I was giving a talk to the Chairman’s Network recently on exactly this subject and I think it’s a pretty interesting one. So I thought I’d try to summarize my talk.
The first thing to cover is whether our economy needs saving. I think this is a fairly easy one. The UK’s economy (together with most of the world) has been flat for at least two years and is not even keeping up with inflation. And this is off the back of the worst recession we have ever seen. So in conclusion the economy has really been in a bad way for several years now and clearly needs saving!
I then thought about who else could save the economy? The government could try to reduce their spending to reduce the deficit but we have seen that this just leads to further decline and does nothing to address the growth that is so desperately needed. The government could also try to spend more in an effort to kick-start some growth and increase employment. But the trouble is that the government doesn’t have any money so this is hardly a sustainable strategy.
What about the finance sector? Until 2008, London’s reputation as the world’s leading financial centre had been growing and growing, creating lots of jobs and generating huge profits in the process. However, as we now know, this was built on sand. Bankers were driven by greed and short term profits, selling products that no-one understood and encouraging people and companies to take on debt that they couldn’t afford. The house came crashing down and the industry will never reach the same heights again.
If you look more generally at big corporations they are experiencing similar difficulties. Profits are generally being maintained by cost cutting rather than any significant growth, as organizations struggle to adapt to the challenges of globalization and a stagnant economy. There are of course exceptions to this and I don’t want to be too downbeat – but it’s difficult to see big business as the answer to our problems.
When you start running through these potential sources of economic growth you very quickly realize that we need to be looking elsewhere for hope and recovery.
This is where the entrepreneurs come in. Entrepreneurs are change agents. They are the innovators, the creators and the growers. They are not happy with the way they find things. They want to change the world or at least their little piece of it. They believe in a better future. God knows we are desperately in need of these things right now.
I think there are four main things that an entrepreneur needs to be successful and have written about this before. Those things are funding, people, a supportive government and the right attitude. I think entrepreneurs need our support more than ever and there are ways we can do that when you look at these areas.
On the funding side why not put a little of our saved money into an early stage business? I mean where else are you going to put it these days? The current generation of investment opportunities have let us down so why not invest in the next generation? Plus there are more and more tax breaks being introduced that make this even more attractive.
In terms of finding the right people I think schools and universities should provide more teaching on entrepreneurship and, wherever possible, have entrepreneurs themselves play a part in this. Entrepreneurs love to tell their story and to give back. The earlier kids can start to learn about starting their own business and be inspired by people who have the more likely they will be to go ahead and do it.
In the technology world there is also a problem with not enough people learning to write software. When I was growing up it was all about learning Japanese or Mandarin as the best way to ensure career success. I would say the most important language of the 21st century is computer coding and that the more people learning how to do this the better it will be for our economy. We can all encourage schools and universities we are connected with to focus more in this area.
I actually think the government has done some good things in terms of supporting entrepreneurs. They have expanded the EIS scheme, entrepreneur’s relief and launched the entrepreneur’s visa to name a few initiatives. What I now think is even more important is for the government to get out of the way and make it as easy as possible for entrepreneurs to build their businesses. I’m thinking especially in terms of employment law and other time wasting regulations and bureaucracy that make building a business even more difficult.
Attitude is probably the most difficult and also the most important thing to change. I still think for most people that being an entrepreneur and starting your own business is seen as an overly risky and reckless pursuit. Americans feel very differently about this and believe that starting your own business is the most amazing and rewarding thing that you can do. This has been passed down through the generations and I think we need more of this attitude and recycling if we are to create an environment that fosters entrepreneurship.
So I think there are ways we can help individually to help create a better environment for entrepreneurs. But there are also initiatives that we could either create ourselves or lend our support to which can also make a big difference. Here are a few examples of great initiatives that are creating more entrepreneurs in the UK:
Seedcamp – now celebrating its fifth birthday, Seedcamp is Europe’s leading accelerator program and seed investment fund. They have now invested in 73 start-ups from across Europe, almost all of which re-locate London, creating more than 800 jobs in the process.
Code Club – they are creating a nationwide network of volunteer-led after school coding clubs for kids. There are now 217 clubs in the UK and they have an ambitious target of 25% of all primary schools by 2011.
Tech City – the government’s initiative to encourage the growth of the tech cluster in East London has helped drive a big increase in start-ups in the area from 15 in 2008 to more than 200 in 2011. You can argue about what contribution the government has made but, either way, it’s an area with a huge amount of start-up activity creating thousands of jobs.
Tell Series – this is a monthly series run out of London Business School where proven entrepreneurs come in to tell their story to the next generation. It attracts great speakers and the events are always packed full of people.
I’m sure there are many other great initiatives out there or just good ideas that haven’t yet been launched. I believe we need to support these initiatives and turn our ideas into reality because they can play their part in creating more successful entrepreneurs. Alternatively we can always just go out there and start a company ourselves!
Either way I’m convinced that entrepreneurs are by far our best hope to kick-start the economy. And of course we all benefit from a stronger economy. So let’s get behind our entrepreneurs in any way we can because who the hell else is going to save our economy?