Why the government's latest scheme to encourage start-ups will lead to generation of failed entrepreneurs...

The current government seems to have a somewhat lopsided approach to encouraging entrepreneurship – while making speeches about how much they admire and how much they want to support people to set up their own businesses, legislation and policies are passed that make it harder for small businesses to be able to afford to employ people, for local authorities to be able to offer rate relief, and tax regimes that favour large international corporations over local enterprises...

 

But its their latest initiative that perhaps gives me cause to be most concerned – not because it affects 'us' (people currently setting up new enterprises), but our children: the next generation of entrepreneurs...

As a parent, I'm constantly trying to make sure my boys are best equipped to get on in the world, and develop resilience to be able to deal with the inevitable adversity and set-backs that we all face. Part of this is about appreciating the true value of money, and the need to earn it. But the governments' latest scheme is to offer primary school children 'loans' of £5 to set up their own businesses as a means to help them learn about being an entrepreneur – all well and admirable on the face of it, as it will offer some children an opportunity they might not otherwise have enjoyed, but there are 2 key issues with this that make me upset:

1)      in the 1980's, there was a short-lived scheme that gave unemployed people small grants to set up their own businesses as a means to move out of unemployment: 30 years on, and this government policy has so impacted the collective consciousness that most people I meet who are thinking of setting up their own enterprise expect that they're automatically entitled to such a hand-out without having to do anything to merit it – if this is the legacy of a scheme targeting unemployed adults, then this £5 'loan' will surely engender at least the next generation of entrepreneurs to expect that there'll always be government cash to help them out and so become less resilient...

2)      what about all the work of encouraging entrepreneurship amongst school children of all ages that already takes place through national bodies such as Young Enterprise and Live Unltd? Their approaches seem to work very well without the need to be offering 'financial incentives' to participants, and are based on developing long-term supportive relationships – much more beneficial to any enterprise than a quick cash hand-out...

 

If government really is serious about encouraging entrepreneurship amongst children, then it needs to make some more informed choices about how it does this: investing in existing, proven national programmes rather than wasting money on new schemes and managing them would be a good start; teaching financial literacy from an earlier age would be good too – I can't tell you how much I despair when start-ups I'm walking alongside deliberately avoid wanting to understand how the money in their enterprise is working and as a result, many I haven't been able to 'win over' have subsequently gone bankrupt, racking up greater personal debt and making people unemployed, and yet could easily have been prevented but for their being more comfortable with some basic financial literacy...

So – the government’s latest great idea to stimulate and encourage business growth and entrepreneurship seems to not only be doomed to fail (like so many before it), but will so do in such a way that it'll drag down the next generation and limit the future potential of our children.

 

Why are we encouraging the lottery to increase inequality in our economy and society?

The national lottery – you've got to be in it to win it; it could be you; millions raised for good causes;... we all know the slogans and headlines – but is it actually causing more damage to our communities than good?

Lotteries tend to work on a pretty simple basis of wealth redistribution: everyone pays in a bit and someone gets the pot at the end. Effectively, we all make ourselves (the majority) a little poorer and someone else (the minority) a lot richer. Sounds a lot like the stuff that loads of people and campaigns are railing against at the moment when it happens in banking or politicians, but someone we don't seem to mind it when we've willingly made ourselves an active participant to the process...?

But what about the money it distributes to good causes? Well, yes – its supported a lot of good projects and activities, but to what extent is this just a sticking plaster over an increasingly big wound? - to what extent is the 'good' that it supports being surpassed by its model of encouraging and celebrating extreme wealth inequality?

Be fascinated to know if anyone’s done any research on this, or any social science or economic researches might be interested to look into this further...

(oh, and for the record – I don't play the lottery and never have: but only because I'm a saddo who's worked out the odds and realised I can make better use of the £ every week that would be otherwise spent on tickets and scratchcards...)

the risk of offering ‘women-only’ finance

I recently came across the female business angel network and was encouraged and depressed by its existence in equal measure:

 

while it’s always good to have finance tailored to specific groups of enterprises (increases the likelihood of engagement, makes it easier to develop supportive relationships, etc), there’s a very large associated risk that it stifles the potential of the enterprise being financed;

 

an entrepreneur engaging with such specific and niche support is highly unlikely to subsequently engage with the wider business support community on the strength of the relationship they develop with it, and so won’t want to look for anything else – ultimately this means that they’ll miss out on opportunities that may have been open to them elsewhere, in programmes that have a more ‘mixed’ recruitment to the businesses they’ll support.

 

Think I’m blowing smoke over nothing? Well, there are two things I’d point to which have led me to come to this perspective:
 

1)  the rise of Islamic Finance: it’s generally not a mainstream offer, and since its introduction I’ve anecdotally been aware that there is a significantly decreasing diversity amongst entrepreneurs in the more general business support programmes I’ve been involved in supporting...

 

2)   I like to think I keep pretty clued up about support available to entrepreneurs of all types (it’s what some clients feel they value the most about me), but as someone who’s been involved with enterprise financing for 14 years in different guises at local, regional and national levels, this is the first time I’ve come across the female business angel network...

 

So – the female business angel network: along with other niche enterprise support offers it’s a great resource to engaging those entrepreneurs who might have otherwise ‘slipped through the net’ on the basis of sexism or other bias and prejudice (however explicit or implicit) within wider business support programmes and bodies, but with an increasingly fragmented marketplace of such support, I’m increasingly concerned about how well its being ‘joined up’ to ensure that those being supporting to pursue and realise their dreams and hopes don’t inadvertently find themselves being unnecessarily stifled or curtailed...

the real reason libraries are struggling...

Some of you will know that I've a long-term interest (love) in libraries - especially with regard to the support that they can offer local communities in light of increasing cuts to others public services. I also curate a twitter list at https://twitter.com/AdrianAshton2/lists/libraries

Contributors to that list often cite various reasons as to the decline and difficulties our public libraries currently face, but I'm coming to the idea that actually the biggest problem for our libraries isn't changing demographics, the rise of the internet, etc but something far more mundane - council bureaucracy! 

I was recently invited to have my picture taken by my local newspaper in Todmorden library as part of a feature on the support that's available to start-up businesses in the local area. However, despite speaking with the library staff and making 2 phone calls to heads of departments, we could only gain a provisional permission to have picture taken of me (a library-card carrying member) looking at some of their books on business start-up (to encourage more people to check them out and use the library), in a public building!, and that final permission would only be given once they'd seen the pictures that the press photographer had taken...

With this clear lack of leadership, is it any wonder that libraries are struggling to remain engaged with the changing faces of their local communities? 

Maybe this is why many feel that the future of public libraries lies in their being managed by the communities they serve, and moving out of local authority ownership and control (after all, that's how public libraries originally started!)


-------------------
updated - well, it looks like we finally got full permission after all! the pictures now on-line in glorious technicolour - http://bit.ly/KfrKN3

Christmas has been outsourced to Santaco...

I hear that Christmas has been affected by austerity and outsourced to Santaco. The elves have been cut altogether (despite organised protest at the highest level). The elves have however been given funds to help them to set up a new Elvish mutual. The Elfing Hands Coop aims to bring peace and harmony to the world, according to its new Chairman who is enjoying spending time at the north pole surrounded by white powder. Santaco is being investigated for allegedly stealing children’s presents and making up false Christmas lists. This hasn’t stopped them continuing to be front runners for the upcoming tooth fairy contract (despite organised protest from the dental profession). 

Santa’s sleigh has been replaced by a high speed helicopter to try to meet new and ambitious payment by results targets. Industry insiders think that new restrictions on using chimneys to gain access to houses without permission means most presents will not be delivered until mid August at the earliest. 

The Minister for Christmas has announced that some people are indulging too much with disastrous consequences for the deficit. “We cannot let the reckless behaviour of a small minority ruin this ancient celebration”. In future the focus will be on early intervention – with Christmas starting in May. He also announced a shift to evidence based gift giving (only approved gifts which lead the recipients to healthy lifestyles, greater well being and reduced use of A and E or other public services) and promised legislation to end to the culture of excess which has blighted the ceremony for so long.

A new hard hitting inspectorate OffYule will be set up with sweeping powers to put people into special measures should they fail to meet new Christmas austerity targets.

(with thanks to Dave Hollings ;-)

why are private businesses supporting and promoting models of enterprise that are completely opposite to their own?

there’s a lot of talk and examples recently of how big business is starting to explore ways in which it can support and encourage the next generation of social enterprise and social entrepreneurs – either through direct sponsorship, or, as in the case of Coca Cola, using under-utilised capacity within its supply and delivery chains to reach those people that others just can’t reach...

and that’s great – right? Governments and NGOs don’t have the resources alone to address the needs of our world, so it’s great to see resources and cash being mobilised out of private hands into the public good.

but... I'm struck by a historical parallel and a philosophical question in all of this. What’s in it for them, and why are they promoting models of business (social enterprise) that are at odds with their own ownership and profit distribution structures?

Go back a little while in history and we see the British Empire setting up co-ops in all the countries it ‘managed’, telling everyone that these were the way to go in terms of economic prosperity for all, sustained wealth, etc, etc – but why then did the British Empire not do more in Britain to promote and support co-ops for its own citizens?

Tellingly, although credited with succeeding in shifting cultural attitudes to the co-op enterprise model, these ‘Empire co-ops’ have largely struggled to realise their potential. And its only now, several generations on, that bodies like the Co-operative College are having the opportunity to be able to revisit these nations and seek to fan the flame of what remains of the co-op legacy...

Without a clearer lead from national and international social enterprise bodies, I'm concerned that we’ll see big private corporate firms start to rush in, create loads of social enterprises that will ultimately collapse (or be stifled in what they could really achieve) – so perhaps the most pressing question is for those private firms like Coca Cola: why are you promoting models of enterprise that are opposite to your own? If you really think that they’re so great, why aren't you changing the way you’re structured as well?

Why we’re to blame when our leaders fail us

A lot of media coverage has been given in recent weeks to an ex-chair of a national ethical bank, and it strikes me as interesting for a couple of reasons that you might not expect –

1) what finally ‘tipped the balance’: this is someone who’s expenses claims on the boards of several charities where they served as a trustee were seriously questioned over the years, and who’s Council computer they used in their duties as an elected councillor were apparently found to contain images that would breach most company’s IT usage policies... but it was only after they were ‘caught’ buying (not taking!) drugs that they were ousted: both as Chair of the Bank and as a Minister of the Church.

Does this mean that as a society we have a scale of (un)ethical behaviours that we’re prepared to accept? (probably - I've written about how pornography is more ethically acceptable than tobacco before...)

2) And given the above, how were they allowed to keep holding (and gaining) the positions of power and authority that they did?

And these questions get me thinking about how they were able to fall so far – why did no-one intervene sooner or spot warning signs?

I think it may be something to do with the way we treat and support those in authority: the higher up an organisation you rise, the less support you have available and offered to you.

For example: think about volunteering for a charity, or being the shop-front worker in a small business – there’s clear induction to make sure you know what you’re doing, regular check-ins to see if everything’s going well, and lots of legislation to make sure that employers are properly looking after you. But become a Director or a Trustee and all that seems to vanish... there are few formal inductions or reviews at the Board level in private, social and charitable enterprises I've walked alongside over the years – and this is echoed by the Charity Commission who've found that the majority of complaints they investigate are due to governance failings, and the need in the private sector over the years to introduce Codes of Conduct for Directors.

So – as the troubles of an ailing bank are heaped upon one person who succumbed to human weaknesses, do we really only have ourselves to blame when we've set them up with no means of helping to support them do the jobs we're asking and expecting of them?