While watching Bloomberg the other day, not all that common for me, the figures for UK GDP came through and it shrank last quarter. The UK seems to be going backwards and it’s worth thinking why and what could usefully happen next.
To start your own business at any time, you have to be a bit crazy; to start one now, you might be considered really very crazy. Yet without this insane element, there would be very few of the kinds of new jobs we all need to deliver overall growth and reduce unemployment in the Western world generally, although many emerging markets are surging ahead without worrying too much.
Now’s the time when employers could be hiring the right people to drive growth and innovation. As an aside, my company we created around twenty new positions during the recession in the UK. And maybe a hundred worldwide. BUT they were not the SAME jobs as before the recession, and we created the financial space for those jobs by our many changes and savings during the recession.
Ok, this year I want the financial reward because those jobs were in fact about getting ready for growth, really. But frankly, for a mid-sized company like us, hiring new people is less risky than for a small business and the entrepreneurs there, that worked hard to build up their company to the point where they need to recruit.
It must be a bitter blow for any small business person to have to recruit more people. It costs money, and that’s nearly always in short supply in a new or small business, and truth is, most businesses are small and small business fail all the time, so the risks of recruitment are significant.
And, if one or more of the people you hire in, say, a 5 or 10 person business is not up to the job, that can threaten that entire business whether you keep them or let them go. Get the process wrong in western Europe, and there are significant financial penalties, which has to be a further disincentive to job creation.
Overwhelmingly, most jobs are created by very small businesses, so all this matters. For someone trying to get a small business going, as I have in my time, a lot has to go right to make it all worth doing in the first place.
And if things don’t go to plan, maybe the business fails, everyone loses: the government loses out on tax revenues and the small business person loses their business and maybe all their money and cannot try again. I would argue that something else is lost: the precious commodity of a risk-taking entrepreneur that goes back to working for someone else rather than working for him or herself.
That’s bad for companies like mine, too. We need small businesses to flourish. They are our potential partners, customers, suppliers and a source of employees in the future, and they ensure a viable overall economy. Many of our channel partners round the world are small businesses and the personal and family life of the founders are pretty bound up into the risks of the business.
So my small request to everyone: please, be nice to people who start small businesses. They are doing it for themselves sure, but ultimately for ALL of us. And can we all look more kindly on the needs of these small businesses? I know, as an example, that the UK government is investing £200m in setting up new centres for innovation and technology, but that’s not going to solve the problem on its own and is somewhat minimalist so far in terms of the overall opportunity (but still good!).
I wish more people would ask: what kind of environment exists out there for small businesses at the moment? And, are we creating the kind of economy where entrepreneurs can thrive or are we stifling it with a high burden of red tape and taxation?
We urgently need to figure out a way of reducing the risk for business start-ups and improving the incentives to start a small business in the first place. This is the way out of unemployment in many countries. Small business owners work very hard and often have less than the Minimum Wage to live on themselves. After all, less burden and complexity for small business means considerable rewards for us all.