Government to push small businesses to grow

The Brown government’s favourite word so far has been ‘change’. Within the space of weeks it has re-branded departments, for example the Department for Trade & Industry (DTI) is now known as the Department for Business, Enterprise and Regulatory Reform, (BERR).

This department, however, will have its policies informed by the Business Council, upon which sit the crème de la crème of big business. Sir Alan Sugar, Sir Richard Branson, Sir Terry Leahy to name just a few. Where, I hear you ask, does small business fit into the picture?

Well, the formerly known Small Business Council, a part of BERR, has also received a name change – it is now to be known as the Enterprise Directorate. It is a name of two halves; the words seem to clank together like two ball bearings. Directorate conjures up images of unrivalled bureaucracy carried out in grey stone Orwellian-type buildings. Enterprise, however, implies a fun-filled game of free and easy growth. Many will no doubt be pleased about the name change for it is now all about growth, growth, growth.

The Enterprise Directorate will remain the Government’s policy unit on small business issues. However, their main objective will be to encourage small businesses to grow.

It cannot be denied that many small businesses need help to grow as they are often forgotten whilst, paradoxically, trying to weave their way through what can be a maze. For example, there are almost three thousand business support services, although the government is also now working to cull them back to around one hundred. But, and I know this may come as a shock to many growth devotees, but when the question is asked, ‘To grow or not to grow?’ many small businesses are quite happy not to grow. They are small businesses because that is how they want to be.

It is an easy assumption of many that, if you are in businesses then you must worship at the altar of the high priestess of growth. But many small business owners will tell you that one of the main objectives for setting out on their own in the first place had nothing to do with becoming the next Sir Alan ‘You’re Fired’ Sugar, but had much to do with lifestyle.

For some, and yes this may be a bigger surprise in today’s ‘breakdown society’, it is a question of ethics. Many people see working for themselves, whilst undoubtedly hard work, as an altogether much simpler life; they are not told what to do by someone else, then watch the majority of the profits they helped create go into the pocket of just a few at the top.

Many small business owners started off working in big businesses and could not wait to get away. It is too easy, and crude, to make the assumption that bigger somehow means better. For many it does not. Assuming that all small businesses must really want to grow is the epitome of arrogance. It is saying ‘we believe this, then surely you must too’.

In an FSB survey only 10% of respondents said they wanted to grow rapidly. Nearly a quarter of all respondents reported that they wished to remain at about the same size. Not surprisingly, when analysed by region, those respondents based in London were more likely to report an ambition for rapid growth (16%, compared with 10% across the UK), whilst those in the North West, West Midlands, Wales and Scotland are less likely to want rapid business growth. So is BERR or the Enterprise Directorate, like many U.K. industries, London focused?

Furthermore for those micro and small businesses based at home it is frequently a matter of convenience. 21% of FSB survey respondents said that convenience was important or very important for having a home based business, especially for those with young children.

However, if the Government is so keen on helping and encouraging small businesses to grow then they will first have to make it a much more appealing prospect and radically address the maze of regulation and compliance that many small business owners struggle with on a day to day basis.

Many of those who do want to grow but find too many barriers cite regulation as the biggest hurdle. In fact, small businesses spend an average of twenty-eight hours per month on compliance and regulatory paperwork alone. Workplace regulation, like taxes, too often negatively impacts on small business in a way not experienced by bigger businesses.

Stephen Timms, the minister for competitiveness with a responsibility for small business, admits that the change of name from the Small Business Service to the Enterprise Directorate will reflect the government’s new focus on the growth of existing small businesses, rather than the creation of new ones. It is envisaged that the Government’s small business strategy, to be released around October, will lead to a three-year action plan covering 2008-2011.

In a recent interview Timms states that only 25% of small-business owners have ambitions for growth, leaving the vast majority that do not share their vision. But he is adamant that he can whip up a frenzy of ambition amongst the small business population and ‘set their sights higher’ and ‘grow their businesses in a more rapid way’.

It is a case of do as I say that will not impress many small firms. The majority of small businesses would prefer Government to get out of their way so they can achieve the success that is appropriate to them.