Not so small fortunes are being invested to encourage people, especially those living or working in areas of deprivation, to start their own businesses or to go self employed.\u00a0 This makes lots of sense to economists, especially if people were previously ‘economically inactive’ or on benefits.\u00a0 The ‘tax take’ goes up and the cost to the Treasury in benefit payments goes down.\u00a0 Result!<\/p>\n
So the public sector invests in ‘making it easy’ for people to start a business.\u00a0 There are dozens of free training sessions and sources of support – many promising to turn business ideas into a reality.<\/p>\n
Let me explain why I think making it easy for people to start a business is not necessarily a good idea.\u00a0 Because when a business fails it usually\u00a0 leaves a trail of destruction \u2013 debt, broken relationships, damaged mental health and occasionally suicide.<\/p>\n
I have recently met with several people each of whom is now in a very difficult situation, at least in part, as a result of engaging with ‘business support’ and starting small businesses because it was \u2018made easy\u2019.\u00a0 Because they were \u2018encouraged\u2019.\u00a0 Because they could access ‘soft loans’.\u00a0 Because they could work with a business adviser who would help them to put together a business plan that ‘worked’.\u00a0 Each of them is now in debt and in extremely difficult personal circumstances which include:<\/p>\n
This is part of the reality that has to be addressed.\u00a0 Sure there are the success stories and we hear plenty about these as they get used as case studies to encourage the next wave of start-ups.\u00a0 Small business can be a great way to make a living and a life.\u00a0 But the ‘dark side’ of small business is very real and needs to be faced up to.\u00a0 We need to be extremely responsible and cautious in the way we promote it.\u00a0 It is a double edged sword with potentially massive consequences for wellbeing \u2013 both positive and negative. It can be a wonderfully powerful tool for economic and social regeneration.\u00a0 But like any powerful tool it has to be used with care.<\/p>\n
When we ‘make it easy’ for people to start a business it is relatively straightforward to get more business start ups.\u00a0 However unless we are careful we also get an increase in small business failures and this can wreak havoc.\u00a0 Not only to the entrepreneurs and their families who are left to manage the consequences, but also to the wider community.\u00a0 Word soon spreads that enterprise is not such a good thing.\u00a0 The trend of increasing start up activity is soon reversed as the real experiences of some entrepreneurs filters through.<\/p>\n
So perhaps we should make it hard for people to start businesses.\u00a0 Not by raising artificial barriers and increasing red tape, but by training our business support professionals to be brutally honest about the small business environment.\u00a0 Success in small business is not about the logic of the business plan but the passion, character and indefatigability of the entrepreneur. Although just about anyone can do it \u2013 they need to go in to it with their eyes wide open to what the journey might, and probably will, hold. Someone making an informed decision not to start a business should be celebrated with as much vigour as a new start up.\u00a0 If there are any choices other than small business perhaps these should be pursued first.<\/p>\n
We should perhaps teach enterprise professionals to persuade clients not to get into small business because it is so tough. <\/em><\/p>\n