Napoleon Bonaparte famously described Britain as “a nation of shopkeepers”. During David Cameron’s glowing endorsement of the UK as a place to do business at the G20 summit yesterday, he appeared to be trying to supplant this description in the consciousness of the world with “a nation of entrepreneurs”, talking about record numbers of businesses registering in the UK. But is there more, or indeed less, to this phenomenom than meets the eye?
Entrepreneurship is certainly box office (The Apprentice, Dragon’s Den etc) but just how widespread within the UK population is true entrepreneurship, the willingness to stake everything on one’s business acumen, to take commercial risks in the pursuit of extravanagant financial reward and (arguably) the complete unemployability of the true entrepreneur in anyone else’s business?
Those who succeed are of course highly visible (Richard Branson, Stelios Haji-Iouannou, Sir Alan Sugar etc) but does that give us a false picture of the UK business community in general? Should I mention that Stelios is a tax exile, or maybe save that for another post!
I have a reasonable insight into a couple of snapshots of the North West business community, namely our client base and the membership of Manchester Business Breakfast Club, not for profit business networking group extraordinaire. I will include Simpson Burgess Nash in the latter, as I think our own experience gives an interesting insight into what motivates the modern UK business community.
Looking at the MBBC membership and at our client base, both feature a reasonably broad spectrum of businesses from start-ups to substantial businesses with multi-million £ turnover, and across the range of business sectors. I think this divides fairly neatly into four sections.
Firstly there are the true entrepreneurs, forever formulating and implementing new business ideas, and looking for the next challenge and the next opportunity. They are a minority, but they are dear to my heart because they provide a disproportionate part of my tax consultancy work.
The second category is those who want to change the world, often but not exclusively in an environmental sense, but certainly by embracing alternative business structures such as co-operatives, community interest companies and the like.
Their primary business aim is not to become a millionaire but to encourage others by their example, their efforts and their words to embrace their world-view. I am hugely empathetic with this group, I wish them every success but they are not entrepreneurs in any sense of the word. This group is particularly well represented among the younger generation of business owners.
There is also a group which I would term lifestyle businesses. We have a client called “Do What You Love For Life”, which to my mind sums up this category perfectly. These are the happy minority who have managed to generate a business out of what they love doing, and have thus successfully pursued the Confucian ideal:
“Choose a job you love, and you will never have to work a day in your life.”
This can be horrendously difficult to achieve, but good luck to those who have achieved it. They would not define themselves as entrepreneurs, however, and nor would I.
This leaves the fourth category, which I would define as those who are in business of necessity rather than by choice, and thus arguably the antithesis of the true entrepreneur. This is often the fate of those who find themselves, often through no fault of their own, on the scrapheap of the world of employment, sacrificed to the prevailing economic wisdom of the market that puts profitability before the personal touch, enterprise before experience and share price before social values.
This group is often characterised by being more advanced in years, which can produce its own well-documented problems when cast unwillingly and unexpectedly onto the labour market. In simple terms, rejection by the traditional labour market often leaves such people with no alternative than to seek to exploit their hard-earned skills and experience on a freelance basis through the medium of their own business.
Once again, this is not entrepreneurship, it is the time-honoured British tradition 0f making the best of a bad job. Incidentally, it also has a marked impact on the unemployment statistics, which for this reason I suspect significantly understate the scale of the employment issues in the UK.
I am not quite sure which of these categories Simpson Burgess Nash fits into, except that it does not fit neatly into any of them. The background to the firm’s formation was that Mr B, Mr S and Mrs N were the management team of a sole practitoner accounting practice run by John Frenkel, forensic accountant par excellence and introducer of the structured settlement for serious personal injury victims to the UK. John’s changed family circumstances dictated a move to London, and he offered us the chance to undertake a management buyout (which, incidentally, turned out to be possibly the most amicable MBO in history).
Without psychoanalysing my fellow directors and owners, I think it is almost certainly fair to say that we were all happy as senior employees, given a lot of leeway to run the business as we saw fit, (certainly I have never been happier before or since). One of us was in the throes of recovering from cancer treatment and none of us was in a position to fund the buyout from our own resources (although one of us subsequently became so, I would not recommend the required scale and juxtaposition of bereavement necessary to achieve this).
So what were the alternatives? Successful and growing as it was, the tax and accounts practice of Frenkels was not going to bumble along as before without a business figurehead prepared to put his or her money where his or her mouth was. When a practice owner moves on, the only way to realise the value of the investment of finance, time and effort in the business is to sell it. And if the management team cannot or will not buy it, the only thing left to do is to sell it to the highest bidder.
There is a wonderful habit in the accountancy profession of describing acquisitions of this nature as ‘mergers’, but please be assured that true mergers in the accounting profession are a rare breed. Personal experience and that of family and friends of being on the ‘wrong’ end of a merger is that ‘dismemberment’ would be a more accurate description of the fate of the prey, as opposed to the predator, in such a process.
Now I am sure we are (or were) confident enough in our own abilities to imagine that we could find other niches for ourselves in the accountancy and tax professions, although individual health issues might have cast doubt even on that prospect. But there were also 8 or 9 other members of staff whose immediate livelihood depended upon the continuation of the practice in some vaguely recognisable form.
It was at the point that we failed to say “stuff them, I’m (potentially) all right Jack” that we started to distance ourselves from the dyed-in-the-wool entrepreneur. The weight of responsibility for the other staff was certainly the decisive factor in making my mind up to go for the buyout, and I am certain that the same is true of at least one of my co-owners and directors, who had every rational reason not to touch the project with the proverbial bargepole.
So the MBO proceeded on the basis of motivation that appears to have been a mixture of reasons 2, 3 and an altruistic version of 4. The one motivation listed above that did not feature large in the buyout was entrepreneurship. Perhaps that is why we could not make any headway with the North West Development Authority’s High Growth programme, although there were other reasons for that as well.
One of the fundamental problems with this is that it is a potential recipe for sub-optimal personal and business performance, particularly when other factors get in the way as well. Somewhere in the complex mix of bereavement (and associated guilt), depression, oscillating weight and addiction (a prize for guessing to what, and it isn’t food) that have characterised my last 6 or 7 years lies cause and effect, but I do not have the skills to analyse this.
All that I do know is that when we took the (economically inescapable and financially beneficial) decision just over a year ago to make 2 members of staff redundant, my reaction was not the entreprenurially inspired “we must do it because it is best for the business” but the much more heartfelt “why did we bother with the MBO if it was going to come to this?” And I am not suggesting that my co-owners found it any easier to square this with their own consciences.
This may be in danger of veering off away from the point of the article, and many may regard it as way too personal to make comfortable reading, but the fact remains that being an entrepreneur always has been, and remains, the furthest thing from my mind in terms of motivation for starting and running a business, and I am sure that not only am I not alone in that respect, but that a good proportion of UK business owners come into the same category.
And while it would be melodramatic in the extreme (not to mention significantly untrue) to say that I have hated every minute of being a business owner, the fact remains that pure entrepreneurship remains as alien to my moral and religious compass as it ever was, even after five and a half years of haplessly trying to run a business (I speak for myself, not my admirable business partners, who are much better at that stuff than I am). And again, I suspect this to be true of a number of UK business owners obliged by force of circumstance to operate in a capacity in which they feel extremely uncomfortable.
But of course this is far from a recipe for a successful enterprise culture in the UK, fuelled by a growing mass of entrepreneurial small businesses, which is very much part of the government’s vision of the coutnry’s economic future. Ask my long-suffering business partners about the frustrations of trying to drag a reluctant tax consultant into the commercial world, and trying to deal with the fallout when that process hits the aforementioned rocks of bereavement, guilt, depression and addiction.
So before David Cameron congratulates himself too much on our supposedly thriving enterprise culture, and stakes all on that culture to generate much needed growth and drag us out of the economic mire, he might care to consider the true motivations that have led to the formation of the rash of new UK businesses, and pause for thought about the implications of this for his future economic policy.
One final thought. How can I be so happy successfully generating a significant income for someone else, and yet so unhappy trying to do it for myself and my business partners? Answers in an e-mail please, because I would dearly like to know.