Starting up the start-ups - Business Works
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Starting up the start-ups

David Saul, MD, Business Environment An increasing number of entrepreneurs are preparing to start their own business, according to the recent Global Entrepreneurship Monitor, which showed that 20% of the working age population plan to start their own firm in the near future.

Studies such as these are particularly interesting when they contradict the received wisdom. With so much talk of austerity and decreasing consumer confidence, surely any potential entrepreneur will think again before taking the plunge and setting up a new venture.

It may be that advances in technology, giving startups the chance to build a presence online without significant investor funding, is the cause of this surprising willingness to start new businesses. Alternatively, maybe people are pessimistic about their employment prospects in a depressed job market and have taken to creating their own work.

While this optimism among budding entrepreneurs is cause for cheer, I recently read a report claiming that more UK businesses were closing than starting and fewer than half of the businesses that launched in 2004 were still going by 2009.

we need to reward the increasing number of brave entrepreneurs setting up new businesses

All the evidence suggests more needs to be done to support start-ups – we need to reward the increasing number of brave entrepreneurs setting up new businesses.

One problem SMEs have faced is access to funding, with banks criticised for falling to meet the government’s Project Merlin lending targets. A report earlier this month from the Big Innovation Centre, which surveyed 11,000 SMEs, also found access to finance had significantly worsened since the start of the recession with failure rates now double those of 2007 and 2008.

However, with banks previously lambasted for lending irresponsibly, 'banks should lend more' might be a somewhat facile response to a complex problem.

Indeed, there’s some evidence to suggest that support for SMEs and alternative financing exists, but isn’t being adequately promoted.

A recent AXA Business Insurance study, for instance, showed that almost half of small business owners hadn’t heard of the Funding for Lending Scheme, more than half were unaware of plans for a government-backed business bank and almost a fifth had no knowledge of apprenticeship schemes.

Furthermore, only five per cent knew they were in an enterprise zone, with one third having never heard of these, and a quarter were unaware of the scheme to roll out super-fast broadband. Additionally, more than 70% did not know what crowdfunding involved.

Despite this, the research certainly didn’t indicate that a simple bit of extra promotion for these various scheme and sources of finance would sufficiently address SMEs' needs. Indeed, only five per cent of those SMEs aware of Funding for Lending scheme believed it was working for small businesses and just nine per cent were confident that the new Business Bank would lend to business owners – suggesting that the schemes themselves need improving, along with their promotion.

As the MD of a serviced office firm, I wanted to look at the ways our industry could make a difference to start-up businesses. During discussions with various entrepreneurs, I often heard complaints about prohibitive rates for office space.

Within the serviced office industry, it’s clear that a tailored package for start-up businesses is required. This could enable SMEs to take an office without paying a deposit or any rent for the first month and allow entrepreneurs to take advantage of an exceptional rate, as part of a flexible low-risk package that avoids the barriers that might otherwise prevent them from starting up.

Likewise, virtual offices could prove important, providing smaller companies with a professional front-of-house reception team and business address, without the risk of buying physical space.

healthy businesses play a key role in building a strong economy

It’s clear that healthy businesses play a key role in building a strong economy, paying significant amounts in tax and creating employment opportunities. It’s crucial that the government and other organisations find ways to support start-ups. It would be good for the whole country if the increasing confidence reported among entrepreneurs was justified.


For more information on Business Environment, please visit: www.beoffices.com



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