Koen Driessen describes the establishment of their company named SCRiBBR. Could you briefly describe what the company entails? Students are able to contact SCRiBBR to have their thesis checked based on language. We take care of marketing, customer contact and administration. So when a student contacts us, we make sure his or her thesis goes to one of our affiliated editors. Our system is fully automated. The system finds suitable editors for every assignment we receive. We are the only company that guarantees every assignment to be checked within 24 hours, because we have a big database of editors at our disposal. When did you start having the idea to own a business? Ever since the internet started to grow, I made money. Enterprise and the internet are in my blood, so when I found out this market was only consisting of sole proprietors when I wanted an editor for my own thesis, my co-founder Bas and me started to build a system. “We’re going to turn this whole market around”. Based on our knowledge of the market we decided to do it. How did the company develop? SCRiBBR is founded based on the Lean Startup. At first we build a simple website where students could sent their thesis by e-mail (Minimal Viable Product), we used their comments on the website to expand and automate upload- and back end- processes. Around January, six months after the founding of our company, we were ranked number one at google and new assignments started to come at a daily basis. We have been expanding our editor database and automate our back end- processes ever since, because it is essential to maintain high growth. Is having your own company and a study a good combination? I definitely recommend having your own company while you’re a student, because there is no better time in life to try it: there’s time and you have low living expenses. But there is a down side, when your company becomes successful, you’ll have to make a choice. Unfortunately, a rapidly expanding company and studying is not a good combination. How do you see the future of your company? SCRiBBR is a solid brand and also market leader in the Netherlands, so we expect to grow even more. We also want to expand beyond our borders and conquer other markets. Finally, what advice would you give students who are planning to start a business of their own? Don’t try to much, don’t start a new coupon site, social network or a mobile app, solve a problem you came a cross. Try to release your product or service in a market you know already. Once you have optimized your processes and your service, your first Initial Public Offering is near! Good luck! General information Founders: Koen Driessen, Bas Swaen, Richard van Laak Study: Information Management (Koen and Richard), Finance and Tax Economics (Bas) Company: SCRiBBR Location: Tilburg Employees: 3 Co-founder, 30+ freelance editors Activities: Platform for drafting texts Website: www.scribbr.com For the English version of the website look at https://www.scribbr.com/proofreading-editing/thesis/ This interview took place in the summer of 2013
Remuneration policy with the right incentives
Berry Wammes, CEO of the Netherlands Institute of Chartered Accountants, is responsible for regulation, policy and international affairs. Before he joined the Netherlands Institute of Chartered Accountant, he was head of Public Relations at PTT Post and later worked at KPMG. dr. Wammes describes in this article the change in the remuneration policy within the accounting profession. In September the Future Accountancy Profession working group presented its plan for the improvement of audit practices. This plan, entitled ‘In the Public Interest’, consists of a number of measures aimed at the creation of a culture in which quality once more plays a central role. The route of the problem is that in recent decades a culture has arisen, with profit and income maximization as its fundamental principles. That culture has been a significant factor in a series of incidents; breaking through to not let this happen again this will require measures which, amongst other things, address remuneration policy. Remuneration must depend primarily on the quality of the work, not on commercial success. The implementation of high quality audits is nevertheless the accountant’s key task. Therefore this must determine the way the earnings model within accountancy organisations is organized. In turn this will also affect the incomes of accountants. The assumption is that the remuneration system is based on reward as well as punishment. If the emphasis is placed on punishment, there is a risk of creating a culture of fear, and that is not a culture in which professional quality and a high quality audit can thrive. This means that accountancy organisations must develop an internal remuneration system, in which the rewarding of quality is dominant. Furthermore, that remuneration structure must apply to all levels within the organisation. However the remuneration model for accountancy organisations with a so-called PI license (Public Interest Organisations) will not be determined by the partners. This is established by a soon to be introduced Supervisory Board. This Supervisory Board appoints the management and remunerates on the basis of quality performance. Therefore, how the remuneration is composed is relevant. The appreciation and remuneration of an individual accountant must be strongly influenced by the quality of his work and the organisation’s long term objectives. This ensures that the incentive underlying the structure of remuneration is in line with the organisation’s objectives. The assessment of the guidance and coaching of members of the audit team and the results of file reviews will also be important criteria in this respect. Management Managers of accountancy organisations receive remuneration independent of profit and which will be established by the Supervisory Board. This remuneration consists of a fixed amount, plus a variable sum, which can add up to a maximum of 20% of annual salary. This variable element is dependent on the long term objectives set by the Supervisory Board, of which the quality of the audit is a significant element. Partners For partners too, the quality of their work defines their paycheck. Performance in terms of commercial objectives plays no role if a partner is assessed negatively on audit quality. Alongside quality, focus on the long term is a significant criterion in remuneration policy. By not paying out remuneration in full immediately, but linking it to a claw-back scheme, the focus is on the long term and quality is further enhanced. Specifically; a component of a partners’ paycheck is deferred for six years. If during that six year period it becomes evident that the partner concerned has taken his eye off the ball, resulting in social damage, the amount covered by this scheme will not be paid out. These withheld amounts will not be distributed amongst the remaining partners, but will be invested in specific measures aimed at improving quality, in consultation with the Supervisory Board. Career Remuneration extends further than just salaries or profit distribution amongst managers and partners in any particular year. Criteria for promotion and career opportunities are also important elements in the remuneration of people. Fundamental criteria is performance with a focus on quality. Performance which focuses on quality is also central to this. Professional expertise, professional skepticism and quality of work should be the crucial elements within the organisation’s promotion policy. This also applies to the criteria for the appointment of partners. Such professional expertise and experience must be conditions for the appointment of partners. Transparency The remuneration policy and the individual remuneration of the directors of accountancy organisations are published in either the annual report or the transparency report, or they are published on the website of the accountancy organisation. This also applies to criteria regarding profit distribution amongst the audit partners. Obviously, remuneration is also partly dependent on the firm’s profitability and therefore the partners and employees all have an interest in that profitability. This is inherent in the choice to carry out accountancy work within a private commission. However we consider that as a result of the aforementioned measures, implying the remuneration structure will be arranged in such a way that its guiding principle is to provide incentives which are primarily aimed at audit quality. With the firm’s profitability as the starting point, individual remuneration is primarily influenced by the quality delivered. This will have a great effect on conduct. Berry Wammes CEO Nederlandse Beroepsorganisatie van Accountants
Student Entrepreneur DualBrands
Could you briefly describe what the business is and what it is doing? DualBrands is a web design business that focuses on innovative projects. We create apps and websites; we do internet marketing and design brands. When did you come up with the idea of starting your own business? Wouter and I have been programming from an early age. We started working together when we realized our skillset matched up perfectly. Our main goal was to create innovative apps and websites for ourselves. In which way has the company evolved since its inception?Since the inception of DualBrands, we found ourselves working more and more for clients. We were still able to innovate, but we had to apply it within the scope of the assignments we procured. Of course we slowly became more professional in the way we handled the business. We also tried more and more to attract bigger clients. We found we enjoyed working on bigger projects more, as a bigger budget meant more room to innovate. Can an own business be combined well with your studies? Up to a point, a business can be combined better with your studies than a ‘normal’ temp job. At least for the webdesign branch, you have the opportunity to manage your time as you wish. You can work for as long as you want, during whatever time of day that suits you. Some clients responded very positively to us being available outside normal business hours. Of course you will have to meet deadlines that sometimes will not be in line with your exam schedule. In deliberation with your client they will often consider your situation up to a point. Which skills you have acquired during your studies, also come back to your daily business activities? Economics and Informatics is often described as learning to operate at the intersection between business and IT. As a result, we were taught about databases, programming, and other technical courses at a higher level of abstraction than just writing lines of code. It helped us get a better sense of the bigger picture. Furthermore, we were taught to translate business needs to IT needs, as well as skills such as marketing and accounting. All of these came in very handy in the real world. What are the skills you have gained from the establishment of your business until now? Working with real world clients is an experience you cannot really get from any study I am aware of. Communication is very important. Often, clients don not have the necessary knowledge to properly explain themselves. Interpreting their wishes in a precise and complete way is very important. If you start with a misinterpreted set of wishes, you will have to fix them later on, which will of course cost considerably more resources than getting it right the first time around. Of course, misinterpretations do occur. Learning to cope with these and other problems has been a valuable skill we learned along the way. How do you see the future of the company? Being around for a couple of years, we found the challenge of setting up projects of our own successfully, remarkably more satisfying than working for clients. Nowadays, when you have the skills to create websites and apps, a lot of people will come up to you with ideas they have always wanted to realize. While some of those are really good, we have already got a big list of concepts we are very confident in. We would love to have the time to make those happen first. Furthermore, we hope to work more with big clients, because, as mentioned before, it gives us the opportunity to work on more innovative projects. Finally, what would you like to say to students who are also planning to start their own business? Whatever value it is your business creates, it is created entirely by you! Although this is a satisfying feeling, it comes with its price. In every business you will face setbacks. Fortunately, in our experience, each of these setbacks will teach you a lesson, which will make you stronger in the end. I personally really prefer a business to a ‘normal’ job. I love entrepreneurship, being able to apply my creativity to business and slowly enabling your business to grow. Just know that whatever amount of time you estimate on investing in your business won’t be enough. It will be worth it though.
Crowdfunding: a new form of financing
Crowdfunding is a relatively new way of financing that brings entrepreneurs and investors together. It complements existing ways of financing, such as bank loans and informal investors. Along with these financing methods crowdfunding allows many new entrepreneurs to begin their own business. Moreover, existing entrepreneurs may also develop new initiatives. Almost every person can invest in these companies, because the minimum investment amount is often only € 10. Crowdfunding is popular. According to crowdfunding consultants Douw & Koren, 32 million was funded by crowdfunding in the Netherlands alone in 2013, spread over more than 1250 projects offered on dozens of platforms. As a result, there are many different types of crowdfunding all offering a different (financial) agreement between the person with the idea and the lender. On some platforms the lender only receives one product or service to thank you for your financial support (reward-base). On other platforms money is being raised through donations. But there are also crowdfunding platforms where you can be rewarded for your contribution. Many platforms offer this traditional form: the project starter closes a loan with various lenders and provides the lenders shares, who share in the profits and control of the company. A crowdfunding campaign usually consists of three phases: preparation, crowdfunding campaign (where investors are sought) and the stage in which the entrepreneur is going to work with the money. Crowdfunding is very time consuming. However, a crowdfunding campaign yields, besides money, much more for entrepreneurs. Thus crowdfunding can be used very well as a marketing tool and by focusing on crowdfunding you can turn your investors into customers. To increase the success of the business, they will use their network and even ambassadors for your company. Furthermore, these investors are keen to give you feedback. There are crowdfunding platforms that focus on individual projects (such as the realization of a new product). There are also crowdfunding platforms focusing on new and existing entrepreneurs. Because it often takes some time before a company makes a profit (assuming that it is going to make profits) platforms can offer a contract of up to 10 years. The operator can thus start the business immediately without having to pay his investors directly. He has the time to achieve his sales target first. On some platforms the investor receives a product or service and gets financial returns paid by the successful entrepreneur. Every entrepreneur makes a prediction of its sales and three turnover limits for the next (up to 10) years. When a sales limit is reached, the investors get paid an amount that is predetermined by the entrepreneur. Entrepreneur and investors ended up sharing this joint success! Please note: As with all financial products, there are also risks to crowdfunding. Deepen your reason well in advance in the various options and / or get good advice on what forms your initiative fits. Arthur de Graaf is as General Manager responsible for the platform SEEDS and the further development of this branch of ABN AMRO.
‘Just graduated’ Rik van Maanen
Hi everyone! My name is Rik van Maanen and I am 25 years old. Although it feels like yesterday, I graduated approximately one and a half year ago. By doing that, I finished my Master in Accounting at Tilburg University. Bachelor Before I signed my diploma in the early summer of 2013, I tried to get most out of my time as a student. It all started in 2007 when I moved from the picturesque Renkum to the ‘big’ city of Tilburg. During my first years of the bachelor of Business Economics (Bedrijfseconomie) I really enjoyed the possibility of going out on any day of the week and decide the next morning whether or not you go to class. The absence of (real) obligations made student life really extraordinary for me. During this wonderful period I also became an active member of Asset | Accounting & Finance. One of my housemates convinced me that it was time to gain some extracurricular experience. After that is all went really fast. I started organizing Benefit Event Student Tilburg (B.E.S.T.) where we managed to arrange Hardwell to play for charity. Shortly after that I organized the Studytour to Brazil and became chairman of the association’s board in 2011. Of course, Asset | Accounting & Finance gave me a lot more than some extracurricular experience. It enriched my life with experience that I never could attain during classes. Next to that, it gave me friends for life. Master Unavoidably, life got more serious during my time on campus. After intensely enjoying my year as board member I immediately started a Master in Accounting. As a completion of my Master Accounting I wrote my thesis on the subjects of bargaining power and abnormal audit fees. I expected companies which are perceived to have more bargaining power where able to decrease the amount of audit fee they were paying. However, somewhat disappointing, the evidence did not support my hypothesis. Work life During my active membership of Asset | Accounting & Finance I also met my current employer: PwC. As you might know PwC (former: PricewaterhouseCoopers) is one of world’s largest professional services networks. PwC’s services can be divided in three practices: Assurance, Advisory and Tax. It will be no surprise I started working in the Assurance practice. In September 2013 I started with the Associate Academy program. The Associate Academy fully focuses on development of soft skills and improving technical skills. It supports me as an Associate with multiple development days during the year. In addition, I immediately got a personal coach who gives me guidance and is a sounding board when necessary. Before I started working I did not know what to expect, and asked myself multiple times if I had enough knowledge to function properly in an organization as PwC. However, partly supported by the Associate Academy program as well as my personal coach, integration with my fellow colleagues went smoothly. During my normal work days I spent almost all my time visiting my clients. In multiple different engagement teams I focus on auditing accounts and assessing internal control processes and systems of different customers. My client portfolio is divided between various types of organization (big vs. small, national vs. international, etc.) so I have to possibilities to maximize my learning curve. Last but not least, I really enjoy working at PwC, but you should enjoy student life as long as you can!
Food will become the new trend
Mr. Ersintepe shares an interesting, but mostly forgotten investment opportunity with us: the (organic) food industry. He explains why this sector should not be overlooked by the investor community. Will food become the new trend? Food will become the new trend While new technologies like social media and cloud based computing are under enormous attention, there is a sector forgotten by investors, but with a lot of potential: the food industry, especially the organic food industry. The main driving force behind this sector is the growth in global population, combined with increased awareness of food safety issues. Except Jim Rogers, there are few experts interested in the agriculture sector. This could be a good sign for investors who like to benefit from these types of opportunities. The market gurus have been positive on agriculture for years, some predicting that the sector is one of the most exciting opportunities for investors in the next ten years. Record Sales The sales and production-expenses have reached new records. For example, American producers have sold $394.6 billion of products in 2012, with the costs of these goods sold amounting to $328.9 billion according to figures released by theU.S. Department of Agriculture. In the United States of America, the total revenue of organic products from farms has increased with 82% since 2007, to an amount of $3.1 billion. At the moment there are 3.2 million farmers working on 2.1 million farms, on 914.5 million hectares of land. Around 78% of all the American farms are run by families or individuals. 75% of all farms have revenues less than $500,000 per year, and these combined cover only 3% of all products sold in the entire sector. Large farms dominate the market; farms that produce over a million dollars per year have a combined market share of 66%. Wealthy Chinese are getting in Smart investors have discovered this trend. Chinese billionaires, who earned well in technology or real estate, are now focusing on food as a new investment opportunity. They are following the footsteps of the rich and celebrities of the West, like Prince Charles, who founded the first premium organic food brand ‘Duchy Originals’ 24 years ago. Also supermarket chains are competing. The American Whole Foods Market has designed stores especially for people concerned about health and food safety. The opportunity for modern agriculture and the relatively stable price of quality food have attracted entrepreneurs and investors into this sector. Rat and fox meat sold as lamb Chinese billionaires have moved their attention into biological foods due to recent food scandals linked to baby milk, the dumping of 16,000 pigs in the Huangpu-river of Shanghai, and rat and fox meat being sold as lamb. Increased awareness Consumers in the Netherlands have also become more aware of their food following a series of scandals; an example being horse meat sold as beef. Environmental factors are also playing a part. Consumers choose animal and environment friendly produced food more often. Last year consumers in the Netherlands spent €257 million more on animal and environment friendly food compared to 2012: an increase of 10.8%, giving total sales of €2.5 billion. This is reported in the fourth edition of the “Monitor Duurzaam Voedsel 2013”, which was sent to parliament by State Secretary Dijksma of Economic Affairs in June 2014. The report confirmed the increasing demand for animal and environment friendly products. Elsewhere in Europe there is also an increased awareness of safe food. More and more Germans are growing their own fruits and vegetables. In February, the German retail market Toom commissioned the research facility Forsa to survey 1,000 German garden owners. According to this research, 68% of the respondents are paying attention to the bio-quality of their fruits and vegetables. Furthermore, 50% of German garden owners are cultivating their own vegetables, fruits and herbs, and half of these are focusing on the bio-quality of seeds, planting material, ground and fertilizer. Biological products in Germany are rapidly expanding, but German farmers cannot satisfy the demand. For Dutch farmers the German bio-market is providing huge opportunities, if they are able to meet the strict demands from the critical German consumer. In the Netherlands there are approximately 1650 organic farms, which export €900 million worth of biological products. Organic foods in demand The demand for organic and natural food is rising. Organic food is unstained food, no fertilizers whatsoever – pure nature. There is an increase in people who go to stores which provide these products. From the report by the U.S. Department of Agriculture, in 2004 the total revenue of organic food in America was $11 billion, in 2011: $25 billion, and in 2012: $28 billion. Compared to 2004, revenues increased over 150%. According to the business paper The Wall Street Journal, revenues of organic stores have increased by 800% to $48 billion dollars since 1998. Investing opportunities If you want to benefit from this trend, there are a number of companies you could invest in. Earlier I mentioned Whole Foods Market. Another Firm is United Natural Foods Inc. (UNFI), a leading distributor of organic and biological food. UNFI is growing rapidly because of takeovers. Revenues of UNFI have risen from $3.75 billion in 2010 to $6.75 billion in 2014. With a reasonable valuation of 22 times the price/earnings ratio and a double-digit profit and sales forecast, it may be a good time to keep an eye on to UNFI. In addition, health food specialist Hain Celestial (HAIN) is one of the most famous companies in the organic food branch. They have brands like Celestial Seasonings tea. They produce for over forty years, purely natural tea with unique and powerful flavors. Their share price increased by 43% in the last 12 months, and the company itself increased since 2009 by 430%, beating the broad market with flying colors. Finally I want to mention Sprouts Farmers Markets (SFM), active on the market of organic food and health products. Given the strong growth rate in this sector, and the available cash in