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Are funding initiatives for start-ups actually hurting the economy?

NOTE: This content is old - Published: Monday, Nov 7th, 2011.

A recent report released by the Department for Business & Skills (BIS) estimated that small & medium sized enterprises (SME’s), that is companies employing 250 or less, are responsible for 99.9% of companies in the UK. A staggering statistic needless to say, and one which highlights the fact that SME’s really are the lifeblood of our economy.

New start-ups are happening all the time, and the government (both at national & local level) recognize that people starting up a business need their support. Think about what you need to put in place for example just starting a new shop:- rent, rates, fixtures/fittings, stock, till, promotion/marketing and the list goes on. More importantly everything I’ve mentioned costs money, money the shop owner wants to recoup. But it’s not just financial commitments to consider, it’s also the amount of time it takes to put it all together; the worry and fears of failure and being prepared to live and breathe business, which is often the level of sacrifice it takes to be successful.

Life as an entrepreneur or business owner then is not all that easy. But at a time where taxpayers are being squeezed to the extreme, starting up a business has to be made to look like an attractive option else why would people bother? Wrexham Council offer free advice to those thinking of starting up a business, along with dedicated workshops. You can also be eligible for funding if you can fulfill a certain criteria, and Glyndwr University offer something similar. However, this does not come without pitfalls or strings attached. In fact, there’s an illogical juxtaposition in the whole process when in difficult economic circumstances someone has an idea for a new business, they don’t want to expose themselves to risk yet they are pushed towards a high risk option with an unpredictable economy. Universities are not interested in low risk service orientated businesses, they want fast growth technology businesses and manufacture. Both create jobs and a much needed financial boost to the economy, so it’s natural to adopt a short-term stance given the circumstances involved.

If someone wants to run a furniture shop, but is directed to the idea of furniture manufacture and told they’ll be eligible for funding, human nature dictates that person would probably go for it. But what’s to say a few months later he decides it’s not for him, it was never what he wanted to do. However now he has 10 employees, funding to sort out and the university have an equity share in his business. Life starts to look somewhat more complicated at that stage.

So what is the lesson to be learned? That no matter how much the Government would like you can’t shape the economy? That those who act on their impulse to start their own business should be given the freedom to do what they want under impartial guidance – as they are giving up so much to do so?

Those are important issues, but perhaps the crucial point is looking to the future. In Wrexham and in Wales we need to do more to promote entrepreneurial activity in schools and colleges. Youngsters can view the world of business without any residual baggage of the current economic landscape; they can bring fresh ideas, and talk to the people that can help nurture them and their idea. Attempting to shape the British economy is logical, but if our natural expertise lies in what are coincidentally low risk enterprises, then so be it, give entrepreneurs the freedom they deserve and lets play to our strengths – even if we can’t export them!

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