new year.

H: With – the British Chambers of Commerce is saying look we need another half percent in January. It was very interesting, I heard, from John Hawksworth, one of the leading economists at PWC and he was calling today for a 1 1/2 % cut to take place today. He felt that 1% just wouldn't be enough.

A: Yes well we've had, you know we've had big cuts already so I'm not sure half a percent's going to, you know, it's not really the big issue as far as I'm concerned. I think how the banks trust each other is more important and how quickly, you know, those levels of lending and the perceived levels of risk, you know how they come down I think is going to be far more important.

H: Indeed, and that impacts immediately on your cash flow position and your bottom line.

A: Absolutely, yes. If your overdraft's cheaper, if your term lending's cheaper, that's what really makes a difference. Absolutely.

H: Right let's pause things there Andrew for a moment, because we're going over to Michael Dell now. Now Michael as we all know is the founder and CEO of Dell Computers, the IT company which he started with an inspired idea and just a thousand dollars in his pocket. Well we sent our correspondent, Murray Norton, out to Dell's Texas headquarters to catch-up with Michael and to hear his experiences of starting and growing a small business. Here's what he had to say,

I: Michael Dell, welcome, thank you very much indeed for joining us on Smallbusinessadvice.tv and firstly, I mean you run a $60 billion global company with 80,000 employees. Now what have been some of the biggest challenges that you've faced during this time, and how have you overcome them?

M: Certainly many challenges, you know as a young company we grew quite fast, and that presented, you know enormous challenges and opportunities – quite thrilling as well. You know I think one of the challenges, certainly a big one that comes to mind, is how do you develop talent? You know you mentioned 80,000 team members at Dell – you know, finding the right people and energising them, and organising them around a strategy that really makes a lot of sense, and can deliver value to customers, you know that's always a challenge for any fast-growing business.

I: You started the company in 1984. Did you ever visualise that it would grow to what it's become today?

M: Not really, you know didn't really know how big the industry would become, just saw an enormous opportunity and felt that, felt that the power of personal computers, you know combined with, you know human capacity would present enormous opportunities.

I: What advice would you give for somebody who's starting a small business today?

M: One of the things that I see in new businesses is they're often looking for perfection, and I think this is a really big mistake. I think you've got to be looking for experiments, and you know, quick experiments. And it's ok to have little failures, and what you want to do is learn as much as you can very quickly, and try things. And you know certainly when we were a small business, you know we'd go out and try all sorts of things to find what would work, and then you know we found something that would work, well you know we'd do that 100 more times, or 1000 more times. We still do it today as a large company.

I: For small businesses, starting out – what advice would you give to them?

M: One of the things that people do instinctually when there are tough times, is they kind of do nothing. And you know they don't, they don't – they kind of hunker down –

H: Is this a frozen rabbit in the headlights –

M: Yes – you know it's kind of just complete stunned into inaction, and I think that's actually the worst thing to do. I think times when everyone is confused and kind of stunned, present, you know, the most enormous opportunity, because nobody's really doing anything, so – you know I think this is a time where the seeds of really successful new businesses will be created. In fact if you look in our industry, which I'm most familiar with, you know the greatest companies kind of came out of, and were formed, in some of the most difficult times in the industry, when no one was really looking, and everyone thought the whole thing was going to go south, and all of a sudden a whole new breed of companies, you know emerged.

I: I suspect because of some of that as well, investment in the right things at the right time. You were saying, it's a tough economic time at the moment, but doing nothing is not an option, doing something is, investing in IT, making things run smoother?

M: You know the right investments in IT, you know around things that provide tangible savings, and can really drive productivity, and let's face it, I mean you know IT tools are the things that you know make you more productive, and you want that all the time, but you especially want it in a challenging, you know, economic environment. And you know particularly when you're in a business where there are tremendous advancements that are levered by the improvements and technology, you know where the kind of things that we provide improve by 50% or more per year. You know sitting back and doing nothing, you quickly end up with a very uncompetitive capability, and so that's why you know it's really important to pick where you're going to invest, but to invest in those things that are really going to drive productivity.

I: So what is Dell doing to help small businesses, especially for those that want to invest in technology but at the same time are worried about cash flow?

M: Well we're doing a great deal with leasing and financing, providing, you know, options for customers you know to help out with certainly the cash flow restraints that are there. Really focusing on providing value to customers and helping you know small businesses simplify how they can access the value that IT brings, you know especially in these challenging times.

I: SP360 for example.

M: Yes we've got this great you know website, SP360 which provides helpful information, stories, resources, white papers, and sort of a peer to peer discussion about hey what are other small businesses doing to leverage technology, to leverage social media and you know innovative new tools that really can help small businesses make the most of technology.

I: Mobility is one of them. Small businesses want this – they're not going to be sitting in an office all day long, they need the lap top that's going to work for them.

M: Yes I mean you know, the office, you know 10 or 20 years ago, was you know you had your phone, you had your desk and you were kind of chained to the thing and you couldn't leave. That's not how people work anymore, you know they're on the go, they want their information with them, they want to be connected all the time, and you know the advances in mobility with very small, very light you know notebook computers with integrated 3G radios, allow the office to be wherever you are

I: And the battery's not going to run flat.

M: Yes we've got, you know, take battery life up to kind of full day, you know battery life, so you can work all the time. You know have access to that data all the time.

I: With the amount of data storage that we need, particularly as a small or medium sized business, and that's growing all the time, we need to store more, we need to store more all the time – how can we effectively manage that storage?

M: You know dealing with this enormous increase in data is a huge challenge and you know we built storage systems, data storage systems, to help companies deal with that in a safe and secure way, so that you know all the data's protected in a redundant fashion, but also in a very affordable fashion. And certainly, you know many companies have, you know, regulatory requirements to store data, but you know the data is the most valuable part of a company, and you know, you know these are really the, you know the most important assets, you know besides the people inside a business, and protecting that, being able to access it easily and store it in a secure manner, so you're not having to worry, hey what happens if I lose all my data. That's super important.

H: Well there's more to come from Michael Dell shortly, but we're now going to pause there for a few minutes because Andrew I'd like to get you involved in this – to pick up on some of the quite interesting points that Michael Dell has come out with, because we've got to remember that this guy is an industry giant, but yet he did start off with, what, $1000 – that's almost £1000 these days with the way things are going, in his back pocket. I mean he makes some interesting points there. What I picked up on was that he was saying now is not the time to just do nothing, that would be absolutely the wrong thing to do. Don't just hunker down.

A: Yes.

H: But have a look at some of the enormous opportunities that are out there. Do you think he's right?

A: I think he is right, I think he's right up to a point. I don't think it's the time to be making silly, you know, investments, but I think small firms are probably pretty good at managing those sort of risks. Clearly if your business has seen a big drop-off in business, now is the time to seek, to start talking to your accountant, you know. I was talking to an accountancy firm last week and they were saying you know, the problem that they see is companies just come to them a couple of months too late, and you know they just didn't own up to it to themselves quite early enough, for whatever reason, so I think that's – for companies that are struggling, you know, seek help early. For the many companies that aren't struggling and are doing, probably just fine, or you know aren't being hit too badly, you know now's the time to start planning for the upturn. You know how can you make hay when the sun starts shining again, so you know absolutely I take his point and you know, start planning now.

H: Now it's interesting you start talking about make hay when the sun shines which it eventually will shine on the economy, because a lot of people are saying things are looking pretty gloomy now. But in some respects planning is quite important to be able to take advantage when that upturn –

A: Yes.

H: Whenever indeed it does come. Because again Michael Dell says it's ok to have little failures as long as you learn quickly. That's interesting.

A: Yes absolutely and I – you know I would also say there are opportunities out there now, I was at an awards ceremony last night, Bank of Scotland Entrepreneur Challenge – all the businesses there are going to do, not just do fine, they'll grow and they'll grow rapidly, and they're all in good niches but they're concentrating on the opportunities now, there are opportunities. You know unfortunately it's for businesses with cash, you know and the fleet afoot so there are – you know, it is a time to experiment in a careful way, you know, if you've got the funds to do it, do it.

H: I mean what would you say was the hallmark of success for some of those award winners at that ceremony? What could we learn from them to be saying, "well actually my business, I could run it a bit better if I followed some of these plans." A bit like some of the things that Michael Dell was talking about?

A: I think they're – you know what was common to all of the finalists last night was the focus they have on their business, the focus they have on their niche, you know they all know their customers, they know their markets very, very well and that perhaps sounds like a bit of a glib thing to say, but it does, it came through very, very strongly. It's really important to kind of know your customers and you know, really – they were all in good niches as well.

H: Sure I know. It's a question of listening to the marketplace.

A: Yes.

H: Rather than just you thinking, right I know what's going to be good; put my goods, put my services out there. Actually you responding carefully to that market research data in a way.

A: Yes and dipping your toe in, you know like Michael says, dip your toe in and you know take a little bit of a hit on something, if it doesn't work, that's fine, don't commit yourself but be proactive about it.

H: I suppose it's also a question of being courageous in these times, because where you see the cash flow being hit, maybe your order books are struggling, you kind of, the temptation is to reign back, but the – all the indicators are that it's a time to perhaps invest now, invest in marketing, advertising, computer hardware to make your life easier. Now's the time to be bold and courageous.

A: Yes, again I'd say it's probably not a time to invest very heavily, but invest in things you get a return on, investment very quickly from, you know, IT's a classic area. Training's a lot of help from government schemes, why would you not take advantage of things like that? A lot of that's free, so you know – and those things I think are key, and there's no question that he should be doing those things. You know, otherwise I think having cash, that's – for the brave people, probably the people that have cash I would think.

H: Indeed, yes. Interesting. Well let's pause things there for a moment Andrew, let's get back out to the United States and Michael Dell in Texas, in the second part of his exclusive interview for Smallbusinessadvice.tv, he discusses green IT and how you can make social networking work for your business. And he gives us his top tips for small business success. Back to now our reporter, Murray Norton.

I: Let's talk about green IT, because it's something that's a badge of honour that just about every company has to be involved in. Should they be involved in it and how can they take advantage of green IT?

M: You know I think one of the risks in, in this economic, economically challenged time is that we kind of put aside some of the social things that, you know we like to think about, as you know, collective population around the world. One of the great things about green IT is that you know of course here in America the money's green, so we, so we, you know we like to say green is green, so what we've done in green IT is not only to reduce the carbon emissions and reduce the, you know, energy requirement, but also to save money, so you know our products have been designed to be the greenest and cleanest products in the industry, but also the result of that is you know, you can reduce the energy consumption by roughly half for many of our products, so pretty big reduction. In some cases, you know an 80% reduction from the kind of machine you might have had 3 or 4 years ago.

I: So by its very nature, being green is actually saving money as well?

M: Yes being green is also about smartly using, you know the earth's resources, which means you're conserving and saving money, you know and that's good all the time.

I: What do you think about small businesses utilising social networking, blogs, Facebook, that kind of thing? Because it does seem that it should be there to drive better competitiveness.

M: I think that the conversations that are happening online with the billions of people that are now connected all over the world, offer an enormous opportunity for businesses of all sizes, and small businesses have been a little slow to take advantage of this. We created a, a – you know – a small business tool kit, social media toolkit on Facebook, so that small businesses could really come into this age and take advantage of the resources, you know, when you think about advertising or how do you market or promote, you know social media is by far and away one of the most cost effective ways to reach your audience, and has very kind of long-lasting and sticky implications and you know customers by their nature, love to be involved in, you know, whatever it is they're doing in a deeper way, so engaging customers in those conversations is a super-effective way for any business to further itself .

I: And it's probably cheaper too.

M: Yes so the return on investment of those dollars versus, you know kind of traditional forms of marketing and advertising. It's going to be quite a bit higher. We've seen that at Dell, you know hundreds, thousands of companies have seen that. Small businesses have been a bit slow to do this, I think it's a big opportunity.

I: Yes. Wiggly Wigglers. That's a company that won an award in the UK, a national award actually, in fact it's a global award that Dell was very much a part of. And they're a perfect example aren't they?

M: Yes they – I think they connected with, you know 90,000 customers, they were able to reduce their marketing expense pretty dramatically. And you kind of see the success that they've had, in igniting this community of customers they have. You know they're using social media, that's a great example.

I: We started out talking from 1984 onwards and where it all started for you from there, and for this company. What does the future hold for Dell?

M: You know I look at our industry and we're kind of at the centre of, you know making the world more productive, and how do you, engage technology in the right way to enable education and to enable medicine, to enable small businesses, large businesses, government – all aspects of society. So, well a lot has been accomplished. You know we have roughly a billion and a half people in the world today connected on the internet, you know you've still got about five and a half billion left to go. So we're still at the pretty early stages of you know how we think about our mission as a company, and certainly the opportunities that go along with that as we go into, you know all countries of the world

I: I guess there's still a lot of people coming online almost every day.

M: Yes probably about 500,000 new people come onto the internet for the first time in their lives, and when you think about the level of incomes rising, in the emerging countries, and also the cost of computers continuing to fall, it opens up vast opportunities, not just for companies like Dell, but for small businesses that want to sell their products, their goods, their services all over the world, and it's so much easier now to connect yourself with, you know customers and suppliers all over the world, way way easier than it used to be.

I: Finally what are the three most important factors, in your opinion, for successful small business?

M: I think you've got to, you've got to kind of know what you're good at and have a clear focus and a clear articulation of what it is that you offer that's valuable, why it's valuable. I think you've got to be able to take advantage of resources around you, whether it's technology or social media or your supplier, or your partners. You know and you know, then you've got to kind of, you've got to figure out an executional model, so in terms of how do you organise that, how do you mobilise, you know a team of people. How do you not try to do it all yourself, and you know how do you engage the rest of the team so that, you know as a leader or a creator of a small business you can multiply your own capacity through you know an increasingly larger team.

I: Michael Dell, thank you very much for your time.

M: Sure, thank you.

H: Well some great advice there from Michael Dell. Andrew I just want to raise a couple of those points with you – before I do that, I've just had a question in from Simon Mallon, Simon thanks very much indeed for getting involved in the show – "will companies perceived as being green or in fact being green or carrying out green policies, will they be more attracted to government and be in line for better business supplements?" I suppose there we're talking about grants; is there a bottom line advantage for going green?

A: I think there is and I think increasingly so. I think procurement is going to go, you know, the contracts are going to go to companies that tick those boxes, and you know more than tick the boxes but have the right procedures in place and the right credentials on, you know environmental policies and you know energy efficiency and so forth, and you know it's not just government, it's big companies as well.

H: Sure but how – I can just hear lots of people now watching this show saying yes green is great, but it's a nice to have in some respects – I'm more focused now on just keeping my business going. So is it – is it that mainstream, that crucial to businesses now, going forward?

A: Yes I take the point. I think a lot of the time the two are – amount to the same thing. You can save money and you can have a more efficient, you know, business as a result. You know mobile working gives you all sorts of opportunities to be more efficient, you know we heard Michael talking about technology it could be cheaper and of course it could be greener, so in some cases I don't think there's a choice to be made.

H: Yes

A: So energy efficiency is, you know it's the easiest thing we can all do I think to be green and you know we'll save money along the way.

H: So basically there's a business case for it as well?

A: Yes it's pretty much a no-brainer in many cases.

H: Sure. I mean interesting, I've just picked up on some of those points that Michael Dell pinpointed – clear, focus. I mean how many small businesses do you think that are questioning where they're going now, don't have a clear focus about their role and who they are and where they're going and what part of the market they're targeting?

A: Yes I, you know again I come back to my point about the winners last night, the finalists last night, you know they all had a really good idea of what their markets were, they were in a good place and a good niche and you know focus, you know, it's never – you can always re-visit your business plan and your kind of raison d'être, and just really focus on what it is you do and how you can add value.

H: Yes indeed. I mean often people sort of laugh about the idea of a mission statement, but if you could actually explain what you do succinctly then you've got a clear pathway forward.

A: Absolutely and if you can't perhaps that means you need to look at the business again and exactly what you do.

H: And I also picked up on what Michael – he was talking about take advantage of the resources. Clearly he was referring to IT resources there, but there is a lot of technology out there that can make life easier and make you more productive.

A: Absolutely I mean the point I made a moment ago about you know mobile working, mobile broadband, the ability to hot desk – all those things I think are – they've been around a while now but perhaps businesses, smaller firms are – some of them might be slower to adopt than others, and there are obvious areas there to, you know to save money and be more efficient.

H: And his final point, execute well – it's kind of a no-brainer, yes you've got to execute well, but he talked about not just doing it yourself, but getting smart people around you.

A: Yes.

H: You can delegate and you can empower to help drive your business forward.

A: Yes absolutely I mean good teams, they're the hallmark of a successful business, you know and if you're the owner / manager, one of the key skills is your ability to put the right team together and get people who are cleverer than you probably at certain things, and not – and be humble about that and you know recognise that and celebrate it.

H: Indeed so it's a question of invest in technology perhaps, but also invest in people.

A: Absolutely, find the right people and invest in them. Indeed.

H: Sounds easy.

A: Yes.

H: But it's a big challenge though isn't it?

A: It's easier said than done.

H: Well that's all we've got time for at the moment so thanks very much indeed Andrew and we're – just about out of time on this edition of the smallbusinessadvice.tv, and I hope you've enjoyed it and if you'd like help on issues faced by your business, do visit the website, that's smallbusinessadvice.tv. The main theme of our next show is how you can harness the power of social media sites to work for your business, very much as Michael Dell was referring to earlier. That live show is at 1 o'clock again, in a fortnight's time, that's Thursday the 18th December I'll give you that again, Thursday 18th December live at 1 o'clock. 13.00 hours. Do try and join us then and thanks very much indeed for taking the time to watch this program today. Goodbye.