Dear Lord Young…

Congratulations on your appointment as the new enterprise csar.  I am sure that the unpaid and part time role will keep you engaged.

I am pleased that you will look at how to ‘encourage people to start businesses rather than find jobs as employees’.  It makes a refreshing change from the usual line of the ‘private sector creating jobs’.  As we know big businesses have, on the whole, been laying people off over recent decades rather than taking them on. And just how long can we keep going with the mentality of ‘gizza job’ and ‘on yer bike/bus’ in a 21st century globalised and localised economy?

Can I suggest you take an early look at the semantics of ‘encouraging people to start businesses‘  and the very practical consequences that are likely to flow from it.  When a figure in authority, never mind Government, sets out to ‘encourage us’ to do something, some of us come over all suspicious.   Are you really interested in our well-being, or is there a more self centred game being played?  There is a good chance that in the very act of ‘encouraging us’ you serve to engender resistance to the very idea you wish us to entertain.  Psychologists call this reactance.

I have not read in detail the guidance on the Regional Growth Fund.  But I understand, from correspondence with someone that has, that it specifically says that self-employment is not something it should be used to promote.  Instead it should be used to encourage jobs created by employers.  There seems to be somewhat of a contradiction here.

But back to the point of encouraging  people to start businesses.  I believe that what you really want to achieve is a society where more people do start businesses that survive and thrive.  This should be the real policy goal.

So how to get there?

I would advocate that you should dissuade as many people as possible from starting new businesses.  Only for those people who insist that this is something that they have to do should we roll up our sleeves and help.  By working in a focussed way with a relatively small number of highly committed people we might have a chance of getting some real success stories.  And as we know, success breeds success.  More positive role models out there leads to more people following in their wake.  This contrasts with the current approach of offering a little support and encouragement to a lot of people, resulting in high business failure and loan default rates and a widespread perception that a journey into enterprise is likely to leave you worse off than when you started.

Can I also suggest that you do not wave money at people, New Enterprise Allowance style,  in a bid to encourage them to start a business?  The reality is that we have armies of advisers out there wading through thousands of appointments with people who are often half-hearted in their aspiration to start a business, but whole hearted in their commitment to securing the money that they see themselves as entitled to.  Instead of offering them a carefully calculated economic incentive (calculated to make things cheaper for the treasury I suspect rather than enabling people to start businesses with a decent level of working capital), offer them nothing, except excellent and committed advice, coaching and support that they need to put together an idea that is worth investing in.   I suspect that almost overnight the numbers of individuals engaged in ‘enterprise development’ would fall dramatically, but those that remained engaged would be there for the right reasons – to develop long term and sustainable strategies for self employment or entrepreneurship – and not just to secure a grant or a loan that they can default on with relative impunity.   NB don’t expect many of the enterprise support agencies to support this idea.  They have developed business models that survive on a mass market for enterprise development.

Of course access to finance matters.  But let others be the gatekeepers to it, not those who are supposed to be coaching clients to develop their enterprising ideas.

Then of course we have the challenge of helping the hundreds of thousands of people who will be faced with redundancy over the next few years.  Can I suggest that we put in place a service that does not ‘encourage them to start a business’, but that does encourage them to fully explore and understand all of their options?  I am sure that many of them have the potential to become successful, if initially reluctant entrepreneurs, if only we can provide them with the right kind of support.

And finally, don’t get all hung up with ‘national voluntary mentoring schemes’ and traditional business support organisations.  Instead get interested in what you can do to encourage communities to provide the support that local people need in pursuing their enterprising ideas (these may be much wider than self employment and business start ups).  Some of the more imaginative enterprise coaching schemes have started to develop community panels to provide practical assistance to local people.  This is an approach that can certainly be developed further.

There is tons of potential out there – and at the moment we are wasting much of it.

Comments

  1. Great post Mike.

    Yet again, you seem to touch on the essence of “real world” issues.

  2. Hi Mike – appreciate that this is an open letter on a blog, but did you send a copy to our Csar?

  3. Only thought so because of my humble opinion of you as a respected thought leader and opinion maker in this field. Every revolution needs a leader…

  4. Lord Young encourages entrepreneurial small business one week, but crushes it the week before. How so? My own business, started from scratch already publishes food hygiene ratings on the internet. In fact it is now the largest such site in the world.

    But Young supports the FSA in spending £8M to re-invent that wheel and introduce more watered-down standards.

    Should I sit back and let Central Government put me out of business? I’d love to hear suggestions on what I can do to lobby against this?

Trackbacks

  1. […] Blogger and social entrepreneur Mike Chitty’s open letter to Lord Young, the government’s new “enterprise […]

  2. […] Blogger and social entrepreneur Mike Chitty’s open letter to Lord Young, the government’s new “enterprise […]

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