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Your
EnterQuest Bulletin - Issue 449
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Thought
for the week: "There
are no facts, only interpretations." Friedrich
Nietzsche
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In
this week's issue:
The
enterprise graveyard - Part 2
Our
lead article last week presented a rather controversial argument
which raised questions about 2012 being held up by Government and
others as the 'year for enterprise', and whether it makes sense
to encourage more start ups, especially now there is so little genuine
local business support available.
Some
respondents managed to grasp the point of our article, which of
course was playing devil's advocate, while there was also some questioning
by those who were perplexed and wondering whether we had simply
lost the plot.
To
illustrate the argument further let's look a little deeper into
what is actually meant by 'local business support' by providing
an example and a couple of different scenarios.
Using
the example of hairdressers, let's imagine that there are two different
individuals aiming to start up in the same town, where there are
already half a dozen hairdressers currently trading.
The
town's population of 10,000 people is stable, but a local factory
has shut down with the loss of 100 jobs and the local council has
laid off 100 staff as part of public spending cuts. There is a local
enterprise agency in the town running start up courses and employing
accredited business advisers but that agency has also been forced
to cut back on the services it provides to local start ups.
Start
up A is an exceptionally talented hairdresser, highly creative and
full of new ideas for styling, although poor with numbers and figures
and is a rather impulsive, disorganised individual with very little
business acumen.
Start
up B is only an average hairdresser, without a great deal of creative
flair, but is quite entrepreneurial, understands cash flow, the
principles of marketing and is very thorough at everything she does.
Of
the two who would be the most likely to survive after starting up?
The one with the talent but little business sense, or the average
hairdresser who is more entrepreneurial?
Of
course the answer to that depends on a number of factors, not just
relating to the two individuals, but also to the relative strengths
and weaknesses of the existing competitors in town, and whether
they are always busy and turning customers away, or not.
For
the sake of illustration we might argue that Start up B, the average
hairdresser, would be most likely to succeed over the more talented
individual who lacks business sense.
Start
up B will recognise the need to employ another hairdresser with
more ability than herself, will keep the books in order, get her
pricing right and find out whether she needs a trading licence from
her local authority.
The
talented hairdresser will get her pricing wrong and her cash flow
will be out of control after three months when she is forced to
cease trading with too few customers coming through the door. One
of the other hairdressers in town will also close down after also
seeing a drop in appointments as customers moved to the two new
hairdressers.
So
where does business support for start ups and early-stage enterprise
come into play?
If
there was a local enterprise agency with face-to-face counselling
available for start ups then part of their role would have been
to spot the difference between the two individuals. Start up A would
hopefully have been encouraged to think twice about starting up
by being helped to understand the difficulties she would face with
the business rather than the hairdressing side of things. Maybe
they would also help her to choose a different career option by
getting a job in someone else's salon, and gaining some business
experience.
Start
up B would probably have used the agency's service to help plug
any gaps in her knowledge and she would also have been advised to
consider the overall customer potential in a town with unemployment
going up, and the number of other hairdressers already trading.
She would have been better prepared for the risks, along with any
potential cash-flow sensitivity and uncertainties while the business
gets off the ground in the first few months.
That
is what is going to be missing in 2012. The ability to help people
make the decision not to start up, when it is clearly not
for them, or when local trading conditions will not support another
hairdressing enterprise in town.
And
the ability to ensure that the individual who has some business
acumen and common sense can overcome their technical limitations
or lack of certain skills by finding someone to help them or work
for them when needed.
Some
respondents to last week's article had commented that recessions
can be a good thing when there is a rise in new start ups entering
the market, as this will result in survival of the fittest. This
is a fair point, but there still needs to be an element of filtering
in place to weed out or discourage those in danger of starting up
with little or no hope from the outset, and arguably this is most
suitably provided by locally-based, qualified and experienced enterprise
practitioners such as those working in enterprise agencies, and
similar local support agencies.
It
is doubtful whether the business minister - the Reaper himself -
and his Business Department, will grasp any of this.
The
business support that the Reaper has, in his own words, 'unleashed'
in 2012 amounts to an army of volunteer mentors, whose role will
do little other than encourage more people to 'go for it' when at
least three quarters of those people who start up in business should
not being 'going for it' at all.
This
Mentorsme scheme is being promoted alongside a number of
other 'dumbed down' enterprise-for-all initiatives favoured by Government,
such as Start Up Britain and the Business Link website with its
faceless, detached-from-reality call centre.
How
does the Reaper propose that these websites will recognise who
should not be starting up in business over those who should?
Enterprise
and entrepreneurship are not straightforward subjects. There are
always complicated factors at play and these factors vary enormously
between one business start up and the next and from one local town
to the next. The local business adviser has probably never been
needed more than now.
To
make ourselves clear on this, EnterQuest was not a big fan of Business
Link, especially following the one-size-fits-all policy introduced
during its regionalisation in 2007. And we believe its closure has
been, on balance, a move for the better.
Furthermore
we would like to see the closure of the £45 million-a-year
Business Link website with its budget diverted into increasing the
availability of local business support measures where they are most
in demand. This would provide a welcome boost for micro enterprise
in general and help to improve the overall standard of business
start ups and their prospects for survival.
However,
the failure of policy-makers to grasp that there is a genuine and
increasing need for access to face-to-face local business support
on a wide scale - whether that is training, counselling or general
advice for start ups - is tantamount to ensuring that the enterprise
graveyard will be overflowing in 2012.
To
comment on this article please
click here to have your say.
You
can view the comments made by EnterQuest readers on last week's
article
2012
and the enterprise graveyard.
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Also
from EnterQuest's publisher
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The
UK Small Business Marketing Bible contains hundreds
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