Naive thoughts on encouraging enterprise

I've been self employed now for just over eight years. Interim verdict: it is quite extraordinarily hard work, and not getting easier.

It has its merits. There's certainly deep satisfaction in developing your own brand, process, philosophy and skillset. I have the freedom to shape the service I provide according to my own judgement. There are no managers with partial knowledge telling me to do things in a way I know doesn't make sense. There's no IT department locking me into using inferior tools. Quality of service isn't compromised by internal politics. There's some correspondence between the quality of my work and the rewards I receive. And my days are not necessarily governed entirely by the utilitarian considerations of the balance sheet: I can choose to emphasise quality and craftmanship, sometimes at the expense of profit.

But good grief there's a lot to dislike, as I shall lovingly detail below. Indeed so much to dislike that most normal people don't really consider self employment or business startup a terribly sensible venture. So I was interested to read Sir Richard Branson's comments in The Guardian the other day about the necessity, if we are serious about nurturing an enterprise culture, of taking concrete steps to making working for oneself a much more plausible option. Sir Richard said:

'Government needs to focus on smaller businesses and find ways of making it easier to set up a business in the UK. It should look at reducing business rates and regulation on small and start-up companies.

'It is these costs and rules that are hampering employment growth. It could look at introducing policies such as a national insurance holiday on hiring people for the first two years.

'We need to encourage more entrepreneurship from the next generation – and focus on giving them the basic business and money-management skills as part of the schools curriculum.'

What's not to hate

I certainly agree that all those measures would help. But I think much more has to be done to make starting a business seem anywhere near as appealing as the prospect of a secure job with an established company. Consider this:

  • The self employed get no paid holidays, no sick leave, no maternity or paternity leave, and no pensions, and yet have to pay exactly the same taxes as everyone else.
  • No meaningful financial assistance is available to get you started. You need substantial savings, wealthy family or friends, or at the very least a significant other with a steady job who can ensure the bills are paid while you're trying to get things off the ground.
  • Legal safeguards against late payment of invoices are flimsy and can quite easily be ignored by large companies who are well aware that small businesses can barely afford the legal action necessary to enforce payment.
  • Given the irregularity of payment for work undertaken, and the difficulty of finding reliable clients, there is no financial security.
  • It is necessary to work quite exceptionally long hours to get a business off the ground, and thereafter to maintain it.

Faced with all that it often seems to me that one would have to be a fool to consider it. Why on earth would you, when after a bit of hunting around it's possible to find a position with an established company that provides a regular salary, a defined working week, colleagues with whom to share the burden, a navigable path to promotion, and all the perks of paid holidays etc etc. Most people wishing to spend substantial time with their family and friends, to take regular holidays and pursue interests outside of work can see that it's perfectly obvious that employment is the wiser option. Most employed people I know work fewer hours for significantly more pay than those who work for themselves.

The hero

Something of which I've become acutely aware since starting my little business, and which I find increasingly irritating, is the idealisation in business culture of the figure of the entrepreneur: the heroic self made man or woman. If everything isn't dreadfully hard work then you're not doing it right. You're certainly not doing it right if you're bleating rather than boasting about how difficult it is. The sturdily self sufficient entrepreneur doesn't need help. Just their own native genius and a willingness to dedicate all day every day to building their business. 'Ruthlessness', 'focus', and that increasingly ubiquitous word, 'passion', are prized above all other virtues.

It all sounds incredibly wearisome. It's no wonder - dare I say - that so many - not all - business people are rather dull. No conversation about anything other than their work. No serious pursuit of other interests. No cultural hinterland. Family life sacrificed for the sake of some future vision that may very well never materialise.

I'm exaggerating for rhetorical effect, but there's truth in the caricature. I know because I've been tempted by that perverse ideal myself, and have certainly fallen into the trap of working far more hours pursuing it than I'll be able to get back, neglecting so many other aspects of life. A dull dog indeed. I'm afraid I think that the eulogisation of the entrepreneur as Nietzschean übermensch is really rather silly, a waste of precious life. We need, I think, to cultivate a gentler vision of entrepreneurship, a way of being that people with a sane, balanced sense of life and purpose might find appealing. I think it should be possible to build a business and to have time with family and friends, to work in the garden, read earnest Russian novels, collect shells, do up a vintage car, learn the Wagner tuba, join a political party, or visit the ruins of ancient Sparta.

Some suggestions

So we could try implementing and extending upon Sir Richard's suggestions for making the prospect of starting a business sound tolerable to the sane majority. Here are some suggestions, naive suggestions, because I really don't know how viable they are. But I do believe thinking along these lines would help make entrepreneurship seem like something for balanced, not just 'passionate', people.

  • Reduce income tax paid by business founders - startups and self employed - at least for the first couple of years. As lamented above, startup founders get none of the benefits enjoyed by most employees: it therefore seems to me they should pay less tax.
  • Provide office space for free. I don't see why the self employed should have to work at home - that isolation is certainly not for everyone - or why startups should have to have to sink precious resources into office hire. Give it to them for nothing, at least for a while.
  • Provide a grant - a grant, not a loan - for essential tools: computers, printers, phones etc. That would help new businesses to concentrate resources on developing their services, not simply kitting themselves out.
  • Offer a measure of financial security by making available to startups the same kind of loans that students get: substantial amounts only payable at a certain income threshold at low interest rates.
  • Supply free access to training courses that the self employed need to develop their business skills: basic accounts, the development of branding materials, social media, and so on (I know that some free courses like thease are already provided by local enterprise companies).
  • Toughen up the law on late payment of invoices. It seems to me utterly scandalous that it should be so difficult, so often, for small businesses and the self employed to get paid by big lazy companies with squads of comfortably salaried accountants - no bitterness here :). Payment should always be due, by direct transfer (no messing about with cheques please, it's 2012) within a week of invoice submission, with interest accumulating daily thereafter.
  • The availability of much cheaper self insurance policies making it possible for the self employed to get the same holidays, sick pay and other benefits enjoyed by employees.

Preferential treatment

All of these proposals unashameably give preferential treatment to people starting a business over those taking a regular job. That is the whole point. The self employed and the employed shouldn't be treated equally. The former should be favoured, because - in most cases - they are doing something bolder, something that requires more initiative, something riskier, something harder, something, as Sir Richard argues, is crucial to our prospects for sustained economic recovery. It isn't enough to just give them copies of Also Sprach Zarathustra and Atlas Shrugged and just let them get on with it.

We need, I believe, to be thinking along these radical lines to foster an entrepreneurial culture. The potential benefits of enterprise need to be much more obvious if we're going to have a hope of persuading sane people to consider seriously the possibility of taking a risk, and not the safe, much more sensible option of salaried employment.