Big is Bust, Micro is Mega - How the Government can help small business through the "crunch"

Tony Robinson OBE and founder of SFEDI, tells Bytestart readers how the Government can help small businesses through the credit crunch. SFEDI is the standards setting and endorsement body for enterprise learning and support.

News of a 17 year high in unemployment with the prediction that it will soon reach 2 million means that there must be a change in policy right across government. It can’t continue to ignore the 4.3 million micro enterprises (0-9 employees) which represent 95% of all UK enterprises. Fewer than 40% of us are VAT registered and most of us have a turnover of £10-£50,000 per annum. Yet, being ‘micro’ doesn’t mean ‘too small to encourage’. We are hard workers and risk takers, trying to earn a living in a hostile environment. More and more want to do what we do.

Government policies to help us must be rooted in ‘our world.’ Support and training must come from people and organisations we trust. Never have we felt so discriminated against.

Self employability and enterprise skills are a ‘must-have’. An estimated £24 billion is lost just in resolving in-house corporate conflict each year so it’s no surprise to find that micro businesses are happier places to work. They run without 360 degree appraisals too. Micro enterprises are the font of future communities, jobs and growth.

One in seven of the work force is self employed. By 2020 it may be closer to one in four. The successful company of the future, with few capital assets, will flexibly bring in self employed professionals and independent contractors to manage increased workload, rather than take on employees. Micro enterprise owners already employ 25% of the workforce.

Self employment can be the only answer to disadvantaged individuals and communities. We have an ageing workforce and, if you’re made redundant at age 45, you’ve only a one in ten chance of finding a new job.

Many enterprising women, ethnic minority business owners or people with disabilities ‘go it alone’ because they see it as the only option. Half of all enterprises in the UK are run from home. Running your own enterprise isn’t just an opportunity to get away from the ‘prats and politics’ - it’s often the only opportunity left to earn a living while keeping a semblance of control over your destiny.

In the current climate, as big business continues its decline, government must finally empower micro businesses with the skills and support to survive and thrive. More jobs and economic growth will come from hard working, lean, flexible, opportunistic, enterprising people than from legions of over qualified, jargon-ridden, slow-moving corporate managers and consultants.

Yet, the last few years have seen huge cuts in publicly funded support to self employment, start ups and micro enterprise owners.

The best thing is that no new government money or infrastructure is even necessary. Enterprise agencies, business clubs, chambers of commerce and the raft of business membership bodies, trade associations and community-based business support groups already out there, not to mention fellow business owners, friends and families, accountants, advisers etc can simply be enabled to provide sustainable enterprise training and support networks.

They are ready, experienced and proven to ensure that 85% of start ups will survive the first two, tricky years of trading. Without their support another 20-25% will fail and be without a job.

Here’s my seven point plan:

1. Reallocate one quarter of the £billions of government money spent on big business. This is spent on unemployment to employment rather than self employment; subsidies for employment and apprentices, finance, technology, capital assets, skills, qualifications, training (Train to Gain alone will cost £1billion in 2009), quality standards and regulatory help for larger SME and major private sector organisations

2. Use it to fund support for the 400,000 new start ups each year and for the 4.3 million existing micro enterprises. Deliver it via people, organisations and networks already trusted by and competent to help these businesses. Being demand-led in this way will save millions of pounds wasted on government marketing to ‘push’ programmes at small business owners.

3. Remove criteria for existing government funded programmes which exclude the self employed and micro business owners. Currently enterprise owners have to take full level 2 and level 3 NVQs to be able to access vital enterprise skills training under ‘Train to Gain.’ All learning and support for enterprise must be offered within the context of the actual enterprise being run.

4. Exploit the banking sector’s need to build credibility. Use existing good practice and quality assurance to build on the banks’ current, good start-up help (more widely available than government’s), branch network and quality websites. Put Lloyds TSB, Barclays and HSBC in charge of enabling a universal, enterprise start up support offer, empowering existing enterprise support communities and offering free mentoring and coaching to everyone preparing for or starting up an enterprise

5. Make it a condition of this help to start ups that they are financially helped for their first year to join a small business membership organisation or Business Club to ensure they continue to benefit from this vital support

6. Provide incentives for start ups to take on employees in their first year. Examples of incentives could be benefits available for staff and owner during test trading phase; 12 months’ reduction in regulatory burden; training allowance; personal tax reduction; VAT raised to £100k and threshold waived for two years from start date.

7. Give the self employed and micro enterprise owners the right to free access to their business specific e-/video/ audio/forum-based learning/support, available from their bank, business club/membership body/trade association and Business Link portal or equivalent. All enterprise owners should be offered subsidised development support for their enterprise skills, with up to, say, twenty hours per annum from accredited, small business friendly SFEDI accredited advisers, trainers, coaches and mentors.

So, what will government get in return for its investment of 25% of the money that’s currently going to the ‘usual suspects’?

• Self employability and enterprise skills will become as important as employability and management skills. Micro enterprise will lead the way on employment, productivity improvement and growth.
• The UK will build an army of hard working, motivated, innovative and healthy micro enterprise owning men and women, who turn disadvantage into opportunity and adversity into the realisation of their potential.

About the Author

Tony Robinson OBE is a chartered marketer, HR practitioner and a former Managing Director of a £35 million FMCG direct selling company. Since 1986 he has co-owned and co-directed his own small business, which specialises in developing learning and skills products and services to entrepreneurs. He champions the importance of meeting the learning and skills needs of prospective and existing small and home business owners and driving up the quality of learning and business support for them. He received an OBE for services to small firms and training in 2001.