The government is turning its attention to support for small businesses. That’s a loose term: 65% of businesses in the UK employ less than 5 people. As one of those businesses, and having started a couple of others in recent years, I have a few tips for how they can encourage entrepreneurship and innovation:
1. Move in to the 21st Century
I am involved in three knowledge businesses and a Web 2.0 startup. Trying to explain or categorise these businesses for the different business infrastructure organisations I have encountered is far too difficult. Banks, accountants, tax inspectors, Companies House all struggle to understand even what are now fairly common businesses like marketing consultancy. They are still set up to deal with butchers, bakers and candlestick makers. There should be an enforced programme of education and standardisation between these companies so that they understand 21st century business — or we will never be the knowledge economy the government so desires.
2. Simplify the rules
Starting a small business is like doing an egg and spoon race over an obstacle course. It is tough enough to get over the line without dropping anything, racing against your competitors, without having to scale the barriers and crawl through the muddy tunnels of bureaucracy. Tax, for example. I’m not saying that it should be lower, just easier to calculate. A thousand pounds plus per year for an accountant to sort out your books is a fair old drain on a small business.
3. Improve support and access to funding
BusinessLink has changed its face again, so I’ll reserve judgement on its latest incarnation, but certainly the mishmash of regional quangos that has existed to date has been absolutely shambolic. It’s as if they were created to give a few random people jobs (and public money) rather than actually help anyone in business. I’d like to see three things: a unified funding directory; a Citizen’s Advice Bureau-style drop in centre with surgeries run by accountants/solicitors/business experts to provide critical advice and a range of support tools (printing/web/internet/business planning software/design templates/fax etc); incentives to banks to support small businesses financially — e.g. underwriting small overdrafts (surprisingly hard to secure).
None of these ideas should need massive funding — in fact they could probably be funded by redirecting existing budgets more effectively. Simplifying tax rules should certainly save money; a standard set of business definitions and education packages could be simply rolled out online. The resulting tax increases from greater innovation and entrepreneurship should certainly provide some upside.