The right support would allow start-ups to break free of London, helping to address economic imbalance
The government likes enterprise. Her Majesty’s opposition likes enterprise. In fact, you’d be hard pushed to find a political party who doesn’t like enterprise. Even the Greens – self-professed arch enemy of the free market – have made positive noises about entrepreneurship over the last few months.
The government isn’t shy in letting us know how it has supported those looking to go solo over the last five years. But are they providing these fledgling businesses with what they really need to have a fighting chance of survival?
If you check out the Start your own Business section of the Gov.uk website, almost all of the advice relates to access to finance. You’ll find four options – grants, finance and loans, funding for start-ups and mentoring. To me that looks like three options that sound very much the same, and a vague nod to expert advice as a bit of an afterthought.
It’s clear then that government help for those looking to set up a business is firmly focused on handing out money – primarily in the form of loans. This is understandable. After all if you’re David Cameron, trotting out a whacking great number in pounds is an easy way to answer the question of what your government is doing to support small business every time it comes up in PMQ’s.
Unfortunately for the prime minister however, the truth is that securing a loan at the point of startup isn’t top of the list of priorities for many budding entrepreneurs these days. Twenty years ago, if you wanted to set up a business, you’d probably need a hefty wedge of capital behind you to do so. For more traditional industries such as manufacturing or the high-street style of retail, access to funding is still important.
But for some of our current high growth sectors such as digital tech or online retailing, a fledgling business can often be started with little more than a laptop, an internet connection and a few months’ rent to provide a basic level of financial security.
That isn’t to say these enterprising individuals don’t need help and support from government, it’s just that what they need is a little more intangible than a loan with a competitive rate of interest.
Top of the list for many is access to a workspace, preferably shared with other similar professionals, with meeting rooms to entertain clients. These spaces provide a professional face for a small business and access to the myriad opportunities that come from collaborative working with like-minded people.
A quick win for government would be to work with local councils to open up the unused space it owns for this very purpose. In the same vein, relaxing regulations around retail space so empty shops can be turned into co-working spaces would not only help microbusinesses – it would breathe new life into our half-dead high streets.
Crucial to these businesses is a high-performance, affordable digital infrastructure. Digital businesses can by their very nature based anywhere, as long as connectivity allows. Reducing the amount of not-spots across the country will allow startups to break free of London’s gravitational pull, correcting the current geographical imbalance in our economy as they spread out across the country.
Ask any small business owner and they’ll tell you the number one thing that keeps them awake at night is how much work they have coming in. The government currently sets a pretty terrible example when it comes to working with smaller suppliers. A track record of late payment, limited access to contracts and prohibitive tendering processes all adds up to a raw deal for SME’s when it comes to working with the public sector. government departments should be leading by example when it comes to engaging with small businesses, but instead it lags way behind.
In short, if the government wants to help the next generation of entrepreneurs it needs to think more inventively about what they need. Instead of weighing them down with debt, give them somewhere to set up shop that doesn’t cost the earth, a 21st century internet connection and a fair crack of the whip when it comes to bringing in work and they’ll do the rest themselves. They’re a self-sufficient bunch you see.
Louis Clark writes on business and politics at medium.com/@louisclarkPR and is a member of the Chingford & Woodford Green Labour Party.
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8 Responses to “The government must think more creatively about how to support small businesses”
failquail
How about cracking down on tax avoidance/evasion by medium-large businesses so as to level the playing field?
Leon Wolfeson
Good joke.
(The funding for that has been slashed, repeatedly, and quite a few ways of avoiding tax legalised)
Leon Wolfeson
“Top of the list for many is access to a workspace”
Er, no. You can work from virtually anywhere these days with a laptop. And there are plenty of cafe’s you can use for meetings. They have wi-fi, even.
Getting the funding to let you live while you make your business work? Near-impossible.
Another reason to support a Basic Income, which would *eliminate* that barrier.
JoeDM
Cut taxes on micro-businesses. That would be the best and least burearcratic way. You could start with removing employers NI.
Leon Wolfeson
Ah yes, slash the tax take. Then watch as further savage cuts mean that small business now has even less people who can afford to buy their products.
*claps*
We’re into deflation, how much less spending will you demand? Small business can’t afford to not be taking any cash for a while like big business will, deflation is very harsh on SME’s!
But you don’t care, and removing employers NI benefits primarily the big companies you have shares in, giving them an even greater advantage over small business.