It is increasingly apparent that the UK economy is now heavily dependent for both its future growth and much needed jobs on the rise in number and quality of start-up firms. This dependence on a vibrant start-up culture is not confined just to the UK for a recent report by the World Economic Forum http://www3.weforum.org/docs/WEF_Entrepreneurship_Report_2011.pdf found that across the developed world that 1% of new firms create 50% of the new jobs. In London our dependence on start-ups is even greater for government VAT figures reveal that approximately 22% of all new start-ups in the UK are in London.
The fact that London has the highest start-up rate (and not unrelated the highest business closure rate) is a testament to the market opportunities, dynamism and sheer size of the London economy. It also strongly correlated to the fact that London’s population is significantly younger ( by almost 12 years) than the rest of the country with a much greater number of people being between the age of 25-34 which is by far the most likely age group for people to start a new business.
So everything is rosy in London when it comes to new enterprise?- Well maybe not. There are worrying signs that the situation in London is about to get worse and that below the headline figures the picture of entrepreneurship in London is more confusing.
1. Firstly, from last month London will be one of few regions in the country where there will be no government funding to directly help people start a business or source professional advice and guidance. Most of London’s enterprise agencies and business support organisations are still able to offer some form of very limited advice and training but it is small beer compared to past years. In a good year up to 5000 individuals start a business directly or indirectly through London’s business support organisations. How many of these new start-ups will be lost to the London economy we will wait to see but surely it is an unnecessary risk on behalf of national and regional government.
2. Secondly, it is apparent from figures from the major banks that only between 3-7% of all the approximate 60,000 new businesses who open business bank accounts in London each year borrow or invest more than £10,000 to start a business. Given the cost of accommodation, staff, research & development etc in London it suggests that in London we are good at starting the one person service business but no so good at starting businesses that have growth or job creation potential. In fact if you break it down further in London we are in effect starting only about 3000 growth focused businesses a year who have the ambition and financial resources to create jobs and according to the WEF report only 1% of these (about 30 new businesses) are tasked to create 50% of all the new jobs needed for the 450,000+ unemployed people in London.
3. Thirdly, the government’s present agenda is to focus resources on stimulating enterprise in regions outside the Capital. As evidenced by the fact that well-resourced programmes such as the Regional Growth Fund and New Enterprise Allowance scheme are either not operating here or applications for funding from the London region are being extremely discouraged( in the case of the Growth funds by the head of the fund Lord Heseltine). The other government agenda is to focus on supporting growing companies through such initiatives as tax credits to encourage R&D and incentives and support to banks and investors to fund growing companies. Some of these schemes effectively exclude start-ups whist others impose almost impossible hurdles and hoops that a start-up will need to jump through to get access to the funding and support.
Capital Enterprise for one is committed to addressing these concerns so in the next week we are planning to launch three new initiatives to help world be and existing entreprenuers in the Capital. They are:
* 1. The Business Boot Camp : This Friday the 13th May at the British Library we have Boris Johnson the Mayor of London launching the a new initiative for new entrepreneurs in the Capital called
the Business Bootcamp. (www.thebusinessbootcamp.co.uk). These are a series of highly intensive and interactive workshops for people looking to start either technology focused or asset based businesses that will require more than £10,000 of investment to get off the ground and growing. The series of bootcamps are all focused on starting a business in a specific sector and are led and delivered by the sectors leading entreprenuers, institutions and corporations. So we have London College of Fashion and representatives from firms such as Arcadia leading the Fashion bootcamp , People 1st and the leading pub chains leading on a bootcamp for those who want to open a pub and so on. There will be 28 separate bootcamps in total run over the next 12 months all designed to help a new entrepreneur overcome what we thing are the 4 biggest challenges to starting an ambitious job creating business. They are:
Insider Knowledge– This is why all the bootcamps are focused on starting a specific type of business such as a restaurant and why they are led by entrepreneurs and industry leaders. This way we can ensure that those attending can get very useful insider information on their specific sector that is not freely available elsewhere . The type of know-how only usually acquired painfully and expensively 6 months after starting.
Industry contacts– Opportunities to meet and talk to potential major customers/buyers, suppliers and potential collaborators (especially useful if you are looking to develop and launch a technology based business)
Finance– Raising significantly amounts of money is never easy but through the bootcamps we will show you how.
High Cost– All the bootcamp leads were tasked to come up with a package of advice, services, and discounts and offers that would significantly reduce the cost of starting a business. If we do not lower the cost of starting a ambitious business for those who attend we have failed.
Check the website out www.thebusinessbootcamp.co.uk to see if there is a bootcamp for you. The bootcamps are sponsored by Royal Bank of Scotland and because they receive no UK government funding require attendees to pay a small fee to attend.
2. Business Bootcamp Extra- Because it is more difficult than ever to navigate your way around all different funding options and government incentives, Capital Enterprise is running a series of 2 hour workshops called Bootcamp Extra solelyon the theme of finance. Each bootcamp will cover a specific scheme such R&D grants, Enterprise Investment Scheme etc and will have presentations by leading experts and businesses who have secured finance from the featured scheme. The first Business Bootcamp extra will take place on the 25th May at 3pm at UCL on the theme of “How to claim R&D Tax credits?” . Both Deloittes and HMRC will be speaking as will some entreprenuers who have managed to navigate through the mcomplicated criteria to get there 175% of their R&D cost rre-imbured by the government. Attendance is freev to all those who register on a Business Bootcamp and for clients of Capital Enterprise members. To find out more e-mail firstname.lastname@example.org and ask for a schedule.
3. What’s on in London- This week sees the re-launch of Capital Enterprise website with a key new feature-a free listing service where members and partners can list and promote events, initiatives and offers available in London to entrepreneurs, small businesses and social enterprises. If it’s happening in London you will find it there. The website also features the other services that Capital Enterprise is offering start-ups whether it is help with finding accommodation, pop-up shops, advice and support or finance. With the demise of Business Link we hope that our website will be useful place to find out about help to start a business in London.
Capital Enterprise believes London needs more and better quality start-ups and we, and our members, are prepared to put our money where our mouth is and do something about it. Let’s hope other’s will follow.