The founder of Seven Investment Management wonders why we aren’t hearing more about the growth in start-ups
It’s almost despite our politicians. It’s usually ignored by our media, and it’s usually regarded by most as an area for the slightly daft. Actually this is probably the most important aspect of our economy. I talk of course about our burgeoning entrepreneurialism in the UK.
In 2012, 484,224 new businesses were registered in the UK, up from 440,600 in the previous year and almost a world away from an average of around 150,000 to 180,000 back in the 70’s and 80’s. Something has changed and it appears to be quite a fundamental alteration in the UK economy.
The smaller to medium sized enterprises (SMEs, defined as having less than 250 employees) are actually the life blood of the UK economy, with more employment and investment than the traditional leviathans that we normally hear about.
People, despite the fears from the banks and the nerves of the media, seem to be far more willing than ever before to risk everything, put the house on the line and have a go at running their own business. This is in spite of the failings of the banking system and our structural failing in the UK to financially support start ups effectively (back to my rants on peer to peer lending again). I find this not just remarkable but very encouraging.
As I have mentioned before, we now have a record number of active companies in the UK (3.1 million), and this is despite the financial environment and a tax regime only marginally conducive to supporting the entrepreneur. I grant that this has improved a little, but as we have a new breed of politicians who have never had a job, and civil servants who have never risked their assets, I suppose that this is hardly surprising.
Going back to the late 90’s we used to have an excellent lunch time television show on BBC2 called Working Lunch, and one of their great highlights was the focus on small and developing businesses. This was done neither in the pseudo drama of Dragons’ Den, nor with the facile game show that is The Apprentice, but rather with real stories of business striving and thriving in and among all the economic issues that the businesses had to face.
Another statistic I found was that start-ups and small businesses make up 95% of all companies and employ more than seven million people, out of a working population of just a tad under 30 million.
Now let’s be realistic. Around half of these companies will sadly die within three years, but at a rising run rate like this, surely this has to be one of the most supportive pieces of economic and business news we have seen lately. So did this astonishing number reach the headlines? No – barely a mention – although page 4 of the Financial Times (at the bottom of the page) had a modest comment.
As Brits we are of course somewhat reluctant to shout about our successes, but on the other hand it’s about time we gave ourselves a dose of confidence that something tangible is being achieved. Oh and please don’t let me hear any politician claiming any thanks for this.
They haven’t put up their house, they haven’t stayed awake at night wondering if the business is going to be there in the morning, and I wonder if they have ever had that fear of putting your cash card in to the bank machine to find that you are down to your last sous.
Even now I hope that one day we will have a Chancellor that really understands the triggers that can help smaller businesses to get them going, not in give-aways, but sensible incentives for investment and returns, and encouraging capital and investment allowances. The UK has a poor reputation for business investment and anything that can help this has to be a benefit.
So well done entrepreneurs; despite the odds many of you have done it and no doubt will continue to do so.
Justin Urquhart Stewart is the founder of Seven Investment Management and a regular media commentator. Originally trained as a lawyer, he has observed the retail market industry for 30 years whilst in corporate banking and stockbroking.