I love the world of the entrepreneur. I am one. And I have written about them in my book, Confessions of an entrepreneur, but I do worry that the government and established media are engaged in a frenzy of activity to glamourise and hype the world of the entrepreneur.
Why should I care?
After all the British economy is now performing well, new jobs are being created, men and women are being encouraged to follow their passions, win their freedom from a boring 9-5 existence and create the business of their dreams. This is all good.
I have two problems with this hype
The first is that statistically most entrepreneurs will fail and often with considerable hardship. This is very rarely highlighted in any government or media information
The second is that creating small lifestyle businesses and millions of little start-ups is not going to revolutionise our economy.
My plea is that there is a more balanced debate about entrepreneurialism.
So let’s take these issues one at a time.
Success and failure
The media is turning entrepreneurialism into a commodity. They imply that anyone can become a successful millionaire entrepreneur.
It’s true that anyone can have an idea and become an entrepreneur. It’s easy to start a company, get a bank account, and create a website. But that doesn’t make you a succcessful entrepreneur. If it did then there would be a lot more millionaires. The Internet has made it incredibly easy for anyone with an idea to start a business. Once upon time having a good idea was a major part of becoming a successful entrepreneur. Now anyone can have a good idea, and those ideas are competing globally and are very very rarely unique. The challenge today is not about can one have a good idea, but about how can one scale the idea into a sustainable business. This is an obvious but important distinction that is rarely mentioned in the press. Most entrepreneurs fail because they run out of cash, can’t commercialise their idea, get fed up with the pressure or fall out with their colleagues. The government and media are not providing any longterm support for the specific companies that have good ideas and are creating value but are struggling to move the business into something more sustainable.
Not all entrepreneurs are created equally
It is good that both the government and the media are encouraging people to start businesses and to give support to those who are. After all the UK needs to create business and jobs, if it is to break out of the debt nightmare that it is in and build a sustainable future for new generations.
But there is insufficient debate about which entrepreneurs should get the most support and why. After all there is a huge difference between becoming an entrepreneur with the aim of building and sustaining a business that employs a lot of people and starting a lifestyle business that allows you and one or two others to live comfortably as a self-employed business person.
The facts demonstrate that the real positive growth engines of the British economy are the fast growing mid-sized companies, who are creating lots of new jobs. From 2000-2013 the number of private sector businesses in the UK grew by 41%, however, 56% of these were in companies with no employees Source Department for Business, Innovation and Skills 2013. This means that the majority of new businesses have zero real growth potential. At the other end the companies with over 250 employees are hardly growing at all. So if we want to make entrepreneurial growth drive our overall economy, we have to be much more selective in how we incentivise the sector. This may not be a populist statement. Hence why politicians are reluctant to talk about it. But it’s true. We need to discriminate positively in favour of the best entrepreneurs who are creating jobs and building our economy.
So what would I stop doing?
For a start, I would not give out random National Insurance giveaways to all small companies, as the government recently did. I am a beneficiary of the recent £2000 NI giveaway, but actually this is too little, too widely spread.
Secondly I would look more closely at how I could deploy tax incentives to help small and medium sized businesses recruit and retain staff as they grow. For the start-ups, I would be encouraging, provide support and some fiscal stimulus, but I wouldn’t get so carried away with the hype.