Another government, another push for another 10 000 small businesses to be created from the ranks of the long term unemployed.
To me it seems similar to what we already have under the Flexible New Deal, unless I am missing something: it may be a tad better resourced. But, I am encouraged that Iain Duncan Smith appears to have a real commitment to social justice, at least, he chairs the cabinet committee on it. Let’s hope that his commitment to social justice rather than newspaper headlines really shapes this New Enterprise Allowance.
So what are the chances of success for the New Enterprise Allowance, and what might be the pitfalls?
To begin with, although I am a big fan of mentoring, I am not convinced that it is the best way to support people with transitions from unemployment to self employment. The best mentors (as opposed to coaches) have ‘been there, done that, seen the film and got the t-shirt’. They can offer sage advice and guidance based on practical experience (usually gained over many years in a specific and relevant industry, and importantly should be chosen by the mentee and not assigned to them by a service provider); Mentors should know what it takes and be available to put in the time and commitment necessary. Let’s also hope that they are properly trained, supported and supervised in the process of mentoring. And mentoring should not be a mandatory component but an option, we have to recognise that folks learn in different ways and for some the thought of being mentored just does not cut it.
So, if we must have a mentoring programme let us run it well. Lets take mentoring seriously. Let’s make sure that we have enough well trained mentors. Personally I doubt that we will. More likely we will find an army of middle managers looking to do some CSR, or rebadge existing enterprise advisers as New Enterprise Allowance Mentors. Plus ça change…probably
I think the enterprise coaching role is, in places where it has not been confused with enterprise evangelism, much more likely to be effective. Non directive, facilitated conversations that give people space to develop their options and make their own choices provides a sustainable route to more enterprising communities. Conversations that don’t use ‘benefits’ and ‘enterprise’ as carrots and sticks to manipulate people to meet government targets and trigger payments by ‘results’. Our industry is riddled with such practice. We need conversations that respect people and their right to choose.
I suspect that mentors will work with mentees primarily on ‘the business plan’. I doubt they will have the coaching skills to really work on developing the person rather than their idea.
Will a decision not to start up be valued and rewarded as highly as a decision to start? I hope so.
Will the New Enterprise Allowance engage ‘the community’ in supporting local people struggling to make the transition to self employment? No sign of community panels and networks to support the formal delivery structures. It is not so much a New Enterprise Allowance that we need in our communities as a New Enterprise Alliance….
Will the scheme be designed to encourage the formation of team based start-ups where complimentary skill sets and personalities ensure that all functions in the business are adequately covered? I doubt it. It will, if history is our guide, take the shortest, lowest cost, route from benefits to self-employment, not the route that is most likely to result in a sustainable business with the potential to grow. While we should be looking to maximise return on investment I suspect we will look to minimise investment. Cost per start-up will be the metric of choice. And the sooner we get the better.
The New Enterprise Allowance will be for long term unemployed who ‘want’ to start a business. Finding the people who really WANT to will be an enormous challenge. Personally I don’t think it is anywhere near enough for someone to want to start a business. It needs to be something that they HAVE to if they are to have a decent chance of success.
We have approaching 800 000 people who have been unemployed for more than 6 months. The New Enterprise Allowance hopes to help 10 000 of them to start a business this year, that is just over 4 in every 500.
- But which 4?
- What percentage of the 800 000 will wish to engage with the programme?
- How many will the delivery mechanism engage with at the start of the process?
- How many of those will make it through to trading?
- What positive outcomes will be delivered to those that engage with the programme but decide not to start a business?
This represents a challenge. To help find the few who really will do the groundwork required and learn what needs to be learned. It is a challenge both for marketing the scheme and effective psychological contracting between service provider and service user..
And the whole scheme reeks of yet more ‘fast enterprise’. A couple of mentoring sessions and three half days with a training company and you will be ready to roll. Well maybe. And maybe not. Where these sorts of schemes prevail they prioritise the most capable and even then have frightening business failure and loan default rates. Good business start ups plan and prepare carefully. They don’t rush it. There is little point in starting 10 000 new businesses in a year if the survival rates are not good. And please this time will someone show an interest in survival rates?
Then there is the cash element. In the transcript of his speech on Conservative Home, IDS is reported as saying:
We will provide business mentoring and a financial package worth up to £2000 to get your business up and running.
Now quite what is meant by ‘a financial package worth up to £2000’ remains to be seen. Cash grant? Loan? Benefits? But clearly in this transcript it is £2000 in addition to the mentoring provided.
But can anyone explain to me the why the magical figure of £2000? How about we teach them to access the finance that they need to give their business a well capitalised start? Whether that is £5 or £5m? If we are serious about teaching people how to run a small business let’s not cap ambition according to the size of our currently cash strapped treasury pockets.
So at first glance it looks to me like wrong pedagogy, wrong curriculum, wrong ‘financial’ package, wrong pace of change and a failure to embed enterprise culture in the community. Apart from that all systems are go. I can already hear the usual suspects sharpening their pencils in anticipation of the invitations to tender.
I hope it is me that is wrong….
What do you think?